Tag: Reuters

Foreign holdings of Chinese bonds jump in September as policy easing seen, BFSI News, ET BFSI

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Global bond investors bought Chinese government bonds (CGBs) in September at the fastest pace since January ahead of their inclusion in a major global index and as investors raised bets for policy easing to support slowing economic growth.

Offshore bondholders held CGBs worth 2.28 trillion yuan ($354.26 billion) at the end of September, according to data released on the weekend by China Central Depository & Clearing Co.

That was a record, and up 3.5% from a month earlier according to Reuters calculations, the biggest percentage increase since January.

The rise comes despite concern among global bondholders of possible contagion risks from a debt crisis at cash-strapped developer China Evergrande Group that has driven Chinese high-yield spreads to their widest level on record.

Indeed, some investors see an upside for Chinese sovereign debt as authorities take steps to stabilise slowing growth and ease pressure on a weak real estate market.

“I think policy in China is way too tight. I think it will get tighter as people reassess credit risk in China and that’s why the economy is slowing down sharply,” said Ariel Bezazel, head of fixed income strategy at Jupiter Asset Management.

“We think that the yield curve will shift down, and probably shift down quite dramatically as the Chinese authorities have to cut rates pretty aggressively,” he said, adding that he “wouldn’t be surprised” if the Chinese yield dipped below 2% in the next year.

The yield on China’s benchmark 10-year bond stood at 2.905% on Monday.

This month will see the start of the inclusion of China in the FTSE Russell WGBI index, which could see large amounts of passive investments flow into China’s debt markets, though Japan’s Government Pension Investment Fund (GPIF) has said it will not invest in the bonds.

($1 = 6.4360 Chinese yuan) (Reporting by Andrew Galbraith in Shanghai and Alun John in Hong Kong; Editing by Kim Coghill)



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London court orders Binance to trace cryptocurrency hackers, BFSI News, ET BFSI

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LONDON -London’s High Court has ordered Binance, one of the world’s largest cryptocurrency exchanges, to identify hackers and freeze their accounts after one user said it was the victim of a $2.6 million hack.

In a judgment made public this week, a High Court judge granted requests by artificial intelligence (AI) company Fetch.ai for Binance to take steps to identify the hackers and track and seize the assets.

While involving a relatively small sum, the case is one of the first public ones involving Binance and will be a test of the English court system’s ability to tackle fraud on cryptocurrency platforms.

“We can confirm that we are helping Fetch.ai in the recovery of assets,” a Binance spokesperson said.

“Binance routinely freezes accounts that are identified as having suspicious activity occurring in line with our security policies and commitment to ensuring that users are protected while using our platform.”

Binance, which has an opaque corporate structure, has faced intense regulatory scrutiny amid a worldwide crackdown on cryptocurrencies over concerns that such exchanges could be used for money laundering or to allow consumers to fall victim to scams or runaway bets.

Binance has said it is committed to complying with appropriate local rules wherever it operates and has expanded its international compliance team and advisory board.

“We need to dispel the myth that cryptoassets are anonymous. The reality is that with the right rules and applications they can be tracked, traced and recovered,” Syedur Rahman, a partner at Rahman Ravelli, which is representing Fetch.ai, told Reuters.

Fetch.ai, which is incorporated in England and Singapore and develops AI projects for blockchain databases, alleges fraudsters hacked their way into its cryptocurrency accounts on the Binance exchange on June 6.

Unable to remove the assets because of account restrictions, they allegedly sold them to a linked third party at a fraction of their value in under an hour.

Rahman said Binance, which had notified Fetch.ai of unusual activity in its account, had already frozen a sum and had indicated it would comply with the orders. The claimants will have to prove they are victims of fraud before seeking a recovery order.

“We have been working closely with Binance and local enforcement to obtain details about the hacker,” Fetch.ai said in an emailed statement. “Issuing a court order for the release of this information is a standard process.”

(Reporting by Kirstin RidleyEditing by Mark Potter and Richard Chang)



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Chinese crypto addresses sent $2.2 billion to scams, darknets in 2019-2021 -report, BFSI News, ET BFSI

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NEW YORK – Chinese cryptocurrency addresses sent more than $2.2 billion worth of digital tokens to addresses tied to illegal activity such as scams and darknet operations between April 2019 and June 2021, according to a report from blockchain data platform Chainalysis released on Tuesday.

These addresses received $2 billion in cryptocurrency from illicit sources as well, making China a large player in digital-currency related crime, it added. The report analyzes China’s cryptocurrency activity amid government crackdowns.

However, China’s transaction volume with illicit addresses has fallen drastically over the two-year period in terms of absolute value and relative to other countries, Chainalysis said. The big reason is the absence of large-scale Ponzi schemes such as the 2019 scam involving crypto wallet and exchange PlusToken that originated in China, it noted.

Users and customers lost an estimated $3 billion to $4 billion from the PlusToken scam.

The vast majority of China’s illegal fund movements in crypto has been related to scams, although that has declined as well, the Chainalysis report said.

“This is most likely because of both the awareness raised by PlusToken, as well as the crackdowns in the area,” said Gurvais Grigg, global public sector chief technology officer at Chainalysis, in an email to Reuters.

The report also cited trafficking out of China in fentanyl, a very potent narcotic pain medication prescribed for severe pain or pain after surgery.

Chainalysis described China as the hub of the global fentanyl trade, with many Chinese producers of the drug using cryptocurrency to carry out transactions.

Money laundering is another notable form of crypto-based crime disproportionately carried out in China, Chainalysis said.

Most cryptocurrency-based money laundering involves mainstream digital currency exchanges, often through over-the-counter desks whose businesses are built on top of these platforms.

Chainalysis noted that China appears to be taking action against businesses and individuals facilitating this activity.

It cited Zhao Dong, founder of several Chinese OTC businesses, pleading guilty in May to money laundering charges after being arrested last year.



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Mastercard submits new audit to India after ban over data handling, BFSI News, ET BFSI

Banking & Finance

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Mastercard has submitted a new audit report to India’s central bank, it told Reuters, as it seeks to overturn a ban on card issuance linked to concerns over the U.S. giant’s handling of data processed abroad.

The Reserve Bank of India (RBI) on July 14 sent panic-waves through Indian banking partners by announcing a ban, effective from July 22, to prevent the U.S. giant from issuing new cards. It cited non-compliance with 2018 rules that required it to store payments data only in India.

The RBI imposed the ban after deciding a “system audit report” submitted by Mastercard’s auditor Deloitte in April was unsatisfactory, three sources familiar with its decision-making said, asking not to be named because of the sensitivity of the issue. Two of the sources said the RBI was reviewing the new report.

In a statement to Reuters, Mastercard said Deloitte performed a “supplemental audit” and a new report was submitted on July 20 to the RBI, six days after the ban was announced.

“We look forward to continuing our conversations with the RBI and reinforcing how seriously we take our obligations. We are hopeful that this latest filing provides the assurances required to address their concerns,” it said.

Deloitte declined to comment, citing confidentiality obligations. The RBI did not respond to a request for comment.

The sources said the RBI was concerned Deloitte’s audit did not clearly state how long Mastercard took to purge Indians’ card data that is processed abroad before being stored locally.

India’s 2018 rules do not restrict where the data is processed, but for “unfettered supervisory access”, the RBI mandates that within a day the data – including transaction details and amount – should be stored domestically.

Mastercard in 2018 said it had started storing data at a facility in India’s western city of Pune to comply. But it still processes a part of each Indian transaction through data centres abroad, and later transfers and stores that data in Pune, one of the sources said.

The RBI has given no details beyond a seven-line statement announcing the ban. The details of RBI’s concern with Deloitte’s submissions have not previously been reported.

American Express, whose Indian presence is much smaller than that of Mastercard and Visa, has also has been banned from issuing new cards since April for violating the 2018 rules.

A fourth person with direct knowledge of the matter said the RBI had given Mastercard multiple extensions to submit clarifications and RBI only issued the ban when Mastercard asked for more time when an extension to July 9 lapsed.

Mastercard did not comment on the extension and the situation in Pune.



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All you need to know about the potential privatisation of 4 mid-sized banks, BFSI News, ET BFSI

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Share prices of Bank of India, Bank of Maharashtra, Indian Overseas Bank and Central Bank of India rallied more than 10 percent each in early trade on Tuesday amid reports that the government may privatise these banks.

Government has shortlisted these four mid-sized state-run banks for privatisation, under a new push to sell state assets and shore up government revenues, three government sources said. Two of those banks will be selected for sale in the 2021/2022 financial year which begins in April, the officials said. The shortlist has not previously been reported.

The government is considering mid-sized to small banks for its first round of privatisation to test the waters. In the coming years it could also look at some of the country’s bigger banks, the officials said.

Bank of India has a workforce of about 50,000 and Central Bank of India has 33,000 staff, while Indian Overseas Bank employs 26,000 and Bank of Maharashtra has about 13,000 employees, according to estimates from bank unions.

PM Modi’s office initially wanted four banks to be put up for sale in the coming fiscal year, but officials have advised caution fearing resistance from unions representing the employees. The actual privatisation process may take 5-6 months to start, one of the government sources said.

To facilitate the privatisation of public sector banks, the government is likely to bring amendments to two legislations later this year. Amendments would be required in the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 for privatisation, sources said.

The government hopes that the Reserve Bank of India, the country’s banking regulator, will soon ease lending restrictions on Indian Overseas Bank after an improvement in the lender’s finances that could help its sale.

“The government should consider what gives it a better pricing without compromising its long-term goal of financing the growing Indian economy,” said Devendra Pant, chief economist at India Ratings, the Indian arm of Fitch ratings agency.

(With Inputs from Reuters)



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