Credit Suisse slides to 27-year low amid selloff, overhaul

Credit Suisse Group AG plunged to a 27-year low as a selloff across the industry compounded doubts about chief executive officer Tidjane Thiam's restructuring plans. 

PHOTO: BLOOMBERG

FEB 12, 201611:20 AM

[ZURICH] Credit Suisse Group AG plunged to a 27-year low as a selloff across the industry compounded doubts about chief executive officer Tidjane Thiam's restructuring plans.

A rout in bank stocks deepened on Thursday after France's Societe Generale SA missed fourth-quarter profit estimates, with earnings declining 35 per cent at the investment bank.

Credit Suisse shares closed at 12.31 Swiss francs (S$17.65), down 8.4 per cent, bringing losses to about 43 per cent this year. That's more than the 41 per cent drop in 2011, at the height of Europe's fiscal crisis.

"It's a lack in trust in the ability of banks to earn as much as they once did," said Benno Galliker, a trader at Luzerner Kantonalbank AG.

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"There's still decent money but not as much as they once did. They can't take as much risk as they once did."

Banks across Europe have reported a slump in trading revenue, hurt by a drop in energy prices, stricter capital requirements and cooling emerging economies.

Societe Generale, France's second-largest bank, signaled on Thursday that it may miss its profitability target for this year, citing 'headwinds' including volatile markets and record low interest rates.

At Credit Suisse, the shares have lost almost half their value since October, when Mr Thiam embarked on an overhaul as the retreat from equities intensified.

The CEO is seeking to bolster earnings by expanding wealth management while cutting costs and reducing exposure to riskier activities, a strategy that involves shrinking the investment bank.

"It's not a great time to be a bank," Mr Thiam said in a presentation to investors Wednesday.

"So I'm using the current challenging environment to accelerate the transformation that I'm driving."

The bank's US$2.5 billion of 6.25 per cent additional Tier 1 bonds fell three cents on the euro to a record low of 84 US cents on Thursday, according to data compiled by Bloomberg.

Coupons on the notes may be canceled and the principal written off in a crisis. The cost of insuring the bank's subordinated securities against default rose 27 basis points to 257 basis points, the highest level since September 2012, amid a wider sell-off in credit markets.

Given the environment, Mr Thiam said his task now is to convince investors and employees that he will deliver on his plan.

"There is a credibility gap. We have it externally, we have it internally," he said.

"We need to execute and we need to show you that we are executing."

BLOOMBERG

    
 

DBS, OCBC, Julius Baer bid for Barclays Asia wealth unit

Singapore's DBS Group Holdings and Oversea-Chinese Banking Corp as well as Swiss bank, Julius Baer have submitted non-binding bids for Barclays' Asian private wealth business, people familiar with the matter said. 

ST PHOTO: ALPHONSUS CHERN

FEB 12, 201612:11 PM

[SINGAPORE] Singapore's DBS Group Holdings and Oversea-Chinese Banking Corp as well as Swiss bank, Julius Baer have submitted non-binding bids for Barclays' Asian private wealth business, people familiar with the matter said.

First-round bids for the Singapore-based unit, which bankers value at around US$600 million, were submitted last week, said the people, who declined to be identified because the deal talks are confidential.

The sale is part of a restructuring drive under Barclays new chief executive Jes Staley and comes as several European banks rethink their Asian strategy due to pressure at home to cut costs.

DBS, OCBC and Julius Baer declined to comment. Barclays also declined to comment.

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Sources familiar with the sales process had told Reuters earlier that Credit Suisse was also weighing a bid for Barclays' wealth unit, but it wasn't immediately clear if the Swiss bank had submitted an offer. Credit Suisse declined to comment.

Barclays managed US$36 billion in private banking assets in Asia as of last year, according to a survey by industry publication Private Banker International that ranked it 14th by managed assets in Asia.

DBS was ranked eighth.

Asia has attracted a raft of European private banking players, notably in the aftermath of the global financial crisis of 2008.

But in addition to pressure to reduce costs, some mid-sized banks are getting cold feet due to slowing growth in the region and fierce competition from some Asian players.

REUTERS

    
 

Hong Kong: Stocks extend losses on global economy fears

PHOTO: BLOOMBERG

FEB 12, 201610:00 AM

[HONG KONG] Hong Kong stocks sank again on Friday, extending a near four percent drop the previous day, as traders grow more nervous about the state of the global economy.

The Hang Seng Index in Hong Kong sank 1.44 per cent, or 267.00 points, to 18,278.80.

AFP

Australia, NZ: Shares drop on global jitters, gold stocks shine

PHOTO: AFP

FEB 12, 201610:49 AM

[MELBOURNE] Australian and New Zealand shares fell 1 per cent on Friday as worries about global growth hauled down most stocks except gold miners, which continued to climb as gold prices surged to a one-year high.

The S&P/ASX 200 index was down 49.78 points at 4,772.8 by 0220 GMT, erasing all of the previous session's gains.

Analysts and investors said there was no sign of a turnaround given there was little that could drive economic growth, and doubted further steps to ease monetary policy worldwide would have much impact.

"The world's suffering from lack of growth, a lack of confidence, and that explains why equity markets are breaking down," said Don Williams, chief investment officer at Platypus Asset Management.

Three of the big four Australian banks fell more than one per cent, while the biggest bank, Commonwealth Bank of Australia held up better, trading unchanged after defying gloom earlier this week with a steady half-year dividend.

Among the big miners, Rio Tinto slipped 0.1 per cent after announcing it would scrap its long-defended 'progressive dividend' in face of a poor outlook for 2016, though it held its dividend steady for 2015 even after its earnings halved.

BHP Billiton inched up one cent, buoyed by a jump in oil prices on a whiff of hope that Opec producers may cut output and expectations it will follow Rio in abandoning the strait jacket of its progressive dividend.

Gold miners were among the market's top five gainers, with Independence Group up 8.4 per cent, Evolution Mining up 5.3 per cent and Northern Star Resources up 4.8 per cent.

Bluescope Steel was the biggest gainer, after it surprised the market by raising its earnings forecast by 28 per cent, sending its shares up almost as much to a one-year high.

New Zealand's benchmark S&P/NZX 50 index fell one per cent or 60.37 points to 5,926.65.

The index was headed for a weekly loss of 3.8 per cent, which would be its worst weekly loss since 2010.

Air New Zealand led losses, falling 3.66 per cent while Z Energy fell 2.1 per cent and Sky TV lost 2.05 per cent.

Health software company Orion Healthcare rose 1.09 per cent as investors bargain hunted the stock, which had fallen for five consecutive sessions.

REUTERS

    
 

Tokyo: Stocks plunge more than 5% by break

PHOTO: EPA

FEB 12, 201611:23 AM

[TOKYO] Tokyo stocks dived more than five per cent on Friday morning, playing catch-up with a global sell-off after a one-day holiday amid deepening worries about the world economy.

The benchmark Nikkei 225 index at the Tokyo Stock Exchange plunged 5.34 per cent, or 838.74 points, to 14,874.65 at the lunch break, as a stronger yen hammered exporters.

The broader Topix index of all first-section shares declined 5.55 per cent, or 70.25 points, to 1,194.71.

AFP

South Korea Kosdaq halts trading after plunging more than 8%

By

Angela Tanangelat@sph.com.sg

      

PHOTO: EPA

FEB 12, 201611:42 AM

TRADING in South Korea's Kosdaq, or "young market of leading sectors", was halted temporarily on Friday after the index plunged more than 8 per cent.

The index fell to 594.75, down 52.94 points, or 8.17 per cent in late-morning trade, triggering a 20-minute suspension in trade at 11.55am in Seoul. The index is now trading around 601.83, down 45.86 points, or 7.08 per cent after trading resumed.

The broader market is also weighed down by poor sentiment surrounding global equities markets, with the Korea Composite Stock Price Index (Kospi) trading at 1,826.48, down 35.06 points, or 1.88 per cent.

The Kosdaq (Korean Securities Dealers Automated Quotations) market was launched in July 1996 to provide funds for startup companies and small-medium enterprises in tech-savvy areas such as information technology, bio-technology and culture technology.