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Morning Briefing

Morning Briefing

The top 200 banks in the world made significant progress in the second half of 2014 towards meeting liquidity rules that come into force in 2019, according to a Basel Committee of Banking Supervision report on progress towards the liquidity coverage ratio (LCR) requirement.

However, they still need another €147 billion in safe assets to meet the new rules. In addition, the report found that the 100 largest internationally active banks met the Common Equity Tier 1 (CET1) ratio that is fundamental to the 2019 Basel III rules at the end of 2014.

India's Tata Sons, the holding company for the $109 billion Tata Group, is reported to be the front-runner to acquire GE Capital's stake in SBI Cards — State Bank of India's credit cards business — following GE's decision to exit financial services.

Tata Sons would have to buy a stake in two joint ventures, SBI Cards & Payment Services and GE Capital Business Process Management Services Ltd, with one being the marketing and distribution end of the business and the second handling technology and processing. GE Capital owns 40 percent of SBI Cards & Payment Services and 60 percent of GE Capital Business Process Management Services Ltd.

Meanwhile, the joint venture continues to roll out new products, with the launch of an online specific credit card, SimplyCLICK, on Tuesday in partnership with seven e-commerce players — including Amazon India, BookMyShow, Cleartrip, FabFurnish, Food Panda, LensKart and Ola Cabs.

Major convenience store chains in Japan, including Seven-Eleven Japan and Lawson, are to accept China UnionPay bank and credit cards at all their outlets from next month in a bid to cash-in on the bulk buying habits of Chinese tourists.

The multibillion euro auction of Portugal's Novo Banco has been cancelled after bids from Chinese and US parties were deemed to be too low by Portugal's central bank. Novo Banco is the 'good bank' created out of Banco Espírito Santo.

It is expected that a second auction will be held later this year after Novo Banco's ECB stress tests are released, but it will probably only involve the sale of a minority stake. The second auction could be delayed if market conditions are not favourable.

In Switzerland, UBS and Credit Suisse could be served a reminder that they are being watched by the authorities today when one chamber of the country's parliament is expected to vote on proposed rules for the two global lenders. The rules include a mandatory separation of their risky investment banking units from their other operations.

If passed, the rules would also require the banks to hold the equivalent of 10 percent of their loans and investments as a capital buffer.

Back in India, Reserve Bank of India deputy governor R Gandhi has called on the country's banks to abandon their 'one size fits all' approach to lending, ensure proper structuring of credit facilities and improve their credit appraisal skills for managing asset quality.

Bad loans are a growing problem for India's banking sector, and Mr Gandhi stressed that loan restructuring should focus on reviving accounts, rather than on asset classification and provisioning benefits.

Meanwhile, Indian government data for the current accounts opened under the Jan Dhan Yojna financial inclusion scheme reveals that 43 percent of them do not have any balance, inhibiting the ability of banks involved in the scheme to provide overdraft facilities.

As of midnight last night, Nigerian government departments are required to ensure all financial transactions pass through a single bank account as part of an attempt to stamp out corruption in government spending.

The account is to be managed by the central bank, and estimates suggest that commercial banks will lose $10 billion as a result of the transfer. The country's president, Muhamadu Buhari, gave the order to close the multiple bank accounts, saying he believed government officials had stolen about $150 billion in the past decade.

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