The "Best of the Web"rounds up some of the more noteworthy recent coverage we have encountered on issuesaffecting the Asia-Pacific financial sector. Please note that some links may requirea subscription.
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In what may reflect risks posed by the turmoil in the resourcessector, Australia's major banks are facing possible losses on loans worth up toA$1 billion to steel and iron ore supplier Arrium Ltd., Bloomberg News reported.Arrium had handed over control to an administrator after banks rejected its recapitalizationplan. Banks are likely to recoup less than 50 cents on the dollar they lent to thesupplier. Omkar Joshi, an investment analyst at Watermark Funds Management, saidthe development is a negative for the four big banks given that they are unsecuredcreditors. Commonwealth Bank of Australia,Westpac Banking Corp.and National Australia Bank Ltd.each lent A$250 million to Arrium, according to sources. Australia & New Zealand Banking Group Ltd. has a facilityof more than A$200 million. The four largest Australian banks have lent a totalof A$65.6 billion to the resources sector, according to filings.
Experts are divided over the potential impact of South Koreanregulators' proposed rules that will require institutional investors to reveal whichstocks they are selling short, The Korea Heraldreported. Some believe that it will strengthen transparency in the market whileother believe that it will hinder short selling's benefits such as market liquidityand pricing efficiency. The Financial Services Commission is set to oblige investorsto reveal their short positions once they reach 0.5% of a company's share capital.Lee Hyung-ju, a director of the capital market bureau at the FSC, said the new regulationswill increase transparency while prohibiting speculative short selling. Identifyingshort sellers can help prevent market manipulation and excessive speculation, saidLee In-ho, an economics professor at Seoul National University. On the oppositeside of the debate, some experts believe the regulation will hinder the positiveeffects of short selling, such as improving market liquidity and price formation.Wealth management firms claim the rules will have negative impact on their businessesas their investment strategies will be exposed to everyone.
The Indian government will no longer take any excuse from publicsector banks that do not pass on the full effects of rate cuts to consumers, The Economic Times reported. The recently the policy rate by 25 basis pointsand implemented a range of measures to improve liquidity. The government now expectsbanks to reduce rates by May 1 and will exert pressure on banks to do so, said agovernment official. Some banks had cut rates after the new marginal cost of fundsbased lending rate regime was rolled out April 1. However, banks want to see a declinein deposit costs before they take a call on lending rate cuts. They have also arguedthat it could take a month before liquidity measures have an effect.
Suncorp Group Ltd.wants to drop bank branches in favor of a one-stop shop for all of the company'sfinancial services, The Sydney Morning Heraldreported. Suncorp Group CEO Michael Cameron said the proposed Suncorp storewill offer customers access to all of its services, products and brands. Cameronplans to consolidate the group's 14 brands, which range from general insurance,wealth, banking to life insurance. The CEO also wants to drive growth from providingmore services to its existing customers rather than wooing new clients.
The Bank of Japan'sintroduction of negative interestrates has yet to spur bank lending as loan growth slowed to the weakestpace in three years in March, Bloomberg News reported. Loans excluding trusts increased2% from the prior-year period but slowed from 2.2% in February, according to thecentral bank. The figures are the first after the BOJ imposed its negative interestrate policy. While it is still too early to consider the policy a failure afterone month, it had been doubtful that negative interest rates would boost loan demand,said Takashi Miura, an analyst at Credit Suisse Group AG. Home lending will eventuallycome back if rates settle but corporate loans need to get back to the 2.5% levels,he added. The policy has put pressure on banks' profitability as they are beingforced to lower interest rates on loans more than on deposits. Some banks have resistedpassing on the costs of negative rates to depositors but some have indicated thatthey will charge some institutional customers.