Bank Islam Malaysia Bhd has launched iTEKAD micro-financing programme for micro-entrepreneurs and those affected by the loss of income due to Covid-19.
Bank Islam said the programme offers seed capital with an affordable micro-financing arrangement for eligible applicants to start and grow their business to generate sustainable income.
In addition to the funding of working capital, iTEKAD will use the zakat fund for the purchase of tools and equipment required for eligible recipients.
“iTEKAD also involves collaborations with selected implementation partners such as State Islamic Religious Councils, agencies and non-government organisations.
“As the pioneering participating Islamic financial institution, Bank Islam will be working together with Majlis Agama Islam Wilayah Persekutuan (MAIWP) and SME Corp Malaysia in the first phase of the programme,” it said today.
Through the collaboration, Bank Islam said, recipients would receive structured entrepreneurship and financial management training.
This is to ensure they receive a more holistic understanding, skills and knowledge in managing their business efficiently and sustainably.
Minister in the Prime Minister’s Department (Religious Affairs) Datuk Seri Dr Zulkifli Mohamad al-Bakri said iTEKAD was an avenue to assist the B40 micro-entrepreneurs and asnaf who are greatly affected by the Covid-19 pandemic.
Bank Islam chief executive officer Mohd Muazzam Mohamed said iTEKAD wad parallel to its values in enhancing the wellbeing of the people through the preservation of wealth, lives, prosperity and intellect.
Mohd Muazzam said it was also in line with the Value-Based Intermediation philosophy, thus further fortifying banks’ commitment in supporting small businesses.
“Bank Islam is allocating RM5 million from Bank Negara Mslaysia’s Micro-Enterprise Facility Fund for this microfinancing programme.
“Eligible applicants that adhere to the asnaf criteria guided by Shariah rules and principles will benefit from a provision of RM300,000 Zakat fund of Bank Islam,” he said.
He said the first phase of the programme was expected to benefit 100 recipients by the end of the year.
The bank has received 14 number of applications, mainly from micro-entrepreneurs in food and beverages, manufacturing and services sectors In Wilayah Persekutuan.
“The selected participants will be undergoing training under SME Corp beginning July,” he added.
Investors in US business mortgage-backed safety and securities are supporting themselves for losses as the coronavirus pandemic pressures proprietors of shopping centers, resorts, workplace towers and also various other homes to avoid repayments.
More than $45 bn of mortgage packed right into US CMBS are past due and also were in supposed moratorium in April, S&P Global stated onTuesday
Analysts with S&P, the nation’s biggest credit scores ranking firm, projection that 10 percent of home loans in US CMBS bargains might fall under misbehavior in May if those in their moratorium remain to go unsettled. In April that share was much less than 2 percent.
“The measures adopted to contain Covid-19 have pushed the global economy into recession and could cause a surge of defaults,” stated Ambika Garg and also Tamara Hoffman, experts at S&P.
Details on financing repayments that have actually fallen back, consisting of those that are much less than one month unpaid, are currently being carefully complied with by investors aiming to comprehend the damages brought upon by the closures and also sanctuary-in- area orders that have actually been enforced as US authorities tried to reduce the spread of the infection.
The moratorium cover home loans that are much less than 30 days late in addition to repayments that have actually not yet been accumulated by the time the home loan servicer releases its month-to-month record to investors.
Since March, resort reservations have actually broken down while dining establishments and also sellers in rural shopping center and also shopping center have actually shut their doors. Only in current days have actually some firms started to resume on a minimized basis. Many services have actually transferred to preserve money and also have actually rejected to pay rental fee.
“We have seen a significant ramp-up in loans not only in special servicing but in a grace period over a short period of time,” stated Sagar Parikh, a securitised items investor at possession supervisor TCW. “It’s our expectancy that the numbers will certainly grab [in] May based upon what we saw from. the forbearance demands.”
S&P stated on Tuesday that 91 finances worth $2bn were recently overdue, with past-due home loans on resorts accounting for virtually fifty percent of the number. The ranking firm approximated those finances raised the general delinquencies in CMBS deals to $9.8 bn.
Lower- ranked tranches of CMBS have actually rolled in worth. The safety and securities, which are cut to offer investors differing levels of direct exposure to the prospective default on the hidden home loans, have actually sunk because late February when worries bordering coronavirus initially struck US monetary markets.
A record dispersed on Tuesday to investors in a CMBS structured by Citigroup in 2012 emphasized the quick spread ofdelinquencies Figures revealed that 6 of the 46 finances underpinning the offer lagged settlement in very early May, up from 3 in the previous month.
Maintaining that the combined fiscal deficit of the Centre and states may go up to 13-14 per cent this fiscal, former RBI Governor Duvvuri Subbarao on Sunday said the financial stimulus announced by the Centre on March 26 on account of lockdown to contain spread of Covid-19, is “not sufficient”.
Speaking at a webinar titled “The Challenge of the Corona Crisis – Economic Dimensions”, organised by the city-based Manthan Foundation, Subbarao said the Centre needs to cap its borrowings as the open-ended borrowings will have negative consequences such as pushing interest rates high.
“The government announced the fiscal support package of 0.8 per cent of the GDP. Is that sufficient? No, it is not sufficient when it was announced on March 26. It looks even lesser now. In fact, the government needs to spend more. And spend more on three things. The first item of expenditure is to enlarge and expand the livelihood support,” Subbarao said.
He said that since March 24, when the lockdown was imposed nationwide, millions of households have become vulnerable and therefore livelihood support has to be extended to many more families as most of their savings have dried up.
“The government needs to cover more households, give more per household and give for much longer per household. That is the first challenge on the government expenditure,” he said.
The Finance Ministry unveiled a Rs 1.70 lakh crore economic package on March 26 involving free food grain and cooking gas for the poor for the next three months.
Subbarao said it is quite clear that the government needs to spend more as it is a moral and political imperative. In order to spend more, the government needs to borrow more. He said he disagreed with the view that since this is an extraordinary and unusual crisis, therefore the government should not tie itself by setting up borrowing limits.
“The combined fiscal deficit of the centre and state governments for this fiscal year as budgeted is 6.5 per cent of the GDP. Because of the loss of revenue on account of the lockdown, because of the decline in the nominal GDP on account of the lockdown, the fiscal deficit will go beyond 10 per cent of the GDP. The additional borrowings will now take the fiscal deficit to the range of 13 to 14 per cent of the GDP. That is exceedingly high and will have all the negative consequences of high fiscal deficit,” he opined.
According to him, the domestic financial sector, which is under deep stress, will be under “deeper stress” by the time the Covid-19 crisis ends, though he sees some silver linings in the situation such as plummeting crude prices and bumper agri-yield.
Stressing that the world has to live with coronavirus for some time, Subbarao said both centre and states are working in tandem to contain the pandemic.
“The dilemma (of lives and livelihood) is the sharpest for India, given our weak medical infrastructure and high population density. Any gaps in prevention can mean loss of millions of lives. On the other hand, a stringent lockdown to control the pandemic can mean millions of livelihoods. This is a very difficult balancing act. Particularly for India, as our economy is in bad shape, Subbarao said.
Commercial banks here are raising their voices against what they consider “near-sighted” financial policies by the government, as the authorities demand lenders cooperate with strong sets of pump-priming measures to prop up the virus-hit economy.
Officials from major Korean lenders said the government needs to take a longer-term viewpoint when devising financial policies even amid the global economic crisis sparked by the COVID-19 pandemic.
Even if top-tier lenders here reported relatively decent earnings in the first quarter of 2020, they may continue being exposed to concerns over their asset soundness if the government keeps introducing stimulus packages at the cost of the financial institutions, a top-ranking official from one of the nation’s major commercial banks said.
“Despite the better-than-expected first-quarter earnings, we still have a sense of concern due to the government’s short-sighted financial policies under which lenders have to offer more loans to the self-employed and allow individual investors to pay their interest rates later,” the official said.
Starting from as early as 2021, most lenders here are expected to suffer earnings shocks following the government’s makeshift stimulus measures, he noted.
Global ratings companies ― such as Moody’s and Fitch Ratings ― have expressed similar concerns over the lenders.
“Fitch Ratings’ assessment of intrinsic creditworthiness of Korea’s four large commercial banks has turned negative due to mounting pressure on the banks’ operating environment, asset quality and profitability that stems from the severe disruption to economic activities globally in the wake of the coronavirus pandemic,” the ratings firm said in a statement Monday.
“As a result, Fitch has revised the rating outlooks on KB Kookmin Bank and Shinhan Bank to ‘Negative’ from ‘Stable,’” it said.
Fitch also pointed out that the negative outlook came as the lenders’ creditworthiness would be put under “mounting pressure” over the next two years due to measures to contain the coronavirus outbreak here. Cooperation amid crisis
But economists here are urging the lenders to “stop whining about” the government’s call to comply with its market stimulus drive.
“The coronavirus-induced economic shock was unexpected, so it is natural for the government to take what might seem immature financial policies to take care of urgent problems one by one, which cannot satisfy all interested parties,” DB Financial Investment economist Lee Byung-gun said.
On top of that, the status quo is not something limited to Korea, according to the analyst.
“Most financial organizations ― such as banks ― in most developed nations are eager to join their governments’ stimulus measures to tackle the crisis,” he said.
“This is not a matter of unilateral sacrifice from the commercial banks,” he said. “Lenders can get back what they offered ― such as loans ― sometime later. They may not welcome the government’s movement, as this may have put a brake on their business plans, but my view is that they need to join hands with the authorities in this unexpected crisis.”
Yonsei University economist Sung Tae-yoon said the government, for its part, should also play a proper “mediating role” between virus-hit parties and banks.
“The financial authorities are advised to offer an incentive package to lenders … after the virus panic ends,” he said.
“Any one-sided demand is not desirable even in a time of crisis, as commercial banks are not state-run organizations, but companies with shareholders,” he said.
A group of four banks led by Citigroup faces a loss of nearly $ 100 million after selling part of a loan guaranteed by two Las Vegas casinos, a sign that the banks are eager to dispose of the assets affected by the pandemic, even with big discounts. Citi, Deutsche Bank, Barclays and Societe Generale loaned $ 3 billion to MGM Growth Properties – owner of MGM Grand and Mandalay Bay casinos on the famous Las Vegas Strip – in February, shortly after MGM sold 49.9 % ownership of properties in Blackstone, according to regulatory filings.
The four banks intended to use the loan to support a $ 1.9 billion deal in the commercial mortgage-backed securities market, but a strong sale triggered by the Covid-19 epidemic shocked these plans, according to people familiar with the agreement.
Instead, banks sold the two lowest-rated tranches of a revised deal to investors with a big discount this week.
The triple B-rated debt tranche priced at 83 cents on the dollar while the riskier, double-rated B tranche only returned 77 cents, according to people. Together, the tranches amounted to $ 534 million. This equates to a loss to the banks of approximately $ 99 million on the face value of the debt.
Citi has written 40% of the original loan on its balance sheet, while the other banks have each taken a 20% share, according to two people familiar with the arrangement.
Banks still have close to $ 2.5 billion of original loan on their balance sheet and hope to sell the highest rated tranches of the CMBS deal once markets stabilize and economic conditions improve, said people familiar with the plans.
The lowest rated CMBS tranches are generally sold at a discount, offset by a premium received on the highest rated tranches. But investors and those involved in the MGM deal said the banks’ chances of recovering the total amount lost during this week’s sale are slim.
“At this point, the loan was made, so the damage was done,” said a banker involved in the transaction.
The bankers also noted that the original loan may have been hedged to offset the risk of a fall in value, but did not provide further details.
Wells Fargo on Tuesday disclosed that federal and state authorities are investigating its lending practices under a key small business relief effort to combat the economic damage from the novel coronavirus.
Wells Fargo did not offer details on the probes, saying only that government agencies are looking into loans it made through the government’s $660 billion Paycheck Protection Program, or PPP, which offers forgivable 1% interest loans to businesses with fewer than 500 workers. The banking giant also said that some of the inquires have progressed to the formal stage. Wells Fargo made the disclosure in its quarterly earnings filing with the Securities and Exchange Commission.
Wells Fargo has come under fire for its limited participation in the government’s small business relief program. Just days after the program launched last month, the company announced it would no longer accept applications, in part because the Federal Reserve had capped how many loans it could make as punishment for past banking practices.
The U.S. central bank in 2018 limited the amount of loans Wells Fargo can make after the bank was earlier revealed to have created millions of phony accounts, as well as committed a string of other consumer abuses.
At the time of the PPP’s launch, Wells Fargo said it would limit the amount of money it loaned through the program to $10 billion and that it would lend only to companies with fewer than 50 employees or to non-profits.
A few days later the Fed announced it was lifting Wells Fargo’s lending cap to accommodate more PPP lending, and Wells Fargo said it would resume issuing loans under the program.
A number of big banks have been accused of putting larger businesses ahead of smaller firms in order to boost their profits from administering PPP loans. Over 220 public companies have disclosed receiving PPP loans, including well known public companies like Shake Shack and AutoNation. The latter two and others later returned or canceled the funding amid public outrage that money from the small business program was going to larger businesses with other financing options.
In mid-April, CBS MoneyWatch reported that JPMorgan Chase had made a number of the largest PPP loans. Wells Fargo is the only big bank so far to disclose that its participation in the program is under investigation.
They have steadily taken market share from their smaller brethren over the past decade and built large capital cushions with record earnings. Now, they must navigate an unprecedented period of economic stress while servicing—and showing leniency toward—hard-hit businesses and consumers.
The banks say they have never been better prepared. Investors, however, are worried about whether they can deliver and get past the crisis without being swamped by bad loans.
The sector has been hammered lately. The shares of the six top institutions— Bank of America (ticker: BAC), Citigroup (C), Goldman Sachs Group (GS), JPMorgan Chase (JPM), Morgan Stanley (MS), and Wells Fargo (WFC)—were down an average of 15% last week and 40% for the year. With banks amounting to leveraged plays on a reeling economy, the market setback is understandable.
Plenty of risk remains. There is uncertainty about what kind of action the government or banks may take to help borrowers, such as forgiveness of interest, fee waivers, or suspension of debt payments—and what effect that will have on profits.
The standard investor playbook is to avoid banks when the economy is going into recession—especially one whose depth and duration is especially hard to predict. The 2008-09 downturn was centered in the housing market, while the current crisis appears to be hitting nearly everything at once.
And many investors would rather stick with safer sectors such as technology (where many companies sit on big cash positions), pharmaceuticals, consumer staples, and electric utilities.
Nonetheless, the big bank stocks look appealing.
“In the financial crisis, banks were part of the problem,” says Michael Mayo, the banking analyst at Wells Fargo. “Now, they can be part of the solution. They spent the past decade preparing for a time like now, so they can act as a source of strength for the economy.”
To appreciate the banks, investors may have to rely on a traditional value measure—tangible book value—rather than earnings, which are likely to come under pressure for a quarter or two as loan-loss reserves surely increase. Published 2020 earnings estimates for banks are probably too high.
JPMorgan trading on Friday at $86, was at 1.4 times tangible book, and Bank of America, at $21, was at 1.1 tangible book. The other four fell below tangible book: Goldman, at $142, and Citigroup, at $39, fetched 70% and 55% of tangible book, respectively.
Tangible book is a conservative measure of shareholder equity that excludes goodwill and other intangibles and has often proved to be a floor under bank stocks.
Mayo says investors need to set aside their wariness of the banks. “It’s night and day versus the financial crisis,” he says. “Bank balance sheets were weak, and now they’re strong. The degree of resiliency is underappreciated. I would be shocked if one of the top 10 banks needs to raise equity or cut its dividend.”
Mayo favors JPMorgan, Bank of America, U.S. Bancorp (USB), and PNC Financial Services Group (PNC), the latter pair being among the highest-quality regional banks. JPMorgan has a diversified base of consumer and commercial lending, high net-worth wealth management, and investment banking. It has produced some of the industry’s best returns and has the best management team, led by CEO Jamie Dimon, who is recuperating from heart surgery.
Bank of America has transformed itself into the country’s top consumer and commercial bank in the past decade under CEO Brian Moynihan, who has espoused what he calls “responsible growth.” The bank has had the lowest loan losses among its peers, reflecting a know-your-customer consumer-loan strategy geared toward high-quality borrowers.
“We are here to be part of the solution,” Bank of America Chief Financial Officer Paul Donofrio told Barron’s. “We’re a haven for consumers and businesses to deposit their money or keep their investments. We see ourselves as a conduit to economic activity in a time like this. For existing clients who want flexibility, we will work with them. That’s our job, and we’re in a position to do it.”
Testing the Banks
How the big U.S. banks stack up now and how their earnings could be affected by the current crisis.
Bank / Ticker
Recent Price
YTD Change
2020E EPS
Stressed 2020E EPS
2020E P/E
Stressed 2020E P/E
Price/Tangible Book
Dividend Yield
Market Value (bil)
Bank of America / BAC
$20.01
-43%
$2.96
$0.71
6.8
28.2
1.0
3.6%
$174.6
Citigroup / C
34.67
-57
8.55
4.87
4.1
7.1
0.5
5.9
72.7
Goldman Sachs Group / GS
142.20
-38
24.05
15.47
5.9
9.2
0.7
3.5
51.2
JPMorgan Chase / JPM
85.60
-39
10.76
3.84
8.0
22.2
1.4
4.2
263.1
Morgan Stanley / MS
30.41
-41
5.31
3.07
5.7
9.9
0.8
4.6
46.6
Wells Fargo / WFC
28.15
-48
3.98
1.77
7.1
15.9
0.8
7.3
115.1
Regionals
Comerica / CMA
$29.68
-59%
$6.01
3.92
4.9
7.6
0.6
9.2%
$4.2
M&T Bank / MTB
106.74
-37
13.38
10.26
8.0
10.4
1.4
4.1
13.9
PNC Financial Services Gp / PNC
88.47
-45
11.46
5.28
7.7
16.7
1.1
5.2
37.9
U.S. Bancorp / USB
33.32
-44
4.27
2.20
7.8
15.2
1.4
5.0
50.7
Data as of 3/19/20; E=Estimate
Sources: Bloomberg; Barclays; company reports
Goldman Sachs and Morgan Stanley have less lending exposure than peers, since they tilt more toward banking, trading, investment banking, and asset and wealth management. Their business mix could limit the downside in their shares from currently depressed levels.
The regional banks have been hit even harder than the largest banks, with some down over 50% this year, because of their exposure to hard-hit small and midsize businesses as well as energy.
Yet both U.S. Bancorp and PNC have less exposure to energy relative to some peers. Mayo upgraded both stocks last week to Overweight. Of PNC, he wrote that its “risk profile is lower, making it a go-to bank in times of trouble, as it was during the financial crisis of 2008.” PNC also has a valuable stake in behemoth asset manager BlackRock (BLK) that is worth about 35% of its market value.
U.S. Bancorp has a diversified model and gets only about half of its profits from traditional banking, with the rest from businesses such as payment processing and wealth management. It has historically been viewed as the highest-quality big regional.
Ngân hàng lớn nhất Israel Hapoalim đã bị Mỹ phạt gần 875 triệu USD vì đã che giấu 7,6 tỷ USD tài sản chưa được khai báo trong các tài khoản của Thụy Sĩ và Israel.
Đây là một trong những mức phạt lớn nhất được áp dụng trong cuộc điều tra trốn thuế kéo dài của Mỹ vào hệ thống ngân hàng Thụy Sĩ.
Hapoalim cũng bị Bộ Tư pháp Mỹ (DoJ) phạt thêm 30 triệu USD vì tội đưa hối lộ liên quan đến hành vi tham nhũng tại Liên đoàn bóng đá thế giới (FIFA), có trụ sở tại Zurich, Thụy Sĩ.
Trong một tuyên bố riêng được thông báo ngày 1/5, Hapoalim cũng thừa nhận đã rửa hơn 20 triệu USD tiền hối lộ cho các quan chức bóng đá hàng đầu thế giới.
Chi nhánh ngân hàng này tại Thụy Sĩ đã tham gia vào kế hoạch khởi động từ tháng 12/2010 đến tháng 2/2015.
Tiền hối lộ được trả bởi một loạt đối tượng bao gồm một công ty tiếp thị thể thao để thao túng việc trao quyền phát sóng các giải đấu bóng đá thế giới FIFA World Cup.
Trong vụ trốn thuế, ngân hàng lớn nhất của Israel và công ty con ở Thụy Sĩ đã thừa nhận không chỉ che giấu mà còn tích cực hỗ trợ khách hàng Mỹ lập tài khoản bí mật, che dấu tài sản, thu nhập và trốn thuế.
Theo DoJ, vụ vi phạm diễn ra từ năm 2002 đến 2014, liên quan đến hơn 5.500 tài khoản.
Ít nhất 4 giám đốc điều hành cấp cao của nhóm ngân hàng, bao gồm hai thành viên hội đồng quản trị của chi nhánh Thụy Sĩ, đã tích cực hỗ trợ âm mưu này.
DoJ cảnh báo có thể đưa ra các quyết định dân sự hoặc hình sự hơn nữa đối với các cá nhân.
DoJ đã trì hoãn việc truy tố hình sự Hapoalim trong 3 năm với điều kiện phải hợp tác với các cuộc điều tra tiếp theo về các hoạt động của Hapoalim cho đến đầu năm 2019.
Đây là một phần của thỏa thuận, theo đó ngân hàng này sẽ trả cho Kho bạc Mỹ, Cục Dự trữ Liên bang, Cơ quan Dịch vụ Tài chính của Tiểu bang New York và Chính phủ Mỹ không truy tố ngân hàng trong 3 năm.
Các ngân hàng Thụy Sĩ, bao gồm các chi nhánh của các ngân hàng nước ngoài ở Thụy Sĩ, đã bị DoJ điều tra kể từ khi ngân hàng lớn nhất Thụy Sĩ là UBS bị phạt 780 triệu USD trong năm 2009 vì hỗ trợ những người trốn thuế.
Cuộc điều tra, liên quan đến khoảng 100 ngân hàng, đã dẫn đến việc chấm dứt “bí mật” ngành ngân hàng Thụy Sĩ.
Hapoalim là một trong số ít các ngân hàng còn lại bị điều tra. Ngân hàng lớn nhất Israel đã chịu một trong những khoản tiền phạt lớn nhất mặc dù vẫn ít hơn nhiều so với mức phạt hơn 2,5 tỷ USD áp dụng đối với ngân hàng Credit Suisse của Thụy Sĩ vào năm 2014.
Vào tháng 9/2017, Hapoalim cho biết sẽ kết thúc các hoạt động với ngân hàng Thụy Sĩ và chuyển khách hàng sang một ngân hàng khác./.
Bank Indonesia (BI) has injected Rp 503.8 trillion (US$32.7 billion) into banks and the debt market to stabilize the rupiah and help support the government’s financing needs to combat the economic shocks of the COVID-19 pandemic.
BI Governor Perry Warjiyo said that banks would be obliged to buy government bonds after the central bank freed up Rp 102 trillion in liquidity. Starting May 1, the reserve requirement ratio will be lowered by 200 basis points (bps) for commercial banks and 50 bps for sharia banks.
BI’s policy to revoke banks’ obligation to fulfil the Intermediary Macroprudential Ratio (RIM) would add another Rp 15.8 trillion of liquidity, said Perry.
“Fiscal policy will be crucial in channeling these funds into the real economy sector,” Perry told an online media briefing on Wednesday. “These quantitative easing measures taken by the central bank will fuel economic activities.”
This is in addition to the Rp 386 trillion worth of liquidity freed by the central bank since the beginning of the year to support the country’s crashing currency and boost banks’ liquidity, Perry said.
The central bank has bought Rp 166.2 trillion worth of government bonds in the secondary market as investors dumped Indonesian assets over fears about COVID-19, resulting in a slump in the value of the rupiah, which depreciated as much as 18.5 percent in early March.
BI’s repurchase agreements (repos) with banks through government bonds as underlying assets has provided the financial system with Rp 137.1 trillion, while BI’s decision to lower the reserve requirement ratio since the beginning of the year has provided banks with Rp 53 trillion. Furthermore, BI’s monetary operations in the form of foreign exchange swaps has provided Rp 29.7 trillion, according to Perry.
The rupiah has started to gain against the greenback over the last few weeks, strengthening to Rp 15,394 per US dollar as per 11 a.m. on Wednesday from this year’s low of 16,625 per US dollar, according to Bloomberg data.
“The volatility of the rupiah is due to technical factors affected by the ongoing conditions,” Perry said, citing the country’s large-scale social restrictions and economic growth projections and other issues as “negative news”. “However, there are also positive factors such as successful bond sales by the government and the strengthening futures market in the US.”
The central bank regards the current rupiah level as “fundamentally undervalued” and projects the country’s currency to reach Rp 15,000 per US dollar by the end of the year.