Former Sunway Holdings Bhd managing director Datuk Yau Kok Seng is joining the Hong Leong Group.
He will be group MD of Hong Leong Industries Bhd (HLI) from Sept 5. Yau, 51, had joined the Sunway Group as head of corporate finance in 1992 and was appointed MD of Sunway Holdings in April 2001.
HLI’s activities include the manufacturing of semiconductors, motorcyles and ceramic tiles. (The Star Online)
Thursday, August 25, 2011
Thailand raises rates
BANGKOK: The Bank of Thailand raised its benchmark interest rate by 25 basis points to 3.5% yesterday and said rates were getting closer to normal levels, but it said it was watching government policies closely in case they stoked inflation.
Economists were divided on whether there would be one, two or no more rate rises in the remaining two meetings of the year. One noted a “modest tempering in the hawkish rhetoric as attention shifts towards downside risks to growth”.
They did not think government pressure to hold down rates would be a factor. The new government, which was sworn in this month, would prefer rates to be cut and says tighter policy is in conflict with its pro-growth programme. (Reuters)
Economists were divided on whether there would be one, two or no more rate rises in the remaining two meetings of the year. One noted a “modest tempering in the hawkish rhetoric as attention shifts towards downside risks to growth”.
They did not think government pressure to hold down rates would be a factor. The new government, which was sworn in this month, would prefer rates to be cut and says tighter policy is in conflict with its pro-growth programme. (Reuters)
Monday, August 22, 2011
Global Bank Capital Regime at Risk as Regulators Spar Over Rules
Capital standards designed to fortify the global financial system are eroding as European officials, beset by a debt crisis, rewrite the regulations and U.S. rulemaking stalls.
The 27 member-states of the Basel Committee on Banking Supervision fought over the new regime, known as Basel III, for more than a year before agreeing in December to require banks to bolster capital and reduce reliance on borrowing. Now, as they put the standards into effect in their own countries, European Union lawmakers are revising definitions of capital, while the U.S. is struggling to reconcile the Basel mandates with financial reforms imposed by the Dodd-Frank Act.
“The game on the ground has changed in Europe and the U.S.,” said V. Gerard Comizio, a former Treasury Department lawyer who is now a senior partner at Paul Hastings Janofsky & Walker LLP in Washington. “The realists in Europe realized that their banks cannot raise the capital they’d need to comply. U.S. banks have reversed course and are more assertively fighting against it. The future of Basel III looks less certain now than it did when it was agreed to.”
The Basel committee revised its capital standards and outlined new rules on liquidity and leverage after the 2008 crisis exposed the vulnerability of the banking system. Credit markets froze following the collapse of Lehman Brothers Holdings Inc., sending the world economy into its first recession since World War II. Basel III was meant to create “a much stronger banking and financial system that is much more resilient to financial crises,” said Mario Draghi, who will take over as president of the European Central Bank in November.
The proposed EU rules, submitted by financial services commissioner Michel Barnier, omitted a ratio designed to improve banks’ cash positions, deferred decision on a rule to limit borrowing, revised capital definitions and extended some compliance dates. In the U.S., regulators are stymied because the 2010 Dodd-Frank Act bars the use in banking rules of credit ratings, which Basel III relies on to determine risk.
“Implementation is a big concern in Europe and the U.S.,” said Karel Lannoo, head of the Centre for European Policy Studies in Brussels. “The EU crisis isn’t over; the U.S. isn’t safely out of its mess. If we can’t get the rules that were supposed to protect the financial system from collapse, we won’t have changed anything to help us the next time around.”
Renewed concern this year that Greece may be unable to pay its debts, and similar worries about larger EU members Italy and Spain, have darkened Basel’s prospects. The sputtering economic recovery in the U.S. and Europe has hurt, too.
U.S. economic growth for the first quarter was revised down to 0.4 percent, while the second quarter’s initial figure was 1.3 percent. In Europe, gross domestic product fell from 0.8 percent in the first three months of the year to 0.2 percent in the second quarter.
Both the Bloomberg Europe 500 Banks and Financial Services Index and the KBW Bank Index of U.S. bank stocks have fallen about 30 percent this year. That wiped out more than $700 billion of market value on the two continents.
The European proposal alters the definition of capital that Basel III aimed to tighten when the committee agreed not to allow anything other than common shares to count toward the top- quality bank capital regulators examine.
At Landesbank Hessen-Thueringen, a state-owned lender based in Frankfurt known as Helaba, silent participations account for more than 50 percent of the bank’s 6 billion euros ($8.6 billion) of capital. Helaba withdrew from the Europe-wide stress tests in July after regulators refused to count some of those hybrid instruments as capital.
Italy fought during Basel talks last year to include deferred tax assets -- future deductions from tax liabilities resulting from current losses -- when calculating top-tier capital. Basel III restricted use of these assets to no more than 10 percent of a bank’s capital. The EU’s proposal would allow unrestricted use of deferred tax assets if they comply with certain requirements. Italy modified its tax laws in February to enable the assets to meet those conditions.
Counting tax assets would raise the capital ratio at Banca Monte dei Paschi di Siena SpA, the oldest bank in the world and Italy’s third-largest, by about 1 percentage point, according to a February Mediobanca SpA report on the benefits of the tax-law change to Italian banks.
“Each adjustment may be justified in each country’s case, but when you put them all together, there will be differences between how the EU implements Basel III and how others do,” said Tobias Moerschen, a European bank analyst at Moody’s Investors Service in New York. “And if other countries feel compelled to go down the same road, you’ll end up with a less level playing field, and that is negative.”
Josef Ackermann, the 63-year-old CEO of Frankfurt-based Deutsche Bank AG (DBK), fired a similar warning shot in a speech in New Delhi the same month: Separate regulatory approaches “would have severe consequences for financial markets and for the global economy,” he said.
Ackerman and other European bankers have complained that the U.S. never fully implemented Basel II, which was approved by the Basel committee in 2004. When community banks in the U.S. realized the regulations would give the largest international lenders the ability to lower their capital ratios, they lobbied lawmakers to prevent adoption of the rules. U.S. regulators, under pressure from Congress, delayed implementation.
While Basel III relies less on ratings than previous regimes, it still uses them to calculate risk. An international debate about what might replace external ratings has been as inconclusive as the one in the U.S.
Officials from the Fed and the Office of the Comptroller of the Currency told a congressional oversight panel last month that they have received numerous proposals and are still trying to come up with a formula that doesn’t rely on ratings firms.
“If the U.S. agencies are unable to implement the Basel committee changes that reference credit ratings, other jurisdictions may infer a lessening of the U.S. commitment to the Basel framework,” David Wilson, the OCC’s chief national bank examiner, told the panel.
While Basel has taken a back seat to Dodd-Frank, U.S. regulators will be able to work around the ratings restrictions and propose rules to implement Basel III this year, according to two people involved in the discussions who asked not to be identified because they weren’t authorized to speak.
“Dodd-Frank already takes care of the most important elements of the financial crisis, so why should we try to incorporate a set of rules into which big holes are already being carved?” Petrou said.
One hole may be opening in Basel III’s global leverage ratio. Unlike the capital ratio, which weights assets based on riskiness, the leverage standard compares capital with total assets without taking risk into account. The rule aims to limit how big a bank can get by capping how much it can borrow in relation to its common equity.
European banks had opposed a leverage ratio, arguing that different accounting regimes make the balance sheets of U.S. lenders smaller than those of their foreign counterparts and that restricting leverage would unfairly punish non-U.S. firms. While U.S. banks are subject to a leverage cap, Generally Accepted Accounting Principles allow them to keep more assets off their balance sheets and to net out derivatives more than International Financial Reporting Standards do.
The EU proposal also softens Basel III’s liquidity standards that would require banks to hold enough cash or easily sellable assets to meet short- and long-term liabilities. It omits the rule covering debt coming due in the next 12 months and modifies the one for 30-day obligations to allow counting covered bonds as liquid assets. Denmark, Sweden and Spain lobbied for the modification because their banks have sizeable holdings of those bonds, which are securities backed by the cash flow from a pool of mortgage loans.
Barnier, the financial services commissioner, and other EU officials have said the changes they incorporated into the implementation proposal are part of the natural process of translating global rules into local practice.
“We are totally faithful to Basel’s spirit, letter and level of ambition,” Barnier said in Brussels last month.
Different interpretations by national regulators emerged during previous incarnations of the accords, known as Basel I and II. Conflicts over Basel III could undermine the new regime if more countries follow Europe’s example and come up with their own versions of the rules, said Vishal Vedi, a London-based partner at Deloitte LLP’s financial-advisory practice.
“There’s concern that divergences between the EU and the U.S. on Basel III implementation will be bigger this time,” Vedi said. “There’s a line when the spirit of Basel III is tossed aside. I don’t think we’re there yet.”(Bloomberg)
The 27 member-states of the Basel Committee on Banking Supervision fought over the new regime, known as Basel III, for more than a year before agreeing in December to require banks to bolster capital and reduce reliance on borrowing. Now, as they put the standards into effect in their own countries, European Union lawmakers are revising definitions of capital, while the U.S. is struggling to reconcile the Basel mandates with financial reforms imposed by the Dodd-Frank Act.
“The game on the ground has changed in Europe and the U.S.,” said V. Gerard Comizio, a former Treasury Department lawyer who is now a senior partner at Paul Hastings Janofsky & Walker LLP in Washington. “The realists in Europe realized that their banks cannot raise the capital they’d need to comply. U.S. banks have reversed course and are more assertively fighting against it. The future of Basel III looks less certain now than it did when it was agreed to.”
The Basel committee revised its capital standards and outlined new rules on liquidity and leverage after the 2008 crisis exposed the vulnerability of the banking system. Credit markets froze following the collapse of Lehman Brothers Holdings Inc., sending the world economy into its first recession since World War II. Basel III was meant to create “a much stronger banking and financial system that is much more resilient to financial crises,” said Mario Draghi, who will take over as president of the European Central Bank in November.
Not Binding
Basel standards aren’t binding, so each country needs to write its own rules putting the agreed-upon principles into effect. The European Commission proposed regulations to parliament last month that would translate Basel III into law. A majority of EU governments also must endorse them. U.S. regulators led by the Federal Reserve have to come up with their own version, though they don’t need legislative approval.The proposed EU rules, submitted by financial services commissioner Michel Barnier, omitted a ratio designed to improve banks’ cash positions, deferred decision on a rule to limit borrowing, revised capital definitions and extended some compliance dates. In the U.S., regulators are stymied because the 2010 Dodd-Frank Act bars the use in banking rules of credit ratings, which Basel III relies on to determine risk.
“Implementation is a big concern in Europe and the U.S.,” said Karel Lannoo, head of the Centre for European Policy Studies in Brussels. “The EU crisis isn’t over; the U.S. isn’t safely out of its mess. If we can’t get the rules that were supposed to protect the financial system from collapse, we won’t have changed anything to help us the next time around.”
Bigger Buffers
While the Greek debt crisis damped enthusiasm for tightening standards last year, the Basel committee managed to develop reforms to reduce risks in the financial system, according to Lannoo and other analysts. Increased capital requirements will create bigger buffers against losses. New liquidity rules will ensure banks have enough cash to deal with panicky customers withdrawing funds.Renewed concern this year that Greece may be unable to pay its debts, and similar worries about larger EU members Italy and Spain, have darkened Basel’s prospects. The sputtering economic recovery in the U.S. and Europe has hurt, too.
$600 Billion Hole
The European Commission estimates that the region’s banks will have to raise about $600 billion to comply with the new capital rules. Banks say that will harm their ability to lend at a time when economies are flailing.U.S. economic growth for the first quarter was revised down to 0.4 percent, while the second quarter’s initial figure was 1.3 percent. In Europe, gross domestic product fell from 0.8 percent in the first three months of the year to 0.2 percent in the second quarter.
Both the Bloomberg Europe 500 Banks and Financial Services Index and the KBW Bank Index of U.S. bank stocks have fallen about 30 percent this year. That wiped out more than $700 billion of market value on the two continents.
The European proposal alters the definition of capital that Basel III aimed to tighten when the committee agreed not to allow anything other than common shares to count toward the top- quality bank capital regulators examine.
Silent Participations
During the 2010 negotiations, Germany sought to maintain recognition of so-called silent participations -- hybrid securities that act like debt and equity at the same time -- which some banks rely on for more than half their capital. While Germany lost the battle to exempt silent participations last year, the EU’s implementation proposal was written to allow the securities to be included if they fulfill certain conditions, according to an EU official who asked not to be identified because he wasn’t authorized to speak.At Landesbank Hessen-Thueringen, a state-owned lender based in Frankfurt known as Helaba, silent participations account for more than 50 percent of the bank’s 6 billion euros ($8.6 billion) of capital. Helaba withdrew from the Europe-wide stress tests in July after regulators refused to count some of those hybrid instruments as capital.
Italy fought during Basel talks last year to include deferred tax assets -- future deductions from tax liabilities resulting from current losses -- when calculating top-tier capital. Basel III restricted use of these assets to no more than 10 percent of a bank’s capital. The EU’s proposal would allow unrestricted use of deferred tax assets if they comply with certain requirements. Italy modified its tax laws in February to enable the assets to meet those conditions.
Counting tax assets would raise the capital ratio at Banca Monte dei Paschi di Siena SpA, the oldest bank in the world and Italy’s third-largest, by about 1 percentage point, according to a February Mediobanca SpA report on the benefits of the tax-law change to Italian banks.
Double Counting
Basel III also sought to put an end to the double counting of capital in insurance subsidiaries, which many European lenders do. The proposed EU rules don’t require banks to deduct investments in these subsidiaries from their capital, which will allow the double counting to continue, said analysts including Andrew Stimpson at KBW Inc. in London. That would benefit banks such as France’s Credit Agricole SA (ACA), whose insurance subsidiary accounts for 10 percent of income.“Each adjustment may be justified in each country’s case, but when you put them all together, there will be differences between how the EU implements Basel III and how others do,” said Tobias Moerschen, a European bank analyst at Moody’s Investors Service in New York. “And if other countries feel compelled to go down the same road, you’ll end up with a less level playing field, and that is negative.”
Dimon, Ackermann
U.S. banks lobbying their regulators about the implementation of Basel rules can use the EU proposal as ammunition, Moerschen said. In March, Jamie Dimon, 55, chairman and chief executive officer of New York-based JPMorgan Chase & Co. (JPM), said at a Chamber of Commerce event in Washington that it would disadvantage U.S. banks if European lenders were allowed to calculate capital ratios differently.Josef Ackermann, the 63-year-old CEO of Frankfurt-based Deutsche Bank AG (DBK), fired a similar warning shot in a speech in New Delhi the same month: Separate regulatory approaches “would have severe consequences for financial markets and for the global economy,” he said.
Ackerman and other European bankers have complained that the U.S. never fully implemented Basel II, which was approved by the Basel committee in 2004. When community banks in the U.S. realized the regulations would give the largest international lenders the ability to lower their capital ratios, they lobbied lawmakers to prevent adoption of the rules. U.S. regulators, under pressure from Congress, delayed implementation.
Dodd-Frank Restrictions
Now the U.S. faces obstacles implementing Basel III because of conflicts with Dodd-Frank. The law’s ban on credit ratings was the result of criticism that Moody’s and other rating firms gave mortgage-related securities investment-grade ratings they didn’t deserve. That helped inflate a U.S. housing bubble as trillions of dollars of home loans were packaged into bonds and marketed to investors as safe.While Basel III relies less on ratings than previous regimes, it still uses them to calculate risk. An international debate about what might replace external ratings has been as inconclusive as the one in the U.S.
Officials from the Fed and the Office of the Comptroller of the Currency told a congressional oversight panel last month that they have received numerous proposals and are still trying to come up with a formula that doesn’t rely on ratings firms.
“If the U.S. agencies are unable to implement the Basel committee changes that reference credit ratings, other jurisdictions may infer a lessening of the U.S. commitment to the Basel framework,” David Wilson, the OCC’s chief national bank examiner, told the panel.
141 Rules
Bank regulators at the Fed and other U.S. agencies have been busy implementing 141 rules mandated by Dodd-Frank, according to a tally by New York-based law firm Davis Polk & Wardwell LLP. As of July 22, regulators had completed 20, published proposals for an additional 24, missed 19 deadlines and had 78 to write, according to the Davis Polk report.While Basel has taken a back seat to Dodd-Frank, U.S. regulators will be able to work around the ratings restrictions and propose rules to implement Basel III this year, according to two people involved in the discussions who asked not to be identified because they weren’t authorized to speak.
‘Big Holes’
U.S. regulators may be tempted to skip Basel altogether, said Karen Shaw Petrou, co-founder of Federal Financial Analytics Inc., an advisory firm in Washington.“Dodd-Frank already takes care of the most important elements of the financial crisis, so why should we try to incorporate a set of rules into which big holes are already being carved?” Petrou said.
One hole may be opening in Basel III’s global leverage ratio. Unlike the capital ratio, which weights assets based on riskiness, the leverage standard compares capital with total assets without taking risk into account. The rule aims to limit how big a bank can get by capping how much it can borrow in relation to its common equity.
European banks had opposed a leverage ratio, arguing that different accounting regimes make the balance sheets of U.S. lenders smaller than those of their foreign counterparts and that restricting leverage would unfairly punish non-U.S. firms. While U.S. banks are subject to a leverage cap, Generally Accepted Accounting Principles allow them to keep more assets off their balance sheets and to net out derivatives more than International Financial Reporting Standards do.
Liquidity Standards
The Basel committee addressed the issue by devising a mechanism for adding total assets that puts aside different accounting standards. Still, the EU proposal doesn’t commit to implementing the ratio by 2018 as required by Basel III. Instead, it asks for a five-year period to review the rule’s effectiveness in curbing risk before deciding whether to make it binding.The EU proposal also softens Basel III’s liquidity standards that would require banks to hold enough cash or easily sellable assets to meet short- and long-term liabilities. It omits the rule covering debt coming due in the next 12 months and modifies the one for 30-day obligations to allow counting covered bonds as liquid assets. Denmark, Sweden and Spain lobbied for the modification because their banks have sizeable holdings of those bonds, which are securities backed by the cash flow from a pool of mortgage loans.
‘Totally Faithful’
“The EU document is notable for its omissions of some key Basel concepts,” said Stimpson, the KBW analyst. “There are also tweaks in the capital definitions. I hope these don’t give Americans the excuse to say, ‘We’re not implementing Basel III.’”Barnier, the financial services commissioner, and other EU officials have said the changes they incorporated into the implementation proposal are part of the natural process of translating global rules into local practice.
“We are totally faithful to Basel’s spirit, letter and level of ambition,” Barnier said in Brussels last month.
Different interpretations by national regulators emerged during previous incarnations of the accords, known as Basel I and II. Conflicts over Basel III could undermine the new regime if more countries follow Europe’s example and come up with their own versions of the rules, said Vishal Vedi, a London-based partner at Deloitte LLP’s financial-advisory practice.
“There’s concern that divergences between the EU and the U.S. on Basel III implementation will be bigger this time,” Vedi said. “There’s a line when the spirit of Basel III is tossed aside. I don’t think we’re there yet.”(Bloomberg)
Friday, August 19, 2011
RAM Ratings reaffirms Bank Rakyat’s AA2/P1 ratings
RAM Ratings has reaffirmed Bank Kerjasama Rakyat Malaysia Bhd’s (Bank Rakyat) respective long- and short-term financial institution ratings at AA2 and P1 with a stable outlook.
In a statement Friday, Aug 19, the rating agency said the ratings reflect Bank Rakyat’s robust profitability, underpinned by its dominant market share in personal financing facilities for civil servants and access to salary deductions administered by Biro Perkhidmatan Angkasa (ANGKASA).
As the salary deductions are non-discretionary from the borrower’s perspective, the repayment profiles of these personal financing facilities are considerably better, it said.
“The ratings also reflect Bank Rakyat’s position as a leading cooperative bank and its role as a developmental financial institution.
“On the other hand, the ratings recognise concentration risks in the Bank’s depositor and financing base,” it said.
RAM Ratings said that Bank Rakyat’s asset-quality indicators remain sound, adding that despite a higher credit-cost ratio of 1.8% at end-December 2010, the bank’s gross impaired-financing ratio had eased to 3.4% (end-March 2010: 5.4%).
Its heftier credit costs primarily relate to further provisions and write-offs on Bank Rakyat’s commercial financing, as well as more conservative provisioning on its personal financing portfolio, it said.
“Despite narrower financing margins, higher credit costs and impairments on its securities holdings, Bank Rakyat’s pre-tax profit went up 11% year-on-year to RM1.7 billion in FY Dec 2010, buoyed by strong financing growth and a corresponding increase in net financing income.
“While intense competition and further upward rate movements are expected to exert pressure on margins, the bank’s net financing margins are still envisaged to be kept sizeable at above 5%,” it said.
RAM Ratings said that with a 10% deposit growth in 1Q FY Dec 2011 adding to the 26% surge in deposits in the 2010 fiscal year, Bank Rakyat’s financing-to-deposits ratio had eased to 87% by end-March 2011 (end-December 2009: 98%).
“Moving forward, Bank Rakyat intends to progressively increase its paid-up capital to RM3 billion (+RM1 billion) by end-December 2011; the Bank is expected to close the year with healthy tier-1 and overall risk-weighted capital-adequacy ratios (RWCARs) of at least 13% and 14.5%, respectively (end-December 2010: 11% and 12.5%),” it said. (theedgemalaysia.com)
In a statement Friday, Aug 19, the rating agency said the ratings reflect Bank Rakyat’s robust profitability, underpinned by its dominant market share in personal financing facilities for civil servants and access to salary deductions administered by Biro Perkhidmatan Angkasa (ANGKASA).
As the salary deductions are non-discretionary from the borrower’s perspective, the repayment profiles of these personal financing facilities are considerably better, it said.
“The ratings also reflect Bank Rakyat’s position as a leading cooperative bank and its role as a developmental financial institution.
“On the other hand, the ratings recognise concentration risks in the Bank’s depositor and financing base,” it said.
RAM Ratings said that Bank Rakyat’s asset-quality indicators remain sound, adding that despite a higher credit-cost ratio of 1.8% at end-December 2010, the bank’s gross impaired-financing ratio had eased to 3.4% (end-March 2010: 5.4%).
Its heftier credit costs primarily relate to further provisions and write-offs on Bank Rakyat’s commercial financing, as well as more conservative provisioning on its personal financing portfolio, it said.
“Despite narrower financing margins, higher credit costs and impairments on its securities holdings, Bank Rakyat’s pre-tax profit went up 11% year-on-year to RM1.7 billion in FY Dec 2010, buoyed by strong financing growth and a corresponding increase in net financing income.
“While intense competition and further upward rate movements are expected to exert pressure on margins, the bank’s net financing margins are still envisaged to be kept sizeable at above 5%,” it said.
RAM Ratings said that with a 10% deposit growth in 1Q FY Dec 2011 adding to the 26% surge in deposits in the 2010 fiscal year, Bank Rakyat’s financing-to-deposits ratio had eased to 87% by end-March 2011 (end-December 2009: 98%).
“Moving forward, Bank Rakyat intends to progressively increase its paid-up capital to RM3 billion (+RM1 billion) by end-December 2011; the Bank is expected to close the year with healthy tier-1 and overall risk-weighted capital-adequacy ratios (RWCARs) of at least 13% and 14.5%, respectively (end-December 2010: 11% and 12.5%),” it said. (theedgemalaysia.com)
Saturday, August 13, 2011
Maybank to increase market share in e-dividend payment
The Bank is principally engaged in the business of banking in all aspects, which also include Islamic Banking Scheme operations.
Malayan Banking Bhd (Maybank) is targeting to raise its market share in electronic dividend payments from 30% to 70% by 2013 with the introduction of its enhanced eDividend system.
As part of Maybank's online cash management system, Maybank2e.net, the enhanced eDividend service is offered in partnership with Inland Revenue Board to automate the taxation process of dividends, which would eliminate hardcopy tax vouchers.
“This means that shareholders no longer have to fill this section in their income tax returns when using the e-filing service as all their relevant dividend payment records will be captured.
“We are working towards linking dividend payments and tax information to Maybank account holders through our popular online banking portal, Maybank2u,” deputy president and head of global wholesale banking Abdul Farid Alias said.
Among the benefits of this new service to registrars and corporate clients are greater cost savings, convenience, security and flexibility.
“For a start, the auto generation of reconciliation files linked to our payment systems will ensure accuracy and punctual delivery of reconciliation reports.
“This reduces Maybank's per transaction cost which is then passed on to our clients,” he said.
“Shareholders are kept informed of their dividend payments via e-mail and SMS notifications while registrars and corporate clients enjoy the flexibility of our system which can cater to customised file formats,” he added. (The Star Online)
Malayan Banking Bhd (Maybank) is targeting to raise its market share in electronic dividend payments from 30% to 70% by 2013 with the introduction of its enhanced eDividend system.
As part of Maybank's online cash management system, Maybank2e.net, the enhanced eDividend service is offered in partnership with Inland Revenue Board to automate the taxation process of dividends, which would eliminate hardcopy tax vouchers.
“This means that shareholders no longer have to fill this section in their income tax returns when using the e-filing service as all their relevant dividend payment records will be captured.
“We are working towards linking dividend payments and tax information to Maybank account holders through our popular online banking portal, Maybank2u,” deputy president and head of global wholesale banking Abdul Farid Alias said.
Among the benefits of this new service to registrars and corporate clients are greater cost savings, convenience, security and flexibility.
“For a start, the auto generation of reconciliation files linked to our payment systems will ensure accuracy and punctual delivery of reconciliation reports.
“This reduces Maybank's per transaction cost which is then passed on to our clients,” he said.
“Shareholders are kept informed of their dividend payments via e-mail and SMS notifications while registrars and corporate clients enjoy the flexibility of our system which can cater to customised file formats,” he added. (The Star Online)
Tuesday, August 9, 2011
AIG sues BoA for US$10bil
Insurer American International Group Inc (AIG) is suing Bank of America Corp to recover more than US$10bil of losses from a “massive fraud” on mortgage debt, deepening the morass of litigation faced by the largest US bank.
AIG, still largely owned by taxpayers after US$182.3bil of government bailouts, is the latest of a growing number of investors filing lawsuits to hold banks responsible for losses on soured mortgages that contributed to the financial crisis. (Reuters)
AIG, still largely owned by taxpayers after US$182.3bil of government bailouts, is the latest of a growing number of investors filing lawsuits to hold banks responsible for losses on soured mortgages that contributed to the financial crisis. (Reuters)
Thursday, August 4, 2011
Maybank keeps RHB option open
KUALA LUMPUR: Maybank, which called off merger talks with RHB Capital Bhd in June, is still keeping its options open for a possible acquisition if the price is right.
President-cum-chief executive officer Datuk Seri Abdul Wahid Omar said RHB was a very good bank and the combination between Maybank and RHB could create a significant amount of synergy, resulting in a significant holder value creation.
“We're always open,” he said in a recent interview with Patrick Jenkins, editor of Financial Times' View From The Top.
He was commenting on whether the largest banking group was still looking for an opportunity to acquire RHB if the price was revised downwards.
“I think there is no reason why it shouldn't be able to continue on its own. I think it has demonstrated its capability to grow on its own.
“For now, on our part, we have decided to stand down and not to proceed at this juncture,” he said.
Abdul Wahid said at that time Maybank had not gone down to actually making a formal bid for it; but given the expectations created, it could be challenging to come up with a compelling proposition.
It was reported that the proposed merger talks were called off not too long after Abu Dhabi Commercial Bank started to sell its 25% stake to Abu Dhabi-based investment fund, Aabar Investments, at a relatively high price.
The fund paid RM10.80 per share for the stake which was higher than the fair value of around RM10.50 per share.
Turning to the financial results, Abdul Wahid said the financial year ended June 30, 2011 would be another record year.
Last year, he said the banking group reported a record profit after tax of RM3.8bil and for the first three quarters, it had already touched an after-tax profit of RM3.3bil.
“At the rate we're going, we reckon that this is going to be another record year.
“We're encouraged by the progress made across the board, both in terms of asset growth as well as the bottom line. I think we're quite optimistic of the future,” he said. (Bernama)
President-cum-chief executive officer Datuk Seri Abdul Wahid Omar said RHB was a very good bank and the combination between Maybank and RHB could create a significant amount of synergy, resulting in a significant holder value creation.
“We're always open,” he said in a recent interview with Patrick Jenkins, editor of Financial Times' View From The Top.
 | ||
| Record year: Wahid reckons Maybank's fiscal year 2011 will set another record. |
“I think there is no reason why it shouldn't be able to continue on its own. I think it has demonstrated its capability to grow on its own.
“For now, on our part, we have decided to stand down and not to proceed at this juncture,” he said.
Abdul Wahid said at that time Maybank had not gone down to actually making a formal bid for it; but given the expectations created, it could be challenging to come up with a compelling proposition.
It was reported that the proposed merger talks were called off not too long after Abu Dhabi Commercial Bank started to sell its 25% stake to Abu Dhabi-based investment fund, Aabar Investments, at a relatively high price.
The fund paid RM10.80 per share for the stake which was higher than the fair value of around RM10.50 per share.
Turning to the financial results, Abdul Wahid said the financial year ended June 30, 2011 would be another record year.
Last year, he said the banking group reported a record profit after tax of RM3.8bil and for the first three quarters, it had already touched an after-tax profit of RM3.3bil.
“At the rate we're going, we reckon that this is going to be another record year.
“We're encouraged by the progress made across the board, both in terms of asset growth as well as the bottom line. I think we're quite optimistic of the future,” he said. (Bernama)
Wednesday, August 3, 2011
Gold Tumbles After Rally to All-Time High Prompts Increased Investor Sales
Gold declined after a rally to an all-time high prompted some investors to reduce their holdings even amid persistent concern that the global recovery may be losing momentum.
Immediate-delivery gold, which reached a record $1,661.95 an ounce yesterday, lost as much as 0.6 percent to $1,651.95 and was at $1,656.66 as of 11:32 a.m. in Singapore. The metal’s so- called relative-strength index reached 75 yesterday, above the 70-point level that’s seen by some analysts as signalling a drop.
Gold rallied 2.6 percent yesterday, the most in nine months, after a report showed U.S. consumer spending declined in June, raising concern a slump in jobs-creation is hurting growth. The metal has risen more than 10 percent in the past month as U.S. lawmakers battled to head off a default by raising the debt ceiling.
“The U.S. debt problem has been settled for now and problems in Europe have resurfaced, which will keep gold’s uptrend intact,” Hou Shufeng, an analyst at China Merchants Futures Co., said from Shenzhen. “After such a big jump in prices yesterday, a little bit of profit taking is to be expected.”
The December-delivery contract in New York gained 0.9 percent to $1,658.80 an ounce after reaching a record $1,664.50 yesterday. Futures have rallied 16 percent this year, driven by increased investment demand and buying by central banks.
Holdings in exchange-traded products expanded to 2,173.923 metric tons yesterday, the highest level ever, Bloomberg data show. The assets, which totaled 2,097.231 tons on Dec. 31, have climbed for seven straight sessions.
Thailand, South Korea and Kazakhstan added gold valued at about $2.4 billion to their reserves last month, joining Mexico and Russia in increasing holdings this year as central bankers hedge against depreciating foreign-currency reserves.(Bloomberg)
Immediate-delivery gold, which reached a record $1,661.95 an ounce yesterday, lost as much as 0.6 percent to $1,651.95 and was at $1,656.66 as of 11:32 a.m. in Singapore. The metal’s so- called relative-strength index reached 75 yesterday, above the 70-point level that’s seen by some analysts as signalling a drop.
Gold rallied 2.6 percent yesterday, the most in nine months, after a report showed U.S. consumer spending declined in June, raising concern a slump in jobs-creation is hurting growth. The metal has risen more than 10 percent in the past month as U.S. lawmakers battled to head off a default by raising the debt ceiling.
“The U.S. debt problem has been settled for now and problems in Europe have resurfaced, which will keep gold’s uptrend intact,” Hou Shufeng, an analyst at China Merchants Futures Co., said from Shenzhen. “After such a big jump in prices yesterday, a little bit of profit taking is to be expected.”
The December-delivery contract in New York gained 0.9 percent to $1,658.80 an ounce after reaching a record $1,664.50 yesterday. Futures have rallied 16 percent this year, driven by increased investment demand and buying by central banks.
Holdings in exchange-traded products expanded to 2,173.923 metric tons yesterday, the highest level ever, Bloomberg data show. The assets, which totaled 2,097.231 tons on Dec. 31, have climbed for seven straight sessions.
Thailand, South Korea and Kazakhstan added gold valued at about $2.4 billion to their reserves last month, joining Mexico and Russia in increasing holdings this year as central bankers hedge against depreciating foreign-currency reserves.(Bloomberg)
Tuesday, August 2, 2011
Gold Coins Selling Out in Lisbon on Big Bets
Rui Lola says gold sales at his foreign exchange and coin store in downtown Lisbon almost doubled this year, draining inventories faster than he can replace them.
What’s happening at the Mundial Agencia de Cambios in the historic center of the capital underscores the global rush from investors seeking refuge from debt and banking crises. Holdings in exchange-traded products backed by gold reached a record $113 billion July 29, data compiled by Bloomberg show. Rand Refinery Ltd., operating the world’s biggest refining complex east of Johannesburg, is selling the most Krugerrands in almost a year.
Purchases accelerated as Greece was bailed out for a second time, U.S. leaders wrangled over borrowing limits and the cost of insuring against bank defaults hit a six-month high. While George Soros sold most of his gold in the first quarter, a year after calling it the “ultimate asset bubble,” John Paulson, who made $15 billion betting against subprime mortgages, remains the biggest investor in the largest ETP backed by bullion.
“The top of the bubble will be euphoric action, a big accelerated price move, and that’s just not the case at the moment,” said Charles Morris, who oversees $2.5 billion at HSBC Global Asset Management in London. “I would expect it to be a very popular asset at its peak, and I don’t think we’re anywhere near that. We think it’s a bull market and we’re on it.”
Bullion, which reached a record $1,632.80 on July 29, will rise as high as $1,713 this year and $1,938 in 2012, according to the median in a survey of the four most-accurate precious- metals forecasters tracked by Bloomberg over the past two years. That may mean 12 consecutive annual gains, the longest winning streak since at least 1920.
Investors in options on Comex gold futures also expect the rally to continue. The most widely held option gives holders the right to buy gold at $2,000 by November, 22 percent more than now. The second-biggest position is $1,800 for the same month, data from the exchange shows. It was the most widely held option as of July 29. Speculators are holding close to their largest bet on higher prices since October 2009, according to figures from the U.S. Commodity Futures Trading Commission.
“People are nervous about the banking system and the euro and believe that investing in gold will help them protect their savings,” said Lola, who manages coin sales at the shop near the Rua do Ouro, once a center for goldsmiths working with metal brought back from Brazil in the 18th and 19th centuries.
“We used to have people, mostly older people and coin collectors, who came here to buy gold coins to offer them as gifts,” said the 32-year-old, who sold 643 ounces of coins in the first six months this year. “Today, we have people from all ages and walks of life buying.”
Central banks, the world’s biggest holders, are also accelerating purchases, adding 155 metric tons valued at about $8.1 billion to reserves in the first five months, according to the London-based World Gold Council. That’s about double the amount bought in all of 2010.
Higher borrowing costs also threaten the bull market. More than two-dozen countries and the European Central Bank raised interest and other rates this year as inflation accelerated, data compiled by Bloomberg show. That diminishes the appeal of gold, which earns investors returns through price gains.
Soros Fund Management LLC, founded by the 80-year-old billionaire, sold 99 percent of its stake in the SPDR Gold Trust and all shares in the iShares Gold Trust in the first quarter, a U.S. Securities and Exchange Commission filing in May showed.
Warren Buffett, with a net worth of $50 billion, says better returns can be found elsewhere. Berkshire Hathaway Inc.’s Class A shares rose more than 12-fold in the past two decades while gold is up more than fourfold.
Bullion’s 14 percent advance since the end of the first quarter has favored investors who kept their bets.
Paulson & Co. remains the largest shareholder in the SPDR Gold Trust, the biggest exchange-traded product backed by gold, according to a filing with the SEC in May. He bought the 31.5 million shares in the first three months of 2009, valued at $2.84 billion at the end of the period. They are now valued at $5 billion.
Investors added 142 tons of gold to their holdings through exchange-traded products since the end of February, taking the total to 2,152 tons, data compiled by Bloomberg show. That’s more than all except four central banks.
“The reason people hold gold is as protection against what we call tail risk -- really, really bad outcomes,” Fed Chairman Ben S. Bernanke told a Congressional hearing on July 13. “And to the extent that the last few years have made people more worried about the potential of a major crisis, then they have gold as a protection.”
The cost of insuring against European banks defaulting with credit-default swaps rose to 177 basis points on July 29, from 120 basis points in April, according to the Markit iTraxx Financial Index of contracts tied to senior debt of 25 banks and insurers. Swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower miss debt agreements. A basis point on a contract protecting $10 million of debt for five years is equivalent to $1,000 a year.
A measure of the combined earnings of the 16-member Philadelphia Stock Exchange Gold and Silver Index will rise 18 percent this year, according to analysts’ estimates compiled by Bloomberg. Toronto-based Barrick Gold Corp. (ABX), the world’s largest producer, will report a 42 percent jump in net income to $4.48 billion, the mean of 11 estimates shows.
The dollar, the world’s reserve currency, weakened 8 percent in the past year, sapping investor confidence already dented by the global recession.
The U.S. Dollar Index, a gauge against six counterparts, will average 74.3 in the fourth quarter, compared with an average of 76 so far this year, the median of 10 analysts’ estimates compiled by Bloomberg show. Gold and the index have a -0.75 correlation, with a figure of -1 meaning they move in opposite directions all the time.
What’s happening at the Mundial Agencia de Cambios in the historic center of the capital underscores the global rush from investors seeking refuge from debt and banking crises. Holdings in exchange-traded products backed by gold reached a record $113 billion July 29, data compiled by Bloomberg show. Rand Refinery Ltd., operating the world’s biggest refining complex east of Johannesburg, is selling the most Krugerrands in almost a year.
Purchases accelerated as Greece was bailed out for a second time, U.S. leaders wrangled over borrowing limits and the cost of insuring against bank defaults hit a six-month high. While George Soros sold most of his gold in the first quarter, a year after calling it the “ultimate asset bubble,” John Paulson, who made $15 billion betting against subprime mortgages, remains the biggest investor in the largest ETP backed by bullion.
“The top of the bubble will be euphoric action, a big accelerated price move, and that’s just not the case at the moment,” said Charles Morris, who oversees $2.5 billion at HSBC Global Asset Management in London. “I would expect it to be a very popular asset at its peak, and I don’t think we’re anywhere near that. We think it’s a bull market and we’re on it.”
Treasury Returns
Gold advanced 15 percent this year, beating the 7.4 percent gain in the Standard & Poor’s GSCI gauge of 24 commodities and the 0.8 percent rise in the MSCI All-Country World Index of stocks. Treasuries returned 4.2 percent, a Bank of America Merrill Lynch index shows. The metal for immediate delivery traded at $1,629.20 an ounce by 4:43 p.m. in London.Bullion, which reached a record $1,632.80 on July 29, will rise as high as $1,713 this year and $1,938 in 2012, according to the median in a survey of the four most-accurate precious- metals forecasters tracked by Bloomberg over the past two years. That may mean 12 consecutive annual gains, the longest winning streak since at least 1920.
Investors in options on Comex gold futures also expect the rally to continue. The most widely held option gives holders the right to buy gold at $2,000 by November, 22 percent more than now. The second-biggest position is $1,800 for the same month, data from the exchange shows. It was the most widely held option as of July 29. Speculators are holding close to their largest bet on higher prices since October 2009, according to figures from the U.S. Commodity Futures Trading Commission.
British Sovereigns
Rand Refinery sold about 66,400 ounces of Krugerrands last month, the most since August 2010. Britain’s Royal Mint used 36,219 ounces in the first half of 2011, 8.9 percent more than a year earlier, data obtained by Bloomberg under a Freedom of Information Act request show. Krugerrands and British pieces are among the coins Lola is finding hardest to replace.“People are nervous about the banking system and the euro and believe that investing in gold will help them protect their savings,” said Lola, who manages coin sales at the shop near the Rua do Ouro, once a center for goldsmiths working with metal brought back from Brazil in the 18th and 19th centuries.
“We used to have people, mostly older people and coin collectors, who came here to buy gold coins to offer them as gifts,” said the 32-year-old, who sold 643 ounces of coins in the first six months this year. “Today, we have people from all ages and walks of life buying.”
Central banks, the world’s biggest holders, are also accelerating purchases, adding 155 metric tons valued at about $8.1 billion to reserves in the first five months, according to the London-based World Gold Council. That’s about double the amount bought in all of 2010.
Borrowing Costs
The trend may also be a warning. Prices rose to a then- record $850 in 1980 as central banks bought gold, only to drop for most of the next 20 years. Bullion tripled from 1999 through the beginning of 2008 as the banks sold more than 4,000 tons.Higher borrowing costs also threaten the bull market. More than two-dozen countries and the European Central Bank raised interest and other rates this year as inflation accelerated, data compiled by Bloomberg show. That diminishes the appeal of gold, which earns investors returns through price gains.
Soros Fund Management LLC, founded by the 80-year-old billionaire, sold 99 percent of its stake in the SPDR Gold Trust and all shares in the iShares Gold Trust in the first quarter, a U.S. Securities and Exchange Commission filing in May showed.
Warren Buffett, with a net worth of $50 billion, says better returns can be found elsewhere. Berkshire Hathaway Inc.’s Class A shares rose more than 12-fold in the past two decades while gold is up more than fourfold.
‘A Little Peculiar’
“They take it out of the ground in South Africa, ship it to the Federal Reserve, where they put it back in the ground,” Buffett said in answer to a question about commodities on April 30 at Berkshire Hathaway’s annual meeting in Omaha, Nebraska. “If you were watching from Mars you might think it’s a little peculiar.”Bullion’s 14 percent advance since the end of the first quarter has favored investors who kept their bets.
Paulson & Co. remains the largest shareholder in the SPDR Gold Trust, the biggest exchange-traded product backed by gold, according to a filing with the SEC in May. He bought the 31.5 million shares in the first three months of 2009, valued at $2.84 billion at the end of the period. They are now valued at $5 billion.
Investors added 142 tons of gold to their holdings through exchange-traded products since the end of February, taking the total to 2,152 tons, data compiled by Bloomberg show. That’s more than all except four central banks.
Inflation Adjusted
ETP holdings will reach 2,404 tons this year and 2,754 tons in 2012, Morgan Stanley estimates. In inflation-adjusted terms, gold’s 1980 record of $850 is equal to $2,299 today, according to a calculator from the Federal Reserve Bank of Minneapolis.
“The reason people hold gold is as protection against what we call tail risk -- really, really bad outcomes,” Fed Chairman Ben S. Bernanke told a Congressional hearing on July 13. “And to the extent that the last few years have made people more worried about the potential of a major crisis, then they have gold as a protection.”
The cost of insuring against European banks defaulting with credit-default swaps rose to 177 basis points on July 29, from 120 basis points in April, according to the Markit iTraxx Financial Index of contracts tied to senior debt of 25 banks and insurers. Swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower miss debt agreements. A basis point on a contract protecting $10 million of debt for five years is equivalent to $1,000 a year.
Mining Earnings
Speculators held a net 233,256 futures and options contracts by July 26, CFTC data show. They held 238,319 a week earlier. The last time the position was that high, gold rose 15 percent to a record in the following two months.
A measure of the combined earnings of the 16-member Philadelphia Stock Exchange Gold and Silver Index will rise 18 percent this year, according to analysts’ estimates compiled by Bloomberg. Toronto-based Barrick Gold Corp. (ABX), the world’s largest producer, will report a 42 percent jump in net income to $4.48 billion, the mean of 11 estimates shows.
The dollar, the world’s reserve currency, weakened 8 percent in the past year, sapping investor confidence already dented by the global recession.
The U.S. Dollar Index, a gauge against six counterparts, will average 74.3 in the fourth quarter, compared with an average of 76 so far this year, the median of 10 analysts’ estimates compiled by Bloomberg show. Gold and the index have a -0.75 correlation, with a figure of -1 meaning they move in opposite directions all the time.
‘Essential’ Investment
“Since the dawn of recorded history, gold has been a parking place, a store of wealth, and that’s never changed,” said Michael Pento, the economist at Euro Pacific Capital Inc. in New York who correctly predicted the collapse in commodity prices in 2008. “Gold is more and more an essential part of investors’ portfolios.”(Bloomberg)Monday, August 1, 2011
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