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Retail News Asia is committed to providing both local and global retailers with the latest Finance news throughout the Asian market. This on a daily base.

  • UBS Clients Face Most Difficult Environment in a Decade

    UBS Clients Face Most Difficult Environment in a Decade

    Despite one of the most challenging investment environments in a decade, Switzerland’s largest bank managed to match its first-quarter profit performance in the second.

    UBS reported a net profit of $2.1 billion in the second quarter despite facing numerous challenges and despite an 11 percent drop in pre-tax profit in the global wealth management (GWM) unit, the bank reported Tuesday.

    The GWM unit posted a pre-tax profit of $1.2 billion in the second quarter compared to the same three-month period last year. Invested assets for the unit stood at $2.8 trillion. Although net new fee-generating assets grew by a modest 400 million in the second quarter, they increased by $19.8 billion through the first half of the year, underscoring the challenges faced during the second quarter.

    Switzerland and the Asia Pacific region reported net new money inflows during the second quarter of $1.1 and $3.3 billion respectively during the second quarter. The Americas region saw net outflows of $3.5 billion, while EMEA reported a $500 million outflow.

    In the asset management (AM) division, UBS booked a pre-tax profit of $1.0 billion. The unit saw net new money outflows of $12 billion in the second quarter, although for the January to June period, flows were a positive 2 billion. Invested assets for the unit were $1.0 trillion, according to UBS.

    The second quarter was one of the most difficult periods for investors in the last decade. Inflation remained high, the war in Ukraine continued, and parts of Asia continued to pursue a strict corona policy. In these uncertain times, our customers rely on our strong ecosystem to help them to meet market conditions and invest for the long term, said UBS CEO Ralph Hamers.

    Today’s financial results translate into diluted earnings per share of $0.61.

    The report said that high and increasing inflation and tight labor markets in many countries have led central banks to raise interest rates at an accelerated pace. The implications of Russia’s ongoing war in Ukraine, including higher energy and commodity prices, as well as the continuing effects of the pandemic and related restrictions, particularly in Asia Pacific, have increased uncertainty about the global economic outlook. As a result, equity and fixed income valuations declined steeply in the second quarter and high volatility persisted.

    Against this backdrop, client sentiment and activity among our private clients remained muted in the second quarter of 2022, while institutional trading activity remained strong. We expect these uncertainties to continue to affect client sentiment, which, combined with normal seasonality, may also affect client activity levels in the third quarter of 2022. While lower asset valuations will hurt our recurring net fee income and weak client sentiment may affect net new assets in our asset-gathering businesses, we expect higher interest rates will positively affect our net interest income.

  • UBS Retreats From Russia in Small Steps

    UBS Retreats From Russia in Small Steps

    Following Russia’s invasion of Ukraine, UBS reduced its exposure to the country and continues to do so.

    As a result of sanctions imposed against Russia by various jurisdictions including the US, EU, UK, and Switzerland, among others, UBS said it is not conducting any new business with Russia or clients domiciled there.

    Furthermore, Switzerland’s largest bank continued to reduce its exposure to Russia by a further $100 million in the second quarter. While the sum is negligible in relation to its overall assets and business, it is nevertheless something that UBS and other banks point out in the reporting of their results.

    At the end of June, UBS had a direct country risk exposure to Russia of $300 million, down from $400 million at the end of the first quarter, and half of the $600 million exposure at the end of last year, UBS said in its second-quarter report.

    What remains is trade finance exposure in personal and corporate banking, one loan in the investment bank, cash account balances, and issuer risk on trading inventory within the investment bank. Moreover, the bank had «no material direct country risk exposures to Ukraine or Belarus as of June 3o.»

    In the first quarter of the year, both the EU and Switzerland banned deposits of over 100,000 euros on Russian individuals not legally residing in the European Economic Area (EEA) or Switzerland. UBS said this exposure has been reduced as well, with about 0.4 percent of invested assets in its global wealth management (GWM) related to such clients at the end of June, which is down from around 0.7 percent at the end of the first quarter.

    At the end of the second quarter, the GWM unit had $2.8 trillion of invested assets.

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  • SEBA to Add More Than a Dozen Staff in Asia

    SEBA to Add More Than a Dozen Staff in Asia

    Julius Baer-backed crypto bank SEBA will reportedly take advantage of the selloff as a buying opportunity, with plans to add more than a dozen staff in Asia.

    SEBA will grow its headcount in Hong Kong and Singapore from around seven to more than 20, according to a report citing its Asia head of corporate development Eugene Sun. The Zug-headquartered crypto bank will hire legal, compliance, and relationship manager staff alongside plans to also obtain licenses in both cities.

    We are finding the selloff to provide an opportunity commercially and in the war for talent, as clients and talent alike seek a more secure and more regulated platform for the promising future of digital assets, Sun said.

    One of SEBA’s headline partners is LGT which announced a partnership in pay to provide crypto to clients domiciled in their home market of Liechtenstein or Switzerland. SEBA is also preparing to launch with LGT in Asia, according to the report which did not provide additional details.

    Private banks generally are going to start to embrace crypto, said Sun.

    SEBA Bank was founded in 2018 and now supports 25 markets worldwide with financial backers that include Julius Bear and DeFi Technologies.

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  • Bank of America eyes Vietnam return

    Bank of America eyes Vietnam return

    Bank of America is seeking permission to set up a $50 million branch in Ho Chi Minh City, its executive vice chair of global corporate and investment banking Madhu Kannan has said.

    In a meeting with HCMC Chairman Phan Van Mai who is visiting the U.S., Kannan sought support for the bank’s return to Vietnam after closing its Hanoi office in 2002 when the parent company initiated systemic reforms.

    In response, Mai said that inviting Bank of America to HCMC was one of his goals during this trip. He said he was committed to helping the bank establish a branch in the city. He noted that HCMC planned to become an international financial hub, Mai said.

    The city also welcomes U.S businesses to invest in the financial, technology, education and healthcare sectors, he added.

    Kannan said that his bank’s activities would align with the city’s development path.

    Founded in 1904, Bank of America is the second largest U.S. lender.

  • Tumbling stock market makes a dent in company earnings

    Tumbling stock market makes a dent in company earnings

    Investment in securities, a major source of income for many companies during the two years of Covid-19, has become a financial burden this year after markets plunged.

    Da Nang Housing Investment Development reported losses of over VND90 billion ($3.85 million) for the first six months “due to negative market factors,” it said in its earnings report.

    Last year it reported profits of VND130 billion from stock trading.

    The VN-Index has fallen by over 20 percent this year due to geopolitical tensions and rising inflation.

    Mining company Hoa An said its profits dropped by 90 percent year-on-year to VND2 billion in the second quarter following a mark-to-market decline of over VND20 billion in steelmaker Hoa Phat Group’s stocks.

    HPG has been hovering around a 17-month low as steel prices dropped due to declining construction activity and a surge in costs.

    At the end of June Hoa An was holding over 2.5 million HPG shares.

    Construction firm Licogi 14 said it had to mark to market its “financial investment” in the previous quarter.

    It lost over VND346 billion during the quarter though revenues from its main businesses soared by 45 percent to VND88 billion.

    Seafood processor Vinh Hoan Corporation invested VND200 billion in stocks in the second quarter but made mark-to-market losses of nearly VND63 billion.

    Its main business thrived meanwhile with revenues jumping by over 80 percent year-on-year to VND4.22 trillion.

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  • HSBC Accelerates Strategy to Resist Break-up Call

    HSBC Accelerates Strategy to Resist Break-up Call

    HSBC is reportedly prepared to defend against Ping An’s proposal to break up the bank, with plans to announce a further acceleration of its strategy to shift resources to Asia.

    HSBC will defend against Ping An’s proposal to explore strategic options like a spinoff of the Asia business, according to a report citing unnamed sources.

    The British lender will argue in the upcoming earnings announcement on August 1 that the bank’s future is dependent on its global network of clients and services. HSBC will also outline its plan to accelerate its strategy to exit non-core businesses and further the shift towards Asia.

    This follows travel by HSBC CEO Noel Quinn to Hong Kong a few days ago to undergo a seven-day hotel quarantine followed by a board meeting in the regional office.

    On exiting non-core markets, the report highlights the possibility of business departures from more unprofitable clients in markets like France and Germany. The bank could also accelerate its exit from Turkey, Armenia, Greece and Oman where it is in talks to merge the latter business with local lender Sohar International Bank.

    During the earnings announcement next month, the bank may not mention Ping An by name or allude to the breakup calls.

    HSBC announced in February last year that the bank would commit 50 percent of capital allocation to Asia in the medium to long-term, up from 42 percent at the time.

  • EU Looking to Lock Switzerland Out

    EU Looking to Lock Switzerland Out

    High inflation in the EU area and geopolitical uncertainties are some reasons why Europeans move assets to Switzerland. Yet as the country drifts further away from Brussels, going after these clients could become more complicated.

    Swiss banks are not allowed to proactively solicit clients in Europe unless they have a branch in the respective market.

    However, for many institutions, such as private banks and independent wealth managers, a second branch in Italy or France is, economically speaking, not worthwhile and does not fit with the business models of these institutions.

    The EU countries who have adopted this protectionist stance, do so in favor of their own banks. By contrast, Germany has made a special concession, allowing banks from third countries – such as Switzerland – a so-called exemption.

    The condition for this deal is that financial institutions adhere to certain regulations and are well supervised in their home country. It is precisely this special arrangement, of key importance to several Swiss private banks, that is under threat, as the Neue Zuercher Zeitung.

    The reason being that the EU wants to further harmonize its banking supervision. So far, only Europe’s large financial houses are monitored uniformly, while smaller houses are subject to national supervision; this explains the different practices in Germany and Italy, for example, with regard to banks from third countries.

    The EU project is now aimed at standardization, which would ban special regulations for individual countries. The driving force behind this development is France, which is primarily against the predominance of Anglo-Saxon banks on its own turf.

    Although Switzerland plays only a secondary role in the French market, if such a procedure is rolled out in other countries, it would be a harsh verdict for many Swiss private banks.

    After all, business with German clients is still lucrative and growing strongly. Estimates by the international consulting firm Boston Consulting Group (BCG) suggest that clients from the EU region and Great Britain have a good 1,000 billion Swiss francs managed by Swiss financial institutions, which employs 20,000 people at local banks and generates tax revenues of around 1.5 billion francs, as the Swiss Bankers Association (SBA) recently calculated.

    The prospect of Switzerland obtaining an exclusive arrangement with the EU is also unlikely. Ultimately, any agreement depends on political willingness within the EU and after Switzerland broke off its discussions to forge an over-arching treaty the EU last year, this willingness is not great.

    Although Germany, Spain and Holland were successful in getting France to omit article 21c – which is responsible for stifling foreign banks – from the plan, observers agree that sooner or later the Paris-based European Banking Authority will bring it back to the agenda.

  • Singapore Central Bank Follows the Pack

    Singapore Central Bank Follows the Pack

    The MAS indicates it will continue to tighten policy to slow inflation and ensure price stability in the medium term.

    The Monetary Authority of Singapore (MAS) indicated in a statement published on its website Thursday that it believes it is «prudent» to take another «calibrated step to tighten monetary policy».

    Along with numerous other international central banks, it believes that doing so will prevent inflation from increasing further given that it expects that pressures on prices will remain elevated over the next few months, as it expects core inflation to rise to slightly more than 4 percent in the short term before it eases.

    Although global supply chain frictions are easing, external inflationary impulses have become more broad-based, reflecting underlying constraints in global commodity and labor markets, the MAS indicated.

    Unlike many other central banks, the MAS uses the exchange rate for the Singapore dollar to set policy given its open and relatively small economy. The policy is set by adjusting the Singapore dollar’s trading band, based on an undisclosed basket of currencies weighted to the countries’ levels of trade with the city-state. The MAS can adjust the mid-point of the band, the size of the band, and the slope of the appreciation.

    In the statement released Thursday, the MAS indicated that it would re-center the midpoint of the policy band, which builds on previous steps that it has taken. It did not change the slope or width of the band.

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  • Banks Rising to the Cloud

    Banks Rising to the Cloud

    Many Swiss retail banks want to move part of their IT to the cloud but certain practicalities are holding them back.

    After big banks have discovered the benefits of using the data cloud, smaller and medium-sized retail banks are starting to get to grips with cloud computing, according to a study by Lucerne University of Applied Sciences and Arts.

    The study listed several reasons in favor of managing part of the IT infrastructure and customer data via a cloud service. Although banks predominantly are focussed on saving costs, a switch to the cloud is becoming unavoidable because software is increasingly only available as a service on the cloud and the introduction of new business models is equally reliant on cloud infrastructure.

    Banks see the greatest risk in having the data stored abroad, as it the case with the majority of providers. However,  the authors of the study found that banks always found ways to protect data confidentiality by means of technical, organizational and, in some cases, contractual measures.

    With many products only being offered in a subscription model (Software as a Service, SaaS), banks primarily want to use cloud computing at their workplace. Important areas of use behind this are named as efficiently developing software in a public cloud and operating SaaS products at the customer interface.

    The retail banks surveyed expect to have moved over 60 percent of their workload to a cloud in the next three years. About one-fifth is expected to run in a public cloud, one-quarter in a private cloud and the rest in a community cloud.

    IT managers are skeptical when it comes to the practicality of shifting to the new infrastructure. For many it is not clear whether operating their core banking system on the cloud by 2024 is technically feasible and economically viable.

    According to a 2021 estimate by the Boston Consulting Group (BCG), banks worldwide operate around 15 percent of their workload in a public cloud. In the future, UBS intends to run one third of its workload in the public cloud, one third in the private cloud and the remaining third traditionally on the mainframe.

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  • UBS Appoints Iqbal Khan as Sole Wealth Leader

    UBS Appoints Iqbal Khan as Sole Wealth Leader

    Swiss bank says current wealth management co-head Tom Naratil will retire, with Naureen Hassan succeeding him in the Americas.

    Switzerland’s largest lender announced overnight in a statement that Iqbal Khan will become the sole president of the flagship global wealth management business following the retirement of the current co-head Tom Naratil, who departs after a 39-year career at UBS and its predecessor banks.

    According to the bank, Khan is the «ideal» person to lead the business given his background as a financial and regulatory auditor, his risk management expertise, and commercial as well as client focus.

    There have been rumors about changing power structures within UBS following the appointment of Colm Kelleher as chairman in April, with talk in Zurich financial circles indicating the possibility of Khan stepping up to replace current group CEO Ralph Hamers at some point.

    The step will be effective on 3 October 2022. Besides the co-leadership of the global wealth management business, Naratil is president and CEO of UBS Americas and he will be succeeded by Naureen Hassan in those posts, while also becoming a member of the group executive board.

    Hassan joins the bank from the Federal Reserve Bank of New York, where she was first vice president and chief operating officer, serving as an alternate voting member on the Federal Open Market Committee.

    Before joining the Fed, Hassan was the chief digital officer for Morgan Stanley Wealth Management and had held various roles at Charles Schwab. She originally began working at McKinsey, a major industry consultancy.

    Hamers indicated in the media release that the global wealth management business and the Americas region were both strategically important and offered «significant» growth opportunities.

    I am confident that Naureen and Iqbal will build upon Tom’s success and continue to deliver for our clients and achieve our strategic ambitions, Hamers said.

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  • UBS Mulls Iqbal Khan as Sole Wealth Management Head

    UBS Mulls Iqbal Khan as Sole Wealth Management Head

    The Swiss bank could be considering ending the co-management of its global wealth unit as it places its potential leader into position for the future.

    UBS is currently evaluating whether to promote Iqbal Khan as the sole head of the global wealth management business.

    The current co-head of the wealth management business, Tom Naratil, may keep his current role as head of the UBS business in the Americas, the news service said, citing people with knowledge of the matter.

    The step could also serve to position Khan as current UBS chief executive Ralph Hamers’ successor, although no final decision has been made yet, it said.

    Given that Hamers has only run UBS for two years, the management change is unlikely to be imminent, the report added. Khan came to UBS from Credit Suisse in 2019, where he ran that bank’s international wealth management business.

    Naratil originally started working for PaineWebber in 1983, a US brokerage purchased by UBS in 2000. He was previously the UBS chief financial officer and chief operating officer in Zurich before returning to manage the US wealth business in 2016.

  • Loans to small businesses a booming business

    Loans to small businesses a booming business

    The business of providing loans to small and medium firms is booming in Vietnam with the rise of several platforms offering more accessible credit than traditional banks.

    Bonbon shop, a platform that helps 35,000 grocery stores connect with over 24 major manufacturers, recently launched a credit option of up to VND200 million ($8,563) for stores to buy supplies.

    The operator of the platform, DMSpro, has partnered with e-wallet SmartPay and lender VPBank to make the loans accessible.

    EVNFinance, a credit provider unit of the national utility Vietnam Electricity, recently launched loan packages of up to VND500 million for 36 months.

    It said borrowers could receive the money within eight hours of making their requests.

    Several foreign credit platforms have been making their way into Vietnam since earlier this year.

    Singapore-based fintech firm Validus entered Vietnam in January and appointed Dinh Van Binh, former vice chairman of Sacombank Investment, as its CEO.

    Vishal Shah, chairman of Validus’ emerging markets, said Vietnam was one of its main markets and the company will continue to invest to expand its presence.

    Also in January, Funding Societies, which claims to be the largest digital financing platform for small and medium companies (SMEs) in Southeast Asia, said that it had disbursed $20 million in loans in Vietnam and targets to increase this to $90 million this year and $1.3 billion in 2025.

    The company estimates that Vietnam has a credit “gap” of around $58 billion in funding SMEs, referring to the amount of money that small and medium businesses have not been able to borrow because of administrative and other blocks.

    Nearly 46.8 percent of companies in Vietnam reported difficulties in accessing traditional bank loans last year, compared to 40.7 in 2020, according to a report by the Vietnam Chamber of Commerce and Industry (VCCI).

    Small companies often have to borrow money from friends or family or even assets to submit as collateral to raise capital, it added.

    Because of these challenges, the SMEs credit market is set to be the next race of many finance organizations, said Hoang The Hung, deputy director of EVNFinance.

    VPBank leaders said they have seen its funding for SMEs rising in the last six months as businesses restarted their operations and needed funds. They expect even stronger growth in the near future.

  • Swiss NGO Denounces UBS

    Swiss NGO Denounces UBS

    The Swiss bank has been accused of money laundering among other wrongdoings in a complaint by the Swiss NGO Public Eye.

    The Swiss NGO Public Eye has filed a criminal complaint against UBS with the Office of the Attorney General of Switzerland, as the newswire AWP reported Friday.

    The plaintiff is accusing the bank of money laundering and not doing enough to prevent it, the report said.

    The allegations are based on Public Eye’s Congo Hold-Up investigation carried out last year, which highlighted the relationship of the former president of the Democratic Republic of Congo, Joseph Kabila to a Belgian businessman. The businessman allegedly received transfers of «dubious» origin on his UBS bank account.

    Based on the NGO’s Congo report, the French Financial Prosecutor’s Office has opened a preliminary investigation, which is looking into alleged acts of aggravated laundering of misappropriation of public funds, while the Belgian justice has searched the Belgian businessman’s home on suspicion of corruption of foreign public officials, the NGO writes on its webpage.

    In 2019, Public Eye filed a criminal complaint against Credit Suisse in connection with the Mozambique affair.

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  • China tightens rules on $1.3 trln credit card business

    China tightens rules on $1.3 trln credit card business

    China unveiled tighter rules late on Thursday to better regulate its $1.3 trillion credit card industry, urging lenders to adopt a “prudent” growth strategy, and monitor risks more closely.

    Banks are also barred from using the number of cards issued or market share as main performance metrics, and are required to cap the number of dormant cards at 20% of total, according to rules jointly published by China’s central bank, and the country’s banking regulator.

    “China’s credit card business has been growing rapidly, playing a key role in facilitating payment and consumption,” the China Banking and Insurance Regulatory Commission (CBIRC) said in a statement on its website accompanying the release of the new rules.

    “Recently, however, some banks … are lax in risk management, and have behaved in ways that hurt customers’ interest,” the regulator said.

    Chinese banks have issued a total of 800 million credit cards as of the end of 2021, with outstanding loans totalling 8.62 trillion yuan ($1.29 trillion), according to the People’s Bank of China. Roughly 86 billion yuan of credit card loans, or 1% of total outstanding, are overdue for six months or longer.

    The new rules require banks to tighten scrutiny over credit card loans, and strengthen risk management control.

    Banks must also set up a sound system to monitor, identify, alert and prevent abuse in the credit card business, according to the rules.

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  • VN-Index bounces back after tumble

    VN-Index bounces back after tumble

    Vietnam’s benchmark VN-Index rose 1.47 percent to 1,166.48 points Thursday but with plunging trade.

    The index closed nearly 17 points higher after losing almost 32 points on Wednesday.

    Trading on the Ho Chi Minh Stock Exchange (HoSE) fell by 27.9 percent to VND9.06 trillion ($388 million).

    The VN-30 basket, comprising the 30 largest capped stocks, saw 24 tickers gain.

    BVH of insurance company Bao Viet Holdings and VRE of retail real estate arm Vincom Retail led with a 3.8 percent gain.

    VCB of state-owned lender Vietcombank rose 3.7 percent.

    Other gainers included PNJ of Phu Nhuan Jewelry and VIC of biggest private conglomerate Vingroup, up 3.6 percent and 3.4 percent respectively.

    Four blue chips fell, with GAS of state-owned Petrovietnam Gas losing 1.8 percent, and FPT of IT giant FPT Corporation falling 0.5 percent. Foreign investors were net buyers to the tune of VND487.46 billion ($20.86 million).

    The HNX-Index at the Hanoi Stock Exchange, where mid and small caps list, was down 0.02 percent while the UPCoM-Index at the Unlisted Public Companies Market was up by 0.19 percent.

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