S&P Global Market Intelligence offers our top picks of banking news stories and more published throughout the week. Please note that some entries may have links to third-party sources that require a subscription.
India to allow on-tap licensing of small finance banks, other regulatory developments
* Reserve Bank of India issued draft guidelines for on-tap licensing of small finance banks to encourage competition. The on-tap licensing facility would allow the central bank to grant licenses for small finance banks throughout the year.
* The Indian central bank also allowed banks to lend up to 20% of their Tier-1 capital to a single nonbanking financial company, or NBFC, up from 15% previously, in a bid to improve liquidity for nonbank lenders. The higher exposure limit is applicable to all NBFCs except so-called gold loan companies, which accept gold and jewelry as collateral.
* The Hong Kong Monetary Authority and the Bank for International Settlements signed an operational agreement on the BIS Innovation Hub Centre in Hong Kong. The hub will identify and develop in-depth insights into critical trends in technology affecting central banking.
Japan Post Bank admits to improperly selling investment trust products
* Japan Post Bank Co. Ltd. admitted to improperly selling investment trust products to elderly customers, Reuters reported. The bank discovered more than 19,500 cases of improper sale of products in the fiscal year ended March 31.
* Woori Financial Group Inc. and KEB Hana Bank face a potential lawsuit over their alleged misselling of high-risk derivative products, The Korea Times reported. A group of up to five investors claim that sales representatives from both banks failed to clarify the investment risks of derivative-linked funds.
* Lakshmi Vilas Bank Ltd. and Indiabulls Housing Finance Ltd. are facing increased scrutiny from India's central bank following fresh allegations of wrongdoings against the housing finance company's promoters and the sudden departure of the bank's CEO, The Economic Times reported. The regulator intensified its "fit and proper" checks on the companies after a lawsuit was filed in the Delhi High Court to ask for a special probe into alleged irregularities, including diversion of funds, committed by the promoters of Indiabulls Housing Finance.
Branch expansions and more
* Mega Financial Holding Co. Ltd. delayed the launch of its virtual bank joint venture Next Commercial Bank Co. Ltd. and now expects it to be formally incorporated by the end of November, one month later than the original plan, according to Mega Financial's general manager,l Kuang-Hua Hu. Hu declined to disclose the reason behind the delay. He added that the online-only bank will begin operations in the third quarter of 2020.
* South Korea's Suhyup Bank launched its microfinance unit Suhyup Microfinance Myanmar Sept. 16, FNTIMES reported.
* NongHyup Bank is in talks to set up a branch in Australia as it hopes to participate in infrastructure financing deals and offer other business financing services in the country, Business Korea reported. The South Korean lender is also planning to file an application with the Chinese government to convert its representative office in China into a branch by the end of 2019.
* Singapore's DBS Bank Ltd. is seeking to double its assets under management and headcount for relationship managers in Thailand by 2023. The bank announced a partnership between DBS Private Bank and DBS Vickers Securities (Thailand) Co. Ltd. to help the bank target Thailand's growing pool of high-net-worth individuals and increase its AUM to S$8 billion from S$4 billion.
In other news
* Hong Kong's full launch of virtual banks could be delayed to early 2020 amid ongoing anti-government protests as well as other factors, Reuters reported Sept. 17, citing unnamed sources with direct knowledge of the matter. Most of the eight banks were looking to start their services in late 2019.
* Moody's downgraded Hong Kong's rating outlook to negative from stable, reflecting the growing risk "that the ongoing protests reveal an erosion in the strength of Hong Kong's institutions, with lower government and policy effectiveness than Moody's had previously assessed."
* Microlender Utkarsh Small Finance Bank Ltd. is selecting investment banks to lead its IPO, which is expected to be around 5 billion Indian rupees in size, Mint reported, citing three people aware of the matter. Under the Indian central bank's mandate, Utkarsh Small Finance Bank must list within three years of the launch of its operations.
* The Bank of Japan is studying ways of cutting rates further into negative territory while keeping yields on long- and short-term bonds from narrowing too much, Reuters reported.
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