作者： bankr

With the rapidly changing digital technology India has seen a sharp increase in online banking and financial inclusion of the common man. Lured by a massive economy and rising middle-class incomes and living standards, a large number of foreign lenders in India have been vying for a bigger share of the Indian banking market for decades, yet they account for just 6 per cent of the total Indian banking assets.

After the recent government’s effort to ease the regulations in the banking space and the thrust on digital payments and banking there is a renewed interest of foreign investors especially PE funds to participate in the Indian banking pie. Attractive returns in India compared to the rest of developed countries are bolstering foreign banks such as Citigroup, Deutsche Bank, and HSBC to invest more in a market that has a vast pool of unpenetrated retail banking clientele.

For example, Deutsche Bank, that two years ago considered selling the Indian unit, and recently in July last year laid off 18,000 staff globally as part of a broader restructuring, is staying put in India which is home to its only retail business outside Europe. The bank injected nearly 500 million euros ($552.45 million) into those operations in early 2019; it is the single largest investment in the country and aims to double its India revenues from current levels.

HSBC’s pre-tax profit from its India retail and wealth management unit more than doubled to a record $48 million last year. While small compared with the $6.6 billion it made in its home market of Hong Kong, the figure contrasted sharply with HSBC’s $74 million loss in China. The Asia-focused lender, which intends to double spending on technology and marketing in the coming three years, aims to double profit again over the next three to five years.

The year 2019 saw a steady flow of foreign direct investment (FDI) into India, despite comparatively slower growth in the global and Indian economy. FDI inflows until September 2019 stood at $26 billion indicating a 15 per cent growth over the previous year. The following chart shows the distribution of FDI in India across various sectors, for the last three quarters of FY20. The services sector (including Financial, Banking, Insurance, Non-Financial or Business) India received the highest share in FDIs amounting to over 639 billion Indian rupees in fiscal year 2019 and 458 billion Indian rupees in the first three quarters of fiscal year 2020 which is 24.63 per cent of total FDI inflows in India. A large portion of these FDI inflows is going towards innovative fintech companies who are leveraging technology and are focused on enrolling customers without minimal or no paperwork. FDI is also being channeled into peer to peer lending companies and other non-banking financial companies which have a strong retail footprint and are trying to meet the credit needs of people who are unable to tap the conventional banking channels.

The growth in the retail banking or lending space is aided by technological innovations but the role of regulatory easing in this growth spurt cannot be ignored. The banking regulator has been very supportive in providing policy legroom to ease banking, services like online customer on-boarding and servicing, background checks which were not approved by the regulators, have been approved in recent times. The government’s conscious efforts and policy push to move more and more consumers as well as merchants into the formal economy have also led to an increase in the size of the overall banking space which has created ample room for all players to grow their businesses.

Foreign banks have been able to leverage these positive developments to their advantage which reflected in their annualised return on equity from their Indian operations to approximately 10 per cent, which stands approximately 40 per cent higher than the ROE’s of domestic Indian lenders. The Indian banking industry at this point is going through a lot of churns, PSU banks are reeling under huge NPA’s and the leading private banking players are dealing with significant corporate governance issues, foreign capital along with brings in best corporate governance practices which has been the reason of the recent success of foreign banks and investors in the Indian banking space.

As India remains in a lockdown till May 3, a question that is popping up on everyone’s mind happens to be—how banking services will be affected?
Needless to say, banking services are considered essential and are expected to continue during the lockdown. “Core banking activities will continue to function as usual. Bank branches are operational and continue to provide services. However, banks have trimmed working hours or have staggered working hours to maintain social distancing, with most banks working from 10 am to 2 pm.”
“Nonetheless, activities that require third-party support, such as those including document collection and verification, are currently moving slowly because of the lockdown,” says Adhil Shetty, CEO, BankBazaar.
Banks are also working with limited staff, so you may have to spend more time at a bank. Also, most banks have streamlined their phone banking services and you can expect longer wait times and services being limited to emergency services like blocking a lost or stolen card. For most other services, banks are encouraging their customers to use their website or app.
In these circumstances, one needs to avoid going out. Shetty advises that as much as possible, one should try to complete all their banking requirements online. Unless absolutely essential, try to postpone activities that requires a physical visit.
“The pandemic has brought about an urgent need to revaluate how we look at all our essential services including banking. The changes happening now are not a temporary stop-gap measure but reflect the shape of things to come. Going forward, banking is going to fundamentally change to an essentially paperless model in the post-COVID world,” he adds.
The idea is to use digital alternatives to cash as much as possible to reduce ATM visits. In case you do require cash, compute how much cash you would require for the next few weeks and withdraw a larger amount so that you do not need to visit the ATM again in the next few weeks.
Apart from transferring funds, banks allow you to do a number of other tasks including applying for cheque books, issuing standing instructions, making bill payments, open or modify FDs and RDs. You can also apply for a new card or block a card through your mobile banking.
If you can postpone some activities, like applying for a loan or opening an account, you may wait till the lockdown is over.
And most importantly, even you are visiting a bank; maintain social distancing rules strictly as advised by bank officials and use precaution such as a mask and gloves. Exercise precaution. Stay Safe and healthy.

Investment-grade bonds that have been downgraded to a rating of at least BB are now eligible for use as collateral in eurozone credit operations, the European Central Bank said.

The move will increase the amount of available, eligible collateral in light of ongoing corporate-credit rating downgrades as a result of the coronavirus pandemic, the bank said Wednesday. The ECB hopes the measures will provide additional liquidity and funding to the eurozone economy.

The use of these bonds — known as fallen angels — as collateral will last until September 2021, the ECB said.

Prior to the ECB’s decision investment-grade bonds with a rating of at least BBB- were considered eligible collateral.

The announcement follows a broader easing of collateral rules adopted by the ECB’s governing council on April 7, which included a temporary increase in the central bank’s risk tolerance.

The European Central Bank has changed its rules to accept “fallen angel” bonds that lose their prime credit ratings to maintain banks’ access to ultra-cheap liquidity during the coronavirus crisis.

The move, which was approved by an unexpected appeal by the ECB’s governing council on Wednesday, aims to limit financial turmoil that could otherwise be caused by an expected wave of credit downgrades in response to the pandemic.

About $ 275 billion in non-financial corporate bonds could become fallen angels by downgrading below the triple B minimum required for investment grade status over the next year, according to OECD estimates in February.

The ECB has already granted a waiver for Greek sovereign bonds from its ban on collateral assets that have a credit rating below investment quality as part of a general relaxation of its collateral rules that she announced two weeks ago.

The ECB said on Wednesday that it had also decided to temporarily exempt bonds that are downgraded to junk status from its requirement that any collateral it accepts should have an investment grade rating. Its relaxed warranty rules will remain until September 2021.

He said he was ready to go further if necessary to avoid a eurozone debt crisis. “The ECB may decide, if and when necessary, to take additional measures to further mitigate the impact of downgrades, in particular with a view to ensuring the smooth transmission of its monetary policy in all jurisdictions in the euro area “, He specified.

Alberto Gallo, portfolio manager of the hedge fund Algebris Investments, said: “The ECB acts to limit the pro-cyclical action of rating agencies and to protect sovereigns like Italy from deterioration. High-yield firms and SMEs account for a large part of the real economy. It is important that the aid is not only for large companies. “

Investors are particularly concerned about a possible downgrade in Italian sovereign debt ratings, with Standard & Poor’s expected to announce a decision on Friday. Italy’s already weak economy was one of the hardest hit by the coronavirus crisis, raising fears that its high debt could become unsustainable.

Italian 10-year sovereign debt yields were sketched out on Wednesday before the ECB’s unannounced announcement, reaching 2.27% before falling to 2.08%.

However, ECB officials said that its decision to accept fallen angel bonds as collateral was more aimed at corporate bonds. Any downgrade of Italian sovereign debt to trash could be treated using a waiver similar to that granted to Greek bonds, they said.

UBS underscored the magnitude of the potential fallen angel problem, noting recently that since 2011, European bonds rated triple B minus, a notch above junk status, had “swelled” from € 330 billion to 1, 14 billion euros. However, the issuance of junk bonds rated double B on the high-yield market increased from 74 to 185 billion euros.

The US Federal Reserve has gone a step further by including junk bonds in its asset purchase program and Wednesday’s ECB decision prompted speculation that it could follow suit as early as next week when its board will meet to discuss monetary policy.

“Right now, companies in the high-yield space are borrowing at high levels,” said Mona Mahajan, investment strategist at Allianz Global Investors. “Both the ECB and the Fed are working to ensure that the high-yield and credit markets remain generally liquid and functioning.”

Bob Michele, chief investment officer and global fixed income manager at JPMorgan Asset Management, said: “The ECB pretty much telegraphs to the EU if you increase the spending packages, we are able to increase our purchases to help control funding. of this package. “

The ECB said it had “decided to extend the eligibility of marketable assets and the issuers of those assets that met the minimum credit quality requirements on April 7, 2020 in the event of a deterioration in credit ratings decided by credit reporting agencies.” ratings accepted in the Eurosystem. as long as the ratings remain above a certain level of credit quality ”.

This means that all investment grade bonds as of April 7 will continue to be eligible even if they are downgraded below the triple B level by the major credit rating agencies as long as their rating remains no more than two notches below. investment grade.

Securities backed by assets with a rating of at least A-minus will benefit from rights acquired under the ECB’s guarantee scheme as long as their rating remains equal to or greater than double B plus. Fallen angel assets will be subject to “haircuts” to reduce their collateral value based on their last credit rating.

Publicly listed diversified conglomerate PT Astra International and British lender Standard Chartered Bank have agreed to lower the sale price of Bank Permata as the COVID-19 pandemic poses risks to the financial industry.

Both companies agreed to amend the conditional sale and purchase agreement on April 20 with Thailand-based Bangkok Bank as the buyer.

“According to the amendment letter, the purchasing price has been changed to 1.63 times Bank Permata’s book value from 1.77 times its book value,” Astra International said in an information disclosure posted on the Indonesia Stock Exchange (IDX) website on April 20.

The change stated in the amendment letter is conditional upon the transaction being completed on or prior to June 30.

Astra’s investor relations head Tira Ardianti told The Jakarta Post on Wednesday that the decision to lower the purchase price was made in light of the unfavorable economic conditions caused by the COVID-19 pandemic.

“Both the seller [Astra and SCB] and the buyer [Bangkok Bank] agreed to the incentive to complete the transaction as well as to provide a sense of certainty to the market during this uncertain time,” she said via text message.

Astra’s parent company Jardine Cycle and Carriage Ltd estimated the sale price to be about Rp 17.46 trillion (US$ 1.12 billion) for Astra, based on it being 1.63 times book value as of Dec. 31, 2019, according to a filing on the Singapore Stock Exchange (SGX).

[RA::Bangkok Bank to acquire another Indonesian bank after Permata deal: OJK
::https://www.thejakartapost.com/news/2020/03/05/bangkok-bank-to-acquire-another-indonesian-bank-after-permata-deal-ojk.html]

Bank Permata announced in December 2019 that Astra and Standard Chartered Bank, each holding a 44.56 percent stake in the bank, agreed to sell their stakes totaling 89.12 percent to Bangkok Bank.

The deal valued Bank Permata at 1.77 times its book value per September and indicated a purchase price of Rp 1,498 per share, meaning that Bangkok Bank would buy the two companies’ stakes for a total of Rp 37.44 trillion.

HSBC’s investment banking head in Asia-Pacific took a six-month sabbatical beginning this month as part of chief executive Noel Quinn’s efforts to reshape the 155-year-old bank.
Gordon French, the Asia-Pacific head of its global banking and markets business and one of its highest-paid bankers in the region, began a sabbatical on April 15 and is expected to explore “other opportunities” within the group when he returns, according to an internal memorandum seen by the South China Morning Post.
The move is part of a realignment of the investment bank that would see regional head roles split between its global banking operations and its markets and securities services business.
Thierry Roland, the regional head for the business in Europe, will head the bank’s newly created RWA Optimisation Unit, which will dispose of assets that do not meet the bank’s return expectations, according to the memo. Andre Brandao will serve as the regional head for the Americas until the end of the year, with a further announcement expected later.
HSBC’s investment banking head in Asia-Pacific took a six-month sabbatical beginning this month as part of chief executive Noel Quinn’s efforts to reshape the 155-year-old bank.
Gordon French, the Asia-Pacific head of its global banking and markets business and one of its highest-paid bankers in the region, began a sabbatical on April 15 and is expected to explore “other opportunities” within the group when he returns, according to an internal memorandum seen by the South China Morning Post.
The move is part of a realignment of the investment bank that would see regional head roles split between its global banking operations and its markets and securities services business.
Thierry Roland, the regional head for the business in Europe, will head the bank’s newly created RWA Optimisation Unit, which will dispose of assets that do not meet the bank’s return expectations, according to the memo. Andre Brandao will serve as the regional head for the Americas until the end of the year, with a further announcement expected later.

KUALA LUMPUR – United Overseas Bank (Malaysia) Berhad (UOB Malaysia) menutup lapan daripada 45 cawangannya di seluruh negara bagi melindungi kesejahteraan pelanggan dan kakitangannya berikutan pandemik Covid-19.

Cawangan-cawangan yang terlibat ialah Jalan Imbi dan Medan Pasar di Kuala Lumpur; Kota Damansara, Shah Alam dan Ijok di Selangor; Raub dan Bentong di Pahang dan Sandaka, Sabah.

Penutupan itu bermula hari ini sehingga berakhirnya tempoh Perintah Kawalan Pergerakan.

UOB Malaysia berkata, penutupan cawangannya di Medan Pasar kerana berhampiran dengan kawasan Masjid India yang kini diletakkan di bawah Perintah Kawalan Pergerakan Diperketatkan (PKPD).

Meskipun penutupan itu, para pelanggan masih boleh mengeluarkan wang tunai melalui mesin ATM, cek dan mesin deposit syiling mulai jam 8 pagi hingga 8 malam, kecuali di cawangannya di Medan Pasar.

For those worried about the debt involved, including some Coalition MPs, the Reserve Bank Governor offers some reassurance.

Mr Lowe told Four Corners “we shouldn’t be worried” about the debt.

“It’s the right thing to do… we have the capacity to borrow, our interest rates are as low as they’ve ever been, the Australian Government has a long record of responsible fiscal policy, so the budget accounts are in reasonable shape. And if ever there’s a time to borrow, now is it,” he said.

There is, however, a gentle reminder to either side of politics who think they can avoid tough decisions in the future about this debt.

“That debt will have to be repaid at some future point, and that will constrain our choices. So we’ll have to confront that,” he said.

We still don’t know how much spending and therefore debt will be required to survive this crisis.

The Prime Minister is also flagging a “pro-growth” strategy on the other side to help get the economy up and running again. In other words, confronting the debt burden won’t be the immediate priority.

After stabilising the plane, those in the cockpit are now trying to work out how to land it.