|Bid||0.00 x 3200|
|Ask||0.00 x 1000|
|Day's Range||78.45 - 79.09|
|52 Week Range||60.05 - 83.11|
|Beta (5Y Monthly)||1.77|
|PE Ratio (TTM)||9.80|
|Earnings Date||Apr 14, 2020|
|Forward Dividend & Yield||2.04 (2.59%)|
|Ex-Dividend Date||Jan 30, 2020|
|1y Target Est||92.08|
(Bloomberg) -- Oil snapped the longest run of daily gains this year as investors assessed the demand hit from the coronavirus and stimulus measures being rolled out to cushion its economic impact.Markets are overconfident in expecting a v-shaped recovery and oil prices are likely to remain weak during the first half of the year, according to Citigroup Inc. China has pledged a raft of fiscal stimulus measures, while Singapore plans to deliver a strong budget to counter the slowdown in tourism and trade.The outbreak has curbed travel and hit supply chains across the world, with Chinese refineries continuing to trim processing rates and Apple Inc. saying it won’t be able to meet its revenue guidance for the March quarter due to work slowdowns and lower smartphone demand. Brent oil rallied the past five days amid optimism the worst economic impacts had been accounted for.“Markets are taking a view that this will be a temporary deferral of demand, rather than destruction,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney. “I don’t agree. I think, the destruction of demand will be significantly higher than the market is pricing at the moment.”Brent for April settlement lost 61 cents, or 1.1%, to $57.06 on the ICE Futures Europe exchange as of 11:35 a.m. in Singapore after closing 0.6% higher on Monday. The global benchmark crude trade at a premium of $5.12 to West Texas Intermediate for the same month.WTI futures for March delivery traded 38 cents lower from Friday’s close at $51.67 a barrel. There was no settlement Monday due to the Presidents Day holiday in the U.S.The supply-chain recovery in China could be problematic despite the stimulus pledge from Beijing, Citigroup analysts including Edward Morse said in a note to clients. Total Chinese product demand may drop by about 3.4 million barrels a day in February and average 1.5 million barrels per day in the first quarter.China offered more funding to banks and cut the interest rate it charges for the money, while Singapore’s Finance Minister Heng Swee Keat said the city-state plans to draw on its “deep reserves” to tackle the virus.\--With assistance from James Thornhill.To contact the reporter on this story: Saket Sundria in Singapore at email@example.comTo contact the editors responsible for this story: Serene Cheong at firstname.lastname@example.org, Ben Sharples, Andrew JanesFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Dividends are one of the best benefits to being a shareholder, but finding a great dividend stock is no easy task. Does Citigroup (C) have what it takes? Let's find out.
Bank of America chief executive Brian Moynihan was paid $26.5m, the same level as in 2018. Morgan Stanley chief James Gorman took a 7 per cent pay cut, to $27m, despite his firm posting record results.
(Bloomberg) -- (Updates story originally published July 3, 2019, to add post-publication comments from Fiyaz spokeswoman.)When Alshair Fiyaz, a wealthy businessman with a shaggy mane of hair, walked into the garden of London’s Four Seasons Hotel on a pleasant June evening five years ago, he had no idea he was being followed. He was there to meet Walid Choucair, a trader wearing a hoodie who collected “Star Wars” memorabilia and expensive guitars. Neither one noticed an officer from the National Crime Agency stick a recording device in the greenery.The investigator was tracking Fiyaz in connection with an insider-trading probe being conducted by the NCA, the U.K. equivalent of the FBI. Choucair wasn’t a suspect, and the officer didn’t know who he was before planting the bug. But after the meeting, the officer followed Choucair to an apartment near the Royal Albert Hall on the edge of Hyde Park. That fateful encounter at the Four Seasons, recounted in court, would turn Choucair, whose life was an adrenaline-charged chase for information about big deals, into Europe’s most high-profile insider-trading defendant. And his two trials—the first ended last year in a hung jury, the second with a conviction last week—opened a window on a loose network of traders from London to Dubai as well as a multinational investigation into suspected insider trading.Fiyaz’s name, and details of the Four Seasons meeting, came up frequently at the trials. Choucair said he often discussed trades with Fiyaz, who was so successful he’d bought an 86-meter yacht and a polo club. The two had partied at Tramp, a London club frequented by rock stars and royals, where they spent thousands of dollars on three-liter bottles of Cristal—although the manager of Tramp testified he had no knowledge of Choucair and Fiyaz being friends. Financial institutions alerted U.K. regulators about Fiyaz’s trading 71 times in 2013 and 2014, Choucair’s lawyer told the court, citing information from the regulator. A spokeswoman for Fiyaz said the suspicious activity reports related to only 27 trades and were triggered because financial institutions are required to flag transactions when a trader makes more than 10,000 pounds ($13,000) a day. She said he has never been interviewed or charged in relation to any crime and denies any suggestion of wrongdoing. But evidence, testimony and legal filings from Choucair’s trials, as well as interviews with traders, their friends, lawyers and people close to the investigation suggest Fiyaz may have been part of a network that cultivated ties to bankers, shared tips via burner phones to avoid detection, fed information to journalists and often secretly monitored each other’s trades. Using their own money or funds from wealthy associates, they made tens of millions of dollars betting on stocks just before a news splash popped the share price. In 2014, the core group of about a dozen traders made more than $100 million, a figure arrived at by adding up figures in legal filings and conversations with traders. Regulators in France and the U.K., where abnormal trading occurs ahead of more than one in five takeovers, spotted the uncanny timing of transactions by Fiyaz, Choucair and others. In addition to Choucair and Fabiana Abdel-Malek, a UBS Group AG compliance officer convicted at the same trial of providing him with information from a confidential bank database, seven men, including Geneva-based trader Alexis Kuperfis and former Societe Generale SA banker Stephane Fima, have been charged with insider trading in France. All have contested the charges. Another trader was arrested in Serbia in November on a U.S. warrant that alleged he committed securities fraud and was extradited in May, Serbian court officials confirmed. U.S. prosecutors are working with European counterparts on their own probe, Bloomberg News reported last month.Fiyaz’s spokeswoman said he hasn’t been questioned about insider trading or financial misconduct by authorities in France or any other jurisdiction. Loic Henriot, a lawyer for Kuperfis, said his client has never been part of a network of traders exchanging information. David-Olivier Kaminski, an attorney for Fima, said his client has nothing to do with the investigations that led to Choucair’s conviction.Choucair, now 40, testified at his trial about his first conversation with Fiyaz, six years his senior, at a pricey Chinese restaurant in London around 2005. They had seen each other at Tramp, where Choucair, the son of a Lebanese construction executive, was a member. Fiyaz and his brother Javed started showing up that year, according to two people familiar with the club scene. They would arrive in separate Rolls-Royces, descend the stairs, pass the red-neon Let’s Get Tramped sign, and set up camp in a corner, surrounded by a clutch of women. Choucair would spend thousands of dollars in that den two or three times a month. Whenever he ordered a $4,000 bottle of champagne, the staff would play the “Star Wars” theme music and announce “Lebanon is in the house,” according to people who’d been there with him.Choucair was out with a friend who knew Fiyaz when they spotted each other at the Chinese restaurant. They got to talking. “We spent the whole night having drinks, which I was very good at, and having a conversation, which he was very good at,” Choucair would testify at his trial 14 years later, trying to explain that his stock tips were coming from traders like Fiyaz and Kuperfis and not from his friend at UBS.Choucair had a privileged upbringing in London. He boarded at Mill Hill, a 212-year-old school set on 150 acres of lush parkland. But it was something more avant-garde that first got his heart racing as a young boy. Watching TV one day, he saw Guns N’ Roses’ wild-haired guitarist Slash tear through a solo and decided he, too, wanted to be a guitar hero. When he was 18, his father died and he inherited a fortune. He spent the next years in a blur of benders, and, in his sober moments, completed a business degree at King’s College London, he said at his trial. He bought an Aston Martin, started collecting guitars and filled his apartment with life-size figures from his other boyhood obsession, “Star Wars.” Fiyaz was raised with his brother in Belgium, where their father, a Pakistani businessman, had settled. They got started at the family company and made their money from shipping and investments ranging from Nigerian oil blocks to Danish department stores and a chocolatier, according to people who’ve met them and information on their websites. But they also attracted the attention of Belgian police, who suspected them of carrying out a scheme to avoid paying value-added taxes, two people familiar with the matter say. The investigation was closed after Fiyaz and his brother agreed to a settlement including a seven-figure payment, one of the people said. Neither was charged and there was no admission of wrongdoing. Fiyaz’s spokeswoman said the dispute was over whether sales by his company were exempt.By the mid-2000s, the brothers had moved to London, where they caused a stir in the Mayfair social scene. Alshair, the younger and more athletic of the two, was permanently dressed to go out. He and Javed faced each other across a pair of imposing desks in an office behind the Dorchester Hotel, where they ran their shipping business. They told people they were looking for fresh investment opportunities. When Choucair saw Fiyaz’s trading setup, he testified, he was intrigued and wanted in. He said that Fiyaz and Kuperfis, nicknamed the Cowboy because he hit the mark so often, showed him how to competitively trade contracts for difference, or CFDs, derivatives that allow a person to bet on a company’s stock without owning shares. It’s a way of trading on margin. With a relatively small down payment, profits and losses can exceed those when buying shares. Many countries have restricted their sale because retail investors can underestimate the risks and incur outsize losses. Choucair and his associates were a paradoxical bunch. They relied on each other for tip-offs but were suspicious that others were spying on them. Fiyaz accused his brokers of telling people about his positions in the market, according to four of the traders, none of whom were witnesses in the case. Some accused him of scoping out their trading positions. Discretion was paramount, and that included using untraceable communications, Choucair testified. Choucair soon had four handsets with unregistered SIM cards for the traders he was talking to. Fiyaz insisted he keep a line dedicated to him, Choucair said in court. Every few months, the traders replaced their SIM cards, and, often, their devices. Fiyaz’s spokeswoman declined to comment on the specifics of Choucair’s testimony but said the jury that convicted Choucair clearly found his attempt to blame Fiyaz untruthful.In 2011, the U.S. Securities and Exchange Commission froze assets of companies belonging to Fiyaz and another trader, saying the firms were suspected of making millions of dollars with the help of inside information to trade on Lonza Group AG’s $1.2 billion acquisition of Arch Chemicals Inc., which Fiyaz benefited from. Authorities dropped the case the next year because of a lack of evidence, and Fiyaz wasn’t accused of insider trading. Investigators lamented that the other trader had harmed the probe by discarding a BlackBerry that SEC lawyers believed contained text messages about his activity, according to U.S. court filings.In Choucair’s case, the Financial Conduct Authority, which led the probe, was convinced it had found his insider. Choucair met Abdel-Malek through their mothers. Choucair’s had asked Abdel-Malek’s to make curtains for the tall windows in her son's apartment. They hit it off and introduced the two children to each other. Abdel-Malek, the oldest of three daughters of religious Coptic Christians from Egypt, was kept on a tight leash, even when she got a position at UBS in London in 2007. By early 2013, Abdel-Malek was a relatively experienced compliance officer at a newly restructured division of the bank. She could look at any deal in which UBS was involved. She had little contact with Choucair for years. But that spring they reconnected, and he invited her and a friend to Tramp to celebrate his birthday, she testified in court. He spent 10,000 pounds that night on champagne, vodka and club sandwiches, it came out in court, and the party lasted until 3 a.m. Their friendship developed, though both said the relationship wasn’t romantic. Later that spring, he bought her a BlackBerry identical to her work model with a disposable SIM card.Prosecutors had company database records showing Abdel-Malek was trawling for deals. She testified that she did this to improve her deals literacy, something her managers had asked her to do. Over the next year, prosecutors said, there were about 30 deals she kept coming back to, telling Choucair when something was imminent, though the pair were only charged in connection with five of them. When prosecutors presented a motive to the jury, they said the glamour of going to Tramp was enough. Meanwhile, the wider group of traders kept nailing stock picks before news of pending mergers broke. Fiyaz and Kuperfis made a combined 55 million euros ($62 million) trading ahead of the announcement of General Electric Co.’s 2014 deal to acquire most of Alstom SA, court records and people familiar with the matter said. Fiyaz’s spokeswoman said she was unwilling to comment on his trading earnings but denied any impropriety.Over time, Fiyaz acquired a mansion on the outskirts of Paris, the Polo Club of St. Tropez and a yacht named Ecstasea with two helicopter landing pads that once belonged to Russian billionaire Roman Abramovich. While it’s unknown how much Fiyaz paid for the yacht, the previous owner bought it for 100 million euros in 2009, according to a U.K. court document. In 2016, Fiyaz hosted a party aboard Ecstasea for the benefit of the Leonardo DiCaprio Foundation, his spokeswoman said. She declined on privacy grounds to say how much he paid for the yacht.But the trading network was heading for trouble. Even before the GE-Alstom deal, a friend of another member of the group, a deals lawyer, was getting divorced. It got nasty, and the lawyer’s former brother-in-law wrote a letter to French investigators saying he’d overheard him exchanging tips with a trader, according to people familiar with the information. Investigators had already dedicated resources to cracking down on insider trading, spurred in part by the French government’s anger that information about the GE-Alstom deal was leaked to the press. The regulators built up phone records connecting the group, the people familiar with the matter said. They secured wiretaps, including for the burner phone of a hair salon owner at one of Paris’s most exclusive hotels, whom they suspected of being a go-between, according to French investigative documents. The trail led to French ski resorts, the Cayman Islands, Geneva and eventually to the garden of London’s Four Seasons Hotel.A transcript of the recording made at the Four Seasons and shown to the jury at Choucair’s trial revealed he was talking to someone on the phone about a deal for a U.S. energy company. Choucair testified that the person was Jeffrey McCracken, at the time head of deals coverage at Bloomberg News.Choucair said he often spoke to reporters, sometimes at the behest of other traders, in the hope they would confirm his tips and publish an article that would cause the share price to spike. That day, Choucair testified in the second trial, Fiyaz had come to London to discuss the energy deal. McCracken, who left Bloomberg in 2017 to join CNBC and hasn’t been accused of any wrongdoing, declined to comment.Bloomberg reporters regularly receive tips from people active in the market and were first to report on several deals mentioned in this article. The news organization’s policy is not to publish any information without confirming with people who have direct knowledge of the matter. The policy also prohibits telling sources when a story will be published.Choucair seemed to know about the investigation before his arrest. In November 2014, he called Kuperfis to warn him. There’s a “big f--king investigation,” he blurted out in a conversation recorded by French investigators and played at Choucair’s trial. Within weeks, Kuperfis and two others were raided in France and Geneva. Kuperfis has been charged with insider trading in France in connection with his trading ahead of chemical producer Air Liquide SA’s $10 billion takeover of Airgas Inc., but he has challenged the legality of the wiretaps, and the case hasn’t come to trial. His lawyer said he couldn’t comment on the case other than to say the charges are unfounded. Choucair’s lawyers said in court that his client knew about the probe because he was told by Fiyaz, who, the lawyer recounted, had claimed he had gotten the information from a National Crime Agency interpreter, according to the judge's summary of the allegations, which the judge ruled should not be shared with the jury. Before his arrest, but after learning of the investigation, Choucair had written a letter that he hid under a rug in his apartment and that was discovered by investigators, according to the judge’s summary. In it, the summary said, he described what Fiyaz had allegedly told him about his NCA sources. The NCA said in December 2018 that it was investigating the matter. Fiyaz’s spokeswoman said he was not on notice of being the subject of any investigation. The NCA, which wouldn’t comment, doesn’t always put suspects on notice. The trial judge described the Choucair letter as “self-serving.”Choucair had his apartment swept for bugs, one person familiar with the matter said, though none were found. He called the FCA, his lawyer said in court. Then, at 6:30 a.m. one morning in September 2015, there was a knock on the door. About a dozen NCA officers had come to arrest him for insider trading. “I knew you were coming,” Choucair said, according to an account his lawyer gave in court. Across the street, they searched his mother’s house. A few miles away, Abdel-Malek’s sister woke her in her bedroom on the top floor of their family home. Two NCA officers were there to arrest her. They found a printout of price-sensitive information in a Chanel handbag and, according to people with knowledge of the matter, a new 30,000-pound Rolex, worth more than a quarter of her annual salary, along with a receipt. The jury wasn’t told about the watch.A few months after his release, Choucair was called back to the police station. Two FCA investigators sat opposite him in a small featureless room. They kept asking him about Fiyaz, Kuperfis and others, Choucair’s lawyer said in court. Choucair kept quiet.During the first trial last fall, Abdel-Malek’s white-haired father sat in the gallery with clenched teeth, clutching a wooden cross and family photographs. Prosecutors couldn’t point to any payments she received, and his lawyer told the jury that Fiyaz and other traders were just as likely a source of information for Choucair as Abdel-Malek. After all, they had bet far more heavily on the very same trades, and Choucair had been in frequent contact with them beforehand. In December, a few days before the end of the first trial, Choucair returned to Tramp. He was playing guitar with his band White Collar. The room was dark, and Choucair, wearing a hoodie and Converse sneakers, lingered in the background, barely moving to the music. The other four band members, wearing leather, tattoos and eye-liner, filled the tiny stage. Then Choucair stepped forward to sing Bon Jovi’s “It’s My Life.” By the time the group was on to Guns N’ Roses’ “Sweet Child o’ Mine,” the electric bass player was pulling his shirt off and climbing onto the drum kit below a chandelier. One band member grabbed the microphone and egged the crowd on. “This might be our last gig,” he said, without explaining that the man who was bankrolling the group might go to jail. It wasn’t Choucair’s last gig. The jury was unable to come to a verdict. At the second trial this year, Fiyaz involved himself more in the proceedings. At times, he had as many as five lawyers in the courtroom. One was a defense counsel who told the judge that Choucair had falsely accused Fiyaz of wrongdoing. “These are very serious allegations which are made against my client,” the lawyer said. “These are allegations which he denies. He’s never been arrested or charged in relation to any of these matters. The FCA has never cautioned him or even invited him in in relation to any of these matters. He is a man of previous good character.” Then just before Choucair was cross-examined, the FCA told the jury it had received information that Fiyaz, via an intermediary, had an insider at Citigroup Inc., who it was alleged may have been in a position to provide him with information about two of the trades in the indictment. The agency said it didn’t have time to investigate if any confidential information had been passed to Fiyaz and there was no evidence that he had received any such information. Last week, the Wall Street Journal reported additional details about the alleged intermediary. A Citigroup spokeswoman declined to comment. Fiyaz “vehemently denies” that he traded on inside information obtained from Citigroup or any other financial institution, his spokeswoman said.This time the Fiyaz-was-my-tipster defense didn’t work. Choucair and Abdel-Malek were both convicted on all five counts and sentenced to three years in prison. Both plan to appeal.Fiyaz wasn’t in court during the eight-week trial, or for the verdict. Traders and lawyers weren’t sure where he was. One said Argentina. Another said he’d been seen at an Alpine ski chalet. In May, Fiyaz’s name appeared on the roster of a polo team contesting the Sun Trophy at his club in France, which once paraded scantily clad models and white Bentleys in front of guests. (Fiyaz’s spokeswoman said he wasn’t involved in the day-to-day operations of the club and doesn’t condone the objectification of women.) But on an uncharacteristically rainy Sunday, there was no sign of Fiyaz on or off the polo pitch tucked away in a forest about 20 minutes west of St. Tropez by car. In the members’ section, a dozen spectators sitting in wicker armchairs, sheltered by awnings, braved the bad weather to watch Fiyaz’s team take a 5-2 drubbing. When asked after the match why Fiyaz had been replaced by another player, a worker at the club said he had been ordered not to talk. The reason, his spokeswoman said a few weeks later, was that it happened to fall during the Muslim holy month of Ramadan and Fiyaz was fasting.— With assistance by Gordana Filipovic and Alan Katz (Updates to add comments from Fiyaz’s spokeswoman in the 4th, 7th, 14th and 27th paragraphs; Tramp manager testimony at Choucair trial in 4th paragraph; and FCA statements introduced at trial in 34th paragraph.)To contact the authors of this story: Franz Wild in London at email@example.comAaron Kirchfeld in London at firstname.lastname@example.orgGaspard Sebag in Paris at email@example.comTo contact the editor responsible for this story: Robert Friedman at firstname.lastname@example.org, Alan KatzFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The head of Poland's Bank Handlowy called on Thursday on Polish authorities to spend billions of zlotys in bank tax money on a bank stability fund instead of state budget purposes due to the forthcoming economic slowdown. In 2016 Poland's nationalist Law and Justice (PiS) government introduced a bank tax, syphoning billions of zlotys yearly from the sector and more than 4 billion ($1.02 billion) last year alone, according to analysts' estimates. The ruling party introduced social handouts including 500 zlotys for every child in a family a month, as well as bonuses for elderly voters, helping it win last October's general elections and stay in power.
(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.Commerzbank AG Chief Executive Officer Martin Zielke plansfurther cost cuts after boosting revenue and capital buffers as he seeks to accelerate the German lender’s turnaround.The bank will disclose the details of a new cost plan when it reports second-quarter earnings, Chief Financial Officer Bettina Orlopp said on a conference call on Thursday, without providing details. The shares jumped as much as 6.1%, spiking after Orlopp’s comments.Commerzbank in September unveiled a new strategy the lender described as “soberingly realistic” because of its low growth targets for revenue and profitability. Several large shareholders privately lambasted the plan as insufficient, people familiar with the matter have said.Revenue at the German lender beat estimates with a 6.8% increase in the fourth quarter as income from its core lending business grew. That led to an increase in operating profit, Commerzbank said Thursday. The bank’s key CET1 capital ratio also improved more than expected.“We will take advantage of the extra leeway” provided by the improvements in profit and capital, Zielke said in the statement. “I’m more optimistic about our return expectations than I was last autumn.”The CEO said later that the bank’s outlook for returns four years from now has improved. He has previously promised a return on tangible equity of more than 4% in 2023.Commerzbank rose to the highest since Aug. 1 in Frankfurt trading and was up 5.6% as of 12:39 p.m. The stock has gained 23% in the last six months.Dividend CutNot everything was positive. The bank reduced its dividend on 2019 earnings to 15 cents from 20 cents a year earlier, which “sends a negative signal,” Morgan Stanley analyst Magdalena Stoklosa wrote. Citigroup analysts called the bank’s 2020 outlook “worse than expected” and said it implies a 15% cut to the consensus for operating profit.Zielke’s strategy to aggressively add new clients has helped the bank to drive up net interest income, blunting the effect of negative rates on lending margins. But the initiative partly explains why the bank has needed to raise its cost targets several times. Commerzbank on Thursday said it added 200 million euros of expected IT expenditure to its 2020 cost target.Unexpected CostsThere are more challenges ahead for Zielke. His decision to take full control of online lender Comdirect Bank AG cost more than planned and the expected sale of the mBank unit in Poland has been met with muted interest from potential buyers.CFO Orlopp said Commerzbank is sticking to its plan to dispose of the Polish lender but only “if the conditions are the right ones and, specifically, if we get the right price.” Zielke added that Commerzbank’s improving capital buffer gives it more leeway on a sale and, as the lender further strenghtens its equity cushion, he’s not sure the bank needs the transaction to fund his strategic plan.As in the preceding years, the bank in 2019 failed to produce a return that covers its cost of capital or delivers returns investors would typically expect from an investment in an asset seen as similarly risky. Zielke has vowed to achieve a return on tangible equity -- a common measure of profitability -- of 2% to 4% over the next few years. The cost of capital for European banks is typically estimated to be 8% to 10%.(Adds CEO comments on profitability in 6th paragraph)To contact the reporter on this story: Steven Arons in Frankfurt at email@example.comTo contact the editors responsible for this story: Dale Crofts at firstname.lastname@example.org, Ross Larsen, Daniel SchaeferFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- When bankers fret about contagion, it’s usually the financial kind. DBS Group Holdings Ltd. is battling a different outbreak. The full-year results of Singapore’s largest lender are pre-coronavirus. Still, they offer clues to what investors in banks with pan-Asian heft — including HSBC Holdings Plc, Standard Chartered Plc and Citigroup Inc. — should be watching.A day before its earnings report Thursday, DBS had to evacuate an entire floor of 300 people in its headquarters after one employee tested positive for the virus. Stressful as such situations are, big organizations like DBS have protocols to preserve business continuity. The bank, which now does a growing chunk of its business online, ought to be able to supply banking services reasonably efficiently. The main concern is whether the epidemic, which has hit its key markets of Singapore, Hong Kong and China, will sap demand for financial intermediation. Things were looking tough even before the virus, though DBS ended the year with record earnings of S$6.39 billion ($4.6 billion), a 14% increase. Loans grew 4% last year, slowing from 7% in 2018. The Singapore mortgage business lost momentum after the government surprised the market in July 2018 by introducing measures to curb price gains. Net interest margin peaked at 1.91% in the first half before stumbling to 1.86% in December, as the Federal Reserve stopped raising interest rates and started cutting.That’s a less favorable stage than the 2003 Severe Acute Respiratory Syndrome epidemic, when DBS had better margins than now.If the top headache for trade finance in 2019 was the U.S.-China spat, supply-chain disruptions would be this year’s migraine. Assuming the outbreak is under control by summer, DBS foresees a 1% to 2% hit to annual revenue. But what if the public health scare lasts longer and spreads wider? Add the risk that the Fed may be forced to cut interest rates further to deal with the fallout from the disease, and the outlook for loan pricing is dimmer than two months ago. Singapore is expected to vigorously prime its fiscal pumps next Tuesday to support virus-hit businesses, such as hospitality and retail. With local infections climbing, DBS should assume that the first half of 2020 may be a washout in its home market. What’s more relevant is whether there will be a sharp recovery, which is what happened after SARS. After dropping 13% in the first half, net profit for 2003 tapered to a smaller 7% fall. It almost doubled the following year. DBS had to face SARS when its balance sheet hadn’t fully healed from the 1997-98 Asian financial crisis. Nonperforming loans, which had surged to 13% of the total in 1999, were still elevated at about 6% in December 2002. Contrast that with 1.5% bad loans at the end of last December; it’s a figure that will keep coming back for scrutiny as the year progresses.The credit quality in Singapore might still hold up, as banks proactively manage their borrowers’ liquidity. United Overseas Bank Ltd., the smallest of Singapore’s three homegrown lenders, said Wednesday that it’s setting aside S$3 billion to provide relief, especially to small companies. Those affected will meet only interest obligations this year. Principal repayment can wait. But DBS’s regional presence could be problematic. A sharp tumble in either the over-leveraged Chinese economy, the epicenter of the epidemic, or turbulence in the frothy Hong Kong property market would put investors’ focus back on provisions for bad debt. Subdued loan volumes, pricing pressures and spikes in credit costs will complete the trifecta of risks for Asian regional banks.Globally, banks garner the biggest chunk of their near $2 trillion annual pretax profit from Asia. The growth rate of that earnings pool collapsed to just 3% between 2014 and 2018 from 12% in the preceding four years, according to new research by McKinsey & Co., which comes with a dire message: “Asia's banks must reinvent themselves or risk disappearing.”When the dust settles, there may be acquisition opportunities for a well-capitalized lender like DBS. That’s a story for a later time. The worry right now is that customers won’t be doing M&A deals because of business uncertainty and anxiety about travel and meetings. That can’t be good news for investment banking fees. To contact the author of this story: Andy Mukherjee at email@example.comTo contact the editor responsible for this story: Patrick McDowell at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services. He previously was a columnist for Reuters Breakingviews. He has also worked for the Straits Times, ET NOW and Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- The voracious appetite for riskier tax-exempt debt is allowing Citigroup Inc. to get affordable housing loans off its books and finance more apartments.Starting last year, Citigroup, the biggest U.S. affordable housing lender, has underwritten four tax-exempt bond issues for state and local government agencies that used $1.4 billion of the proceeds to buy mortgages the bank made to finance 149 properties with 16,850 units nationwide. The deals gave Citigroup cash to make new home loans.“We’ve tapped into a new source of financing for affordable housing by using demand in the muni market,“ said John Heppolette, Citigroup’s head of municipal markets and finance. “More demand ultimately keeps the cost of financing affordable housing down.”The structure is allowing the bank to tap into booming demand for tax-exempt debt, which has driven yields to a more than six decade low and led investors to shift cash into lower-rated securities to generate higher returns.At the same time, many state and local governments are eager for ways to pump more money into low-cost housing projects. As wages stagnate and real estate prices increase, families nationwide are spending a greater share of their incomes on housing. The U.S. has a shortage of seven million affordable rental homes available to extremely low-income renters, according to the National Low Income Housing Coalition. A household is “cost-burdened” when it spends more than 30% of its income on rent and utilities.Historically banks and government sponsored entities like Fannie Mae and Freddie Mac have provided capital for multifamily affordable housing. While New York City and state issue bonds for multifamily housing developments, the debt is typically backed by large pools of properties that provide additional collateral, allowing the securities to get higher ratings.By contrast, Citigroup’s deals involve smaller portfolios with a limited cushion to absorb losses and have carried ratings from S&P Global Ratings of BBB and BBB+, two and three steps above junk, respectively. Municipal-bond investors have been eager to take on the risk: high-yield muni funds have drawn in more than $20 billion since the beginning of 2019, according to Refinitiv Lipper US Fund Flows data.Citigroup sold its multifamily loans to municipal conduit bond issuers like the California Housing Finance Agency, the Arizona Industrial Development Authority and the National Finance Authority in New Hampshire. The conduits purchase the loans by issuing municipal bonds backed by mortgages on the properties, which are also subsidized by the U.S. Low Income Housing Tax Credit program.The bonds don’t directly raise cash for affordable housing projects, but they allow Citigroup to make new loans. Scott Helfman, a spokesperson for Citigroup, declined to comment on how much it made on the sale of the loans.The bank took the top spot in Affordable Housing Finance magazine’s annual lender ranking for the ninth consecutive year in 2019. Citi Community Capital, the firm’s community-development arm, made more than $6 billion of loans to affordable rental projects in 2019.“You start originating that much over a long period of time, it starts to build up significantly,” said Heppolette, whose bank is planning more such securitization deals this year.Last month, Citigroup managed an approximately $480 million bond issue backed by 39 mortgage loans on 43 affordable multifamily rental properties in 12 states. A $455 million series with a 4.125% coupon was priced to yield 2.28% to the 10.6 year average life of the loans, according to Citigroup. The yield was about 0.9 percentage point more than AAA bonds maturing in 11 years. The deal also had a $26.5 million subordinate series that absorbs losses before the senior bonds.Citigroup’s first deal last year was a $172 million issue by the California Housing Finance Authority. The securities yielded about 2.63% to an average life of 11 years, according to Helfman.The debt was priced attractively because it wasn’t a typical muni housing bond structure, said Robert Ellis, a vice president at Kore Private Wealth, which purchased some of the securities. Prices have gone up as investors become more familiar with the structure and money continues to flood into the muni-bond market.“It’s a new creature as far as we know in the muni space,” said Margaret Hay, vice president at Kore in New York. To contact the reporter on this story: Martin Z. Braun in New York at email@example.comTo contact the editors responsible for this story: Elizabeth Campbell at firstname.lastname@example.org, William Selway, Christopher MaloneyFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Sign up for Next China, a weekly email on where the nation stands now and where it's going next.President Xi Jinping led a chorus of voices in Beijing expressing optimism about the Chinese economy this year, but market economists aren’t so confident with numerous banks cutting their forecasts.“We have the ability and confidence not only to defeat the epidemic, but also to accomplish the set goals and tasks for economic and social development. I believe China will be more prosperous after overcoming this epidemic,” he told Indonesian leader Joko Widodo in a phone call Tuesday, according to the official Xinhua news agency.That message was repeated across Chinese media, with a senior government-affiliated economist saying that the effect of the outbreak was temporary and wouldn’t stop China from reaching the target of doubling gross domestic product and per capita income compared to 2010.“It will not have a long-term impact on the supply of production and productivity, nor will it even affect the whole year or weaken the potential growth capacity of China’s economy,” Cai Fang, vice president of the Chinese Academy of Social Sciences, wrote in Wednesday’s People’s Daily. China can reach its targets as long as economic growth this year is about 5.7%, he wrote.In contrast, economists at numerous investment banks have cut their forecasts for growth this quarter and for 2020 over the past few weeks. S&P Global Ratings said growth this year could be as low as 5%, and with many people still unable to return to work due to restrictions on movement and firms, it’s unclear when the situation will improve.“The unknown features of 2019-nCoV, such as uncertainties about the incubation period, false negative results in testing and undetected channels for contagion, suggest the turning point will be still days, if not weeks, away,” Citigroup Inc. economists including Yu Xiangrong wrote in a report to clients this week. Citigroup has lowered its growth forecast twice in the past two weeks.Xi said authorities were at an important juncture in fighting the virus, which has killed over 1,000 people since emerging in December in Hubei province and fueled fears of a broader slowdown for the world’s second-biggest economy. He urged officials to work together to contain the virus at a rare meeting of top leaders earlier this month, saying the outcome would directly impact China’s social stability.Federal Reserve Chairman Jerome Powell also told lawmakers that the U.S. central bank was closely watching the fallout from the outbreak and singled it out among the risks threatening the American and world economies.“In particular, we are closely monitoring the emergence of the coronavirus, which could lead to disruptions in China that spill over to the rest of the global economy,” Powell said.At least some parts of government in China are beginning to show that they’ve got the message from the top about the importance of the economy. Officials in the province of Zhejiang said yesterday that their focus has shifted from all-out efforts to prevent and control the outbreak toward containing the epidemic while ensuring the economy’s operation.Stringent and ThoroughXi’s comments to Widodo, also known as Jokowi, echoed those made when he appeared Monday in Beijing’s Chaoyang district, wearing a mask and having his temperature taken. It was Xi’s first time interacting with the public since widespread anger over the death of a doctor who had tried to raise the alarm early on about the virus, before succumbing to it last Friday.Even as countries around the world suspend air travel to the mainland, stop cruise ships from docking and quarantine people arriving from China, Xi said in the phone call that his nation would strengthen cooperation on prevention and control measures with others, including Indonesia.“We hope that countries in the region will work hard to maintain bilateral exchanges and cooperation while making reasonable prevention and control efforts,” he said.(Updates with Chinese media coverage in third paragraph.)\--With assistance from Jacob Gu, Yinan Zhao and Miao Han.To contact Bloomberg News staff for this story: Karen Leigh in Hong Kong at email@example.com;Dandan Li in Beijing at firstname.lastname@example.orgTo contact the editors responsible for this story: Brendan Scott at email@example.com, James Mayger, Sharon ChenFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
An Australian investigator who helped bring criminal cartel charges against Citigroup Inc and Deutsche Bank AG told a court on Wednesday he felt "pressure" after his boss made public comments suggesting imminent prosecutions. The disclosure in a pre-trial hearing relates to a central plank of the defence in Australia's biggest white collar criminal case, over a controversial 2015 stock issue for Australia and New Zealand Banking Group: the banks' lawyers want to show investigators used tainted evidence and deviated from regular process due to pressure. The matter of Australia vs Citi, Deutsche, ANZ and several of their current and former executives is being closely watched by investment bankers around the world because it could have implications on the way they are allowed to run share sales.
PayPal Holdings Inc is teaming up with criminologists and experts at several universities to probe the payment systems used in the trafficking of illegal firearms in the United States, the company said on Tuesday. The research aims to help financial companies and law enforcement understand what types of payment methods are used to finance illegal transactions and prevent them from taking place, PayPal executives said. The effort will be led by the Center on Crime and Community Resilience at Northeastern University and the University of Chicago Crime Lab.
China-based issuers led initial public offerings (IPOs) and follow-on offerings in depositary receipt (DR) form in 2019, representing more than half of all DR activity, according to an industry report from Citi.
An Australian investigator who helped bring criminal cartel charges against Citigroup Inc and Deutsche Bank AG said he first heard concerns about a stock issue they worked on from a rival regulator, but the agencies acted independently. The disclosure on Tuesday in a pre-trial court hearing relates to a central part of the defence against the country's biggest white collar criminal case: the investment banks want to show the evidence used to charge them was tainted by outside influences and departure from due process. The banks, their client Australia and New Zealand Banking Group and several current and former executives are charged with colluding during a 2015 stock issue for ANZ to withold unsold shares and keep the stock from falling.
Citibank ranked the highest among 17 major U.S. banks for customer satisfaction with retail banking advice as customers increasingly seek guidance through digital channels, according to a new study from J.D. Power.
(Bloomberg) -- Chinese-based manufacturers began to restart factories Monday, but no one knows for sure when they’ll be back at full-speed -- or what sort of chaos may ensue.Foxconn, which makes the majority of the world’s iPhones in Zhengzhou, a few hundred miles from the epicenter of the coronavirus outbreak, resumed some production on Monday but it wasn’t clear how many workers returned to the factory. On Sunday, the company told some employees that it was postponing resuming production and sent a sent an internal message saying that it wouldn’t be able to decide on a back-to-work date “until further notice” for its iDPBG business unit, which makes gadgets for Apple Inc., according to a version reviewed by Bloomberg News.Last week, Foxconn took the unprecedented step of telling workers to stay away from its Shenzhen headquarters until further notice as government inspectors vet its containment procedures, Bloomberg News reported. Apple’s most important partner warned investors of the daunting task of securing enough workers despite widespread transport blockades, quarantining thousands, and the “nightmare” scenario of an on-campus epidemic that could shut down production altogether.“How we can make sure there will be no infection within our campuses will be the first priority, because if you put a lot of people together and one of them gets infected, that will be a nightmare,” Foxconn investor relations chief Alex Yang told investors on a Thursday call, according to a recording obtained by Bloomberg News. “We try very hard to make sure the possibility of any on-site infection will be as low as zero, although it will be challenging.”Read more:Foxconn Delays Return of Workers to Main China iPhone PlantsThe deadly virus has illustrated the increasingly central role China plays in global manufacturing, from clothing and chemicals to automobiles and especially technology. Just about every major piece of consumer electronics is made in China, from iPhones and gaming consoles to half the world’s liquid crystal display or LCD screens. The contagion has already shuttered plants across China for a week longer than anticipated after the Lunar New Year break -- a disruption that could get much worse if rolling quarantines and suspended rail and air links prevent the return of the millions of blue-collar laborers at the heart of electronics assembly.When they do make it back, untold numbers will get funneled into a quarantine of up to two weeks -- a sequester of unknown scale. Any disruptions at Chinese plants can, in a worst-case scenario, freeze parts of the supply chain by triggering cascading shortages. Influential supply chain analyst Kuo Ming-chi of TF International estimates Foxconn’s main iPhone-making base will properly resume work only next week -- and then at 40% to 60% capacity. Citigroup estimates just 30% of the entire Chinese semiconductor workforce will return to their workplaces on Feb. 11.Foxconn said in a statement Saturday it’s working with local governments to prepare for the return of employees, without specifics. Shenzhen’s Longhua district said in a WeChat post it was helping the Taiwanese company fine-tune its plans. “To safeguard everyone’s health and safety and comply with government virus prevention measures, we urge you not to return to Shenzhen,” Foxconn wrote in a Feb. 5 text message to employees based in the southern city. “As for the happy reunion date in Shenzhen, please wait for further notice.”Apple slipped 0.6% to $318.19 in New York Monday. Foxconn declined 1.1% in Tapiei.On last week’s call, Yang spoke in depth about Foxconn’s virus-prevention measures and the need to comply with various regulations in the so-called “iPhone city” of Zhengzhou -- just 300 miles from Wuhan, the origin of the outbreak -- covering infection-fighting measures from quarantines to face mask and hand sanitizer inventories. “If you are talking about tens of thousands of people in a line, in a building, in a campus and we try to prevent a virus -- and in the meantime you are asking for them to do their normal job -- that’s very challenging.”Apple and Foxconn, known also as Hon Hai Precision Industry Co., were among the first corporations to try and quantify the viral epidemic’s impact. Hon Hai slashed its 2020 outlook last week, anticipating disruptions to Apple’s carefully calibrated production chain centered on China, as well as dampening consumer demand and overall economic growth. As China’s largest private employer and a key partner to many of the world’s most recognizable consumer brands, the Taiwanese company has become a high-profile symbol of how the outbreak could disrupt Chinese manufacturing and hence the world’s supply of electronics.The disruptions extend well beyond electronics or technology. Many auto plants in the world’s largest market remain idled. Toyota Motor Corp., which initially halted its Chinese plants until Feb. 9, said Friday it now plans to resume production as soon as Feb. 17. Honda Motor Co. said it will reopen its factory in Hubei on Feb. 14 with an eye toward restarting output the week of Feb. 17. And Volkswagen AG also delayed the resumption of production at some of its Chinese businesses until Feb. 17.Expect the “supply chain situation to get worse before getting better,” wrote Jeff Pu of GF Securities.What Bloomberg Intelligence Says:Hon Hai, ZTE and Quanta may not recover as quickly as electronics makers did after the SARS outbreak. China’s growth may slow further and 5G phone sales could disappoint as they don’t seem to have the features that drive widespread consumer upgrades.\- Charles Shum, BI technology analystClick here for the researchOne thing in the industry’s favor is that the first half of the year is often a lull period for a consumer electronics sphere driven by holiday sales and new iPhones in the fall. Yang stressed that the disruption was “manageable” and that Hon Hai would scramble to make up for any early 2020 production shortfall.Several of the biggest names in tech including Sony Corp. and Samsung Electronics Co. have said they’ll restart production in China as scheduled. Production at Tesla Inc.’s new Shanghai factory -- its first outside the U.S. -- resumed on Feb. 10., it said. And Apple-assembler Pegatron Corp. on Monday said it’s gradually restarting operations.But much depends on the extent and severity of the outbreak. Even if it peaks soon, the interconnectedness of just-in-time global supply means the entire system will go through an unprecedented upheaval. The shortage of just one component exerts a ripple effect on the entire chain by holding up production further down the line, rippling through the carefully choreographed networks that companies from Apple to Huawei Technologies Co. and display-maker BOE Technology Group Co. rely on.“There will certainly be risks of on-site infections. Companies also do not have control over neighborhoods near their factories,” said Eric Tseng, chief executive officer of Taipei-based Isaiah Research. “Manpower levels for most manufacturers will still be low during the first two to three weeks of February due to the length of quarantines and the possibility that not many workers will return.”If Supply Chain Must Face a Pandemic, Now’s the Time: Tim CulpanUnlike in previous years, Foxconn hasn’t even begun the recruitment of the hundreds of thousands it employs annually to piece together gadgets like the Sony Corp. PlayStation and HP Inc. computers, according to people familiar with the matter. Local executives were awaiting clarity and trying to reconcile rapid-fire and sometimes conflicting virus-prevention measures announced by local governments.As such, its main iPhone-making plant in Zhengzhou may start the week of Feb. 10 with just a small number of workers who didn’t decamp for their hometowns before the extended break, one of the people said. The majority of the plant’s workforce are expected to encounter immense travel obstacles, the person added, asking not to be identified talking about internal matters. Foxconn’s two biggest campuses in Shenzhen now also face a similar predicament given the warning to employees to stay away.To make matters worse, the virus has shrunk the available labor pool. Foxconn will temporarily halt recruiting workers from Hubei, site of the outbreak’s epicenter in Wuhan, and other heavily affected areas in neighboring provinces, a second person said. It’s ordered workers currently in Hubei as well as from seven other cities in adjacent Henan, Zhejiang and Jiangsu provinces not to return to work, according to an internal document dated Feb. 4. obtained by Bloomberg. The company offered a 200 yuan ($28) reward to employees who report on co-workers violating that ban. While the picture remains murky, Foxconn is the most visible proxy for the confusion that now grips the broader supply chain.More broadly, economists are still struggling to tote up the economic fallout of the outbreak. While SARS was bad economic news for China and its neighbors, which suffered from weaker exports and falling tourism, China’s small weight capped the global impact back then, when China’s GDP was 4% of the global total. That share now stands at 17%. That means, even if the outbreak peaks soon and producers impose double overtime to make up for lost production, the final end-demand in 2020 for gadgets of all stripes could take a severe beating.At Huawei, China’s largest tech company and a global leader in smartphones and networking gear, executives are debating when to resume production for fear of angering Beijing by forcing large numbers of people into cramped dorms and factories, according to another person familiar with the matter. Then there’s the LCD makers from BOE to Tianma Microelectronics Co. that now crank out 50% or more of the screens for all TVs, phones and even car dashboards -- much of that from Wuhan.The city is an important base for FiberHome and other optical fiber makers as well, that Huawei and networking firms rely on. “These will get directly hit,” said Kevin Chen, an analyst at China Merchants Securities. “ Near-term, their production will be impacted even if they resume working they might have a problem getting enough workers resulting in lower utilization.”Read more: China Coronavirus Cloud Hangs Over Apple’s Resurgence(Updates with Foxconn resuming some production in second paragraph.)\--With assistance from Ishika Mookerjee, Christopher Anstey, Sohee Kim, Chunying Zhang, Tian Ying, Vlad Savov and Colum Murphy.To contact the reporters on this story: Debby Wu in Taipei at firstname.lastname@example.org;Gao Yuan in Beijing at email@example.comTo contact the editors responsible for this story: Peter Elstrom at firstname.lastname@example.org, Edwin ChanFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Bank of America's (BAC) chief executive officer Brian T. Moynihan's total compensation package for 2019 remains unrevised at the 2018 level of $26.5 million.
An Australian antitrust investigator who helped bring criminal cartel charges against Citigroup Inc and Deutsche Bank AG denied acting with "impropriety" when presented with communications between the regulator and informants' lawyers. The court testimony from Australian Competition and Consumer Commission (ACCC) enforcement director Michael Taylor on Monday points to a defence strategy questioning the integrity of an investigation that ended in charges of collusion during a A$2.5 billion ($1.67 billion) share sale in 2015. In pre-trial hearings, lawyers for the investment banks and their client, retail lender Australia and New Zealand Banking Group Ltd (ANZ), have been trying to show witness statements by a third investment bank which worked on the deal, JPMorgan Chase & Co, were tainted by coordination between JPMorgan's lawyers and the authorities.
Research has repeatedly shown that businesses who aim to create an inclusive work environment by nurturing and developing diverse talent outperform businesses that do not. This session will look at how senior leaders can set this tone from the top to facilitate positive change within their organizations and beyond. This panel of influential senior leaders will be sharing innovative approaches to workplace inclusion, as well as their own personal experiences of the impact of successful initiatives.