Banking and Finance News & Trends: Oct Week 2

Banking and Finance News & Trends: Oct Week 2

Banking and Finance News & Trends: Oct Week 2

Table of contents

    1. Banking and Finance Industry News
    2. Investment, PE & VC News
    3. People Moves

 

Banking and Finance Sector News

1. Trends: Increasing Non-Dom Flows from UK to Singapore

Bank of Singapore (BOS), a subsidiary of OCBC, is seeing increased asset flows from wealthy UK residents. This is particularly true for “non-doms” (individuals who live in the UK but are taxed as if their permanent home is elsewhere) due to proposed tax hikes on foreign residents.

Takeaway: BOS is capitalising on this by strengthening its presence in Europe, particularly in London, and aims to double its revenue from outside Asia in the next three to five years. The firm also plans to expand its London team and recently hired a new London head, Rob Woodthorpe Browne. BOS is concurrently growing its presence in Dubai and is focusing on the rising interest of Chinese clients in the region.

 

2. Markets

i. China: Launches Liquidity Facility and Sets Terms for US$226b Brokerage

China’s central bank, the People’s Bank of China (PBOC), has launched a 500-billion-yuan liquidity facility to stimulate its economy. This programme allows “qualified” companies, including securities, funds, and insurance firms, to swap assets such as bonds, stock ETFs, and CSI 300 stocks for highly liquid assets like treasury bonds. The move aims to enhance firms’ ability to access capital and can be expanded if needed.

Concurrently, Guotai Junan and Haitong Securities will merge to create a state-backed brokerage with US$226 billion in assets. The merger will expand the firm’s global reach and give it a presence in major financial hubs like New York, London, Singapore, and Hong Kong. The transaction involves a share swap, raising working capital, and plans for a significant share placement. Once completed, Haitong will be delisted, and a new entity will emerge, subject to regulatory and shareholder approvals.

Takeaway: The liquidity facility is part of Beijing’s efforts to boost economic recovery. The PBOC’s latest liquidity programme signals a continued push by China to stabilise its financial markets and spur economic activity, particularly through the stock market. However, more direct consumer-focused stimulus may be required to meet the country’s growth target. Meanwhile, the merger of Guotai Junan and Haitong aligns with China’s strategy to foster top-tier investment banks capable of competing with global players. It will form a new entity with assets of 1.6 trillion yuan, which tops Citic Securities and makes it the largest in the country.

 

ii. China: Big Stimulus Anticipated Ahead of Fiscal Briefing

China is set to hold a briefing on fiscal policy on October 12, sparking expectations of a major economic stimulus package, potentially worth 2-3 trillion yuan. The briefing, led by Finance Minister Lan Fo’an, will likely detail new measures to support the country’s economy. The Asia-Pacific (APAC) private capital market, which has seen a decline in China’s contribution in recent years, may be poised for a rebound. This is because reports by Preqin showed that China’s government has been implementing stimulus measures and reforms focused on its property sector, technological development, and value-added production. These initiatives could revitalise China’s economy and boost private capital market performance in the region, benefitting investors and neighbouring trade partners.

Takeaway: Preqin anticipates a gradual recovery in private market fundraising in APAC, with a projected growth rate of 6.7% annually through 2029. Recent monetary easing, housing measures, and government commitments have already started boosting market confidence. However, broader fiscal action is seen as essential to achieving China’s 2024 growth target of around 5%. Key areas of focus economists anticipate include infrastructure investment, local government financing, and bank recapitalisation.

 

iii. Fed Rate Cut Benefits ASEAN+3, But Near-Term Risks Persist: Amro

The ASEAN+3 region is experiencing a positive impact from the US Federal Reserve’s recent rate cuts, leading to improved financial conditions. However, Amro warns that risks remain, particularly concerning potential inflation resurgence, increased debt levels, and geopolitical tensions.

Takeaway: The key highlights of the report include:

  • While interest rates in certain ASEAN+3 economies have begun to fall, Amro anticipates that the overall debt burden will continue to be significant, owing to rising debt levels and the gradual pace of rate reductions. To address the growing debt, it is important for central banks and regulators to monitor financial imbalances, restore policy buffers, and use macroprudential tools to prevent the accumulation of risks.
  • If the success of disinflation efforts is aimed at maintaining a strong labour market, additional cuts would positively impact the ASEAN+3 region. This would bolster equities and currencies, resulting in capital inflows and more favourable financial conditions.
  • Risks in financial markets can not only be absorbed but also spread and amplified through the US dollar, particularly during periods of monetary tightening and geopolitical unrest. While US dollar funding stress may not immediately affect the domestic financial stability of the ASEAN+3 countries, the potential spillover effects should not be overlooked.
  • In the short term, efforts should concentrate on enhancing economic fundamentals to lessen these spillover effects, improving surveillance and risk management strategies, and bolstering regional financial safety nets.
  • To address the financial stability risks linked to funding property developers, authorities are advised to consider improving credit access for financially sound companies. This might include offering guarantees for feasible projects and easing the burden of immediate debt repayments. Meanwhile, smaller financial institutions, such as regional and savings banks, may explore diversifying their business models beyond real estate investments to reduce their risk exposure.

 

3. Business Moves

i. Malaysia’s Public Bank to Acquire Stakes in LPI

Public Bank, Malaysia’s third-largest lender by assets, is set to acquire a 44.15% stake in general insurer LPI Capital from the estate of its late founder, Teh Hong Piow. LPI Capital is the parent company of Lonpac Insurance, and the deal will amount to RM1.72 billion (approximately S$524 million). The acquisition price of RM9.80 ringgit per share is nearly 25% below LPI’s recent closing price of 13.00 ringgit. The deal is expected to be earnings accretive and is projected to be completed by Q1 2025.

Takeaway: This transaction will enable Public Bank to extend a mandatory general offer for the remaining shares. This acquisition aligns with Public Bank’s strategy to broaden its general insurance operations and evolve into a fully-fledged universal bank, complementing its growth initiatives beyond organic methods. The move is expected to enhance the bank’s fee income. Meanwhile, the founder’s estate also plans to gradually sell portions of its Public Bank shares over five years to comply with regulatory requirements.

 

Investment, PE & VC News

pe vc deals and family office partnerships

1. Trends

i. Investors’ Interest in Japan’s Hotel Sector Grows

Hong Kong investors are increasingly turning to Japan’s hotel sector as investment opportunities surge due to Japan’s low interest rates and a boom in tourism. Investments in Japanese hotels are projected to reach 600 billion yen (approximately US$4.1 billion) this year.

Takeaway: The investments represent a strategic diversification for investors facing a slowdown in Hong Kong and geopolitical tensions in the region. Japan has emerged as the top property investment market in Asia, attracting significant cross-border investment, particularly from Hong Kong-based firms.

 

ii. Asia’s HNW Market to Achieve Double-Digit Growth in the Short Term

Insurers and brokers in Singapore and Hong Kong predict that Asia’s high-net-worth (HNW) market will grow between 10% and 20% over the next two to five years, outperforming pre-pandemic levels.

Takeaway: This optimism is driven by robust economic growth in emerging Asia, particularly in China, which is expected to continue narrowing the wealth gap with the United States. The market sees an influx of first-generation entrepreneurs who require new legacy planning and wealth protection strategies. This demographic shift presents significant opportunities for the insurance sector, particularly as these individuals seek to safeguard their assets and ensure financial security for future generations.

 

2. Business Moves

i. Citadel Raises Asia Equities Headcount to Over 60 in Three Years

Citadel has raised the headcount for its Asia-based fundamental equities team to over 60 in just three years. The expansion includes recruiting two new portfolio managers, Doris Yang and Jerry Jiang, which brings its number of investment pods in Asia to nine.

Takeaway: This growth marks a shift from the earlier trend of reductions in the hedge fund industry following the global financial crisis. Notably, four of Citadel’s recent hires began their careers at FIL Investment Advisors. In comparison with peers like Millennium Management and Point72, Citadel is taking a relatively cautious approach.

 

ii. Bloomberg Launches Initiative for Hong Kong Family Offices

Bloomberg has partnered with the Hong Kong government to bolster the city’s family office market through a new initiative called the “Hong Kong Family Office Nexus.” This collaboration aims to enhance Hong Kong’s position as a global financial hub by providing resources and support for family offices. Key components of the initiative include:

  • Community building through networking events.
  • The development of a digital knowledge hub and a “Hong Kong Family Office Playbook” to share insights, expertise and knowledge about the market and operations.
  • Access to Bloomberg’s global network of experts and technology support.
  • Philanthropic collaboration with the Hong Kong Academy for Wealth Legacy.

The knowledge hub is expected to launch soon, with community events starting in late 2024.

Takeaway: This initiative signals a strategic effort to innovate and expand the family office sector in Hong Kong, presenting opportunities for financial services firms to engage in wealth management and philanthropy as the market evolves.

 

3. Deals

i. Temasek Negotiates US$1b Investment in India’s Top Snack Producer

Temasek, a Singapore investment firm, is in early discussions to acquire a 10 to 15% stake in Haldiram Snacks, India’s largest snack maker. The deal will value the company at around US$11 billion and could pave the way for a future IPO of Haldiram’s.

Takeaway: Temasek’s interest aligns with that of global investors, who are now paying greater attention to India, given the country’s fast-paced economic growth, which makes it a prime destination for dealmaking. Temasek’s current strategy is focused on acquiring minority stakes and supporting the growth of Indian companies, opting not to follow the trend of seeking majority ownership in businesses within the world’s most populous nation. Its primary investment areas are digitisation, consumer markets, and sustainable living.

 

ii. Andrew Ng’s AI Fund Makes First Investment in India with Jivi

Computer scientist Andrew Ng’s AI Fund has made its first investment in India by backing Jivi, an AI-driven healthcare startup based in Gurugram. Jivi uses AI to assist with medical diagnoses, treatments, and administrative tasks.

Takeaway: This investment comes at a time when India’s AI sector is rapidly expanding and is projected to reach $22 billion by 2027—healthcare and financial services are among the top contributors.

 

iii. BlackRock Among Parties Interested in Buying Credit Firm HPS

BlackRock is in talks to acquire HPS Investment Partners, a major player in the US$1.7 trillion private credit market. HPS is also considering an IPO, which may value it at over US$10 billion. Any acquisition will likely require a premium. However, the discussions are ongoing and might not result in a deal, with other suitors like CVC Capital Partners also interested in a potential combination with HPS.

Takeaway: This potential deal could enhance BlackRock’s position in private credit, an area of growing client demand, particularly from pensions and sovereign wealth funds.

 

iv. BlackRock, GIC Eyes Stakes in Hyundai Motor India’s Record-Breaking IPO

Hyundai Motor India’s upcoming IPO, valued at US$3.3 billion, is set to be the largest in India’s history and one of Asia’s biggest. Major institutional investors, including BlackRock, Singapore’s GIC, and Capital Group, have shown strong interest, with the anchor book fully allocated—half to domestic and half to international investors. The IPO will offer around 142.2 million shares, representing a 17.5% stake in the company.

Takeaway: Investor excitement about India’s growth and high valuations has led to an unprecedented number of companies going public, positioning the country as the busiest IPO market globally. This year, more than $9 billion has been raised from over 250 IPOs, with additional significant listings on the horizon, such as the Indian food-delivery service Swiggy.

 

v. Saudi PIF to Acquire a 40% Stake in Selfridges Stores

Saudi Arabia’s Public Investment Fund (PIF) is set to acquire a 40% stake in Selfridges after purchasing the interest of the insolvent Signa Group.

Takeaway: The deal will leave Thailand’s Central Group with a 60% stake, and both entities will invest additional funds to strengthen Selfridges’ financial position. This acquisition follows Signa’s collapse due to rising interest rates, prompting Central to reassess several joint ventures, including other luxury retail operations in Europe. Central has taken steps to acquire the operating companies of the Swiss luxury department store chain Globus, along with the operating company and flagship store of KaDeWe in Berlin.

 

vi. PIF Eyes Buying Minority Stakes in Sports Streamer

PIF is also considering acquiring a minority stake valued at around US$1 billion in DAZN, a sports streaming platform known for its extensive sports content. This includes football, boxing, and baseball. The discussions have been ongoing since late last year but are still in early stages, with no guaranteed deal.

Takeaway: The potential investment could enhance PIF’s influence in European football, as DAZN holds broadcasting rights for major leagues like Serie A and La Liga. DAZN seeks a valuation of US$10 billion to US$12 billion. It has experienced significant revenue growth despite posting a recent operating loss due to high rights costs. This would mark the first time a streaming service of this nature has drawn potential investment from PIF, which has invested billions in other major sports like Formula One and golf in recent years.

 

People Moves

i. Banks: HSBC, DBS, BoS, BNP, Julius Baer and Pictet

HSBC: HSBC made three appointments.

  • William Chan was named the Global Chief Investment Officer (CIO) and Head of Investments for Global Insurance. Chan will be based in Hong Kong and lead a team of investment specialists that consolidates the expertise and experience of various CIO teams. He will also focus on optimising the institution’s investment capabilities and insurance’s investment portfolio and determining strategic asset allocations. Chan has over 30 years of industry experience and has previously served as the CIO of HSBC Life Hong Kong. He is also actively promoting sustainable practices in the insurance industry as a leader of the Green Task Force.
  • HSBC Life Singapore appointed Ouling Lu as the Chief Product Propositions Officer and Michael Wei as the Chief Partnership Distribution Officer. Lu previously served at Milliman and Allianz, and Wei at Sun Life Singapore, Citi, OCBC, and Manulife.

DBS: DBS Group Holdings is undergoing significant leadership changes.

  • Wallace Lam, the current head of its Hong Kong Institutional Banking Group, is set to depart. Boris Chan, who leads global transaction services, was appointed as his successor. This transition comes amid broader changes at the bank, including a planned leadership shift with Tan Su Shan taking over from CEO Piyush Gupta in March.
  • Meanwhile, Kuok Khoon Hua was appointed to DBS Hong Kong’s board of directors. Kuok is the son of Malaysia’s wealthiest individual, Robert Kuok, and CEO of Kerry Properties. He has held several leadership roles across multiple companies, including Kerry Holdings and Kerry Logistics Network.

BoS: The Bank of Singapore (BoS) hired Karthik Shenoy as the Head of Platforms and Transformation. Shenoy will focus on executing the bank’s three-year strategic plan aimed at improving internal infrastructure and platforms. Karthik has over 20 years of experience in financial services and has held senior roles at Credit Suisse, where he led various fintech, wealth tech, banking & lending platforms and APAC markets. His strength lies in pricing, trade lifecycle, risk, and portfolio management.

BNP Paribas: BNP Paribas made two appointments.

  • Bruno Boussard was named the new CEO of its Taiwan branches, effective October 1 and subject to regulatory approval. Boussard has been with the bank since 1993 and has over 30 years of experience. He previously served as the deputy head of the group asset liability management treasury in Paris and has held several leadership roles. Boussard succeeds Manon Breuvart, who will transition to a new role in Paris as the head of credit for BNP Paribas Wealth Management.
  • KK Wai, a former managing director at Credit Suisse, was named BNP Paribas Wealth Management’s head of structured products for Asia. Wai, who will be based in Hong Kong, has over 20 years of experience in the financial sector. He previously held senior roles at Credit Suisse, including co-head of structured products advisory and head of trading solutions.

Julius Baer: Julius Baer added four senior relationship managers to its Southeast Asia team.

  • Yen Mei Chin and Freddy Sim join from Credit Suisse and are experienced in serving high-net-worth (HNW) and ultra-high-net-worth (UHNW) clients.
  • Stanley Lim previously covered the Southeast Asia market at Citi Private Bank and has served at OCBC.
  • Doreen Seah joins from Deutsche Bank.

Pictet: Pictet appointed Alison Lim as the new CEO for its Singapore branch, effective January 6, 2025 and pending regulatory approval. She will succeed Sharon Chou, who is retiring after a distinguished 35-year career in finance. Lim, who currently manages SEA at BNP Paribas Wealth Management, has over 30 years of experience in wealth management from institutions like Credit Suisse and UBS. Her career began at the Monetary Authority of Singapore, where she contributed to establishing Singapore as a wealth management hub.

Read the full article about Kuok’s role in DBS’s bank.

 

ii. Financial Services: Allfunds, BNY and China Renaissance

Allfunds: Allfunds, a WealthTech platform for the funds industry, hired Patrick Mattar as Global Head of Exchange-Traded Products (ETP) Distribution. This move comes as Allfunds prepares to launch an ETP platform in 2025 to complement its current offerings in traditional and alternative funds and enable it to create a full spectrum of ETP under one integrated solution. Patrick will oversee the development and integration of the ETP platform, drive innovation and focus on enhancing client experience. He previously served as the Global Head of ETFs at Aberdeen Standard Investments (now Abrdn) and held a leadership position at BlackRock’s iShares.

BNY: BNY hired Jamie Pratt as the new head of its corporate trust business in APAC. Pratt, who will operate from Hong Kong, will also join the Corporate Trust Executive Council and the APAC Leadership Council. Pratt has over 25 years of experience in corporate trust, private capital, securitisation, coverage and sales. He previously led HSBC’s issuer services across the Americas and has worked at Barclays Capital and Deutsche Bank.

China Renaissance: China Renaissance Holdings appointed Hui Yin-ching, wife of the missing founder Bao Fan, as chairperson and executive director, effective October 9. Hui will oversee strategic planning and focus on expanding the firm’s wealth management services and entering emerging markets.

 

iii. Investment: M&G, Manulife, Amundi, FIL, WMA and 5Y

M&G: M&G Real Estate appointed David Askham as the new director of portfolio management for the Asia living sector. Askham, who has 25 years of experience in property, including 20 years at M&G, will lead the firm’s strategic growth in this area to tap into the potential of the APAC living sector for its global investors. In alignment with this strategy, M&G’s Life business plans to invest $250 million in the living sector and has recently acquired a $68 million prime residential portfolio in Osaka.

Manulife: Manulife Investment Management hired Calvin Lim as an alternative investment specialist. Based in Singapore, Lim will focus on enhancing the firm’s private market offerings in Asia, including private equity, private credit, and real assets. He joins from BoS and has previously served at Goldman Sachs.

Amundi: Amundi, the Paris-based asset management firm, added Aidan Yao as a senior investment strategist at its Amundi Investment Institute in Hong Kong. Yao has previously served as chief economist at Long Shine Asset Management and senior emerging Asia economist at AXA Investment Managers. His background also includes positions at the Hong Kong Monetary Authority and the Reserve Bank of New Zealand.

FIL: Fidelity International appointed Damien Mooney as the new managing director for APAC (excluding Japan), effective October 28. Mooney previously spent 13 years at BlackRock and nine years at Fidelity, during which he held various senior roles, including the regional head of marketing for APAC. He succeeds Rajeev Mittal, who is leaving after six years with the company.

WMA: Steve Knabl was appointed as the managing partner at Wealth Management Alliance (WMA), a Singapore-based multi-family office founded by former UBP Asia CEO Stephan Repkow. In his new role, Knabl will focus on providing tailored financial solutions by collaborating with various banks and financial institutions. He joins WMA after a long tenure at Swiss-Asia Financial Services, where he served as COO and managing partner. However, his previous firm faced regulatory penalties from the Monetary Authority of Singapore earlier this year due to violations of anti-money laundering regulations, resulting in a reprimand for both Knabl and the firm’s CEO.

5Y Capital: 5Y Capital hired Meng Xing, the former COO of Didi’s autonomous driving division, as a partner. Meng will focus on investments in cutting-edge technologies such as AI. After earning degrees in applied mathematics and economics, Meng worked in investment banking at JPMorgan and managed key projects in the technology sector. His curiosity led him to start two AI companies, both of which were acquired. He started his journey in venture capital career in 2016 at Shunwei Capital. There, he focused on autonomous driving and AI investments and backed companies like Xiaopeng Motors. At Didi, he contributed significantly to expanding the autonomous driving division.

 

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Image Credits:

  • Xinhua
  • South China Morning Post
  • Insurance Business Mag
  • Bloomberg
  • Reuters
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