India stress test sees rising bad debt; US firms reevaluate ETFs after China ban

TOP NEWS IN BANKING & FINANCIAL SERVICES

* The Reserve Bank of India said in its Financial Stability Report that macro stress tests incorporating the first advance estimates of GDP for 2020-21 released Jan. 7 indicate that the gross nonperforming asset ratio of all scheduled commercial banks may rise to 13.5% by September 2021 from 7.5% in September 2020 under the baseline scenario. The ratio could rise to 14.8% under a severe stress scenario.

* BlackRock Inc. and State Street Corp. will reevaluate the exchange-traded funds that track the benchmark Hang Seng Index, following the U.S. ban on investment in companies believed to have ties to the Chinese military, The Nikkei reported. State Street said it will not make new investments in sanctioned securities through its Tracker Fund, the biggest ETF based in Hong Kong.

➤ Bad loans, capital may be key challenges for India's state-owned banks in 2021

India's state-owned banks are staring at a year of rising bad loans and increased competition from their private-sector peers in 2021 but analysts think they can weather the challenges ahead with more capital raising.

➤ Southeast Asia E-Money Market Report shows tech firms disrupting banks

S&P Global Market Intelligence's latest Southeast Asia E-Money Market Report looked at the usage of popular retail payment instruments in Southeast Asia and shows that nonbanks have overtaken banks as primary payment providers in the region's largest market.

BANKING

* China's Bank of Communications Co. Ltd. issued a statement saying that it has not experienced an attack and no client information has been leaked, following its discovery of several posts on the dark web purportedly selling its clients' information.

* South Korea's four major banks — KB Kookmin, Shinhan, Hana and Woori Bank — announced plans to merge or shut down a total of 26 retail offices in January and February, the Maeil Business Newspaper reported.

* Thailand-based Bank of Ayudhya PCL appointed Sayam Prasitsirigul as chief information and digital officer, effective Jan. 1, Krungthep Turakij reported.

* Krung Thai Bank PCL said all its branches in shopping malls across Thailand will close early at 6 p.m. until further notice due to the COVID-19 outbreak.

FINANCIAL SERVICES

* Bursa Malaysia Bhd. said the stock exchange is operating as normal after an employee tested positive for COVID-19, bringing the total number of positive cases at the Malaysian bourse to three. Detailed contact tracing and deep sanitization work have been carried out by the bourse.

* Indonesian online wealth management platform Ajaib raised $25 million in a funding round led by Alpha JWC Ventures and Hong Kong-based Horizons Ventures Ltd., South China Morning Post reported.

* Singapore's Sea Group, the owner of e-commerce Shopee, has taken over Indonesian small lender PT Bank Kesejahteraan Ekonomi and planned to turn it into a digital bank, Bisnis Indonesia reported. The move came even as authorities are still working on digital banking regulations.

* India-based Volkswagen Finance Private Ltd. acquired a majority stake in financial technology firm KUWY Technology for an undisclosed amount as part of its plan to grow its retail financing business, The Economic Times reported.

* Service outages beginning Jan. 5 impacted about 15% of Australia-based Tyro Payments Ltd.'s electronic funds transfer at point of sale terminals, The Australian Financial Review reported. The company confirmed it will need to replace the devices by the end of the week.

* The board of Australian financial technology firm azupay Pty Ltd. said it will officially announce Jan. 12 the appointment of John Murphy as CEO, The Australian Financial Review reported. Murphy has been its acting CEO since September.

POLICY AND REGULATION

* The People's Bank of China is seeking feedback on regulations covering China's credit reporting business, including prohibiting credit reporting agencies from collecting information illegally and preventing abuse of personal credit information.

* China's National Association of Financial Market Institutional Investors told Haitong Securities Co. Ltd. and two of its units, as well as Donghai Fund Management Co. Ltd., to rectify their behavior after they were found to have broken rules when they underwrote bond issuances for Yongcheng Coal & Electricity Holding Group Co. Ltd. that later defaulted, Caixin reported.

* Chinese authorities plan to push internet platforms including Tencent Holdings Ltd., Ant Group Co. Ltd. and JD.com Inc. to share their consumer loan data with credit agencies run or backed by the People's Bank of China, Reuters reported citing sources.

* China plans to allow commercial banks to sell bad personal loans to distressed asset managers starting this month, and Industrial & Commercial Bank of China Ltd. could be the first bank to do so, Bloomberg News reported, citing sources. The country's six largest state-owned commercial banks, 12 joint-stock lenders, its largest distress asset managers and some regional bad-debt management firms are part of the program.

* The People's Bank of China lifted the upper and lower limits on credit card interest rates starting Jan. 1, Caixin reported. It will also allow credit card issuers to set their own interest rates for unpaid monthly balances, Caixin reported.

* South Korea's Financial Services Commission confirmed that the current ban on short selling will be lifted starting March 15 as planned, the Chosun Ilbo reported.

* The Indian government and the Reserve Bank of India are discussing the proposal to extend the classification period for bad loans to 120 days from 90 days in the wake of mounting bad debts due to the effects of the COVID-19 pandemic, Business Standard reported.

INDUSTRY NEWS

* The number of Japanese consumers who have used noncash transactions increased to 60%, as the pandemic steered consumers toward a cashless economy, Tokyo's The Nikkei reported, citing a public survey conducted by the publication.

* Japan is preparing to expand the state of emergency it recently declared in Tokyo and three neighboring prefectures to the western prefectures of Osaka, Kyoto and Hyogo, Reuters reported, citing Jiji Press. The three prefectures have requested the measure to contain the spread of the coronavirus.

MARKET SNAPSHOT

Click here for a summary of indexes on the MI platform.

Eden Estopace, Sally Wang, Sarun Saelee, Cathy Hwang, Emi White and Aditya Suharmoko contributed to this report.

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