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11 December 2012

News on the global financial markets

Morning Bell

GFMA voices concerns about UK top-down bank-seizure plans
GFMA warned of shortcomings in UK plans for top-down seizure of global financial institutions in trouble. When a holding company doesn't have enough capital, resolution through a single point of entry might be inappropriate, GFMA CEO Simon Lewis says. "Resolution strategies therefore need to be tailored to the circumstances of each institution and the development of firm-specific cross-border cooperation agreements will be a key component to achieve this," Lewis said. Reuters (10 Dec.)

Industry News

Political upheaval drives down Italian bonds and stocks
Prices of Italian stocks and bonds declined Monday as investors, fearing more political instability, dumped holdings. Some of the biggest declines came from major banks, which have large holdings of government debt. The New York Times (tiered subscription model) (10 Dec.), Bloomberg (10 Dec.)

UK and US growth is picking up, OECD says
Economic expansion is accelerating in the UK and the US, and growth might pick up in Italy and China, according to the Organisation for Economic Cooperation and Development. The OECD expects weak growth in Germany, France and the broader euro zone, as well as Canada, Japan and Russia. Reuters (10 Dec.)

Emerging markets increase samurai-bond issuance
Bonds denominated in the yen -- so-called samurai bonds -- issued in emerging markets have surged this year, to $7 billion, compared with last year's total of $4.4 billion. Financial Times (tiered subscription model) (07 Dec.)

South Korean exchange will offer OTC clearing
Asia is falling into line with rules similar to the US Dodd-Frank Act, with Korea Exchange planning voluntary clearing of won-denominated interest-rate swaps in the spring. Financial Times (tiered subscription model) (10 Dec.)

HSBC settles US money-laundering case for $1.9B
US state and federal authorities announced that HSBC Holdings will pay $1.9 billion to settle allegations of large-scale money laundering, including sending funds to Iran and allowing Mexican drug cartels to transfer money through American affiliates. The UK banking giant was not indicted to avoid destabilisation of the global financial system. The New York Times (tiered subscription model)/DealBook blog (10 Dec.), The Guardian (London) (10 Dec.), Bloomberg (10 Dec.)

HSBC adds director of financial-crime compliance
HSBC Holdings has promoted Robert Werner, head of standards assurance, to the newly created post of director of financial-crime compliance. Werner, who joined the UK bank in August, used to be a US Treasury Department official. HSBC is part of a US investigation into money laundering, prompting the bank to ramp up risk management and compliance. The New York Times (tiered subscription model)/DealBook blog (10 Dec.)

StanChart is fined $327M for Iranian dealings
Standard Chartered has agreed to pay $327 million to the Federal Reserve and other regulators to settle allegations that it made the US "vulnerable to terrorists, weapons dealers, drug kingpins and corrupt regimes" because it hid $250 billion in transactions with Iran, despite US sanctions. The Telegraph (London) (tiered subscription model) (10 Dec.)

Man Group CEO plans to retire in February
The New York Times (tiered subscription model)/DealBook blog (10 Dec.)

Regulatory Roundup

ECB bank-supervision plans adjusted to address German objections
In a proposed compromise intended to assuage German concerns, only euro-zone banks with assets exceeding €30 billion would fall under daily supervision of the European Central Bank. The offer, from EU president Cyprus, aims to smooth the way for agreement by leaders meeting this week on an initial step toward a banking union. The proposal, however, would allow the ECB to intervene in smaller banks under some circumstances. Reuters (10 Dec.)

Economic imbalance could trigger currency wars, King says
Bank of England Governor Mervyn King warned that failure to balance economies could lead to countries devaluing currencies to increase growth. "The need to rebalance is not confined to those countries that had large trade deficits," he said. "The contrast between the deficit and surplus countries is one overshadowing us all." The Telegraph (London) (tiered subscription model) (11 Dec.)

Spotlight on China

Chinese bank lending falls short of forecasts
Yuan-denominated loan origination last month in China fell short of economists' expectations. The People's Bank of China says banks issued $84 billion in loans. Economists surveyed by Bloomberg News had expected $88 billion. Bloomberg (11 Dec.), Reuters (11 Dec.)

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