China’s state news agency Xinhua is reporting that the chief economist at the Bank of Communications Lian Ping has forecast net profit growth for listed banks at around 8.3% this year, which represents a notable retreat from the double digit era.
The profit pressure facing China’s banks is being attributed to government moves to ease its grip on interest rates.
The Financial Times says the shine is coming off southeast Asia – the golden child of banking after the global financial crisis – as valuations tumble and competition for funding heats up across the region.
The FT says that the battle for funding is only going to get tougher once the US Federal Reserve begins to taper its supply of cheap US dollars to the world’s financial markets. Amid slowing regional economies, debt-fuelled high asset prices and currency swings, banks are battening down the hatches for a rough ride.
Reuters says Swiss bank UBS will begin outsourcing its fixed income trading platform to two technology groups in an attempt to save costs.
The combination of a regulatory drive to make markets less risky, a reduction in banks trading for their own account and the end of a 30-year bull market in fixed income is forcing all banks to rethink their operations and, in most cases, shrink.
Bloomberg reports that HSBC Holdings has suspended two London-based foreign-exchange traders while Citigroup has put two spot traders who specialised in G-10 currencies on leave.
That brings the total number of traders known to be fired, suspended or put on leave to at least 17 since Bloomberg News reported in June that employees at some firms said they shared information about their positions with counterparts at other banks to try and manipulate the WM/Reuters rates, a key benchmark in the $5.3 trillion-a-day currency market.