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Australia to launch financial inquiry; Malaysian banks report earnings

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 may require a subscription.

Australia to launch a probe into the financial sector over alleged misconduct

* Australian Prime Minister Malcolm Turnbull announced a probe into the country's financial sector to investigate the alleged misconduct of banks and other financial services entities. The royal commission will examine the conduct of banks, insurers, financial services providers and superannuation funds.

* Analysts said the royal commission could weaken the reputation of Australian banks and put further pressure on profitability — while allowing the lenders to move on from misconduct allegations.

Other regulatory and legal updates

* Bank Indonesia plans to issue new rules that aim to improve banks' credit distribution and liquidity management. Under the new rules, the implementation of reserve requirements will be expanded to Islamic banks and foreign currency-denominated deposits.

* CTBC Bank Co. Ltd. was fined NT$2 million by Taiwan's Financial Supervisory Commission for breaches in its internal control mechanisms. The regulator fined the bank after an IT operational procedure was not properly followed, resulting in certain voice log data losses.

* Australia & New Zealand Banking Group Ltd. dismissed a "small" group of bankers for consuming illegal drugs at a work-related event. The company also fired another employee for making "unwelcomed sexual comments and advances towards a female from another bank" at a separate event.

* The Philippine central bank imposed sanctions on Metropolitan Bank & Trust Co. in connection with a 1.75 billion peso internal fraud case. The sanctions ranged from reprimand to the suspension of the bank's directors and officers.

* China Development Bank filed a bankruptcy petition against India's Reliance Communications Ltd. under the country's Insolvency and bankruptcy code. Reliance Communications owes nearly US$2 billion in syndicated loans to the bank.

* A Dhaka court jailed a former deputy general manager of Bangladesh Krishi Bank for his part in four corruption cases involving the misappropriation of 4.3 billion taka.

Malaysian banking groups report earnings

* CIMB Group Holdings Bhd. reported a year-over-year increase in consolidated third-quarter net profit as net interest income rose and provisions declined.

* RHB Bank Bhd. reported net profit attributable to equity holders for the third quarter of 488.8 million Malaysian ringgit, down from 505.3 million ringgit in the prior-year quarter.

* Hong Leong Financial Group Bhd. reported a year-over-year increase in net profit for the fiscal first quarter to 455.3 million ringgit, or 39.8 sen per share, from 386.2 million ringgit, or 33.8 sen per share.

* Malayan Banking Bhd. reported a year-over-year increase in third-quarter net profit to 2.03 billion ringgit from 1.80 billion ringgit in the year-ago period.

M&A updates

* Bank of East Asia Ltd. and unit Credit Gain Finance Co. Ltd. are selling their equity interests in three China-based companies and a Hong Kong loan portfolio to China Financial Services Holdings Ltd. and unit QL Finance Co. Ltd. for 563.4 million Chinese yuan.

* Shimada Shinkin Bank and Kakegawa Shinkin Bank plan to merge to survive Japan's low interest rate environment. The two banks aim to complete the merger by the end of March 2019.

* IDBI Bank Ltd. is looking for buyers for its stakes in National Stock Exchange of India Ltd., IDBI Federal Life Insurance Co. Ltd. and IDBI Trusteeship Services Ltd. as part of plans to shed noncore assets.

* AFFIN Bank Bhd. plans to buy an additional stake in AXA Affin General Insurance Bhd. from Felda Marketing Services Sdn. Bhd. for 81.44 million ringgit.

* Oversea-Chinese Banking Corp. Ltd. completed the acquisition of National Australia Bank Ltd.'s private wealth business in Hong Kong for an undisclosed sum.

* PT Bank Rakyat Indonesia (Persero) Tbk is paying 71.32 billion rupiah to acquire a 35% stake in PT Bahana Artha Ventura.

* IndusInd Bank Ltd. will invest 450 million rupees in microfinance lender Satin Creditcare Network.

S&P takes rating action on Japanese megabanks

* S&P Global Ratings lowered its long-term issuer credit rating on Mitsubishi UFJ Financial Group Inc. and major banking subsidiaries given the rising economic risk in the group's business portfolio. S&P downgraded Mitsubishi UFJ Financial's long-term issuer credit rating to A- from A.

* S&P downgraded the long-term issuer credit ratings on six financial subsidiaries of Mitsubishi UFJ Financial following a ratings downgrade of the parent.

* S&P also lowered its outlook on Sumitomo Mitsui Financial Group Inc. and its core banking subsidiaries' long-term issuer credit ratings to stable from positive.

In other news

* The Bank of Korea raised its key interest rate by 25 basis points to 1.50%, its first hike since 2011.

* India's demonetization policy may not have achieved its aim of cracking down on the black economy but it has brought millions of new customers into the formal banking sector, Sanjiv Chadha, State Bank of India's U.K. chief, said during the FT Banking Summit in London.

* Bank of Baroda plans to close its branch in Hong Kong and a representative office in Thailand as it rationalizes its business.

* Woori Bank unit Woori Bank Vietnam Ltd. and LienViet Post Joint Stock Commercial Bank signed a memorandum of understanding.

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