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Daily Dispatches – SEC ban to cause audit chaos in China

The Auditor

Chinese affiliates of the four largest accounting firms were barred for six months from leading audits of US-listed companies after failing to comply with Securities and Exchange Commission orders for documents at the heart of a series of accounting fraud probes, reports Bloomberg.

The decision would force more than 200 Chinese companies traded in theUS to find new auditors, while multinationals with significant operations in China, like General Motors Co., would also have to bring in new firms to check those units.

The firms receiving the bans — Deloitte Touche Tohmatsu CPA Ltd., Ernst & Young Hua Ming LLP, KPMG Huazhen and PricewaterhouseCoopers Zhong Tian CPAs Ltd — said they will appeal the decision.

The SEC filed an action against the auditors in 2012 after struggling for years to obtain information for dozens of accounting fraud probes at China-based companies.

IMF says big banks still too much of a risk

Big banks still pose a threat to the world financial system because there is a general assumption that governments will come to their rescue in case of trouble, an International Monetary Fund executive said on Thursday, according to a Reuters report.

“It is astonishing that officials in countries are still largely ill-equipped to deal with a Lehman Brothers-style bankruptcy, where assets and liabilities are scattered across multiple jurisdictions and entities,” Jose Vinals, tasked with financial oversight at the IMF, said in a blog post.

Bad news for Citigroup’s Korea employees

Citigroup, whose international consumer bank is the largest among US lenders, will stop running Korean branches that aren’t around large cities, Chief Financial Officer John Gerspach said, reports Bloomberg.

The New York-based lender has been revising its Korea strategy for the past 18 months with early efforts focused on changing the mix of its portfolio, he said.  The company has said Korea will drag on Asia revenues through 2014.

Westpac scores major coup at Davos

Westpac has been ranked the world’s most sustainable company in a major global coup for the Australian bank, reports the Sydney Morning Herald.

The bank was handed the prestigious prize at the World Economic Forum in Davos, Switzerland.

Thai riots threaten banking stability

Asian Banking & Finance reports that ratings agency Fitch says that continuing political turmoil in Thailand is slowing economic activity and could challenge the Thai banking sector.

A degree of political instability is already factored into the ratings. But emerging credit pressure could rise in spite of the recent imposition of a state of emergency which will help manage the fallout from, but not resolve, the underlying political deadlock between the ruling- and the principal-opposition party.

DBS eyes SocGen’s private bank

Singapore’s DBS Group is in advanced talks to buy Societe Generale’s Asian private bank, a deal that would help boost its private banking assets by almost a third, according to a report in the South China Morning Post.

It was unclear how much Southeast Asia’s biggest lender would be willing to pay for the bank, but previous estimates from financial sources have valued it at between US$300 million and US$400 million.



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