Business News » banks

Banks around the world are in “regulatory holiday”

viliyana89 — Mon, 02 Aug 2010 12:31:27 +0000

The bankers who spent last year lobbying against reforms in the sector can be attributed to well-deserved break. For others it will not be easy. In the upcoming month of August will be three years since the first problems appeared with the British bank Northern Rock, which after weeks triggered a liquidity crisis. A year later, does it require large U.S. banks to be bailed out by government. The time is ripe to ask what has changed since then to make the global financial system more secure in reporting greater risks and less dependent on government support. The sad answer is that changes are not enough. Last week the bank regulators have imposed new standards on capital adequacy and liquidity – those who had to identify harmonization and firmness in global financial regulations, against the backdrop of attempts by banks to avoid monitoring. Instead, the Bank for International Settlements (BIS) announced exchange earlier proposals and give the banks eight years to meet the requirements. BIS should succumb to pressure from France and Germany do not be too tight to their banks. Discouraging compromise followed European stress tests that only 7 of 91 banks have not passed because the criteria they were too low.
Consensus between the U.S. and Europe from 2008 on the need for their financial decrease of mastodons was deceptive desire. The main problem for reaching an effective solution in response to the financial crisis of 2008 was a different agenda to policy makers in different countries and across U.S. states. As a result, reforms are inconsistent and generally did very little about the decision of the two major problems that crisis call – that global banks are too big and too bound to be left to fail. The most disappointing part of the reform is how easily these banks rejected the obvious solution – to divide the investment operations of retail banking. This would help to rein in excessive risk-taking, financed with funds from deposits and government guarantees. Expressed as former head of Barclays Martin Taylor, the investment departments of banks are parasitic in nature. Volkar Paul, former chairman of the Federal Reserve (U.S. central bank), fight for inserting text into the draft financial reform in the U.S., which prohibits transactions for own account of the big banks and forced them to limit their investments in hedge funds and non-public companies. Later, however, the second requirement was softened, but banks now able to circumvent the first. BIS acknowledges in a report this week that without structural reforms, regulators must find another way to reduce the tendency of banks to become larger, more complex and burdensome for taxpayers. U.S. rely on new powers, empowering regulators to take control of problem institutions, and to divide them. Some U.S. politicians believe that this solves the problem of “too big to fail”, but it’s naive conception. Much depends on the ability of regulators to impose restrictions regarding leverage, capital and liquidity of financial institutions, such as problems for banks on Wall Street were caused not least by their high leverage. In this respect, the compromise made by the BIS, this week is a bad sign, although the future will tell.

Real test for banks will be to raise long-term financial resources

viliyana89 — Sat, 24 Jul 2010 09:26:37 +0000

Since most European banks have moved long-awaited stress tests, they now face even more serious challenge in the coming months, namely – the collection of long-term resource for billions of dollars with which to finance lending. Card is placed on the fragile economic recovery across Europe. Unlike the U.S. the majority of European companies rely on bank financing. If banks fail to attract investors to the bond markets, they will be able to grant long term loans, which businesses to fund their investments. According to the European Central Bank (ECB) bank loans accounted for 70% of debt financing to companies in the euro area, while 80% of loans to U.S. companies raised through capital markets, reported Wall Street Journal. European governments are hoping stress tests that only 7 of 91 banks failed to pass, to reduce concerns about the health of the banking sector in Europe, encouraging investors to buy bonds of credit institutions. So far, banks face problems raising funds from markets, and instead resorted to mass services of the ECB to fund their daily operations. “The real test is whether banks will be financed at a reasonable price from the capital markets to perform their usual function in the economy,” said Gary Jenkins, head of analysis of fixed income instruments at Evolution Securities.
Problems with funding reflected the changed attitude among U.S. money funds, which historically have been a stable source of funding for European banks, says Alastair Ryan, analyst at UBS. Currently, these funds have lost their risk appetite and banks shy away from the Old Continent, partly because of new regulations in the U.S.. Insurance companies, another common source of funding, are about to face higher demands for the holding of bank debt against the looming global regulation. “Overall, financial markets are likely to remain expensive and inaccessible to banks for an extended period of time,” said Ryan. Last month, Bank of England warned that credit institutions in the world (mostly those in Europe) are facing a huge challenge to refinance resource worth 5 trillion. dollars, which is expected to matures over the next three years. Problems are most acute in France, Germany and Italy, where banks annually will have to refinance more debt than they normally issued within a year. According to estimates by the International Monetary Fund (IMF) this year in the euro area mature debts 877 billion in 2011 will be 771 billion and in 2012 to 714 billion. Refinancing of maturing debt is not the only problem facing European banks. New requirements for liquidity offered by international bank regulators require banks to hold more long-term rate (stable) funding, as are deposits and emissions of long-term bonds. This, analysts said, could force banks to raise new funding for the trillions of euros. Natural source of raising funds from banks deposits, which are cheaper than bonds. Therefore, competition for deposits is increasing. This is good for making a deposit, but inflate the cost of financing in the banking sector. Some banks, like the Spanish Banco Santander, is trying to attract deposits in the UK, offering interest rates to 4% – well above competitors, experts share. Recently, some European economists lowered their forecasts for economic growth on the Old Continent this year and next because of problems with bank financing. If, however, stress tests remove pressure on banks, the economic outlook may be better than expected, “said David Mackie, an economist at JP Morgan.

Banks refused to set aside billions for future crises

viliyana89 — Sun, 20 Jun 2010 10:42:51 +0000

Plans by financial regulators around the world to force banks to set aside billions of dollars in additional capital to cope more easily with future crises will be lifted because of intense lobbying against them by the financial sector. Details for Regulatory Reform, which was published six months ago, became the subject of heated disputes between lawmakers and representatives of the banking sector. Now achieved consensus tends to reduce the severity of the proposed changes, writes Financial Times. Preliminary draft of the latest proposals of the Basel Committee, responsible for regulation in the banking sector worldwide, will be presented at the summit of the G-20, which will be held in Toronto this weekend. The most significant change proposed by the committee’s recommendations affect the financial reforms of the amount of liquid funds that banks must hold to protect themselves in financial crisis. Measures to improve the capital base of banks in the short term are retained. Basel Committee, however, may abandon the idea that banks should maintain a stable long-term lending. This means that more stringent rules for consideration of the maturity of their assets and liabilities may be removed. According to representatives of the banking sector made design changes to the financial reform could prevent an excessive increase in funding costs for banks that will affect them and the fees they pay customers. Six months ago they predicted in its initial form measures could bring the industry to 5 billion additional costs.
Analysts initially proposed by the Basel Committee reforms introduced in combination with additional taxes in the sector, as happened in Britain, will reduce the return on assets of one bank on average 20% to 5%. Changes related to debt and liquidity of banks currently remain unclear.

Standard Chartered Bank got 537 millions USD from shares in India

viliyana89 — Sat, 29 May 2010 13:58:40 +0000

The British bank Standard Chartered Bank has gathered 537 million dollars from offering shares in India, announced the Air Force. The issue was oversubscribed more than twice. Standard Chartered has sold Indian shares through depository receipts. This is the first such sale made by a foreign company in the country. The Bank will issue 240 million Indian depository receipts at a price of 104 rupees (2.24 dollars) each. Interest in the issue was both by institutional investors, and the individual. Receipts will be listed two exchanges – Bombay Stock Exchange and National Stock Exchange of India, to 11 June Buyers will receive receipts of bonuses or dividends on them in the same way as if they were direct owners of shares in Standard Chartered. The Bank plans to increase its presence in India, has opened its first branch more than 150 years. Really this revealed in front of many investors the potential of the Asian market and show that the countries like India and China can be the consumer of the financial instruments offered by the European companies and banks.
The Standard Chartered Bank was in great need of investments, because of the deficit and financial crisis.

Bond investors remain wary of banks

viliyana89 — Thu, 27 May 2010 07:19:27 +0000

The investors in the bond market becoming more distrustful of the reliability of the largest financial companies in the world, although major rating agencies have not moved to decrease their credit rating at this stage. Required by investors in bonds yield banking giants such as France’s BNP Paribas and Goldman Sachs U.S. is 242 basis points higher than that of government securities of the United States. This index shows Global Broad Market Financial to Bank of America Merrill Lynch, which brings together bonds of companies with an average credit rating of A1 on the scale Moody’s. This difference is much higher than presumed credit rating of banks. It is actually much closer to the difference of 259 basis points between the interest on government securities and bonds in this industrial companies that have a credit rating by five steps lower than that of banks. Only three weeks until the difference (spread) between the profitability of banks and government bonds was up 11 basis points. Even in early 2009 spread was less than now amounting to 177 basis points. All this reflects the distrust of investors to the bonds of large banks that are actually most at risk from potential bankruptcy in Greece or another indebted country. Government debt crisis reduced confidence in Europe in the creditworthiness of the banks whose profits may suffer more than planned and additional regulations in the financial sector.
According to the Swiss rating agency Independent Credit View possible banks have a shortage of over 1.5 trillion. dollars in its capital base by the end of 2011, and this may force some to turn for support to the state. The yield on bonds of the biggest French bank BNP Paribas is 412 basis points above that of U.S. government securities at the time, and that of Goldman Sachs is 325 basis points. Currently nine of the ten financial companies with the largest spreads are based in Europe, except for insurance company AIG, which was rescued by the U.S. government in 2008 because of heavy losses during the subprime mortgage crisis. Bonds of financial companies have brought their average loss of 0.74% owners of this month compared with a profit of 0.52 percent for bonds of industrial companies. That makes May the most loser month for investors in bonds of financial companies in March 2009 when they suffered a loss of 1.7 percent. Banks have invested in debt securities indebted European countries amounted to about 1 trillion. euros at the end of 2009

Don’t worry for your money!

viliyana89 — Fri, 16 Apr 2010 17:30:05 +0000

The Germans are outraged that have to pay the debts of Greece. Politicians exploit these feelings without having to bother to explain to people the whole truth, says the publication of the newspaper Suddeutsche Zeitung, quoted by Radio Deutsche Welle. Reality has little to do with clichés. Worse is that the Germany government totally failed in its mission to inform and calm just Germans the truth about what is highly indebted to Greece for the common currency, responsibility and interests of Germany. Silence continued so long that finally Luxembourg Prime Minister Juncker seemed forced to take over the role of educator.
No money – no jobbery
In an interview on the radio Juncker said what chancellor Merkel suppressed. He explained that no European taxpayer and at least Germany should be afraid for their money. In the event that Athens asked for money, she will get a loan, which will be quite normal to pay interest. Germany Government may even benefit from such a loan, since it would take the money market at much more favorable conditions than those under which they grant to the Greeks. And not only Germans could allocate money to Athens. No, we should help all countries in the euro area, the burden will be distributed in accordance with a special key.
Furthermore, why the government did not explain Germany finally, that it is not very unselfish when it comes to financial aid? Germany Greece credits are beneficial for Germany’s economy. Greece is an important market for Germany companies. Greeks love Germany as much goods as the Germans like to go on holiday in Greece. No money – no jobbery, this is the truth.
Who wins and who loses?
And do not forget the interests of Germany and banks. Special provincial banks have invested in the cool Greek securities – total around 30 billion euros. If these securities suddenly lose its value, then even before the end of the year just rescued so many billions of taxpayers’ financial institutions will once again prove to the brink. And that means they probably will again need to be saved.

Largest bank in USA turned back to profit

viliyana89 — Thu, 15 Apr 2010 10:57:16 +0000

The largest commercial bank in the U.S. – Bank of America returned to profit after three consecutive quarters of red territory since it acquired investment bank Merrill Lynch has realized good results and allocation provisions for bad loans fell. The positive financial result for the first quarter amounted to 3.18 billion dollars or 28 cents a share before distribution of dividends. A year ago when it was last quarter in which Bank of America reports profits she had amounted to 4.25 billion dollars. The results were better than analysts’ expectations, notes Bloomberg. Yesterday, shares of the bank closed at a level of 19.48 dollars or more than 6 times the level in March 2009 when it was imminent danger of nationalization of the financial institution. Several days ago the biggest competitor of the U.S. bank JP Morgan Chase announced yet another quarter, which ends with profit.
On Monday, expect the results of the third-largest financial institution Citigroup.

Raiffeisen International may sale the banks in Russia and Ukraine

viliyana89 — Thu, 01 Apr 2010 11:32:54 +0000

Raiffeisen International Bank Holding AG may sell units in Russia and Ukraine in the event that the financial company had to strengthen its capital base and reserves with which to cover possible losses from bad loans to its subsidiaries. This forward Moskow News, quoted the Chairman of Raiffeisen International Christian Conrad, the Austrian group that is ready to give up control over their Russian and Ukrainian banks. Raiffeisen International is one of the largest foreign banks in Russia and owner of Raiffeisen Russia in Russia and Raiffeisen Bank Aval in Ukraine. According to Christian Conrad final decision will depend on whether and how much will have to increase the reserves of the subsidiaries of the Bank’s bad loans. By Raiffeisen International also stated that there are several possible scenarios for the development of the group in the future, one provides its teams in Russia and Ukraine to be sold through initial public offering (IPO). In February, Raiffeisen Zentralbank Osterreich, which is one of the largest cooperative banks in Austria and Raiffeisen International announced plans for a possible merger. Raiffeisen International is a public company in which 70% of capital held by Raiffeisen Zentralbank, the rest are traded freely within the Austrian Stock Exchange. The main market is Raiffeisen International Central and Eastern Europe, the bank is represented in 17 countries in the region.
Its Russian branch is one of the most important because it generates about 50% of its profits. Its share fell to 33% last year and the assets of Raiffeisen Russia decreased by 22% over 2008 to 11.68 million. Unaudited results for Raiffeisen International in 2009 showed that because of bad loans and deteriorating economic situation in Central and Eastern Europe for 2009 profit has contracted with goals 78% of the results of the previous year.

German banks make money on the back of Greece

viliyana89 — Sun, 21 Mar 2010 09:56:50 +0000

The German banks make money at the expense of Greece, gave Prime Minister Theodoros Pangalos accused. He explained that this occurs when his country is waiting from Berlin and the EU assistance to remedy its financial system. “What can be seen from the German position is that banks in Germany have speculated with the bonds to its counterparts in the euro area, as allowed to play with the fate of unhappy people in my country, while on their back in Germany, make money,” said Pangalos. With almost 43 billion euro loan banks are Germany’s biggest creditor of Greece. Berlin last week to oppose the idea of providing new financial assistance to Athens and said that the Greek government only has to cope with the crisis. Greek deputy is one of the most fierce opponents of Germany. His name was implicated in a month ago, the media war between the German magazine Focus, and two Greek newspapers. Pangalos then Germany criticized the attitude of the Greek financial crisis, stressing that Athens never received adequate reparations for World War II. And came to an official note from the the German Foreign Ministry, which said that discussions about the past do not help to solve today’s problems. Now Pangalos prosecution argued with Germany’s export expansion. “Although the countries of Southern Europe suffer from the fall of the euro, German exports because of rising profits, which made massive Germany”, said Deputy Prime Minister of our southern neighbor.
On the same forum was lectured by the Bank of Greece, quoted by the agency Reuters. It said that the country’s economy has turned into a vicious circle of problems, and only strict discipline can help to be shortened huge budget deficit debt. And this can happen to the reforms that help the economy begin to grow, advised the Greek central bank. Vdokladase added that recovery would be prolonged and painful, and initiated measures are only the beginning of the great contraction. The next step will be to support economic growth through structural change, focusing primarily on development of competition. Bank analysts expect that this year will be reported decreased by approximately 2% of GDP. Inflation may reach about 3%. The report said that the fragile economic recovery in the euro zone started in the third quarter of 2009 will continue this year, mainly due to fiscal incentives. Greece’s budget deficit in 2009 reached 12.9 percent of GDP and public debt – 115 percent of GDP.

China introduced stricter rules for banks’ reserves

viliyana89 — Mon, 25 Jan 2010 17:06:33 +0000

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.
At present it is unclear whether other banks are affected by the new requirements, but it is financial institutions are at the heart of today’s drop in the main stock index in the country with over 2 per cent.