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Daily Dispatches – Bank bailouts a burden, says Goldman Sachs boss

Sydney Morning Herald reports that Lloyd Blankfein, chairman and CEO of controversial bank Goldman Sachs, told a conference in Australia this morning that the much-vilified bank bailouts arising from the global financial crisis (GFC) had placed “a very big burden on the social fabric and the culture of the United States and around the world.”

Goldman Sachs played a key role in the events leading up to the GFC, originating and trading sub-prime mortgage products with a number of other Tier 1 global banks. Many of these had to be rescued by governments around the world because they were deemed “too big to fail”

Blankfein noted that the political environment in the US was currently very ‘poisonous’, saying that the GFC trauma and the bank bail-outs had become extremely political.  He said that it remained a “very poor time” to take risk, and without risk-taking there was less chance for economic growth. 

But he had kind words for Ben Bernanke, chairman of the US Federal Reserve, whose quantitative easing programme had been providing the banks with easy cash. 

“I think the US is very well off for having had him in that seat at that time and … the US being the big economy that it is I think it served the interests of the world as well.”

Insider trading crackdown

Bloomberg reports that the US government has come down hard on SAC Capital Advisors LP, the USD$14 billion hedge fund founded by Steven Cohen. The fund has been charged with perpetrating what prosecutors called ‘an unprecedented insider trading scheme’.

SAC Capital Advisors LP was labelled a ‘veritable magnet for market cheaters’.

SAC was charged with four counts of securities fraud and one count of wire fraud, with the alleged activities, which involved more than 20 companies and went back as far as 1999, reaping hundreds of millions of dollars in illicit profits.

Insurance gathering pace in Asia

Bloomberg reports that AIA Group, the second-largest Asia-based insurer by market value, has reported a better-then-expected 34% increase in first-half profit, helped by acquisitions and paper gains from its equity investments.

Net income for the Hong Kong-based insurer climbed to USD$1.93 billion in the six months to May 31, or 16 cents a share, from USD$1.44 billion, or 12 cents, a year earlier.

AIA’s mark-to-market gains from equity investments doubled to USD$659 million from a year earlier. The value of new business increased 26% to USD$645 million, exceeding the median estimate of USD$633 million of eight analysts surveyed by Bloomberg.

More money into Myanmar

Bloomberg reports that Myanmar is attracting significant funds, with Indian and Chinese companies competing for business.

Export-Import Bank of India, the state-controlled trade financing institution, has pledged USD$800 million in Myanmar, which includes funds to upgrade the Yangon-Mandalay railway and a plant for Tata Motors to assemble vehicles in the country.

China has agreed to lend more than USD$2.4 billion in Myanmar.

UBS best

The Sydney Morning Herald says that investment banking major UBS has again beaten rival firms to dominate the latest Australian analyst and equities rankings compiled by markets consultant East Coles.

UBS retained its top spot among nearly 50 broking houses in the rankings of overall research, a position it has held for several years.

Other top contenders for equities research include Deutsche Bank and Macquarie.

Move over ICBC

The Industrial & Commercial Bank of China has been deposed as the world’s largest bank by market capitalisation by Wells Fargo, data showed Wednesday, according to the Business Recorder.

ICBC’s six-year reign as the world’s biggest bank began in July 2007, and its value peaked at USD$374 billion in November that year thanks to China’s rapid economic expansion.

US bank Wells Fargo is now worth $236 billion, according to the New York Stock Exchange, where it is listed, while Chinese figures show ICBC’s value has fallen to around $223 billion.

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