Global investmentbanks face tough competition from Chinese banks, the Hong Kong stock exchangeneeds to revisit a proposed delisting mechanism and Indian public sector bankswill use a national database to check the financial records of borrowers.
For global investment banks, Asia has always been anattractive destination, as banks hoped to tap into the region's fast-growingeconomies and companies. However, local banks stepped up and the Chineseeconomic slowdown has tempered global banks' ambitions in the region, The Wall Street Journal reported. Thetop 10 list of investment banks doing business in China and Asia's emergingeconomies are dominated by Chinese banks, which have pocketed 60% of fees fromadvising on mergers and raising capital in Asia, according to research firmDealogic. No U.S. or European bank ranks higher than seventh in the rankings.Chinese banks have stolen business away from their Western rivals as they canallocate huge sums of money for deals.
The Hong Kong stock exchange is right to be wary of adelisting mechanism after the penny stock fiasco of 2002 but Enoch Yiu of the South China Morning Post argued thebourse should get over its fear and consider another stab at a delistingmechanism. Hong Kong Exchanges& Clearing Ltd. first considered introducing a delistingmechanism in 2002. In July that year, the bourse released a consultation paperthat proposed delisting penny stocks or companies that are trading below 50Hong Kong cents for 30 days. A day after the consultation paper was released,investors dumped more than 300 stocks, which led to the market's capitalizationto fall by HK$10 billion in a single day. The exchange dropped the consultationafter. Yiu believes that it is time for the stock exchange to revisit adelisting mechanism in light of a stock connect with the Shenzhen stockexchange and the possibility of a third board for startups. Shenzhen has amechanism that delists a company if it has posted a loss for three consecutiveyears. With a proposed new board and a revamped Growth Enterprise Market, HongKong Exchanges needs a clear exit mechanism to let poorly performing companiesgo since startup companies have high failure rates.
Indian state-run banks will have an easier time ensuringthat they are lending to customers with a good financial track record, The Economic Times reported. Publicsector lenders will use the National Economic Intelligence Network database tocheck the financial track record of borrowers and to inform authorities aboutfinancial irregularities, according to a senior government official. Thedatabase has over 7,000 files on economic offenders. Banks will be able toaccess information on their borrowers and can take proactive measures by askingborrowers to pledge their undisclosed assets. Banks will also submit anyirregularities to intelligence agencies to increase the speed of theirinvestigation.
South Korean banks and insurers are cutting staff numbers asthey deal with falling profits and the decreased need for physical bankbranches, The Korea Herald reported.The number of employees at banks stood at 132,170 as of the end of June, thelowest number in nearly 10 years, according to the Financial SupervisoryService. Banks have gradually reduced the number of their branches and staff asmore people use online and mobile banking, the FSS said. Banks fired 1,450staff in the first six months of this year, recruited fewer new employees andencouraged senior staff members to opt for early retirement. Meanwhile, thenumber of branches fell to 5,297 in June, down 115 branches from the prior-yearperiod. Insurance companies also streamlined their businesses. Insurers onlyhired 59,444 employees in June, the lowest number in five years. Insurers willlikely enforce more cost-cutting measures in the future as low interest ratespersist, an industry official said.
A tax amnesty program in Indonesia has raised questionsabout Singapore's reputation as a clean financial center, The Wall Street Journal reported. Some US$10.5 billion inpreviously undeclared assets was repatriated to Indonesia in the last three months,according to the country's tax office. More than half of the amount collected,about 57%, came from Singapore. The revelation comes after banks in Singaporewere under intense scrutiny for their connections with the 1MalaysiaDevelopment Bhd. scandal. Some bankers and lawyers say that more embarrassingscandals could be in store as Singapore's financial system becomes reliant onprivate wealth. Singapore is home to the regional investment banking andprivate wealth management operations of many Western banks. Regulating a systemwith so many foreign clients is challenging but Singapore authorities promisedto more proactively target and pursue cases of cross-border money laundering.