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Morning Briefing

Morning News

As US bank stocks sold off more sharply than the wider market on what was a bad Monday by any standards, analysts were quick to point out that lenders are more resilient than they were at the time of the financial crisis.

In the worst performance of the bank stock index since November 2011, the KBW Bank Index fell by 5.44 percent during a turbulent day of trading that sent the Dow Jones Industrial Average 3.6 percent lower.

"The banks are meaningfully less risky than they were," UBS analyst Brennan Hawken told the Wall Street Journal. As China's stock markets crashed again in early trading today, that resilience can expect further stress tests, of the market variety.

Turbulence of a different kind is the main talking point in the Indian banking sector as the dramatic changes in the quest for financial inclusion present opportunity and anxiety in equal measure. Indian banks are looking over their shoulders at the competition at the moment, as was evidenced when Arundhati Bhattacharya, chairman of State Bank of India, had a dig at the thriving private banks at an Indian banking seminar.

She said the private banks were thriving because of the efforts public sector banks made to support business and infrastructure during and immediately after the financial crisis. "Today why is the private sector growing at 22 percent? Because they are cannibalising the completed projects at low cost because risks have gone down. They may not be able to cannibalise me because I am big. But they are cannibalising the smaller banks," she added.

Ms Bhattacharya also called for Indian banks to come together and discuss ways of improving financial literacy as an essential ingredient in driving financial inclusion.

Speaking at the same seminar, Bank of Maharashtra chairman Sushil Muhnot said India's public sector banks needed to focus on younger digitally active customers, even to the point of launching an entirely separate brand for them.

One would think they should take his advice quickly, as India's newly licensed payments banks are certainly in a hurry to gain market share. Vijay Shekhar Sharma , co-founder of Paytm and its parent company One97 Communications, has confirmed that Paytm is to split in two to best manage its payments bank licence.

One97 will continue to handle Paytm's e-commerce operations, while a new payments arm, Paytm Payment Bank Ltd, will oversee its banking business, including Paytm's mobile wallet. One97, owned by Alibaba, will hold a 49 percent stake in the payments arm, with Sharma will own a majority stake, according to PaymentEye.

Back in the US, but in the world of cards this time, Visa has said that online shoppers using Visa Checkout are 17 percent more likely to complete their transaction than those who use PayPal.

After placing items in their shopping carts online, Visa Checkout said 66 percent of its customers completed their transaction, compared to 49 percent of PayPal's Express Checkout customers.

In Switzerland, AFP reports that the head of the foreign ministry's Directorate of International Law has revealed that thousands of "politically exposed persons" (PEPs) hold Swiss bank accounts. The PEPs categorisation includes heads of state and other senior officials and Switzerland has been embarrassed in the past about the nature of the funds in such accounts. Swiss authorities plan to introduce a law to simplify the process of freezing and unblocking such funds by the end of the year.


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