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HK drops suit against UBS, StanChart; Australia to conduct banking stress test

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HK drops suit against UBS, StanChart; Australia to conduct banking stress test

GREATER CHINA

* Hong Kong's Securities and Futures Commission has withdrawn its lawsuit against UBS Group AG and Standard Chartered Plc over market misconduct in the 2009 IPO of now-delisted China Forestry Holdings Co., The Wall Street Journal reported, citing sources familiar with the matter. However, the banks may still face financial or other forms of penalties from the regulator, the sources said.

* People's Bank of China Governor Zhou Xiaochuan said the country expects its 6.9% GDP growth in the first half to continue its momentum in the second half, even as the government seeks to encourage deleveraging. Zhou added that China would keep implementing a set of policy measures to address weaknesses in the economy and prevent potential risks, including those from shadow banking activities and housing market bubbles.

* Data from China's central bank showed that new yuan-denominated lending rose to 1.27 trillion yuan in September from 1.09 trillion yuan in August, Xinhua News Agency reported, citing a central bank statement. Meanwhile, M2, the country's broad measure of money supply that covers cash in circulation and all deposits, increased 9.2% at the end of September from a year earlier, and up from 8.9% as of August.

* China and South Korea agreed to extend their 360-billion-yuan currency swap agreement for three years starting Oct. 11, The Nikkei reported, citing Kim Dong-yeon, South Korea's deputy prime minister and minister of strategy and finance, and Lee Ju-yeol, governor of the Bank of Korea. A source close to the matter said technical problems prevented officials of both countries from making an official announcement.

JAPAN AND KOREA

* Haruhiko Kuroda, governor of the Bank of Japan, warned that investors may be complacent over geopolitical risks that could disrupt financial market stability and global economic recovery, Reuters reported.

* U.S.-based American Family Life Assurance is looking to issue about ¥60 billion worth of yen-denominated hybrid bonds soon, The Nikkei reported.

* The estimated total insurance payout by three Japanese insurers — Tokio Marine Holdings Inc., MS&AD Insurance Group Holdings Inc. and Sompo Holdings Inc. — for damage caused by recent hurricanes in the U.S. and major earthquakes in Mexico may exceed ¥200 billion, The Nikkei reported.

* Kim Dong-yeon, South Korea's deputy prime minister for economic affairs and finance minister, said the country does not "artificially intervene" in foreign exchange markets, ahead of the U.S. Treasury's biannual announcement on its list of currency-manipulating countries Oct. 16, The Korea Herald reported.

ASEAN

* Southeast Asian central banks and monetary authorities have agreed to renew a memorandum of understanding on the US$2 billion ASEAN swap arrangement for two more years starting Nov. 17, according to a statement from Bank Negara Malaysia. The agreement was established in 1977.

* Bank for Agriculture & Agricultural Co-operatives is in talks with Thailand's Fiscal Policy Office and the research center of the Bank of Thailand on ways to improve the country's rice insurance program and the feasibility of offering similar insurance products to corn and dairy farmers, Post Today reported.

* Chuchi Fonacier, deputy governor of the Bangko Sentral ng Pilipinas, said local lenders could start expanding in Southeast Asian countries such as Singapore, Brunei, Cambodia, Laos, Myanmar and Vietnam, with the full rollout of the ASEAN banking integration framework by 2020, The Philippine Star reported.

* The Bangko Sentral ng Pilipinas said it will shelve clearing and settlement operations on Oct. 16 following the order to suspend government work due to a two-day nationwide transport strike, Rappler reported, citing a central bank statement. The Philippine Stock Exchange Inc. and the Securities Clearing Corp. of the Philippines will also suspend trading the same day due to the suspension of operations in the Philippine Payments and Settlements System, according to the local bourse.

SOUTH ASIA

* India-based IndusInd Bank Ltd. agreed to acquire Bharat Financial Inclusion Ltd. in an all-stock transaction, subject to regulatory and shareholder approvals. Under the proposed deal, Bharat Financial shareholders will receive 639 shares of IndusInd Bank for every 1,000 shares of Bharat Financial.

* The IPO of General Insurance Corp. of India, priced at between 855 rupees and 912 rupees per share, was subscribed 1.37× on the last day of bidding Oct. 13, The Economic Times reported. The Indian government raised about 98 billion rupees from the sale of some of its shares in the insurer through the IPO, Reuters separately reported.

* The Insurance Regulatory and Development Authority of India received three applications for nonlife insurance companies and two from reinsurers seeking to set up shop in the country, Press Trust of India reported, citing Nilesh Sathe, a regulatory official. The initial approvals will be discussed during the regulator's board meeting in late October.

* Pakistan's Summit Bank Ltd. said in a bourse filing that its board has approved a revision in the swap ratio in relation to its proposed merger with Sindh Bank Ltd. Under the revised deal, one ordinary share of Sindh Bank would be issued for every 4.17 ordinary shares of Summit Bank, subject to regulatory and shareholder approvals.

AUSTRALIA AND NEW ZEALAND

* The Reserve Bank of Australia will conduct "top-down stress tests" on the country's banking system, in addition to monitoring from the Australian Prudential Regulation Authority, The Australian reported. This comes after the central bank voiced concerns over heightened threats to financial stability amid increasing household debt and excessive property prices.

* Commonwealth Bank of Australia said it would move about 2,000 customer service representatives and tellers to a new compensation plan focused on customer service outcomes, rather than financial ones. The new measures will be backdated to July 1, the start of the bank's current performance period.

* Australia & New Zealand Banking Group Ltd. is seeking to secure a securities license in Japan in the "reasonably short term," The Australian Financial Review reported, citing Grant Knuckey, CEO of the bank's Japanese operations. Knuckey noted that the country "deserves to be reprioritized."

* Insurance lawyer John Berrill said a class action suit against Westpac Banking Corp., which alleged the insurer overcharged thousands of life insurance customers, may depend on "forensic" analysis of terms and conditions of the insurance policies and premiums, The Sydney Morning Herald reported.

R Sio, Sally Wang, Sarun Saelee, Cathy Hwang, Emi White and Aditya Suharmoko contributed to this report.

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