Loans

Politics align for Malaysia bank merger

1 Jun 2017

Efforts to squish together the country's banks have repeatedly failed. Now RHB could buy AmBank, creating a $9 bln group. After the 1MDB fund scandal, big shareholders may be keener to do a deal. A rising oil price helps too. The trick will be to keep the structure simple.

China’s growth obsession fosters collateral fraud

1 Jun 2017

A Reuters report lays bare how loans are often backed by fake holdings of land or metals. It’s not surprising: the system deliberately enables corner-cutting to boost economic activity. But a lack of trust in asset values could prove traumatic if prices start to fall.

Car debt adds horns to UK’s Brexit vulnerability

31 May 2017

Britons’ non-mortgage debt has been growing at a 10 pct annual clip, of which half the growth is car financing. The risk for that lies not with banks or borrowers but car companies. If they pull back, a post-Brexit Britain could end up with less consumption – and less employment.

Germany is dealing with its bank-branch addiction

23 May 2017

Measly interest margins and rising capital requirements are forcing the country’s savings institutions to cut costs and shut branches. Germany still has more banks than petrol stations, but the shift is helpful, and may benefit big lenders like Deutsche Bank and Commerzbank.

India unsheathes new weapon in bad debt fight

5 May 2017

The government has granted the Reserve Bank of India new powers to force lenders to push errant borrowers into bankruptcy. That puts extra pressure on state banks to finally clean up their soured loans. Given the failure of more refined methods, the bludgeon is welcome.

IPO delay lifts spotlight off China’s shadow banks

25 Apr 2017

The first listing of a mainland trust company in 20 years is up in the air after it missed a Hong Kong regulatory deadline. This is a pity. The listing would have helped outsiders decipher the high-yielding trust products at the core of China’s intricate shadow-banking industry.

China’s smaller banks flunk hard decisions

12 Apr 2017

Big banks' annual results suggested China's bad debt problem is easing. Alas, the picture at smaller institutions remains grim. Some, like China Everbright, rolled over lots of shaky loans. It would be easier in the long run if these lenders started recognising more losses now.

Credit boom could drive $44 bln Indian bank deal

10 Apr 2017

A mooted merger of Axis and Kotak would let the former dilute bad loans and the latter meet ownership rules. The real prize would be having a large lender ready to meet any surge in demand for credit – as state banks, crippled by bad debts, stand aside.

Hong Kong’s margin loan rules are due an overhaul

5 Apr 2017

The market collapse of a Hong Kong-listed dairy farming group highlights the perils of share pledging. Disclosure rules in the city don't go far enough. Investors need to know early on, and in full, if large blocks of shares are tied to loans.

Britain sells mortgages, buys small Brexit hedge

31 Mar 2017

Selling 11.8 billion pounds of former Bradford & Bingley mortgages to Blackstone and Prudential will cut the UK’s national debt without leaving a loss. The buyers are showing confidence in the UK economy. The seller is shoring itself up in case such confidence proves misplaced.

Bad bank is poor solution for Europe’s dud loans

14 Mar 2017

Policymakers have called for a pan-European fund to soak up the region’s dud assets. But the record for such schemes is mixed, and hard to tailor to Europe’s diverse problems. The risk is that it becomes a backdoor bailout. Governments would be better off fixing bankruptcy laws.

China gets a timely economic spring in its step

10 Mar 2017

A batch of positive data sets a good tone for the economy in 2017, easing fears of capital flight and deflation. The respite may be brief. Even so, it provides some room for Beijing to step back from firefighting, allowing it to focus on deleveraging and its ambitious restructuring plans.

Vietnam’s banking malady threatens star status

27 Feb 2017

Local lenders need to keep pumping credit into the economy to sustain the country's 6 pct growth. But banks are short of capital. A plan to allow more foreign investment will only help if Vietnam is willing to let outsiders take control of healthier banks as well as weak ones.

Singapore banks running out of profit defences

14 Feb 2017

Singaporean lender OCBC posted disappointing results due to higher bad debt charges, driven up by delinquencies in the energy sector. Banks in the city-state have propped up profits by running down bad debt provisions, but that leaves them increasingly vulnerable.

Chinese countryside breeds new financial risks

8 Feb 2017

Guangzhou Rural Commercial Bank is eyeing a $1.5 bln Hong Kong IPO. Loan quality raises red flags. One problem is the group is expanding fast outside its main market through partially owned units that serve small-town borrowers. That increases the risk of a build-up in bad debt.

Student-loan case throws down regulatory gauntlet

18 Jan 2017

In a page from the crisis playbook, the CFPB accused Navient of cheating borrowers paying for college. Suing days before Donald Trump becomes president is a bold gambit for the same agency that nailed Wells Fargo for fake accounts. It's fighting as much for survival as consumers.

EU banks handed new way to lose business

9 Jan 2017

The European Central Bank will set tougher rules than American peers to limit risky lending. The limits could make it harder for Europe’s banks to compete with U.S. or UK ones in lucrative private equity deals. The upshot may be safer lenders – but ones that make even less money.

China gets steelier about debt restructuring

22 Sep 2016

Metals trader Sinosteel has agreed a $4 bln workout. The deal is a fudge, but spreads the pain more widely than expected. Meanwhile, a smaller miner has been allowed to fail. Both episodes suggest China is getting a bit tougher about debt problems in moribund sectors.

China’s bank watchdog is pushing on a balloon

28 Jul 2016

Regulators may restrict smaller lenders from the riskier parts of the $3.5 trln market for wealth management products. That would protect savers and limit the hazards caused by repackaging loans as short-term investments. Banks will probably just search for new loopholes, though.

China’s giant savings bank not as safe as it seems

6 Jul 2016

One in three Chinese citizens has money in Postal Savings Bank of China. It has fewer loans to bloated state firms and fewer bad debts than rivals. But big holdings of bonds issued by other arms of the Chinese state – and increased dabbling in shadow finance – still pose risks.