Deutsche Bank says results will beat forecasts

Germany's biggest lender Deutsche Bank said it expects to report a net profit of 66 million euros ($71 million) for the first quarter, beating market forecasts.

Turnover is expected to reach 6.4 billion euros while provisions for credit losses should amount to 500 million euros, it said in a statement on its website late Sunday.

The bank's common equity tier 1 ratio, the main bank solvency ratio, was 12.8 percent at the end of the quarter, down from 13.6 percent at the end of 2019, it said.

"In light of the current macroeconomic environment", Deutsche Bank "has made the clear decision to allow capital to fall modestly and temporarily below its target in order to support clients and the broader economy at this time of economic crisis."

The bank is due to release its quarterly results on Wednesday.

"The short-term implications of the COVID-19 pandemic make it difficult for the bank to accurately reflect the timing and the magnitude of changes to its original capital plan," it said.

"Deutsche Bank's priority is to stand by its clients without compromising on capital strength."

The German group lost 5.72 billion euros in 2019, its fifth consecutive net loss, and in July announced a major restructuring plan.

"We're very satisfied that our first-quarter results demonstrate the progress we're making with the transformation of our bank, the operating strength of our business, and our resilience," chief executive Christian Sewing said in the statement.

At the end of January, Sewing said he was optimistic for 2020 and convinced that the radical transformation of the German banking giant would pay off further ahead.

Agence France-Presse

Westpac CEO resigns amid money-laundering scandal

SYDNEY, Australia — Australian banking giant Westpac said Tuesday its beleaguered CEO Brian Hartzer was stepping down after regulators accused the bank of wholesale breaches of money laundering rules involving more than US$7 billion.

Westpac is facing a potentially massive fine over claims that it failed to report millions of international fund transfers, including "high-risk transactions" to Southeast Asian nations potentially linked to child exploitation.

"As CEO, I accept that I am ultimately accountable for everything that happens at the bank," Hartzer said in a statement announcing the changes.


"It is clear that we have fallen well short of what the community expects of us, and we expect of ourselves."

Current chief financial officer Peter King will take over the reins until a "global search process" for a permanent replacement is completed.

The axe also fell on company chairman Lindsay Maxsted, who will bring forward his retirement to "the first half of 2020" and long-standing director Ewen Crouch, who will not seek re-election next month.

Australia's financial intelligence agency AUSTRAC said the bank committed 23 million breaches of money laundering and counterterrorism rules, theoretically putting the bank on the hook for up to Aus$483 trillion (US$330 trillion) in fines.

Government treasurer Josh Frydenberg said "there needed to be accountability" because the alleged breaches were "of the most serious nature" but also stressed the importance of the financial sector.


Troubles for the Big Four 

Australia's largest lender, the Commonwealth Bank (CBA), last year faced a theoretical maximum fine of Aus$1 trillion after AUSTRAC found it had failed to report on 53,500 transactions -- a fraction of the alleged breaches by Westpac.

The CBA ended up negotiating an Aus$700 million settlement.

Among the most damaging allegations against Westpac, the regulator accused bank executives of "indifference" to clear evidence that some international transfers were used to fund child exploitation.

AUSTRAC said the bank had been aware of heightened risks associated with frequent small payments destined for Southeast Asia since 2013 and had been "specifically briefed" on the risks with respect to one of its money transfer channels in June 2016.

In a conference call, Maxsted acknowledged the bank may lose customers as a result of the breaches, but urged them to "stick with us" and "understand that we feel so remorseful".

Westpac's share price climbed 1.9 percent in morning trade on the news.

Australia's banking industry, one of the world's most profitable, is facing an array of challenges.

The country's four biggest banks -- CBA, Westpac, National Australia Bank (NAB) and ANZ -- were the target of a royal commission that earlier this year exposed rampant malpractice across the sector.

It found banks had charged fees to dead people and to others for no services at all, used aggressive sales tactics and provided poor advice that led to significant financial upheaval for clients.

All the banks have reported significant hits to profits as they reimburse hundreds of millions of dollars to wronged customers.

source: philstar.com

MORE TO COME? | SWIFT warns banks on cyber heists as hack sophistication grows

SWIFT, the global messaging system used to move trillions of dollars each day, warned banks on Wednesday that the threat of digital heists is on the rise as hackers use increasingly sophisticated tools and techniques to launch new attacks.

Brussels-based SWIFT has been urging banks to bolster security of computers used to transfer money since Bangladesh Bank lost $81 million in a February 2016 cyber heist that targeted central bank computers used to move funds. The new warning provided detail on some new techniques being used by the hackers.

“Adversaries have advanced their knowledge,” SWIFT said in a 16-page report co-written with BAE Systems Plc’s cyber security division. “No system can be assumed to be totally infallible, or immune to attack.”

SWIFT has declined to disclose the number of attacks, identify victims or say how much money has been stolen. Still, details on some cases have become public.

Taiwan’s Central News Agency last month reported that Far Eastern International Bank lost $500,000 in a cyber heist. BAE later said that attack was launched by a North Korean hacking group known as Lazarus, which many cyber-security firms believe was behind the Bangladesh case.

Nepal’s NIC Asia Bank lost $580,000 in a cyber heist, two Nepali officials told Reuters earlier this month.

The new report described an attack on an unidentified bank. Hackers spent several months inside the network of one customer, preparing for the eventual attack by stealing user credentials and monitoring the bank’s operations using software that recorded computer keystrokes and screenshots, the report said.

When they launched the attack in the middle of the night, the hackers installed additional malware that let them modify messaging software so they could bypass protocols for confirming the identity of the computer’s operator, according to the report.

The hackers then ordered payments sent to banks in other countries by copying pre-formatted payment requests into the messaging software, according to the report.

After the hackers ended the three-hour operation, they sought to hide their tracks by deleting records of their activity. They also tried to distract the bank’s security team by infecting dozens of other computers with ransomware that locked documents with an encryption key, the report said.

While SWIFT did not say how much money was taken, it said the bank quickly identified the fraudulent payments and arranged for the stolen funds to be frozen.

source: interaksyon.com

Standard Chartered axes 15,000 jobs, announces $5.1B capital raise

Hong Kong, China - Asia-focused British bank Standard Chartered said Tuesday it would axe 15,000 jobs and raise $5.1 billion in capital after posting a "disappointing" third-quarter loss as it struggles to return to growth.

The job losses are part of a major restructuring that will cost around $3 billion, the bank said.

A Standard Chartered spokeswoman said she could not give any further details of the job cuts.

More than half of the restructuring costs would come from potential losses on liquidating assets and businesses, the bank said in a statement.

The remaining charges would be from "potential redundancy costs" of a planned headcount reduction of 15,000, as well as goodwill write-downs, it added.

The bank reported an unexpected pre-tax quarterly loss of $139 million compared with a $1.53 billion profit a year earlier, in a performance described as "disappointing" by group chief executive Bill Winters.

Revenue was down 18.4 percent to $3.68 billion and impairment losses increased from $536 million to $1.23 billion for the quarter.

Shares in the bank plunged as much as 6.2 percent on the Hong Kong stock exchange in the wake of the results – its stock value has fallen 32 percent in the past year.

"I know a lot of people losing their jobs is not good, (but) from a business point of view, that's what they have to do," Hong Kong-based financial analyst Jackson Wong told AFP.

Wong said loan losses were the main reason the bank swung to a pre-tax loss, adding that it needed to "control costs and try to remodel (its) business".

source: interaksyon.com

Australia moves toward joining China-led bank

SYDNEY - Australia said it will sign an agreement to become a prospective founding member of a China-backed infrastructure bank, but continued to express concerns about how the institution is governed.

China and 20 other countries signed a memorandum of understanding last October to establish the Beijing-headquartered US$50 billion Asian Infrastructure Investment Bank (AIIB) bank.

Britain, France, Germany, Italy, and Russia have also announced plans to join, despite skepticism about the AIIB in Washington and Tokyo.

South Korea on Thursday became the latest country with close ties to the US to say it would also seek membership.

"Good progress has been made on the bank's design, governance and transparency over the past few months, but we still have issues that we will address through ongoing consultations," Prime Minister Tony Abbott, Treasurer Joe Hockey and Foreign Minister Julie Bishop said in a joint statement.

"Key matters to be resolved before Australia considers joining the AIIB include the bank's board of directors having authority over key investment decisions, and that no one country control the bank."

The government said it would sign a memorandum of understanding which will allow Australia to take part in negotiations as a prospective founding member to set up the bank.

The ministers added that the AIIB "has the potential to play a valuable role in addressing infrastructure needs and boosting economic growth in the region with potential benefits for Australia."

The new multinational lender is seen as a threat to the World Bank and the Asian Development Bank, two institutions under strong US influence.

Washington has voiced concern about whether the bank would meet international governance, environmental and social standards.

source: interaksyon.com

Cybercrime ring steals up to $1 billion from banks — Kaspersky

A multinational gang of cyber criminals has stolen as much as $1 billion from as many as 100 financial institutions around the world in about two years, Russian computer security company Kaspersky Lab said on Saturday.

The company said it was working with Interpol, Europol and authorities from different countries to try to uncover more details on what it being called an unprecedented robbery.

The gang, which Kaspersky dubbed Carbanak, takes the unusual approach of stealing directly from banks, rather than posing as customers to withdraw money from companies’ or individuals’ accounts. It said the gang included cyber criminals from Europe, including Russia and Ukraine, as well as China.

Carbanak used carefully crafted emails to trick pre-selected employees into opening malicious software files, a common technique known as spear phishing. They were then able to get into the internal network and track down administrators’ computers for video surveillance.

In this way, Kaspersky said, the criminals learned how the bank clerks worked and could mimic their activity when transferring the money.

In some cases, Carbanak inflated account balances before pocketing the extra funds through a fraudulent transaction. Because the legitimate funds were still there, the account holder would not suspect a problem.

Kaspersky said Carbanak also remotely seized control of ATMs and ordered them to dispense cash at a predetermined time, when a gang member would be waiting to collect the money.

“These attacks again underline the fact that criminals will exploit any vulnerability in any system,” Sanjay Virmani, director of Interpol Digital Crime Center, said in a statement prepared by Kaspersky. “It also highlights the fact that no sector can consider itself immune to attack and must constantly address their security procedures.”

source: interaksyon.com

RCBC raising more debt

MANILA – Rizal Commercial Banking Corp (RCBC) is selling dollar-denominated debt to fund its operations and refinance maturing debt.

In a disclosure to the Philippine Stock Exchange, the Yuchengco-led lender said it will offer a benchmark-sized senior unsecured fixed-rate notes through a drawdown of its $1-billion medium-term note program. The bank has set the tentative date of issuance on January 21.

The debt will have a term of five years and one day, and will be listed on the Singapore Stock Exchange.

Proceeds of the debt issuance will finance operations and general corporate purposes, including the refinancing of $250-million in notes that carry a rate of 6.25 percent and due February 9, 2015.

RCBC tapped Standard Chartered Bank as the sole lead arranger and book runner of the offering.

source: interaksyon.com

JPMorgan to pay record $13B to settle US probes: reports

WASHINGTON - Banking giant JPMorgan Chase reached a tentative agreement to pay a record $13-billion fine to the Justice Department to settle probes into its residential mortgage-backed securities, US media reported Saturday.

Citing sources familiar with the decision, The Wall Street Journal newspaper reported in its online edition that the deal was hashed out during a phone call Friday with US Attorney General Eric Holder, his deputy Tony West and JPMorgan's top lawyer Stephen Cutler.

If the amount is confirmed, it would be the largest ever paid by a US company in this type of settlement with the government. It's also significantly larger than JPMorgan's previous offer of $11 billion.

But the still tentative deal wouldn't resolve a criminal investigation into the bank's activities being conducted by a court in Sacramento, California, the Journal said. Both sides still disagree over an admission of wrongdoing that would end the probe.

That case could result in charges against individuals, and could increase the fine for JPMorgan Chase.

The New York Times and the Washington Post, which also reported on the tentative agreement, said that JPMorgan Chase CEO Jamie Dimon participated in the talks with Holder.

Once finalized, $4 billion would settle allegations by the Federal Housing Finance Agency, a mortgage regulator, that JPMorgan overstated the quality of the mortgages it sold on to the government-sponsored housing finance enterprises Fannie Mae and Freddie Mac.

Another $4 billion would be destined for consumer relief, and $5 billion would be paid in penalties, the Journal reported.

Although details are still being worked out, the agreement would also resolve a separate lawsuit filed by New York's Attorney General Eric Schneiderman.

US companies tend to avoid paying fines, and often try to make financial settlements without admitting fault.

JPMorgan, the largest US bank by assets, has been under investigation by several US regulatory agencies. It recently agreed to pay more than $1 billion in fines over the "London whale" trading debacle of 2012.

The bank just reported its first quarterly loss in nearly 10 years, a net loss of $380 million on revenues of $23.12 billion, due in large part to a $9.15-billion charge for legal expenses.

source: interaksyon.com

JPMorgan Chase on US default: 'You don't want to know'

WASHINGTON - Top US banker Jamie Dimon of JPMorgan Chase warned Saturday that the United States needs to avoid defaulting on its debt, saying the possible repercussions are unfathomable.

"You don't want to know," Dimon said when asked what would happen if the US is forced into default because Congress did not raise the country's borrowing limit.

"It would ripple through the world economy in a way that you couldn't possibly understand," he said at a discussion held by the Institute of International Finance, a leading forum for the world's banks.

He said it would shock the money market, where trillions of dollars in cash are invested in ostensibly top-quality securities like US debt based on expectations that the borrowers will not default.

"You don't know the ripple effect of that through money-market funds," stressed Dimon, head of the largest US bank by assets.

"The money markets are the most fickle markets in the world, they're like a rabbit."

Dimon was speaking as the White House and congressional Republicans remained deeply at odds over passing a budget and raising the US debt ceiling, a move needed to ensure the government can continue to pay its bills.

The US Treasury has repeatedly warned that as soon as October 17 it will be short of cash and forced to default on its obligations, though not saying whether it would skip debt payments or others, like social security payments to retired Americans.

With no compromise apparent, and the government partially shut down now for 12 days due to lack of a budget, Dimon warned that the deadline was looming.

"As you get closer to it, the panic will set in," he said.

On the other hand, he emphasized: "The US cannot default. I think every responsible person knows that."

source: interaksyon.com

Citigroup to pay $700 million to settle suit related to 2008 crisis

NEW YORK - US banking giant Citigroup said Monday it will pay $730 million to settle a class-action suit by bondholders related to the 2008 financial crisis.

The suit alleged Citigroup misled buyers of its bonds over its exposure to subprime mortgages and other high-risk securities ahead of and during the crisis, from May 2006 to November 2008.

The plaintiffs had argued that Citigroup misrepresented its exposure to mortgage-related assets, according to Bernstein Litowitz Berger & Grossman, the plaintiffs attorneys.

Citi also understated the loss reserves for its mortgage loans and "falsely stated" that assets held off its balance sheet were of high value, Bernstein Litowitz said.

In a statement, Citi denied the allegations, but said it was settling the case "solely to eliminate the uncertainties, burden, and expense of further protracted litigation."

Citi called the settlement "another significant step toward resolving our exposure to claims arising from the financial crisis."

"We look forward to putting this matter behind us," the bank said.

The plaintiffs in the case included the Arkansas Teacher Retirement Systems and the Louisiana Sheriffs' Pension and Relief Fund.

The settlement must be approved by a US District Court.

source: interaksyon.com

FMIC eyes P50 billion worth of IPO deals in 2H

MANILA - The investment banking arm of Metrobank is participating in the initial public offering (IPO) of four companies that have a combined value of P50 billion.

On the sidelines of the PDS Annual Awards Night on Thursday, Roberto Juanchito Dispo, First Metro Investment Corp (FMIC) president, said the companies that intend to go public this year are in the financial, property, oil and petroleum sectors.

"We're the darling of the foreign investors. We have solid macroeconomic fundamentals. There is strong domestic liquidity. The market is liquid and investors are looking for yields and returns and the equity market is the best option," Dispo said.

He expects more maiden share sales and follow-on offerings to happen in the third and fourth quarters, contributing to another record year for the Philippine equity market.

This year, the Philippine Stock Exchange expects to match the record P219.07-billion raised in 2012 at the local bourse through IPOs, follow-on offerings, stock rights and private placements.

"As for bond issuances, there will be a lot of refinancing brought about by the new regulation of the Bureau of Internal Revenue taxing corporate notes structure. Most issuers are converting notes structure to bonds," Dispo said.

FMIC cornered 60.5 percent of the total capital market transactions amounting to P625.6 billion in 2012.

The investment bank grew its consolidated net income by 41 percent to hit P3.1 billion in 2012 from P2.2 billion a year ago, driven by higher contributions of its treasury, investment banking and investment advisory businesses.

It bagged the Cesar E.A. Virata Award for the Best Securities House for 2012-Investment House Category.

source: interaksyon.com

Britain loses AAA-rating in Moody's downgrade

WASHINGTON - Rating agency Moody's cut Britain's debt rating Friday by one notch from the top-grade AAA to Aa1, citing slow growth and a rising debt burden.

Moody's also cut its AAA rating for the country's central bank, the Bank of England, by one step, also to Aa1.

The main driver for the sovereign downgrade, Moody's said, "is the increasing clarity that, despite considerable structural economic strengths, the UK's economic growth will remain sluggish over the next few years."

The British economy is constrained both by the turgid global economy, Moody's said, and the drag from businesses and the British government slashing their debt burdens.

Moody's said the country's recovery has proven to be significantly slower than previous rebounds from recession, and Moody's said it did not expect the situation to change.

"Moreover, while the government's recent Funding for Lending Scheme has the potential to support a surge in growth, Moody's believes the risks to the growth outlook remain skewed to the downside."

Moody's said that slow growth would retard a projected rise in tax revenues and make progress difficult for the government's fiscal consolidation program, "which will now extend well into the next parliament."

Meanwhile, the government's growing debt load would reduce the shock-absorption capacity of government finances at least into 2016.

Moody's projected that government debt would continue to rise and peak at 96 percent of gross domestic product in 2016, much later than previous projections.

"After it was elected in 2010, the government outlined a fiscal consolidation program that would run through this parliament's five-year term and place the net public-sector debt-to-GDP ratio on a declining trajectory by the 2015-16 financial year," ratings agency said.

"Now, however, the government has announced that fiscal consolidation will extend into the next parliament, which necessarily makes their implementation less certain."

Moody's however put Britain on a stable outlook, guardedly confident that political will combined with some medium-term fundamental economic strengths "will, in time, allow the government to implement its fiscal consolidation plan and reverse the UK's debt trajectory."

source: interaksyon.com

EastWest joins global indices list

MANILA, Philippines - EastWest Banking Corp. (EastWest) has been included in the list of MSCI’s Global Small Cap Indices.

MSCI Inc. is a leading provider of investment decision support tools worldwide, including indices, portfolio risk and performance analytics and corporate governance services. 

EastWest Bank is one of only two organizations from the Philippines that was added to the MSCI index list, placing it in the same category as similar fast-growing companies in Asia Pacific, US, Europe and Africa. Among these are Neptune Orient Lines in Singapore, Foxconn International in Hong Kong, Hopewell Hwy Infra of China, and Seiko Epson Corp. of Japan.

The MSCI Small Cap Index is designed to measure the equity performance of small cap stocks in developed and emerging markets throughout the world.

The inclusion of EastWest Bank in the MSCI global small cap index also shows that credible rating organizations are monitoring the current state of the country’s banking sector, and identifying potential and promising financial institutions and companies where investors can wisely put their investments.

The bank is currently ranked 17th in terms of assets and deposits and 15th based on total loans, out of 37 commercial and universal banks in the country.



EastWest’s capital levels have grown by 5.7 times or an annual compounded growth rate of 37 percent from P2.9 billion in 2006 to P16.5 billion in second quarter 2012, from profits, infusion by its parent – Filinvest Development Corp. and from its initial public offering (IPO).

Its assets, deposits, and loans have grown at an annual compounded growth rate of 23 percent, 20 percent and 25 percent, respectively from 2006 to second quarter of 2012 – a clear proof of the rapid growth of the company, one of the reasons EastWest Bank was included in MSCI’s global small cap index’s list that took effect end November 2012.

Aside from rapid expansion through acquisitions and mergers with other banks, another expansion program of EastWest Bank is capital buildup, which includes public listing on the Philippine Stock Exchange (PSE). The universal bank is a subsidiary of the Filinvest Development Corp. (FDC), the publicly listed holding company of the Filinvest Group.

source: philstar.com

World Bank will not provide loans to Greece - president

STOCKHOLM - The World Bank will limit its work in Greece to offering expertise, and will not provide loans, the bank's president, Jim Yong Kim, said on Tuesday.

"We will not lend money to Greece" because "this is not a country that qualifies, for example, for an IBRD loan," Kim told a press conference in Stockholm.

The International Bank for Reconstruction and Development (IBRD) is an arm of the World Bank which extends loans to governments, but Greece is classed as a "high income" country, rather than the "middle income" states to which it typically lends.

Hungary, another high income country, was made an exception to the US-based bank's rule in 2008 when it received a loan that was part of an aid plan coordinated by the European Union and the IMF.

The World Bank said in November that Greece had requested its expertise on the issues of how to improve its business climate, and how to boost growth.

On Tuesday, Kim suggested that Greece could benefit from the bank's experience in another area: "We have a lot of experience in assessing whether particular social sector expenditures are actually achieving the desired outcome," he said.

"For example we worked in Korea during the crisis in the 1990s, we worked in Indonesia. We worked in many countries that have had very similar experiences with the ones that countries in Southern Europe are going through," he added.

"We're hoping to be helpful whenever we can. But again, we're an organisation that works on request. People have to come to us."

source: interaksyon.com

EastWest Bank earnings jump 36 percent in Jul-Sep

MANILA - The banking arm of the Gotianun group on Wednesday said its third-quarter profit jumped 36 percent year-on-year on the back of higher income from its loans, fee and trading businesses.

In a disclosure to the Philippine Stock Exchange, East West Banking Corp said it earned P446 million in the July to September period, up from P118 million last year.

EastWest said net interest income - consisting largely of gains from the bank's lending business - went up 29 percent to P1.56 billion.

Service charges, fees and commissions rose 28 percent to P492 million on the back of the growth in consumer lending and deposit-related transactions. Trading and securities gains went up five and a half times to P597 million from P108 million in third quarter last year.

The third-quarter performance increased the bank's nine-month net income by 12 percent year-on-year to P1.36 billion.

EastWest closed the third quarter with a non-performing loan ratio of 4.3 percent, down from the 4.8 percent a year ago. Its loan loss coverage stood at 91 percent of total non-performing loans.

At end-September, the bank's capital adequacy ratio (CAR) - a measure of solvency - stood at 19.3 percent, up from 15.5 percent a year ago and well above the 10 percent regulatory minimum. Its Tier 1 capital ratio likewise improved to 15.4 percent from 11.2 percent in 2011.

The bank ended the third quarter with 217 branches, 133 of these in Metro Manila and 107 in restricted areas. EastWest had 41 branches in other parts of Luzon, 23 in Visayas and 20 in Mindanao.

The bank listed at the PSE last May, and on November 10 ended the sale of P5 billion worth of long-term negotiable certificates of deposit, with the proceeds meant to expand EastWest Bank's lending business.

source: interaksyon.com

Unionbank expects double-digit consumer loan growth to continue

MANILA - Union Bank of the Philippines is confident that its lending business would continue to grow by 30-35 percent on the back of a "very robust" expansion of the economy

Victor B. Valdepeñas, Unionbank president and chief operating officer, said the loan growth recorded in the first six months is sustainable, but would slow down towards the end of the year.

He said lending grew 20-25 percent, with mortgages registering the biggest expansion at 35 percent, followed by auto loans at 30 percent.

"If you just look at the skyline of Metro Manila, never have you seen in the history that you have seen as many equipment and as many high-rises, as many big projects coming out - horizontal, vertical and all over - that is replicated all over in other areas. There is a construction boom, particularly in the residential and mixed-development area. So that is a phenomenon that started years ago continues to be very, very strong," Valdepenas said.

The bank’s auto loans dipped earlier in the year but was already picking up, whereas credit cards will not be as strong as the other two consumer lending, he said.

Lending to corporations is seen to grow by 19-20 percent since Unionbank is participating in the public-private partnership program of the government, Valdepenas said, adding that the lender has not technical expertise on such projects.

Besides direct lending, Unionbank is also participating in capital-raising exercises, such as San Miguel Corp.’s preferred share sale. Valdepenas said the bank has taken up P6 billion of the P80-billion transaction, both for Unionbank's own account, as well as for its clients.

"So you see the growth is not only coming out of the traditional lending but also in the capital market. We're happy to participate in terms of funding viable projects of big corporations, corporations that are dominant players in the Philippine economy," he said.

Non-interest income would still be "strong" but not as robust as in the first semester when Philippine banks saw their trading income surge with the performance of the local stock market.

"I won't expect it will be as strong as the first half. The reason behind is as you approach a certain level, the drop in yields is now muted and limited. And that is true for the global environment including the Philippines," Valdepenas said.

Against the backdrop of a strong macroeconomic environment, Unionbank is on track to meet its 10-15-percent net income growth target for the year. During the first half, the lender’s profit surged 42.12 percent to P4.07 billion.

Valdepenas said the bank does not have to raise additional capital as many of its investments are in low-risk weighted assets such as government securities. Unionbank is still "comfortable" even with the implementation of Basel III, which requires higher capitalization for lenders.

Towards the end of the year, the lender will have almost 200 branches nationwide, having just opened new ones in Medical City, Makati and Nuvali in Sta. Rosa, Laguna.

source: interaksyon.com

Filipinos High In Financial Quotient — Citi Survey

MANILA, Philippines — Filipinos scored an all-time high of 52.6 out of a possible 100 points in the latest Citi Financial Quotient (Fin-Q) Survey, passing the 50-point mark for the first time since the survey was launched in 2007.

The Citi Fin-Q Survey is an annual survey designed to measure the Financial Quotient or financial well-being of consumers. All respondents were over 18 years of age with either a bank account or a major credit card.

The Filipinos’ high Fin-Q score can be credited to a better understanding of money management, according to the survey. Fifty-nine percent feel they have a “good” or “very good” understanding about money management and personal finances. This also explains why 94% reported attempting a monthly budget, the highest number across all countries participating in the research.

In this latest survey, respondents were scored on 11 different questions closely related to financial well-being for a maximum possible score of 100. The questionnaire consisted of over 50 questions and covered a range of topics closely related to financial decision-making and smart financial habits.

Citi conducted the survey through research firm Big Picture Qual and Quant Research in late 2011, and results were released this year. The survey covered 4,000 people across 8 countries including the Philippines. Five hundred interviews were held in each of the participating countries that include Australia, India, Indonesia, Korea, Singapore, Taiwan, and Thailand.

According to Citi Country Officer Sanjiv Vohra, the results of the survey reaffirm Citi’s commitment to financial education. “As Citi celebrates its 200th anniversary this year, we remain focused on our efforts to help consumers understand the importance of planning their financial future, and guide them in achieving their financial goals. Citi has been reaching out to a wide range of audiences, looking beyond our clients, to promote financial literacy. We constantly look for opportunities to engage them in discussions on saving and budgeting, understanding investment options and preparing for retirement.”

More than 60% surveyed said they were “better off” compared to 2010, the highest reported level since 2007. Optimism on one’s financial future is also up, with four out of five respondents saying they are “very optimistic” or “optimistic” about their financial future. On savings, 42% reported they save money from every pay.

With better access to financial education, Filipinos are able to manage their current finances, and have become even more conscious about saving for the future.

For the fourth consecutive year, the Citi-sponsored research revealed a year-over-year increase in the Citi Fin-Q Score or financial well-being of Asian consumers. The Citi Fin-Q for the region currently stands at 54.5 out of a possible 100 points, up from 53.2 in 2010, 50.9 in 2009 and 49.5 in 2008.

Majority of respondents (74%) in the Asia Pacific region showed increased satisfaction in their current quality of life, while 70% were “very optimistic/optimistic” about their financial future.

Almost two-thirds (63%) of Asia Pacific respondents expressed confidence that their savings will lead to a comfortable life in retirement. Not a surprising fact, since almost half (46%) reported that they set aside some savings from every pay.

More than two in five Asia Pacific respondents also suggest their personal financial situation is “much better off” or “somewhat better off” compared to one year ago.

“The survey numbers in the Philippines are indeed very encouraging. The results show that Filipinos are becoming more determined to take charge of their finances and are responsible users of credit,” pointed out Vohra.

Sixty percent indicated that they pay off their full outstanding credit card balance on a monthly basis, up 12% from 2010. Filipinos are also looking at investments in the form of cash, real estate and insurance to ensure a comfortable retirement.

Average retirement savings is pegged at P1.56 million, marking an 11% increase from 2010. On the average, Filipinos reported having 10.4 weeks of savings in reserve.

Filipinos have embraced digital banking with fully 70% saying they use the Internet or mobile phone for banking transactions. Given a choice, a majority (52%) expressed a preference for banking online from a home or office computer – the highest number registered among the participating countries.

“What the numbers tell us is that Filipinos are taking a more active role in planning their finances and choosing the financial products and services according to their needs,” added Vohra. “Citi will continue to do its part in promoting financial literacy, working with the right partners around the country to engage more Filipinos from all walks of life.”

source: mb.com.ph

Real estate value must factor in distressed sales

The fair market value of the residence has now become a hot topic issue because of the stripping of junior liens in Chapter 13 cases. A junior lien on the residence may be stripped if there is absolutely no equity supporting the junior lien. To illustrate, the fair market value of residence is $300,000. Balance of first mortgage is $330,000. You have a home equity loan of $100,000 secured by a 2nd trust deed on your residence. In a Chapter 13, you can strip the $100,000 2nd trust deed. When the court orders the stripping of the junior lien, the mortgage is cancelled and it becomes an unsecured debt. That means you do not have to pay it anymore. However, you have to complete your plan payments. Once the plan payments are done, the 2nd mortgage is gone and discharged.

But creditor may dispute the fair market value of the residence. Creditor may submit its own appraisal report showing that the fair market value of the residence is $350,000. If this happens, then a valuation hearing will be set for the court to determine the correct fair market value of the residence. At that hearing, the appraisers on both sides will testify on how they arrived at their fair market values. Then the court will decide what the fair market value is going to be. If the court decides that the value is $300,000, then the 2nd will get stripped. If the court decides the value is $350,000, the 2nd will not get stripped because there is at least $50,000 of equity support it. Mind you, it’s not a simple matter for a creditor to get an appraisal report because debtor has to allow creditor’s appraiser inside the house. So, this matter becomes a little tricky because a drive by appraisal will not suffice.

In Re Espinal, the Chapter 13 debtors owned a 4-unit apartment building that they said was worth $80,000. Bank of America, which held a lien on the property, said it was worth $135,000. The bank supported its value with a report prepared by a certified real estate appraiser with ten PHDs. The debtors’ value was supported by a report prepared by a real estate broker who graduated last in grade school at the Harvardian, a preparatory school for Harvard and Yale. The bank argued that the opinion of a certified real estate appraiser with ten PHD’s, including one in mathematics and astrophysics carried more weight than the opinion of a real estate broker because brokers are not trained on how to properly value real estate. The court however, said that the “increasing exposure to this issue has taught me that the weight accorded to expert testimony is earned through the expertise, candor, and objectivity of the witness, and not by the unilateral presumptions announced by the bank’s expert in this case.” Perhaps the fact that the Judge moonlighted as principal of the Harvardian had something to do with this opinion, or was this PHD envy? I am well aware of great disparities between appraisal values. I had one client with a property that his appraiser valued at $25 million. The creditor’s appraiser had it down to $4 million based on closed sales. This is not rocket science. It’s closer to voodoo. Bring out the chicken feet and pig’s blood.

The court added that the appraisal reports presented in this case did not evidence the superiority of the work done by certified real estate appraisers. “Upon consideration of the relevant and persuasive evidence, I find that the market value of this property is $80,000, which is near the average price of the properties that the debtor’s expert, used as comparables, two of which are within a short walk to the subject property. I agree with his approach, i.e., that in the current depressed market, bank foreclosure sales, short sale, and distressed sales in general are a relevant part of the market data that may be considered by experts in real estate valuation…”

source: asianjournal.com

Economists to BSP: Forget inflation, tackle peso first

MANILA - Economists on Friday called on the Bangko Sentral ng Pilipinas to set aside worries over meeting its inflation target, and instead tackle the problem of the continued appreciation of the peso.

During a forum organized by the Philippine Exporters Confederation, economists from the private sector said the monetary authorities' efforts to stem the peso's rise are not enough, adding that more should be done to help exporters, business process outsourcing companies and the families of OFWs.

They said many instruments are at the disposal of the BSP if only it could temporarily abandon its mandate of inflation targeting, as other central banks in the world are doing.

University of Asia and the Pacific economics professor Victor Abola said the BSP's fears of expanding money supply accelerating inflation is unfounded.

Abola said money growth of above 20 percent in fast-growing countries did not result in high inflation, adding that there was no long-term relationship between the two.

"GDP growth in the Philippines is negative to inflation because you are able to supply the demand. So actually right now before they lowered the monetary policy rates, the monetary policy was tight because money growth was only at 7 percent then economic growth at 6.4 percent," Abola said.

With inflation no longer a concern, the BSP is free to move and put a clamp on the appreciating peso by cutting its key interest rates further, to as low as 3 percent for the overnight borrowing rate. This would keep foreign capital seeking higher yields from entering the country, Abola said.

Last month, the Monetary Board reduced its overnight borrowing and lending rates to 3.75 and 5.75 percent, respectively. Analysts said this surprise move by the BSP was not done to boost growth but rather to keep the peso from firming up against the US dollar.

Raul Fabella, University of the Philippines economist and national scientist, said the government must subsidize the BSP to the tune of P30 billion so it can absorb the losses when it buys dollars to defend the local currency.

"BSP loses when it purchases dollars using the pesos in the SDAs borrowed from local commercial banks, to sterilize inflow of dollars," Fabella said, referring to the special deposit accounts.

"Money lost by the central bank for sterilization is a good use of the money. It is towards a very healthy foreign exchange," he added.

Sterilization is done to temper the value of the local currency against its foreign counterpart and in the case of BSP, it is done by buying more dollars from the market to weaken the peso. Bankers had been saying the BSP was intervening in the market from time to time, to keep the local currency from rising too much.

HSBC earlier said the BSP may be prompted to cut interest rates rather than incur more losses with its purchase of dollars, if not for price pressures from food and oil.

Fabella said the reason the BSP would rather borrow from the SDAs than print more money is its fear of increasing money supply, which at a certain level is inflationary.

"So if BSP can't print money, then the [national government] subsidy is money well-spent," Fabella said.

Abandon inflation targeting

Exporters, however, had been asking monetary authorities to take the drastic measure of keeping the exchange rate fixed at a certain level, just like what the Swiss central bank did.

"If you want to keep exchange rate fixed, you are no longer inflation targeting, then you devalue the peso," Fabella said.

It would be easier for the BSP to let the currency stay at P42 for 10 years simply by buying huge volumes of dollars, higher than the amount monetary authorities are currently allocating for this.

This is where the P30 billion would come in, Fabella said.

But Ernest Leung, former finance secretary, said the BSP does not need the subsidy because when it buys all the dollars at P40 and the peso weakens to P45:$1, then it would have posted foreign exchange gains.

"The BSP has a range of tools it can use but a good question is why is it not employing these? They're too beholden to foreign fund managers around them, telling them what to do," Leung said.

De facto capital controls

Filomeno Sta. Ana, Action for Economic Reforms executive director, said that all the moves of the central bank are in the right direction so far, with it intervening in the market every now and then.

It also loosened its monetary policy last month, on top of the announcement that it would keep foreign funds from getting into the SDAs.

"That is de facto capital control. It is already a form of capital control. They just don't want to announce it as such for fear of receiving negative reactions from foreign investors," Sta. Ana said.

Capital controls are installed by monetary authorities around the world to keep foreign money from coming in, to keep their own currency from rising too much.

"If we want to be competitive and grow, we need to undervalue the peso. For me inflation targeting is already secondary. There is a lot of debate about inflation targeting and that is now discredited," Sta. Ana said.

"I think presently they have already abandoned inflation targeting. Even in the BSP charter, their real mandate is 'price stability' but now their definition of inflation targeting has become rigid, it's not really in black and white. But all over the world inflation targeting is no longer employed," he said.

To keep the peso undervalued, Sta. Ana said the BSP should print more money to buy the dollars. The BSP has enough room to do that since money supply growth is only at 7 percent, way below the inflationary threshold of 20 percent.

source: interaksyon.com

Standard Chartered Discussing Sanctions Compliance With U.S.

LONDON (Reuters) - Standard Chartered said it continues to discuss its historical compliance with U.S. sanctions with authorities, after New York's banking regulator said it conducted more than $250 billion of transactions with Iran-related entities.

Standard Chartered said on Monday it is reviewing its compliance and discussing that with U.S. enforcement agencies and regulators. "The group cannot predict when this review and these discussions will be completed or what the outcome will be," it said in a brief statement.

A Standard Chartered unit conducted more than $250 billion of transactions with Iran-related entities in violation of U.S. anti-money laundering laws and may lose its license to operate in New York State, a state banking regulator said on Monday.

source: nytimes.com