Category: Banking & Financial Services

05/06/16

Permalink 01:48:25 pm, by dacare, 141 words, 994 views   English (US)
Categories: News of China, Banking & Financial Services

Central bank drains 220 bln yuan from market

China's central bank drained 220 billion yuan (33.85 billion U.S. dollars) from the market this week to ensure stable money supply.

This follows a drain of 290 billion yuan from the financial system last week.

The People's Bank of China (PBOC) conducted 360 billion yuan in seven-day reverse repurchase agreements (repo) this week, a process in which central banks purchase securities from banks with an agreement to resell them in the future.

With 580 billion yuan's worth of repos maturing this week, the PBOC ended up draining a net 220 billion yuan from money markets.

On Friday's interbank market, the benchmark overnight Shanghai Interbank Offered Rate (Shibor), which measures the cost at which Chinese banks lend to one another, was down by 0.1 basis points to 2 percent.

The Shibor for seven-day loans fell 0.3 basis point to 2.326 percent. The Shibor for three-month loans dropped 0.2 basis point to 2.894 percent.

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01/15/16

Permalink 10:02:29 pm, by dacare, 1095 words, 290 views   English (US)
Categories: News of China, Banking & Financial Services, Technical, IT Recruiting

China’s Haier to Buy GE Appliance Business for $5.4 Billion

By LAURIE BURKITT, JOANN S. LUBLIN And DANA MATTIOLI
Updated Jan. 15, 2016 5:17 a.m. ET

Haier

BEIJING— General Electric Co. agreed to sell its appliance unit for $5.4 billion to Chinese manufacturer Haier Group, which is looking to expand its products into homes around the world.

GE and Haier announced the deal Friday, saying the companies will cooperate world-wide to expand their reach in health care, advanced manufacturing and the industrial sectors.

The deal will help Haier sell refrigerators, washing machines and other appliances that are already popular in China overseas after years of struggling to gain a stronger foothold in the U.S. and elsewhere. Haier said it will have the rights to use the GE brand for appliances for 40 years.

The acquisition also enables GE to focus on its industrial business—jet engines and power turbines instead of washing machines and even finance.

“Haier has a good track record of acquisitions and of managing brands,” GE’s chairman and chief executive officer Jeff Immelt said in a news release. “Haier has a stated focus to grow in the U.S., build their manufacturing presence here, and to invest further in the business.”

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Qingdao Haier Co., a Shanghai- listed company in which Haier owns 41%, will acquire the GE appliance unit, Haier said. It said the deal “establishes a model for cross-border investment and cooperation between China and the United States.”

The deal, which values GE Appliances at 10 times the last 12 months of earnings before interest, taxes, depreciation and amortization, according to GE, was reported earlier by The Wall Street Journal.

It marks the third major overseas acquisition by Chinese companies this week.

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China’s Haier Nears Deal to Buy GE Appliance Business
A consortium of investors including China National Chemical Corp. on Sunday agreed to buy KraussMaffei Group for 925 million euros ($1 billion), one of the largest Chinese takeovers of a German company. Two days later, Chinese conglomerate Dalian Wanda Group Co. agreed to acquire production and finance company Legendary Entertainment for $3.5 billion in cash, the largest China-Hollywood deal to date.

GE has been running an auction for the century-old appliance business since it abandoned a $3.3 billion sale to Sweden’s Electrolux AB in December. The U.S. Justice Department had sued to block that transaction, saying the combination of the two companies would hurt competition for cooktops and ranges. Haier is unlikely to face the same antitrust hurdles as Electrolux because of its small presence in the U.S.

In seeking a fresh buyer, GE executives wanted “a better deal” than they had gotten from Electrolux, one person familiar with the matter said. GE also stands to receive a $175 million breakup fee from Electrolux.

The Chinese appliance maker outbid other foreign corporate bidders for the Louisville, Ky.-based business, according to a person close to the deal.

Haier has struggled to compete in the U.S. While it calls itself the biggest appliance maker in terms of unit sales, Haier is mainly known in the U.S. for niche products such as compact refrigerators and window air-conditioning units.

The privately held company has also been expanding its range of products and retail partners in the U.S. Last August, Haier said it would invest $72 million to expand its 15-year-old refrigerator plant in Camden, S.C.

The GE transaction, however, will vault the Chinese company past Electrolux and other rivals in the U.S. market for white goods, which is currently led by Whirlpool. Sales for the GE Appliances and Lighting division, of which appliances is the lion’s share, were $8.4 billion in 2014.

Haier held talks with GE in 2008 to buy the U.S. firm’s appliance unit. In 2010, a Haier executive said the company didn’t buy at the time because the price for the unit was too high. Haier also made an unsuccessful bid for Maytag Corp. in 2004, but lost out to Whirlpool.

Since then, Haier has been vying for more U.S. retail partners, tapping major advertising agencies in an effort to become a household name. Haier held a 29.8% market share of major household appliance sales in China last year, compared with 5.6% in the U.S., according to market research firm Euromonitor.

For Haier, which had $32.6 billion in revenue world-wide in 2014, growth overseas is critical. Profit margins from the company’s refrigerators and washing machines in China are razor-thin due to increased competition at home, where online shopping has sparked price wars, pushing down prices in the electronics and appliances sector.

Another drag on business is that fewer people in China are buying new homes and thus need fewer new appliances.

The deal will broaden Haier’s customer base and distribution channels. It will also sharpen its credibility in the U.S., where “Chinese brands are perceived as low quality,” said Klaus Meyer, a business professor at China Europe International Business School in Shanghai.

Based in China’s northeastern coastal city of Qingdao, Haier is one of China’s legacy state-owned enterprises. Haier’s chief executive, Zhang Ruimin, was the general manager when the company started in 1984 as a successor to a loss-making refrigerator factory that had been opened in 1949, when Chairman Mao Zedong founded modern China.

Mr. Zhang, now 67, has become somewhat of a legend in business circles back home, building a no-nonsense demeanor when he, as newly appointed chairman in 1985, grasped a sledgehammer, smashing a faulty refrigerator to demonstrate zero tolerance for shoddy products at the factory.

Within his first decade as chairman, he transformed Haier, creating China’s largest appliance maker and becoming the first businessman appointed to China’s Central Committee, one of the Communist Party’s highest decision-making bodies.

Mr. Zhang built the brand by investing in a cartoon in the 1990s called the “Haier Brothers,” creating mascots that generations in China came to recognize long after the airing of the more than 200 episodes. Today, Haier has become one of the China most valuable brands, worth $1.9 billion in 2015, according to media agencies Millward Brown and WPP, which calculated the value using the company’s financial data and consumer survey data.

GE Appliances will keep its headquarters in Louisville, Ky, the companies said.

Haier said in a statement to the Shanghai Stock Exchange if the deal ceases due to failure to obtain approvals from antitrust regulators, Chinese regulators or Qingdao Haier’s shareholders, Qingdao Haier will be required to pay $200 million to $400 million to GE as compensation.

GE’s assets Haier is acquiring had a book value of 1.84 billion dollars as of the end of 2014.

—Ted Mann in New York and Rose Yu in Shanghai contributed to this article.

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12/24/15

Permalink 11:05:31 am, by dacare, 246 words, 134 views   English (US)
Categories: News of China, Banking & Financial Services

17 banks have fund-manager licenses revoked

The China Banking Regulatory Commission has revoked the private fund-manager licenses of 17 commercial banks, over what sources said were legal concerns.

A person close to the CBRC said on Wednesday the specific reason could be that they had violated certain conditions under the Law on Commercial Banks, which does not allow lenders to operate integrated securities investment operations.

Instead, they have to set up subsidiary companies to engage in the business, but only after undergoing close government examination and approval.

The 17 are believed to include China Everbright Bank, Ping An Bank, SPD Bank, China Minsheng Bank, Bank of Ningbo, Bank of Beijing and China Zheshang Bank.

Five of these banks registered departmental general managers with the Asset Management Association of China as their qualified private fund managers, while the 12 others named their chairmen, according to Caixin Media.

Nine of the banks applied as securities investment managers, four as private equity investment firms, and four as other types of investment operations.

All private equity and securities investment funds are required to register with the Asset Management Association to gain licenses.

The Asset Management Association declined to comment on the issue.

Huang Peng, a partner at Beijing-based Guantao Law Firm, said commercial banks conducting such investment business remain controversial, both in China and overseas.

Some have suggested that banks running simultaneous lending and investment operations could increase the risk of moral hazard, while others have said it is feasible, as long as different departments manage the businesses separately.

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01/27/15

Permalink 09:42:50 am, by dacare, 113 words, 303 views   English (US)
Categories: Banking & Financial Services

Anbang raises bank stake

Anbang Insurance Group Co raised its stake in China Minsheng Banking Corp Ltd to 19.28 percent last week, according to a disclosure published on Monday by the Hong Kong Stock Exchange.

For Anbang, which is spending more on real estate and financial services investments, it was the ninth share increase in the country's biggest private lender over the last three months.

China Minsheng shares gained 1 percent in Shanghai trading to close at 10.49 yuan ($1.75). The stock has gained about 70 percent over the last three months.

In December 2014, the Beijing-based insurer raised its stake in Chinese property firm Financial Street Holdings Co to 20 percent, while increasing its shareholding in China Merchants Bank Co Ltd to 10 percent.

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08/15/14

Permalink 01:41:46 pm, by dacare, 558 words, 402 views   English (US)
Categories: News of China, Banking & Financial Services

Big five banks plan bond sales to boost capital


A Bank of China branch in Yichang, Hubei province. China's top five banks will raise 128 billion yuan ($20.8 billion) over a two-week period.

China's top five banks will raise 128 billion yuan ($20.8 billion) in a two-week bond offering spree following a yearlong hiatus, as regulators signal a willingness for lenders to aggressively tap fixed-income markets.

The country's banking regulator began phasing in new higher capital adequacy requirements last year, in line with global rules known as Basel III, and aggressive implementation of the third Basel accord is a key element of China's plan to fortify banks against risks from a slowing economy.

China Construction Bank Corp and Agricultural Bank of China Ltd, the country's second and third-largest banks, respectively, have announced plans to raise 50 billion yuan worth of Basel III-compliant Tier 2 capital via domestic bond issues on Friday.

Bank of Communications Co Ltd, the country's fifth-biggest lender, plans to raise 28 billion yuan on Monday.

The issues follow two large offerings last week, the first from the country's top five banks since early 2013 and China's transition to Basel III.

Industrial and Commercial Bank of China Ltd and Bank of China, the country's largest and fourth-largest lenders, together offered 50 billion yuan of bonds last week.

The flurry of offerings shows Chinese regulators have signed off on the giant deals despite their potential drain on market liquidity, and are comfortable with the new Basel III-compliant bond structure, sources told IFR Asia, a Thomson Reuters publication.

China's economy showed further signs of softening in July despite a burst of government stimulus measures, and banks have tightened lending to risky areas such as the property sector.

The government embarked on a massive credit-fueled economic stimulus program from 2008 to 2010 to pull the economy through the global financial crisis. Many analysts expect a large portion of bank loans extended during that time to turn sour.

The fundraising spree still leaves China's top lenders lagging regional counterparts.

Asian banks (excluding Japan and Australia) have raised more than $32 billion in Basel III compliant securities to date, which includes $26 billion issued in 2014, in local and international markets, according to Moody's data.

Steven Chan, a banking analyst at Maybank Kim Eng, a Singapore-based research firm said the amount being raised was small viewed against the assets of China's top lenders. "It's very small compared with the trillions of assets," he said.

China's big State-owned banks have announced plans to raise $43.5 billion in on- and offshore Tier 2 capital by the end of 2015.

Agricultural Bank of China plans to sell 50 billion yuan of Tier 2 securities, Bank of Communications is in for 40 billion yuan and China Construction Bank for 60 billion yuan. ICBC is eyeing a total of 60 billion yuan, while Bank of China will make a play for the same.

All that makes for a total of 270 billion yuan in Basel III compliant bonds that will hit the market - more than from any other single country.

Lenders are issuing to replace old-style Tier 2 bonds that are about to mature and hold yields down, Chan said.

"If you don't repay bondholders, the yield will increase automatically, so the best way is to issue bonds at a similar or lower rate to repay the earlier one."

A total of 93 billion yuan of subordinated bonds from China's commercial banks will mature next year, according to China Central Depository & Clearing, a State-owned clearinghouse for onshore bonds.

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08/14/14

Permalink 10:24:08 am, by dacare, 241 words, 334 views   English (US)
Categories: News of China, Banking & Financial Services

China unveils support for insurance industry

The Chinese government on Wednesday unveiled measures to develop the insurance industry, vowing to raise premium incomes to 5 percent of GDP by 2020.

The package, announced on the State Council website, let the insurance industry play a bigger role in the fledgling social security network.

The second of its kind since 2006, the package could see citizens paying an average of 3,500 yuan (565 U.S. dollars) per capita in premiums by 2020.

Commercial insurance will become the primary undertaker of individual and household programs and an important supplier of corporate pensions and health insurance.

The insurance will be given a bigger role in the prevention and relief of disasters and accidents through the introduction of catastrophe insurance products.

Insurance funds will be encouraged to invest in bonds and equities to support major infrastructure projects, urban renewal and urbanization.

The government will encourage the house-for-pension insurance experiment and launch a pilot program to introduce compulsory insurance for environmental pollution, food safety, medical accidents and campus safety.

Zhao Xianghuai, an analyst with Guotai Junan Securities, believes the package will open more space for China's insurance industry, which had a total assets worth 9.4 trillion yuan by the end of June this year.

"The package has elevated the position of the insurance industry and created new room for development," Zhao said.

Boosted by the announcement, Chinese insurers rose across the board on the stock markets, with New China Life Insurance Co., Ltd. leading the gains, up 3.57 percent to 25.27 yuan.

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