OCBC's new deposit-based home loan rivals DBS's, says consultancy firm

By

Claire Huanghuangjy@sph.com.sg@ClaireHuangBT

A boutique mortgage consultancy firm has welcomed local lender OCBC's version of a deposit-based home loan peg - 36 FDMR (fixed deposit mortgage rate) - launched last month, adding that it will give DBS a run for its money. 

ST PHOTO: JAMIE KOH

NOV 13, 201510:56 AM

A BOUTIQUE mortgage consultancy firm has welcomed local lender OCBC's version of a deposit-based home loan peg - 36 FDMR (fixed deposit mortgage rate) - launched last month, adding that it will give DBS a run for its money.

As OCBC's version offers a more generous cash reward that not only has a lower bar to qualify for at S$500,000, it also pays out more, thereby covering almost fully the costs of refinancing to OCBC, mainly legal and valuation fees, the firm said.

The one-time free conversion is a good safety net to homeowners who could then reprice to a fixed rate loan, for example, to contain costs should interest rise up too fast, it added.

Said Darren Goh, executive director of MortgageWise.sg: "Riding on greater awareness (how it works) now of deposit-based home loan first introduced and made popular by DBS with its FHR (fixed deposit home rate) in June 2014, it is a strategic move by OCBC to win back market share."

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He said the move by OCBC will help to deepen and widen the product offering in the marketplace for home loan solutions with local banks latching on to deposit-based peg for mortgages.

OCBC's version is defined as the prevailing rate of its Singapore dollar 36-month fixed deposit rate for deposits from S$5,000 to S$20,000. Currently the rate is at 0.65 per cent per annum.

The consultancy firm said it believes the two deposit-based home loans from OCBC and DBS are of the same nature and present the same benefits and risks to the borrower.

"By default 36-month deposits is a higher cost of funds to the bank compared to 18-month, but the final interest after adding the spread that each bank levies is more crucial than which peg," it said.

The difference, said Mr Goh, then lies more in the overall package in terms of the spread and how much it goes up after the first few promotional years, lock-in periods, refinancing incentives like cash rebate, and innovative features like what OCBC offered - a free conversion if FDMR moves.

   
 

Manulife sees insurance, asset management deals in Asia

Manulife Financial Corp, Canada's biggest insurer, is interested in a range of insurance and asset management acquisition opportunities across several markets in Asia, a top executive said on Thursday. 

PHOTO: MANULIFE SINGAPORE

NOV 13, 201510:43 AM

[TORONTO] Manulife Financial Corp, Canada's biggest insurer, is interested in a range of insurance and asset management acquisition opportunities across several markets in Asia, a top executive said on Thursday.

The company is looking to strengthen its position in Japan and Hong Kong, its two biggest markets in Asia, as well as add capabilities at fast-growing segments such as China, Philippines and Vietnam.

Toronto-based Manulife, whose rivals in Canada include Sun Life Financial Inc and Great-West Lifeco Inc, has made a slew of acquisitions in recent months. Any deal in Asia would accelerate its growth plans in the region, which has been a big driver for the broader company.

Manulife is looking to take advantage of its own capital position and favorable demographic trends in the region, said Roy Gori, chief executive of Manulife Asia. "You've got a middle class that's growing very rapidly, you've got an aging population," he said in an interview with Reuters. "And wealth will more than double in the next 10 years." The company has about 10,000 employees in Asia and operates in 12 markets. The region accounts for about a third of Manulife's earnings and about half of its insurance sales. "An important part of our strategy is to diversify our business and to have some far smaller businesses gain greater scale," he said, adding that such moves would help improve margins and better deal with market volatility.

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Choppiness in the price of oil took a toll on the company's profits in the third quarter, causing them to miss market expectations.

In April, Manulife signed a US$1.2 billion deal with Singapore's DBS Group Holdings Ltd for a 15-year partnership that will allow the insurer to sell products through the lender's Asian branch network.

The company would be interested in more such 'bancassurance'deals, in which insurers pay to access lenders' branch networks, Mr Gori said. "Bancassurance is a key aspect of growth and opportunity for us. So we'll continue to pursue that," he said.

In another deal, Manulife agreed to buy Standard Chartered's Hong Kong pension business and entered into a partnership to provide pension services through the mandatory provident fund platform to the bank's customers in Hong Kong.

Mr Gori, who joined Manulife from Citigroup to head the Asian unit earlier in 2015, declined to say how much the company would spend on acquisitions.

Manulife had cash and short-term securities of C$18.3 billion at the end of the third quarter.

REUTER
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UK govt urged to set up new body to help investment banking thrive

Pedestrians walk past the Bank of England in the City of London in this file photograph dated on May 15, 2014. 

PHOTO: REUTERS

NOV 13, 20158:24 AM

[LONDON] Britain's government should set up a new body chaired by the finance minister to ensure banking regulation is not excessive and help coordinate policy so international banks can thrive in London, the country's banking lobby group said.

The British Bankers' Association (BBA) said on Friday the new agency should have responsibility for ensuring delivery of policy for international banking and the regulatory approach across government departments and regulators.

It should be chaired by Finance Minister George Osborne and include the governor of the Bank of England, the BBA said.

The proposal was one of 23 recommendations set out by Britain's former top financial regulator Hector Sants, now vice-chair at consultancy Oliver Wyman, in a report for the BBA on the industry's competitiveness.

It said Britain should also consider bringing changes to its bank tax into force earlier and setting up a new independent agency to determine penalties imposed on banks and how they should pay compensation to customers.

The report said changes are needed because London's attractiveness as a destination for international investment banks was being eroded by factors including unilateral regulation, tax uncertainty and weakening profitability across the industry. "Wholesale banking is an internationally mobile industry and there is a real risk this decline could accelerate," said Anthony Browne, BBA Chief Executive.

He said many banks had been moving jobs away from London and Britain's market share of activities linked to capital formation, such as cross-border lending and initial public offerings, was static or falling.

The BBA said the government had adopted a more positive stance towards banks since an election in May and it should now set out its plans for "stable policy and regulation" of international banks, which account for more than 30 per cent of the 405,000 people working in banking in Britain.

The BBA and Oliver Wyman report, titled "Winning the Global Race'", also said supervision of investment banking conduct should be beefed up by introducing more specialisation at the Financial Conduct Authority.

REUTERS