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Archive for the ‘Banks’ Category

Senior VP financial planning was a problem gambler

In Banks, Financial competency, Financial planning on 01/07/2018 at 5:57 am

WTF!

For 12 years, Emeline Tang Wei Leng carried out an elaborate ruse, deceiving five people – including her own family members – into investing their savings in non-existent fixed deposit plans with HSBC bank.

Given her former position as a senior vice-president at the bank, they trusted her with a total of S$5.2 million. But Tang, 39, used their savings to fund her gambling habit.

On Friday (June 29), the District Court sentenced Tang to 10 years and six months’ imprisonment for 34 charges including cheating and forgery. Another 223 charges were taken into consideration during sentencing.

Starting out as a relationship manager, Tang rose up the corporate ladder and was in the financial planning division when she left HSBC in 2012.

https://www.todayonline.com/singapore/former-hsbc-senior-vp-jailed-cheating-family-members-and-elderly-s52m

As an investor in HSBC, I’m left wondering about the HR practices of the bank.

But then all this modern day emphasis on employees’ dignity and privacy rights, and employers fear of getting into trouble on social media for intrusive survelliance of staff, means incidents like this is more likely than not to happen. Sad.

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Great if my bank offers this service

In Banks, Property on 27/06/2018 at 4:44 am

In early June, the govt released the Digital Readiness Blueprint to help every Singaporean navigate a digital future of cashless payments and other innovations.

Great if my bank, HSBC, offers this service

For people looking to buy or sell a home, it offers to research neighbourhoods, move furniture, remove garbage, paint a house and even decide which bins to take out each week.

FT

Here’s what RBC, a Canadian bank, is attempting to do

RBC aims to offer more end-to-end services — or “ecosystems” — covering wider customer needs than only financial, such as when they want to start their own business, sell their house, or find a new car. For instance, the bank is offering a service for entrepreneurs to register their start-up company with the government, provide it with cloud-based accounting software, supply a branding service and send it letterheads and business cards, all before it has lent the company a cent. For people looking to buy or sell a home, it offers to research neighbourhoods, move furniture, remove garbage, paint a house and even decide which bins to take out each week. Many of these services are supplied by partners integrated into RBC’s digital platform.

FT

 

 

Chinese fraud in US executed from S’pore

In Banks, China on 17/03/2018 at 4:42 am

Bank of America Merrill Lynch recently agreedto pay US$1.4 million to settle S.E.C. allegations that it didn’t do enough to investigate red flags at a Chinese company Longtop Financial Technological, a Chinese software company accused of fraud in 2011 whose unregistered securities it sold.

The sales occurred in a brokerage account opened in a Singapore branch of BofAML and were executed by traders in New York at the direction of the Singapore office, according to the SEC. In 2013, BofAML sold Merrill Lynch’s international wealth management business, including the Singapore branch office.

HoHoHo: More money for Budget

In Banks, China, Emerging markets, Hong Kong, Temasek on 28/02/2018 at 5:50 am

Soon, Temasek will be contributing a bit more to the Budget.

“StanChart restarts dividends as profit returns” is the FT’s headline on the turnaround in StanChart. It stopped paying dividends several years ago.
And there’s still plenty of room for it to improve
[D]espite stellar economic growth in Asia, which accounts for over two-thirds of underlying pre-tax profit, the group is still destroying economic value. Return on equity, at 1.7 percent or 3.5 percent excluding exceptional items, is still far below the group’s cost of equity, which is probably more like 10 percent. Costs are rising, even as the group clamps down on loan losses.

After years of retrenchment, Winters needs turbocharged revenue growth and restraint on costs to hit his modest medium-term target for an ROE of 8 percent. Suppose operating costs grow just 2 percent annually, with flat loan losses and restructuring charges and taxes at 30 percent. StanChart would need 7 percent annual revenue growth to fulfil its aim by 2020, according to a Breakingviews calculation. That is more than double last year’s rate and at the top of the bank’s projected 5 to 7 percent range.

https://www.breakingviews.com/considered-view/stanchart-shareholders-pay-winters-a-compliment/

If things work out at StanChart (and elsewhere), maybe GST increase can be delayed? Dream on, pigs will fly first.

Update at 7.30am Chris K responded:

News like this does not impact the NIR Temasek delivers the budget becos the contribution is based on expected real returns over the long run.

I responded:

So long as no transparency shows how flakely is NIR. It’s want the PAP administration says it is.

Why 30-year old HDB flats difficult to sell/ Why PAP rule will end in 2029

In Banks, CPF, Financial competency, Financial planning, Political economy, Political governance, Property on 02/02/2018 at 7:19 am

A doctor turned fat cat investor responded to Jialat for PAP where I reported a property saleman (OK, OK, he’s title is “research director”) as saying “From the ground, homes with leases of less than 60 years took longer to sell, and at a much lower price …”. (Background reading for those who have not followed the problem with HDB leases of less than 60 years: HDB flats: 35 is a dangerous age)

He wrote

Since 2016/2017 HDB flats older than 39 years have seen a “cliff drop” in prices due to:
(1) Reduction of CPF quantum that can be used for properties with less than 60 yrs lease;
(2) Age of buyer plus remaining lease must be >= 80.

In many mature estates undergoing SERS activities, the price of 40+ year old flats are having 35% discounts against nearby brand new “subsidized” BTO flats. Even with marketing efforts extolling the “higher chance” of SERS for those older flats, buyers are not buying it.

This mini cliff drop has been exacerbated since LW [Lawrence Wong] did an about turn against Old Fart’s & Woody’s asset enhancement propaganda.

Currently majority of HDB flats are still within 25-38 yrs old. The above problem will get worse over the next 10-15 years.

This gives PAPies another 2 terms at least to continue milking Sinkies.

Assuming the next general election is in 2019, this means the PAP will lose power or its two-thirds parly majority in 2029 or thereabouts. Mad Dog will then be 67 and Dr Paul will be about 65. If Mad Dog becomes PM jialat. If Dr Paul becomes PM, let the good times roll.

So if SDP is still headed by Mad Dog as is most likely because he’ll knife Dr Paul in the back to ensure that he’ll rule the SDP, I’ll be forced to vote PAP for the good of S’pore. So I hope he steps down soon.

 

HO HO HO: How Shi**y is StanChart?

In Banks, China, Emerging markets, Hong Kong, India, Temasek on 30/01/2018 at 6:11 am

In 2016, when China as a country grew at close to 7 per cent, StanChart’s revenue across greater China and north Asia declined by 15 per cent. While Southeast Asia GDP grew by nearly 5 per cent, StanChart’s revenue there shrank by 5 per cent. And in Africa and the Middle-East, another fast-growing region, the bank’s revenue was down 4 per cent. StanChart’s full-year numbers for 2017 have yet to be published, but at the last count its ROE was running at about 5 per cent …

Today’s FT

Jialat for PAP

In Banks, Financial competency, Financial planning, Property on 29/01/2018 at 7:39 am

Unhappy HDB “owners”will complicate change of PM (Connecting SMRT failures, 4th gen ministers & change of PM) and other plans.

In yet another sign of a recovery in the private residential market (SIBOR up 25%, but property mkt is hot?), prices went up 1.1 % in 2017, reversing the 3.1%  decline in 2016, figures from the URA showed last  Friday.

But the HDB Resale Price Index (RPI) for 2017 declined by 1.5% , HDB said on Friday.

Worse for those wanting to sell older HDB flats

From the ground, homes with leases of less than 60 years took longer to sell, and at a much lower price … we anticipate the market to improve, especially in areas where former HUDC developments were sold en bloc. Some of these buyers downsized to a HDB flat and kept the proceeds for retirement, or to support their children in purchasing a private home.

Dr Lee Nai Jia, Head of Research at Edmund Tie & Company

http://www.todayonline.com/singapore/private-home-prices-11-2017-reversing-2016s-31-decline

(Trumpets pls: I posted this in April 2017 HDB flats: 35 is a dangerous age. And btw, this Old private flats’ value can also fall off a cliff).)

Anyway, the PAP has a problem if private property prices keep going up while HDB flats prices continue to decline, or stagnate at these levels.

Those with HDB mortgages will not be happy that their their “heavily subsidised” flats have not appreciated in value in line with FTs’ and elites’ private property values, while those with older flats will be doubly unhappy.

Since more than 80% of Singapore’s population live in HDB flats, a growing gap between HDB prices and private housing prices is not good for the PAP.

But at least Mad Dog and the cybernuts will be happy: more of the 70% will be unhappy with the PAP. They can “Keep on wanking and dreaming that the PAP will lose the next GE”.

Blockchain is the new Internet/ Sell banks?

In Banks on 27/01/2018 at 11:22 am

Banks talk of blockchain technology as something to be tamed and turned into a tool for the back-office, much as the big media companies once saw the internet as merely a useful way to cut their distribution costs.

FT’s Silicon Valley commentator

So banks going the way of media cos and it’s time to sell my HSBC and UOB (via Haw Par) shares?

One big difference is that banks play a biger role in the economy (real and financial) than media cos. So politicans and regulators have a vested interest in looking after them. Think how MAS is protecting our banks and extrapolate to the West.

Fintech: the reality behind the hype

 

Ho Ching doesn’t rest

In Banks, Indonesia, Temasek on 27/12/2017 at 8:47 am

PM and wife may be on hols but MUFG and Temasek have just done a deal that hopefully (Indon regulators willing) would see the Japanese bank acquiring a 73.8% stake in Bank Danamon from its largest existing shareholder, Temasek (Temasek wants to be rid of it’s stake after the Indons blocked a merger with DBS Indonesia.)

the Japanese bank will buy 19.9 percent from Singapore state investor Temasek Holdings [TEM.UL] for 15.875 trillion rupiah ($1.17 billion), a deal it expected to close within a few days.

MUFG will then raise the stake to 40 percent, pending regulatory approval, between the second and third quarters of 2018.

MUFG said after that, it sought approval to hold at least 73.8 percent in Indonesia’s fifth-largest bank by offering to buy out other shareholders in addition to acquiring shares from Temasek.

https://www.reuters.com/article/us-mufg-m-a-bank-danamon/japans-mufg-seeks-majority-of-indonesias-bank-danamon-idUSKBN1EK11H

So unlike ministers

In Banks, Uncategorized on 23/12/2017 at 1:43 pm

The zero bonus, or doughnut, could be looming for bond traders as bank revenue from fixed-income sales and trading units has been falling FT reports.

Ever wondered about how banks detect money laundering?

In Banks on 02/12/2017 at 9:55 am

If u like me have faced questions when u wanted to deposit a S$1000 note into yr bank account, then read https://www.economist.com/blogs/economist-explains/2017/11/economist-explains-16.

Software and data bases are the front line, not the teller.

Btw, my standard answer to the teller, “If PAP issues S$1000 notes, cannot use them isit? Not happy, tell PAP to stop printing them.”

HoHoHO: Still no dividend from StanChart

In Banks, Temasek on 02/11/2017 at 7:00 am

StanChart fell 6.5% to a six-month low of 702p in London after investors showed their disappointment with the slow turnaround.

Although there was a more than doubling of quarterly net profits, the bank had falling revenue in corporate finance, credit cards and personal loans. Analysts unhappy that there was only 4 % in revenues, which missed expectations, as well as higher than expected costs (also up 4%)

Worse, still no revival of dividend, “Andy Halford, chief financial officer at Standard Chartered, said the firm would assess whether or not to reinstate its much-anticipated dividend at the end of the year.”

HOHoHo.

Update at 10.45am: DBS is a better investment http://www.reuters.com/article/us-stanchart-results-breakingviews/breakingviews-stanchart-has-yet-to-reward-shareholders-patience-idUSKBN1D14KJ

HoHoHo: Rogue bank and the Indon military

In Banks, Indonesia, Temasek on 09/10/2017 at 5:49 pm

NYT is the first media publication to report that the inquiry StanChart faces involves clients with links to the Indonesian military.

Standard Chartered Faces Inquiry Over $1.4 Billion Transfer by Indonesians

By CHAD BRAY

The London-based bank told regulators about the issue after the money was moved in 2015 by clients with links to the military.

NYT Dealbook

Why PM wants a cashless payments system/ Ownself sabo ownself

In Banks, Economy, Political governance on 27/09/2017 at 6:42 am

Why does PM wants a cashless payments system?

Because no-one can hide from Big Brother when the banks are at the centre of the system.

When TRE republished my piece on a TRE appeal on behalf of its longest serving team member, there was this response

oxygen: MY INFORMATION SOURCES ARE RELIABLE – just bring whatever cash you want to donate, fill in a deposit slip of amount and account number of payee and hand it to the bank teller at the counter.

No banker is interested in who is the donor or deposit maker. A can pay C on behalf of B who is short of cash or unable to have funds to settle his/her debt to A. Or X can pay Z $XXX giving the latter a financial loan.

It is none of anybody’s business except as between the transacting parties. No bank ask you why you pay a check to supplier A – Z for what financial obligations. They are not interested to know your business transactions. People gives to charity – nothing wrong with that.

So those who can afford and want to give to charity, just walk into a bank and do it before 30 September.</blockquote

and someone tried it and it worked

Trying it out: This morning I deposited S$50 to the given POSB account over their counter. I handed cash and remain anonymous. I did not give any of my personal details. I got the receipt. But the recipient name is slightly different. I hope it is all in order. I was trying out donation on anonymity basis.

http://www.tremeritus.com/2017/09/20/follow-up-to-tr-emeritus%E2%80%99-in-house-techie-requires-assistance/

So go on – if you are able and incline to contribute to humanitarian cause. It is nobody business if you want to do charity or help someone (can be Ah Kow, Ah Ngeow or Ah Beng or Ah Lian) who haven’t got the time to Q in a banking hall to do charity.

Singapore POSB Account

Payee: Ten Leu-Jiun

A/C No: 193-69702-0

(The last day of payment to this account is 30 September 2017.)

Ownself sabo ownself

Incidentally, no picture, no sound from the PM or his minions on the e payments system proposed by Razer’s CEO https://sg.news.yahoo.com/razer-ceo-submits-two-pronged-e-payment-system-proposal-pm-lee-112133198.html.

PM was talking cock when he was moaning that S’pore was so far behind China in e-payments because it’s his and his administration’s fault.

They are not fighting vested interests i.e. the banks: think transction and merchant fees charged. And the PAP administration’s red line is that banks must be at the heart of the system. This among other things ensures that the authorities have access to information.

But let’s be thankful to the PAP for sticking to the Hard Truth of die die must protect our banks: Cash is king. And anyway I own Haw Par which is a cheap way of buying into UOB.

But don’t try depositing a $1000 bill into any bank account. A few yrs ago, someone gave me a $1000 bill. I gave it to my mum and she decided to put it into my POSB account. Bank wanted me to come down to deposit it. She said I was overseas and so bank reluctantly took the money.

 

PR BS from DBS

In Banks, Humour on 23/08/2017 at 6:40 am

Training? What training? Support? What support?

DBS Bank will be investing more than S$20 million over the next five years in a programme that will train its 10,000 employees in Singapore in digital banking skills and technologies.

The move is in support of Singapore’s vision to be a Smart Nation which Prime Minister Lee Hsien Loong highlighted during his National Day Rally speech, it said in a press release on Monday (Aug 21)*.

Break down the $20m to a yearly figure ($4m) and divide the $4m by the number of employees (10,000), and u get $400 per employee a year. Peanuts.

What training for digital banking skills and technologies can one get for $400 per employee per year?

Training? What training? Support? What support? It seems to be more about  carrying the PM’s balls, than anything else.

No wonder we not that Smart a nation.

——————-

*The article goes on: The broad-based programme will include artificial intelligence (AI)-powered e-learning. AI can make personalised course recommendations for employees and help them to collaborate and engage in mobile education at any time or place across the bank, it said.

Employees can also try experiential learning, where they will be able to go on paid sabbaticals to work on prototypes and start their own businesses. Accelerator programmes will provide mentorship and funds for intrapreneurs.

Staff can likewise apply for grants and scholarships to upskill themselves in emerging technologies like data and analytics, desiging thinking and automation, the bank said. Innovative learning spaces, like the DBS Academy and DBS Asia X, are also part of the programme, where employees have access to digital master classes, or work in collaboration with start-ups and the broader fintech community.

Read more at http://www.channelnewsasia.com/news/singapore/dbs-to-invest-s-20-million-over-5-years-to-transform-employees-9143874

The Bank that made Trump Great Again

In Banks on 14/08/2017 at 2:30 pm

It lent him money when American banks refused to take his calls. But he then sued the bank: ungrateful.

From NYT Dealbook

By Amie Tsang
Few major financial institutions have been willing to lend to Donald J. Trump over the years. But during his victorious presidential campaign, he pointed to one that had done plenty of business with him: Deutsche Bank.
Now that relationship has come under scrutiny.
Regulators are reviewing hundreds of millions of dollars in loans made to Mr. Trump’s businesses through Deutsche Bank’s private wealth management unit, The New York Times reported, citing three people briefed on the review. The regulators are examining whether the loans might expose the banks to heightened risks.
New York regulators have paid particular attention to personal guarantees Mr. Trump made to obtain the loans.
There is no formal investigation of the bank, and personal guarantees are often required for big loans from wealth managers. The regulators are focused on whether these guarantees could create problems for Deutsche Bank should Mr. Trump fail to pay his debts, leaving it with a choice of suing him or risking being seen to have cut him a special deal. The concern is not hypothetical: Mr. Trump sued the bank to delay paying back an earlier loan.
Separately, Deutsche Bank has been in contact with federal investigators, and it is likely eventually to have to provide information on the Trump accounts to the special counsel in the Russia inquiry, Robert S. Mueller III.
Mr. Trump’s 20-year relationship with the bank is complicated, involving more than $4 billion in loan commitments and potential bond offerings, most of them completed. Despite the risks involved, working with Mr. Trump has made Deutsche Bank money, according to people with knowledge of the details.

HoHoHo: StanChart refuses to resume dividend

In Banks, Temasek on 03/08/2017 at 5:51 am

Global investors buy banks for the yield but StanChart stopped paying dividends last yr.

For yrs, Temasek  looked good because the bank was minting money regularly with double-digit growth in revenues and profits: even during the banking crisis that hurt Temasek’s other ang mohbanking investments (Barclays and Merrill Lynch). But then two yrs ago, it suffered heavy losses on some of its vast loans to risky Asian companies in Indonesia and India.

Standard Chartered PLC said it isn’t ready to start paying dividends again but will reconsider it at the end of the year.

The Asia-focused bank’s shares fell 4% after it said it still has a long way to go to improve returns, despite improvements in underlying profits.

First-half revenue rose to $7.2 billion from $6.8 billion a year earlier. Revenue in the second quarter met analysts’ expectations, at $3.6 billion. Net profit for the first half climbed to $971 million from $465 million a year earlier.

http://www.marketwatch.com/story/standard-chartered-dividends-remain-suspended-2017-08-02

Finally HSBC pleasantly surprises

In Banks, Hong Kong on 01/08/2017 at 4:42 pm

Just before the CEO retires. As Guardian says:

HSBC’s tale also shows what can happen when a big international bank stops shooting itself in the foot and avoids scandal. The cleanup of HSBC – forced by past scandals, notably the £1.2bn fine in the US for money-laundering offences plus tax avoidance scams in Switzerland – is finally delivering for shareholders.

https://www.theguardian.com/business/nils-pratley-on-finance/2017/jul/31/hsbc-shows-what-happens-when-a-bank-stops-shooting-itself-in-the-foot

And from NYT Dealbook

HSBC plans to buy back up to $2 billion in shares after its performance proved better than expected in the second quarter.
The London-based bank has been overhauling its operations, shedding tens of thousands of jobs, selling underperforming businesses and shrinking its global investment banking business. And as its prospects have improved, it has announced $5.5 billion in share repurchases since the second half of last year.
Profit was up to $3.9 billion in the second quarter, from $2.5 billion the year before.
The bank is also headed toward a change of leadership. Mark Tucker, the chief executive of AIA, will replace Douglas Flint as chairman in October. Mr. Tucker will have to find a chief executive to replace Stuart Gulliver, the chief executive, who plans to retire.

HoHoHo: This too will end in tears

In Banks, Temasek on 16/06/2017 at 4:49 am

I can’t think of any foreign bank that has made a success of its US ambitions unless the ambitions are limited. Certainly not the case here. StanChart is taking on two JP Morgan and Citi in trade financing on their home turf.  And Ho Ching has other things on her mind.

Standard Chartered aims to expand its U.S. presence with a local hiring push and by bolstering its team in the country with senior staff from its main regions of Asia, the Middle East and Africa, its top bankers said.

The world’s top economy contributed $661 million (518.6 million pounds) to Standard Chartered’s operating income in 2016, or 5 percent of the total, making it the smallest of its major markets – Hong Kong, China, India, and the United Arab Emirates.

“We really view the Americas as a growth area. When I say that, we are not looking to be JPMorgan or BAML (Bank of America Merrill Lynch) or Wells Fargo,” StanChart’s Americas CEO Torry Berntsen told Reuters at the bank’s New York office.

“We think we have a special calling card in terms of what our network looks like.”

The plan is to offer StanChart’s trade finance, transaction banking, cash management and forex market products to large U.S. firms, senior bankers said.

http://uk.reuters.com/article/uk-stanchart-usa-idUKKBN1950GJ?il=0&em_pos=small&ref=headline&nl_art=6

 

Thinking of buying IgNoble?

In Banks, China, Commodities, Energy on 07/06/2017 at 6:55 am

The reasom why the share price collapsed further yesterday was because Noble’s

main banks are locked in last-ditch talks over whether to give the crisis-hit commodity trader more time to find a white knight investor or force the company into a restructuring or liquidation, according to people with knowledge of the discussions.

FT

HSBC, Soc Gen, ABN Amro, Citigroup and ING are its main banks.

HoHoHo: Did u know?

In Banks on 02/06/2017 at 6:46 am

Standard Chartered is the only western bank left in Zimbabwe.

Yup the country ruled by Mugabe the guy who gives glowing references to our Gleneagles Hospital to his fellow dictators.He’s a regular customer. And his wife loves shopping here.

What Mad Dog Chee doesn’t say about GIC’s UBS investment

In Banks, GIC on 21/05/2017 at 10:28 am

The anti-PAP cybernuts have been circulating Mad Dog’s “analysis” about GIC’s investment in UBS on social media.

What he doesn’t tell S’poreans is that when the deal was announced, the shareholders of UBS especially the Swiss retail investors were publicly complaining to the int’l and Swiss media that the deal was a sweet deal for GIC, short-changing them. They wanted a rights issue which they didn’t get and which they were really grateful when the shares tanked. They got on their knees and thanked mgt.

Why liddat Dr Chee? It’s an inconvenient fact that doesn’t fit yr “PAP are incompetent”analysis? Or u didn’t know? That blur isit?

Yes, GIC got the UBS investment wrong. But I didn’t hear Mad Dog or other anti-PAP activists, or cybernuts pointing out that it was a bad move at the time.

Dr Paul, can u and Wee Nam increase the dosage? Triple it at vey least. Maybe time to try something new? His relapses are getting a bit too frequent. Maybe call in Dr Ang Yong Guan to help? He specialises in nut cases doesn’t he?

Old private flats’ value can also fall off a cliff

In Banks, CPF, Financial competency, Financial planning, Political economy, Property on 10/05/2017 at 4:41 am

It’s all about using CPF to pay off the bank mortgage. And don’t count on an en bloc sale to keep the value of flat up. The older the group of flats, the more the developer has to pay to govt to top up to 99 years. He’ll bid accordingly. He’s not like Bill Ng, the ATM (or one-armed bandit that keeps on paying and paying.

Sometime back I featured this great graphic from ST on how the value of a HDB flat will fall over a cliff after the first 35 years. Extracted from http://www.straitstimes.com/opinion/will-you-still-love-your-hdb-flat-when-its-over-64.

hdb_flat_depreciation_wsyecon12

But private 99 year old properties are different right?

The reasoning of the salesmen is that banks usually finance leaseholds if the property to have a remaining lease of 30 years on the maturity of the loan

According to OCBC, when it comes to financing of leasehold properties, the requirement is for the property to have a remaining lease of 30 years on the maturity of the loan. “The quantum of loan to be granted is dependent on the bank’s credit assessment, which includes assessment of debt servicing capacity,” says a spokesman in an email response.

https://www.theedgeproperty.com.sg/content/perils-owning-ageing-leasehold-properties

But what these people don’t say is that banks only do this if borrowers can use CPF monies.Banks generally provide financing for the purchase of a leasehold property if home buyers are able to use their CPF.

This is the tricky bit because according to the article I linked to above

CPF has several ways to calculate this [eligibility]…

The first formula is based on the sum of the age of the applicant and the remaining lease on the property. The total must be equal to or exceed 80 years, says Huang. For instance, if the buyer is 40 and the remaining lease on the property is also 40 years, the total is 80 years. This means that the buyer is eligible to use his CPF contribution for the purchase of the leasehold property.

If the buyer is only 30, however, and the remaining lease on the property is 40 years, the total equals 70 years. In this case, the buyer will not be eligible to use his CPF contribution towards the purchase of the leasehold property. “This implies that young people cannot use their CPF to buy old leasehold properties,” says Huang.

And

CPF also requires that a property have a remaining lease of at least 60 years. If the lease on a property is below 60 years, but more than 30 years, a valuation limit is set on the amount of CPF contribution that can go towards the payment of the property.

… the numerator in the ratio will be the remaining lease on the property when the purchaser turns 55. Assuming the buyer is 40 today and the remaining lease on the property he wants to buy is also 40 years, when he turns 55, the remaining lease will be 25 years. The denominator will be the remaining lease today, which is 40 years. The ratio of 25 years/40 years is equivalent to 62.5%.

This means if the property purchase price is $1 million, the buyer can withdraw from his CPF up to a limit of 62.5% of the value, that is, $625,000, explains Huang. “And that percentage is the valuation limit.”

What all this means is that there’s a restricted pool of buyers for older flats if there are problems using CPF monies.

So what? Can always have collective sale right? The article helpfully disabuses

JLL’s Tan advises owners of private residential projects on leasehold sites to be aware that, as the lease gets shorter, the differential premium that developers have to pay gets higher. “This will eat into their sale price,” he says.

Using a recent HUDC enbloc sale

For Rio Casa, if the differential premiums were included, the total land cost would amount to $649.8 million, according to SLP Research (see chart). SLP’s Mak points out that the differential premiums account for about 30% of the total land cost for some of these HUDC estates.

So don’t play, play. Think.

 

HSBC: Two unfashionable strengths

In Banks on 18/04/2017 at 5:35 am
that keeps on printing money: commercial banking and UK operations.
Even JP Morgan is trying to do more trade financing globally, a sector of commercial banking that is dominated in East Asia by HSBC, StanChart and Citi.
From Bloomberg:

The commercial bank reported a 12 percent increase in adjusted pretax profit to $6.1 billion last year, which was the most among HSBC’s four divisions and accounted for about a third of group’s total earnings, according to company filings. The U.K. contributed $1.8 billion of its pretax profit compared with $2.9 billion in the Asia region.

 

 

HDB flats: 35 is a dangerous age

In Banks, Financial competency, Financial planning, Political economy, Property on 13/04/2017 at 4:48 am

It’s all about financing.

Here’s a great graphic from ST on how the value of a HDB flat will fall over a cliff after the first 35 years. Extracted from http://www.straitstimes.com/opinion/will-you-still-love-your-hdb-flat-when-its-over-64.

hdb_flat_depreciation_wsyecon12

 

Will PAP allow HSBC to introduce Mx here?

In Banks on 04/04/2017 at 4:56 am

If HSBC introduces Mx here, it’ll be the bank of choice for LGBTs. The Guardian reports from the UK, where HSBC, like in HK, is a tua kee retail bank 56that also owns First Direct, an internet only bank with 1.35m customers.

HSBC is to offer its transgender community a choice of 10 new gender-neutral titles as part of its plan to improve the banking experience for customers.

The banks says its account holders will no longer have to use conventional titles such as Mr, Mrs and Ms, but instead be able to choose from a long list that includes Mx, Ind, M, Mre, and Misc. HSBC said titles chosen would be applied across customers’ accounts, including on their bank cards and all correspondence.

HSBC’s new honorifics are:

Ind (abbreviation of individual)
M
Mx (pronounced “mix” or “mux”)
Misc (for miscellaneous)
Mre (for mystery)
Msr (a mix of miss/sir)
Myr
Pr (prounced “per”, for person)
Sai (pronounced “sigh”)
Ser (pronounced “sair”).

HSBC makes history

In Banks, Corporate governance on 18/03/2017 at 7:26 am
An outsider is appointed chairman for the first time ever.

We shareholders hope he will bring the fresh ideas needed to solve the bank’s problems. The share price has done no where in the tenure of CEO that’s going to leave next year. Though to be fair, dividend yield of around 6% is not to be sneered at.

From NYT Dealbook

HSBC Looks to an Outsider

HSBC may be based in London, but it generates much of its profit in Asia.
And so, in a nod to that, it has named Mark Tucker, the chief executive of the Asian life insurer AIA Group, as its next chairman.
Mr. Tucker will replace Douglas Flint, who has been chairman since 2010, in October.
Although Mr. Tucker has spent much of his career in the insurance industry, he was group finance director for a year at HBOS, a British bank that nearly collapsed during the financial crisis and is now part of Lloyds Banking Group.
He has also been a director at Goldman Sachs since 2012, a position he will leave when he joins HSBC.
Mr. Tucker’s first task will be to find a replacement for Stuart Gulliver, who has said he will quit as chief executive next year.
But there are other challenges: The bank has missed a string of financial targets and is in the midst of a restructuring.

The Real Masters of the Universe

In Banks, Uncategorized on 09/03/2017 at 4:47 pm

Money talks, BS walks: where the real money is made in banking.

In 2016, banks made $209bn from transaction banking, compared with the $172bn made by their trading arms, according to the data, which cover global, regional and local banks. This is almost three times the $77bn that banks made from advising clients on M&A and helping them raise finance. Transaction services also eclipsed lending revenues for every year since 2011.

FT

It was and still is very labour intensive. Fintech will change this. Too bad for the bank staff especially in a hub like S’pore.

 

When Wall St banks didn’t want to lend to Trump

In Banks on 26/12/2016 at 4:34 am

There was a German bank.

There was a time when Trump was a pariah on Wall St: his casino cos defaulted on their loans owing Citi, JPMorgan etc billions.

Trump’s dealings with Wall Street stretch back decades to his attempt to build an Atlantic City casino empire. That badly timed push forced him to renegotiate with creditors when he couldn’t pay back billions of dollars in loans … In 1998, a small group of its real-estate bankers led by Mike Offit underwrote a $125-million loan for renovations on Trump’s building at 40 Wall Street. Trump showed up at Offit’s office, his reputation badly bruised.

https://www.bloomberg.com/news/articles/2016-12-22/deutsche-bank-s-reworking-a-big-trump-loan-as-inauguration-nears

A friend in need is a bank indeed.

DBS HK info leak affects clients here too

In Banks, Hong Kong on 10/12/2016 at 1:22 pm

A DBS customer here I know says that he had getting overseas calls asking him to take out loans from DBS. He was surprised to get the calls and when he asked how he got on the call list, the line went dead, only for another call to come later.

Telemarketers contacted DBS clients to try to get them to borrow from the bank, with the employees and the call center splitting commissions, Apple Daily reported, without citing a source for its information. Some employees were sales staff who were authorized to sell loan products in branches or on the street but not by cold calling, it said.

Some DBS staff allegedly bribed department managers to get client data, including names and contact details, Apple Daily reported.

More from https://www.bloomberg.com/news/articles/2016-12-09/hkma-expresses-concern-after-report-of-dbs-arrests-in-hong-kong

The Hong Kong Monetary Authority expressed concern after a newspaper said DBS Group Holdings Ltd. staff were arrested in a probe connected with an alleged leak of customer data.

The city’s Independent Commission Against Corruption began investigating after the data were supplied to a telemarketing center in mainland China, Apple Daily reported.

The Singapore-based DBS disputed the newspaper’s report that more than 20 current and former staff had been arrested, but wouldn’t specify a number.

 

 

 

S-Reits are still a hold

In Banks, Property, Reits on 02/12/2016 at 1:12 pm

for me.

After all UBS tells its private banking clients “[Reit] yield spreads to government bonds in Singapore (450 basis points) and Hong Kong (400bp) compare favourably with the global average of 306bp . . . And we expect the continued demand for yield to drive this spread lower, supporting Reit prices.”

But then didn’t DBS tell its private banking clients to buy Swiber bonds?

But then UBS is no DBS.

Lose-lose for OCBC and Barclays

In Banks on 29/11/2016 at 3:49 pm

FT reports that Barclays has raised almost a third less than expected from the US$225m sale of its wealth and investment management business in Singapore and Hong Kong to OCBC.

 When the deal was announced in April this yr, Barclays had indicated it could fetch US$320m from selling the business, which had US$18.3bn of assets under management at the end of last year. It had tot the unit was worth US500m.

When the unit’s clients were given the choice of whether to join OCBC, some of them decided to either stay at Barclays or to leave for another bank. This reduced the price OCBC paid, which was fixed at 1.75% of assets under management.

While OCBC paid a lot less (one third less), it can’t be happy that so many clients don’t believe the BS about Bank of s’pore, it’s private bank.

Banking: Nothing has changed since 19th century

In Banks on 28/11/2016 at 2:08 pm

In the 19th and early 20th century, bankers were seen as the aristocracy of clerks. They were paid more and had better conditions. Sound familiar doesn’t it?

But what doesn’t sound familiar at all was that a banking career was then seen as a moral duty.

In 1912, AW Kerr, a senior figure in Scottish banking, gave an address to a packed meeting of the Institute of Bankers in Edinburgh.

“The banker engages in capitalistic economising not purely as a matter of expediency, of constrained adaptation to the mundane necessity of making a living, but in the expectation that such activity would test his inner resources as a person in charge of his own existence, and affirm his human worth,” he said.

Those were different times. Though, curiously, since the financial crisis top bankers are once again banging on about human worth.

Just a couple of months ago the new head of Barclays gave a speech in which he told staff that if they didn’t hold values such as respect, integrity and stewardship dear, they should quit.

Kerr, I think, would have approved.

Then, as now, the rank and file may have seen it rather differently.

A sketch by Robert Shirlaw, who worked at the bank in 1900, shows a clerk who has climbed a stair of ledgers and is waving a victory flag. He looks pretty pleased with himself there at the top, yet trapped below him are squashed clerical workers.

The caption reads: “We climb upwards on the stepping stones of our own dead selves.”

http://www.bbc.com/news/magazine-23419229

So doing God’s work and minting it ain’t new.

Fintech round the world

In Banks, Internet on 19/11/2016 at 6:15 am
Lawrence Tang of Invest Hong Kong at the recent Money 2020 fintech conference in Las Vegas. “We are at the right place to try to capture some of these high-flying fintech companies,” he said.

Where Finance and Technology Come Together

The new industry mixing finance and technology has no clear capital, but major international cities and lesser ones are vying to attract companies.

Fintech: the reality behind the hype

In Banks on 09/11/2016 at 1:08 pm

It’s all about automating processes

At Goldman the number of people engaged in trading shares has fallen from a peak of 600 in 2000 to just two today … and another 200 software engineers who work on systems that, in effect, do the job on their own.

And

Goldman has mapped each of the 146 steps of an initial public offering in 51 charts that appear in proper sequence on a five-foot long roll-out. Costly, redundant steps are being cut or, once again, automated.

(Economist)

Based on what Tharman and the central bank say about fintech, they get the bit about automating processes as this MAS wish list shows: http://fintechnews.sg/3268/fintech/mas-100-fintech-problems-to-solve/

And it’s not only me who says that the authorities here get it about fintech

a list of fintech start-ups in Singapore compiled by CLSA using data from website Tech in Asia includes almost 180 firms. By contrast, a comparable list for Hong Kong would have fewer than half that number. Singapore’s local regulator appears “to be highly supportive of fintech and has a clear view of when and under what conditions it will regulate the industry”, says Jonathan Galligan, CLSA’s head of Singapore research.

FT

 

China the paper tiger

In Banks, China on 06/11/2016 at 2:41 pm

New York’s banking regulator fined the Agricultural Bank of China US$215 million for a series of money-laundering violations and attempts to “mask” suspicious transactions. The bank is not contesting the fine.

As the Agricultural Bank of China of is owned by the Chinese state, this is as insulting to tChina as sailing a foreign warship sailing within 12 miles of a Chinese rock in the South China Sea.

And it isn’t even a US Federal agency that the bank is kow towing to. It’s a state agency that is giving China the bird and making it grovel.

What has RedBean and other China supremacists have to say?

Duterte the talk cock sing song Peenoy president should note that even China kow tows to a state agency.

Causeway relations: No barking, No growling

In Banks, Malaysia on 27/10/2016 at 5:42 am

Whatever we may think about the First Lady of M’sia (FLOM) and her hubbie (First Man of M’sia? FMOM?), let’s give them credit for one thing. They’ve not played the “S’pore” card that Tun M and other M’sian polticians used to play. They’d bash S’pore to distract attention from their actions. They’d blame their problems on S’pore’s machinations into M’sian politics.

If the following actions had been carried out when Tun M was PM, our water supply would have been cut:

— S’porean authorities investigated the circumstances in which US$681m moved from a S’pore-based bank (Falcon Bank) into a M’sian account of FMOM and then FMOM transferred US$620m back to Falcon. Falcon Bank’s local unit was ordered to close.

— They also investigated BSI Bank’s local unit over fund flows linked to Malaysia’s 1MDB. BSI’s local unit was shut down in May on account of financial irregularities and its officers were charged in connection with the probe.


Dr M still not sarisfied, has problems with S’pore

Former Malaysian prime minister Mahathir Mohamad has attacked Singapore’s handling of alleged money-laundering linked to Malaysian state investment fund 1Malaysia Development Berhard (1MDB), accusing the Republic of not targeting those accused of siphoning off more than billions from the fund.

“Notice that the Government of Singapore is very reluctant to pinpoint the people involved in this corruption,” Dr Mahathir said in an interview with The Financial Times. “It affects Singapore’s reputation as a financial centre. It is not doing the right thing. The people who accepted the bribes are not the people who are laundering the money.”

Today


Despite all these actions, there were no accusations from FMOM or his ministers that S’pore was acting against M’sian national interests. If these investigation had happened during Dr M’s premership, he’d have declared war or, worse, cut iff the water supply. At the very least, ties between the two countries would be very chilly.

Instead the love-fest initiated by both PMs continues. We should thank Najib for his maturity.

Gregory (Scotland Yard detective): “Is there any other point to which you would wish to draw my attention?”

Holmes: “To the curious incident of the dog in the night-time.”

Gregory: “The dog did nothing in the night-time.”

Holmes: “That was the curious incident.”

Silver Blaze by  Sir Arthur Conan Doyle

Wells Fargo misdeeds were peanuts

In Banks on 15/10/2016 at 11:24 am

Only $5 million had to be set aside to compensate customers and the $185 million in fines are a rounding error.

wells fargo stock fake account scandal

But its top executive had to go.

Unique Selling Point of Swiber junk bonds?

In Banks, Energy, Financial competency on 07/10/2016 at 3:31 pm

DBS’s private banking clients were told Swiber bonds were safe ’cause DBS was a big lender?

This wicked, evil tot crossed my mind when I was reminded that DBS

had a S$700 million ($522 million) exposure to the Swiber group of companies and expected to recover roughly half, given some was secured by assets. That amount represents 92 percent of Swiber’s $567 million in total equity at the end of the first quarter, the last time it reported its financial position. It also probably means that just over half of all the leases, borrowings and notes payable reported by Swiber were owed to DBS.

Any credit officer should balk at a lender being in charge of more than half the debt of an entire company. It gets worse, however, because on top of that, Swiber’s debt had already become much larger than its equity, a sign the bank should have considered scaling back its exposure.

https://www.bloomberg.com/gadfly/articles/2016-08-03/how-deep-into-oil-rigs-is-dbs

I mean DBS wouldn’t lend money to any dog, let alone a dying dog with maggots festering in it, would it? And persuade its private banking clients snd accredited investors to join in, would it?

More on StanChart’s latest problem with the US

In Banks, Temasek on 29/09/2016 at 2:38 pm
 

From NYT Dealbook

Standard Chartered Under Investigation

Standard Chartered has been accused of potential wrongdoing by officials at an Indonesian power company in which it is an investor.
The United States Justice Department is looking into the accusations, a person briefed on the matter said. The investigation was related to accusations that officials at the company, MAXpower, had paid bribes to win contracts, according to The Wall Street Journal, which earlier reported the inquiry.
A recording of a conversation with the company’s chief executive, who used to work at Standard Chartered, featured discussions about illicit payments and joking references to soccer balls stuffed with cash, The Journal reports.
The situation is particularly tricky for the bank, which is based in London but does most of its business in Asia, because of the settlement it reached after an investigation into accusations that it had transferred money for countries affected by United States sanctions.
Misconduct could prompt prosecutors to re-evaluate whether to revoke the deferred-prosecution agreement and force the bank to plead guilty.
It’s also a blow to William T. Winters, the chief executive who has been trying to overhaul the bank.

StanChart got caught again

In Banks, Temasek on 28/09/2016 at 4:56 am

Standard Chartered said it was being investigated by the US Department of Justice over claims that an Indonesian subsidiary had paid bribes to secure contracts.

The London-based but Asia-focused bank said it had referred the matter to the “appropriate authorities” and launched its own review.

The Wall Street Journal newspaper said that an internal audit at Indonesian energy company Maxpower Group found evidence of possible bribery and US prosecutors were examining whether the bank was culpable for not stopping it.

Two years ago I wrote Double confirm StanChart’s rogue bank & PAP apologist is a fool

Remember a “PAP is always right” man KPKBing when StanChart was charged that the reulator was a “rogue regulator”. StanChart then made the dean of LKY School look dumb, really dumb, by pleading guilty.

Double confirm that StanChart is a rogue bank and the PAP apologist is a fool because now: The management of Standard Chartered is facing renewed pressure after being placed under fresh scrutiny by US regulators.

Two years after being fined more than £400m for breaching US sanctions towards Iran, the bank revealed that a two-year deferred prosecution agreement (DPA) that was imposed at the time was being extended for three years.

The US authorities are now investigating whether Standard Chartered breached its sanctions rules beyond 2007, the period when the previous offences for which the bank was penalised took place.

http://www.theguardian.com/business/2014/dec/10/standard-chartered-management-us-regulators-investigation-sanctions

 

Feds treat as bribery US bank’s programme for PRC White Horses

In Banks on 27/09/2016 at 2:05 pm
 
JPMorgan’s efforts to hire the children of China’s ruling elite seem to keep coming back to bite it. NYT Dealbook

(JPMorgan hired friends and mamily of leaders at three-quarters of major Chinese firms it took public in HK under the Sons and Daughters program, which ran from 2004 to 2013, JPMorgan took referrals from a broad spectrum of China’s business and political elite, according to a document compiled by the bank as part of a federal bribery investigation)

NYT Dealbook continues

The bank is preparing to settle with federal prosecutors and the Securities and Exchange Commission after being the subject of a federal bribery investigation.
But it is now also facing scrutiny from the Federal Reserve and the Office of the Comptroller of the Currency, two agencies that were not previously known to be involved.
The Fed is seeking a $62 million fine, while the Office of the Comptroller of the Currency will seek to mete out its own punishment, according to people briefed on the investigations. The two regulators are focusing on a breakdown in controls and practices that allowed the improper hiring to take place, rather than the bribery aspect.
JPMorgan is expected to pay federal prosecutors and the S.E.C. about $200 million.

 

How the mighty are fallen

In Banks on 27/09/2016 at 5:07 am

On market capitalisation Deutsche Bank now ranks 78th among global banks, just below the likes of Malaysia’s Public Bank [a sua kee in M’sia] and Brazil’s Itausa Investimentos Itau. FT

And if u are wondering our three local babks are a lot bigger on this measure than Deutsche.

Whatever happened to ” Deutscheland uber alles*”?


 

*above others

China’s plans to rule tech & finance

In Banks, China on 22/09/2016 at 2:33 pm
“It is the goal of Chinese outbound industrial policy programs to replace foreign technology leaders in the medium term — not just in China but also in global export markets.”
— Sebastian Heilmann, president of the Mercator Institute for China Studies, a think tank based in Berlin, on China’s strategy of investment.

 

 

China’s Wealthy Help Bolster European Capital

Asia’s high net-worth individuals, whose wealth has surpassed counterparts in North America, have been major investors in regional bank bonds.

 

From NYT Dealbook

Perils of being an “atas” investor

In Banks, Financial competency on 20/09/2016 at 1:27 pm

Mom was “medium risk” investor but junk bond sold to her 

When Elaine Tham signed an “accredited investor” form with her bank in Singapore two years ago, she took a fateful step toward losing all the money she had set aside for her children’s education.

Based on her financial profile and investment priorities — her need for S$150,000 ($110,000) to pay university fees — a local branch of HSBC Holdings Plc had initially categorized her as a “medium risk” investor. But because the value of her property and car entitled her to “accredited” status, a category reserved for wealthy investors, Tham says she was persuaded to take a riskier path. She agreed to invest S$250,000 in the bonds of a small Singapore energy-services company, Swiber Holdings Ltd., which said in August that it won’t be able to repay its bondholders.

Tham is one of many Singaporeans who lost money by investing in Swiber, which sold an unusually high proportion of its bonds to the wealthy clients of banks in Singapore. Amid signs last week that more local energy-services companies are being dragged down by the prolonged slump in global oil prices, some are urging quick action to plug loopholes in Singapore’s investor-protection rules.

Man didn’t know he was “accredited investor”

The revisions to the law proposed by the MAS might have helped another Singaporean bondholder, Sandeep Kapoor, who says he is facing losses after buying S$250,000 of Swiber bonds in 2014. The 50-year-old engineer said he only found out he was an accredited investor last month, some two years after the purchase, via his relationship manager at DBS Group Holdings Ltd. 

Under the proposed revisions, he would have been given the chance to opt in to accredited investor status, rather than being automatically assigned to the category because of his wealth.

http://www.bloomberg.com/news/articles/2016-09-19/bond-losses-show-vulnerability-of-singapore-s-not-really-rich

How managers encourage abusive behaviour

In Banks on 19/09/2016 at 2:24 pm
Khalid Taha, a former Wells Fargo personal banker, said he fielded complaints from customers about questionable accounts until shortly before he left the bank this summer.

but ensure that their staff suffer the consequences

Wells Fargo Warned Workers Against Sham Accounts, but ‘They Needed a Paycheck’

Former employees say that their managers warned them not to bend the rules, but they felt pressured by the bank’s aggressive sales culture to create fake accounts anyway.

NYT Dealbook

Our banks are sway kees even in SE Asia

In Banks on 13/09/2016 at 3:20 pm

I’m surprised to learn that the State Bank of India is bigger than DBS. And that Bank Central Asia is bigger than OCBC and that ICICI Bank and Bank Rakyat Indonesia are bigger than UOB.

Temasek’s China banks perform better than ang moh counterparts

In Banks, China, Temasek on 10/09/2016 at 4:36 am

Temasek has meaningful stakes in China Construction Bank, Industrial and Commercial Bank (ICBC) and Bank of China  and they are doing well. Something the ant-PAppyists cybernuts don’t tell.

As they say an info graphic (esp from the FT) is worth a lot more than a A380 filled with BS.

Chinese banks

Since Feb’s lows, these three (and Agri Bank  have delivered a total return upwards of 40%)

And dividend yields are attractive, at over 5%.

But ant-PAppyists will always KPKB,.

The truth about the loss of IT jobs

In Banks, Economy on 09/09/2016 at 6:13 am
Here’s one TRE poster that I hope doesn’t join the migration to The Idiots  — Singapore or TISG as it prefers to be known. He wrote:
Good News:

This is good news, the Indians will return to India. IT department here all belongs to Indians already, no longer a Singaporean job. We got sold out long ago.

Rating: +18 (from 20 votes)
He’s right up to a point. The IT industry here belongs to FTs from India and locals are discriminated against in the sector according to people like Gilbert Goh and TRE posters.

He was responding to a Bloomberg report carried by TRE that said Barclays intends to cut approximately 100 IT jobs here

The report said that the employees are part of the Information Technology Operations team.The IT function will be moved to India to save on costs.

Barclays has since confirmed in a statement that it is in the process of cutting jobs here saying “identified a number of additional roles that carry out global activity in Singapore which can be relocated”

As I’ve reported before, in the early noughties, the PAP administration allowed the likes of Merrill Lynch, Citi and Beutsche to import cattle truck-loads of Indian IT FTs, in return for the banks promising to set up big chunks their global back office IT ops here.

As I reported beforem one shop in Suntec City had to fold after Citi retrenched its Indian ITs during the financial crisis. The owner’s biz model was premised on Indian FT techies.

Carrefour also closed its section selling freshly made Indian food that it opened a year earlier.

These two businesses show the kind of spin-offs of having FTs here. And what happens when they leave.

In general, the benefit of FTs coming in is the money they spend on entertainment, rent etc. When they leave, this spending is lost.

Using bitcoin technology

In Banks on 06/09/2016 at 5:36 pm

Blockchain is the technology behinf bitcon. And banks are studying how to use it to transfer $. Chart: How blockchain works

 

Banks say the greater safety that will come with a “golden record” of trades — one ledger that updates in real time as trades are executed.

There will be cost saving, as a fully synchronised and digitised settlement operation makes cumbersome, labour intensive back offices redundant

There will also be capital saving, as the time delay between transactions being executed and settled is reduced,

The problem: no reversal for honest mistakes, or fraud: transfer is transfer

 

Why Goldie wants to be the people’s bank

In Banks, Internet, Investment banking on 29/08/2016 at 3:26 pm

The maths behind Goldman Sachs move into retail internet finance

As it has done many times in its past to survive and to thrive, Goldman is in the process of reinvention. This explains Marcus, its new online lending business named after the company’s founder, Marcus Goldman, along with GS Bank, its online savings account business with no minimum balance requirements. After all these years, Goldman Sachs has suddenly discovered retail banking. But it is not out of altruism or charity, nor is it nefarious. It is all about making money from money, which has always been Goldman’s specialty. In fact, GS Bank and Marcus fit together elegantly in helping Goldman find new sources of profitability.

And here’s why: In the zero-interest-rate environment that the Federal Reserve has carefully curated for eight years, Goldman and other banks can gather up money — the raw material they use to make more money — at virtually no cost. By opening an online bank, Goldman can gather up billions of dollars in consumer deposits without the cost of a physical branch and pay its customers close to nothing for their money. Goldman is offering to pay savers 1.05 percent annually. That may sound like close to zero, and it is, but the rate is also nearly 17 times more than the 0.06 percent annual interest rate that JPMorgan pays me on my savings account.

Goldman’s idea is to get people like me to move my money, of course. Sure, the 1.05 percent is a teaser rate, created to attract billions of dollars to Goldman’s new venture. And it will no doubt work. Since April, GS Bank has collected $1.8 billion in deposits, essentially by word of mouth.

Goldman will then take that raw material and use it to make more money, in large part by lending it out through its online lender Marcus, which aims at consumers looking to borrow around $20,000. Goldman will charge plenty more in interest for these loans than the 1 percent it is paying savers at GS Bank. Although its terms will not be known until Marcus rolls out officially in October, assume for the moment that the going rate for consumer loans of this nature – if both Lending Club and Prosper are useful guides – is around 12 percent. That difference – the 11 percentage points – is what Goldman will largely rake in as profit.

Buffett: Bank fines like speeding tickets

In Banks on 11/08/2016 at 6:07 pm

Warren Buffett on Driving Violations, Baseball and Jamie Dimon Warren E. Buffett offers an unusual defense of Jamie Dimon, comparing the billions of dollars that JPMorgan Chase has paid in fines to state troopers handing out a speeding ticket.

Big banks strike back

In Banks on 10/08/2016 at 1:57 pm

Just when u think they have been defeated

Big Banks Make a Pitch for Hearts and Minds

Citigroup’s ad campaign for the Olympics showcases the benefits of large global banks, and other big banks are trying to soften their image.

NYT Dealbook

S’pore: “hewers of wood and drawers of water”

In Banks, Economy on 10/08/2016 at 7:50 am

FT reports that Goldman has 62 per cent of its “strategic location” headcount in Bangalore, 22 per cent in Salt Lake City, 8 per cent in Dallas/Irving, 7 per cent in Singapore and 1 per cent in Warsaw.

We are “hewers of wood and drawers of water” for Goldie. PAP administration will say that we must thank the FTs for this. Given our world beating rankings in academic excellence, who is responsible for ensuring that we (because of the FTs) can only be “hewers of wood and drawers of water”?

The PAP administration is a reasonable answer given its claim that the rankings shows the PAP administration’s long-term planning. To be fair, in the early noughties, the  PAP administration sought to make S’pore a global hub for banks IT operations. FT Indians were let in by the cattle-truck load because Merrill Lynch, Citi and Deutsche agreed to use S’pore as  global hub. I know someone in Suntec City whose biz model depended on the FT Indians Citi employed. When Citi retrenched, he closed his biz. As did the spot in Carrefour that sold great Indian cooked food.

Fintech’s greatest impact

In Banks on 02/08/2016 at 1:08 pm
Will be in trading, settlements and general back office.

From NYT Dealbook

We’ve Hit Peak Human and an Algorithm Wants Your Job. Now What? On Wall Street, the still-essential business of banking will go on – but maybe without as many suits. “We have 20,000 manual interventions on trades every day,” said Michael Rogers, president of State Street. “There’s a huge opportunity to digitize that and move it forward electronically.”

 

Why Dodge City’s marshall upset with HSBC

In Banks, Currencies on 27/07/2016 at 1:19 pm

From NYT Dealbook

How Traders Use Front-Running to Profit From Client Orders Federal prosecutors charged two HSBC employees on Wednesday with “front running.” But how do traders use this practice to maximize profits?

The real reason HSBC didn’t return to HK?

In Banks on 13/07/2016 at 1:42 pm

Shareholders like me were disappointed that HSBC decided against returning to its hometown HK, preferring to remain being HQed in London

Seems one good turn deserves another: UK lobbied US for leniency for the narco bank. http://www.bbc.com/news/business-36768140

The Mexican branches of HSBC had custom-built counters to facilitate drug money deposits.

Italian mess shows why the Brits voted Leave

In Banks on 11/07/2016 at 2:02 pm

There is a crisis in Italian banking and the cheapest, most efficient way of solving the crisis is an Italian govt bail-out. But EU “rules” are “preventing” this.  EU wants the retail investors in bank bonds to take a hit.

With a friend like EU, who needs enemies.

From NYT Dealbook:

ITALY’S PLAN FOR BANKS IS DIVIDING EUROPE The Italian government needs to spend an estimated $45 billion to shore up its banks, which are burdened with bad loans. But fears that European authorities will bar the government from providing this support is adding to turbulence in the aftermath of Britain’s vote to leave the European Union,Peter Eavis reports in DealBook. And the situation could keep investors on edge through the summer.

Italian bank shares have dropped steeply – an indication of a storm ahead. The stock price of Banca Monte dei Paschi di Siena, one of Italy’s most troubled lenders, is down 80 percent in the last 12 months. Its shares trade at under 10 percent of its book value – a sign that investors really think that the bank needs new capital, although when bank stocks sink that much, they find it almost impossible to raise new capital on the markets.

Italian banks don’t appear to need an overwhelmingly large sum to return them to a firmer footing. The problem is their 200 billion euros, or about $222 billion, of bad loans. The banks have already set aside significant reserves to absorb losses in these loans, effectively valuing them at 40 percent of their original value, according to some analyses.

But investors appear to think that the loans are worth less than that, and the theory is that banks would have to value the loans at an even lower level.Banking experts say that €40 billion of support is needed to help the banks take those losses.

The Italian government could mimic the United States government’s TARP spending in 2008 and plow that money into the banks, but a bailout of that sort may be illegal under relatively new European rules that aim to protect taxpayers.

The rules aim to force investors in the banks to provide support in times of trouble by buying their debt securities. Under anti-bailout rules, these securities would be forcibly turned from debt into new equity, which could absorb any new losses taken on the bad loans. Under such a so-called bail-in, the equity would in theory be worth less than the debt securities, leading to losses for investors who held the debt.

In Italy, however, retail investors hold many of these debt securities– families own about a third of them, according to the research organization Bruegel. A bail-in would focus the pain on Italian households, and the fear of losses might also prompt investors to stop lending to banks and lead depositors to withdraw their money.

A compromise with Europe’s leaders does not look impossible, although there is considerable tension over the question.

The rules provide ways to give Italy a pass, but Cassa Depositi e Prestiti, a large investment entity controlled by the Italian government, could also provide bailout funds. Either way, analysts agree that the government would have to overhaul the industry.

Training bankers the Chinese way

In Banks, China on 07/07/2016 at 1:26 pm

Chinese Bank Staff Beaten for Poor Performance on Course A motivational trainer in China beat eight rural bank employees with a stick, shaved the heads of the men and cut the hair of the women after they performed poorly on a training weekend.

NYT Dealbook

Wayang only, our banking secrecy laws

In Banks on 26/06/2016 at 5:30 am

In the case reported below, MAS was quoted as saying by ST that “Banking information could be disclosed through client’s consent or via Singapore mutual legal assistance.”

MAS seems to suggest that consent or mutual assistance are the main channels for disclosure.

So where got banking secrecy? All wayang.

From NYT Dealbook:

UBS Gives I.R.S. Records on U.S. Citizen’s Account in SingaporeUBS ended a legal fight with the Internal Revenue Service, agreeing to hand over records on an American client’s account in Singapore as the authorities seek to move beyond Switzerland in their fight against offshore tax evasion.

“UBS confirms that it complied with the summons based on client consent in accordance with Singapore law,” Marsha Askins, a UBS spokeswoman, said in an e-mail.

IRS agents served a summons on UBS in 2013 for the records. Hsiaw had $990,351 in his UBS account in Switzerland in 2001, and closed that the next year, transferring $194,356 to his Singapore account in 2002, according to the IRS petition. The bank said it couldn’t produce the information because Singapore’s bank-secrecy laws prevent disclosure without permission from Hsiaw, which he hadn’t provided, according to a court filing.

Singapore’s laws and regulations don’t prohibit sharing of information for investigations into possible tax offenses, and banking information could be disclosed through client’s consent or Singapore mutual legal assistance, according to the city state’s central bank.

“Even if Singapore’s bank secrecy laws, as UBS contends, precludes disclosure of the summoned bank records relating or pertaining to Hsiaw’s Singapore account(s), international comity requires that the records be disclosed,” IRS revenue agent James Oertel said in the Feb. 23 petition.

 

Fintech I can appreciate

In Banks on 23/06/2016 at 7:01 pm

Goodbye, Password. Banks Opt to Scan Fingers and Faces Instead. Frustrated by thieves stealing personal data from millions of customers, banks are investing in biometric technology to offer better security.

NYT Dealbook

And govt wants to encourage fintech?/ PAP is never wrong

In Banks, Economy, Internet, Political governance, Public Administration on 22/06/2016 at 6:04 am

Is Tharman trying to tell jokes again? (Examples in the past, another recent one?). He’s the leading advocate of fintech here.

But demand for digital services leaves banks and other financial institutions more open to more risk. The majority of top bankers said they were open to more risks than they could manage as a result of digital developments, according to a global survey of bankers by the consultancy Accenture.

Yet the PAP administration has indicated by its plan to restrict direct access to the internet for civil servants that it is trying to cut cybersecurity risks by cutting internet connections.

——————————————————

Delinking cicil servants from the internet

‘The Govt’s move to delink computers used by civil servants from direct access to the Internet is “absolutely necessary” to keep govt data and public services secure,’ PM. He cited the possibility of personal data like NRIC numbers, addresses and income tax returns being hacked and put up for sale in the internet.

When this policy takes effect in May next year, civil servants can only access the Internet through dedicated computers or through their own computers. It seems that there have been very determined attacks on the Govt’s IT systems and the threats are getting more severe and sophisticated. Just relying on the system’s defensive measures is looking like a losing proposition? It is best to cut the connections to the minimum?

————————————————————-

So how does the call for more fintech dovetails with the plan to deny most civil servants direct access to the internet?

 

Fintech is all about increasing connections, the civil service delinking initiative is all about cutting connections.

Does the PAP administration think that the banks and other financial institutions can safeguard data better than it can? Or that the data financial institutions hold  is not so impotant?

Or maybe is the delinking policy, is as suggested by Chris K, aimed at avoiding a PR disaster:” PAP must always look good even when PAP goofs”? A variant of “Napoleon is always right”*?

Or is Tharman just joking about the importance of fintech to S’pore?


*Another one of Boxer’s mottoes is “I will work harder”. Sounds so S’porean and something that the PAP encourages. But then why is productivity is so worryingly low. Too many of the PAP’s favoured caste, FTs, isit?

2047 financial problem in HK

In Banks, China, Hong Kong, Property on 21/06/2016 at 1:24 pm

From NYT Deal book

Expiration Date on China’s Promises Stokes Unease in Hong Kong Housing Most banks have yet to formulate mortgage policies beyond 2047, when an agreement guaranteeing the city a high degree of autonomy runs out.

I’m sure Uncle Redbean and Goh Meng Seng will scold the banks foer being afraid. They look forward to the day when Chinese “rule of law” prevails in HK.

 

HSBC Defends Its Asian Ambitions

In Banks on 16/06/2016 at 2:01 pm

“I wouldn’t want to be anywhere else,” Douglas Flint, the bank’s chairman, said in an interview. “The fact that the market is uncertain about the value of that today just reflects market sentiment and it will change.”

Seriously, where else can it go?

But Asia is looking sick.

Equity trading Floors Go Quiet Across Asia Revenue from trading stocks in China and Hong Kong could fall 30 percent to 50 percent in the first half compared with a year earlier, Bloomberg reports, citing senior executives at four firms who spoke on the condition of anonymity.

NYT Dealbook

HoHoHo, StanChart Cracks Down on ‘Above the Law’ Bankers

In Banks, Corporate governance, Emerging markets, Temasek on 15/06/2016 at 1:50 pm

The bank is cracking down after “recent transgressions” concerning employees’ outside business interests, close financial dealings with co-workers and excessive expenses, Bloomberg reports, citing a series of memos issued over the past two months.

NYT Dealbook

Fall of BSI and Goldie rainmaker: From heroes to zeroes

In Banks, Malaysia on 14/06/2016 at 1:17 pm

How a 143-Year-Old Swiss Bank Took a Quick Road to Ruin in Asia When a rainmaker left RBS Coutts with 70 colleagues for BSI, a small Swiss bank looking to get big in a hurry, it set off a chain of events that thrust the bank into the center of the financial scandal involving 1MDB.

NYT Dealbook

And here’s how a Goldman Sacks partner, whose wife called Rosmah Najib (FLOM or self-styled First Lady of M’sia) a friend, became a zero

http://www.bloomberg.com/news/articles/2016-03-30/the-rise-and-fall-of-tim-leissner-goldman-s-big-man-in-malaysia

HSBC, StanChart tua kee, DBS “peanuts”

In Banks on 13/06/2016 at 1:18 pm

According to a recent survey, HT says HSBC’s market penetration of corporate banking relationships in Asia (ex Japan) at 60%, StanChart’s at 50% and Citi’s at 44%. ANZ and DBS followed with 34 and 33%.

Fintech began in 1860s

In Banks, Internet on 06/06/2016 at 1:48 pm

With the use of the telegraph

Timeline: The Evolution of Fintech Starting in 1865, the structures, networks and ideas that are the foundation for financial technology today began to take shape.
NYT »

More on Fintech and the banks

In Banks, Uncategorized on 03/06/2016 at 6:20 pm

From NYT’s Dealbook

FINTECH VS. BIG BANKS Regulatory concerns have long dogged the banking industry, but these days, senior executives of big banks are keeping a close eye on something potentially more disruptive to the sector, which is financial technology, or fintech, Andrew Ross Sorkin writes in DealBook’s special section “Fintech’s Power Grab.” It’s too early to tell just how much fintech will upend the financial industry, but those who back the start-ups say that the potential is enormous. If these newcomers succeed, “Wall Street as we know it may become an outpost of Palo Alto,” Mr. Sorkin writes.

Of course, there are the skeptics, like the banking investor J. Christopher Flowers, who have dismissed the fintech frenzy as mere hype that defies common sense and will leave a trail of failed companies in its wake. But Mr. Sorkin writes that a third view may have the highest likelihood of coming true: “The big banks, so powerful and yet so anxious about the possibility of being disrupted by the upstarts, will gobble them all up in a spate of mergers and acquisitions that puts the disrupters squarely inside the institutions they were supposed to overtake.”

The banking industry needs to realize that change is coming whether it likes it or not, contends Steve Case, a founder of AOL and an entrepreneur with investments in several fintech businesses, who just wrote a book about the future, “The Third Wave.” “Some banks will be smart and figure out how to partner with some of these entrepreneurs or acquire some of these companies or do joint ventures, but if they just think it’s going to stay the way it is, they will be surprised,” Mr. Case said.

NORTH KOREA LINKED TO ATTACKS ON BANKS

In Banks on 30/05/2016 at 5:24 pm

From NYT Dealbook:

Security researchers have tied several online breaches at Asian banks to North Korea, Nicole Perlroth and Michael Corkery report in DealBook. The digital security firm Symantec said that in three recent attacks, the thieves used a rare piece of code that had been seen in only two previous cases – the hacking attack on Sony Pictures in 2014 and attacks on banks and media companies in South Korea the year before.

Symantec researchers said the evidence linked an attack at a bank in the Philippines last October with attacks on Tien Phong Bank in Vietnam in December and another in February that resulted in the theft of $81 million from the central bank of Bangladesh.

Eric Chien, a security researcher at Symantec who found the code used across the attacks, said it was the first time that a nation had used online attacks for financial gain.

The attacks raised alarm bells because the thieves gained access to Swift, which is considered the world’s most secure payment messaging system. It is used by 11,000 banks and companies to move money between countries, making it a tempting target. Swift itself had warned of a coordinated assault on banks, although it stressed that it was the banks’ connections to its networks, rather than the network itself, that were breached.

The possibility that Pyongyang had turned to digital theft was not surprising. North Korea’s economy has been ravaged by sanctions and food shortages. Its gross domestic product was estimated to be $12 billion to $40 billion, compared with South Korea’s $1.4 trillion.

“If you presume it’s North Korea, $1 billion is almost 10 percent of their G.D.P.,” Mr. Chien said. “This is not small change for them.”

There is no evidence to date that the thieves have gone after large American or European banks, though new possible attacks are being reported weekly. Last week, evidence emerged that Banco del Austro, an Ecuadorean bank, was infiltrated by hackers who were able to sneak into the Swift network.

FireEye, the security firm investigating the intrusion on Bangladesh’s central bank, is looking at several more undisclosed cases where banks’ systems were compromised, The Wall Street Journal reports, citing a person familiar with the matter. The suspected attacks involved eight other banks, all of which are in Asia.

Analysts worry that the breaches could hold back global finance; larger banks may become reluctant or even refuse to transact with smaller banks in the developing world unless they have assurances that their networks would not be compromised.

Making victims of cybercrime pay: So PAPish

In Banks, Humour on 26/05/2016 at 5:08 pm

But it’s the UK, not S’pore.

The FT reports that UK bank customers may have to cover cost of fraud under new proposals. Under the plans, individuals or companies with lax online security could find themselves  without banking services or even excluded from the system under which banks compensate customers whose accounts are hacked.

Bet u this will happen here first. It’s so PAPish. It’s a Hard Truth to favour big biz over the little people, is it  not? Harry must be turning in his metaphorical grave.

Two “secret” tecniques that Buffett uses

In Banks on 22/05/2016 at 2:58 pm

In March this ye, the FT carried an article “The $62bn secret of Warren Buffett’s success”.explaining that that he’s a leading proponent of delaying tax payments as long as possible.

A reader in response to the article said that this technique was part of another technique Buffett uses: unique, deep value liability funding strategy inasmuch as it is an investing strategy

Great article. Most of us misunderstand Buffett’s strategy. It’s a unique, deep value liability funding strategy inasmuch as it is an investing strategy. He was able to get 15%-20% return even if his stock investments only went up 5%. How? OPM leverage. Check out these guys’ explanation below – they’re really sharp. I’d keep an eye out for them: https://www.scmessina.com/2015/02/if-warren-buffett-had-to-start-today-could-he-still-reach-his-current-level-of-wealth/

Cyberattacks on global payments system

In Banks, Internet on 22/05/2016 at 11:01 am

NYT Dealbook

SWIFT REPORTS A NEW ATTACK Thieves have found their way into the Swift global bank network as investigators are still trying to solve the $81 million heist from the central bank of Bangladesh, Michael Corkery reports in DealBook.

The second attack involved a commercial bank, which Swift declined to identify. In a letter it planned to send to users on Friday, which The New York Times reviewed, Swift warned that the two attacks bore similarities and were likely part of a “wider and highly adaptive campaign targeting banks.”

Banking experts said the attacks might be impossible to solve or trace. Swift said the thieves got their hands on legitimate network credentials, initiated the fraudulent transfers and installed malware on bank computers to disguise their movements.

The attackers clearly exhibit a deep and sophisticated knowledge of specific operation controls within the targeted banks – knowledge that may have been gained from malicious insiders or cyberattacks, or a combination of both,”Swift said. It also warned that the gang of thieves may have been able to recruit bank employees to hand over credentials.

Security experts who have studied the attacks said the thieves were probably lurking inside the bank systems for months before they were detected and are likely to strike again.

Swift’s core messaging system was not breached, but the criminals attacked the banks’ connections to its network. Banks are responsible for maintaining the security of their own connections to Swift and digital criminals have found ways to exploit loopholes in bank security to obtain login credentials and dispatch fraudulent Swift messages.

This second attack suggests a highly sophisticated threat that did not depend on weak digital defenses.

HSBC: Bad news, good news

In Banks, Emerging markets on 21/05/2016 at 10:11 am

HSBC Said to Hire 175 Compliance Employees HSBC is hiring 175 people for the financial crime compliance team at its British consumer bank, which will eventually be isolated from its trading business, Bloomberg reports, citing people familiar with the plan.

HSBC to Move 840 Technology Jobs Out of Britain to Save Costs The bank announced plans last year to shed as many as 50,000 jobs by the end of next year as it seeks to reduce its costs and reshape its business.

HoHoHo: Chinese banks

In Banks, China, Temasek on 05/05/2016 at 10:10 am

Mid-sized Industrial Bank reported some of the highest levels of investment receivables in its first-quarter results. The bank held Rmb2tn in investment receivables as of the end of March, 36 per cent of its total assets and equivalent to the size of Singapore’s gross domestic product last year.

(FT)

And remember we hold shares in  three out of the four biggest banks

The suspicion is that Chinese banks are owning up to just as much bad news as they can afford while keeping reported earnings stable. It’s not clear who they are trying to fool. Shares of the big five trade at between 70 and 80 percent of book value, suggesting investors wised up long ago. The latest trickery will only make them more cynical.

http://blogs.reuters.com/breakingviews/2016/04/29/chinese-banks-stealth-clean-up-fools-nobody/

OCBC pays price for biz model

In Banks on 03/05/2016 at 10:16 am

While

United Overseas Bank (UOB) posted a 4.4 per cent fall in first-quarter net profit, as lower wealth management fees and trading income more than offset higher net interest income. (CNA)

OCBC had a 14 per cent decline in quarterly net profit. Unlike UOB and DBS it has adopted a bankassurance model which depends on income from its life insurance division.

Oversea-Chinese Banking Corp (OCBC), Singapore’s second-biggest lender, announced on Friday (Apr 29) a 14 per cent decline in quarterly net profit, as its insurance income dipped and allowances rose.

For the three months ended March, net profit was S$856 million, down from S$993 million a year ago.

Profit from its life assurance unit plummeted 58 per cent, a fall of S$116 million, largely due to unrealised mark-to-market losses from subsidiary Great Eastern Holdings’ bond and equity investment portfolio, the bank said.

Wealth management income, comprising income from insurance, private banking, asset management, stockbroking and other wealth management products, was down 17 per cent to S$482 million, from S$583 million a year ago. (CNA)

DBS’s results should be a lot closer to UOB’s than OCBC’s, unless there’s something really nasty at DBS’s Indonesian business.

 

S’pore banks under some pressure

In Banks on 28/04/2016 at 6:16 am

Too much capital: The average Tier 1 capital ratio at OCBC, DBS and United Overseas Bank was a unhealthy 14% at the end of last year.

Worse

each dollar of Oversea-Chinese Banking Corp.’s assets earns only 1.2 cents in operating revenue before provisions, compared with 1.6 cents for Hang Seng Bank in Hong Kong. 

The narrow wiggle room for liquidity calls for caution. Hang Seng Bank’s loan-to-deposit ratio is less than 72 percent, by Bloomberg’s calculations, and 85 percent for OCBC. It’s hard to see Singapore lenders aggressively expanding their loan books if deposit growth doesn’t keep pace. But as Bloomberg Intelligence analyst Diksha Gera noted recently, HSBC and Malaysia’s Maybank are joining Citigroup and Standard Chartered in locally incorporating their Singapore retail banks. Growing competition for deposits at home could whittle away margins. 

http://www.bloomberg.com/gadfly/articles/2016-04-06/singapore-s-broken-piggy-bank

UBS bearish that StanChart has turned a corner

In Banks, Emerging markets, Temasek on 27/04/2016 at 10:32 am

It’s Shares jump despite fall in profit

Standard Chartered shares surged 10% in London after the bank — which generates almost three quarters of its revenue from Asia — reported a surprise decline in loan impairments and capital increased more than some analysts estimated.

Pretax adjusted profit fell 64 per cent to US$539 million (S$729 million) for the first three months of 2016, from US$1.5 billion a year earlier, said the London-based bank in a statement yesterday. Losses on bad loans fell 1 per cent to US$471 million in the quarter, well short of the US$650 million of impairments estimated by Mr Chirantan Barua, an analyst at Sanford C Bernstein. 

But there are still huge problems.

Revenue dropped 24 per cent in the quarter to US$3.35 billion, as income from every business unit declined.

http://www.bloomberg.com/news/articles/2016-04-26/standard-chartered-profit-drops-64-as-revenue-misses-estimates

UBS expects the share price to fall to 430p within 12 months.

With many funds short or underweight at the start of the year, commodity prices regaining some poise, EM equities rallying and EM funds seeing a return to inflows, a rally is directionally easy to rationalise.

But the StanChart rally has happened against a ~60% fall in consensus profit forecasts for this year and 30% decline for next. Our estimates are unchanged and so is our view: we see great businesses within StanChart – predominantly Transaction Banking, Financial Markets and bits of Retail – but we think the headwinds of de-risking, deleveraging, and flat and low yield curves will combine with elevated loan losses to make life particularly difficult near term (we forecast a loss for this year), leaving the 8% ROE target for 2018 out of reach.

 

 

HoHoHo, Soros bearish on China

In Banks, China, Temasek on 25/04/2016 at 10:06 am

After StanChart, thetr are three other Chinese other monkees on Temasek’s back. Remember we have big stakes in three of China’s big 4 banks.

As China’s Growth Slows, Banks Feel the Strain of Bad Debt Chinese lenders feel rising pain from souring loans in troubled industries – even as they face pressure to keep local companies afloat.

NYT Dealbook

Soros bearish on China

George Soros is warning markets that China’s financial system is at risk and the rise in credit will be the downfall for world’s second biggest economy.

Speaking at an Asia Society event in New York on Wednesday, Soros said the similarities between the credit markets in China “eerily resemble” to those of the United States in 2007 before the financial crisis.

Recent stimulus packages in China have seen sharp rises in asset prices – namely in the housing and construction sector, but Soros believes these have been fueled by excessive lending to underperforming industries.

“Most of the money that banks are supplying [in China] is needed to keep bad debts and loss-making enterprises alive,” Soros said.

Read more: George Soros Worried about China’s Financial System | Investopedia http://www.investopedia.com/articles/investing/042116/george-soros-worried-about-chinas-financial-system.asp#ixzz46i1T5WmU
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HSBC: End in sight

In Banks, China, Hong Kong on 20/04/2016 at 10:23 am

HSBC Chief Said to Leave in Two Years Stuart Gulliver, HSBC’s chief executive, will step down in two years, and the bank has already started compiling a list of possible internal successors, The Sunday Times reports, citing senior sources.

NYT Dealbook

Naving him as CEO since 3011 is like us kanna Mah Bow Tan and Raymond Lim and Taacob at the same time.

Here’s an interesting tot from FT reader on executive salaries

“Chief executives are agents for owners, the shareholders. They should be treated the same way as football club managers. Your team performs badlly and you are promptly sacked. Preferably they should have only one or two year’s contracts, to be ended on expiry without compensation.”
By Brian Reading on Four ways to bring galactic executive pay back down to earth

 

Fintech is fashionable

In Banks on 04/04/2016 at 12:24 pm

NYT Dealbook reports

‘FINTECH’ BOOM SAID TO THREATEN BANK JOBS Up to 30 percent of employees in the banking industry could lose their jobs to new technologies over the next decade, Nathaniel Popper reports in DealBook.

A report by Citigroup said that the number of employees at American banks would drop to 1.8 million in the year 2025, down from 2.6 million last year. An even sharper drop is predicted for European banks.

The jobs would be lost to start-ups cutting into different parts of the financial industry.

The projection comes after Antony Jenkins, the former chief executive of Barclays, said that banking was facing a series of “Uber moments,” in which the jobs in the industry could halve.

Banks are already being forced by volatile market conditions and new regulations to make cuts.

The Citigroup report noted that the banking sector had attracted record investment over the last five years and that new technologies had taken off the fastest in Asia, particularly China.

New financial technologies have been slower to gain traction in the United States. But “given the growth in fintech investment, this isn’t likely to continue for long,” wrote Kathleen Boyle, the managing editor of Citigroup GPS, in the report’s introduction.

High flyer takes pay cut

In Banks on 28/03/2016 at 10:21 am

CEO of a big UK insurer left to head a big Swiss bank: more prestigious.

He gives  the lie the to Hard Truth that got to pay big bucks to attract talent to be minister. Either that or being minister is not a pretigious job. Btw, I once remarked that ministers needed “danger” money what with LKY’s “Off with his head” attitude even after he moved to the shadows.

FT reported last week:

Credit Suisse’s new chief executive Tidjane Thiam took a big pay cut to join the Swiss bank.

The bank’s annual report shows he was paid SFr1.58m for the six months he worked last year as well as a bonus of SFr2.86m, a package roughly in line with his predecessor Brady Dougan writes the FT’s Laura Noonan.

It annualises to SFr4.57m, a lot less than the £11.8m – or around SFr16.5m – Mr Thiam got for his last year at insurer Prudential. Credit Suisse paid SFr14.3m to buy Thiam out of his Prudential shares, the report showed.

Mr Thiam asked the board to cut his first bonus by 40 percent to reflect the challenging environment the bank was facing, and in solidarity with colleagues including those in global markets where the 2015 bonus pool was cut by 36 percent.

Pinoys big time money launderers

In Banks, Casinos on 19/03/2016 at 5:39 am

Brazen Heist of Millions Puts Focus on the PhilippinesThe country’s lightly regulated casinos and tough bank secrecy laws had prompted warnings from the United States and money-laundering experts before the theft.

The Philippine authorities cannot say what happened to the $81m sent to their country. Much of the money disappeared in its opaque casinos, which they say are not covered by rules to prevent money laundering (a worry in itself). The CCTV system at a bank branch where some of the money was withdrawn was not working.

(Economist)

DBS, OCBC, UOB: peanuts

In Banks on 18/03/2016 at 2:51 pm

They are tiny in private banking, not only globally but refionally too.

In October lat yr, it was reported by CBA DBS’ private banking arm is now the eighth largest in the Asia Pacific, according to a widely followed industry ranking released on Friday (Oct 16), after assets under management (AUM) grew by by 35 per cent last year.

Private Banker International (PBI), an industry journal, said DBS’s AUM for high-net-worth clients rose 35 per cent to US$73 billion last year, helped by the Singapore lender’s acquisition of Societe Generale’s Asian private banking business.

No where near the global giants

Global wealth

See if you can spot OCBC or UOB.

 

HoHoHo: Chinese banks have more problems

In Banks, China, Temasek on 16/03/2016 at 9:29 am

Funny that we don’t hear much in ST nowadays that Temasek has big, big stakes in Chinese banks. http://www.temasek.com.sg/portfolio/portfolio_highlights/majorportfoliocompanies.

Last yr, ST was boasting

http://www.straitstimes.com/business/companies-markets/temasek-raises-stake-in-chinese-bank-icbc

http://www.straitstimes.com/business/temasek-raises-stake-in-icbc-in-vote-of-confidence-after-rout

But maybe, ST’s cottoned on that Chinese banks have problems, big problems

NYT Dealbook reports

“CHINESE BANKS SWAP DEBT FOR EQUITY A new approach to managing China’s corporate debt burden offers temporary relief for banks, but spells difficulties for the country’s economy, Keith Bradsher reports in DealBook.

Deeply troubled companies are using stock to pay for overdue loans. On Thursday, a heavily indebted Chinese shipbuilder disclosed that it would issue equity to its creditors, instead of repaying $2.17 billion in bank loans.

Banks with stakes in indebted companies are likely to be even more reluctant to shut them down, leaving China with enormous overcapacity in sectors like shipbuilding, steel and cement, hampering growth for years to come.

The strategy has advantages – it would allow companies to cut their debt loads. This could help their credit profiles and keep their businesses running. Bank loan books will also appear healthier, since they can reduce the amount of past-due loans.

However, it could make problems more pernicious as the companies are putting off hard choices like laying off employees or closing operations.

It is still unclear how widespread the strategy has come. The shipbuilder, China Huarong Energy Company, had to disclose the move only because it is listed on the Hong Kong stock market. It is one of dozens of Chinese shipbuilders in financial distress as prices for new ships worldwide have halved in the last two years.”

And there’s another related problem

http://blogs.reuters.com/breakingviews/2016/03/11/china-debt-swap-could-leave-banks-in-capital-hole/

HSBC: Cut ang moh, Indian layabouts

In Banks, Hong Kong, India on 23/02/2016 at 7:06 am

People and assets.

HSBC’s so-so results prompts th=hs analysis. Results fr 2015 were flat after an expected US$1,9bn  4Q pre-tax profit turned into a loss of US$858m.

As at August 2015, Asia accounted for 69% of HSBC’spre-tax profits. And HK, China is where the money is minted.

Well these show that ang mohs and Indians: people and assets are lazing in the sun.

 

HSBC

Yes India is in Asia but look at the number of Indians employed, more than the Honkies. HK is the place that HSBC makes its money, not india but there are more Indians working for HSBC than Hongkong people.

Related post: StanChart’s very own Little India.

Update at 10.45 am: http://blogs.reuters.com/breakingviews/2016/02/22/hsbc-shares-weighed-down-by-fear-of-future/

Update at 4.30pm; From NYT Dealbook: HSBC’S FOURTH-QUARTER LOSSES HSBC, Britain’s largest bank by assets, posted a loss of $1.33 billion for the three months ending Dec. 31,Chad Bray reports in DealBook. It had posted a profit of $511 million in the fourth quarter of 2014. Before taxes, the bank posted a loss of $858 million.

The bank also revealed in its earnings statement that it was under investigation by the Securities and Exchange Commission over its hiring practices in Asia. Several banks are under scrutiny after the commission opened an inquiry into whether JPMorgan Chase hired the children of powerful officials to help win lucrative business contracts.

HSBC did not give any further details on the investigation.

Its results were weighed down by restructuring costs, provisions for legal and regulatory matters, loan impairment charges and provisions for credit risk.

The bank is in the process of reshaping its operations, shedding tens of thousands of jobs, selling underperforming businesses and shrinking its global investment banking business.

“China’s slower economic growth will undoubtedly contribute to abumpier financial environment, but it is still expected to be the largest contributor to global growth,” Douglas Flint, the HSBC chairman, said in a news release.

Why banks sell-off is worrying

In Banks, Financial competency on 12/02/2016 at 6:00 am

This NYT Dealbook piece  appeared on Tuesday morning NY time. Relevant given what keeps happening since then. Gd description of the worries

INVESTOR NERVOUSNESS OVER BANKING GIANTS Worries about the world’s biggest banks have already played out in the stock markets as their shares have plunged, but there are also ominous signs in markets used to bet on the creditworthiness of large financial firms, Peter Eavis reports in DealBook.

The KBW Nasdaq Bank Index, a benchmark for the banking sector, was down more than 3 percent on Monday and had lost nearly 20 percent of its value this year.

Investors are rushing into benchmark government bonds, too. The yield on the 10-year Treasury note has declined, while the price of gold is rising. TheVix volatility index, also known as Wall Street’s fear gauge, has risen.

When investors sell bank shares or bet against the banks in credit markets, it can be a signal of more serious turbulence. It suggests that banks – usually the gears of an economy, transmitting credit to firms and households – are becoming more vulnerable to market volatility and underlying economic weaknesses.

The declines in bank shares may not indicate that banks are particularly fragile, but that investors are skeptical about their abilities to earn solid profits in the future, partly because of ultralow interest rates around the world.

Still, it doesn’t look too optimistic with Citigroup’s stock trading at nearly half the bank’s book value and European banks grappling with their own problems, which have contributed to the recent deep declines in their stock.

Fears about the health of the world’s banks continued to drag stocks down in Asia and Europe on Tuesday, Reuters reports. The Nikkei plunged more than 5 percent and investors stampeded for haven assets like the yen and gold.

Fears about the global economy also pushed the yield on Japanese 10-year bonds, the benchmark of government borrowing, down to zero for the first time, as Jonathan Soble reports in The New York Times. They quickly fell into negative territory, meaning some investors were buying bonds despite knowing that if they held them until maturity, they would come away with less money than they paid.

HOHONOHO: StanChart’s expected results

In Banks, China, Commodities, Emerging markets, Temasek on 26/01/2016 at 4:24 am

StanChart which suffered the biggest share price falls this year, will announce its results on February 23. Analysts expect it to report an 85%  fall in earnings per share, FT reports.

Last yr it was the second worse performer on FT100, down 47%, I think.

One analyst says there is debate that its business model is fundamentally broken. Another says that its strategic review released in Nov shows that it’s a collection of biz, none of whch cover their cost of capital.

Whatever China and other emerging mkts are in trouble and StanChart is an emerging markets bank. Until these mkts recover, StanChart can only cut costs (Sack more staff from Little India Marina Bay? Move jobs from London and S’pore?) and be more efficient.

HoHoNoHo

Updated at 5.00am

Chart: Troubled EM debt at record high

HoHoHo, PM must be proud

In Banks, China, Temasek on 19/01/2016 at 7:03 am

DBS, StanChart kanna mark by China for gaming the Chinese FX regome:

FT reported last week:

The latest tightening comes after the central bank temporarily suspended some foreign banks in China, including Standard Chartered, Deutsche Bank and Singapore’s DBS, from conducting certain foreign exchange transactions designed to arbitrage the gap between the onshore and offshore renminbi exchange rates.

HSBC is really an old friend of China. It may be the bank of choice for Chaqco and other Mexican drug lords, but it doesn’t game PRC regulations.

HoHoHo, StanChart’s a nightmare BUT don’t panic

In Banks, China, Temasek on 06/01/2016 at 1:09 pm

StanChart yesterday fell a further 1.7%, although it remained off the previous session’s intraday low.

In 2015, it was the second worst performer in the UK’s FT 100 index, falling 47%

From FT

Matthew Sutherland, investment director for Asian equities at Fidelity International said wild rides in regional stocks are likely to be the norm for 2016. “We’d better get used to it,” he said.

It’s important that investors don’t panic on weak days, but continue to take a disciplined and calm approach to investing. This is particularly true with regard to China. Yes, China’s growth is slowing, but the quality of that growth (in other words more consumption and less debt-fuelled investment) is far more important, and the difficulties are more than discounted in cheap valuations.

Accentuating the positive, he adds:

The really good thing is that the Chinese stock markets are very broad, which enables us to find lots of great bottom-up ideas irrespective of the macro environment.

Coming back to StanChart, on 15th Dec it led a London market rally on after JPMorgan Cazenove argued that the bank is at least 50 per cent undervalued versus peers.

Capital concerns have been addressed by StanChart’s $5.2bn rights issue, said JPMorgan, which was joint co-ordinator and underwriter to the cash call.

It forecast that, even if loan defaults return to the levels of the 1997 Asian crisis, StanChart’s capital buffer will remain within management’s target range.

Downside protection comes from StanChart’s new strategy to shrink risk-weighted assets by a third and move away from low-return business, with rising US interest rates providing a tailwind, JPMorgan said.

Yet the shares are trading at half their 2016 tangible net asset value and are on less than 10 times next year’s earnings, falling to just five times earnings in 2018, it forecast.

JPMorgan repeated an 870p target price on StanChart, which gained 6.4 per cent to 512.7p.

(FT)

 

“Prudent banker” is an oxymoron

In Banks, Financial competency on 04/01/2016 at 2:29 pm

Here’s a comment from an FT reader which promoted the above headline.

Where do we find bankers that understand prudent lending?

“What is wrong with lending more money into the Chinese stock market?” Chinese banker recently

“What is wrong with lending more money into real estate?” Chinese banker last year

“What is wrong with lending more money to Greece?” European banker pre-2010

“What is wrong with a NINA (no income no asset) mortgage?” US banker pre-2008

“What is wrong with lending more money into real estate?” US banker pre-2008

“What is wrong with lending more money into real estate?” Irish banker pre-2008

“What is wrong with lending more money into real estate?” Spanish banker pre-2008

“What is wrong with lending more money into real estate?” Japanese banker pre-1989

“What is wrong with lending more money into real estate?” UK banker pre-1989

“What is wrong with lending more money into the US stock market?” US banker pre-1929

It’s a global problem.

HoHoHo, StanChart’s rights issue is juz first-aid

In Banks, Financial competency, Temasek on 18/12/2015 at 12:59 pm

Temasek is willing to give Standard Chartered (STAN.L) time to work on its turnaround before deciding on the fate of its underperforming $4 billion (3 billion pounds) stake in the UK bank as part of a portfolio reshuffle, people familiar with the matter said.

“Temasek is giving them time. They’ve had a lot of engagement with the board, and Bill has sort of managed expectations in terms of turning this ship around,” said one of the people familiar with Temasek’s thinking.

Temasek declined to comment.

It was not clear how long Temasek will wait to see the results of the restructuring.

By subscribing this month to its allotted portion of Standard Chartered’s $5 billion share sale, the Singapore investor has buttressed that position for now. But Temasek may become increasingly uncomfortable with the investment if shares in the bank do not recover.

Its paper loss on the Standard Chartered investment was $1.2 billion, excluding dividends, just on the 12 percent stake it bought in 2006, according to calculations by Reuters. Temasek raised its stake to 18 percent in December 2007. Since then Standard Chartered’s shares have lost about two-thirds of their value.

http://uk.reuters.com/article/uk-temasek-strategy-idUKKBN0U003N20151217

StanChart completed its rights issue late last week. What the local MSM doesn’t tell us

StanChart .. has suffered because of poor peer-market conditions since it priced its shares. But investors, even though they took up almost all of their rights, are also giving a vote of diminished confidence. After StanChart old shares were shorn of the right to buy new shares on Nov. 23, the stock fell to 15 percent below its theoretical settling price. And the 9.8 percent further fall since then is worse than the decline in the Euro Stoxx Banks index.

That’s perhaps not surprising. StanChart, under new boss Bill Winters, is years from earning a return above its cost of equity. Since the new money will mostly go to bolstering the balance sheet rather than promoting productive lending, the return on the new money may be even lower. That might explain why, while Lonmin seemingly faces graver challenges, it’s StanChart to whom the market has blown a bigger raspberry.

 

 

HoHoFo: StanChart gets E grade in UK test

In Banks, Temasek on 02/12/2015 at 4:41 am

Royal Bank of Scotland and Standard Chartered were the weakest of Britain’s seven largest lenders in a Bank of England stress test.

For the second year, the central bank has subjected the UK’s biggest lenders to tests to measure whether they would survive a financial shock.

This time, it was assumed that oil had fallen to $38 a barrel and that the global economy had slumped.

No bank was ordered to come up with a new capital plan.

Out of the seven banks tested, RBS and Standard Chartered were found not to have enough capital strength, but both took steps to raise capital …

Standard Chartered’s chief executive Bill Winters said: “The results of the test demonstrate our resilience to a marked slowdown across the key markets in which we operate.

“The test was conducted on our balance sheet as at the end of 2014. Since then we have made further significant progress in strengthening our capital position.

“We are operating at capital levels above current minimum regulatory requirements and have a number of additional levers at our disposal to further manage capital.”

http://www.bbc.com/news/business-34972092

HoHoHo, next yr’s test will be harder still.

http://www.bbc.com/news/business-34972092

The UK’s banking sector is heavily (relatively) exposed to China much more so than other countries by a country mile. The exposure is concentrated between HSBC and Standard Chartered. Loan exposure to China represents around 30% of their loan books.

By compaeison our local banks’ exposure is “peanuts”.

Btw, Aberdeen Asset Mgt is a top 10 shareholder in both banks.

US banks: Here we go again

In Banks on 27/11/2015 at 2:21 pm

Banks seem to lurch from ome crisis to another. From NYT Dealbook

BANKS WEIGHED DOWN BY PILES OF LEVERAGED LOANS Investors have grown skittish about buying the debt of companies with weak credit ratings, leaving big Wall Street banks stuck with piles of debt, Peter Eavis and Leslie Picker report in DealBook. They are starting to book multimillion-dollar losses writing down the value of these positions.

Banks make loans to companies with junk credit ratings in the hope of selling the debt on to investors that include mutual funds, hedge funds and entities called collateralized loan obligations. Investors snap up the debt obligations, attracted by high returns.

The investment banks that focus on the market appear to be sitting onpotential losses that may exceed $600 million.

Private equity firms finance their purchases of companies with the loans, then put the debt on the balance sheet of the acquired company.

A large part of the paper losses comes from debt issued by Veritas, the software company that Carlyle Group is buying in a $5.5 billion leveraged buyout. Morgan Stanley and Bank of America led the transaction and a lack of demand for the debt has left it on the books of the banks.

The hits are a fraction of those suffered by the banks in the 2008 financial crisis and the market for such debt may well recover, but this could weigh on merger activity. Banks that are unable to sell debt may become more stringent in their lending for acquisitions.

If the Federal Reserve raises interest rates next month, that could limit the flow of money that has buoyed speculative markets, including the one for leveraged loans, in recent years.

Banking regulators had discouraged leveraged loan deals that would overburden companies with debt after the crisis, but the market has still ballooned.

Banks do put financial cushions in deals to protect themselves, but on some deals the prospective prices have fallen so far that they might havedropped through those buffers, leaving the banks at a loss.

End of private banking boom in Asia?

In Banks on 23/11/2015 at 12:56 pm

Citigroup plans to double the number of wealth management clients in Asia in the next five years to one million, as the bank seeks to capitalise on an emerging middle class in the region.

Going by Citi’s track record in joining any party when it’s about to end (sub-prime lending, commerical property lending etc) our local banks who are trying to get big in privaye banking should be wary.

DBS’ private banking arm is now the eighth largest in the Asia Pacific, according to a widely followed industry ranking released on Friday (Oct 16), after assets under management (AUM) grew by by 35 per cent last year.

Private Banker International (PBI), an industry journal, said DBS’s AUM for high-net-worth clients rose 35 per cent to US$73 billion last year, helped by the Singapore lender’s acquisition of Societe Generale’s Asian private banking business.

“Other factors that contributed to (DBS’) success are a focus on digital banking, innovation, and the ability to retain customers as their individual wealth grows,” it added.

PBI had ranked DBS number nine in its previous ranking. Overall, PBI estimates that total AUM in Asia Pacific increased by 12 per cent to US$1.54 trillion last year.

(CNA sometime back)

Crying all the way to the bank

In Banks on 12/11/2015 at 2:17 pm

Despite a bad yr with losses mounting.

Or should this be “Laughing all the way to the bank with the investors’ money”?

From NYT’s Dealbook

BONUS PAY ON WALL STREET LIKELY TO FALL Bonuses in the financial industry this year are expected to fall 5 to 10 percent, Nathaniel Popper reports in DealBook. It will also be the first year since 2011 thatcompensation for the whole industry is expected to drop, according to a report by the compensation consulting firm Johnson Associates.

There are still some bright spots in private equity and mergers-and-acquisition work, but most of the industry is struggling. The report expects end-of-year compensation in investment and commercial banking to be down 30 percent from 2009 levels.

Business lines requiring less capital, often because they are considered less risky, are seeing better returns and bonuses. For bankers advising on mergers and acquisitions, incentive payments are expected to be 15 to 20 percent higher.

Asset management requires less capital but will experience a 5 percent drop in bonuses this year as the business struggles with tepid markets and economy. The sharpest decline is expected in fixed income, where bonuses are predicted to drop 10 to 20 percent this year.

Finance remains one of the most generously paid industries in the world. The average securities industry bonus was $172,860, according to the New York State comptroller’s office.

But it is facing challenges from new regulation, slow economic growth and competition from new, technologically oriented competitors.

European banks have had to cut back and make changes to management.American banks have fared better, but companies like Goldman Sachs and Morgan Stanley have been turning in disappointing results. Alan Johnson, founder of Johnson Associates, said companies would have to cut costs significantly in the months ahead.

He noted that the ripple effects mean that Wall Street is losing its allure for the most talented young potential recruits who receive better offers from tech companies in Silicon Valley.

“In the last few years, it’s become a real issue,” he added.

A TOUGH YEAR FOR HEDGE FUNDS, BUT NOT REAL ESTATE Hedge funds have had a tough year with volatile markets, but hedge fund managers remain incredibly wealthy, Alexandra Stevenson and Matthew Goldstein report in DealBook. Larry Robbins, the hedge fund manager who founded Glenview Capital Management, bought a Manhattan penthouse on the Upper East Side with sweeping views of both the Hudson River and the East River for $37.9 million this summer.

Mr. Robbins’ real estate deal comes at a trying time for his $8.8 billion hedge fund. Last week, he apologized to investors for losing 15 percent of their money so far this year.

“I’ve failed to protect your capital,” he wrote in the seven-page mea culpa. He promised to forfeit his pay for this year.

Mr. Robbins has still managed to profit handsomely over the years from his firm’s performance and has a net worth of $2.3 billion.

His new apartment in the Charles condominium on First Avenue will be used as a second home. His primary residence is a sprawling estate on over four acres of land in Alpine, N.J.

Mr. Robbins is neither the only one splashing out on property, nor the only one whose hedge fund is struggling.

William A. Ackman, the founder of Pershing Square Capital Management, is part of a group of investors that this year closed a deal to pay $91.5 million for a six-bedroom apartment at One57, a luxury residential tower in Manhattan. Pershing Square is down 19 percent so far this year.

Last Deepavali in Marina Bay’s Little India?

In Banks, Holidays and Festivals, Humour on 10/11/2015 at 12:52 pm

A CNA story* on Sunday said that StanChart will be cutting jobs here in Technology and Operations. Now this is an area dominated in StanChart by FTs from India like two-timing New Citizen Raj**

That brings to mind the following:

FT reported that India is so impt to StanChart that it’s planning to set up a subsidiary so that it can expand its branch network there. A wag commented: “In Singapore there is an area known as “Little India” (I had lunch in the area yesterday). Go into the offices of StanChart’s regional office here and any S’porean would think that “Little India” has expanded into the Marina Bay area.”

Marina Bay’s Little India, will be no more? This will be the last Deepavali in StanChart’s Marina Bay office? Next yr will be the first Chinese New Year there?

——————————-

*Following Standard Chartered’s announcement that it will axe 15,000 jobs globally, the bank has declined to reveal how many of these job losses will come from Singapore.

However, recent high-profile departures are said to include the bank’s global head of FX research Callum Henderson and global head of aviation finance Simon Perkins.

A source familiar with the Asia-focused British lender told Channel NewsAsia on condition of anonymity that Technology and Operations is an area in Singapore targeted for cuts.

When contacted by Channel NewsAsia on Friday (Nov 6), a StanChart spokesperson said a large number of the total headcount reductions will be through attrition. The spokesperson said the bank was unable to provide further details at this point in time.

Standard Chartered currently employs around 7,000 people in Singapore.

The bank on Tuesday said it will cut 15,000 of 86,000 jobs around the world, meaning that nearly one in five employees will lose their jobs.

**I understand that New Citizen Raj works in StanChart.

StanChart: What ST doesn’t tell S’poreans

In Banks, Corporate governance, Temasek on 06/11/2015 at 4:26 am

And neither did BT or MediaCorp.

The constructive, nation-building media should have reported or analysed or quoted analysts that

— Temasek could have prevented the problems from growing out of control by kicking previous mgt’s ass* when yellow lights were flashing Ang moh tua kee isit? HoHoHo);

— the shake-up restructuring plans are underwhelming investors (shares have fallen over 11% this week; and

— the changes will not be that rewarding.

It’s not me, or TRE cybernuts or Uncle Redbean (they too didn’t), it’s the UK’s Guardian that writes:

The big long-term shareholders – Temasek, from Singapore, and our own Aberdeen Asset Management – are obliged to sound supportive, swallow the lack of a final dividend and back the rights issue. But they should also look in the mirror. The market smelled trouble at Standard Chartered for at least two years, but the pressure from the wings rarely rose above the level of mumbles. Temasek and Aberdeen were too willing to believe the boasts from the highly remunerated boardroom about Standard Chartered’s specialness.

The consequences of delay are now horribly clear: a decade of chasing growth will be followed by half a decade of clean-up and cost-cutting. This story could have been different.

http://www.theguardian.com/business/nils-pratley-on-finance/2015/nov/03/standard-chartered-fails-to-realise-resilience-boasts

Yup it could have been different. Temasek has an over 20% stake in StanChart which should give it a strong voice, if it uses it.

And the MSM doesn’t tell us that some analysts are not impressed by the plans to launch a capital raising, cut 15,000 jobs, slash almost 30% of its $10bn cost base and restructure almost a third of its US$315bn risk-weighted assets.

In fact credit rating has juz been downgraded by Fitch Ratings in the latest sign that the new strategy is not being well received.

And finally the MSM doesn’t tell us that the clean-up will not bring great rewards

Yet these rewards are humdrum and distant. StanChart expects return on equity to remain below 10 percent until 2020. That’s no better than troubled investment banks like Deutsche Bank. A further economic slowdown in its main markets, or increased regulatory demands, could throw it off course. Even after a 10 percent drop on the morning of Nov. 3, StanChart shares trade on about 80 percent of tangible book value, after adjusting for the rights issue. With a long slog ahead, it’s hard to see much upside.

http://blogs.reuters.com/breakingviews/2015/11/03/stanchart-faces-years-of-pain-for-humdrum-gain/

Here’s another interesting insight

Never believe a big bank that boasts that its culture is so different: its lending principles conservative, its business immune to the traditional banking vices of over-confidence, over-expansion and bad behaviour.

For a decade, Standard Chartered told us that its rising income and profits flowed from a unique winning formula. Here was chairman John Peace in the annual report a few years ago describing the supposed magic: “2012 was another year of good performance for Standard Chartered, thanks to a consistent strategy, a stable management team, supportive clients, customers and shareholders, and, above all, our great people.”

(Guardian)

——————————–

*It was already unhappy over corporate governance over the number of executive directors on the biard and had expressed its unhappiness publicly by voting against the  reappointment of the executive directors yrs ago when the bank was a jewel in the Temasek portfolio and management were considered geniuses.

HoHoHo: Relying on mgt incompetence at StanChart

In Banks, China, Emerging markets, India, Temasek on 11/10/2015 at 6:22 am

Standard Chartered has to hope that a quarter of its top brass really aren’t very good at their jobs. That is the portion of the UK-listed emerging markets bank’s 4,000 most senior staff who will find themselves surplus to requirements, Reuters reported on Oct. 9. Although StanChart could gain from a big cull, it’s a risky move.

http://blogs.reuters.com/breakingviews/2015/10/09/stanchart-takes-bet-on-management-incompetence/

So should HoHoHo and us S’poreans.

Will ang mohs or Indians get terminated? Not many Chinese to sack despite 50% of revenues related to China business. (Related post: StanChart is Little India)

More for HoHoHo to ponder when she returns to work

StanChart’s shares have underperformed the European peer group by 30 percentage points this year. The bank’s 7.7 percent return on equity in 2014 was unacceptable, especially as it was earned on a relatively low 10.7 percent Basel III capital ratio.

— Some bearish analysts reckon Winters should completely cover the bank’s $8.7 billion of non-performing loans to better match Asian peers like DBS. That would cost $4 billion, more than StanChart’s expected $3.1 billion of forecast 2015 pre-tax profit.

HoHoHo: StanChart’s capital shortfall

In Banks, China, Emerging markets, Temasek on 09/10/2015 at 1:08 pm

FT reported earlier today:

Goldman Sachs analysts predicted on Thursday that StanChart would face an estimated capital shortfall of $4bn in the Bank of England’s stress tests, which measure how the lender would fare in an emerging markets crisis.
But Goldman estimated that StanChart could cover this shortfall by selling its stakes in several Asian lenders and exiting low-returning clients and businesses, such as its smaller retail branch networks.

Related post: Why Little India now includes Marina Bay

But let’s be fair: When emerging mkts and commodities (StanChart has high levels of lending to the crumbling commodities sector) were fashionable 9lucrative) it was the right bank to be invested in. FYI according to Nomura 50% of its revenue is related to China.

Given  the exposure to China by HoHo Ho and GIC, ttme for Ah Loong to call Xi and offer him advice on how to fix the Chinese economy? Can lend him Tharman who is lauded in int’l circles.