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Indian banks face scrutiny; China to scrap bank foreign ownership limits

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.

Indian banks face regulatory scrutiny

* Bank of Baroda cooperated with South African authorities regarding investigations relating to the politically connected Gupta family. South African police raided the lender's Johannesburg and Durban branches as part of investigations into alleged influence peddling under former South African President Jacob Zuma.

* India's ICICI Bank Ltd. may face regulatory scrutiny from abroad, including the U.S. SEC, in relation to its loan to Videocon Group. The U.S. SEC is said to be interested in the case since the bank is listed in the U.S. ICICI Bank said it has not received "any specific communication" from the U.S. SEC regarding allegations of improper loan to Videocon.

* India's Central Bureau of Investigation filed cases against officials of Bank of Baroda and Indian Bank over alleged embezzlement of government funds in connection with an alleged fraud involving a nongovernmental organization.

* The Hong Kong Monetary Authority tightened its supervision on the local branches of three Indian banks as their capital adequacy ratios fell below the regulatory requirement. The regulator told the branches of Allahabad Bank, Punjab National Bank and Indian Overseas Bank to maintain high-quality liquid assets in the city equivalent to 100% of unpledged deposits.

Regulatory updates

* The China Banking and Insurance Regulatory Commission is proposing to scrap limits on foreign shareholding in domestic banks and asset management firms. There is currently a 20% ownership ceiling on a single foreign investor and a 25% cap on aggregate foreign shareholding in a single commercial bank or asset management firm.

* The Chinese regulator also expects domestic banks to enhance and implement differentiated credit policies. Further, Chen Wenhui, the regulator's vice chairman, urged banks and insurance companies to focus on primary business operations.

* The anti-money laundering agency of South Korea's Financial Services Commission will operate a joint task force to devise strategies to help local banks operating in the U.S. better comply with relevant U.S. regulations.

* Taiwan's Financial Supervisory Commission plans to ease M&A rules for private sector financial holding companies in order to promote consolidation in the sector.

* The Reserve Bank of New Zealand is planning to implement stricter rules regarding the appointment and role of bank directors, including limiting the duration an independent director can stay on the board and the number of directorships a director can hold at one time.

Deals

* India's Federal Bank Ltd. agreed to acquire up to a 19.89% stake in investment bank Equirus Capital Pvt. Ltd. for an undisclosed sum.

* Yes Bank Ltd. is acquiring a 9.95% stake in India International Exchange Ltd. for an aggregate amount of 105.0 million Indian rupees.

* Punjab National Bank will divest its stakes in unit PNB Housing Finance Ltd. as well as in other entities such as BSE Ltd. and CRISIL Ltd. in line with the Indian government's agenda to reform Indian public sector banks. Carlyle Group LP is also seeking buyers for its 33% stake in PNB Housing Finance. The U.S.-based private equity firm is looking to divest the stake in the next 18 months.

* IndusInd Bank Ltd. obtained approval from India's central bank to incorporate a wholly owned subsidiary as part of its pending acquisition of Bharat Financial Inclusion Ltd. The bank has already received approval from the central bank for the deal.

* South Korea's Woori Bank is in talks to acquire a controlling interest in Kyobo Securities Co. Ltd. from Kyobo Life Insurance Co. Ltd. in a deal estimated at 320 billion won. Woori Bank is also close to acquiring a bank either in India or Vietnam, with negotiations expected to wrap up in June.

In other news

* Bank of Chongqing Co. Ltd. filed a prospectus with China's securities regulator for its proposed listing of 781 million shares in Shanghai.

* Australia & New Zealand Banking Group Ltd. will cut at least 60 jobs from its markets division in Australia and global offices. The move was driven by "challenging" conditions and "ongoing headwinds", according to Shayne Collins, the group's managing director of markets, in an internal email to staff.

* KEB Hana Bank plans to set up an online-only bank joint venture in Indonesia. The South Korean lender is seeking a local partner to roll out mobile and online platforms linked to the retail banking operations of its Indonesian unit.

* Standard Chartered Bank expressed its interest in applying for a virtual banking license in Hong Kong, becoming the first global bank to do so.

* Rizal Commercial Banking Corp. will dissolve its U.S. subsidiary, RCBC North America Inc. The dissolution of the U.S. subsidiary is in line with the bank's strategy to expand accessibility of its Telemoney international remittance services through overseas partnerships.

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