Tag: Asia Pacific

HSBC names co-heads for Asia commercial banking business, BFSI News, ET BFSI

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SINGAPORE, – HSBC Holdings PLC appointed two executives to run its commercial banking business in Asia Pacific and said its current regional head will lead HSBC UK’s commercial banking business.

In a statement on Monday, HSBC said Amanda Murphy, currently the head of its commercial banking business in the United Kingdom, will lead commercial banking operations in South and Southeast Asia.

Frank Fang, who currently heads commercial banking for Hong Kong and Macau, will continue to lead the businesses in both markets and support clients as they capture opportunities arising from the Greater Bay Area, HSBC said.

Both executives will jointly lead Asia’s commercial banking business.

Stuart Tait, who has been leading Asia Pacific commercial banking, will take up Murphy’s role (Reporting by Anshuman Daga; Editing by Kirsten Donovan)

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Credit Suisse’s Asia decision making to stay in the region after overhaul, BFSI News, ET BFSI

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Credit Suisse‘s key decision making power for Asia Pacific will stay in the region despite the previously separate division being integrated into the bank’s broader structure as part of its new strategy, its regional chief executive said.

The Swiss-based bank last week said Asia Pacific would no longer be a stand alone division and its wealth management and investment banking units would be absorbed into global divisions as part of a paring back of the bank .

The decision has stoked worries from local bankers who fear a loss of autonomy could contribute to the bank’s already declining market share in key investment banking divisions in Asia, two sources said.

“We have always worked together with our global colleagues, whether they are in Europe or the U.S., for example on deals that have required a global solution for clients, and the collaboration across APAC will also continue. Nothing will change on that front,” Helman Sitohang, Credit Suisse’s Asia Pacific chief executive told Reuters on Monday.

Sources said Credit Suisse’s standalone Asia private bank was a differentiator for both customers and bankers.

Under that structure, senior managers usually had leeway to take decisions such as balance sheet lending and staff promotions, unlike many private banks in the region that relied a lot on their headquarters for key approvals.

One source said that despite assurances by management, there were worries that risk taking would be curtailed and the speed of decision making might slow down.

“As a region, we continue to be empowered to make decisions such as those related to market presence, key clients and HR-related matters, and at the same time maintain our speed of decision-making and connectivity to the global infrastructure that certain deals require,” Sitohang said.

For years, Credit Suisse has been one of the most active investment banks in developing markets such as Indonesia and Vietnam, as it won mandates from entrepreneurs and business families, often backed by financing.

Asia Pacific contributes about 20% of Credit Suisse’s global revenue, according to its most recent financial results. Its investment banking market share in Asia Pacific, including Japan, has fallen so far in 2021, according to Refinitiv data.

The bank sits tenth on the announced mergers and acquisition league table with a market share of 3.1%, down from 4.9% for the full year in 2020.

In equity capital markets – a key driver of fee revenue in Asia – it has a 2% market share, down from 3.1%, the figures showed.

Sitohang said Credit Suisse’s Asian investment banking performance had been “difficult because of the various headwinds we have had as a firm globally”, pointing to scandals involving hedge fund Archegos and supply chain financier Greensill.

But he was confident the business could rebound.

“The intent is to come back strongly and regain our market position,” he said.



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Visa invites startups in Asia Pacific to build next generation digital payment capabilities

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Payments major Visa is looking for startups from across the Asia Pacific to join the second cohort of their accelerator program.

“The Visa Accelerator Program focuses on helping startups in Asia Pacific expand their business into new markets with a strong emphasis on identifying commercial opportunities for the startups to collaborate with Visa and its extensive network of bank, merchant and government partners in the region,” it said in a statement on Wednesday.

With increased expectations for digital-first experiences from consumers and businesses, startups in the 2022 cohort will tackle some of the most pressing financial and technological opportunities in Asia Pacific such as simplifying and expanding money movement between consumers, businesses and governments and delivering new innovative payment methods such as digital currencies through the development and adoption of blockchain, it further said.

“As the world transitions from a pandemic to an endemic state, there is great demand for digital-first experiences that shape new thinking around digital currencies and open data. And many startups have developed new innovations to tap these opportunities,” said Chris Clark, regional president, Asia Pacific, Visa.

Applications open on Wednesday and close on January 9, 2022, with the program commencing in mid-April 2022.

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Emerging Asia-Pacific markets incline towards cashless payments, shows McKinsey survey, BFSI News, ET BFSI

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The number of users in emerging markets in Asia-Pacific, which includes India, has increased from 65% in 2017 to 88% in 2021, according to a survey by consultancy firm McKinsey.

The shift to digital banking was likely accelerated by existing trends such as increasing use of digital channels, including banking, broader use of video calls in place of face-to-face meetings, etc. These trends have intensified during the COVID-19 pandemic, and high levels of digital adoption are likely to hold even as the pandemic subsides, the survey suggests.

In emerging markets, FinTech apps and e-wallet penetration reached 54% in 2021, compared with 43% in developed Asia–Pacific. In 2017, the penetration was just 38% in emerging markets.

More than half of the respondents in most Asia–Pacific markets report that cash is used for less than 30% of weekly spending, the survey said.

The survey results indicate that banks can expand their digital offering, by leveraging existing assets. According to McKinskey, banks will need to reinvent its business and delivery models by focusing on three key areas – value of branches, customer engagement, and overall competitive positioning.

Approximately 97% of all Asia–Pacific consumers favour mobile and online banking, and 2% of consumers in developed Asia–Pacific and 3% in emerging Asia–Pacific continue to conduct most of their bank business at the branch.

With digital banking becoming more and more popular, the question of functionalities of bank branches arises. However, despite these numbers, McKinsey says that bank branches will continue to be consumers’ primary partner in managing money. Banks can make sure that branch staff have time to concentrate on activities like advising on loans, insurance, or investments to customers, and digitise other processes, it said.

To further engage customers in digital banking, McKinsey’s research suggests that banks should urge customers to buy banking products online. Even though 70% of respondents expressed openness for using digital channels for services beyond transactions, only 20-30% said they were comfortable to buy online banking products like savings accounts, loans, or credit cards.

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S&P, BFSI News, ET BFSI

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Global ratings agency S&P said has said its base case is that the global banking sector will continue to slowly stabilise as the economic rebound gains momentum and as support is gradually withdrawn. Should a re-intensification of risks occur, this will require more support from public authorities for the real economy.

For 11 of the top 20 banking jurisdictions, S&P estimates that a return to pre-Covid-19 levels of financial strength will not occur until 2023 or beyond. For the other nine, it estimates that recovery may occur by year-end 2022.

Strong support

The strong support by authorities for households and corporates over the course of Covid-19 has clearly helped banks, it said.
Lenders were also well-positioned going into the pandemic after banks bolstered their capital, provisioning, funding and liquidity buffers in the wake of the global financial crisis. S&P Global Ratings expects normalisation to be the dominant theme of the next 12 months as rebounding economies, vaccinations and state measures help banks bounce back much more quickly than was conceivable in the dark days of 2020.

“We see less downside risk for banks as economies rebound, vaccinations kick in and banks feel the stabilising effects of state intervention,” said S&P Global Ratings credit analyst Gavin Gunning.

“With no vaccine in October 2020, we believed at the time that 2021 could be a very difficult year for banks. State intervention on behalf of corporates and households — including significant fiscal and monetary policy support — is working and banks have benefited,” said Gunning.

Improving outlook

S&P’s net negative outlook for the global banking sector improved to 1 per cent in June from 31 per cent in October 2020. As at June 25, about 13 per cent of bank outlooks were negative. This is significantly lower than October 2020 when about one-third of rating outlooks on banks were negative.

Credit losses

Credit losses for Asia-Pacific banks could reach $585 billion by 2022, or nearly double the pre-Covid level raising credit costs for banks, S&P Global had said in June.

The credit costs of the Indian banking system may rise to 2.4 per cent by March 2022, compared to a base case of 2.2 per cent, according to the S&P report, “Intervention Worked: Credit Losses Set To Decline For Most Asia-Pacific Banks”.

“In India and Indonesia, where banks have suffered higher asset distress in recent years, the credit losses are set to trend closer to our expected long-term average in the coming years,” S&P had said.

Moratorium cushions blow

S&P had said moratoriums on loan repayments–together with fiscal, monetary, and policy support–have helped cushion the blow to borrowers in Asia-Pacific from the Covid outbreak and containment measures.

Credit losses are set to fall across most Asia-Pacific banking systems over the next two years, partly because targeted assistance to stretched borrowers will likely continue in many places until pandemic-related challenges substantially abate, it had said.



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Account number issues main reason for failed bank payments, BFSI News, ET BFSI

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Failed payments are estimated to have cost the global economy $118.5 billion in fees, labour and lost business in 2020 according to the latest study from Accuity, a risks solutions company.

The total cost of failed payments regionally was $41.1 billion in EMEA, $33.7 billion in the Americas and $43.7 billion in Asia-Pacific (APAC). The report shows that the average cost of failed payments varied across the globe, depending on the type of organization. Banks spent on average approximately $360,000 in 2020 on failed payments – which includes all fees, labour and costs related to customer attrition – whereas the average corporate firm spent just over $200,000.

What’s a failed payment?

A failed payment is a payment that is rejected by a beneficiary bank or an intermediary bank in the payment flow. Payments can fail for several reasons including inaccurate or incomplete information, data entry issues due to human error or poor reference data and validation tools.

The impact

The study also found that 60% of respondents are losing customers because of failed payments and about 80% of organizations with over 20,000 failed payments per day reported having lost customers as a result. Failed payments have the biggest impact on customer service, with 37% of organizations reporting a severe impact and nearly 50% indicating some impact.

Although fewer than 50% of respondents stated they were actively trying to reduce the number of failed payments, the study found that a failed payments rate of 5% or above was the tipping point that compelled 80% of organizations to act.

Failed payments can result in a major impact on customer service – 50% reported some impact, and 37% reported a severe impact.

Tangible costs such as fees and labour might be easier to measure, but the intangible – including customer relationships – can be more difficult to repair, the study said. The payments market is fiercely competitive, so it is vital for organizations to take greater measures to improve their payments data to reduce their failed payment rate, it said.

The reasons

Account number issues were the cause of one-third of failed payments and inaccurate beneficiary details were the result of another third. Overly manual processes that are prone to human error were among the other reasons. Manual processes introduce human error and slow down the payment process, making it less efficient. Further, one-third of organisations say they still manually validate payment data, and two thirds (66%) find the reduction of manual processes ‘extremely challenging’.



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Banks bulk up in Hong Kong as China business overshadows politics, BFSI News, ET BFSI

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HONG KONG – Some global banks, funds and other financial services providers say they are stepping up hiring in Hong Kong, in a sign the city’s unique position as a financial gateway to China is outweighing concerns about Beijing’s tightening grip over it.

Goldman Sachs Group Inc, Citigroup Inc, UBS AG and other banks are each hiring hundreds of people in the city this year, adding substantially to their existing ranks.

Citigroup, for example, has said it is bulking up its staffing by 1,500 people, including additional headcount and replacements in 2021, double the number of people it hired a year ago.

It has about 4,000 people in the city. A Goldman spokesman said the bank, which has about 2,000 people in Greater China, expects hiring in Hong Kong to be up 20% this year.

The Securities and Futures Commission, Hong Kong’s market regulator, is seeing a rebound in licenses it issues for people involved in asset management, securities and other financial activities, according to data on its website.

The total number of licenses it issued was up 1.7% at the end of March, compared with nine months earlier, and just shy of an all-time peak in 2019.

“Hong Kong has some unique advantages, and it will remain the gateway for many of our local and global clients to access China,” said Kaleem Rizvi, Head of Citi’s Asia-Pacific corporate bank.

Many financial companies slowed hiring last year, after protests against Chinese rule and a new security law imposed on the city to crush dissent by Beijing, as well as the coronavirus pandemic, six bankers, recruiters and other industry executives said.

The increased hiring plans of some major players show that they are now willing to live with the political risks.

“Everyone in the business community I have spoken with welcomes the peace and stability now, compared with the chaos of 2019,” said Weijian Shan, chairman and chief executive of Hong Kong-based private equity group PAG.

To be sure, politics remains contentious and unsettling for some finance professionals, some bankers have said. Some expatriate financial workers have left or considered leaving Hong Kong, along with thousands of residents of the former British colony.

Hong Kong police have asked some banks to hand over account details of opposition activists and politicians arrested under a stringent national security law imposed by Beijing, and the government has threatened jail time for bankers handling assets belonging to media tycoon Jimmy Lai frozen under the new law.

Hong Kong’s financial regulators declined to comment on banks’ hiring plans or some bankers’ disquiet about the political tightening.

CLOSE TO CHINA

Bankers and other financial services professionals interviewed by Reuters said much of the lure of being in Hong Kong comes from the city’s close ties to China and the business it brings.

That business is booming. Flows via the stock connect schemes linking Hong Kong with the Shanghai and Shenzhen exchanges rose to record highs in the first quarter of 2021.

Companies, mostly from mainland China, raised more money through Hong Kong listings in the first five months of this year than they did in the same period of the last four years combined, Refinitiv data shows.

Mergers and acquisitions in Greater China are the highest since 2018.

Anthony Fasso, Asia Pacific chief executive of global asset manager PineBridge Investments, said Hong Kong was adapting to the new realities.

“We believe that Hong Kong will remain a globally competitive international city at the doorstep of one of the largest and fastest growing economies in the world,” Fasso said.

HIRING SPREE

Besides Goldman and Citigroup, Swiss bank UBS hired 200 people in the year through March, which consisted of 20 new full-time staff compared to seven in the previously financial year, a spokesman said.

The bank took on 100 contractors and 80 graduates in the year to March. It was the highest number of graduate recruits to join UBS in more than 10 years. The bank has 2,500 people based in Hong Kong.

HSBC Holdings Plc has said it plans to add 400 staff in Hong Kong this year, part of its plan to recruit 5,000 people in the next five years in the region to wealth management in Asia.

Lok Yim, Hong Kong chief executive of Deutsche Bank AG, said the German bank was also planning on making further strategic hires, after a first quarter that had been its strongest in years.

“We are probably two to three times as busy now as we were late last year,” said Olga Yung, regional director at recruitment firm Michael Page in Hong Kong.



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Pine Labs appoints Marc Mathenz as CFO, BFSI News, ET BFSI

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Pine Labs has appointed Marc Mathenz as the Chief Financial Officer.

Marc is known for scaling and growing international businesses with an entrepreneurial and transformation mindset. He’s known for expanding Fiserv and First Data businesses in the APAC region with strategic M&A, skillful integration. Marc was former MD & CEO of both Fiserv and First Data in APAC and was regional CFO at First Data earlier.

B Amrish Rau, CEO, Pine Labs said, “In this key phase of growth for Pine Labs, I am delighted to welcome Marc Mathenz as the next CFO. Marc takes over the reins from Sameer who has done a great job as CFO and now moves to a new role in Capital Markets for the organisation. Marc is a multidimensional leader with deep financial expertise and will help steer the Pine Labs battleship, which is poised for bigger and better milestones in its journey ahead.”

Rau said, “A great addition to our leadership team as we scale new frontiers in the times ahead. On a lighter note, I knew we had the right fit when Marc picked Moneyball as his favourite movie ever; a willingness to succeed against all odds, that’s a winner’s trait. I wish Marc the best.”

Marc Mathenz, CFO, Pine Labs, said, “I am very excited to be joining Pine Labs at this pivotal point in its journey. As the company sets out to become a merchant and consumer focused payments and fintech market leader across Asia Pacific, I hope that my experience in managing and scaling multi-country and multi-cultural businesses will help Pine Labs accelerate its already steep growth trajectory.”



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Investors decode crypto’s massive slump, BFSI News, ET BFSI

Personal Finance

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Bitcoin has rewarded investors with massive gains all year, but now the cryptocurrency’s famous volatility is back.

The token plunged below $50,000 in Friday trading for its worst week in almost two months as a proposed tax hike for wealthy Americans intensifies an industry selloff.

While the digital token is known for its big price swings, this latest bout has been particularly head-spinning after the all-time high notched on April 14.

Still, talk to investors and analysts and many will say it was a long time coming — with last week’s rally in the satirical Dogecoin and the eye-watering valuation for Coinbase Global Inc. clear signs of market froth.

Here’s what market players are saying about the crypto slump. Comments have been edited and condensed.

Ulrik Lykke, executive director at crypto hedge fund ARK36
“Throughout April, the markets have been slightly overheated due to a large number of margin and leveraged traders. This caused a runup and the correction was only to be expected. In addition, traders’ anxiety and the overall emotional nature of the crypto markets also may have played a role.

“Notably, though, the price of Bitcoin fell only 25% from the recent all-time high and there are reasons to believe the overall trend will remain bullish unless the price drops below $40,000.”

Felix Dian, founder of crypto investment fund MVPQ Capital
“Looking at the previous bull cycle (2016/17), there have been quite a few occurrences when Bitcoin loses momentum and dips below the 100-day moving average. This one was overdue.

“We are actually seeing record subscriptions into our fund this month, from institutional family offices, with many willing to use this as an opportunity to add. Ultimately, strong hands buying will meet the lack of available liquid supply of Bitcoin, triggering a squeeze and further down the road a new retail FOMO wave.”

Jeffrey Halley, senior market analyst for Asia Pacific at OANDA
“The threat of regulation, either directly in developed markets or indirectly via the taxman, has always been crypto’s Achilles’s heel.

“Hopefully, we will hear as many ‘experts’ saying this is a sign of Bitcoin becoming a ‘maturing mainstream asset’ if it falls 10% this weekend, as we do when it rises, or a crypto-exchange chooses to IPO. In the meantime, don’t hate me for being bearish Bitcoin in the near term.”

Nikolaos Panitgirtzoglou, strategist at JPMorgan Chase & Co
“Institutional demand has indeed slowed. I’m not sure what could trigger a re-acceleration of institutional demand. You either need a big announcement like Tesla or simply a correction and clearing of retail froth to incentivise institutional investors to re-enter the market.”

Philip Gradwell, chief economist of Chainalysis, a crypto reasearch firm
“The Coinbase listing was the end of the beginning for crypto. So what do such price movements in the first week of a new phase mean? To be honest, I don’t think they mean that much.

“Prices are still historically high and the fall over the weekend appears to have been a fairly standard reversal after peak prices, which was magnified by three factors. First, the liquidation of a record number of leveraged bets. Second, there had been a build up of Bitcoin on exchanges, which is typical when people are waiting to see if the price will continue to rise or reverse. When it reversed these holders likely rapidly sold. Third, all of this happened in an illiquid weekend market that appeared to have relatively few buyers.”



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