The Central Bank of China has ordered banks in the country to raise the level of reserves as new rules come into force from today forward CNBC, citing unnamed sources. Thus in practice has entered into force the decision to increased requirements to the level of reserves for which the information leaked last week. The new provision requires that the level of reserves to increase by 0,5 percentage points. Information that currently is not official, says that the requirements imposed on certain financial institutions, which officials say have a risky behavior. Last week Reuters reported that similar requirements are imposed on CITIC Bank, which is the seventh largest bank in the country and the largest lender Industrial and Commercial Bank of China.
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The U.S. president Barack Obama plans to impose a special tax 50 of the largest banks and financial companies in the country over the next decade, cited by New York Times. Thus the administration of President hopes to attract 90 billion dollars, which could offset any losses to taxpayers from the rescue of the financial sector. This tax will be charged for all banks, insurance companies and brokerage houses with assets exceeding $ 50 billion. He is expected to come into force after 30 June this year and bring at least 90 billion dollars of tax revenue for the next ten years. It said a senior official in the administration of Barack Obama, which does not wish to remain anonymous. He stated further that the tax may remain in force for a longer period in the event that any losses from the program for relief from the problem of financial assets not covered in the meantime. According to government estimates the program worth $ 700 billion will likely bring a loss of 117 billion dollars, this is much better than previous estimates. According to State Administration introducing such a tax would ensure that large financial institutions that are the biggest culprits for the financial crisis and the biggest beneficiaries of the measures the government will take responsibility to ensure that all costs incurred by the funds taxpayers will recover completely.
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The European stocks started the week with a fall, as Pan-European index Dow Jones Stoxx 600 lost 0,5 per cent to 247.88 points. National Bank of Greece SA – the largest Greek bank, slid 5.6 percent during trade in Athens. Prime Minister George Papandreou will have to convince investors that it can cope with the worst fiscal crisis in the country for 15 years. The government will submit to the new EU plan to tackle the deficit in January. Greece is facing a “very difficult” situation and should take “bold” decision to fix its budget deficit, said today the President of the European Central Bank Jean-Claude Trichet. By Standard and Poor’s today identified a “negative” outlook to the country’s credit rating, which means that it can be reduced to two months. Second largest bank in the country – EFG Eurobank Ergasias SA, lost 6 percent today, and Piraeus Bank SA – 4 per cent. Shares of Royal Bank of Scotland lost 4.7 percent and those of Lloyds – 4,1 per cent after British finance minister Alistair Darling refused to repeal the tax on very high bonuses. Shares of Siemens AG retreated by 1,6 percent as Morgan Stanley cut its recommendation on them.
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The Venezuelan President Hugo Chavez announced on Wednesday that his government may intervene in the management of more private banks, shocking investors only two days after authorities closed four banks, officials said. His statement led to the largest decline in government bonds than three months, the local currency fell heavily Bolivar on the black market. On Monday, four banks were closed, owned by businessman Ricardo Fernandez. It brought hundreds of worried owners of deposits in the streets and triggered speculation that more banks may be closed or acquired by the state. Recalling the events of the financial crisis in 1994 which swept half of the banks in the country, opposition television stations, given the histories of worried depositors, despite assurances from the government that will protect deposits in closed banks. “Our radar is aimed at another group of banks,” said Chavez in his speech on Wednesday without giving further details. “Be assured that if we had to intervene in all private banks in Venezuela, I’ll do it,” reassured “the president.
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30 Financial companies on the list for international supervision by the Council for financial stability, said the Financial Times. That supervisory authority (Financial Stability Board) was created after the Summit of the G-20 in April in London to monitor the global financial and banking sector. In the list available to the British daily newspaper, but it is not public, have fallen 6 insurance companies and 24 banks from Europe, Japan and North America. Among insurers is U.S. giant AIG, as it was saved from bankruptcy with a solid government injection. The Council’s opinion is that these 6 companies can create the preconditions for risk across the financial sector on the one hand because of the participation in a vast network of credit units as a typical example is Aviva, or because of sophisticated financial engineering – a typical example is the Swiss Re. Governing body of the Council for financial stability, which included representatives of central banks of the G-20 and EU, assisted by a small secretariat, based at the Bank for International Settlements in Basel, Switzerland.
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The Federal Reserve Chairman Ben Bernanke urged U.S. Congress to ensure that the costs of closure of large financial institutions will be borne by the financial industry and will be covered with American taxpayer money. He insisted on a credible process for allocating losses between shareholders and creditors of troubled banks. Bernanke comments to coincide with the efforts of the U.S. central bank to strengthen supervision of banks and financial system. The Fed seeks to control the vicious practice of paying large bonuses to bank management and excessive risk taking by banks in an effort to maximize profits in a short time, police Bloomberg. In the U.S. Congress is currently preparing the biggest reform of the financial regulation of the years before the Great Depression. It is crucial lawmakers to eliminate gaps in the surveillance system, said Bernanke before Congress. He also insists that all large, interconnected firms, whether banks or not, be subject to increased surveillance. To this aim must be put in place stringent requirements on their capital, liquidity and practices for managing risk.
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The management of two of the largest financial groups in the U.S. – Citigroup and Bank of America, has received an average salary of 18 million dollars per person in 2008 This happens within the same year, when both are threatened by bankruptcy banks received 90 billion dollars financial assistance from the state. For example, Citigroup has paid 390.2 million dollars for 21 people from top management, and Bank of America for an amount estimated at 227.8 million dollars, divided between 13 executives. The amount per person in the first case amounts to 18.6 million dollars, while the second – for 17,5 million dollars, police Bloomberg. The average salary for managers of both banks is double that of the other five rescued by the state financial institutions. Faynbarg Kenneth, who was charged with the task of government to ensure that bonuses and pension packages at high-paid 100 managers of troubled companies instruct their salaries for 2009 to be shortened by an average of 50%.
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The indexes of the Old Continent ended with reductions this week for the last session on Thursday after pan-European index Dow Jones Stoxx 600 rose to its highest level in 12 months. Reason for this became worse-than-expected quarterly results at Sony Ericsson, General Electric and Bank of America. Financial companies in the composition of the Dow Jones Stoxx 600 contributed most to today’s drop the index. Dow Jones Stoxx 600, which monitors the securities markets in 18 western states, slid 0.7 percent to 245.58 points. Thus limit its stock measure ahead of the start of the week to 1.2 percent. With the sharp drop today distinguish the Exchange in Athens. The main Greek ASE index decreased by 2.2 percent to 2830 points after news that the Treasury may impose a single tax profits of banks and other companies. Thus the government hopes to reduce the large budget deficit of the country. Shares of National Bank of Greece, which is the largest credit institution in Greece, fell by 3.6 percent to 26.80 euros per share after the news. In Britain’s FTSE 100 was down by 0.6 percent to 5190 points, but the record weekly rise of 0.6 percent. Top losers were financial and extractive companies because of disappointing results at Bank of America and cheaper metals.
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The Eight major banks are already with profits in the U.S., which reported earnings in the second quarter of 2009 today to the group, which fell safe as Goldman Sachs and JP Morgan Chase joined Bank of America and Citigroup. The Bank of America reported profits of 3.2 billion dollars during April-June (or $ 0.33 per share) and revenues amounted to 33.1 billion dollars, which is 60 percent more. The results were better than expectations, according to which profits should be between 0.28 and 0.29 dollars per share. Last year in the second quarter was 0.72 dollars per share (or profit amounted to 3.41 billion dollars). The Net income of Bank of America for the period April-June increased by 9 percent to 11.9 billion dollars. Furthermore, the Bank announced that during the second quarter expanded loans to more than 211 billion dollars. Treasury announced that it added reserves (provisions) for credit losses amounted to 13.4 billion dollars. Citigroup results show a net profit of 3.1 billion dollars for the second quarter of 2009, or earnings of 0.49 dollars per share (compared to a loss of 0.55 dollars per share or net losses of 2.5 billion dollars in the second quarter of 2008 ). Bank earnings have amounted to 29.97 billions USD revenues to 17.54 billion dollars for the prior year.
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