Tag: S&P

Index publisher MSCI looking at launch of crypto indexes, BFSI News, ET BFSI

Personal Finance

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Global securities index publisher MSCI is looking at launching indexes for cryptocurrency assets, according to Chief Executive Henry Fernandez, in what would be another step towards mainstream acceptance for digital currencies and the companies trading in them.

Fernandez, speaking at a Clubhouse event organized by venture capital firm Andreessen Horowitz earlier this week, said MSCI has been talking to experts and is aiming to launch crypto indexes.

He gave no details on what assets any index would focus on nor any timeline for their introduction and MSCI later declined a Reuters request to elaborate on his comments.

Companies including Bank of New York Mellon Corp, Mastercard, Visa and Goldman Sachs have taken small steps towards supporting cryptocurrencies but they are still little used in day-to-day life.

In May, the S&P Dow Jones Indices unveiled new cryptocurrency indexes, bringing bitcoin and ethereum to the trading floors of Wall Street. The new indexes, S&P Bitcoin Index, S&P Ethereum Index and S&P Crypto Mega Cap Index, will measure the performance of digital assets tied to them.

Crypto exchange Coinbase Global, of which Andreessen Horowitz is the biggest shareholder, also successfully listed on the tech-heavy NASDAQ in April, as bitcoin hit a record peak.

MSCI has been looking to expand its offerings, with Fernandez saying on Clubhouse the areas of private credit and environmental, social and governance (ESG) held opportunities for the company.

In April, the company launched 20 thematic indexes to help investors bet on “megatrends” in China that are aligned with the Chinese government’s policy goals.

The company publishes popular indexes for global equities and other securities, used by asset managers and investors to guide the allocation of $14.5 trillion in assets globally as of the end of 2020.

Inclusion in its indexes tends to open the door to more funds investing in the asset in question.



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S&P, BFSI News, ET BFSI

Banking & Finance

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

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,” said S&P.

Moratorium cushions blow

S&P 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.

S&P forecasts that credit losses will remain well below its expected long-term average in most countries despite last year’s economic hardship. Credit losses encompass provisioning for expected bad loans, and generally precede charge-offs, the actual write-down of loans that detract from the balance sheet allowances for credit losses

Extended troubles

S&P said the effect of Covid on credit costs in the country will be extended over several years.

“Given the scale of the supports to banks and borrowers, downside risks will stay elevated.

“Besides moratoriums and fiscal support, temporary lenient regulatory and accounting treatment of stressed borrowers will also be lifted over time. And new waves of Covid remain a threat,” it said.

S&P said Asia-Pacific banks should safely avoid a ‘cliff effect’ even as extensive relief measures are progressively removed.

The report said while China‘s banks has taken much of its pandemic-related pain up front, with large credit losses reported in 2020, the fallout is not quite over.

Given the vast size of the country’s banking system, this translates into big numbers, it said.

The report discussed forecast credit losses for the 12 larger banking systems in Asia-Pacific: Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand, Singapore, South Korea, Taiwan, and Thailand.



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Cyber attacks on banks can trigger more rating action, warns S&P, BFSI News, ET BFSI

Banking & Finance

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The banking sector is becoming more exposed to cybercrime after the Covid pandemic accelerated digitalisation and remote working, which can impact ratings, S&P Global Ratings said on Tuesday.

Cyber attacks can harm credit ratings mainly through reputational damage and potential monetary losses, the ratings agency said in a report titled ‘Cyber Risk In A New Era: The Effect On Bank Ratings.’

Banks and other financial institutions are attractive targets for cyber criminals because they possess valuable personal data and play a critical role in servicing particular financial or economic needs and segments.

“Cyber attacks have had only a limited effect on bank ratings to date but can trigger more rating actions in the future as cyber incidents become more frequent and complex,” said Credit Analyst Irina Velieva.

Weak governance

Institutions with weak risk governance are less prepared for, and therefore more vulnerable to cyber attacks, it said.

“Although it is crucial to learn from previous attacks and strengthen cyber-risk frameworks in real time, the appropriate detection and remediation of attacks takes precedence because the nature of threats will continue to evolve,” S&P said cyber defence will become an increasingly important part of entities’ general risk management and governance frameworks, in need of increasing spending and more sophisticated tools.

“We acknowledge, however, that this might not be straightforward for many entities, especially the ones with weaker risk-control frameworks and insufficient budget allocated for cyber defence.”

Threats to banks

According to RBI’s annual report for 2019-20, the amount involved in banking frauds grew 2.5 times to Rs 1.85 lakh crore in 2019-20 compared with Rs 71,500 crore in 2018-19.

The internet banking system works through a wide set of applications, networking devices, internet service providers, and many other entities. All of these are potential entry points for attackers.

Several banks and financial establishments use third-party services from other merchants and fintechs. If those outsider merchants don’t have appropriate security set up, the bank could land in a soup.

Under spoofing, hackers find a way to imitate a financial institutions’ website’s URL with a website that looks and functions the same. When customers enter their login data in an impersonated website, the data is then taken by the cybercriminals to utilise it later.

Cybercriminals can utilise a person’s personal and financial data and commit fraud. A privacy breach in a bank can also lead to the information of the bank’s customers being sold or purchased on the dark web by other cybercriminals.



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Wall Street drops as big banks fall after results, BFSI News, ET BFSI

Personal Finance

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By Devik Jain and Medha Singh

– Wall Street‘s main indexes dropped on Friday, weighed down by losses in major U.S. lenders after their earnings reports, while incoming President Joe Biden’s $1.9 trillion stimulus plan also sparked fears of an increase in corporate taxes.

Shares of JPMorgan Chase & Co, Citigroup Inc and Wells Fargo & Co, which had seen a strong rally in the run-up to earnings, were all down even as the banks posted better-than-expected fourth-quarter profits.

JPMorgan fell 2.2% following a seven-day winning streak that had pushed the stock about 12% higher.

The S&P 500 banks index shed 3.3%.

Wall Street’s main indexes are set to wrap up the week lower after climbing to record highs recently on bets of a hefty fiscal package and optimism about vaccine distribution.

Also weighing on markets was a Washington Post report that said COVID-19 vaccine reserve was already exhausted when the Donald Trump administration vowed to release it this week, dashing hopes of expanded access. (https://wapo.st/2MZoiwa)

“It’s a concern of the vaccine and maybe, to a lesser extent, the Biden spending plan that he outlined last night,” said Paul Nolte, portfolio manager at Kingsview Investment Management in Chicago.

“It’s more of a healthy correction to some of the advances that we’ve seen in the market.”

Biden’s stimulus proposal, unveiled on Thursday, includes some $1 trillion in direct relief to households and has sparked fears that the government would need to hike corporate taxes to fund the spending.

“Biden’s concern is not the stock market, his concern is Main Street and that’s a good thing … but that tells you there’s going to be an increase in corporate taxes,” said Dennis Dick, proprietary trader at Bright Trading LLC in Las Vegas.

Meanwhile, data showed a further decline in U.S. retail sales in December – the latest sign the economy lost considerable speed at the end of 2020.

Nine of the 11 major S&P sectors fell, with energy, financials and industrials posting the steepest declines after leading markets higher in the recent rally.

The defensive utilities and real estate were the only sectors trading higher.

At 11:39 a.m. ET, the Dow Jones Industrial Average fell 135.21 points, or 0.44%, to 30,856.31, the S&P 500 lost 18.40 points, or 0.48%, to 3,777.14 and the Nasdaq Composite lost 60.55 points, or 0.46%, to 13,052.08.

Earnings for S&P 500 companies are expected to decline 9.5% in the final quarter of 2020 from a year ago, but are expected to rebound in 2021, with a gain of 16.4% projected for the first quarter, according to IBES data from Refinitiv.

Exxon Mobil Corp fell 3.6% after a report said the U.S. Securities and Exchange Commission launched an investigation of the oil major, following a whistleblower’s complaint that the company overvalued a key asset in the prolific Permian shale oil basin.

Spotify Technology SA dropped about 5% after Citigroup downgraded its shares to “sell”.

Hewlett Packard Enterprise Co rose 1% after J.P. Morgan upgraded the enterprise software maker’s stock to “overweight”.

Declining issues outnumbered advancers by a 2.8-to-1 ratio on the NYSE and by a 2.9-to-1 ratio on the Nasdaq.

The S&P 500 posted 5 new 52-week highs and no new lows, while the Nasdaq recorded 180 new highs and eight new lows.



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