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Malaysia sues Goldman Sachs units over 1MDB scandal; Citi to exit Chinese JV


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Banks’ Response to Rising Rates & Liquidity Concerns

Malaysia sues Goldman Sachs units over 1MDB scandal; Citi to exit Chinese JV

Market disruptions will likely recur as central banks move toward their pre-crisis monetary policy settings, according to Claudio Borio, Bank for International Settlements' head of monetary and economic department. Prices fell for many asset classes in the last quarter of 2018 as central banks raised interest rates and slimmed balance sheets. In the financial institution's quarterly review, Borio said monetary policy normalization was "bound to be challenging" amid trade tensions and political uncertainty.

In banking news, Malaysian prosecutors filed charges against three Goldman Sachs Group Inc. subsidiaries over their handling of $6.5 billion in bonds issued by the country's investment fund, 1Malaysia Development Bhd., the Edge Markets reports. The state also sued former Goldman Sachs banker Timothy Leissner, Malaysian financier Jho Low and former 1MDB general counsel Jasmine Loo Ai Swan. Another former Goldman Sachs executive, Roger Ng, is under police remand in Kuala Lumpur and is expected to be charged later this week.

Citigroup Inc. is exiting Citi Orient Securities Co. Ltd., its Chinese joint venture with Shanghai-based Orient Securities Co. Ltd. The company is transferring all its 33.33% equity interest in the joint venture to Orient Securities as talks of owning a 51% stake in the joint venture have not progressed.

Rosemont, Ill.-based Wintrust Financial Corp. acquired Elektra Holding Co. LLC and unit Chicago Deferred Exchange Co. LLC in a cash deal valued at approximately $51.9 million.

Broker/dealer Robinhood will rebrand the name and marketing of its new product offering, which will launch in 2019. The company, which earlier marketed the product as a "checking and savings" account that will provide customers with a 3% interest on their deposits, now says the product will be a cash management program. Robinhood received backlash after questions on how the product will be insured and whether the money will be protected arose, Bloomberg reports. The company said the accounts will be insured by the Securities Investor Protection Corp. — something the organization's head denied.

And in other news, President Donald Trump appointed Office of Management and Budget Director Mick Mulvaney as interim White House chief of staff. Mulvaney, who also previously served as acting director of the Consumer Financial Protection Bureau, will replace John Kelly, who is leaving at the end of 2018.

In other parts of the world

Asia Pacific: China to share investor identities with Hong Kong; Sri Lanka reinstates PM

Europe: TP Icap sues NEX; BAWAG to buy BFL Leasing; Novo Banco sells NPLs

Middle East & Africa: Access Bank said to acquire Diamond Bank; Moza Banco agrees to buy Banco Terra

Now featured on S&P Global Market Intelligence

Credit union auto loans growing, but some bracing for eventual slowdown: Despite strong year-over-year growth in auto loans, some credit unions are looking to diversify their balance sheets in preparation for a projected decline in car sales in 2019.

Travelport deal adds to rising private equity buyout momentum in fintech space: Year-to-date through Dec. 10, there are six announced private equity buyouts worth at least $1 billion in the fintech space, according to S&P Global Market Intelligence data.

Countries agree on Paris accord rulebook at COP24 but punt some issues to 2019: More than 195 countries, including the U.S., adopted rules for implementing the Paris Agreement on climate change. However, other key issues such as market mechanisms for cutting emissions were punted to 2019.

The day ahead

Early morning futures indicators pointed to a lower opening for the U.S. market.

In Asia, the Hang Seng retreated 0.03% to 26,087.98, while the Nikkei 225 rose 0.62% to 21,506.88.

In Europe as of midday, the FTSE was down 0.47% to 6,812.80, and the Euronext 100 fell 0.69% to 936.76.

On the macro front

The Federal Reserve Bank of New York's Empire State Manufacturing Survey, the National Association of Home Builders' housing market index and the Treasury International Capital report are due out today.

Click here to read about today's financial markets, setting out the factors driving stocks, bonds and currencies around the world ahead of the New York open.

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