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Daily Dispatches – the rising costs of getting caught out

UBS has become the latest bank to have to cough up hefty financial penalties for unacceptable market behaviour, with the bank’s Japan operation being ordered to pay US$100 million as part of a global resolution of allegations that it manipulated LIBOR, reports Bloomberg

UBS Securities Japan pleaded guilty in December in the US to one count of wire fraud and agreed to pay the fine, according to court filings. The bank’s settlement offer was accepted by the judges yesterday.

Still, this payout is not nearly as severe as the one facing JPMorgan, which is on the verge of handing over close to $1 billion, as s we flagged on Monday, to settle US and UK claims that lax internal controls led the bank to provide inaccurate information about last year’s record trading loss to the board, investors and regulators, people with knowledge of the matter said.

Bloomberg says JPMorgan is close to final settlement with four regulators over its handling of the trades by an employee known as the London Whale because his bets were so large.

The firm may also pay US$80 million to settle two watchdogs’ probes tied to consumer lending practices, one person said.

Chief Executive Officer Jamie Dimon’s pay was cut in half last year after the board said he was partially responsible for faulty oversight of the trades. The bank has announced it is hiring 3000 new employees to beed up its compliance function.

Fidelity targeting Asian growth, plans hiring

Fidelity Worldwide Investment plans selective hires in the coming months to support strategy to grow its share of Asia’s increasing pool of institutional assets, says AsianInvestor.

Asia-Pac’s little gem shines

Bloomberg reports that New Zealand’s economy expanded more than forecast in the second quarter from a year earlier thanks to increased construction activity that offset the drag from the worst drought in 30 years.

“Aside from drought-induced volatility, the New Zealand economy is firmly in the grip of a widespread upturn,” Michael Gordon, senior economist at Westpac, told Bloomberg.

India determined to press ahead with financial reforms

Despite calls for a populist policy to appease an enormous population that is increasingly dissatisfied with the country’s troubled economy, India’s finance minister Palaniappan Chidambaram has vowed to press ahead with tax and investment reforms long demanded by business, says the Financial Times.

Chidambaram says government wants the winter session of parliament to pass a long-awaited bill to introduce a goods and services tax (GST), as well as a law allowing foreign investors to increase their stakes in Indian insurance companies.

Singapore is best prepared out of 90 countries to respond to change

Business Times reports the outcome of the second KPMG study into ‘change readiness’ which found that out of 90 countries surveyed, Singapore is the best prepared to respond to changes such as natural disasters, global competition, economic shocks and demographic trends.

KPMG’s Change Readiness Index measures the ability of three groups in each country – its private and state-owned enterprises, its government and its people and civic society – to respond to change.

Singapore came out tops for enterprise and government, and fifth for the people and civil society component.

Sweden, Qatar, New Zealand, Germany, Israel, Japan, Saudi Arabia, Australia and the United Kingdom were placed in the top 10.

S Korea tough market for foreign banks

The Financial Times says that foreign banks are struggling to make headway in South Korea, despite the country’s ambitions to become a regional financial hub for north east Asia.

Standard Chartered said in its latest earnings report that the country “remains our most difficult market” and complained of “multiple policy and regulatory interventions” that had exacerbated the effect of a slowing economy.

The three foreign operators in South Korea – StanChart, Citibank and HSBC – have struggled to lure customers from the well-established local banks and bankers say government intervention has put pressure on margins.

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