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China supports EU efforts at financial stability

In Uncategorized on December 21, 2010 at 9:30 am

China supports measures taken by the European Union and the International Monetary Fund to stabilize Europe’s debt crisis, Vice Premier Wang Qishan said Tuesday.

China has also taken steps to help European nations combat the sovereign debt crisis, Wang said at the opening of the third China-EU High-Level Economic and Trade Dialogue.

Wang said the two sides “should have confidence and enhance cooperation to work together for a robust, sustainable and balanced growth,” according to the official Xinhua News Agency.

Last week, EU leaders agreed to the creation of a permanent rescue mechanism for debt-laden countries in 2013 that would replace an existing bailout fund.

Chen Deming, China’s minister of commerce, speaks at a press conference during the 3rd EU-China High-level Economic and Trade Dialogue at the Diaoyutai State Guesthouse in Beijing on Tuesday December 21, 2010.

Ireland last month agreed to borrow up to euro 67.5 billion ($90 billion) from the EU and International Monetary Fund and implement severe spending cuts as its economy staggered under the weight of massively indebted banks.

The Irish rescue followed the EU-IMF bailout of Greece earlier this year and added to fears that other financially weak countries including Portugal and Spain would need bailouts, imperiling the future of the euro common currency.

China has also been involved in bailing out European countries, offering in October to buy Greece’s debt. Last week, Portugal said that China had pledged increased support for its efforts to climb out of a financial crisis, reportedly promising to buy $4 billion in Portugese government debt.

The EU is China’s largest trading partner, while China is the EU’s second-largest trading partner behind the United States, Wang said. Two-way trade for the first 11 months this year reached $433.9 billion, an increase of 33 percent from the previous year.

Wang said global economic recovery is being hampered by weak demand, while world markets have excessive liquidity and are turbulent.

He reiterated that China would implement a prudent monetary policy to ensure the world’s second-largest economy can maintain steady growth.

“China is taking a proactive fiscal policy and stable currency policy, while the EU is actively taking measures to combat the debt crisis,” Wang said. “China and the EU should strengthen cooperation to promote strong, sustainable and all-around growth for the economies of China and EU and even the global economy.”

Other officials participating in the talks include EU Competition Commissioner Joaquin Almunia, EU Trade Commissioner Karel De Gucht and China’s Commerce Minister Chen Deming.

Wang said he expected “substantive” progress during the talks on a wide range of trade and economic issue, including recognition of China’s market economy status and the loosening of EU restrictions on high-tech goods exports.

Wang said China and the EU should cooperate in a variety of sectors, including new energy and environment protection, while fighting protectionist measures.

“We need to jointly resist trade protectionism, advancing Doha round talks for balanced and all-around success,” he said.

Source: SGGP

Seven European banks fail financial stress test

In Uncategorized on July 24, 2010 at 11:17 am

Government leaders and the IMF on Saturday hailed stress tests on European banks which failed seven of the 91 institutions checked, but markets remained nervous about the credibility of the exams.

German state-owned lender Hypo Real Estate, five regional savings banks in Spain and ATEBank of Greece failed the test of whether they could resist a new financial shock.

The euro fell just after the release of the results but made up the lost ground. US stocks also ended slightly higher but European governments face a nervous wait for markets to reopen Monday to get the full global reaction.

German state-owned lender Hypo Real Estate, five regional savings banks in Spain and ATEBank of Greece failed the test of whether they could resist a new financial shock. All have been ordered to recapitalise or take state aid.

The Committee of European Banking Supervisors (CEBS), which carried out the tests, said the seven banks would need about 3.5 billion euros (4.4 billion dollars).

The stress tests were intended to reassure markets over the health of the European banking system and political leaders and the head of the International Monetary Fund were quick to praise the tests and the results.

Many experts and economists were sceptical though.

The European Union’s Belgian presidency said: “The aggregate results of the tests show a high degree of resilience in the EU banking sector as a whole, reflecting the efforts undertaken over the last years by the banks and some governments to restore confidence in the European banking sector.”

Belgian Finance Minister Didier Reynders, speaking for the EU, told AFP the results were “positive because we have been transparent and the tests were quite strict.”

Spain’s Finance Minister Elena Salgado insisted the results were “satisfactory” despite the failure of the five savings banks.

“The Spanish financial system has overcome the financial crisis very well,” she declared.

IMF managing director Dominique Strauss-Kahn said the tests were “a major undertaking and represent an important step toward improving transparency and bolstering market confidence.”

“The publication of the results and the actions that have been announced to address bank capital deficiencies promise to significantly strengthen the European financial system,” he added.

US Treasury Secretary Timothy Geithner said the EU “has made a significant effort to increase disclosure on the conditions of individual European financial institutions and enhance market stability.”

Some analysts however said the checks failed to shed much light on the real state of the banking sector.

The report spared all banks examined in debt-laden Portugal. Greece, which sparked fears for the stability of the entire eurozone and was rescued by an EU and IMF bailout, also got off lightly with just one bank failing.

Another focus of concern, Ireland, saw its banks also pass the CEBS capital ratio test, as did Italy. French and British banks likewise emerged with pass grades.

Neil MacKinnon, an economist at VTB Capital in London, said it “looks like a whitewash and the initial reaction is one of scepticism on the part of the markets.”

ING bank analyst Chris Turner said the CEBS announcement “does not appear to have uncovered any ‘skeletons in the closet’,” but added: “Whether it goes far enough remains to be seen.”

Vitor Constancio, vice-president of the European Central Bank and a CEBS member, insisted the stress tests were “a substantial and severe test, both in macroeconomic terms and in financial terms.”

The tests measured the banks so-called Tier One core capital and measured it against outstanding assets, such as loans. A key test was the effect a government debt crisis would have on balance sheets which hold large amounts of government bonds.

Banks must maintain a minimum ratio of 6.0 percent. The CEBS calculated the seven risk banks would see this ratio fall below six percent.

The CEBS estimated by the standard of its test that the total potential damage to balance sheets at the 91 banks — which account for 65 percent of the European banking market — would be 566 billion euros (727 billion dollars) over two years if certain tough conditions hit.

If markets judge the tests too weak, analysts have warned the result could be to undermine or even negate the exercise.

Britain’s influential Financial Times newspaper highlighted the nervousness in a commentary on Saturday and said the European exercise was “neither uniform, transparent or stressful enough, but it is a good step forward if treated with caution.”


Source: SGGP

IMF head laments ‘loss of momentum’ in financial reform

In Uncategorized on June 18, 2010 at 4:25 am

World leaders’ commitment to global reforms of the financial sector is flagging, IMF head Dominique Strauss-Kahn said on Thursday

 World leaders’ commitment to global reforms of the financial sector is flagging, IMF head Dominique Strauss-Kahn said on Thursday.

“I am sometimes a bit worried about the loss of momentum” in the reform of the financial sector, in face of the “huge” task ahead, Strauss-Kahn told a conference.

Previously, “leaders were very committed to do something in the financial sector but as the crisis vanished, most of them are more concerned by domestic questions,” the head of the International Monetary Fund said.

“It would be unfair to say that the momentum has disappeared … nevertheless I don’t see the pressure as big and strong as it was a few months ago,” Strauss-Kahn added.

Governments in the United States and Europe have been scrambling to revamp and adapt banking rules since the collapse of US investment bank Lehman Brothers in September 2008 sparked a global credit crunch.

The IMF however has said that more direct measures than those proposed so far are needed, such as levies tied to risk presented by individual banks or limits to the size of their business.

Strauss-Kahn also said he was concerned about the consistency in priorities in financial reform across borders, citing different approaches in the United States and Italy as examples.

“Having an inconsistent system in the biggest economies … is of course creating new cause for regulatory arbitrage and the trigger for the next crisis.

“The countries having experienced some problems in the financial sector, namely the US and the European countries, are really keen to do something,” he said.

However, those countries that have not had major problems in the financial sector, like Canada and some emerging economies, tend to say that major reforms are not needed, he added.

Source: SGGP

Rate cuts, credit growth make for a healthy financial market

In Uncategorized on May 12, 2010 at 8:51 am

Interest rate cuts and credit growth have injected vigor and strength into Vietnam’s financial market recently.

All state-owned commercial banks cut lending interest rates by 1 percent to 13 percent per year May 1, and many other commercial banks quickly followed suit.

LienVietBank said it has cut negotiable lending interest rate on short-term loans in VND by 0.5 percent per year while providing customers with good credit an additional 0.5-percent cut.

Dr. Nguyen Duc Huong, LienVietBank’s standing vice chairman, said the current trend monetary market watchers were seeing was commercial banks reducing lending rates to attract customers with good credit and efficient business operations.

Customers and agents process transactions at an Eximbank branch in Ho Chi Minh City (Photo: SGGP)
Military Commercial Joint Stock Bank has not yet officially announced its new interest rates, but has said that the new rates would “benefit borrowers.”

Many other commercial banks told SGGP that they were considering cutting operating expenses to lower lending interest rates, especially for short-term loans.

Banking experts said that the trend could send most lending interest rates 0.5-1 percent lower this month than those in late April.  

More cuts expected

Dr Cao Sy Kiem, chairman of the Vietnam Association of Small and Medium Enterprises, told SGGP the drop in interest rates had not yet bottomed out.

“Compared to a few months ago, when the lending rate soared to 17-18 percent, current rates are affordable to most businesses. However, they should be lowered even further to boost the profitability of loans.”

Currently, lending rates on medium and long term loans remain high, at 14-14.5 percent per year, even 16 percent at some banks.

At a recent monthly Government meeting in April, Prime Minister Nguyen Tan Dung instructed banks to lower lending and deposit interest rates to 12 and 10 percent respectively this year.

Dr. Nguyen Ngoc Bao, head of the Monetary Policy Department at the State Bank of Vietnam (SBV), said the central lender was planning to adjust interest rates in line with the Prime Minister’s instructions. 

Duong Thu Huong, general secretary of the Vietnam Bankers Association, said the lending interest reduction should be carried out gradually, since many banks had previously received deposits at higher rates than current ones.

Deposit rates at commercial banks are now 11-11.5 percent, down 0.5-1 percent from late April, according to the SBV.

Ms. Huong pointed out that deposits would increase only once deposit interest rates are higher than the inflation rate. “Whether commercial banks can further lower deposit rates in the future depends a lot on the inflation situation,” she said.

Credit growth recovery

After a slowdown in the first quarter of the year, overall credit growth has recovered, the central bank said.  In April, credit expanded by 1.73 percent from March, with credit in VND expanding by 1.41 percent.

Compared to late last year, credit has now grown by 5.58 percent, meaning commercial banks can boost lending in the months to come, the state lender said.

After nearly a month-long slump, the selling price of US dollars at commercial banks has recovered. Over the past two days, a dollar has sold for VND19,060 at Vietcombank. However, on the open market, the rate was lower, at VND19,010. 

Along with the recovery of USD price, it has been rumored that the central bank will soon adjust the forex trading band.

Talking with SGGP yesterday, central bank governor Nguyen Van Giau said the rumor was groundless. “The foreign exchange market is now stable and we have no plan to adjust exchange rates,” he confirmed.

Source: SGGP

Spain does not need financial bailout: EU Commission

In Uncategorized on May 5, 2010 at 12:39 pm

BRUSSELS, May 5, 2010 (AFP) – Spain does not need the kind of financial bailout package which has been offered to Greece, the EU’s Economic Affairs Commissioner Olli Rehn said on Wednesday, damping down market expectations.

“There is no need to propose financial assistance,” for Madrid, Rehn told reporters as he unveiled the commission’s new economic forecasts for 2010 and 2011.

“No, we’ll not do it,” he added, in when asked whether the eurozone would be forced to put together the kind of multi-billion euro loan rescue package it is organising for Greece, which is under pressure massively to reduce its deficit and pay down its loans.

Rehn criticised the fierce market speculation which has put Greece in its cross hairs and is seen turning its attention to Spain and Portugal where deficit are also running uncomfortably high.

“There’s no limit to the speculation,” he complained.

The rumours swirled around the markets on Tuesday, many suggesting that Spain was on the point of turning cap in hand to its EU partners or the IMF, provoking a sharp falls on European stock markets.

PAME union members block the entrance to a ferry in the port of Piraeus in Greece due to a 24-hours strike on May 5, 2010. AFP photo


Source: SGGP

Thai troops on Bangkok streets to protect financial hub

In Uncategorized on April 19, 2010 at 9:44 am

Hundreds of Thai troops, many of them armed, were deployed on the streets of Bangkok early Monday to protect the city’s financial heart from anti-government rallies, AFP reporters witnessed.

Military and riot police were deployed in the central financial district, known as Silom, close to the Reds’ current rally base in the capital’s commercial heartland.

“If they come up Silom road, we will block the Red Shirts. We will not attack them, we are blocking them,” a soldier said, asking not to be named. The security personnel had stacked uncoiled barbwire at the roadside.

Source: SGGP

ADB helps Vietnam with financial stability

In Vietnam Economy on March 3, 2010 at 3:39 am

ADB helps Vietnam with financial stability

QĐND – Monday, March 01, 2010, 22:8 (GMT+7)

PANO – Officials from The State Bank of Vietnam (SBV), Ministry of Finance and the National Financial Supervisory Commission are taking part in a 5-day training workshop with the aim of equipping the Vietnamese Government officials with the necessary skills to understand financial vulnerability and early warning systems to ensure the country’s financial stability.

The workshop is organised by the Asian Development Bank (ADB) and the State Bank of Viet Nam (SBV) in Hanoi.

The global financial and economic crisis is affecting every economy in the world, with no economy left untouched. This mean that every economy, big or small, or whether it belongs to developed or developing countries, is likely to be at risk from a financial crisis. While the recent trend towards greater globalisation and regional integration has brought many benefits, it has also exposed countries to new potential vulnerabilities. This new environment requires policymakers to be alert and keep up-to-date about the new sources of vulnerabilities. An early warning system can serve as a useful tool to monitor and assess a country’s vulnerability to potential risk.

“The training workshop will improve the knowledge of government officials and provide them with required skills and tools to monitor and assess financial vulnerabilities in the economy,” said Ayumi Konishi, Country Director for Viet Nam.

“These joints efforts and accumulation of knowledge and skills will help Viet Nam to ensure Viet Nam’s financial and economic stability”, the Director added.

Two economists from ADB Headquarters will serve as facilitators.

The workshop will introduce the ADB’s early warning systems software package (VIEWS). The program also includes a panel discussion on effects of macroeconomic imbalances on the Vietnamese economy.

Mai Huong Photo: wikipedia

Source: QDND

Qantas to begin restoring flights dumped in financial crisis

In World on December 21, 2009 at 4:03 pm

SYDNEY, Dec 21, 2009 (AFP) – Australian airline Qantas on Monday said it would begin increasing its domestic flight capacity to meet improving demand, restoring services cut during the economic downturn.

Qantas chief executive Alan Joyce said the airline would add more than 340,000 seats starting in March on routes including Melbourne, Sydney, Townsville, Perth, Ayers Rock, Cairns, Adelaide and Brisbane.

“We are seeing some improvements in domestic demand and so the time is right to begin restoring capacity to ensure we are well placed to meet that demand,” Joyce said.

“The changes will see the addition of a total 19 return services across selected routes, while capacity will be restored on others by upgrading from Boeing 737 to larger Boeing 767 aircraft.”

Qantas slashed capacity in 2008 as a result of soaring fuel prices and dampened passenger demand.

The airline cut capacity by five percent in May of that year, later further reducing capacity by the equivalent of grounding 10 aircraft to cope with the slump in passenger demand caused by the global financial slowdown.

“We will continue to monitor demand with a view to restoring further capacity at the appropriate time,” Joyce added.

Source: SGGP Bookmark & Share

US House passes historic financial sector overhaul

In World on December 13, 2009 at 4:06 am

The US House of Representatives approved the most sweeping regulatory overhaul of the financial sector since the Great Depression of the 1930s, one of President Barack Obama’s key goals.

Lawmakers voted 223-202 to pass the 1,300-page legislation, a package of measures Obama’s Democratic allies crafted in response to the global financial meltdown of 2008, which has left the US economy still sputtering.

The US Senate was expected to take up the plan — which faces stiff opposition from the financial industry and its Republicans allies, not one of whom voted in favor of the plan — in 2010.

Obama hailed the vote in a statement, adding: “I urge both houses of Congress to pass this necessary reform as quickly as possible on behalf of the American people. I look forward to signing a strong bill.”

“The crisis from which we are still recovering was born not only of failure on Wall Street, but also in Washington. We have a responsibility to learn from it,” said the US president.

Obama has hit out at Wall Street “fat cats,” expressing anger that banks bailed out by the government again plan huge bonuses as millions of Americans battle poverty and unemployment.

“I did not run for office to be helping out a bunch of fat cat bankers on Wall Street,” Obama said Friday in excerpts of an interview with CBS television to be aired on Sunday.

With unemployment still hovering at around 10 percent, amid a recession triggered in part by the excesses of financial institutions, Obama voiced frustration that “some people on Wall Street still don’t get it.”

Obama told CBS he believed some banks had paid back all the bailout funds in order to escape government controls regulating such things as bonuses.

“They’re still puzzled why it is that people are mad at the banks. Well, let’s see. You guys are drawing down 10, 20 million dollar bonuses after America went through the worst economic year… in decades and you guys caused the problem.

“These same banks who benefited from taxpayer assistance who are fighting tooth and nail with their lobbyists… up on Capitol Hill, fighting against financial regulatory control,” Obama added.

Democratic House Speaker Nancy Pelosi has described the measure, a centerpiece of Obama’s response to the 2008 global financial meltdown, as a clear warning to Wall Street that “the party is over.”

“American families will no longer be at the mercy of Wall Street in terms of their jobs, their homes, their pension security, the education of their children,” Pelosi said Thursday.

Lawmakers had faced votes on several amendments, defeating one that would have scrapped a central provision, the creation of a Consumer Financial Protection Agency (CFPA) to oversee mortgages and credit cards.

The bill, which may help Democrats harness simmering voter anger ahead of the 2010 mid-term elections, has drawn fierce opposition from the financial sector and its Republican allies as stifling innovation with weighty new rules.

The number two House Republican, Representative Eric Cantor, said the legislation “frightens people and creates uncertainty in the American economy, preventing job growth.”

The bill notably tackles the issue of firms deemed “too big to fail,” which received hundreds of billions of dollars in US government “bailout” cash because their collapse would have dealt crippling blows to the economy.

The legislation gives regulators the power to dismantle such giants, and lays out a systematic way to unwind them in case of collapse that ensures shareholders and unsecured creditors, not taxpayers, bear the losses.

It also reinforces the powers of the Securities and Exchange Commission to detect irregularities that could provide an early warning of fraudulent investment schemes, like the fraud perpetrated by Wall Street swindler Bernie Madoff.

The measure also includes a first-of-its-kind plan to regulate the vast market in arcane financial products called derivatives.

It would give the Federal Reserve broader powers to oversee large at-risk firms, but also give the Government Accountability Office — the investigative arm of the US Congress — more oversight power over the Fed itself.

Amid US public anger at lavish bonuses paid out at firms the government saved from collapse, the measure provides for shareholders to hold non-binding annual votes on executive compensation, including severance packages known as “golden parachutes.”

The House and Senate must approve identical legislation in order to send it to Obama to sign into law.

Source: SGGP Bookmark & Share

Financial crisis, swine flu blamed for tourist fall

In Vietnam Travel on September 11, 2009 at 5:46 pm

Global financial crisis and swine flu are blamed for the recession of the world tourist industry, experts said at a tourist seminar held in HCM City on Sep. 11.

Dr. Victor Wee in his presentation at the seminar. (Pphoto: Truong Son)

The seminar, “Capacity building for Vietnam’s tourism businesses against the backdrop of the global financial crisis,” was held to discuss lessons and recommendations for local tourism businesses to improve their capacity.
It welcomed presentations by various well-known and experienced lecturers from regional countries. 
The morning schedule included a seminar “Asia Pacific’s tourism trends” by Kris Lim, Associate Director of the Strategic Intelligence Center (SIC) under the Pacific Asia Travel Association.
This was followed by a discussion about innovation in product development by Dr. Victor Wee, Chairman of program Committe of the UN World Tourism Organization.
In the first presentation, Mr. Lim highlighted the case that most countries in the world have experienced a negative drop in their tourism industries since last year’s fourth quarter.
He cited the World Tourism Organization, which had reported a 1.9 percent increase in international visitor arrivals in 2008 and forecast a more than four percent contraction in 2009.
The two main suggested factors for the situation were the global financial crisis and swine flu.
Other minor reasons are believed to be the slow development of the cruise-liner and airline sectors and the impact of climate change.
However, the SIC director noted that the Asia-Pacific region had suffered less than most, with the worst drop being ten percent, compared to the Americas’ record of more than 15 percent, both in May 2009.

Discussing Vietnam in particular, the presentation reviewed a negative fluctuation since its second quarter in 2008. From 1.3 percent increase in the total arrivals in the second quarter, tourism industry quickly saw a slump at negative 9.6 percent in the third quarter, but slightly improved at negative nine percent in the last quarter of 2008.
The fluctuation continued during the first seven months of 2009, with the bottom recorded a drop of 28.6 percent. In an effort to get its head above water, the industry managed to stem the fall to 10.1 percent in June. But, in the next month, the collapse continued, with a 17.8 percent at loss. 
The two exceptions to the region’s tourism woes and have shown a rising trend are South Korea and Malaysia.
While discussing Republic of Korea, Mr. Lim proposed two main factors to help Korean tourism maintain its healthy growth, including depreciation of the Korean Won and impressive tourist packages for the Japanese market. 

Vietnam tourism industry shows strong potential to develop in the coming time, Mr. Kris Lim said at the seminar.
However, Mr. Lim did not recommend the first proposal for other countries, especially Vietnam, as he thought the idea is a two-edged sword.
In explanation, he said the number of tourists bound for Republic of Korea could be very impressive during the first four months of the year but in return, the number of Koreans leaving the country could drop, as overseas trips would become more expensive.  
Discussing the Malaysian tourism industry, Dr. Wee believed the three most-helpful actions were to research and draw the attention of countries who had either not suffered or were suffering less from the financial crisis, especially the Middle-East and Iran; diversify its markets and applying different products for different market segments; and give cut-price promotions to increase demand from both local and foreign visitors. 
Answering a question by a participant about solutions for Malaysia and whether they fit the Vietnamese situation, Dr. Wee suggested Vietnamese tourism officials to carry out more promotion packages.
He also recommended a stronger cash injection from the Government to stimulate local businesses, as “once they feel confident again, they will start to invest more in the industry.”
Malaysian tourism experts gave tips for local tourism agencies, including extensive use of technology such as the Internet, create more value-added services, consider brand extension in promotions, focus on niche products such as youth travel, music and sports, volunteer tourism, eco-tourism and gastronomic tourism, strategic alliances, using icons as a marketing strategy and celebrity endorsement.
The last tip from Dr. Wee was to solve obstacles for most foreign investors in Vietnam. He admitted that governments in most of the region’s countries have limited budgets for public services. As a result, they only provide basic infrastructures for their countries. Banks are the partners and also the agent for hesitance by most investors.
“While investors await special treatment from banks for their tourism project, most banks do not welcome such business, with loans for tourism projects quite difficult to get and interest rates for such loans being quite high. In Malaysia, the banks provide a special loan, a ‘soft loan,’ for tourism projects with the preferential rates. Vietnam should consider this method.
“In addition, the Government should clear procedural mess and make procedures more practical and easy for foreign investors,” Dr. Wee added.
The seminar will continue during the afternoon with two presentations, including “Tourism recovery – BOOST” by Chi Chuan, from the Singapore Tourism Board, and “The impact of visas on tourism and investment” by Baron Ah Moo, CEO of Indochina Land Management Vietnam.

Source: SGGP