Concerns have eased that China was dragging the global financial economy into another banking crash like the one in 2008 that sent the world spinning into recession. The country’s central bank, the PBOC, has taken the pressure off the liquidity squeeze by giving some of its larger lenders cash but details – typically – are thin on the ground.
This country’s opaque monetary policy has led analysts to speculate that China’s apparent reluctance to shore up the cash positions of its largest banks in recent weeks was like a parent disciplining a wayward child who has spent all his pocket money. The state has been slow to go into the market, in a bid to cut off the air supply to unregulated ‘shadow’ lenders who account for about half the credit in the market. All would be well and good if this rampant credit extension – up about 20% year-on-year – was fuelling economic growth, but it doesn’t appear to have filtered through, and there are now fears that China will miss its own economic growth target of 7.5% for 2013.
The world should not worry overly much that China’s banks will collapse, though. Unlike the global banks that tipped the world’s economy into free fall back in 2008, China’s major financial institutions are all state-owned. Economists believe the country will do what is necessary to maintain stability. As always, one should bear in mind that China plays the long game, famously illustrated by Mao Tse Tung’s response to Richard Nixon, when asked what he thought of the French Revolution. “Too early to say.”
While the People’s Bank of China is taking remedial action to tackle unregulated selling of wealth management products within the country’s borders, it has also approved plans to to launch a new pilot programme allowing individual households to make financial investments overseas. One of the complaints of onshore Chinese investors has been about the paucity of domestic investment options and choices, which has led to the ‘Chinese housewife’ phenomenon of buying physical gold. Singapore’s Business Times reports that the new programme will allow individual households to make financial investments overseas, largely seen as a sign of the country’s progress towards capital account liberalisation.
Singaporean banks DBS and UOB are enjoying record high fees and commissions from selling wealth management products. Asian Banking and Finance quotes Phillip Securities as saying that as client relationships develop and affluence in the region grows, “we expect this to drive (further) growth. Fees and commission (should) grow in importance as (this banking activity) is less capital intensive and thus favoured in view of high Basel III capital requirements.”
Three former Dominion Finance directors have pleaded guilty to misleading investors by making untrue statements in offer documents. The Sydney Morning Herald reports that Rick Bettle, Vance Arkinstall and Paul Forsyth, who were also directors of North South Finance, admitted the Securities Act charges on Wednesday in the High Court at Auckland. Dominion Finance Group went into receivership in 2008, and North South Finance followed in 2010. Both were subsidiaries of NZX-listed Dominion Finance Holdings, which was placed in liquidation in 2009.
While debate rages around the banking world about executive pay, consider this pension payout to the retiring chairman and CE of drug distribution company McKesson. John Hammergren’s retirement package sets a new record in corporate America, being a lump sum payment of USD$159 million. According to the Sydney Morning Herald, chief executives of those companies in the Standard & Poor’s 500 index that award pensions receive an average benefit of about USD$7 million.
Australian bank Westpac says that it is aiming for a 50:50 split between men and women in leadership roles by 2017, up from the current target of 40% women, 60% men. Banking Day reports that the Workplace Gender Equality Agency says Westpac achieved its 40 % target two years ahead of schedule. The bank set that target in 2010, when the percentage of women in leadership roles was one third.
Standard Chartered’s head of private banking in Singapore, Shayne Nelson, moves to Emirates NBD as group CE. Latham & Watkins partner Kai Schneider joins Clifford Chance in Singapore to lead the funds’ team. Barclays has promoted Ken Wei Wong to be head of bond syndication in Asia (ex-Japan).
Taiwanese politicians can be accused of taking a robust democracy a little too far. Since the 1980s, the country’s parliament has become famous for its fisticuffs, hair pulling, shoe throwing and microphone bashing, with up to 50 people piling into the fray at times. And yesterday, after a period of relative calm since 2008, another fight broke out, this time over taxes on share trading. As this YouTube clip shows, the mainly women legislators pushed and shoved each other, pulled each other’s hair, tore at clothes, and one even tossed water over rival lawmakers. Security guards were called in to break up the scuffle. It is unclear who won.