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Sias to host corporate governance week
SINGAPORE
in the region are recognising the
need for better corporate governance
— something that can be
achieved by increasing the level
of communication between companies’
boards and investors, according
to the Securities Investors
Association Singapore (Sias).
“Investors want to know how
companies are ensuring independence
on the board. If they are truly
run by independent directors, it
will be good for investors,” said Sias
president and chief executive David
Gerald yesterday.
His comment came as Sias announced
its first week-long corporate
governance event slated for Oct 4
to 8. Highlights include the Asian
Investors’ Corporate Governance
Conference, the Investors Choice
Awards, executive workshops and
a seminar for Catalist-listed firms.
It is targeting 400 participants,
two thirds of which are expected
to come from South-east Asia. The
event also calls on companies to
publish a statement of support for
corporate governance in the media.
— More organisationsChina to launch credit default swaps
But derivatives restricted to avoid pitfalls
NEW YORK
China will limit the amount of leverage used in CDS and will not permit the contracts to be written on high-risk assets such as sub-prime mortgages, Mr Shi Wenchao, the secretary general of the National Association of Financial Market Institutional Investors (Nafmii), told reporters at a briefing in New York. Crucially, investors in the derivatives will also be required to own the underlying security, Mr Shi said.
“It’s too bad that we in America and in Europe did not have those kinds of limitations two or three years ago,” said Mr Donald Straszheim, International Strategy and Investment Group’s head of China research.
“All of us around the world might be in a lot better shape than we are now. What’s most important is that their plans are to not allow this whole process to get out of control,” he added.
CDS are derivatives that pay the buyer face value if a borrower fails to meet its obligations, less the value of the defaulted debt.
Private swaps complicated efforts to solve the 2008 global credit crisis in the US when regulators and market users could not easily determine how interconnected banks had become through trading contracts.
American International Group needed a federal bailout that swelled to US$182 billion ($243 billion) after losses fuelled by a unit that sold CDS on mortgage-linked debt to banks including Goldman Sachs.
— China will introduce credit-default swaps (CDS) by the end of the year, allowing banks to hedge risk while restricting the contracts to avoid pitfalls the American credit markets experienced over the last several years, according to an official with a state-backed Chinese financial association.Neither Evil Nor Good“We believe CDS is a neutral risk-management tool. It is neither evil nor good,” said Mr Shi, whose group monitors the country’s interbank market and promotes innovation in financial products.
“CDS in China is a management tool. There will be no repackaging or restructuring of risk,” he added.
China is planning to introduce credit derivatives to help manage risk in the nation’s growing domestic bond market, he had said earlier at a June briefing in Beijing.
Sales of yuan-denominated corporate bonds in China jumped to 496 billion yuan ($98 billion) last year from just 7.9 billion yuan in 2000, according to data compiled by
The People’s Bank of China formed Nafmii in 2007 to help develop the country’s over-the-counter financial markets, which span bonds, loans, foreign exchange, commercial paper and gold.
Last month, McDonald’s became the first foreign company to sell yuan-denominated bonds in Hong Kong with a 200 million yuan issue.
Nafmii officials are in New York meeting with firms including Citigroup and JPMorgan Chase about the asset-backed securities market, Mr Shi said.
The group also met with financial firms in Germany and Poland to discuss securitisation, he added.
Chinese officials began discussions with bankers several years ago to learn about securitisation, he said.
In 2007, AAA-rated securities backed by home loans tumbled in value with the onset of the sub-prime mortgage crisis, leading to US$1.8 trillion of losses worldwide.
“We learned from the UK, Europe and the US. But we did find that there were problems with some of the teachers,” Mr Shi said.
It’s too bad that we in America and in Europe did not have those kind of limitations ... Mr Donald Straszheim, International Strategy and Investment Group’s head of China Research
Getting tough on banks
S’pore lenders not affected ? Analysts
BASEL
Banks in Singapore are largely unaffected by the new rules as they are way ahead of the requirements, analysts said.
The Monetary Authority of Singapore (MAS) yesterday said: “Singapore-incorporated banks, which have been subject to MAS’ conservative capital requirements, are well-capitalised and are adequately placed to meet these new global standards.”
“MAS will review our capital standards in consultation with industry and if necessary, revise our current requirements.”
Brokerage research house DMG said: “We see minimal impact on the three Singapore banks as their current capital adequacy ratios are way in excess of the Basel requirements.”
DBS Group, the largest bank in Singapore, said: “We welcome the harmonisation of global capital standards for banks.”
OCBC chief financial officer Soon Tit Koon also welcomed the rules, saying: “We are glad to see the greater clarity provided by the new Basel release.
We will continue to generate common equity through earnings accumulation over the next few years. Our scrip dividend scheme has also helped to preserve our common equity.”
UOB said the rules “provided more clarity and the timeline for implementation is also more generous than the original Dec 2009 proposal.”
As of June this year, DBS Group had Tier 1 capital ratio of 13.1 per cent, according to DMG.
That compares with 15.1 per cent for UOB and 15.3 per cent for OCBC.
The new rules, called Basel III, will require lenders to have common equity equal to at least 7 per cent of assets, weighted according to their risk, including a 2.5-per-cent buffer to withstand future stress, the Bank for International Settlements (BIS) said on Sunday.
Banks that fail to meet the buffer would be unable to pay dividends, though not forced to raise cash, said the BIS. The definitions of what counts as capital and how risk is assessed have also been tightened.
Banks will have less than five years to comply with the minimum ratios — 4.5 per cent common equity and 6 per cent
Tier 1 — and until Jan 1, 2019, to meet the buffer requirements, the BIS said. Tier 1 capital, whose definition has been narrowed, includes common equity and perpetual preferred stock.
Banks are currently required to have common equity equal to 2 per cent of total assets and 4 per cent Tier 1 capital.
— Regulators looking to rein in the sort of risk-taking that caused the last financial crisis have reached a compromise in Switzerland that more than doubles capital requirements for the world’s banks while giving them as long as eight years to comply.AgenciesAUD fOr gOOd deposit Interests ?
gamIng eqUItIes fOr beTTer retUrns ?
sell all properties and keep one for residence ?
GOLD is safe haven ?
Hulumas ( Date: 14-Sep-2010 16:45) Posted:
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pharoah88 ( Date: 14-Sep-2010 08:16) Posted:
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BASEL III IMPACT
Singapore banks' Capital Adequacy Ratios [CARs]:
DBS 13.1%
OCBC 15.1%
UOB 15.3%
1st Tier Capital 6%
Total Capital 10%
Banks need to SCOOP for FRESH CASH
bUt ineffective due to MEAN NEAR ZERO Deposit Interest Rates
Bank Financing Capacity will be reduced and restrained by SHORTAGE OF CAR ? ? ? ?
property sector will be depressed ? ? ? ?
STRONG SGD is created by the SALE OF BONDS in USD by the Billions ? ? ? ?
| US Market |
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Stocks are up by notable margins in mid-morning trading on Monday, as the markets are reacting to fresh banking regulations and another spike in merger-and-acquisition activity. The strength in the markets has lifted the major averages to their best intraday levels in a month. tripling of reserve requirements. |
SME lender is Japan’s first bank failure in 7 years
TOKYO
The Financial Services Agency (FSA) has told the bank it cannot do any business for at least three days and must make efforts to protect existing depositors, the agency said in a statement.
Japanese media said the FSA is likely to let the bank go under and will only refund depositors a maximum of ¥10 million ($160,000). This would be the first time that a cap on deposit insurance had been used in Japan, since it was acted in 2002 after a slew of banks went bankrupt with the bursting of the economic bubble in the 1990s.
The bank specialises in providing banking services for small and medium sized businesses. It may report a negative net worth of ¥150 billion, the
Banking shares were mixed in Tokyo trade on Friday; the benchmark Nikkei Index was up 1.90 per cent.
Also on Friday, Japan approved a US$11 billion ($15 billion) stimulus package aimed at helping the export driven economy tackle deflation and the impact of a surging yen.
The previously announced plan, approved by the Cabinet of Prime Minister Naoto Kan, includes initiatives aimed at boosting consumption and creating employment for graduates. It is also intended to provide investment in green industries and offer support for small business.
The fresh stimulus package of ¥915 billion will be financed by reserve funds and is expected to lift the country’s gross domestic product by about 0.3 per cent, creating around 200,000 jobs.
The plan also specifies a strong yen as “a problem that cannot be unaddressed”, stating that the government “will take determined action, including intervention, when needed”.
Revised data on Friday showed that Japan’s gross domestic product grew by an annualised 1.5 per cent in the April-June quarter, well above an initial estimate of 0.4 per cent.
Colin Tan
Before Monday [6 Sep 2010], if HDB resale flats were tradeable investment products on the screen of international ratings agencies, they would have attained a triple-A rating; so highly regarded were they by property investors. However, all that changed when the Government announced measures to effectively close them to new investors and speculators. The new rules disallow concurrent ownership of HDB flats and private residential properties if the owner has not stayed in his public housing flat for five years.
Private property owners who buy an HDB flat now have to dispose of their private homes within six months.
When the ownership rules for HDB resale flats were relaxed just a few years ago — when prices were still depressed — no one could have foreseen how they would go on to outperform the private housing market in terms of rental yields and capital appreciation within just a few quarters.
In terms of risk, they were probably the safest investment property to spend your savings on. Almost as good as Singapore Government bonds, HDB flats were a safe haven compared to the surrounding financial turbulence.
Many had expected the opening of the two integrated resorts to strongly drive up the demand for private housing.
As a result, values were chased up to unrealistic levels, only to disappoint when the widely anticipated boom did not materialise. Instead, the unrealistic price levels for private properties drove demand towards the public housing sector and kept them there.
Rental demand from both foreign workers and expatriates for public housing flats grew. Rental yields rose and soon caught the eyes of investors. Soon, more people began to buy them as investment properties — a trend noticeable as far back as 12 to 18 months ago.
At the same time, more and more would-be HDB upgraders could not cross the widening gap between the private and public housing sectors. Upgrading became restricted to a bigger flat type or a newer flat in a better location.
In the meantime, newly-formed households were moving into the housing market. Unlike in the private housing market, where a premium is paid for properties under construction, the premium in the public housing market is for completed flats or those nearing completion.
This is because demand for the former is driven by investors who pay more for the opportunity to speculate, while demand for the latter is driven by the need for immediate occupation.
Without the release of flats from upgraders, additional supply could only come from newly-maturing flats whose owners had occupied their properties for five years. New annual supply from this source is fixed as it is tied to events which happened seven to eight years ago.
Before long, a shortage developed and was made more acute by investors who were crowding out genuine households and raising overall sentiment and prices with their record-price buys. It did not help that new flat prices were linked to prices for resale flats which were fast becoming a full-fledged investment product and a safe haven from the excessive liquidity in the market.
New flats, with their myriad ownership rules, are definitely not investment products. They can never be truly comparable to resale flats. They are poles apart, as different as night and day.
To make price adjustments from one to the other is to compare Singapore apartments in Woodlands to apartments just across the Causeway in Johor Baru. They may look the same and distance-wise, not far from each other but one commands a value significantly higher than the other.
The new rules announced on Monday bring them back a lot closer — in terms of minimum occupation period and ownership restrictions. This can only be good for the market. It makes the job of those who decide on the prices of new flats a lot easier.
To those who complain, these are not really new rules. We are just falling back on old ones which worked well in the past.
To investors, if you cannot afford to live in a private property and invest in another in the first place but want to live in an HDB flat and invest in one, you are probably the most vulnerable to a sudden and sharp downward price correction.
It may not be immediately obvious to you, but like a gambling addict, you need protection from yourself.
property@mediacorp.com.sg The writer is head of research and consultancy at Chesterton Suntec International.
fOreIgn MAYBANK thIrd-lEg dEEp pEnEtratIOn IntO sIngapOre BankIng sEctOrs
vEry serIOUs thrEat fOr lOcal sIngapOre banks ? ? ? ?
frOm thIs pOInt Onward,
sIngapOre banks wIll start tO shrInk ? ? ? ?
pharoah88 ( Date: 05-Sep-2010 18:23) Posted:
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Islamic banking in the heart of Geylang Serai
Julie Quek juliequek@mediacorp.com.sg SINGAPORE
The bank did not disclose the details of the new Islamic financial products at Friday’s launch but confirmed they were in the pipeline and formed part of its strategy to grow its Islamic banking business beyond its domestic market in Malaysia.
The new Islamic banking branch in Singapore is located in the heart of Geylang Serai, home to a large base of Muslims.
It is part of Maybank’s bigger plans for its Islamic banking unit as it aims to be the leading Islamic bank in Asean.
Malaysia’s biggest lender also said it hoped that earnings from outside its home country would contribute a higher percentage to its overall profits over the next five years.
Maybank chief executive Abdul Wahid Omar said: “The idea here will be to grow our profit to make up about 40 per cent from our international operations by 2015.”
Apart from the Asean region, the bank also expects demand coming from the Middle East, China and India.
Analysts say that oil-enriched Middle Eastern investors are attracted to Asia as the outlook for the United States and Europe remain sombre.
Mr Raj Mohamad, managing director of consultancy firm Five Pillars, said: “Asia is very well-positioned now to offer what is commonly known as Syariah-compliant products, to attract these monies from the Middle East.”
With about two-thirds of the world’s Muslim population in Asia, there is a huge potential for retail Islamic banking products to grow, analysts said.
BRA banks flOOd
SIN banks ebb
pharoah88 ( Date: 05-Sep-2010 17:34) Posted:
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GIC ‘eyeing $3.2b stake in Brazilian bank’
SAO PAULO
GIC declined comment when contacted by
Banco BTG Pactual, controlled by billionaire Brazilian Andre Esteves, was created in 2009 after BTG took over UBS Pactual from the Swiss bank.
It is the largest independent investment bank in Latin America and has regional offices in key global financial capitals such as London and Hong Kong to leverage on its expertise in emerging markets.
The bank operates in the areas of investments, asset management and wealth management.
GIC already is the largest shareholder in Switzerland’s UBS and one of the biggest in United States’ Citigroup, with its stakes in the two banking giants estimated at some $12 billion at current market prices.
If it takes the stake in BTG, it will be spreading its multi-billion bets beyond Europe and North America into the South American market.
— The Government of Singapore Investment Corp (GIC) is in talks to buy a 16-per-cent stake in Brazilian investment bank Banco BTG Pactual for US$2.4 billion ($3.2 billion), the Brazil-based Exame magazine reported on Friday, citing people familiar with the negotiations it did not name.Bloomberg, while spokespeople for BTG Pactual in Sao Paulo were not immediately available for comment.SHORT BANKS ??
SHORT PROPERTIES ??
LONG GENTING TWINS ??
pharoah88 ( Date: 05-Sep-2010 17:10) Posted:
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Property cooling measures timely: Wing Tai — The measures announced by the government on Monday to cool the property market were timely as prices had gone up to unsustainable levels, according to real estate developer Wing Tai Holdings.
Wong Siew Yin
SINGAPORE
Mr Edmund Cheng, Wing Tai’s deputy chairman who said this on Friday at the launch of its luxury project Belle Vue Residences (picture), added that prices for future land tenders would need to be adjusted downwards as sentiment had cooled.
However, he said Wing Tai would not be affected too much by the new curbs.
“The measures, I think, address the upgraders’ market more. Most of our properties are all high-end, upper-middle and super high-end, so the impact is not much,” he said.
Wing Tai said 109 of its 167 units at Belle Vue had been sold. It said it was confident that the project would be fully taken up, with foreigners expected to make up half the buyers. The remaining units are priced between $2,300 and $2,800 per square foot.
But while developers such as Wing Tai may stay positive, some observers expect the banking sector to feel the impact from the recent anti-speculative measures.
Banks could see a significant drop in profit contributions from housing loans, some analysts said.
“UOB has the largest percentage based on their total income. For them, we are looking at 20 to 30 per cent of their total top line coming from housing loans.
Therefore they would be, in our view, most affected by the clamp down in the property sector, followed by DBS,” said Mr Moh Tze Yang, lead analyst at SIAS Research.
pharoah88 ( Date: 05-Sep-2010 17:05) Posted:
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SHORT BANKS ?
LONG GENTING TWINS ?
Ha ha, at least, one consolation, Genting SP will pay the loan earlier to ds 3 banks mah. So that they can roll the cash again loh. Blessing for disguise! Cheers.
UO B
Neutral | $18.90
Goldman Sachs downgrades from Buy on view stock lacks near term catalysts.
Cuts target price to $20.80 from $22.70 after rolling over valuation basis to 2011, trimming 2010 to 2012 earnings estimates by 2 to 5 per cent to reflect margin pressure.
Notes UOB’s 2Q2010 loan growth slower than other 2 Singapore banks due to management’s cautious view.
sOmehOw sOmebOdy DON'T WANT
Testing and Certification tO ensures a high level of integrity and fairness in the bankIng industry
pharoah88 ( Date: 18-Aug-2010 23:40) Posted:
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Playing for the BIG STAKES
Testing and Certification ensures a high level of integrity and fairness in the gaming industry
FOR Weike Gaming Technology, testing and certification are important parts of the business as they allow the company to compete in the highly-regulated casino industry.
Founded in 1998, Weike designs, develops and manufactures gaming products such as slot machines, electronic table gaming machines and network systems for Asian markets such as Singapore, Macau, the Philippines and Malaysia.
According to chief executive David Kinsman (picture), the company’s client list includes top gaming operators such as Las Vegas Sands and the Genting Group, and sales are forecast to reach US$20 million ($27.1 million) this year.
Testing and certification are of utmost importance for the gaming manufacturer as all its products need to comply with various international and country regulations, Mr Kinsman said. In Singapore, Weike’s gaming equipment is certified to the Casino Regulatory Authority’s technical standards.
Gaming machines are first assessed on whether they match regulatory technical standards. Then, they are subjected to “platform integrity testing”, which includes electrical safety. Finally, there is a round of mathematical testing to ensure that the machines operate as they are designed to do.
Testing and certification can also help elevate the standards of manufacturing.
In the case of Weike, industry best practices were introduced to its manufacturing process to improve the quality and performance of the company’s products.
This helped Weike bag the 2009 Best Asian Manufacturer Award by However, the testing and certification process has not been easy for Weike. Each piece of gaming equipment that Weike produced had to be sent to the United States or Australia for the procedure.
“As gaming machines are typically bulky and heavy, it is costly to ship them around. It is also very time consuming,” said Mr Kinsman.
So it was good news to Weike in April this year, when the Singapore Accreditation Council (SAC) granted accreditation to the first gaming testing laboratory in Singapore, BMM Compliance.
BMM has been assessed under SAC’s Accreditation Scheme for Gaming Laboratories, which is based on international standard ISO/IEC 17025. It covers both the management system and the technical capability of the laboratories.
Here, the BMM laboratory provides an easily-accessible facility for Weike to test its products for various regulated markets around the world.
“Having a laboratory at our doorstep makes the entire process simpler and faster. We can also work closely with them to improve on our products quickly,” Mr Kinsman said. Betting on future growth With some 60 casinos and 340 clubs in Asia, the gaming industry is poised for further growth. Estimated gaming machine sales for the region average between US$50 million and US$75 million annually.
The presence of gaming testing laboratories in Singapore will also attract other gaming machine manufacturers to set up operations here, said Mr Kinsman.