A Week of Banking
HSBC said it is to buy out SwissLife Holdings’ ownership in two ventures for 228.8 million euros ($305 million). It will buy the remaining 50.01 percent stake it doesn’t already own in life insurer Erisa and property and casualty insurer Erisa IARD. The transaction is subject to approval by regulators.
Citigroup is expected to cut more than 15,000 jobs or move them to less expensive locations as part of a restructuring programme. Analysts expect the move to reduce costs by more than $2 billion a year. The review is likely to involve cuts in some of the regional headquarters’ operations.
HSBC Holdings chairman Stephen Green said the company will scale down its U.S. sub-prime mortgage division. It will reduce mortgages to riskier borrowers.
Bendigo Bank directors have decided to open the bank’s doors to other prospective buyers following the unsolicited takeover from Bank of Queensland. Goldman Sachs, St. George Bank, National Australia Bank and Westpac Banking Corp. have been cited as possible predators.
Australian Prudential Regulation Authority has provided support for the establishment of non-operating holding companies for banks. But it warns banks to protect depositors and to maintain their capital levels.
Bank of Queensland has posted a 21 percent rise in first half profit. The bank’s first half income rose 24 percent to A$219.6 million ($178 million) as interest income grew by 21 percent to A$154 million ($125 million).
Citigroup said it plans to nearly double its network in China to 30 from 16 at the end of 2007. It will also boost its headcount to 4,000 from 3,000 this year in line with its booming business.
UCBH Holdings said it will buy China’s Business Development Bank for $205 million to speed up growth in China. It has signed an agreement to buy all of the shares of Business Development Bank from owners including Thailand’s Charoen Pokphand Group.
China Banking Regulatory Commission said it continue to push all city commercial banks to fulfill the mandated capital adequacy ratio of eight percent by the end of 2008. Out of more than 100 city commercial banks, 38 of them still fall short of the requirement.
China Development Bank and China Export-Import Bank were reported to sell the first yuan-denominated bonds in Hong Kong. China Export-Import Bank provides trade finance to mainland companies and China Development Bank finances mainland infrastructure projects.
Dah Sing Banking Group is said to have been granted approval to acquire 17 percent stake in China’s Chongqing City Commercial Bank. It will be buying Chongqing City Commercial Bank at RMB 2.00 ($0.258) per share.
Citigroup has appointed Kaven Leung as head of Asia private banking at Citigroup Private Bank. He will continue to be based in Hong Kong and oversee the private bank’s businesses in Singapore, Hong Kong, Taiwan, China, South Korea and other Asian countries.
The Viet A Commercial Joint Stock Bank said it plans to issue shares to raise its registered capital from VND 500 billion ($31,200) to VND 1.25 trillion ($78 million) in 2007. The bank is currently in negotiations to select a foreign investor.
State Bank of Vietnam has tightened the regulations on the establishment of joint-stock commercial banks. The regulations were aimed at curbing negative phenomena and ensuring the stability of the banking system.
UBS AG said it will strengthen its existing cooperation with Vietcombank. The two banks plan to strengthen their collaboration in terms of technology, knowledge sharing, training as well as product distribution.
Bank Internasional Indonesia has joined an ATM network called ATM Bersama to help increase its fee-based income by 20 percent in 2007. Customers will be able to make online transactions through 11,200 ATMs across the country. The bank operates 720 ATMs nationwide.
Bank Indonesia has relaxed the regulations restricting lending to defaulting borrowers to revive bank lending to the real sector. Banks are now allowed to extend loans to a defaulting borrower if they were to be used to fund different projects, and there was a clear separation of the cash flow between the projects.
Bank Negara Indonesia said it plans to sell its 48.5 percent stakes in Bank Finconesia. If unsuccessful, it will invite strategic investor to manage the joint venture bank.
HSBC is set to launch retail banking operations in Japan in early 2008. It plans to open 50 branches within four years. The bank is to offer high-end banking and wealth management services to lure the most affluent customers from the largest retail banks.
U.S. private equity group Lone Star was said to be auctioning off its $1.4 billion stake in Tokyo Star Bank. Several buyout firms were in the running to buy part of Lone Star’s 68 percent stake in the bank.
Former vice president of Mizuho Corporate Bank, Tsunehiro Nakayama will replace Yoshiyuki Fujisawa as Merrill Lynch Japan Securities’ chairman on May 1, 2007. Fujisawa will become adviser to the U.S. brokerage house’s Japanese unit.
Shinhan Bank was reported to be looking at buying a Russian bank. The move is said to be part of the bank’s efforts to double its overseas branch network by 2013 in a bid to become one of the region’s leading banks.
Woori Bank was seeking to raise around $500 million from the sale of a subordinated bond in the international debt market. The bank plans to market its hybrid Tier 1 bond from mid-April in Asia, Europe and the U.S.
According to the Financial Supervisory Service, employees of Shinhan Financial Group were the highest paid in 2006 among listed firms on the main stock market. Shinhan employees received the largest salary of 98 million won ($104,395) on average.
The Employees Provident Fund was reported to have approached Barclays and Royal Bank of Scotland as well as other international lenders to sell a 20 percent stake in Rashid Hussain. It also hopes to attract a private equity fund for another 20 percent stake by the end of 2007.
United Overseas Bank (Malaysia) expects its fee-based income to contribute up to 40 percent of its total earnings by end of 2007. The bank was seeking to expand its foundation of fee-based services by boosting its wealth management business that includes selling insurance via bancassurance.
Standard Chartered Bank Malaysia plans to set up an Islamic banking subsidiary in the next two years. It hopes to double the size of its Islamic assets in 2007 to RM 4 billion ($1.1 billion) from RM 2.04 billion ($588 million) in 2006 as it expands its product range and sales network.
Lebanese Bank Audi SAL-Audi Saradar Group has expanded to Egypt. It plans to open a total of 40 branches in Egypt by the end of 2007. The bank currently has branches in France, Switzerland, Jordan, Syria, Saudi Arabia, Qatar, Sudan and the UAE.
BNP Paribas and its Turkish partner TEB are planning to raise their market share in Turkey to five percent from the current 1.5 percent by the end of 2010. They will focus on organic growth by opening up more branches to gain customers in the credit card and mortgage sectors.
Dubai Holdings has set up a new company Dubai First to capture six percent of the UAE credit card business by the end of 2007. Dubai First will operate as a subsidiary of Dubai Financial with an authorized capital of Dh1 billion ($272 million) and paid up capital of Dh350 million ($95 million).
Union Bank of the Philippines was to sell P2.038 billion ($42 million) worth of soured loans in a bid to further clean up its books. The board had approved the sale of the bad loans to Deutsche Bank AG, London.
Al-Amanah Islamic Bank will be put up for public bidding on May 21, 2007 with the floor price set at P900 million ($18.7 million). The auction was expected to attract foreign Islamic bankers as well as local business groups.
Philtrust Bank has received approval to operate as a universal bank. With the license, Philtrust can enter investment banking and ‘non-allied’ activities such as real estate.
DBS Group Holding was reported to be seeking partners to bid for a stake in Korea Exchange Bank held by the U.S. private equity fund Lone Star Funds.
OCBC Bank said it preferred to focus on South-east Asia and China but will not place the same emphasis in India.
Standard Chartered has unveiled its travel industry portal called Travel Perks. Visa cardholders can now instantly convert reward points into travel once they register at the website. Customers no longer have to wait till they have enough points for a particular travel deal.
Karnataka Bank has been given approval for a Tier II bond offering. The timing of the issue had not been fixed.
Temasek Holdings and the Government of Singapore Investment Corporation were expected to obtain approval by June 2007 to own 10 percent stake each in India’s ICICI Bank.
Spanish bank BBVA has received approval to open its representative office in Mumbai. The office was to initiate closer contacts with the Indian market and to support the group’s business operations in India. Joiel Akilan has been appointed as chief representative in India.
Taishin Financial Holdings said it will inject NT$14.5 billion ($438 million) into Taishin International Bank to improve its capital adequacy.
Fuhwa Financial Holdings will be renamed Yuanta Financial Holding after the merger with Yuanta Core Pacific Securities with effect from April 9, 2007. The group plans to use NT$20 billion ($604 billion) in funds obtained from Yuanta to improve the financial structure of its banking arm and to acquire rivals.
Taiwan’s government is to ban bank chief executives and presidents from taking similar top management jobs in non-financial companies. The move is part of the an attempt by the Financial Supervisory Commission to tighten supervision of the financial institutions.
Canada-based Nova Scotia bank will acquire more than 24 percent of Thanachart Bank through a capital increase. The sale price to Nova Scotia is not known but sources estimated the deal to be worth 7 billion baht ($214 million).
Kiatnakin Bank may acquire a foreign strategic partner to support the bank’s business expansion. The bank also plans to widen its bancassurance business via cooperation with insurance companies. It will set up a new venture capital firm for the business.
With the economic outlook weakening over the past few months, HSBC Thailand said it will adopt better cost controls while still maintaining its investment plans for key technologies.