Archive for ‘Banking’

29/07/2016

Strike hits Indian banks, but treasury functions normal | Reuters

A nation-wide bank strike in India hit the public transactions like cheque clearances and cash deposits, but the vital treasury operations including a 150 billion rupee ($2.24 billion) government bond auction are unlikely to be affected, traders said.Staffing in treasuries of banks are likely to be less than normal days but officials will ensure that functions like bidding at the auction will run smoothly, three traders at state-run banks said.

“Treasury people have been allowed to enter the head office of the bank, so there is no problem for us in trading or bidding at the auctions,” said a senior trader at a large state-run bank.

However, there could be some issues in some banks settling the previous day’s trades due to thin staffing.

“Settlement will be a problem at back office,” said a senior official with State Bank of India.The RBI was also not too worried about the impact of the strike on treasury operations and settlements of banks.

“There shouldn’t be any problem. Primary dealers are also there to underwrite if needed. But auctions should go through smoothly,” the official said.

An estimated 1 million bank staff are expected to strike work, opposing the government’s proposal to merge SBI‘s associate banks with itself. In addition, unions are against the government’s proposed move to privatise IDBI Bank.

($1 = 66.9800 Indian rupees)

Source: Strike hits Indian banks, but treasury functions normal | Reuters

Advertisements
08/07/2015

Greece and China expose limits of ‘whatever it takes’ | Reuters

For a world so confident that central banks can solve almost all economic ills, the dramas unfolding in Greece and China are sobering.

“Whatever it takes,” Mario Draghi‘s 2012 assertion about what the ECB would do to save the euro, best captures the all-powerful, self-aware central bank activism that’s cosseted world markets since the banking and credit collapse hit eight years ago.

From the United States to Europe and Asia, financial markets have been cowed, then calmed and are now coddled by the limitless power of central banks to print new money to ward off systemic shocks and deflation.

But even if you believe central banks will do whatever it takes – to save the euro, stop the recession, create jobs, boost inflation, prop up the stock market and so on – it doesn’t necessarily mean it will always work.

Draghi himself merely pleaded for faith on that score three years ago when he added, “Believe me, it will be enough.”

Critically, given the direction of events in Athens, his celebrated epigraph was preceded by “Within our mandate…”

And so the prospect of the European Central Bank potentially presiding over, some say precipitating, the first national exit from a supposedly unbreakable currency union will inspire a rethink of the limits of Draghi’s phrase for all central banks.

Of course, the ECB does not want to push Greece out of the euro. But ‘whatever it takes’ may just not be enough to preserve the integrity of the 19-nation bloc if the ECB’s mandate prevents it from endlessly funneling emergency funding to insolvent Greek banks.

And as long as the Greek government is at loggerheads with its creditors, the central bank can’t wave a magic wand of monetary support without breaking its own rules.

The ECB continues to insist it will do all in its power to prevent contagion to other euro zone markets and there’s little doubt it will make good on that. But the problems stemming from a Greek exit are not of financial seepage but of political contagion to other euro electorates tiring of austerity. And that sort of contagion is beyond ECB control.

via Greece and China expose limits of ‘whatever it takes’ | Reuters.

11/05/2015

Private banker KV Kamath named first BRICS bank head | Reuters

Indian private banker K.V. Kamath has been named as the first head of a new development bank being set up by the BRICS group of emerging market economies, Finance Secretary Rajiv Mehrishi told reporters on Monday.

K.V.Kamath gestures during the Reuters India Summit at his office in Mumbai in this November 25, 2008 file photo. REUTERS/Stringer/Files

The BRICS – Brazil, Russia, India, China and South Africa – agreed to set up the $100 billion development bank last July, in a step toward reshaping the Western-dominated international financial system.

“Kamath has been appointed as the head of the BRICS bank, the appointment will become effective when he becomes free from his current assignments,” Mehrishi told reporters in New Delhi.

It was agreed then that the New Development Bank, which will fund infrastructure projects in developing nations, would be based in Shanghai. It would be headed by an Indian for a first five-year term, followed by a Brazilian and then a Russian.

via Private banker KV Kamath named first BRICS bank head | Reuters.

09/04/2015

Demands for Bribes and Other Barriers Get in Way of Modi’s Banking Push for the Poor – India Real Time – WSJ

Firozaben, a nurse at an upscale clinic here, opened an account at the state-owned Bank of Baroda Ltd. in December, attracted by the promise of an overdraft provision and accident- and life-insurance policies—all for no fee, courtesy of a government program to bring India’s masses into the banking system.

The same month, Mohammad Assalam Ansari, a tailor, traveled to an account-opening “boot camp” run by the bank. He says he had to pay 100 rupees before a clerk would give him an application form. Despite this, he says his application was rejected; he isn’t sure why.

Their stories reflect both the promise and the weakness of an ambitious program by Prime Minister Narendra Modi to widen access to financial services to the country’s poor. The goal is to make India less cash dependent, shrink the black economy, reduce corruption and boost growth.

via Demands for Bribes and Other Barriers Get in Way of Modi’s Banking Push for the Poor – India Real Time – WSJ.

19/12/2014

Chinese Banks Lure Deposits by Offering Goodies for Cash – Businessweek

Banks in the U.S. once gave away toasters and irons to lure depositors. Banks in China are upping the ante. With customers pulling out money and putting it into higher-yielding investments, they are offering Mercedes, iPhones, and daily deliveries of vegetables to sidestep interest rate caps and get people to stash some yuan in savings accounts.

Chinese Banks Offer Goodies for Cash

“Chinese banks are hemorrhaging their deposits,” says Rainy Yuan, an analyst at brokerage Masterlink Securities in Shanghai. China’s banks lost 950 billion yuan ($154 billion) of deposits in the three months through September, the first quarterly drop since 1999. In the first 11 months of the year, new deposits were 23 percent lower than in the same period last year, People’s Bank of China data show. Offering incentives to attract money is not the solution, Yuan says: “There is no fix for this. All the efforts they made to win savers back will only push up the costs, so it’s a losing battle to fight.”

Decline in new deposits in the first 11 months of 2014 vs. the same period last year

Savers seeking higher returns have been pouring money into online money-market funds offered by the e-commerce companies Alibaba Group (BABA) and Baidu (BIDU). One fund, Yu’E Bao, started last year by Alibaba affiliate Alipay, drew 535 billion yuan in its first 15 months of existence from 149 million customers, more than the populations of France and the U.K. combined. Users simply tapped a few buttons on their mobile phones to secure an annual rate of return that climbed as high as 6.8 percent before falling to about 4 percent recently.

Savers can also earn more on their money by moving to high-yield products, the fastest-growing part of the so-called shadow banking system. Households put 12.9 trillion yuan into high-yield trust products as of Sept. 30. Trust companies pool investor capital to put money in real estate and construction projects, or make corporate loans, and promise returns of more than 10 percent. Trust companies have seen assets under management rise more than tenfold since the start of 2009.

The Shanghai Composite Index’s 45 percent surge over the past six months has led people to shift money from banks to stocks. In the first week of December, Chinese investors opened almost 600,000 stock trading accounts, a 62 percent increase over the previous week, according to China Securities Depository & Clearing.

To stimulate the economy, China’s central bank on Nov. 21 announced a cut in benchmark interest rates for the first time in more than two years. That was offset by the central bank’s decision to raise the maximum interest rate banks can pay customers to 20 percent over the benchmark from 10 percent above it. Ping An Bank (000001:CH), China Citic Bank (601998:CH), and Bank of Ningbo (002142:CH) immediately alerted customers through text messages that they would offer the highest rate allowed.

via Chinese Banks Lure Deposits by Offering Goodies for Cash – Businessweek.

24/11/2014

Property, manufacturing woes help trim China’s shadow banking | Reuters

A bid by China to rein in its “shadow banking” activity is producing results, thanks to slowing economic growth and tighter regulation.

One Chinese yuan coins are seen in this photo illustration taken in Shanghai April 7, 2013. REUTERS/Carlos Barria

But some success for a policy drive to curb risky lending is not all good news for Beijing, as smaller companies may face even bigger struggles to find funding. A cut in interest rates, announced by Beijing on Friday, is unlikely to help them much.

Shadow banking includes off-balance-sheet forms of bank finance plus lending by non-traditional institutions, all of which is less regulated than formal lending and thus considered riskier.

At the end of 2013, China had the world’s third-largest shadow banking sector, according to the Financial Stability Board, a task force set up by the G20 economies. It estimated that Chinese assets of “other financial intermediaries” than traditional ones were then just under $3 trillion.

In the three months ended Sept. 30, the shadow banking portion of what China calls total social financing – a broad measure of liquidity in the economy – contracted for the first time on a quarterly basis since the 2008/09 financial crisis.

via Property, manufacturing woes help trim China’s shadow banking | Reuters.

07/03/2014

BBC News – Chaori Solar in landmark Chinese bond default

Solar panel maker Shanghai Chaori Solar Energy Science & Technology has defaulted on interest payments owed on its bond, say media reports quoting the firm.

Solar panels

It is the first Chinese firm ever to default on its onshore corporate bonds.

On Tuesday, the firm warned it would be unable to make a 89.8 million yuan ($14.6m; £8.7m) interest payment on a one billion yuan bond issued in 2012.

The default is seen as a test case for the Chinese government.

Investors have assumed in the past that the Chinese government would bail out any Chinese corporation in danger of defaulting.

The move to allow Chaori to default signals a new stance.

“There’s never been a corporate bond default, [so] investors have been conditioned that there is no such thing as risk in China,” Leland Miller, president of research firm China Beige Book, told the BBC.

“The Chinese leadership is trying to break down this misunderstanding that everything is backstopped.”

Chaori Solar said it planned to pay 4 million yuan ($654,000) of the interest payment due on the billion yuan bond, which was taken out two years ago.

via BBC News – Chaori Solar in landmark Chinese bond default.

Enhanced by Zemanta
20/02/2014

China, UK discuss setting up yuan clearing bank in London – Osborne | Reuters

The British and Chinese governments are in active discussions about setting up a clearing bank in London for China’s currency, a milestone that will put the city in a leading position to offer yuan trade business in Europe.

British Chancellor of the Exchequer George Osborne listens to a question after his speech during a breakfast meeting held by the British Chamber of Commerce in Hong Kong February 20, 2014. REUTERS/Bobby Yip

Taking a leaf out of Hong Kong’s blueprint in being the leading offshore yuan hub after the establishment of Bank of China (Hong Kong) as a clearing bank, the authorities are pressing ahead with having one for the city of London.

The move will help expand the Chinese currency‘s footprint beyond Hong Kong, where more than 80 percent of yuan trade settlement transactions are handled and foster greater confidence among European companies to adopt the yuan, also known as the renminbi, as a currency for trade.

“The UK and Chinese governments are in active discussions now about the appointment of a RMB clearing bank in London, recognising London’s role as the Western centre of offshore RMB

via China, UK discuss setting up yuan clearing bank in London – Osborne | Reuters.

Enhanced by Zemanta
Law of Unintended Consequences

continuously updated blog about China & India

ChiaHou's Book Reviews

continuously updated blog about China & India

What's wrong with the world; and its economy

continuously updated blog about China & India