Tag: ubs

UBS picks ex-Morgan Stanley chief as next chairman, BFSI News, ET BFSI

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Geneva, Nov 20, 2021 -Swiss banking giant UBS on Saturday said its board had nominated former Morgan Stanley president Colm Kelleher as its next chairman, replacing Axel Weber after a decade in the role.

“The board of directors of UBS Group AG will nominate Colm Kelleher as new chairman … for election to the board at the annual general meeting on 6 April 2022,” the bank said in a statement.

If elected, Kelleher, a 64-year-old Irishman, will succeed Axel Weber, a former Bundesbank chief who took over the chairmanship at Switzerland’s largest bank in 2012.

Weber “will have reached the maximum term limit after 10 yeas in office and will thus not stand for re-election,” UBS said.

Weber said Kelleher, who retired from his post as Morgan Stanley president in June 2019 after three decades at the US investment bank, was the right man for the job.

“With Colm Kelleher’s nomination, UBS is pleased to propose a board member and future chairman who has a deep understanding of the global banking landscape,” Weber said in the statement.

“His more than 30 years of leadership experience in banking and excellent relationships around the world make Colm an ideal fit for UBS.”

Ralph Hamers, who took over as UBS chief executive a year ago, also said Kelleher would bring “valuable expertise in banking to the board, and I’m looking forward to working with him to further shaping the future of UBS.”

Kelleher himself said he was looking forward to working with the UBS team, and that “being able to help shape the bank’s future is a great privilege.”

Also on Saturday, the UBS board nominated Lukas Gahwiler, chairman for its Switzerland division, to the position of global vice chairman.

nl/pbr

UBS GROUP AG

MORGAN STANLEY



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UBS revises GDP forecast to 9.5% from 8.9% for FY22, BFSI News, ET BFSI

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Mumbai, Nov 17 (PTI) Citing faster-than-expected recovery, rising consumer confidence and the resultant spending spike, Swiss brokerage UBS Securities has revised upwards its growth forecast for the current fiscal to 9.5 per cent from 8.9 per cent in September. The brokerage also sees the economy clipping at 7.7 per cent in FY23 but moderating to 6 per cent in FY24, as it expects the benefit of the low-interest rate regime to end by the end of FY23, and it sees the central bank hiking policy rates by 50 bps in the second half of the next fiscal.

The Reserve Bank also forecasts 9.5 per cent GDP growth this fiscal while the average projection ranges from 8.5 to 10 per cent. The government projection is around 10 per cent.

The GDP grew 20.1 per cent in the June quarter of FY22.

In its September review, UBS said on a seasonally adjusted sequential basis, the real GDP declined by 12.4 per cent in the June quarter against the -26 per cent in the same period last year.

Therefore, we maintain the base case estimate of GDP growth at 8.9 per cent in FY22 compared to the consensus of 9.2 per cent against the deeper 7.3 per cent contraction in FY21, UBS Securities said.

The economy is bouncing back on progressive reopening, and the recovery from the second wave has been more pronounced than what we anticipated, Tanvee Gupta Jain, the chief economist at UBS Securities India said on Wednesday. Therefore pencilled in a higher-than-expected GDP run this fiscal.

Without giving an exact number, she said the economy will grow by 9-10 per cent in Q3 and 6-6.5 per cent in Q4 this fiscal, leading to higher overall full-year growth.

Gupta-Jain told reporters in a concall that she sees real GDP clipping at 9.5 per cent this fiscal, up from 8.9 per cent forecast earlier, 7.7 per cent in FY23 — which is more optimistic than the consensus 7.4 per cent for the year, but the growth momentum will moderate to 6 per cent in FY24 as the output gap will remain negative amidst the global growth engine slowing down.

Their optimism comes from their internal UBS India Activity Indicator data, which suggest economic activity has improved sequentially by an average of 16.8 per cent in the September quarter after contracting 11 per cent in the June quarter. Even for October, the indicator was up 3.1 per cent month-on-month on the festive demand bounce.

The brokerage bases the more-than-consensus growth optimism on the following: though consumption growth may moderate measures to boost public Capex and early signs of a recovery in the residential real estate sector may offset some of the adverse impacts.

Similarly, exports could also moderate next year from the very high rates this year due to a shift from goods to service consumption at the global level as the pandemic recedes.

They also see a potential credit accelerator effect in the country aiding the recovery. The baseline assumption is that activity continues to normalise, and remaining mobility restrictions are gradually removed.

Downside risks to the outlook include the following: a mutant virus that is resistant to vaccines is the biggest downside risk, as it may leave the government no choice but to begin new mobility restrictions, another could be a more than the expected spike in inflation and the resultant hike in repo rates to the tune of 75 bps next fiscal. If both materialise, then FY23 growth will be much lower at 5 per cent, she said.

And the upsides would be a successful and timely implementation of the recently announced structural reforms boosting growth beyond our baseline forecast, which will also lead to the economy closing the output gap faster.

According to the brokerage, potential growth has slowed to 5.75-6.25 per cent currently compared to over 7 per cent in 2017, due to longer-than-expected disruption caused by the pandemic and balance sheet concerns faced by economic agents.

Beyond FY22, Gupta-Jain believes Capex, especially infrastructure spending, manufacturing and exports will be the next key growth drivers.

On inflation, she expects CPI to decelerate to 4.8 per cent in FY23 from 5.4 per cent in FY22, assuming the RBI gradually starts unwinding its ultra-easy policy as the economic recovery gains momentum. In a base case scenario, she expects a policy rate hike of 50 bps in H2 FY23.

On the fiscal front, she expects the government to remain committed to fiscal consolidation and narrow the deficit to 8.8 per cent in FY23 from 10.1 per cent in FY22.



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Foreign brokerages not so bullish, market correction in the offing?, BFSI News, ET BFSI

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NEW DELHI: Foreign brokerages are downgrading Indian markets for being extremely expensive based on traditional valuation metrics, when compared to peers such as China and Japan in Asia.

The NSE Nifty is up 30 per cent in 2021 so far, while the BSE sensex is up 28 per cent, driven by financials, utilities, industrials and consumer discretionary stocks even as the broader MSCI Asia Pacific ex-Japan index has largely remained flat.

On Monday, Nomura downgraded India’s equity markets to neutral from overweight due to expensive equity valuations.

The Japanese brokerage firm prefers allocating to China and other Asean countries that have underperformed India in 2021. The brokerage feels while the upside is already priced in, headwinds could emerge that will prove to be risky in the future.

Nomura said 77 per cent of domestic stocks in the MSCI index are trading higher than pre-pandemic or post 2018 average valuations.

“We now see an unfavourable risk-reward given valuations, as a number of positives appear to be priced in, whilst headwinds are emerging. We, thus, downgrade India to neutral in our regional allocation and will look for better entry points given our still-constructive medium term view. We like China (significant under-performer seeing stabilising sentiment) and Asean (tactically laggard reopening play),” said equity strategists Chetan Seth and Amit Phillips in a note.

Ironically, in February Nomura had upgraded India to overweight, citing fiscal activism and declining Covid-19 cases.

“However, we think these positives are now adequately reflected in current valuations – that appear rich not only on absolute basis but also on relative basis. Even on two-year forward price-to earnings (PE) basis (incorporating India’s strong earnings outlook), India is trading at record high elevated premium relative to regional markets,” the analysts added.

What are the biggest risks for India?Elevated commodity prices, sticky core inflation and tentative signs of slowdown in demand are among the biggest risks for India.

Analysts at Nomura think if the current trend in prices of natural gas, crude, coal and electricity continue till the end of the calendar year, and increase by around 5 per cent till March 2022, then the potential impact on consumer price inflation (CPI) would be around 1 per cent.

Nomura not the only one

Nomura is not the only one advising clients to cut allocations to India. Last week, brokerage UBS echoed similar views and said India has become “unattractive” due to “extremely expensive” valuations when compared to the Asean countries.

The brokerage also said that earnings momentum is fading in India and there is less scope for an economic rebound this year, even as domestic stocks have outperformed markets like Indonesia by 31 per cent year-to-date.

Low real yield and expensive currency suggest some vulnerability for India in the tapering environment.

“India, like Taiwan, looks very poor on our scorecard framework. The relative valuation of India to Asean, two areas with similar growth dynamics and occasional perceived macro vulnerabilities, looks too wide to justify,” it said.

A Bank of America survey that was released last week showed global fund houses are underweight on emerging markets and want to cut exposure in the next 12 months, citing inflationary risks.

Global fund managers’ allocation in October to emerging market equities fell to the lowest level since September 2018, while allocation to US equities increased to the largest since November 2020.

In a newsletter titled Greed & Fear, Christopher Wood, the global head of equity strategy at Jefferies, has said India’s overweight position looks ‘vulnerable’.

What is triggering the market correction?

Rising fuel prices, inflation and high valuations are now triggering a correction in the market after months of record rallying.

While the sensex is down 1 per cent in the last five days, slipping below the 61,000-mark, the Nifty also slipped below 18,000 as experts are starting to caution investors because of stretched valuations and the impact of inflation on corporate earnings.

The BSE sensex last touched an all time high of 62,245 on October 19, but since then it has declined by 2 per cent.

More such calls for reduction of allocation to India is likely to result in further outflow of funds and a deeper correction in the markets.

Foreign portfolio investors (FPIs) have already turned net sellers by pulling out Rs 3,825 crore in October so far. FPIs had been net buyers for two consecutive months and had invested Rs 26,517 crore in September and Rs 16,459 crore in August.



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Top global banks crash crypto party, invest heavily in blockchain, currency firms, BFSI News, ET BFSI

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Despite being very vocal about how bad Bitcoin supposedly is, top global can’t ignore the potential revenue streams and importance of having a strong strategic position in the crypto economy.

Most major banks including Standard Chartered, Barclays, Citigroup, Goldman Sachs are investing in crypto and blockchain-related companies in 2021.

Out of the top 100 banks by assets under management, 55 have invested in cryptocurrency and/or blockchain-related companies. Either directly, or through subsidiaries, according to Block Data.

The most active investors based on the number of investments in blockchain companies are Barclays (19), Citigroup (9), Goldman Sachs (8), J.P. Morgan Chase (7) and BNP Paribas (6).

The investors active in the biggest funding rounds are Standard Chartered ($380 million in 6 rounds), BNY Mellon ($320.69 million in 5 rounds), Citigroup ($279.49 million in 9 rounds), UBS Group ($266.2 million in five rounds) and BNP Paribas ($236.05 million in 9 rounds).

Where are they investing?

About 23 of the top 100 banks by assets under management are building custody solutions, or investing in the companies that provide them.

Custodians offer financial services to look after their clients’ funds, for a fee. They either build their own technology to offer this service, or use a technology provider whose solutions they can integrate into their own systems.

Why are banks investing in cryptos

Seeing cryptocurrency exchanges with a fraction of their staff become substantially more profitable or valuable than many banks. This started as early as 2018, when Binance, the leading exchange at the time, recorded $54 million more profit than Deutsche Bank, with just 200 vs 100,000 employees. More recently, Coinbase’s valuation was higher than Goldman Sachs, with just 4% of their employees.

Countless requests from their clients to provide Bitcoin solutions along with a change in regulations in 2020 that allows banks to offer crypto custody solutions is also among the reasons for banks to turn to cryptos.

The investments

Standard Chartered has invested $380 million via 6 rounds in firms including blockchain network Ripple, whose XRP token has a capitalisation of around $48 billion. It’s also an investor in Cobalt, a trading technology provider based in the UK. BNY has put money in Fireblocks, whose platform allows financial institutions to issue, move and store cryptocurrencies.

Citibank has invested $279 million in 9 rounds. It has put money in SETL, whose ledger technology is used to move cash and other assets.

UBS, with $266 million and 2 rounds, is an investor in Axoni, whose technology is used to modernize infrastructure in capital markets.

BNP Paribas has invested $236 million in 9 rounds and was developing real-time trade and settlement applications using smart contracts based on the DAML programming language with Digital Asset.

Morgan Stanley with $234 million with 3 investments has invested in NYDIG, a crypto custody firm and the bitcoin subsidiary of Stone Ridge, a $10 billion alternative asset manager.

JP Morgan Chase has bet $206 million via seven rounds and has investments in ConsenSys, an ethereum software company.

Goldman Sachs has put $204 million through eight investments, and its investee firms include Coin Metrics, a provider of blockchain data to institutional clients.

MUFG has put $185 million in six investment rounds in firms including Coinbase, the US cryptocurrency exchange that went public in April, and in Bitflyer, a Tokyo-based cryptocurrency exchange.

ING has bet $170 million spread across 6 investments and has backed HQLAx, a blockchain liquidity management platform.



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Global big banks plot back-to-office plans as vaccines roll out, BFSI News, ET BFSI

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The biggest banks in the world plan to re-open their offices, emboldened by aggressive vaccination drives and falling COVID-19 cases in major financial hubs, after sending most employees home early last year to help stem the spread of the coronavirus.

Banks globally are adopting different methods to ensure a successful back-to-office plan including hybrid working models and vaccination drives.

Here is the state of play with back-to-office plans in various regions:

UNITED STATES

Wells Fargo & Co

The bank said in March it plans to start bringing workers back to its offices after Labor Day due to the increasing availability of vaccines. The company is evaluating whether to allow certain businesses or functional subgroups in the U.S. to return to the workplace before Labor Day.

Goldman Sachs Group Inc

The bank planned to bring U.S. employees back to the office by mid-June.

JPMorgan Chase & Co

The largest U.S. bank will bring its employees in the United States back to the office on a rotational basis from July and plans to maintain a 50% occupancy cap during the return-to-office phase.

The bank also plans to step up the return of all of its employees in England to working at least part of their week in its offices from June 21.

Citigroup Inc

CEO Jane Fraser said in a memo in March that post-pandemic, most of the employees would be able to work in a “hybrid” setting, allowing them to work from home for up to two days a week.

Morgan Stanley

The bank’s chief executive officer, James Gorman, said if most employees are not back to work at the bank’s Manhattan headquarters in September, he will be “very disappointed”.

Gorman said his bank’s policy will vary by location, noting the firm’s 2,000 employees in India will not return to offices this year.

The bank’s staff and clients will not be allowed to enter its New York offices if they are not fully vaccinated, according to a source familiar with the matter. Employees, clients, and visitors will be required to attest to being fully vaccinated to access the bank’s offices in New York and Westchester, the source said.

Bank of America Corp

The lender expects all of its vaccinated employees to return to the office after Labor Day in early September, and will then focus on developing plans to bring back unvaccinated workers to its sites, Chief Executive Officer Brian Moynihan told https://bloom.bg/3gyALn3 Bloomberg News in an interview.

UNITED KINGDOM

Barclays

CEO Jes Staley has said the bank will adopt a hybrid working model and will reduce its real estate footprint but maintain its main offices in London and New York.

HSBC Holdings

HSBC has said it plans to cut its global office footprint by around 40% as it moves to a hybrid working model for most employees. The lender moved 1,200 call center staff in Britain to permanent home working contracts, Reuters reported in April, going further than some rivals in cementing changes to working patterns.

Lloyds Banking Group

Britain’s biggest domestic bank is hoping to resume office-based trials and experiments with around 5,000 of its staff this summer, once government restrictions allow. The lender has said it plans to cut 20% of its office space over two years.

Standard Chartered

StanChart said it will make permanent the flexible working arrangements introduced during the pandemic, and that it could cut a third of its office space in the next three to four years.

NatWest

CEO Alison Rose has said the bank is likely to adopt a hybrid working model, but has stressed offices will remain important as a place to bring people together to collaborate.

GERMANY

Deutsche Bank

Deutsche Bank in London plans to bring more staff back from June 21, assuming the city’s lockdown restrictions are loosened, according to a person with knowledge of the matter.

Germany’s largest lender has also told its investment bankers in the U.S. that it expects them to resume working from office no later than Labor Day, according to a memo seen by Reuters. The bank earlier said it was following a regional approach to the pandemic and return to the office issues, reflecting the different situations in individual countries.

SWITZERLAND

Credit Suisse

Credit Suisse in July 2020 launched a global program evaluating various work-from-home options, which are expected to shape its post-pandemic working models. It has been monitoring and adapting work arrangements since launching work-from-home globally in March 2020, taking into account local guidelines.

UBS

UBS Chairman Axel Weber in May said flexibility would remain part of work arrangements at Switzerland’s biggest bank going forward, where roles allow. Return to office plans vary from region to region, in accordance with local government guidelines.

CANADA

Royal Bank of Canada, the country’s largest lender, is exploring a flexible and hybrid work arrangement to bring its employees back to the office, Chief Executive Officer David McKay said.

Source: Company statements, memo, sources (Reporting by Noor Zainab Hussain and Niket Nishant in Bengaluru, Iain Withers and Lawrence White in London, Tom Sims in Frankfurt and Oliver Hirt in Zurich, and Matt Scuffham and Elizabeth Dilts Marshall in New York; Editing by Anil D’Silva and Ramakrishnan M.)



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SBI, ICICI, Axis are UBS’ top banking picks, BFSI News, ET BFSI

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Mumbai: UBS expects banks to report muted loan growth and a 25-50 basis point increase in non-performing loans in the first quarter.

Ahead of the start of the earnings season, the brokerage said unsecured loans and loans against property are the most important segments for the private sector players.

The brokerage prefers banks with greater provision buffers and has a buy rating on SBI, ICICI Bank, and Axis Bank.

Kotak Mahindra Bank and Punjab National Bank are the least preferred names. UBS has a sell rating on both the banks and has a neutral stance on Federal Bank, IndusInd , HDFC Bank and Bank of Baroda.

“While we expect a gradual recovery in economic growth, a sustained economic slowdown could impact the banking and finance sector on several fronts – this may lead to a slowdown in credit, increase NPL risk, impact fee income and exert pressure on NIM,” said UBS.

The brokerage said competition from other financial savings products such as mutual funds, insurance, could slow deposit accretion for banks, leading to intense competition for deposits, which, in turn, could put pressure on margins of banks growing loans faster than the industry.

“Provisions could be higher than expected if the economic slowdown due to Covid-19 is extended further or the NPL resolution process is extended and haircuts are higher than our current estimates,” said the UBS report.



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Global banks in Hong Kong push to get staff back to office, BFSI News, ET BFSI

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By Kane Wu and Scott Murdoch

HONG KONG – Global banks are moving faster in Hong Kong to get staff back to office versus in other major centres, given fewer daily COVID-19 cases in the Asian city, and are offering incentives such as onsite vaccinations and days off to encourage inoculation.

Morgan Stanley has more than 70% of its staff back at their desks in the Asian financial hub, while 60%-70% of Credit Suisse employees are in their office，said people who work there. A Citigroup spokesman said 75% of the bank’s staff were in the workplace in Hong Kong.

JPMorgan plans to reach 75% office occupancy in the coming weeks and Bank of America, which until recently had most of its staff working from home, aims to reach full capacity by end-June, their bankers said.

Morgan Stanley, Credit Suisse, JPMorgan and Bank of America declined to comment.

At UBS, up to 60% of its Hong Kong workforce were back in the office, a spokesman told Reuters.

At these levels, occupancy at the Hong Kong offices of many of these banks will be ahead of the rates in New York and London where daily virus cases are still in the hundreds.

Hong Kong has recorded only one daily case on an average in the past week, while 28.5% of its population has received at least one vaccine shot, government data showed.

The banks’ return-to-office push in Hong Kong comes amid the city’s dealmaking boom and hiring frenzy as the Chinese economy recovers from the pandemic.

Returning to the workplace will allow bankers to attend in-person meetings and help secure more deals in a market where mergers and underwriting deals are set to pick up pace.

Most banks are offering two days off for employees who get vaccinated, in line with a government policy, to encourage staff to get inoculated and hasten their return to office.

Some are pushing harder.

Morgan Stanley set up an on-site vaccination operation on June 16 for staff who had not received any shot, according to people who work there. The bank will do it again in three weeks so people can get their second shot, one of the employees said.

Morgan Stanley declined to comment.

Citi will host its first onsite vaccine clinic for local staff on June 22, the spokesman said.

FLEXIBLE POLICY

While banks are looking to bring workers back to office, some are retaining a flexible approach.

An HSBC spokeswoman said the bank’s Hong Kong headquarters was now open for all staff to return but that people could choose between working from office and home.

“I hated working from home,” said a sales banker at HSBC. “I missed being able to chat with my colleagues all the time for leads and gossips. It was not fun at all at home.”

Standard Chartered said two-thirds of its bankers were back in office but that it too remains flexible. Hong Kong is its single largest market.

The bankers Reuters spoke to declined to be named as they were not authorised to speak to the media.

Goldman Sachs is also encouraging all staff members to get vaccinated in the Hong Kong office, a spokesman said.

“Since we reopened the office to all staff on June 7, the number of employees coming to the office every day is at pre-COVID levels, or higher if you consider that travel is way down,” he said.



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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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HSBC CEO says Bitcoin not for us, BFSI News, ET BFSI

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HSBC has no plans to launch a cryptocurrency trading desk or offer the digital coins as an investment to customers, because they are too volatile and lack transparency, its Chief Executive Noel Quinn told Reuters.

Europe’s biggest bank’s stance on cryptocurrencies comes as the world’s biggest and best-known, Bitcoin, has tumbled nearly 50% from the year’s high, after China cracked down on mining the currency and prominent advocate Elon Musk tempered his support.

HSBC’s stance also contrasts with rival banks such as Goldman Sachs, which Reuters in March reported had restarted its cryptocurrency trading desk.

“Given the volatility we are not into Bitcoin as an asset class, if our clients want to be there then of course they are, but we are not promoting it as an asset class within our wealth management business,” Quinn said.

“For similar reasons we’re not rushing into stablecoins,” he said, referring to the digital currencies that seek to avoid the volatility associated with typical cryptocurrencies by pegging their value to assets such as the U.S. dollar.

Bitcoin traded at $34,464 on Monday, down nearly 50% in just 40 days from its year high of $64,895 on April 14.

Pressure on the currency intensified after the billionaire Tesla Chief Executive and cryptocurrency backer Musk reversed his stance on Tesla accepting Bitcoin as payment.

‘Difficult questions’

China, which is central to HSBC’s growth strategy, said last Tuesday that it had banned financial institutions and payment companies from providing services related to cryptocurrency transactions.

Reuters reported in April that HSBC had banned customers in its online share trading platform from buying shares in bitcoin-backed MicroStrategy, saying in a message to clients that it would not facilitate the buying or exchange of products related to virtual currencies.

Quinn said his sceptical stance on cryptocurrencies partly arose from the difficulty of assessing the transparency of who owns them, as well as problems with their ready convertibility into fiat money.

“I view Bitcoin as more of an asset class than a payments vehicle, with very difficult questions about how to value it on the balance sheet of clients because it is so volatile,” he said.

“Then you get to stablecoins which do have some reserve backing behind them to address the stored value concerns, but it depends on who the sponsoring organisation is plus the structure and accessibility of the reserve.”

The soaring popularity of cryptocurrencies has posed a problem for mainstream banks in recent years, as they try to balance catering to clients’ interest with their own regulatory obligations to understand the source of their customers’ wealth.

HSBC’s stance against offering cryptocurrencies as an asset class marks it out against European rivals such as UBS, which is exploring ways to offering them as an investment product according to media reports earlier this month.



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Global banks move some India operations overseas, BFSI News, ET BFSI

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Global banks are feeling the coronavirus heat in India.

With several employees or their kin down with Covid, Wall Street banks with centres in top metros including Bengaluru, Mumbai, Pune and Gurgaon, are moving some work to overseas locations.

About 200 employees at HSBC’s tech centre in Bengaluru are affected due to Covid, and its centres in China and Krakow have picked up work from Bengaluru.

Deutsche Bank, with 4,000 employees in Bengaluru and Pune, said it does not expect the pandemic to disrupt its operations as it has all the contingency plans in place.

Standard Chartered said last week that about 800 of its 20,000 staffers in India were infected. As many as 25% of employees in some teams at UBS are absent.

Wells Fargo

At Wells Fargo & Co’s offices in Bangalore and Hyderabad, work on co-branded cards, balance transfers and reward programs is running behind schedule. Some work is getting transferred to the Philippines, where staff is working overnight shifts to pick up the slack. The San Francisco-based bank employs about 35,000 workers in India to help process car, home and personal loans, make collections, and assist customers who need to open, update or close their bank accounts.

Wall Street giant Morgan Stanley, which has 6,000 employees in Mumbai and Bengaluru, said a small percentage of its staff

have been impacted due to the pandemic, though it is operating in a business-as-usual mode.

Goldman Sachs

Goldman Sachs’s Bengaluru centre which has over 6,000 employees across all the businesses, had close to a 48-hour impact as some of its employees were affected by Covid.

But the work was picked up by Salt Lake City in Utah that makes up the second-largest presence in North America. Work from India moved to London too in those 48 hours.

At UBS, with many of the bank’s 8,000 staff in Mumbai, Pune and Hyderabad absent, work is being shipped to centres such as Poland. The Swiss bank’s workers in India handle trade settlement, transaction reporting, investment banking support and wealth management. Many of the tasks require same-day or next-day turnarounds.

Barclays Plc is shifting some functions were shifted to the UK from India.

Citigroup Inc said there’s currently no significant disruption, while Deutsche Bank AG said employees were working seamlessly from home.

Dire predictions

Nasscom, the key lobby group for India’s $194 billion outsourcing industry and its almost 5 million employees, has downplayed the threat to operations.

Experts have warned the crisis has the potential to worsen in the coming weeks, with one model predicting as many as 1,018,879 deaths by the end of July, quadrupling from the current official count of 230,168. A model prepared by government advisers suggests the wave could peak in the coming days, but the group’s projections have been changing and were wrong last month.



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