The "Best of theWeb" rounds up some of the more noteworthy recent coverage we haveencountered on issues affecting the Asia-Pacific financial sector. Please notethat some links may require a subscription.
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The Reserve Bank of India is fighting proposed changes to globalcapital rules that will mean additional capital charges for India's alreadyburdened banks, Bloomberg News reported. The Basel Committee is reviewing rulesfor the regulatory treatment of banks' government bond holdings. The proposalwill mean imposing higher capital requirements on sovereign assets that bankshold. For Indian banks already struggling with bad loans and higher provisions,the proposal could be disastrous as they hold nearly 30% of their assets instate debt. RBI Governor Raghuram Rajan said the regulator is opposing theproposal "tooth and nail" at Basel. He pointed out that deliberationsat the committee are sometimes dominated by advanced economies.
Bank Negara Malaysia's surprise rate cut could likely affectbanks' earnings, The Star reported.Analysts expect the rate cut to further squeeze margins at banks. Bank NegaraMalaysia had cut its overnight policy rate by 25 basis points to 3%, its firstrate cut since 2009. The cut is negative for banks as their base rates tend todecline more than their deposit rates, an analyst said. , and are theleast likely to be affected by the rate cut, according to Kenanga Research. Thethree firms would be able to mitigate the rate cut better as their fixed-ratelending makes up about 30% of their total loan portfolio.
The world's recent obsession with catching virtualpocket-sized creatures has inadvertently helped a faltering Japanese bank, The Wall Street Journal reported. Sharesof Bank of Kyoto Ltd.have surged 20% in two days thanks to its 4.2% stake in Nintendo. The gamemaker has seen its market value rise 52% after the release of "PokémonGo." This is extremely good news for Bank of Kyoto, as its Nintendo sharesare now worth US$1.2 billion, or nearly half the bank's market capitalization.
Australia& New Zealand Banking Group Ltd. is betting on a future wherepeople use their smartphones for purchases. ANZ CEO Shayne Elliott predictsthat consumers will prefer digital wallets to plastic credit and debit cards inless than a decade, The Sydney MorningHerald reported. The bank is going all-in with the prediction and isoffering Google's Android Pay system to its customers. Elliott argued thatconsumers had already embraced contactless payments and it would not be a bigleap for them to use their phones for payments. Smartphones could be moresecure and hold extra information for consumers, the ANZ CEO added. The bankhas also offered Apple's counterpart to Android Pay and there has been a strongadoption of Apple Pay among the bank's customers, Elliott said.
Indian microfinance firms hoping to turn into small financebanks may have to turn to securitization to free up their capital, Mint reported. Microfinance firms willhave to adjust to new rules once they transform into small finance banks. Assmall finance banks, they will have to keep a portion of their deposits withthe central bank and invest part of their deposits in government securities.Securitization allows a lender to bundle loans together and sell them toanother financial institution to free up capital. The new small finance bankswill also have to bring down their borrowings from banks and increasefundraising by deposits.