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Archive for the ‘Banks’ Category

Cyprus’ “unique service”

In Banks on 25/03/2013 at 4:40 am

“Cyprus is not just an island in the sun. We have developed a unique service sector which was based on confidence in the banking system,” George Vassiliou, a former prime minister, told the Guardian recently.

The “unique service” was laundering “dirty” money from Russia.

HSBC lords it over its peers in Asia

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

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

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

M’sia: Banking & politics

In Banks, Malaysia on 11/03/2013 at 2:49 pm

CIMB has a very gd CEO who made the bank a regional player bigger than DBS by managing to pick-up a controlling stake in an Indon bank during the 2007 financial crisis at a song (usually foreigners get screwed in Indonesia), and the rest is history. Everyone else is now playing catch-up including MayBank.

Sadly, if BN does not win a two-thirds majority in the coming general elections, he will out on the street. As the election result is expected to be close, CIMB executives are assuming whoever wins, he will go. He is the younger brudder of the PM, and if BN does not win a two-thirds majority, he will be defenestrated, and younger brudder will follow.

But it’s always like that in M’sia. The CEOs, and controlling shareholder (unless it is a govt agency) are always vulnerable when there is a change of PM, or when there is an unsuccessful attempt to replace a PM.

Contrast HSBC with StanChart

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

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

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

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

 

 

Asean round-up

In Airlines, Banks, India, Indonesia on 09/03/2013 at 7:09 am

The Mitsubishi UFJ Financial Group “is among banks considering a purchase of TPG Capital’s $1.6 billion stake in Indonesia’s PT Bank Tabungan Pensiunan Nasional, two people with knowledge of the matter said,” Bloomberg News reports.

A bid by Malaysian low-cost carrier, AirAsia, to set up an airline in India has won approval from the Indian government.

It would be the first foreign company to try to capture the rising demand in India’s aviation sector.

AirAsia India would be a joint venture with the well-known Tata Group, based in Chennai in South India.

India’s aviation industry, which has suffered major losses, was opened to foreign investment last year.

The government now allows foreign companies to own up to 49% of a local airline.

AirAsia, which is Asia’s largest low-cost carrier, will make an initial investment of 800m rupees ($15m; £10m) and will own 49% of the new airline, while Tata Sons will have a 30% stake. Part of BBC report

Citi sees shareholders* no ak, ignores their wishes

In Banks, Corporate governance, Temasek on 07/03/2013 at 5:37 am

Citigroup Makes Preparations for Profit-Sharing Plans Executives of Citigroup “stand to collect $579 million under profit-sharing plans that include the one shareholders voted against last year. The lender booked a $246 million expense in 2012 tied to the plans, adding to $285 million for the previous year and $48 million in 2010, according to regulatory filings,” Bloomberg News reports.

Charles Peabody, an analyst with Portales Partners LLC in New York, said the payouts are difficult to justify given last year’s shareholder rejection. Peabody, who told clients in a 2011 note that he was “dismayed” by the lack of stringent financial thresholds in that year’s plan, said today that Citigroup hasn’t done enough to tie pay to performance.

“The compensation plan was a travesty,” said Peabody, who has an underperform rating on the shares. “Citi’s board and management team continue to make a mockery of shareholder, political and regulatory demands that compensation reflect performance.” …The profit-sharing payouts are on top of annual salaries and bonuses granted to senior executives …

… Citigroup’s use of pretax profit to grant awards “sets the bar too low,” said Hodgson, the compensation analyst. “They’re not looking at anything else apart from pretax income, which is just not a good enough measure of a bank’s performance.”

*GIC still has a slug of Citi

Bang balls Temasek haters: Standard Chartered’s Profit Rises Despite U.S. Fine

In Banks, Temasek on 06/03/2013 at 10:07 am

Standard Chartered posted a slight increase in annual net profit in 2012. Its businesses in emerging economies offset a US$667 million fine in the United States connected to illegal money transfers.net income rose less than 1, to US$4.8 billion, compared with 2011, while revenue rose 8%, to US$19.1 billion. It was the 10th consecutive year that Standard Chartered had reported a yearly increase in its profit. Its vast operations across Asia, Africa and the Middle East helped protect the bank from many of the problems affecting developed economies like the United States and Europe … Standard Chartered has continued to expand in emerging markets by taking advantage of growing demand for financial services from both local companies and international entities looking to invest.

The bank said its operating income in China grew 21 percent last year, to $1 billion, as it benefited from expanding its local branch network sixfold since 2003. Standard Charted said it was now active in 25 emerging economies where its annual growth was in double digits.

http://dealbook.nytimes.com/2013/03/05/standard-chartereds-profit-rises-after-u-s-fine/?nl=business&emc=edit_dlbkam_20130305

DBS: Why it needs to buy Temasek’s stake in Danamon

In Banks, Indonesia, Uncategorized on 14/02/2013 at 9:30 am

Indonesian lenders the most profitable among the 20 biggest economies in the world, according to data compiled by Bloomberg. The average return on equity, a measure of how well shareholder money is reinvested, is 23 percent for the country’s five banks with a market value more than $5 billion … Returns in Indonesia, Southeast Asia’s largest economy, are driven by net interest margins, the difference between what banks charge for loans — an average of 12 percent, according to the central bank — and what they pay for deposits. The average margin for the country’s big banks is 7 percentage points, the highest of the 20 economies … Indonesia’s high net interest margins have prompted banks such as DBS Group Holdings Ltd. in Singapore, where the figure averages 2 percent, to look at acquisitions. DBS, Southeast Asia’s biggest lender, made a $6.8 billion bid in April for 99 percent of Bank Danamon and is awaiting regulatory clearance.

http://www.bloomberg.com/news/2013-02-04/world-s-most-profitable-banks-in-indonesia-double-u-s-returns.html

UOB and OCBC have an easier time because of their relatively large M’sian contributions to earnings. Malaysia is generous to its banks.

DBS’s core markets of S’pore and HK are very competitive and mature markets.

Asean round-up

In Banks, Telecoms, Temasek, Vietnam on 02/02/2013 at 7:08 am

In Vietnam, the government’s planned sale of a 20% in Sabeco, a brewery,  is expected this year, according to bankers.

Wilmar, one of Asia’s largest agribusinesses, and Cargill, the commodities’ trader are setting up in Burma.

18 companies, including Malaysia’s Axiata, Norway’s Telenor Group, parent of the Thai mobile operator DTAC, Digicel, the Caribbean based operator, and two Singaporean companies, Singapore Telecommunications, one of southeast Asia’s biggest telephone companies, and ST Telemedia, a unit of Temasek Holdings, have submitted proposals for the two telecoms licences

The Burma has abolished a 25-year-old ban on public gatherings of more than five people: more liberal than S’pore.

Malayan Banking Bhd (Maybank) has made a US$100 million capital injection into its Philippines operations.The banking group, the fourth largest in the region, on the previous Friday launched a new corporate head office in Manila and announced plans to double its number of branches in that country to 100 by 2014, and thereafter to 200 by 2018, Malaysia’s Business Times said.

It currently has 54 branches there, with another expected to open in the city of Davao by the end of this month.

Maybank Philippines Inc (MPI), which has been operating since 1997 and is now the 24th largest bank by assets, may eventually go for a listing there. The Philippine central bank had last year issued a directive, requiring banks controlled by their foreign counterparts to go for a listing on the Philippine Stock Exchange.

SMEs: Problems getting finance, but govt U-turn on FTs?

In Banks, Economy on 31/01/2013 at 4:53 am

http://sbr.com.sg/financial-services/news/over-half-singapore-smes-application-financing-got-rejected-in-2012

And wonder if the SME financing target mentioned in this BT report from sometime in the middle of 2012, was met. As not heard any more, I suspect not.

UP to $175 million of the $250 million the government has earmarked for investment in small- and medium-sized enterprises under the first phase of its public-private co-investment funding programme for local SMEs will be seeded with private equity funds by year-end.

The programme includes a fund-of-funds called the SME Catalyst Fund, which the $175 million investment falls under, and a direct co-investment fund called the SME Co-Investment Fund.

This means that some $350 million will be placed with the PE funds by the end of this year for investment in SMEs, as the private sector has to match dollar-for-dollar what the government is putting with the PE funds.

The $350 million is part of the first phase of the co-investment fund that is expected to come up to $500 million – $250 million from the government, and the other half from private sector capital.

As to whether the White paper on population reflects a U-turn on the policy of starving SMEs of cheap FTs, only time will tell. Watch and wait. Remember the WP was bitching in parly about the shortage of labour among SMEs. Chinese-owned SMEs fund the WP.

Jappo banks step up presence in ASEAN region

In Banks, Japan, Vietnam on 29/12/2012 at 10:09 am

This week:

— Mitsubishi UFJ (MUFJ), Japan’s biggest bank, bought a 20%  stake worth US$743m  in state-owned VietinBank, the largest-ever merger or acquisition deal in Vietnam’s banking sector. The deal aims to boost “support for Japanese companies operating in Vietnam”, Bank of Tokyo-Mitsubishi UFJ president Nobuyuki Hirano said, and to tap South-east Asian markets; after seeing its profits tumble this year, like other Jappo banks.

The Japanese bank last month reported profit in the six months to September dived 58 per cent year on year to US$3.6 billion, due partly to declines in stock holdings.

VietinBank, or Vietnam Joint Stock Commercial Bank for Industry and Trade, said State Bank of Vietnam will still own the majority of its shares. For the record, it is Vietnam’s second largest bank by asseys.

— SMFG said it plans to expand its consumer finance business to target the growing middle classes in South-east Asia.

The new Greater East Asia Co-Prosperity Sphere?

BANZAI!

No ASEAN round-up this hols week.

HSBC: great customer & shareholder service

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

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

And its continuing to try to improve investor returns:

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

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

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

StanChart not looking too gd

In Banks, Temasek on 15/11/2012 at 6:33 am

Standard Chartered graphic
“Analysts at Barclays recently highlighted concern over StanChart’s bad debt trends, evident in a 42 per cent increase in loan impairments in the first half of the year, compared with pre-tax profit growth of only 9 per cent,” reports FT. The growth is fastest since 2002.

So as StanChart still trades at a 25% to HSBC (1.5x book value versus 1.2X), this may account for the stories that Temasek wants out of its stake.

HSBC: Better than the average bank

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

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

 

 

Reasons why Cina banks deserve their deratings

In Banks, Temasek on 31/10/2012 at 10:18 am

 http://blogs.reuters.com/breakingviews/2012/10/30/three-reasons-chinas-banks-deserve-their-derating/

For the record, Temasek has big stakes in three of the four biggest banks. Cheong all the way?

Citi: Last dog in the race

In Banks, Corporate governance, GIC on 23/10/2012 at 5:15 am

http://www.businessweek.com/articles/2012-10-18/a-daunting-to-do-list-for-citigroups-new-ceo#p1

And we own a big chunk of it still. ((((((

FT’s banking editor suggested that it could be split five ways: “into an equity and fixed-income trading entity; an advisory platform; a US retail bank network; a global trade finance shop; and an emerging markets retail bank.” [This para added at 6.07am on day of publication.]

CIMB, OCBC interested in stake in Thai bank

In Banks on 09/10/2012 at 5:32 am

OCBC and CIMB have signed non-disclosure agreements as they consider bidding for General Electric’s stake in Bank of Ayudhya, Bloomberg News reports. MayBank is interested as usual, but doing nothing, as usual. I’m surprised that OCBC is interested.  

Bank of Ayudhya is Thailand’s top or second-ranked provider of credit cards, car loans and personal finance, having bot businesses from HSBC, GE and AIG, among others.

StanChart: Troubles never come singlely

In Banks, Indonesia, Temasek on 02/10/2012 at 6:44 am

The British bank where Temasek has a controlling stake of 19%, which agreed in August to pay the New York state’s top banking regulator US$340 million to settle money-laundering allegations (and in the process making a PAP apologist look even more stupid: he attacked the NY regulator as a “rogue prosecutor”), may be at risk of losing money on a US$1 billion loan to an Indonesian tycoon to buy shares in an Indon mining company*controlled by the family of an indon presidential candidate. He bought the shares at abt 11 sterling last yr. Now under 150 pence.

http://dealbook.nytimes.com/2012/09/27/standard-chartered-next-worry-a-1-billion-indonesian-loan/?nl=business&emc=edit_dlbkam_20120928

In the 70s and 80s, StanChart was the go-to bank for goofs but in the 1990s and noughties (aside from employing one TJS) it gained a reputation as a bank that didn’t do silly things: not anymore.

So far in the scheme of things, the losses are “peanuts”. Let’s hope there is no mega encore.

—–

*Related post: https://atans1.wordpress.com/2012/09/25/indonesia-even-friends-get-screwed/

Time for a SME bank?

In Banks on 22/09/2012 at 5:58 am

Even the  govt in UK is setting one up to bring together ‘alphabet soup of existing schemes’ http://www.guardian.co.uk/business/blog/2012/sep/03/business-bank-george-osborne.

http://www.bbc.co.uk/news/business-19641548

We too have  ‘alphabet soup of existing financing schemes’ to help SMEs. But SMEs are always asking for more for whatever reason.

And this. A new institute has been set up to offer subsidised business consulting for SMEs. United Overseas Bank (UOB) and the Singapore Management University (SMU have set up the UOB-SMU Asian Enterprise Institute,  which aims to equip local firms with information and expertise to help their regional expansion.http://www.channelnewsasia.com/stories/singaporebusinessnews/view/1227153/1/.html

MayBank touted as buyer of Thai bank stake

In Banks, Malaysia on 14/09/2012 at 6:43 am

General Electric is analysing options for its US$2.1 bn stake (33%) in Bank of Ayudhya. MayBank touted as possible buyer.

http://www.bloomberg.com/news/2012-09-12/ge-said-to-weigh-possible-sale-of-bank-of-ayudhya-stake.html

Buying this stake would add one more piece to the jigsaw being built after the purchase of Kim Eng (has big presence in Thai stk mkt). As usual MayBank is playing catch up to CIMB.

Update on Citi: New Citi, old Citi

In Banks, GIC on 02/09/2012 at 7:09 am

As GIC still has a loss position in Citi (though it has realised profits to offset the loss, unlike in UBS), tot I’d update readers

http://dealbook.nytimes.com/2012/08/22/the-new-citigroup-isnt-your-fathers-citicorp/?nl=business&emc=edit_dlbkam_20120823

DBS screws its customers again, and again?

In Banks on 27/08/2012 at 7:26 am

A few years ago, DBS sold HN5 Notes to its valued Treasure customers, blowing the buyers to kingdom come and discriminated against locals when it came to compensation.

So when early in 2011, when it started pushing yuan deposits and other investments linked to the yuan to its customers, I tot “No, not again”. By early May 2011, it had sold more than 27 billion yuan (S$5.2 billion) of investments linked to the Chinese currency to wealthy investors here it boasted.

Well 2011 wasa not a gd year for the yuan, and 2012 has been a disaster. 

While most economists expect the renminbi will stay flat or rise slightly over the next year, financial markets tell a different story.

In the non-deliverable forward market, where traders place bets on the future exchange rate, the yuan or renminbi is priced to fall 1.3 per cent against the dollar over the next 12 months.

Some experts say the decline will be much more substantial. Jim Walker, an economist who predicted the 1997 Asian financial crisis, forecasts a 5 per cent depreciation over the next year because “corporate financials in China are deteriorating dramatically. Extract from last week’s FT.

And we know S$ has been appreciating vis-a-vis the US$.

 Interestingly OCBC, Singapore’s second-biggest bank, was not aggressively promoting offshore yuan deposits to Singapore customers due to the risk of near-term losses as the local currency is likely to appreciate at a faster pace.

“We’re pretty cautious with regard to offshore RMB business in terms of deposits. For a Singaporean, we think it is not very wise,” CEO David Conner said at an earnings briefing in May 2011.  

“Our forecast has always been that the Singapore dollar will appreciate faster than the renminbi so we are not pushing that hard with our customers.”
 
OCBC’s comments came shortly after aforesaid boast by DBS. So it looks like although Rajan the FT Indian who blew up the “treasured’ clients moved on, the culture of screwing clients still remains?
 
(BTW, O’Connor is the kind of ang moh FT, we don’t get enough of. We get trashy FTs like SGX’s CEO (ang moh) and president (Indian Indian) who talk the talk of attracting IPOs but who underperform.)
 
And DBS is now using rocket science to make customers spend and spend  http://www.bbc.co.uk/news/business-19286426. More “treasures’ getting shafted?
 
 

Bank run in Vietnam UPDATE

In Banks, Vietnam on 24/08/2012 at 9:16 am

Depositors in Vietnam have withdrawn hundreds of millions of US dollars from one of the country’s largest banks after the arrest of one of its founders. StanChart has a 15% stake in this bank.

The CEO of Asia Commercial Bank, Ly Xuan Hai, has been arrested on suspicion of committing economic crimes.

What this run shows is that:

— Doing biz in Vietnam can be dangerous if the authorities don’t like you.

— Banks like StanChart and HSBC do biz in some dangerous places and their high capital ratios and conservative loan to deposit ratio have a purpose.  But really do all three S’pore banks need to be among the 10 safest banks in the world?

Three cheers for CJ

In Banks, Financial competency on 19/08/2012 at 5:57 am

Chief Justice Chan Sek Keong said in a written judgment: “In the light of the many allegations made against many financial institutions for ‘mis-selling’ complex financial products to linguistically and financially illiterate and unwary customers during the financial crisis in 2008, it may be desirable for the courts to reconsider whether financial institutions should be accorded full immunity for such ‘misconduct’ by relying on non-reliance clauses which unsophisticated customers might have been induced or persuaded to sign without truly understanding their potential legal effect on any form of misconduct or negligence on the part of the relevant officers in relation to the investment recommended by them.”

http://www.todayonline.com/Singapore/EDC120817-0000042/Non-reliance-clauses–Time-to-reconsider?

Related posts:

https://atans1.wordpress.com/2012/08/17/hong-leong-finance-sues-morgan-stanley-for-deception-selling-investments-designed-to-fail/

https://atans1.wordpress.com/2011/04/01/helping-retail-investors-the-hk-way-and-the-spore-way/

https://atans1.wordpress.com/2010/08/06/what-abt-high-notes-sm-goh/

https://atans1.wordpress.com/2011/11/04/sporeans-get-justice-in-us/

Wonder if Bank of S’pore provides this kind of service?

In Banks on 04/08/2012 at 7:15 am

Or if DBS’s and UOB’s private banks are even trying?

Coutts recalls a story when a client dropped his wallet over the side of his yacht. One satellite-phone call later and the bank couriered out cards and cash to the next port he was going to. Then there was the diabetic client who got straight off an aircraft and into back-to-back meetings. When he finally checked into his hotel, there was nothing on the menu he could eat, so he called his bank – obviously – which duly sent a taxi there, complete with restaurant recommendations.

Private banks even send their clients’ children on boot camps for offspring of the ultra-rich. AH Loder Advisers has an annual dog sled expedition across the Arctic. While billed as leadership training, these trips are as much about ensuring the children stay with the bank when they inherit.

http://www.guardian.co.uk/business/2012/jul/22/private-banks-swiss-accounts-coutts-tax

HSBC: Doing God’s Work?

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

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

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

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

HSBS is expected to be fined heavily by the US.

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

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

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

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

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

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

Third time lucky, Temasek?

In Banks, Temasek on 22/07/2012 at 5:10 am

But if investment is another Merrill Lynch or Barclays or like GIC’s UBS nightmare, amount lost will be “peanuts”. Still.

Credit Suisse initiated a series of measures on July 18 to boost its capital position, including a 3.8 billion Swiss franc issue of mandatory convertible securities to new and existing investors.

The securities will pay an annual coupon of 4% until they convert into 234 million ordinary shares in March 2013. Half the issue will be taken up by strategic investors including Qatar Holding, Saudi Arabia’s Olayan Group, BlackRock Investment, Capital Research Global Investors, Norway’s Norges Bank and Temasek. Some of the strategic investors have also underwritten the other half of the issue, which will be offered to existing Credit Suisse shareholders.

http://www.breakingviews.com/sovereign-funds-still-hungry-for-western-banks/21030574.article

Related posts

Estimate of Temasek’s losses on ML and Barclays

https://atans1.wordpress.com/2010/08/04/swee-say-said-that-gd-temasek-lost-billions/

Estimate of GIC’s loss on UBS:

https://atans1.wordpress.com/2011/07/26/gic-not-reported-in-st-cna-or-today/

HSBC: Returned to roots

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

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

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

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

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

F&N: ThaiBev the bidder?

In Banks on 18/07/2012 at 5:36 am

As you will know, OCBC and its Great Eastern Holdings insurance unit said they had been approached with an offer to buy their combined 18.2% stake in F&N as well as their 7.9% cent holding in Asia Pacific Breweries.

FT reports that the bidder is “a unit of ThaiBev”.  It is Thailand’s largest and one of the largest beverage alcohol companies in South East Asia. Listed on SGX. Interestingly it has distilleries or breweries  in Scotland, Poland, Ireland and France, in addition to Thailand and China. Makes Chang Beer.

Serious money

In Banks on 17/07/2012 at 9:52 am

Will never hear of this in our MSM, only why the Swiss bankers are rushing to Asia (and S’pore).

Geneva, which became a refuge in the 1960s for Egyptian cotton merchants fleeing President Gamal Abdel Nasser, developed as a Middle East banking center after King Fahd constructed a palace in the lakeside suburb of Collonge-Bellerive, where he held councils on summer evenings

http://www.bloomberg.com/news/2012-07-10/geneva-bankers-tap-old-ties-to-find-new-riches-amid-arab-spring.html

Middle East has an estimated US$4.5 trillion of private wealth.

Too bad abt the investment banks though  http://dealbook.nytimes.com/2012/05/24/in-the-persian-gulf-struggling-to-adapt-as-deals-dry-up/?src=dlbksb

“30-yr” GIC investment Citi almost junk

In Banks, GIC on 23/06/2012 at 9:25 am

15 major banks* (including another GIC investment UBS)  were hit with credit downgrades on Thursday that could do more damage to their profitability, credit worthiness and further unsettle equity markets.

The credit agency, Moody’s Investors Service, which warned banks in February that a downgrade was possible, cut the credit scores of banks to new lows to reflect new risks that the industry has encountered since the financial crisis.

Citigroup was among the hardest hit. After the downgrades, the bank stands barely above the minimum for an investment grade rating, a sign of the difficult business conditions it faces.

Banks have struggled to improve their profits against the backdrop of the European sovereign debt crisis, a weak American economy and new regulations. The downgrades may amplify their problems. With lower ratings, creditors could charge the banks more on their loans. Big clients may also move their business to less-risky companies, further affecting earnings.

Wonder if LKY, who made the 30-yr comment, has repented making the comment?

Update

Citi bitches: Citi said in a statement that Moody’s approach “fails to recognize Citi’s transformation over the past several years,” adding that “Citi strongly disagrees with Moody’s analysis of the banking industry and firmly believes its downgrade of Citi is arbitrary and completely unwarranted.”

But more woes: Citigroup seen as vulnerable to emerging markets’ currency movements Charles Peabody, an analyst for Portales Partners, estimated on “Bloomberg Surveillance” that $3 billion to $5 billion of Citigroup’s book value was vulnerable to changes in the value of the Mexican peso and the Brazilian real http://www.bloomberg.com/news/2012-06-20/citigroup-may-take-5-billion-hit-on-forex-peabody-says.html

Good news: It claims it is boosting revenue at its corporate and investment banking unit in with rising fees from debt underwriting and cash management as initial public offerings shrink http://www.bloomberg.com/news/2012-06-18/citigroup-asia-fees-rising-as-debt-sales-counter-equity-slowdown.html.

—–

*Bank of America, Citigroup Morgan Stanley, JPMorgan Chase, Goldman Sachs, Credit Suisse, Deutsche Bank, UBS, HSBC, Barclays, BNP Paribas, Crédit Agricole, Société Générale, Royal Bank of Canada, and Royal Bank of Scotland.

When will S’pore become part of the Silicon Valley ecosystem?

In Banks, Political economy on 15/06/2012 at 6:42 am

When SVB Financial Group’s banking unit Silicon Valley Bank opens a branch or office or j/v here, we will know that S’pore has made it into the Silicon Valley ecosystem. It has juz opened its first int’l branch: in London. It will target Britain’s technology, life science, private equity and venture capital sectors

Silicon Valley Bank counts Cisco Systems, Mozilla and Pinterest, among its US clients.

Silicon Valley Bank also has offices in Israel, India and is expected to open a joint venture bank in China with Shanghai Pundong Development Bank.

http://www.bbc.co.uk/news/business-18368713

When it comes to town, bang balls KennethJ, TJS, TRE, TOC, E-Jay, SDP etc.  But don’t worry guys, it’ll be a long time, if ever, before the PAP government’s rhetoric becomes a reality*. In tomorrow’s post, I’ll link to stories which show how competitive Vietnam is becoming in software development to places like India, and that even Cambodia, with an American’s help, can use the internet get into a global biz competing with China and India.

*I mean juz see the BS around the comment made on LSD use, and on sex between adults juz because they are not married. So intolerant.

Why our banks will be issuing more perps

In Banks on 12/06/2012 at 5:03 am

(Or “Another reason why perps are so popular among coporates”)

As the sovereign debt crisis drags on, international lending by global banks in the fourth quarter last year fell by the largest amount since the Lehman Brothers crisis in 2008.

http://dealbook.nytimes.com/2012/06/04/global-banks-cut-lending-in-response-to-economic-slowdown/?nl=business&emc=edit_dlbkpm_20120604

Gd news for our three local banks. They can expand their US$ lending activities (US$ is preferred currency of borrowers).

Expect them to raise more perps. They will be exploring the possibility of selling US$ perps to our local retailer investors to avoid having to swap the proceeds into US$. But retail investors don’t like foreign currency issues: juz look at Hutch Ports.

Filipino super bull

In Banks on 09/06/2012 at 6:01 am

BDO Unibank Inc., the Philippines largest lender on Tuesday priced the country’s largest share sale (US$1bn 1-for-3 rights offering at a 24.9% discount to its 15-day VWAP to give a total deal size of Ps43.5bn,US$1bn),  to give the bank funds to compete for infrastructure lending. Details.

Teresita Sy-Coson, vice chairwoman of SM Investments Corp., said “Infrastructure is not our area of expertise, but we intend to join the government’s initiatives by providing funding for those who will take up those projects.” She is the daughteer of the controlling shareholder.

.The bank aims to reduce its dependence on consumer loans by tapping credit demand from the nation’s biggest companies, including Ayala Corp. (AC) and San Miguel Corp. (SMC), as they bid for $16 billion in infrastructure projects unveiled in 2010 by President Benigno Aquino. The fund infusion will also bolster Manila-based BDO’s risk buffers and spur overseas expansion, Sy-Coson said.

http://www.bloomberg.com/news/2012-06-03/billionaire-sy-plans-record-share-sale-for-bank-southeast-asia.html

The Philippines’ PSE Composite Index is up 15% since the start of the year.

BDO Unibank is not the only bank bullish on the Philippines. In early May, CIMB  agreed to buy just under 6o% of the Philippines’ Bank of Commerce (BOC) for 12.2 billion pesos (M$881 million) in cash, a move analysts said gives it early mover advantage in a market with high-growth banking potential.

Maybe if DBS can’t get its deal on Bank Danamon through or on acceptable terms, it should look North.

DBS has a 21.4% stake in BPI via its 40% stake in Ayala DBS where Ayala has the majority 60% stake. UOB seems to have a 2% stake in BDO Unibank. OCBC doesn’t seem to have a presence in the Philippines. All three local banks have subsidiaries in Indonesia.

Temasek is Filipino-lite. It doesn’t own anything direct in the Philippines: no banks, no telcos.

Its largest exposure is via Singtel which has a major investments in the Philippines (via Globe 47% which it controls together with Ayala 32%. Global is the second largest telco in the Philippines.

Keppel has some exposure via a shipyard but its not big.

If Temasek wants to go big in the Philippines, then DBS could be used.

Related post: https://atans1.wordpress.com/2012/06/02/philippines-reasons-for-optimism-and-scepticism/

Why our local banks shld stop wasting resources on China proper

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

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

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

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

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

Indonesia does DBS shareholders a favour

In Banks, Indonesia, Temasek on 01/06/2012 at 2:38 pm

By planning to allow financial institutions a maximum of 40% in an Indon bank (applicable only to new investors), the Indon central bank has blocked Temasek’s plan to sell its 67% stake in Bank Danamon to DBS Bank where it has a controlling stake.

On a day when banks (and other blue chips) are weak in local trading (UOB -1.5% and OCBC -0.5%) fact that DBS is only -o.6% shows that investors are not upset over the failure of the deal.

One reason is that institutional investors don’t like big “strategic” deals by their investments because they usually overpay and are prone to destroy shareholder value. Here while the price is decent, the issue of lots of new shares to Temasek is dilutive to earnings.

Ah well back to the drawing board DBS mgt to find a new driver for growth. Same too for Temasek’s financial enginners. The deal would have reduced Temasek’s direct exposure to Indonesia while increasing its exposure to DBS.

Euro crisis R perpetual securities & our local banks

In Banks, Financial competency on 22/05/2012 at 9:45 am

(or “The next, next disaster for retail investors & DBS”)

While reading this , I saw Calvin Yeo’s reply to a question on why corporates were issuing perps

 … one reason is to diversify the sources of funding. Another reason is that the market cannot withdraw the financing facility like the bank can in a credit crunch. Investors also have generally less bargaining power than the banks, so it is harder for them to take action against the issuer or place restrictive covenants. As you see, the terms of the bond are drawn up by the issuer rather than the lender. For most loans, banks tend to be the ones giving the terms of the loan.

Another main reason is that banks don’t normally issue perpetual loans, you would have to issue perpetual bonds or preferred stocks for that.

On the issue of diversification, most European banks have been cutting back their lending outside their home markets because they are shrinking their balance sheets to meet the new capital rules. No-one wants to invest in them (on terms acceptable to the banks) because of the Euro crisis.

In Asia, the French banks (like Soc Gen, BNP and Credit Agricole) were once very big USD lenders, the currency of choice, to corporates. They have now withdrawn*. So corporates that used them, now have to find other lenders. Seems to have found a new source of suckers in the retail mkt here.

See related post on central bank’s concerns.

Asian banks (including our DBS, OCBC and UOB) are increasing their USD lending to these corporates as the European withdrawal have improved USD lending margins (the Frogs were very, very aggressive) .

Let’s hope DBS doesn’t get too aggressive in USD lending. Not concerned by OCBC’s and UOB’s increased lending (I own Haw Par shares as partly as a play into UOB). They have conservative controlling shareholders and mgt (I’m assuming the newish CEO of OCBC is as conservative as O’Connor**). Can’t say the same abt the cowboys at DBS and Temasek, though DBS’s chairman and CEO have reputations as conservative bank executives. The Bank Danamon deal shows otherwise in my view.

——

*But European banks still have lots of exposure to S’pore or rather the other way round. See chart in http://www.zerohedge.com/news/why-stability-stalwart-singapore-should-be-scared-if-feta-truly-accompli. Nothing to worry abt as most of this exposure is not to locals because it’s offshored in turn. Do remember that S’pore is a major global financial market.

**Anyway someone in OCBC is a tough taskmaster. O’Connor earlier this yr said that working in OCBC for 10 yrs felt like 40 yrs. No wonder Tony Tan and Yong Pang How (remember him?) preferred to be cabinet minister and chief justice respectively. And remember O’Connor was from Citibank, not known for its relaxed style.

OCBC: KPI for new CEO?

In Banks, Corporate governance on 15/05/2012 at 8:33 am

OCBC Bank was recently named as the world’s strongest bank for the second straight year by Bloomberg Markets Magazine. (The ranking featured 78 global banks with at least US$100 billion in total assets.They were assessed based on factors such as their Tier 1 capital ratio, loan-to-deposit ratio, ratio of non-performing assets to total assets and their efficiency ratio, which compares costs with revenues.)

OCBC said the bank’s strength is partly built on its “disciplined credit management practices and robust risk management capabilities”.

If I were the controlling shareholder of OCBC, I’d be very upset at this ranking because what it means is that OCBC is not making its assets work: it has too much capital. I’d tell the board that the most impt KPI should be that OCBC drops out of the top 10 on the list.

It can be done. UOB was at seventh place, down from sixth last year, while DBS fell three spots to eighth this year.

UOB and DBS are doing the right thing. Their core market (like that of OCBC) is S’pore and it’s a safe, boring, stable market where margins are only so-so. So not much capital is needed, if one sticks to the basics of banking, and not try to be a hedgie.

As to the right amount of capital, look at StanChart at no.12. It operates in a wide range of emerging markets, some in unstable parts of the world like West Africa and so needs to have capital lying around. If S’porean banks have abt the same level of capital, they should still be safe.

Temasek: Rebalancing its Chinese bank portfolio

In Banks, China, Temasek on 03/05/2012 at 6:04 pm

Last month, Temasek bought US$2.3bn worth of shares in Industrial and Commercial Bank of China (ICBC), taking its overall stake in the bank to 1.3%. I commented that it was increasing its bet on the big Chinese banks (it owned big stakes in three of them) when the mood on them was getting bearish.

Well it is now sell US$2.4bn worth of its shares in Bank of China and China Construction Bank.

So overall, it is reducing its stakes in BoC and CCB (locking in some profits: it got into these at very attractive prices as a cornerstone pre-IPO investor) while adding a stake in ICBC to the mix at a slight discount to the market.

Update on 4 May 2012 at 3.10pm: More details http://www.bloomberg.com/news/2012-05-02/temasek-selling-2-4-billion-in-boc-china-construction.html

Temasek’s Chinese banks have an unending appetite for capital

In Banks, China, Temasek on 27/04/2012 at 6:54 pm

Regular readers will know that Temasek’s investments in Bank of China and China Construction Bank are great investments. It came in as a pre-IPO cornerstone investor and unlike the Western banks that had similar status had not sold out. Gd friend of China. It trades out and in of these stocks to make realised profits. But these trading profits are peanuts as the trading positions are peanuts in relation to its holdings in these banks

And that it recently bot Goldman Sach’s remaining stake in ICBC, at a slight discount to its mkt price. 

As this article explains these banks have an unending appetite for capital because they are “squeezed for capital”. So Temasek has to be willing to cough up more of our money if it wants to avoid being diluted when rights issues are called.

ANZ Bank attractive to Chinese strategic buyer?

In Banks, China on 20/04/2012 at 7:24 pm

An Australian who recently retired as head of Standard Chartered’s business in China believes there’s a strong chance of a major Chinese lender picking up a cornerstone stake in one of Oz’s big four banks within a few years. The Age carried an interview with Mike Pratt, , who says it’s “highly possible” that a major Chinese player will take a stake of up to 15%  in a major Australian bank this decade”.

ANZ Bank would make the most sense, given its super-regional bank strategy. Commonwealth Bank is increasing its presence in Asia but is nowhere as regional as ANZ Bank.

Westpac (a portmanteau of “Western-Pacific”) despite its name, and National Australia Bank both focus on Oz after misadventures abroad.

Analysing Temasek’s investment in another Chinese bank

In Banks, China, Financial competency, Temasek on 16/04/2012 at 7:06 pm

Temasek has agreed to buy Goldman Sachs’s shares in the Industrial and Commercial Bank of China (ICBC), the world’s largest bank. It will buy US$2.3bn worth of ICBC shares, taking its stake to 1.3% in the bank.

In an interview with Reuters at the end of March, Ho Ching’s presumed successor-in-training, Temasek’s head of portfolio management,acknowledged the heavy allocation to financials, but noted that it holds four very good banks: Bank of China, China Construction Bank, DBS Group and Standard Chartered. Well it has added ICBC to this list, and at a price close to the market price, unlike the stakes in the other two Chinese banks where it got a “special” price as a pre-IPO cornerstone investor.

But is it a wise move?

True, since the lows last October of the Chinese and HK stock markets, the shares of the four leading Chinese banks (including Bank of China, China Construction Bank and ICBC) have gone up by more than half, easily outperforming the broader market.

But since March, prices have been off (but masked by general market falls) because of concerns abt China’s growth, bad loans and comments by the  Chinese PM, Wen Jiabao, who hinted  of breaking the monopoly state-owned lenders have enjoyed in China’s banking sector. (The sector is dominated by four big state-owned banks and Temasek now has significant stakes in three of them.)

Mr Wen said that their monopoly was hurting businesses in the country, as they had few options to raise capital.

“Frankly, our banks make profits far too easily. Why? Because a small number of major banks occupy a monopoly position, meaning one can only go to them for loans and capital,” he was quoted as saying by China National Radio. “That’s why right now, as we’re dealing with the issue of getting private capital into the finance sector, essentially, that means we have to break up their monopoly.”

The lack of easy availability of capital has often been cited as threat to growth of small and medium-sized businesses in China. There have been fears that some of these businesses, seen as key to China’s growth, may turn to unofficial sectors for capital, increasing their borrowing costs substantially

But Temasek could be betting on, “Wen has one year left [in his term].” This was said by an unnamed Chinese state banker quoted by Reuters. “This is a task for the next generation of leaders. It cannot be accomplished within one year.”

But the banker could be wrong, Wen could be telling us what has been agreed upon between his generation and the next generation of leaders.

Remember, It took a beating on its finance industry holdings after the 2008 crisis, losing about $5 billion in stakes held in Barclays and Merrill Lynch, now part of Bank of America. It has since trimmed its financial holdings by 4 percentage points to 36 percent of the portfolio. Last month, it sold a 1.4 percent stake in India’s No.2 lender ICICI Bank. From said Reuters reported.

And of the remaining two “very good banks” where Temasek has significant stakes, DBS has juz decided to buy Temasek’s stake in Bank Danamon. Management will now be preoccupied with getting the deal approved by the Indonesian authorities, then integrating the bank into DBS. Before this deal, management had finally got to grips with DBS’s operational problems. The danger is that the focus on the Danamon deal may lead to backsliding in the area of operatons.

The genuine jewel is StanChart, but by global standards, it is “peanuts”.

Role Reversal for Bank of America and Citigroup

In Banks, GIC, Temasek on 11/04/2012 at 7:22 pm

Going into the earnings season, these two big banks have reversed roles: Bank of America, which last year faced concerns about its health, has rallied this year, while Citigroup now confronts doubts.

NEW YORK TIMES

For the record:

— Temasek dumped its stake in BoA in 2009 when hedgies were buying, losing, it is estimated US$4.6bn;

— GIC is now sitting on paper losses on its remaining stake in Citi (stake was profitable last July, see link below); and

— one LKY said in 2008 that these (and UBS, where GIC still has unrealised losses) were beyond long-term investments. There were 30-year investments.

Why UOB is “betterest”?

In Banks, Corporate governance on 06/04/2012 at 7:41 am

Bank results down 4%, CEO’s salary down 18%.

http://www.channelnewsasia.com/stories/singaporebusinessnews/view/1193445/1/.html

Own shares in Haw Par which has stake in UOB.

DBS & UOB

In Banks on 04/04/2012 at 6:40 am

So investors sold DBS on news of its Bank Danamon purchase. It closed 0.39 lower (2.75%) to 13.79. About a quarter of the sellers seemed to have bot UOB which closed up o.36 (1.97%) to 18.64.

As to OCBC, it closed down 0.03 (o.33%) to 8.96. Unlike DBS and UOB, a large chunk of its profits comes from life insurance. Hence, it was of no interest to those who wanted out of DBS but wanted exposure to S’pore banks. And there is the uncertainity of what the new CEO will want to do. The retiring CEO did a good job: he stuck to the basics of banking and life insurance.

DBS: Investors don’t like the Indon deal

In Banks, Corporate governance, Indonesia, Temasek on 03/04/2012 at 11:34 am

Well DBS is down 0.44 to 13.74 some 3% from Friday’s close.

Despite all the propoganda from our constructive, nation-building mainstream media, aided and abetted by the wires and most brokers, investors don’t like the Bank Danamon deal. To be fair, investors nowadays don’t like their investee companies doing mega strategic deals (like Pru’s attempted purchase of AIA last year) because the historical numbers (still disputed) seem to show that strategic deals destroy shareholder value.

Well the non-Temasek shareholders of DBS will have an opportunity to reject the deal, if they think that Temasek benefits far more than DBS? BTW, did you know that when DBS bot PosBank from Temasek all that many years ago, it was a great deal for Temasek, not so gd for DBS .

Another Ang Mog bank retreats from Thailand

In Banks on 25/03/2012 at 4:10 pm

HSBC recently put put up a “For Sale” on its retail banking network in Thailand.

Now ING is doing the same for its stake in a Thai bank. http://www.reuters.com/article/2012/03/23/us-ing-tmb-idUSBRE82M05520120323. ING has  put a US$775m price on its 31%  stake in TMB. It .bought the stake in Thailand’s seventh-largest lender in 2007 for US$607m. Nice profit if it gets its asking price.

 

Wall St’s finest after the collapse of Bear

In Banks, GIC on 19/03/2012 at 8:38 am

Citigroup’s down 82%

http://dealbook.nytimes.com/2012/03/16/how-wall-street-has-fared-after-bears-fall/?nl=business&emc=edit_dlbkpm_20120316

Citi cont’d

In Banks, Financial competency, GIC on 15/03/2012 at 11:40 am

Citigroup’s CEO Vikram Pandit said the bank still has capacity to return more capital to shareholders and will seek clearance for a “meaningful” payout after the Federal Reserve rejected an initial plan, the wires report. The Fed allowed f\JPMorgan Chase and Wells Fargo to increase their payouts.

Despite this failure to payout more to shareholders, Vikram S. Pandit could see a total of US$53 million in compensation for 2011, from his yearly pay combined with a multi-year retention package, Bloomberg News reports, citing filings and an analyst’s estimate. Could remind TOC and TRE readers or their usual writers of the transport and HDB ministers who “retired” after failing to anticipate the problems that increased FTs would cause in their portfolios and of “50-year flood” Yacoob who got moved to MICA after Orchard Rd was hit by two such floods in two months in 2010.

Related post: https://atans1.wordpress.com/2012/03/14/citi-falls-fed-test-one-of-only-four-that-failed/

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