HSBC suspends retail banking in Russia
Moscow, Russian Federation (AHN) – Hong Kong and Shanghai Banking Corporation pulled out of retail banking in Russia. HSBC said it will focus on making available global lending services to industrial and corporation clients.
With the announcement, HSBC will close five retail units in Moscow and St. Petersburg.
Husein Ozkaya, manager of HSBC’s Russian operations, said Europe’s largest bank decided to stop retail banking after a review revealed that corporate banking offered it the strongest opportunity in the country.
With the announcement, HSBC became the latest foreign bank to leave retail banking in Russia after another leading British bank Barclays also pulled out recently from Russia as the retail banking sector becomes dominated by local banks.
Only one in four Russians have a bank account, making Russia one of the lowest banking penetration rates. But the potential yield is vast because of the country’s population of 142 million which resulted in the retail banking business doubling in size every two years prior to the 2008 financial crisis.
Barclays paid in 2008 $560 million (GBP 373 million) for Expobank, which was six times the book value to be able to offer retail banking services in Russia. But after barely two years, Barclays sought a buyer for its retail business in Russia and instead decided to focus on investment banking.
Banco Santander of Spain is also leaving retail banking in Russia.
The foreign banks attracted depositors with new services such as Internet banking, linked investment accounts and online bill payments. It helped foreign banks that Russians had a distrust of their own financial institutions due to a series of scandals and ruble devaluations, which wiped out savings of Russians in the 1990s.
But the anticipated decline of Russian state banks’ share of the retail market did not take place because of a matching of similar services by Sherbank – a former Soviet retail bank – to those offered by foreign banks. To further attract local depositors, Sberbank emphasized that it is a state-backed institution, while many western banks were on the brink of collapse.
HSBC advised account holders to close their accounts by June 30, while their credit cards could no longer be used after May 31. To help clients move their savings to other banks, HSBC said it would waive fees for cash withdrawals and outbound transfers.
View full post on All Stories
World Bank: Rise in food prices may plunge millions deeper into poverty
Washington, DC, United States (AHN) – Volatile global food prices that have soared 36 percent higher than last year are pushing millions of people deeper into poverty, World Bank officials warned Thursday.
“More poor people are suffering and more people could become poor because of high and volatile food prices,” World Bank Group President Robert B. Zoellick said in a statement. “We have to put food first and protect the poor and vulnerable, who spend most of their money on food.”
Higher fuel prices, along with events in the Middle East and North Africa, including severe weather events, are responsible for pushing food commodity prices up, according to a report by the World Bank Group.
The global food price index rose 36 percent because of steep increases in the prices of staple food items. Although rice prices have remained stable, other prices have not. Maize rose by 74 percent, wheat by 69 percent, soybeans by 36 percent and sugar by 21 percent. In addition, some countries have seen the prices of fruits and vegetables, meats and cooking oil continue to increase, which holds the potential to have a negative consequence on poor people’s nutrition and health.
World Bank officials estimate about 1.2 billion people around the world live below the extreme poverty line of $1.25 per day in developing nations. In contrast to the developing world, higher wages and a higher cost of living in the U.S. mean the poverty line there is $29.84 per day.
In addition, World Bank officials say that 44 million people have already been driven into poverty since June because of the increases in food prices.
According to latest edition of the World Bank’s Food Price Watch:
- Another 10 percent increase in global food prices could drive an additional 10 million people below the $1.25 extreme poverty line.
- A 30 percent price hike could lead to 34 million more poor.
View full post on All Stories
Israeli central bank determined to gain control of Israel’s growth engine
Jerusalem, Israel (TML) – The Israeli growth engine has powered the economy through wars, a global financial crisis and turmoil in the Middle East, but Stanley Fischer, the country’s central banker, is now determined to get a grip on the controls.
Fischer took economists and the financial markets by surprise late on Monday by lifting the Bank of Israel’s base lending rate 0.5 percentage point to 3%. While the rate is low by historical standards, the bank has doubled the rate in just nine months. More hikes are likely to come, the economists said.
Israel’s economy grew by 4.6% last year, capped by a 7.7% annual rate in the final quarter of the year. Even as oil prices are climbing and regional unrest raises political uncertainty for the country, there has been little sign that the expansion is cooling very much. The Bank of Israel’s S index, a barometer for economic activity, rose a sharp 0.4% in February.
But the heady rate of growth has begun to show its dark side in higher consumer prices, a development of major concern for a country with a long and bitter memory of hyperinflation. The consumer price index (CPI) rose 4.2% in the 12 months to February, well over the bank’s target range of 1% to 3%. Economists see inflation slowing over the next year, but not enough to bring it back into the range.
“He made a mistake. He didn’t understand the significance of the inflationary danger,” Michael Sarel, head of research at Harel Group, told The Media Line. “It’s a step that was very much needed. It’s a pity he didn’t act earlier.”
Until Monday, Fischer had been steering interest rates higher, but only gradually, as he tried to balance his mandate to contain inflation with the need to prevent the shekel from appreciating by boosting interest rates much higher than in other developed economies. A stronger shekel hurts export, a key sector for the Israeli economy, by making
costs measured in dollars higher.
Except for a brief dip in 2008, Israeli gross domestic product has grown between 4% and 6% annually since 2003. The expansion has proceeded even as the world economy was reeling from the fallout of the U.S. housing market and during wars with Hizbullah in Lebanon and Hamas in the Gaza Strip.
With the interest rate less than inflation and likely to remain so for some time, Fischer acted too slowly in raising interest rates, most economists say. Monday’s unusually sharp rate increase marks an “admission of failure to some extent,” Citigroup Global Markets said in a report on Tuesday. It said investors are now looking for rates to be pushed up to as much as 4.5% by the end of the year, a forecast it labeled as “excessive.” Most economists and the central bank itself said it would likely be about 4%.
But Citigroup and others said Fischer may now have changed his strategy and wants to rely on a stronger shekel to mitigate the inflationary impact of higher global prices for oil and other commodities. If so, the Bank of Israel has some very early indications that it’s wish is being granted: The shekel appreciated on the back of the rate hike, with the official rate set at 3.525 to the dollar on Tuesday, close to its strongest level in 27 months.
The Israel Manufacturers Association, which represents the country’s biggest industrial companies, warned on Tuesday that if the shekel appreciates to 3.5 to the dollar, companies will lose some $2.9 billion in export sales, equal to about 6.6% of the country’s exports. They will even be hurt in the domestic market because the price of imports will fall.
The Bank of Israel itself assumes that every 10% appreciation in the exchange rate after inflation causes a 2% drop in exports, with a more adverse impact on profit margins.
Economists said the latest rate hike and the ones expected over the next months would certainly put a brake on economic growth but, with the economy in hyper drive, Fischer has room to maneuver without causing damage. Merchandise exports jumped at a near 30% annual rate in the December-February period, according to Israel’s Central Bureau of Statistics.
“The more significant impact is on both the mortgage rates for floating rates loans which will become more expensive,” Jonathan Katz, Jerusalem-based economist at HSBC Holdings, told The Media Line. “It will have a damping effect on housing demand as well as consumer demand because those who are making interest payments will see their disposable income decline.”
For the Bank of Israel anything that would help calm the local real estate market would be welcome. Home prices, which aren’t included in the official CPI but factor into household costs all the same, have shot up by 16.3% in the 12 month to February, even after the central bank took steps to discourage people from taking out mortgages.
In January alone, home price rose 0.9%, slowing only marginally from a 1.3% monthly pace in November and December. Jean-Michel Saliba, a Bank of America/Merrill Lynch economist who covers the Israeli economy, said Fischer would probably have to do more to address the problem of home prices.
“Average mortgage rates are increasing but are still close to historic lows. More macro-prudential tools may be needed along with measures on the supply side,” Saliba told The Media Line. “The export sector is likely to bear the pain of the shekel’s strength.”
View full post on All Stories
Philippine Central Bank reviews growth forecast for 2011 over impact of Japan quake
Manila, Metro Manila, Philippines (AHN) – The Philippine Central Bank will review the country’s growth forecast of 7 to 8 percent economic expansion in 2011 to assess the impact of the March 11 Japan quake and tsunami.
Central Bank Governor Amando Tetangco hinted that the magnitude 9 tremor could have a short-term negative impact on the Philippine economy and other Asian neighbors.
Japan is a major export market for the Philippines and source of dollar remittances from about 350,000 Filipinos living in Japan.
January data showed that Japan accounted for 14 percent of the Philippines’ export market and OFW remittances from Japan comprised 5 percent of the total $1.48-billion remittances.
Tetangco indicated the Philippines may miss this year’s growth target because of the natural catastrophe and nuclear disaster that hit Japan, but expressed optimism that Manila would still register a healthy growth rate for 2011.
He added the forthcoming rehabilitation effort in Japan would also benefit the Philippines for the medium- and long-term.
Another impact of the Japanese disaster would be on official development assistance fund. The Philippines is the fourth largest recipients of loans with favorable terms from Japan.
View full post on All Stories
Fed improves ability to handle big bank failures
D.C., Washington, United States (AHN) – U.S. Federal Reserve Chairman Ben Bernanke told the Senate Banking Committee Thursday that the Feb has improved its ability to handle big bank failures. He said the improvement the past 24 months was partly because of the Dodd-Frank Act that revamped financial regulation as an aftermath of the financial crisis of 2007-08.
As regulator, the Fed must be very aggressive and not give banks the too much room, particularly in weak areas such as risk management, Bernanke said. He admitted not all the rules of the Act had been implemented, but the Fed had started to place tighter risk standards.
Aside from Bernanke, the chairman of the other regulatory agencies over financial institutions such as the Securities and Exchange Commission, the Federal Deposit Insurance Corporation and the Commodity Futures Trading Commission, and the acting Comptroller of the Currency also appeared before the senate committee. They provided updates on how their agencies were enacting and implementing new rules and regulations mandated by the Act, signed in July 2010.
The CFTC and the SEC have a combined proposed 64 new regulations that would impact parts of the financial markets and issued eight final and four interim rules.
As part of the Fed initiative to prevent big bank failures, the agency ordered the 19 largest U.S. banks to test their capital levels against another recession with an unemployment rate above 11 percent.
The banks stress-tested their loans, securities, earnings and capital performances versus three possible economic outcomes. The banks submitted the results of their tests last month to the Fed, which will finish the review in March.
Some of the banks include those that plan to hike dividends reduced during the financial crisis. The stress test ensures that banks’ capital bases are strong enough to withstand a double-dip scenario before they begin returning capital to shareholders.
On Thursday also, the House Financial Services Committee held a hearing in which bank regulators queried about the Fed proposal to require debit card issuers to reduce by up to 90 percent the interchange fees. The same issue was tackled in the Senate hearing.
Bernanke and FDIC Chairwoman Sheila Bair opined that a two-tiered system, where smaller banks would be exempt from the interchange fee reduction, might now work because merchants may not accept debit cards from smaller institutions to whom they have to pay higher interchange fees.
View full post on All Stories
Philippine Central Bank keeps key lending rate, hikes inflation forecast
Manila, Metro Manila, Philippines (AHN) – The Central Bank of the Philippines kept overnight borrowing rates at 4 percent and overnight lending rates at 6 percent for the 14th straight policy-setting meeting. At the same time, the bank hike inflation forecast at 4.4 percent for 2011 and 3.5 percent for 2012.
The seven-member Monetary Board reduced in July 2009 the policy rates by 200 basis points to ease the impact of the global financial crisis on the Philippine economy and has kept it at that level since then.
Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr. said that despite the 0.8 percent inflation rate forecast for this year and 0.5 percent increase for next year, the forecasts are still within the 3 to 5 percent target range for the years 2011-2014.
Tetangco explained the higher inflation rate forecast was the result of higher risk to inflation outlook because of anticipated pressures on prices.
In particular, the governor cited risks of higher food prices due to higher global food prices, more expensive rice, weather disturbances that affect agricultural production, higher oil prices and higher electricity rates.
But Tetangco stressed that despite the rise in food inflation, the Philippines is the least affected in the region by global food price shocks because of favorable domestic supply conditions.
In January, the country logged a 3.5 percent inflation rate. With this rate, the Philippines remains as one of the few nations where the real policy rate is still positive at 0.5 percent based on a policy rate of 4 percent and the January inflation rate.
Aside from the Philippines, only Malaysia among emerging and newly industrialized economies enjoys a positive real policy rate of +0.75 percent, while Asian neighbors Hong Kong, India, Indonesia, Singapore, South Korea and Thailand all have negative real policy rate, Tetangco pointed out.
View full post on All Stories
India’s rising inflation fuels speculation its central bank will increase interest rates again
Delhi, India (AHN) – Inflation is putting pressure on India’s economy and threatening the country’s rapid economic growth.
India’s Prime Minister Manmohan Singh warned Friday that India had unsustainable rates of inflation with its general inflation rate running 8.4 percent, while its food inflation rate is at 17 percent.
Singh’s comments caused speculation that India was probably going to increase interest rates again in an attempt to curb inflation. If so, it would mark the eighth time interest rates were increased in 12 months.
India has experienced growth in its gross domestic product of 8.5 percent. India’s growing economy, along with those of other developing nations, has been fueling the global economic recovery.
Increases in food prices and oil prices, along with rising wages, increase the likelihood that India’s central bank will increase interest rates before it meets again on March 17.
However, some analysts expect growth to strengthen to 8.6 percent. In addition, India’s rupee strengthened by 0.4 percent this week to 45.60 per dollar in currency trading
View full post on All Stories
Goldman lifts commodity hopes – notably for crops
The investment bank edges higher its estimate for returns on commodities this year, with prospects for crops particularly improved
View full post on Commodities Stories
Bank talks stuck in deadlock on lending
Landmark reform delayed as Independent Commission on Banking looks to ringfence retail
View full post on UK Business Stories
Despite risk of inflation, Bank of England leaves interest rate at 0.5%
London, United Kingdom (AHN) – The Bank of England’s Monetary Policy Committee (MPC) kept interest rates at 0.5 percent in the United Kingdom for the 22nd month in a row despite rising prices for commodities and the threat of inflation.
The most recent figures for the Consumer Price Index (CPI) showed inflation at 3.3 percent with increases in food prices leading the way. Although the target for the CPI is 2 percent, it remained at or above 3 percent for all of last year.
In addition to leaving the core interest rate where it has been since March 2009, the MPC did not announce any new quantitative easing measures. Quantitative easing is the practice of putting more money into an economy to try to stimulate it
Some critics think the MPC will have to raise the interest rate soon. They say that increases in fuel prices and the VAT at the beginning of the year, coupled with higher prices for imports because of the lower value of the British pound, will result in pushing inflation higher, perhaps pushing the CPI to 4 percent.
However, most economists expected the MPC to leave interest rates alone and not take any new quantitative easing measures. They say that it is important for the MPC to continue on this course until at least mid-year because the economy is still fragile.
View full post on All Stories
Day Trading- Fuji recalls women’s cruiser bicycles over fall hazard
- Get fully automated day trading system
- Wal-Mart reports more sales but lower Q4 profits
- SEC Warns Top Banker of Charges Over Magnetar Deal
- Taco Bell to launch new Dorito shells
- Questions loom as Europe inks new Greek bailout
- Make Easy Money with Automated Forex Trading
- Clock ticking for Egypt’s finances
- Diffa traders hit by Nigerian border closure
- Automated Forex Trading System
- Business loans
- An error has occurred; the feed is probably down. Try again later.
- Trading 101
- Stocks fall Friday amid European downgrade concerns
- U.S. stocks fall as eurozone worries overshadow jobs news
- Stocks up after jobless claims hit 3 1/2-year lows
- Stocks open lower on eurozone deal doubts
- Dow holds strong gains Wednesday after Fed move
- Stocks slide on euro worries; oil trades over $100 a barrel
- Markets open down Friday despite drop in unemployment rate
- U.S. stocks rally Friday ahead of weekend Eurozone summit
- Apple shares drop 5.3% in Germany following news of Jobs’s death
- U.S. considers fraud investigation into Chinese Internet companies
- Internet Money
- Business Credit Information
- Honda widens recall for airbag problem
- GM CEO: Earnings good, but not good enough
- Chinese companies buying automaker Saab
- Suzuki demands VW return shares after alleged contract breach
- Chrysler has best September since 2007
- Honda recalls million cars worldwide
- General Motors to manufacture plug-in Cadillac ELR plug-in hybrid electric car
- GM earnings soar 92 percent on global sales
- Volkswagen postpones MAN supervisory board takeover
-
