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Home » Daily Briefing » Daily briefing - 12 October 2016

Daily briefing - 12 October 2016

Chinese banks will have to raise as much as $1.7 trillion in capital to cover a likely surge in bad loans, as the credit profile of the country's top 200 companies deteriorates, according to S&P Global. Even under a base case scenario, they would require $500 billion, writes Reuters, which says that the government announced a series of new guidelines to address the problem: "The measures include encouraging mergers and acquisitions, bankruptcies, debt-to-equity swaps and debt securitization to improve credit allocation and stop wasteful spending in the economy." According to the China Banking Regulatory Commission (CBRC), Chinese non-performing loans are already at two percent, the worst since the financial crisis of 2009.

A new study by Visa indicates that adoption of mobile devices for payments is becoming widespread in Europe, with the fastest growth happening in the distinctly non-millennial 55-64 year-old group. "One year ago," according to Visa, "38% of the people surveyed said they had never used a mobile device to make payments and had no plans to do so. Today, that number has dropped to 12%." Turkey, at 91 percent, had the highest percentage of mobile payment users, with Nordic countries Sweden, Norway and Denmark close behind. Visa also notes that users of contactless cards are more open to trying other new payment types.

Reports this morning in the Financial Times indicate that the fault for Samsung's unnerving battery meltdown may not be the battery itself, but tweaks to the smartphone's processor designed to speed up the amount of time it takes to charge the battery. "If you try to charge the battery too quickly it can make it more volatile. If you push an engine too hard, it will explode. Something had to give. These devices are miracles of technology -- how much we can get out of that tiny piece of lithium-ion," one source told the Financial Times. Smartphone users sometimes joke that they spend so much time charging their phones, they might as well be using landlines.

The New York Times is running a story about a Wells Fargo employee who warned the company that she was seeing employees opening fake accounts and sending out unsolicited credit cards — in 2005, the year John Stumpf became president. With evidence that aggressive cross-selling was warping ethics as far back as 2005, it's hard to see how COO Tim Sloan can be delivered into the CEO role as a 'clean pair of hands'. Meanwhile New York's Department of Financial Services ordered banks under its watch to "ensure that their sales practices do not incentivize any shady behavior".

Citibank continued its long withdrawal from international markets in recent days with the sale of its Argentinian business to Banco Santander Rio. The bank said the sale of its retail and card business for an undisclosed amount would include about $1.4 billion of assets including credit cards, personal loans and retail brokerage business. This follows the sale of its Brazilian assets at the weekend to Itaú Unibanco Holding for $220 million.

So, is this the real meaning of Too Big To Fail? The special treatment meted out to Deutsche Bank's during the ECB's increasingly hard to fail stress tests was "just terrible for undermining stability", according to Anil Kashyap, who made his first appearance as an independent member of the Bank of England's Financial Policy Committee. He was speaking to the Treasury Select Committee. The matter is material — EU officials are now in the odd position of opposing the type of strict capitalisation rules they were calling for just a few years ago.

Lord Adair Turner backtracks on peer-to-peer lending criticisms
Why former trader Brad Katsuyama is a hero to some
IMF offers bleak assessment on recession in Africa
Mybucks to enter Ugandan market with 49 percent share in Opportunity Bank
Vodafone partners with PayPal on contactless payments

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