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kevinan108

HSBC chief to subject UK banking operation to performance tests | Business | The Guardian - 0 views

www.guardian.co.uk/...ng-operation-performance-tests

bank HSBC Guardian UK retail banking stresstest

shared by kevinan108 on 18 May 12 - No Cached
  • As he gave an update of the bank's strategy – which has led to 14,000 job cuts as he cuts costs to make the bank more efficient – Gulliver said the UK business would be subjected to his performance tests once it was known how the final details of the Independent Commission on Banking (ICB) were implemented.
  • Gulliver described the UK as essential for retail banking and he said on Thursday that the business was one of the best performing, describing it as a "home" market.
  • He is intending to achieve $3.5bn (£2bn) of savings within three years to bolster the bank's return on equity to 12-15%. It was 11% last year.
Kevin Mao

Banking rules may encourage riskier trading, warns ratings agency | Business | The Guar... - 0 views

www.guardian.co.uk/...ng-rules-riskier-trading-fitch

banking rules Shadow Regulations Changes

shared by Kevin Mao on 17 May 12 - No Cached
  • 29 biggest banks in the world could be encouraged to embark on riskier trading activities
  • The 29 banks are deemed to be global systemically important financial institutions
  • agency also warned that borrowing costs for customers could rise as banks try to maintain their profitability
  • ...7 more annotations...
  • might even be a shift to the capital markets to raise funds and banks could move into the less regulated areas of finance, known as "shadow banking"
  • Banks need to meet the new capital requirements, known as Basel III and being implemented as a result of the 2008 banking crisis, by the end of 2018,
  • The impact of holding extra capital – about 23% more than their current holding of $2.5tn – could reduce returns on equity to 8.5% from the 10.8% average of the 29 banks during the period 2005-2011
  • in an effort to entice investors the banks may be encouraged to take bigger risks
  • 29 banks will in total need to find $566bn on the assumption that these crucial banks need a 10% capital cushion
  • need for extra capital will reduce the return on equity
  • If the banks did not raise equity it would take them three years to raise the extra capital
  • Kevin Mao on 17 May 12
     
    This article is about new banking rules that may encourage riskier trading.
kevinan108

Rattled Greeks not alone in massive bank savings exodus | Economy | News | Financial Post - 0 views

business.financialpost.com/...in-massive-bank-savings-exodus

bank EuropeanCrisis Greece runonbanks deposits

shared by kevinan108 on 18 May 12 - No Cached
  • Worries about a run on Greek banks has rattled Athens this week, after savers withdrew at least 700 million euros on Monday alone, according to minutes of Papoulias’s comments to political leaders posted on the presidency’s website.
  • Greece’s banks have lost 72 billion euros in deposits since the start of 2010, or about 30%, according to data compiled by Thomson Reuters.
  • And on Thursday, Spain’s Bankia was reported to have seen more than 1 billion euros drained by its customers in the past week.
  • ...1 more annotation...
  • Cash flooded into Britain; more than 140 billion euros was deposited in four big banks alone. The UK benefits from its position outside the eurozone and its Asia-focused banks HSBC and Standard Chartered are seen as particular safe-havens. Other banks to see big inflows included Barclays, Germany’s Deutsche Bank, Switzerland’s Credit Suisse and UBS and Russia’s Sberbank and VTB.
Kostya Golovan

Regulators clash over 'shadow banking' behind ETFs - Citywire - 0 views

www.citywire.co.uk/...a589740

shared by Kostya Golovan on 17 May 12 - No Cached
  • Regulators are in direct conflict over how exchange traded funds (ETFs) take in ‘short-term money’ and promise instant liquidity, but can invest in long-term and less liquid assets.
  • offering immediate liquidity but are potentially raising short-term money to fund longer-term investments.
  • This concern began when regulators started worrying about money market funds…it's just deposit taking but called something different. It's taking short-term money but investing in longer-term securities.
  • ...6 more annotations...
  • the macro regulators think this liquidity transformation, as a type of ‘shadow banking’, needs regulation.
  • whole point of these vehicles is shorter-term liquidity and that investors should have more immediate access to money.
  • Ucits rules do stipulate funds must invest in liquid assets.
  • However, Gleeson and other industry experts pointed out that
  • A manager will be sanctioned if they use assets that do not have liquidity.
  • Shadow banking is positive. The danger is we regulate to the point this becomes unprofitable
  • Kostya Golovan on 18 May 12
     
    This article looks at how exchange traded funds (ETFs) take short term cash, very liquid capital, and use the funds to make long term investments. It is all well and good until the fact that ETFs are marketed as vehicles offering immediate liquidity is considered. The liquidity of ETFs is dependent on the underlying assets in which the money is invested. Therefore, regulations might be set forward ensuring that ETFs invest only in liquid assets.
Kostya Golovan

Banking regulations cost more than they deliver | Mail Online - 2 views

www.dailymail.co.uk/...-regulations-cost-deliver.html

shared by Kostya Golovan on 17 May 12 - No Cached
  • One should never underestimate the depths to which politicians will go to seek popularity
  • It must be the evil capitalists, they suggested, and not Labour's appalling spending record that was to blame for Britain's struggling response to the recession.
  • worrying tendency to meet recession with excessive regulatory response to banks, in order to justify taxpayer-funded bailouts.
  • ...12 more annotations...
  • Where banks are concerned, regulatory responses are often commercially restricting, difficult to comply with, and ineffective in lowering commercial risk.
  • Not unjustified, of course - if you believe in bank bailouts.
  • This is often done by shifting business towards high-risk products in the battle for survival.
  • Apart from restricting credit through profit loss on regulatory compliance, it may also result in the shift of risk to general credit transactions, as banks seek to recoup profits lost from overregulated areas such as hedging products.
  • On the back of the J.P. Morgan's billion dollar losses, there is now a temptation in the EU to pass a measure similar to the Volcker rule in the U.S Dodds-Franck Act.
  • The Volcker rule, in the U.S., prevents banks from using additional profits on deposits for a high-risk bet strategy
  • Banks have made it clear that this sort of regulation is difficult to comply with, as bet-style transactions and a pure hedge are very difficult to distinguish
  • These seek to distinguish between retail and other banking operations, and to increase reserves in banks to protect the taxpayer.
  • One might observe that the inflationary costs of low interest rates to encourage lending, and over-regulation that effectively reduces it (and also comes with public-sector administrative costs) are not exactly compatible on principle.
  • Long-term growth will also suffer, and with it, jobs - especially as we are in a recession.
  • It would be better for banks to crash and burn where they deserve to, and for governments not to get involved in second-guessing market risk, through unworkable regulation, for political gain.
  • Further, politicians ought to realise that the best way to protect the taxpayer is not to get involved in bailouts at all.
  • Kostya Golovan on 18 May 12
     
    The banks are apparently being over-blamed in the causation of the worldwide economic crisis by politicians. They are using the hype of the economic crisis in their favor and assigning all the blame to the banks which is in turn now leading to increases in regulations over the banking industry. Over-regulation will hurt the banking industry by reducing the number of option and easy with which they can utilize their money.
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