We need to find a fairer way of providing Goods and Services to the rest of the people on Earth.Cryptocurrencies and/or Gold Standard of money....maybe the answer to fight hyperinflation caused by too much printing of paper/fiat currencies by Governments and Central Banks all over the World. (https://nomorefiatmoneyplease.blogspot.com)
[MILAN] UniCredit, Italy biggest bank by assets, plans to slash thousands of jobs and restructure or exit its retail business in Austria and leasing operations in Italy as it moves to bolster its financial strength and avoid a capital increase.
UniCredit, the latest major EU bank to announce deep overhaul of operations to boost profits and increase core capital, said on Wednesday it expected a CET 1 ratio of 12.6 per cent in 2018 compared to 10 per cent in a previous plan.
Net profit for 2018 is expected at 5.3 billion euros (S$8.1 billion), it said, down from 6.6 billion euros envisaged in the previous plan.
In a statement the bank said it would reduce its workforce by 18,200 people, including 6,000 people through the sale of its Ukraine business and a joint venture of its Pioneer asset management operations with Santander.
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Job cuts will take place both in local and global corporate centres as well as in commercial banks in Italy, Germany, Austria and Central and Eastern Europe, the lender said.
Swiss bank Julius Baer's maiden sale of a Singapore dollar (SGD)-denominated, Basel III-compliant perpetual Additional Tier 1 (AT1) bonds has turned so hot that the bank has lowered the final price guidance to 6 per cent area.
PHOTO: REUTERS
SWISS bank Julius Baer's maiden sale of a Singapore dollar (SGD)-denominated, Basel III-compliant perpetual Additional Tier 1 (AT1) bonds has turned so hot that the bank has lowered the final price guidance to 6 per cent area.
The final price guidance is now 6 per cent area, plus or minus 10 basis points, according to the fifth and final update from the bookrunners.
Order books are circa S$1.8 billion with strong support from private bank investors, said Clifford Lee, DBS Bank's head of fixed income.
"It ticked all three boxes-familiar name, attractive yield and strong investment grade rating," said Mr Lee on the strong interest.
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Citigroup, DBS Bank and UBS are handling the deal.
The initial price guidance for the offering, which was launched on Wednesday at 9am, was 6.375 per cent, and indication of interest quickly reached in excess of S$500 million half an hour after the sale began.
The Swiss bank last month said that it intends to sell SGD perpetual tier 1 subordinated bonds in a benchmark-sized volume - at a minimum of S$250 million to S$300 million - making it the first foreign bank to issue such a bond in the Singapore market.
The new bonds will likely be the highest-yielding AT1s in the SGD bond universe, since the existing AT1s are issued by the three local banks which are larger and have superior credit ratings, wrote iFAST in a note on the Julius Baer offering on Monday.
Malaysian ringgit banknotes of various denominations are arranged for a photograph in Tokyo, Japan.
PHOTO: BLOOMBERG
[KUALA LUMPUR] Malaysian bond bankers haven't had this little to do in five years as companies shelve investment plans because of a depressed ringgit.
Companies in Southeast Asia's third-biggest economy had sold 44.6 billion ringgit (S$14.5 billion) of notes by the end of September, the least since 2010, according to data from Bank Negara Malaysia. Imports of investment goods shrank 26.4 per cent through August, the most since 2009, a trend that Barclays Plc doesn't see reversing soon.
Rising costs of imports and consumer sentiment plunging to below global financial crisis lows have made borrowing for investment a tough sell. The Malaysian economy grew at the slowest pace in almost two years in the second quarter as plunging commodity prices and a political scandal made the ringgit the worst performer among Asian currencies this year.
"If you're a company importing machinery for expansion, it may not be viable anymore given the currency weakness and slowing growth," said Rahul Bajoria, a Singapore-based economist at Barclays. "This could mean slower private investment going forward, something we have already seen in the past three quarters." The slump is also hurting syndicated loans. Global banks lent just US$1.4 billion to Malaysian borrowers in the three months through Sept. 30, the slowest quarter in more than six years, data compiled by Bloomberg show.
The one bright spot has been this year's record US$8.9 billion of offshore bond issuance, buoyed by increased activity from the Malaysian government and state-owned enterprises. But excluding dollar notes from the sovereign, Petroliam Nasional Bhd and Export Import Bank of Malaysia, the leftover US$2.2 billion is the lowest mainly private issuance since 2011.
The cost of foreign bonds for Malaysian companies has risen as the ringgit dropped 23 percent in the past year, the currency's worst performance since the Asian Financial Crisis. The ringgit tumbled 32 per cent in the twelve months following March 1997, prompting a wave of corporate defaults and eventually leading to capital controls by the Malaysian government.
"The public and private sectors of Malaysia were never frequent issuers" offshore, said Florian Schmidt, head of debt capital markets for SC Lowy in Hong Kong. "I presume that the desire to avoid currency mismatches - remember 1997 - plays a significant role." Malaysia's central bank left interest rates unchanged for an eighth meeting on Nov. 5 as policy makers juggle risks to economic growth while contending with the fragile currency. The ringgit also weakened last week after Federal Reserve Chair Janet Yellen said a December rate hike would be a "live possibility" if US economic data continue to point to growth and firmer prices.
AmInvestment Bank Bhd, the fourth-biggest arranger of local bonds this year, is seeing some positive signs amid ambitious government plans. It forecasts that issuance could reach as much as 80 billion ringgit this year based on deals in the current pipeline.
"Things have picked up in the fourth quarter," said Seohan Soo, executive vice president of the capital markets group at Kuala Lumpur-based AmInvestment Bank. "We are seeing more corporates refinancing and fundraising for infrastructure projects." Prime Minister Najib Razak signaled in October that he'll accelerate infrastructure projects next year to help support the economy. That should see government-related bond and bank financings increase as he seeks to boost capital spending while reducing the fiscal deficit as promised.
Corporate lenders, on the other hand, may want to book some holidays.
"Bigger infrastructure projects will continue," said Bajoria at Barclays. "But you won't see much private demand for capital."
"Too big to fail" Chinese banks face US$400 billion capital call
A Chinese national flag flutters outside the headquarters of the People's Bank of China, the Chinese central bank, in Beijing, in this Apr 3, 2014 file photo.
PHOTO: REUTERS
[HONG KONG] China's four biggest banks may have to raise up to US$400 billion to meet new global capital rules, an onerous task that could pressure them to slow down lending at a time when Beijing wants them to help prop up economic growth.
The Financial Stability Board (FSB) this week finalised rules for ensuring banks do not become "too big to fail", a pledge made by the G20 after governments spent more than US$1.5 trillion rescuing financial firms in the 2008 financial crisis.
The rules will apply to China's major state lenders, a coup for Western banks which had complained that a proposed exemption for emerging market institutions would give the Chinese banks an unfair competitive advantage as they expanded overseas.
The reforms require the world's 30 systemically important banks, known as GSIBs, to hold a buffer of capital that can be written down to protect taxpayers if the bank goes bust.
This layer of Total Loss Absorbing Capacity, or TLAC, comprises a large chunk of debt and comes on top of banks' core Basel capital requirements.
China has four GSIBs: Bank of China, Agricultural Bank of China, Industrial and Commercial Bank of China , and China Construction Bank which was added to the GSIB list only last week.
Industry insiders and analysts said the Big Four would need to raise a total of between US$350 billion and US$400 billion to comply with the rules, but they were unlikely to do this until after 2020.
In a note published ahead of Monday's announcement, James Antos, an analyst at Mizuho Securities in Hong Kong, said China's banks would suffer the "greatest burden" in meeting the requirements because they currently held minimal senior debt. "Since these banks are majority owned by central government agencies, we are not convinced that adding debt is entirely appropriate. We think TLAC will boost costs for China's Big Four banks without adding much in the way of depositor protection." China's regulators lobbied hard for an open-ended exemption from TLAC, arguing its capital markets were not deep enough to absorb so much issuance, leading the FSB to propose an exemption for emerging markets banks in February.
BIG WINDOW
On Monday, the FSB scrapped the emerging markets waiver in favour of a much longer phase-in period. "At face value, this final version looks a lot fairer," said Royce Miller, a partner at law firm Freshfields in Hong Kong. "There were powerful voices at the table and valid arguments on both sides and this is a compromise which means the Chinese banks have to comply by fixed deadlines, but they have a very long window." GSIBs from developed markets will be required to meet a minimum TLAC requirement of at least 16 percent of the group's risk-weighted assets (RWAs) from January 2019, and at least 18 percent from January 2022, while this time frame is 2025 and 2028 respectively for emerging markets banks.
Shares in China's Big Four banks fell an average of 1.7 per cent in Hong Kong trading on Tuesday, slightly underperforming the benchmark Hang Seng index.
ICBC declined to comment. The other three banks did not respond to requests for comment.
Although Chinese banks' raised record levels of capital last year and boast healthy average core equity ratios of around 12-15 per cent, this buffer is under growing pressure as lending growth outstrips these firms' ability to retain earnings.
The capital requirements are, however, unlikely to cause a shock to the system, said Matthew Smith, China banks analyst at Macquarie, citing the banks' generous deadline. "By then, the capital market in China should be more developed to accommodate these sizable fund-raising activities." But the new requirements are likely to spur a change in Chinese banks' behavior as they look to rely more on wholesale funding, potentially pare down risk-weighted assets, and become more familiar with TLAC debt instruments such as subordinated bonds, said bankers. "The Chinese banks have won a stay of execution," said one Hong Kong banker who has helped Chinese banks raise capital."But they are going to have to become extremely active in the capital markets."
