LONDON, July 21 -- British Finance Minister Philip Hammond said on Sunday he would make a point of resigning before Mr Boris Johnson became prime minister, saying he could never agree to his Brexit strategy.
Mr Johnson is widely expected to win the governing, centre-right Conservative Party's leadership contest on Tuesday and be named as prime minister once Mrs Theresa May resigns the premiership on Wednesday. Mr Hammond has become an increasingly fierce critic of Mr Johnson's Brexit strategy - leaving the European Union with or without a deal on Oct 31 - and would never have expected to remain as chancellor of the Exchequer in a Johnson government. But the fact that the second-most senior figure in the government is making a point of resigning rather than wait to be moved on in the incoming prime minister's reshuffle is a significant gesture - and an indicator of the opposition Mr Johnson could face in pursuing his Brexit strategy. "I'm sure I'm not going to be sacked because I'm going to resign before we get to that point," Mr Hammond told BBC television. "Assuming that Boris Johnson becomes the next prime minister, I understand that his conditions for serving in his government would include accepting a no-deal exit on the 31st of October. "That is not something that I could ever sign up to. "It's very important that the prime minister is able to have a chancellor who is closely aligned with him in terms of policy, and I therefore intend to resign to Theresa May before she goes to the palace to tender her own resignation on Wednesday."
Mrs May will head to Buckingham Palace in London on Wednesday to see Queen Elizabeth II, the head of state, and relinquish her office. Mr Johnson's rival for the premiership is Foreign Secretary Jeremy Hunt, who has said that Britain should prepare for a no-deal Brexit if a deal seems unlikely by the end of September. Mr Hunt would be prepared to delay Britain's departure date if a deal seemed within reach, but is also prepared to take Britain out of the EU without a divorce deal. Mr Hunt has not said who he wants running the Treasury should he win the leadership contest.
CHANTILLY, July 17 -- The Group of Seven industrialized nations started a two-day financial meeting Wednesday in France, focusing on effective measures to regulate Facebook Inc.'s proposed digital currency Libra to prevent potential money laundering and terrorist financing.
The G-7 finance ministers and central bank governors are also expected to discuss ways to reform global corporate tax rules amid criticism that big internet companies get away without paying their fair share of taxes as they can book profits in low-tax jurisdictions. The meeting came as regulators, lawmakers and central bankers are scrutinizing Facebook's project -- unveiled just last month -- to create a crypto currency-based retail payments system in a move that critics say could affect the global financial system and challenge the role of the dollar as the world's main reserve currency. Speaking to reporters ahead of the meeting in Chantilly, north of Paris, Bank of Japan Governor Haruhiko Kuroda sought close international coordination in drawing up regulations for Libra and crypto currency payments. "If (Libra) were to be used as a means of payments, it could well affect the economy and finance," Kuroda said, calling for necessary regulations to curb a significant impact if the project were to be implemented "on a huge platform." He was referring to the social media giant's global reach with its user base of 2.7 billion, about a third of the world's population.
The BOJ chief said that together with measures for financial stability, antitrust and privacy issues could also be part of regulations.
Kuroda and Finance Minister Taro Aso are representing Japan at the gathering, which also brings together their counterparts from Britain, Canada, France, Germany, Italy, the United States and the European Union. U.S. Treasury Secretary Steven Mnuchin has warned that Libra and other cryptocurrencies are a "national security issue," and that digital asset providers must be subject to government regulations and oversight just like any bank. Mnuchin said President Donald Trump's administration has "very serious concerns" that Libra, which Facebook plans to launch as early as next year, could be used for unlawful activity such as money laundering and financing terrorism. France, which holds this year's G-7 presidency, has launched a task force to study how central banks can regulate Libra and other cryptocurrencies to prevent money laundering and ensure consumer protection and financial system stability. The G-7 also plans to discuss a French call for minimum corporate taxation as part of efforts to appropriately tax information technology giants such as Google LLC, Amazon.com Inc., Facebook and Apple Inc. in a revamp of cross-border tax rules proposed by the Organization for Economic Cooperation and Development. But it is not known whether France will win G-7 backing for its initiative, partly because the United States has criticized Paris' new tax on major internet companies' revenue in the country for "unfairly" targeting American companies.
Customarily, the G-7 will assess the state of the world economy and look into measures to mitigate downside risks to global growth such as trade tensions between the United States and China. Federal Reserve Chairman Jerome Powell has signaled the U.S. central bank will likely cut interest rates in late July for the first time in 11 years, given uncertainties about trade policy and the world economic outlook. China's economic growth slowed to 6.2 percent in the April-June quarter, the weakest pace in at least 27 years, as Trump sharply raised tariffs on Chinese imports in May to pressure Beijing into altering what Washington says are unfair trade practices. The G-7 finance ministers and central bankers are not planning to issue a joint statement after the meeting, but French Finance Minister Bruno Le Maire is expected to release a summary of discussions, according to Japanese delegation sources.
BERLIN, July 10 -- Deutsche Bank is coming under fire for the lavish golden parachutes it has paid out to top executives who left during a chaotic period of management turmoil over the past year.
Germany's biggest bank has spent more than €52 million on severance pay for senior executives who were fired or left voluntarily over the past 14 months, almost matching the lender's annual pay for the entire management board. The struggling lender has undergone a string of overhauls, culminating with the announcement on Sunday that it will cut 18,000 jobs in a historic retrenchment from investment banking activities. When weighed against the heavy job losses among rank-and-file employees and the fears that Deutsche risks running short of capital if its plan goes wrong, the generous pay-offs to departing executives may act as a lighting rod for criticism of the bank. "Big severance packages for sacked managers are mad," Frankfurt-based headhunter Christine Kuhl, a partner at Odgers Berndtson, said, adding that this rewards executives "who did a terrible job". Deutsche's severance pay bonanza began with the ousting of John Cryan as chief executive in April 2018 when the British-born former CEO received a pay-off of €10.9 million. Subsequently, six additional board members left, cashing in at least €41 million in severance pay between them, according to a Financial Times calculation based on figures disclosed in the annual report and estimates based on the bank's standard policies. The payments for recently departed executives almost matched Deutsche's annual pay to active management board members, which in 2018 stood at €55.7 million.
The total severance pay equals more than a fifth of Deutsche's 2018 dividend of €227 million, which the lender last weekend suspended for two years to help pay for restructuring costs of €7.4 billion. Gerhard Schick, head of lobby group Finance Watch Germany, called the payments "inappropriate", pointing to the mass lay-offs at Germany's largest lender that started on Monday morning. "Golden parachutes for failed managers while thousands of employees are losing their jobs just do not match," said Schick. Deutsche's executive board members are contractually entitled to "a severance payment upon early termination of their appointment at the bank’s initiative" unless the bank terminates "for cause", according to the bank's annual report. A typical severance payment is "two annual compensation amounts" and is limited to the total pay outstanding for the remainder of a person's contract, it said. Garth Ritchie, the former head of Deutsche's investment bank whose departure was announced on Friday, has overseen three years of falling revenue at the division which has been lossmaking for the past two quarters and will be shrunk dramatically after his departure. Yet Ritchie can expect a pay-off of at least €11 million. He would have left by the end of 2018 without any golden handshake had the supervisory board not given him a new five-year contract last September.
Sewing on Monday harshly criticised the investment bank's former top echelon, accusing it of trying to "generate revenues wherever they happened to pop up", operating in areas where the bank was uncompetitive and nurturing a culture of "poor capital allocation".
Chief regulatory officer Sylvie Matherat has been under pressure for years after the bank was hit by a string of money-laundering scandals. Yet Matherat can expect at least €9 million in severance pay. Frank Strauss, Deutsche's former head of retail banking, is entitled to at least €6 million. Otto Fricke, a German MP for the pro-business Free Democrats, said he welcomed Sewing's pivot towards Deutsche's traditional heritage as a corporate bank. "However, I doubt that double-digit euro severance packages are in line with this tradition," Fricke told the Financial Times, adding that such payouts showed that "Deutsche Bank lost its balance in the past". Sven Giegold, a Green member of the European Parliament, pointed out that the payouts were "undeserved". "It does not bode well for the fresh start that Deutsche Bank needs and that has been promised so often," he said. A person close to Paul Achleitner said the chairman always sought an amicable solution for underperforming managers and tried to offer them "a face-saving exit".
In 2017, the bank recouped €38.4 million of deferred bonuses from its pre-crisis management understood to include former CEOs Anshu Jain, Jürgen Fitschen and Josef Ackermann, as well as former chief risk officer Hugo Bänziger. Deutsche's most recent leadership change, which entailed the appointment of three new board members, is the latest example of rapid managerial churn at Germany's largest lender. Since Achleitner became chairman in 2012, a total of 17 executives departed early. In total, Deutsche paid them €83 million for leaving. The last board member at Deutsche Bank who left after serving his full term was chief executive Josef Ackermann, who led the bank during the golden years for investment bankers in the run-up to the financial crisis. "Viewed from outside, not all management changes at Deutsche Bank appear plausible," said Kuhl at Odgers Berndtson, adding that some were "hard to understand". As an example, she referred to Strauss. "[He] seems to have delivered on his targets but still left." Kuhl said that recruiting for Deutsche has become more difficult in recent years. "The times where people were totally thrilled to join Deutsche are long gone," she said. The headhunter partly blamed Achleitner for the churn. "Selecting the CEO and other executive board members is his key responsibility, and the ongoing churn suggests he is struggling to get it right not just once," she said. Deutsche and Achleitner declined to comment. A person familiar with his thoughts said that in 2012, when he became chairman, he had inherited a bank that needed radical strategic and managerial change. This led to the ousting of Jain and Fitschen three years later, this person argued, adding that their successor, Cryan, needed to build his own team, triggering more changes. When Achleitner concluded that Cryan was the wrong man to lead Deutsche and promoted Sewing last year, history repeated itself. Schick at Finance Watch Germany is calling for the chairman's head. "As far as I'm concerned, Paul Achleitner is the first one who should leave," he said, arguing he is associated with the collapse in the share price and the fact "that these days, we really have to worry about Deutsche".
Author: Lora Smith
PARIS, July 9 -- The number of funds domiciled in France has fallen steadily in recent years despite lobbying to attract more asset management business to the country following the upheaval caused by Brexit.
There were 10,804 funds domiciled in France at the end of last year, according to financial regulator the Autorité des Marchés Financiers, which used data from the European Fund and Asset Management Association. This was down from 11,790 at the beginning of 2012. The decline is striking given that Europe's other large fund jurisdictions — Luxembourg, Ireland, Germany and the UK — all registered increases. The news is a blow to France, which had hoped the UK's decision to leave the bloc would open the door to it becoming a larger hub for fund management. Paris's business district launched a quirky campaign shortly after the 2016 EU referendum to try to lure London-based financial workers across the Channel. The AMF attributed the fall to the transfer of funds to other jurisdictions, although it added that the total fund number had remained stable since 2017. "Delegation" rules allow funds to be domiciled in one part of the EU, with investment management activity taking place elsewhere. Large numbers of investment managers have established entities in Luxembourg and Ireland in preparation for Brexit.
Luxembourg is the biggest fund domicile in Europe with nearly 15,000 funds. France is the second-largest market while Ireland has overtaken Germany to claim third spot. It is not all bad news for France. A year ago BlackRock, the world's biggest asset manager, chose Paris over London for its new base to provide alternative investment services across Europe and Asia, although London remains its main European office. Part of the French campaign included French president Emmanuel Macron wooing Larry Fink, BlackRock chief executive, at the Elysée Palace. Other financial groups that have beefed up their presence in the French capital include US banks Citigroup and Bank of America.
Author: Lora Smith
BANGKOK, July 5 -- Investors want the incoming government to stick to its investment plans for infrastructure mega-projects and release budget plans for them as soon as possible, said the head of private banking at Kasikornbank (KBank).
The government’s planned infrastructure projects will draw in further foreign investment into the country, which is seen as an attractive and low-risk investment market, Siriporn Suwannagarn, managing director and financial advisory head of Kasikornbank's Private Banking Group, said at a press conference on Friday. Foreign and domestic investors would like plans for the next government budget to be released as soon as possible, she said. This way, investors will be able to adjust their investment strategies to optimise returns on sectors that will benefit from new government policies.
"For instance, if the government announces its plans to roll out more Pracharat policies directed to the grassroots economy, then the agricultural sector will stand to benefit. On the other hand, if the government increases its focus on the Eastern Economic Corridor, then there may be further investment opportunities in the manufacturing sector," she said.
Growing foreign investment flows into the country along with a strong current account surplus have strengthened the baht in recent months, creating a key opportunity for Thais to invest abroad. However, Siriporn cautioned investors on the high level of stock market volatility around the world as the global economy has entered a late-growth cycle. "Global markets have been overreacting to the 'good' financial news as the US Federal Reserve has signalled lower interest rates and the US and China agreed to resume trade talks at the G20 meeting," she said.
The Thai stock market has been part of this trend. The Stock Exchange of Thailand (SET) Index at the end of June showed an increase of 6.8 per cent over the previous month, marking it as the best performer in Asia. It is up 10.6 per cent from the end of 2018 to 1,730.34 points. The average daily trading value on the SET and the Market for Alternative Investment (mai) in June was Bt60.53 billion (US$1.95 billion), up 3.1 per cent from the preceding month. However, the US policy rate has not been lowered yet and the US tariffs on Chinese goods have not been reduced, Siriporn said. If these factors worsen, investors should readjust their portfolios and invest less in equities, focusing more on assets such as gold and bonds, she said.
Author: Pete McGee
But with Trump's repeated complaints about dollar strength – even after the US refrained from formally labeling China a currency manipulator at the end of May – anything is on the table, according to Canadian Imperial Bank of Commerce. Presidential ‘obsession’"The obsession with currency manipulation – a month after the last Treasury report had different conclusions – means we should be prepared for anything," said Bipan Rai, CIBC’s North American head of foreign-exchange strategy. "The Treasury hasn't intervened to weaken the dollar for decades, but we wouldn't be surprised if that changes potentially under Trump." The euro touched the day's high on Trump's tweet Wednesday before retreating. The latest missive did little to rattle the offshore yuan, which is roughly unchanged near 6.88 per dollar. The Bloomberg Dollar Spot Index is down about 0.5% this year, after a 3.2% gain in 2018. But using a Federal Reserve trade-weighted measure, the dollar is not far below the strongest since 2002, which threatens to make US exports less competitive abroad.
The risk of intervention increases should the Fed decide not to ease policy at its meeting this month, Rai said. Trump has staged a campaign against Fed Chairman Jerome Powell in recent months, comparing the central bank to a "stubborn child" last month for not cutting rates. Trump may ramp up his jawboning efforts as other major central banks start to ease, said Anthony Doyle, global cross-asset investment specialist at Fidelity International. "I wouldn't be surprised if jawboning was to increase in coming months," Doyle said in an interview with Bloomberg Television. "Generating inflationary pressures, generating competitiveness through a lower currency is one tool that central banks can use to support their economies and it’s the only game in town at the moment." Not enoughEven if the Fed does lower rates in a few weeks – a move that bond traders overwhelmingly expect – that might not be enough for the president, according to Bank of America Corp. "The president is likely to get his way at least for the time being," foreign-exchange strategist Ben Randol said via email. "However, the problem arises if US economic outperformance continues and the dollar proves accordingly resilient," he said. "In that case, the temptation to intervene in FX markets will increase if Fed cuts don't do the trick."
Author: Lora Smith
FRANKFURT, July 3 -- The European Central Bank's new chief economist used his first speech in the role to claim past monetary stimulus has been effective and more is available if needed.
Philip Lane, who joined the Executive Board in June, echoed President Mario Draghi's recent remarks that there is room to cut interest rates from record lows or resume bond purchases to boost inflation amid the current economic slowdown. The euro zone is struggling under a manufacturing downturn driven largely by global trade tensions, and a gauge of factory activity published Monday showed factories still stuck in a slump. Lane also said the ECB's long-term bank loans and a communication strategy provide complementary support.
"The effectiveness of the policy toolkit means that we can add further monetary accommodation if it is required to deliver our objective," he said at a conference in Helsinki. "It is essential that a central bank shows consistency in its monetary policy decisions by proactively responding to shocks that might delay convergence to the target or move inflation dynamics in an adverse direction." Investors and economists predict that the ECB will cut interest rates as soon as this summer. The deposit rate is already at a record low minus 0.4% and the central bank only capped its 2.6 trillion-euro quantitative-easing programme at the end of last year. Lane said the ECB's latest adjustment to its communication on interest rates – a pledge to keep them on hold through at least the first half of 2020 – isn't "intended to ratify market views". Rather, it offers an idea of the most likely path foreseen by the Governing Council given the current state of the economy.
Author: Lora Smith
LONDON, June 26 -- Bitcoin jumped to its highest in eighteen months on Wednesday on safe-haven investment flows and growing expectations that Facebook’s Libra could turn cryptocurrency investments mainstream.
“It obviously does appear to be benefiting from some sort of flows that gold is benefiting too,” said Michael Hewson, chief market strategist at CMC Markets. “You’ve got all this stuff about Libra going on which is renewing interest in bitcoin”. Bitcoin traded last at $12,485 after reaching a high of $12,935 earlier in the Asian session. So far this year, the cryptocurrency has nearly tripled in value after being in the doldrums last year.
MACAU, June 26 -- The house always wins - and now it has artificial intelligence on its side.
Some of the world's biggest casino operators in Macau, the Chinese territory that is at the epicentre of global gaming, are starting to deploy hidden cameras, facial recognition technology, digitally enabled poker chips and baccarat tables to track which of their millions of customers are likely to lose the most money. The new technology uses algorithms that process the way customers behave at the betting table to determine their appetite for risk. In general, the higher the risk appetite, the more a gambler stands to lose and the more profit a casino tends to make, sometimes up to 10 times more. This embrace of high-tech surveillance comes as casino operators jostle for growth in a slowing industry that is under pressure globally from economic headwinds and regulatory scrutiny. In the world's biggest gaming hub, where expansion is reaching its limits, two casino operators - the Macau units of Las Vegas Sands Corp and MGM Resorts International - have already started to deploy some of these technologies on hundreds of their tables, according to people familiar with the matter. Sands plans to extend them to an additional 1,000 or more tables, said the people. Three others, Wynn Macau, Galaxy Entertainment Group and Melco Resorts & Entertainment, are in discussions with suppliers about also deploying the technology, according to the people, who asked not to be identified because they are not authorised to speak publicly about the plans.
Macau junket operator Suncity Group Holdings, which is building a casino in Vietnam, said it is planning to deploy a system where RFID technology - which uses radio frequencies to attach tags to objects - is installed on chips and tables, storing data on players. The gambling giants are motivated by the challenge of maximising profits from the growing Chinese middle class, who stream into Macau en masse, as it is the only place in Greater China where gambling is legal. More than three million people visit the territory every month, from wealthy and focused bettors, to families on short trips with grandparents and children in tow. The advanced-surveillance technologies give casinos a way of easily separating who might become serious gamblers from those just having a fun weekend. It is not unusual for casinos to have surveillance cameras for security and to detect cheating, with Las Vegas operators utilising RFID-enabled chips that they can disable if they are stolen out of the casino. But these new technologies go a step further in tracking and rating every customer, building up a treasure trove of data.