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2 Japanese banks to merge in 2019; Australian regulator takes Westpac to court

GREATER CHINA

* Chinese officials determined that debt-laden conglomerate HNA Group Co. Ltd. is facing a liquidity issue and should receive help, sources familiar with the matter told Bloomberg News. A senior official at the People's Bank of China led a meeting June 12 with the China Banking and Insurance Regulatory Commission, two other regulators, China Development Bank and Hainan's provincial government as well as HNA Co-chairman Chen Feng, telling them to support the conglomerate's future bond issuances.

* The China Securities Regulatory Commission cautioned new economy companies against inflating their valuations in the pre-listing stage, noting that companies such as ZhongAn Online P & C Insurance Co. Ltd. have dropped from their peaks or fallen below their offer prices after their Hong Kong IPOs, the South China Morning Post reported. The regulator also told China's listed firms to boost efforts at "Communist Party-building" to enhance corporate governance, Reuters reported separately.

* U.K.-based payment services provider WorldFirst may receive a license to operate in Shanghai soon, making it the first overseas firm to enter China's payments market, the South China Morning Post reported, citing Zheng Yang, director of the Shanghai Financial Services Office. WorldFirst had initially applied with the People's Bank of China in May.

* The Shanghai municipal government and Bank of Communications Co. Ltd. signed a strategic agreement to deepen cooperation and for the lender to provide financial services to the city, Caijing reported.

JAPAN AND KOREA

* Shareholders of Japan-based Hamamatsu Shinkin Bank approved a merger with Iwata Shinkin Bank to set up a newly consolidated company called Hamamatsu Iwata Shinkin Bank in January 2019, Tokyo's The Nikkei reported.

* The New York State Department of Financial Services notified South Korea's Financial Services Commission of its plan to probe banks suspected of failing to meet compliance guidelines, prompting local lenders such as NongHyup Bank and Industrial Bank of Korea to beef up anti-money laundering measures, The Korea Times reported. An unnamed bank official said NongHyup Bank set up an independent unit to handle compliance-related issues and increased the unit's staff to 23 from 16.

* South Korean prosecutors investigating hiring irregularities at six local commercial banks issued indictments against 38 people, including former and current CEOs, The Korea Economic Daily reported. KB Financial Group Inc. CEO Yoon Jong-kyoo and Hana Financial Group Inc. CEO Kim Jung-tai were not indicted, the publication noted.

* South Korean banks may hike their lending rates after the U.S. Federal Reserve raised its rate by 25 basis points to a range of 1.75% to 2%, Yonhap News Agency reported, citing unidentified market sources.

ASEAN

* Singapore Exchange Ltd. said a court-appointed arbitrator ordered it to continue listing and trading SGX Nifty contracts beyond August 2018, amid a dispute on India derivative products offered by the Singapore bourse. In addition, SGX was told not to offer its proposed new India equity derivative products. Arbitration proceedings are ongoing and the hearings on evidence will begin in early 2019.

* Six out of 10 economists surveyed by Philippines-based BusinessWorld said the Bangko Sentral ng Pilipinas may keep its rates unchanged during its policy meeting June 20, the publication reported. Guian Angelo Dumalagan, market economist at Land Bank of the Philippines, said the central bank may keep rates steady as inflation pressures in the domestic economy "seem to have moderated."

* Indonesia's Deposit Insurance Corp. said savings interest rates have risen, reflecting the increase in Bank Indonesia's rate, Bisnis Indonesia reported. The central bank hiked its benchmark seven-day repo rate by 25 basis points to 4.75% in late May.

SOUTH ASIA

* Fitch Ratings revised its outlook on India-based Axis Bank Ltd. to negative from stable, mirroring growing pressure on the lender's standalone profile relative to banks with a viability rating of "bbb-." In addition, the rating agency lowered ICICI Bank Ltd.'s support rating to 3 from 2 and support rating floor to BB+ from BBB-, with a stable outlook. The rating agency affirmed the two companies' long- and short-term issuer default ratings at BBB- and F3, respectively.

* State Bank of India informed the country's refiners that it will stop handling payments for Iranian crude oil starting in November, Reuters reported. The decision comes after the U.S. government said it will reinstate sanctions on Iran after having withdrawn from the 2015 Iran nuclear pact.

* India-based IDBI Bank Ltd. has begun the process of appointing a transaction adviser to divest a 25% stake in IDBI Asset Management Co. held by IDBI Capital Market, Business Standard reported. IDBI Bank owns 67% of the asset management business, while IDBI Capital Market holds the remaining 33%.

* India's Banks Board Bureau, an advisory panel set up by the government for selecting candidates for top-level board appointments, recommended 22 general managers for elevation as executive directors at a number of state-run banks, Press Trust of India reported. The panel is headed by newly appointed Chairman B. P. Sharma.

AUSTRALIA AND NEW ZEALAND

* The Australian Securities and Investments Commission commenced civil penalty proceedings against Westpac Banking Corp. over alleged poor financial advice provided by Sudhir Sinha, a former financial planner. The regulator alleged that in four sample client files, Sinha breached the "best interests" duty, gave inappropriate advice and failed to prioritize clients' interests. In June 2017, the regulator banned Sinha from providing financial services for a five-year period.

* Moody's assigned counterparty risk ratings to 24 Australian banks and their overseas branches, in line with the counterparty risk assessments already assigned. The country's major banks — Australia & New Zealand Banking Group Ltd., Commonwealth Bank of Australia, National Australia Bank Ltd. and Westpac Banking — were assigned long- and short-term counterparty risk ratings of Aa2 and Prime-1, respectively.

* Moody's also assigned counterparty risk ratings to five New Zealand lenders and their overseas branches, in line with the counterparty risk assessments already assigned. ANZ Bank New Zealand Ltd., ASB Bank Ltd., Bank of New Zealand, Kiwibank Ltd. and Westpac New Zealand Ltd. were assigned long- and short-term counterparty risk ratings of Aa3 and Prime-1, respectively.

R Sio, Sally Wang, Jonathan Cheah, Jaekwon Lim and Santibhap Ussavasodhi contributed to this report.

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