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Posts Tagged ‘HSBC’

Impt of Indonesia to Jardine’s and other local listcos

In Indonesia on 15/04/2014 at 6:03 am

Inonesia was the largest revenue generator for many Singapore-listed companies in their most recent financial year, according to Singapore Exchange (SGX).

One in 10 stocks listed on SGX reported revenues specifically from Indonesia. Of those 80 companies, slightly more than a quarter reported Indonesia as the country that accounted for their largest revenue share.

This excludes stocks which segment revenue to South-east Asia, Asia and the Middle East, or Asia-Pacific regions, such as Jardine Matheson Holdings and Wilmar International.

Jardine Cycle & Carriage (JC&C), a member of the Jardine Matheson group and part of the Straits Times Index, has an interest in Indonesia-listed conglomerate Astra. Together with its subsidiaries and associates, JC&C employs people across Indonesia, Malaysia, Singapore and Vietnam. It has a total market capitalisation of $17.3 billion and a year-to-date total return gain of 35 per cent.

(BT 10 April)

JC&C is the Jardine group’s crown jewel, which reminds me, “Jardine [Matheson] shares have multiplied 10 times in 12 years, never mind the dividends,” according to a recent FT piece. I missed this. In early noughties, I tot of selling HSBC and buying Matheson or Strategic. Never did. Well HSBC (bought in 84) outperformed Jardines in 80s and 90s but went AWOL or MIA in noughties.

I had tot that based on history, Jardines would goof when I decided against the switch. In its attempts to diversify out of HK before the reds came in and ruined HK, it bot rubbish in Hawaii and elsewhere. HSBC backed people like Superman and other local tycoons while diversifying out of HK and into the US and UK. A sensible strategy more in line with Perfidious Albion. In the noughties, it was HSBC that crashed buying a US subprime lender. The losses there would have ruined a Citi or any other more efficient manager of capital. Happily HSBC had lots of fat to lose. And a massive rights issue almost doubled my holding. HSBC is getting its act together.

Still, Jardines would have been better .

Open letter to HSBC S’pore on Anton Casey

In Banks on 22/01/2014 at 6:58 am

(Update on 23 January 2014: TOC has confirmed that his present employer is Crossinvest*: Mr Casey’s firm Crossinvest Asia is investigating his comments and is set to take “appropriate action” once the review is completed, British newspaper, The Independent reported.

In a statement, Managing director Christophe Audergon said: “Crossinvest does not condone the comments. We believe they were made in poor taste.”

I’m very certain, he will be moving on from Crossinvest given that: The Company was created out of a Swiss single family office with almost three decades of leading experience and presence in Switzerland. We operate based on the finest Swiss Private banking traditions. 

Well among the finest Swiss Private banking traditions are

– discretion; and.

– operating in the shadows, leaving no fingerprints behind.

Don’t see Casey meeting these standards.

As to my thinking he worked at HSBC, it was an honest mistake.)

Dear Sirs,

I am a long-time shareholder (since 1984) and a client (since 1981), and am someone who has had friends working there: locals and international officers, and am writing this letter more in sorrow than anger.

I hope HSBC does the right thing by S’poreans especially its local customers, and moves on the FT (where T stands for Trash not Talent) by the name of Anton Casey out of the bank. His so-called attempt at humour does not reflect well on the bank because he is holding a senior position in wealth management.

One would be reasonable in wondering of the quality and discretion of HSBC’s management when such a senior executive exercises such an appalling lack of judgement and sensitivity.  Especially since HSBC prides itself on being the “global local bank”.

His behaviour also insults the international officers. I knew and worked with a few of them in the early 1980s on various projects. They were all minor public school boys who would never ever stoop to such insulting behaviour which they would have rightly called ‘hooliganish” and “racist”.

HSBC has always had a tradition of good customer service: it even built larger-than-usual cashier windows in Mexican branches to get more notes through, making it easier for the drug barons to deposit cash.http://atans1.wordpress.com/2012/07/18/hsbc-returned-to-roots/

So in the spirit of serving the customer and being the “global local bank”, move him out of the bank. His apology should not excuse his most unbecoming behaviour.

Yours faithfully,

CI aka E.K. Tan

HSBC: London & Greater China Bank

In Banks on 02/04/2013 at 5:16 pm

The map shows HSBC’s biz in terms of loans made as of 2010. S’pore is up there with China, Brazil, Oz and UAE. After the UK, Greater China (HK, China and S’pore) comes second. The bank is running down its US loan portfolio with continuing sales and write-downs.

BTW, the Argies are trying to shake down HSBC, accusing it of money laundering.

HSBC lords it over its peers in Asia

In Banks, Uncategorized on 14/03/2013 at 3:01 pm

StanChart also does well in Asia (wholesale banking profits in Asia rose 10% over 2010-12). but it is a minnow compared to these banks.

And investment banks are looking increasingly for deals in Asean region. In the IPO league table in 2012with KL at 5th place and HK at 4th. SGX with two FTs leading it was nowhere.

Contrast HSBC with StanChart

In Banks, Uncategorized on 10/03/2013 at 6:16 am

Both were narco banks. They were founded in the 19th century to finance the trade in opium between British India and Manchu China. They moved on with HSBC becoming one of the biggest banks in the world while StanChart remained like HSBC, once was, a an emerging markets bank. But HSBC returned to its roots: HSBC was fined for providing help to the Mexican drug cartels (bank counters were made bigger to facilitate the handing over of bank notes). StanChart was fined for a technical offence.

HSBC’s Profit Fell 17% in 2012 on Money Laundering Fine. HSBC has since hired the former chief of the US Treasury department’s sanction unit to assist with compliance.

http://atans1.wordpress.com/2013/03/06/bang-balls-temasek-haters-standard-chartereds-profit-rises-despite-u-s-fine/

 

 

HSBC: great customer & shareholder service

In Banks on 23/12/2012 at 10:12 am

Among the details to emerge in the US investigation of HSBC as the narco barons banker of choice were the larger-than-usual cashier windows in Mexican branches to get more notes through. Nice to see that the bank that I use and invest in is so customer-friendly.

And its continuing to try to improve investor returns:

– The selling selling of its entire 15.6% stake in Ping An Insurance, the big insurer based in Shenzhen, to Charoen Pokphand Group* means HSBC has sold more than 40 noncore assets since the beginning of 2011 and booked about $4 billion in gains on those sales this year alone, DealBook reports.  HSBC expects to book an after-tax gain of US$2.6 bn on the Ping An sale (more than enough to pay the US$1.9bn US fine).

– In October, it announced that it will close its Islamic finance operations in six markets, maintaining its presence only in Saudi Arabia, Malaysia, and a scaled-down operation in Indonesia.

*controlled by the Thai billionaire Dhanin Chearavanont. The deal is to be financed partly by the state lender China Development Bank,

HSBC: Better than the average bank

In Banks on 06/11/2012 at 6:14 pm

While many bank chiefs have scaled back their financial ambitions, HSBC’s chief executive is persisting with the goals he set for the lender 18 months ago.

 

 

HSBC: Doing God’s Work?

In Banks, Humour on 29/07/2012 at 6:51 am

On 25 July, Mexican regulators have imposed a fine of  US$27.5m on HSBC for its failure to comply with money-laundering regulations. The fine is the highest ever imposed by Mexican regulators. It constitutes 51.5% of the 2011 annual profit of HSBC’s Mexican subsidiary.

The week before, a United States Senate committee found that HSBC had provided a conduit for “drug kingpins and rogue nations”. HSBC’s head of compliance, David Bagley, resigned at the Senate committee hearing over allegations that the bank ignored warnings that Mexican drug money was being allowed to pass through the bank.

The US department of justice is conducting a criminal investigation into HSBC’s operations.

HSBS is expected to be fined heavily by the US.

So as a shareholder, I was upset that it didn’t use the defence that it was doing God’s work by laundering narco money. As the latest issue of the Economist writes: A gleaming chapel in Hidalgo state recently put up a bronze plaque thanking Heriberto Lazcano, head of the Zetas, for a donation. When the pope raised an eyebrow about such “narco alms”, a Mexican bishop, Ramón Godínez, replied that when Mary Magdalene washed Jesus’s feet with expensive perfume, he didn’t ask her how she paid for it. “There is no reason to burn money just because its origin is evil. You have to transform it. All money can be transformed, just as corrupted people can be transformed,” he said. With God as its money launderer, Mexico’s dirtiest industry should stay on a high.

HSBC: Being the drug barons banker of choice has its privileges

In Banks, Humour on 25/07/2012 at 10:04 am

If HSBC can surmount its current troubles, it has extraordinary opportunities. The year-long investigation was cited by the Senate as a test case. There is abundant evidence of other global banks having similar problems. Creating a compliance system that can satisfy regulation will not be cheap or simple. Companies in poor countries may find that their costs for routine transactions soar. But the rare banks that have the scale and the resources to operate in this environment will have a business niche to themselves. http://www.economist.com/blogs/schumpeter/2012/07/hsbc%E2%80%99s-grilling

As a shareholder with a barbed sense of humour, I can laugh all the way to the bank.

Earlier post: http://atans1.wordpress.com/2012/07/18/hsbc-returned-to-roots/

HSBC: Returned to roots

In Banks, Humour on 18/07/2012 at 1:32 pm

As a shareholder of HSBC and shumeone with a barbed sense of humour, don’t know whether to cry, or laugh and commend HSBC.

The present CEO is trying to get HSBC back to its Asian (i.e Chinese) roots, out of adventures in the US and Latin America. Funny thing is that in these places it was returning to its roots. 

HSBC was used by “drug kingpins”, says the US Senate, something the bank agreed with. It will be fined heavily. But in the 19th century it was banker to Jardine Matheson and the other British and Indian drug lords who were selling opium into China.

Great ad slogan, “Trust us.  The Mexican and Columbian drug cartens trusted us”. Or “Banker of choice to the drag barons of East & West throughout the ages”.

Why our local banks shld stop wasting resources on China proper

In Banks, China, Investment banking, Temasek on 07/06/2012 at 5:14 am

(Or “Why Temasek’s big bet on Chinese banks makes sense“)

DBS is the 6th largest foreign bank in China proper. It has a strategy of expansion into China. So have UOB and OCBC.

Well, its a tough biz to be in. Non-Chinese banks have only 2% market share. Even HSBC, StanChart and Citi have problems http://www.bloomberg.com/news/2012-06-04/china-wall-hit-by-global-banks-with-2-market-share.html

DBS, OCBC and UOB shld juz not bother abt China.

“Subsidy” is NOT a four letter word

In Financial competency, Political economy, Political governance on 06/03/2012 at 5:33 am

Many bloggers are upset that the govmin is giving S$1.1bn to SMRT and ComfortDelgro to help improve bus services. Seems to them, “subsidy” is a dirty word. Hmm, didn’t they get the idea that subsidies are always bad from the PAP idea, particularly one LKY?

But maybe, the PAP has changed its mind that the word “subsidy” is a dirty word. Reminds me of what Keynes is supposed to have said In response to an accusation of inconsistency: Keynes is often reported to have said “When the facts change, I change my mind — what do you do, sir?”. More to the point, he is reputed to have said: “When circumstances change I change my mind. What do you do?”

Well the facts and circumstances have changed. The PAP’s share of the popular vote is only 60% and its perceived presedential candudate won by just 7000 votes or less than 1%.

I’m not complaining that the PAP is being pragmatic by addressing the hot issue of overcrowded public transport: I take the bus. I’m not one of those who don’t take the bus regularly, has one car per family member, doesn’t pay income tax, and bitches abt this subsidy.

BTW, I don’t own shares in either company, nor in SBS Transit. I never bot as I tot dividends might not be sustainable. Juz look at the share prices in recent years. The yield remains highish because share prices have collapsed i.e. dividend payments have fallen.

But now the 2011 dividend payments for ComfortDelgro and SBS Transist look sustainable.

Anyway, here’s an example of a subsidy. I own shares in HSBC which I’m glad took advantage of the European crisis to get a subsidy from the European Central Bank. Let the BBC’s Robert Preston tell the story,

“HSBC, widely perceived to be the strongest of the UK’s banks and one of the strongest in the world, borrowed €5.6bn from the ECB … The reason it may be controversial that British banks have borrowed so much from the ECB – a bit less than 4% of all the money on offer – is that the interest rate is so low, just 1%. So arguably eurozone taxpayers are subsidising UK financial institutions.

HSBC: Which number to focus on?

In Accounting, Banks, Financial competency on 01/03/2012 at 1:55 am

 (Or “HSBC: Glass half empty or half full?” or “The difficulty of analysing a company esp a bank”)

HSBC Holdings, one of Europe’s biggest banks, said on Monday that its profit rose 27 percent last year in part because of greater demand for loans in the developing world.

(“Profit” here means profit attributable to shareholders)

http://dealbook.nytimes.com/2012/02/27/hsbc-profit-rises-on-demand-from-emerging-markets/?src=dlbksb

But FT preferred to focus on the 6% fall in pre-tax underlying profits to US$17.7 bn.

But pre-tax profits actually rose 15% to US$21.9bn. But FT, rightly in my view, took out the US$13.9bn gain in the value of the bank’s own credit. This is Alice-in-wonderland accounting that banks have to use (some happily, some reluctantly). The weaker banks love it.

HSBC is currently the most profitable Western bank, with its nearest rival, JP Morgan having profits 15% lower.

HSBC Asia Pacific posted profits before tax of US$13.3 billion – 15% more year on year. The region accounted for 61% of the group’s total pre-tax profit.

As regards HSBC S’pore, it posted a pre-tax profit of US$595 million for FY2011, up 14% from a year ago.  A lot better than OCBC’s and UOB’s S’pore operations. I plan to blog on how well Citi’s, HSBC’sand StanChart’s S’pore operations compare to our three local banks, one of these days. BTW StanChart juz reported that its pre-tax profit from it’s S’pore operations has hit US$1bn, up 40%.

HSBC: Cutting the fat

In Banks on 02/08/2011 at 9:42 am

HSBC has said it will cut 30,000 jobs by 2013 and exit operations in 20 countries as it looks to save billions of dollars.

The announcement came as the bank reported pre-tax profits for the first six months of the year of $11.5bn (£7bn), up 3% on the $11.1bn the bank made a year earlier. A very decent set of results.

As a shareholder, I can only say “about time”.

Gd analysis  http://dealbook.nytimes.com/2011/08/01/hsbc-to-cut-25000-more-jobs/?nl=business&emc=dlbka8

HSBC: Plans don’t impress

In Banks on 12/05/2011 at 10:13 am

HSBC’s CEO said that it would now focus its wealth management business on 18 key economies, and limit retail banking to markets where it can achieve profitable scale.

The bank is also streamlining IT operations and the operational structure. It hopes to save up to $3.5bn (£2bn; 2.4bn euros)

The bank said it would be directing investment into fast-growing national economies including Mexico and Turkey, and to certain wider regions, such as Asia and the Middle East. Asia means China (including Taiwan and HK), India, Indonesia,  Malaysia and S’pore.

The UK remains a core market.

Market was not impressed with HSBC shares down 0.8%. Analysts and investors were disappointed that the bank did not come out with more details e.g. the number of jobs that would be lost to show that the bank is serious.

HSBC: 44% price rise?

In Banks, Uncategorized on 22/04/2011 at 9:15 am

HSBC shares may rise by at least 44% if it focuses on markets that generate higher returns according to an analyst at Investec Securities, Bloomberg reports.

HSBC could climb to about 950 pence a share if Gulliver commits to ensuring all businesses generate a return on equity exceeding 10 percent, Gareth Hunt, a banking analyst at Investec Securities in London, wrote in a note to investors today. The London-based bank needs to cut costs in the U.K., reallocate capital at its U.S. division and sell parts of the business that aren’t profitable enough, he wrote. Gulliver, who took over as CEO in January, will brief analysts on his plan for the bank on May 11.

HSBC: Asia flying

In Banks on 02/03/2011 at 7:41 am

HSBC said its Asian operations can sustain return on equity of as much as five percentage points above the lender’s global target as growth outpaces other regions. It’s global target is 15%.

Bloomberg report.

BTW the 2008 financial crisis enabled me to double my holdings in HSBC via its rights issue. But there were times when my balls shrunk.

HSBC: Returning to its Chinese roots

In Banks, China on 18/12/2010 at 7:03 am

Remember the “S” stands for “Shanghai” and “H” for Hongkong.

Growth in China has averaged around 10 percent a year for the last decade and shows little sign of slowing. As trade flows with the rest of the world increase — HSBC says they will reach $5 trillion by 2015, which means growth of 13 percent a year — more of China’s cross-border trade will be settled in yuan.

On paper, HSBC is well placed to take a good chunk of business in that yuan-denominated trade. It is often one of the first foreign entities to win key licenses in China. It was the first to settle a cross-border yuan trade last year, the first to handle a yuan-denominated interest rate swap in Hong Kong in October, and it became the first international bank to complete yuan settlements in six continents with a deal in Brazil last month. … Read the rest of this entry »

StanChart has no plans to buy DBS

In Banks on 11/11/2010 at 5:28 am

The CEO of StanChart’s SE Asian operations said recently that Standard Chartered had no plans to spend the proceeds of a £3.3bn (US$5.3bn) rights issue on a significant acquisition in Asia. The bank planned to expand in the region largely through organic growth, rather than acquisitions.

The bank was not looking for any “transformational transactions” in SE Asia, although it might seek to acquire small businesses specialising in sectors or products that would add to its operations.

This would rule out a bid for DBS. Many had speculated (self included) that the bank might be preparing to spend part of the rights issue proceeds on a large acquisition. A very few (self included) speculated that DBS was a target, given that DBS is so badly managed and Temasek is a controlling shareholder in both.

DBS reminds me of StanChart in the 70s and 80s, when the latter got almost everything wrong. Only in the 90s did it get its act together. For younger readers, in the 60s Hongkong Bank and StanChart were roughly the same size, even though the former was already the leading bank in HK.

Standard Chartered bought two smallish S’pore-based businesses

– an aircraft leasing business in 2008; and

– a small factoring business earlier this year.

In 2008, it bot the private banking business of American Express in £430m.

HSBC’s view of emerging mkts

In Africa, China, Economy, Emerging markets on 09/11/2010 at 6:04 am

Mkts are flying what with Aug- Oct passing without a mkt collapse and the Fed pumping money into the system. Time to join the party. I’ve sat on the sidelines so far this yr, so I’ll sit on my hands a bit longer. Must admit its hard not to want to do something.

The CEO of HSBC, said late last week, there were likely to be “some bumps in the road ahead” in developing countries, especially in China. Reminder: HSBC generates most of its earnings growth in Asia.

“Our latest data from emerging markets points to a slowdown in the rate of recovery,” he said in a statement. But the bank added that it still expected growth in the region to outpace that of the developed world for the foreseeable future.

He gave a positive outlook for the rest of the year, saying that “the global economy is in better shape than many expected a year ago.” But that “while fears of a double dip in the West may be overplayed, the passage from downturn to upturn is clearly taking longer than previous cycles.”

HSBC said pretax profit in the third quarter was “well ahead” of the period a year earlier, as reserves for bad loans reached its lowest quarterly level since early 2007. Its lending business in the United States accounted for the biggest share of improvements. Business in October was “in line with third-quarter trends,” HSBC said. HSBC does not give detailed earnings figures on a quarterly basis.

The investment banking unit of HSBC also reported a drop in trading. HSBC said performance of the business was “robust although trading activity was lower.”

DBS safer than OCBC and UOB

In Banks on 13/09/2010 at 5:53 am

According to Global Finance, DBS is the world’s 23rd safest bank. In Asia, HSBC is the safest bank (19th). But in Asia Pacific region,  Oz banks are even safer with National Australia Bank, Westpac,  and Commonwealth Bank (at 11, 12, and 13 respectively)

French, Dutch and German banks occupy most of the top positions in the Global Finance survey, which uses  long-term credit ratings from agencies Moody’s, Standard & Poor’s and Fitch, and analysis of total assets owned by the 500 largest banks in the world to do the survey.

The safest bank is Germany’s KfW , followed by Frances’s CDC and Bank Nederlandse Gemeenten (BNG) of the Netherlands.

US banks are dogs (and taz insulting dogs), with BNY Mellon at position 30,  JP Morgan Chase (40), Wells Fargo (42) and US Bancorp (47).

HKEx: Plan B when Shanghai overtakes it

In Uncategorized on 11/03/2010 at 5:48 am

Sounds (see below) bit like SGX’s strategy of playing second fiddle (although perish the tot of SGX admitting that it is  pursuing second tier status).

And it doesn’t need a Plan B, yet. Note that Prudential said that has made its application to the exchange for an introduction and said it would not offer any new ordinary shares. It had previous said it would apply for a dual listing after it stakeover of AIA. French cosmetics group L’Occitane is getting ready for an IPO in Hong Kong next month in a move that highlights rising consumer demand in Asia for luxury goods. It  could raise up to US$700m to bankroll its Asian expansion plans.And FT reports further, “A successful listing could re-ignite interest among other European luxury goods companies, including Prada and Ferragamo, which abandoned Hong Kong IPO plans ahead of the global downturn.”

Contrast this with SGX. It has now only started marketing to the Ruskies. Let’s hope some decent R-Chips come our way.Thinking of S-Chips: Sino-E and friends, I have my doubts.

From Reuters Breakingviews:

The Hong Kong Stock Exchange is the world’s second-biggest by market capitalization. Call it the China factor. Yet as the mainland’s own exchanges get bigger, Hong Kong can’t count on winning prize listings forever. It’s time for a Plan B.

Hong Kong has long been the destination for public offerings of China’s state-owned companies, because mainland rivals were deemed too small. But now, China wants to develop an international financial center on the mainland. Even Hong Kong stalwarts, like the lenders HSBC and Standard Chartered, plan to issue shares over the border. The next big bank to list, Agricultural Bank of China, may eschew Hong Kong altogether.

Hong Kong can’t get away from its Chinese roots. Efforts at diversification from Chinese public offerings have had little success. In 2009, mainland enterprises still accounted for more than 82 percent of all public offering money raised. The failure of the American International Group’s Asian life insurer, A.I.A., to go through with a planned listing may cut Hong Kong’s pipeline in half.

Charles Li, the exchange’s new chief executive — and a mainlander — says the exchange seeks to position itself against competition from London, New York and Shanghai by doing things that others can’t do. One way would be to focus less on initial public offerings and more on other businesses, like derivatives. As China’s own capital market deepens, the need for more sophisticated products will increase.

The real gold mine, though, could be for Hong Kong to focus on becoming China’s offshore renminbi capital. China is keen to push the renminbi internationalization agenda, but progress has been slow, mainly because of a lack of products for investment. Trading renminbi bonds offshore could be a good start. Stocks priced in renminbi could follow.

Hong Kong would need Beijing’s approval, and might have to accept a future without blockbuster public offerings. But better a partner than a rival.

ROB COX and WEI GU

Earlier posting on Shanghai’s ambitions http://atans1.wordpress.com/2010/03/01/spore-hk-have-competition/

Standard Chartered: more copycating of HSBC

In Temasek on 10/03/2010 at 5:57 am

Now that Standard Chartered has followed HSBC in saying that it wants to get a China listing–  just  after  its CEO  said it will donate his bonus to charity, ala HSBC’s CEO — maybe it will announce that it wants to buy a bank in China: what HSBC was reported as planning.

Some people are surprised that Temasek did not quash the bonus plan. You can only guess why they tot Temasek would be upset. But remember Temasek says it does not interfere with its investee cos’ commercial decisions.

Where shld Standard Chartered base its CEO?

In China, India, Temasek on 04/03/2010 at 5:28 am

Last sat ST reported that analysts were saying  that Standard Chartered will be forced to relocate its CEO into Asia in imitation of HSBC.

If it does, it will be a test of Temasek protestations that it does not interfere with the commercial decisions of its investee companies. Remember it is the single largest shareholder in SC (195 ), and all the other big shareholders are “peanuts” as Mrs SM might put it.

The logical place for the CEO is to base himself in HK, SC’s biggest market and which is part of China: it and HSBC are targeting China as the biggest driver for growth.

But could Temasek or its shareholder resist the temptation to have  SC’s CEO here. Singapore is way behind HK in IPOs, hedge fund HQs (Soros prefers HK as his Asia HQ), fund mgt,   and in wealth mgt where S’pore wants to be a global player, the head so HSBC and JP Morgan’s private bank are basing themselves in HK, or thaz what reports are saying.

Already the private bank’s  and PE’s global HQs of SC are here, giving SC  the perfect excuse for relocating its CEO here.And S’pore’s nearer India, another big driver for SC’s future growth. As  to HK and China, he can fly there on SIA, not Cathay, of course.

And relocating here will give our MSM the excuse they need to exult the merits of this government before the expected early general elections.  Hard for the MSM to laud the government given the growing inability of ministers to avoid contradicting one another.

Note the news that SC’s CEO will also donate his bonus to charity, came only after it was reported that HSBC’s CEO would donate his. SC is always playing catch up to HSBC. At one time they were the same size, but one is a global player, the other is 19% owned by Temasek. But then OCBC was once on par with HSBC.

I’m a shareholder of HSBC for over 25 yrs.

BTW the relative sizes of both and how both had a gd crisis:

“The ranking three years ago and for most of the preceding few years saw HSBC as the biggest bank, Barclays and Royal Bank of Scotland chasing its tail, Lloyds some way behind that and Standard Chartered as the enthusiastic, fast-growing puppy.

‘Today HSBC isn’t just the biggest British bank. Its market value of more than £120bn is more than that of all the other four added together. It’s in a league of its own.”

“Today the market value of Standard Chartered, at an almost unbelievable £32bn, is only £2bn less than Lloyds’ and £5bn less than Barclays. And it is £11bn more than RBS (although that’s to ignore all the “B” shares that RBS has flogged to taxpayers).”

Excerpt from http://www.bbc.co.uk/blogs/thereporters/robertpeston/2010/03/the_new_banking_hierarchy.html

and if you want to read why HSBC and SC did so well a gd read.

A problem with int’l trade credit, again?

In Economy on 14/12/2009 at 5:45 am

I came across the following extract from a BBC Online article. The writer, “Laura” works in a British commercial bank.

If what she says applies in places like S’pore, HK, USA etc, we could see a second dip soon.    Note after the collapse of Lehman, int’l trade almost stopped for a few months because banks stopped accepting letters of credit from banks that they thought could collapse.

“I have had a growing worry over international finance over the last few months. Since the crunch started, confidence in other banks has been knocked. The most obvious manifestation of this was LIBOR being thrown out of kilter. Whilst this has now settled it only shows the picture of banks operating in the UK. What can’t be seen easily is the reduction or extinction of the willingness of banks to accept letters of credit from foreign banks which many customers who export or who have sister companies abroad need to trade round the world.

‘There are some countries now which have no banks which UK organisations are happy to accept a letter of credit from. Letters of credit are, in simplistic terms, one bank saying our customer is good for the money. This letter says we guarantee that so please let them have the goods and pay after delivery. If your customer then doesn’t pay you, their bank has to honour the letter of credit they approved. If your bank doesn’t have faith that they would honour that then the whole system falls down. Which it virtually has.

‘This situation hasn’t notably improved for some countries and I think this is a real threat to economic growth to UK Plc next year, as low exchange rates should mean good times for exporters. If they can’t get funding, however they won’t be able to capitalise on this.”

But banks that have global networks and strong franchises in trade financing like HSBC (I got shares here), Citi (after US government bailout) and Standard Chartered are minting money.

Where value investing can go wrong

In GIC, Investment banking, Investments, Temasek on 24/11/2009 at 8:25 am

“A study by Standard & Poor’s, one of the world’s leading credit rating agencies, has raised questions over the financial strength of some of the biggest banks ahead of new rules that could require them to raise more funds.

‘The analysis by S&P showed that HSBC is the best capitalised bank in the world, while Switzerland’s UBS, Citigroup of the US and several of Japan’s biggest banks are among the weakest.”: an excerpt from the FT.

No the purpose is not to show that highly paid managers at GIC goffed, or how smart I am. I have been a shareholder of HSBC since the 1980s. Even during Green’s (Christian + McKinsey, a lethal combination that always leads to problems) tenure as CEO, I kept the faith.

Now that the CEO is a man who joined the bank as an International Officer from a minor public school with I think A-levels, and he is basing himself in HK, one can only expect the return to the values that made HSBC great during the tenures of Sandberg, Purvis and Bond. Oh Purvis won the Military Cross in Korea, when he disobeyed orders to withdraw. He claimed he couldn’t hear the radio messge.

Sorry I am digressing. When Temasek bought into Merrill Lynch and Barclays and  GIC into UBS and Citi, I realised that they were buying into highly efficient banking machines. There was just enough capital for regulatory reasons and to provide a buffer for some things going wrong.  They needed a bit more cushion and GIC, Temasek were providing it.  Risky but history was on their side.

When the world recovered from the credit crunch of 2006, 2007, GIC and Temasek would reap the rewards of these finely tuned cash machines. They were the equivalent of the best of the best F1 cars.  I thought we had smart boys and gals. And that the risk would pay off.

But then came Bear Sterns, Lehman Brothers and AIG, and the rules changed. The winners were the better capitalised banks. If HSBC had as little capital as Citi, I’d be a poor man. The amounts it had to write-off on US sub prime would have shmed Citi. But it had capital.

So value investing doesn’t always pay off.

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