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Home » Retail Banking 2020 Insights » Morning Briefing: China shadow banks appeal for bailout

Morning Briefing: China shadow banks appeal for bailout

Morning News

Irresponsible lending in China's shadow banking system has again come under the spotlight after eleven of the country's shadow banks wrote an open letter to the top Communist party official in the nothern province of Hebei seeking a bailout for Hebei Financing Investment Guarantee Group amid fears of defaults on at least 24 high-yielding wealth management products, the Financial Times reports.

According to a report published earlier this year by financial magazine Caixin, the bankrupt company had guaranteed 50 billion yuan ($7.8 billion) in loans from as many as 50 financial institutions, with over half of the total being accounted for by non-bank lenders.

Banks could be hit for billions in civil claims over rate rigging

The FT also reports that civil claims over the rigging of currency markets could be the next major challenge facing global banks following a legal settlement in a New York court case on Friday that saw nine banks, including Barclays, Goldman Sachs, HSBC and Royal Bank of Scotland agree a $2 billion settlement with thousands of investors affected by currency rigging.

Lawyers involved in the case warned that UK banks could face court cases within months as a result of the ruling with cases also expected to be brought in Hong Kong and Singapore.

Meanwhile, in further evidence that banks' tawdry malpractice continues to haunt them, the Wall Street Journal reports that the US Securities and Exchange Commission (SEC) said Citigroup had agreed to pay almost $180 million to investors in a settlement over allegations that it made false and misleading representations concerning the risks associated with two hedge funds that collapsed in the financial crisis.

Two affiliates of Citigroup — Citigroup Global Markets and Citigroup Alternative Investments -consented to the SEC order without admitting or denying the findings. Elsewhere, it was reported that four traders sacked by Citigroup as part of its investigation into exchange rate rigging are to take unfair dismissal cases against the bank.

Malaysia consumer loan market still growing

In more mundane and, indeed, more welcome news, The Edge reports that Malaysia's consumer loan market is still growing, although at a slower pace than last year.

Datuk Abdul Farid Alias, group president and chief executive officer of Maybank, Malaysia's largest banking group by assets said total loan growth for the entire Malaysian banking industry stood at nine percent so far this year, compared with 10.5 percent in 2014.

India's bank valuations

India's LiveMint has published a chart showing that private banks and even some public sector banks in the country are trading at a premium to their 2004-2007 valuations despite the fact that the economy has deteriorated severely since then.

China Bank enters credit card business

In the Philippines, China Bank is marking its 95th anniversary by launching its first-ever credit cards with the enticing offer that those who are approved for the MasterCard-branded cards by 30 November 2015 will receive a perpetual waiver of annual fees.

KT rolls out new mobile wallet app in South Korea

Finally, KT Corp, South Korea's second-largest mobile carrier, has unveiled a new mobile wallet app that picks the best credit card or discount coupon benefits for users to pay for specific services. The smart wallet, CLiP, organises discounts or instalment payments at designated stores, letting its users know which of their cards would offer the most benefit for a specific payment.

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