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Central banks react to US Fed hike; Moody's outlook on Asian banks is negative

S&P Global Market Intelligence offers our top picks of banking news stories and more published throughout the week. Please note that some entries have links to third-party sources that may require a subscription.

Asian central banks react to US Fed rate hike, other regulatory moves

* The Hong Kong Monetary Authority raised its base rate by 25 basis points to 1% following the anticipated move by the U.S. Federal Reserve to raise the benchmark federal funds. The HKMA followed the U.S. Fed's action in raising rates as the Hong Kong dollar is pegged to the U.S. currency.

* Meanwhile, Bank Indonesia kept its benchmark interest rate unchanged at 4.75%. The central bank said it will remain vigilant on the risks that capital flows into Indonesia can be reversed.

* Bank of Korea decided to leave the base rate unchanged at 1.25%, but said it is closely monitoring political uncertainties in the domestic and global fronts.

* The Monetary Authority of Singapore is proposing new guidelines on short selling with an aim to enhance transparency on such transactions. Under the new guidelines, market participants will be required to specifically disclose short-sell orders to the relevant exchange, among other things.

* The Monetary Authority of Macao has placed a per-transaction restriction on the limit for cash withdrawals by Chinese bankcards through the city's ATMs, in line with China's efforts to regulate capital outflow.

* Taiwan's Financial Supervisory Commission fined Australia & New Zealand Banking Group Ltd. NT$4 million for selling yuan-linked target redemption forwards to unqualified customers.

* The Bangko Sentral ng Pilipinas' monetary board amended the guidelines on the establishment of branches to offer banks more flexibility on their expansion plans. Separately, the Philippine central bank made further amendments to foreign exchange regulations to ease transactions of foreign banks in the country.

Moody's takes negative outlook on Asian banks in 2017, other ratings actions

* Moody's said the outlook on Asia-Pacific banks in 2017 is negative due to the region's challenging operating conditions, which will place pressure on lenders' asset quality and profitability.

* Fitch Ratings downgraded its outlook on Australian banks to negative from stable amid a potential fall in house prices that could threaten banks' profit in 2017.

* Moody's downgraded the baseline credit assessments and adjusted baseline credit assessments of Singapore's DBS Bank Ltd., Oversea-Chinese Banking Corp. Ltd. and United Overseas Bank Ltd. to "a1" from "aa3" due to the banks' weakening asset quality and profitability.

* S&P Global Ratings upgraded its outlooks on Bank of Communications Co. Ltd. and unit Bank of Communications Financial Leasing Co. Ltd. to stable from negative as it expects the parent's improved capitalization to provide a stronger buffer against the negative economic risk trend in China.

* Moody's raised Bank of Singapore Ltd.'s ratings outlook to stable from negative following a similar change on the rating of parent Oversea-Chinese Banking Corp. Ltd.

ICICI Bank halts sale of home finance unit, other banks eye acquisitions

* ICICI Bank Ltd. reportedly placed on hold its plans to sell unit ICICI Home Finance Co. Ltd. to TPG Capital Advisors LLC following disagreements with the private equity fund over valuation. This marks the second time ICICI Bank has halted the sale of ICICI Home Finance after doing so in April following a disagreement on price with potential private equity buyers.

* Bank of Baroda is in talks to purchase a majority stake in Central Bank of India's housing finance subsidiary, Cent Bank Home Finance. Investment bankers expect Central Bank of India to get 2.5 billion rupees from the deal.

* The leasing arms of China Merchants Bank Co. Ltd. and Ping An Insurance (Group) Co. of China Ltd. are among the bidders for AirAsia Bhd.'s aircraft leasing unit, Asia Aviation Capital. The unit is valued at about US$1 billion.

In other news

* Daiwa Securities Group Inc. agreed to invest US$20 million in Chinese investment bank CSC Financial Co. Ltd. as a cornerstone investor.

* South Korea's first internet-only bank, K-Bank, is set to commence operations in early 2017 after obtaining final approval from the country's financial regulator.

* Zhongyuan Bank Co. Ltd. has hired CITIC CLSA as the sponsor for its Hong Kong IPO, according to two people familiar with the situation.

* Chinese billionaire Shi Yuzhu has increased his shareholding in China Minsheng Banking Corp. Ltd. to 9.59% from 1.02% ahead of a revamp of the bank's board of directors.

* Bank Indonesia and the Bank of Japan signed an extension of a bilateral swap agreement for the third time, amounting to US$22.76 billion.

* Hong Kong Chief Executive Leung Chun-ying will not seek re-election in March 2017 due to family reasons. Separately, Hong Kong's financial secretary, John Tsang, resigned from his post on Dec. 12. KC Chan, secretary for financial services and the treasury, will be acting financial secretary.

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