Banking and Finance News & Trends: Sep Week 3

Banking and Finance News & Trends: Sep Week 3

Banking and Finance News & Trends: Sep Week 3

Table of contents

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

 

Banking and Finance Sector News

1. Market Outlook

Interest Rates Fall, but Central Banks Are No Longer Aligned

Over the past two years, central banks worldwide aggressively raised interest rates to combat high inflation. However, as inflation slows, many are now cautiously reversing course, though the pace and timing vary across regions.

  • Emerging markets and European countries have begun easing rates.
  • The US Federal Reserve finally made a significant cut on September 18 after keeping rates high.

However, there are notable exceptions globally.

  • Japan, which was slow to react to increasing inflation, raised its rates in July. Policymakers are currently divided about the pace of future interest rate increases.
  • Nigeria has been increasing its rates this year due to a surge in inflation.
  • Brazil’s central bank also raised rates out of concern that accelerating economic growth might lead to inflationary pressures.
  • Australia’s central bank, the Reserve Bank of Australia (RBA), maintained its key interest rate at 4.35%. The move aims to combat persistent inflationary pressures and help the nation achieve its inflation target of 2 – 3%.

Takeaway: If the Fed can manage a soft landing—lowering inflation without triggering a severe recession—it could ease global financial pressures, especially for currencies affected by the strong US dollar. Policymakers remain cautious, balancing rate cuts with concerns of reigniting inflation.

Read the full article about Australia’s interest rate policy.

Read the full article about Japan’s interest rate policy.

Read the full article about central banks’ interest rates policy.

 

2. Markets

i. Indonesia Plans for a Counterparty Clearing House

Indonesia is set to launch its first central counterparty clearing house (CCP) for foreign exchange and money market transactions. The CCP will streamline and integrate Indonesia’s fragmented markets. It will begin with Domestic Non-Deliverable Forwards (DNDF) and expand to other financial instruments over the next five years. Both banks and non-banks will be involved. The CCP is backed by key stakeholders including Bank Indonesia and several major banks.

Takeaway: The move is expected to enhance liquidity, and mitigate risks like defaults, positioning Indonesia to deepen its capital markets.

Read the full article about Indonesia’s CCP.

 

ii. China Cuts Key Interest Rates and Boosts Mega Banks’ Capital

China’s central bank, the People’s Bank of China (PBOC), is ramping up monetary stimulus in an effort to meet its 5% growth target for 2024. The measures include:

  • A 50 basis point reduction in the reserve requirement ratio (RRR) for most banks, freeing up about 1 trillion yuan to stimulate lending and economic growth.
  • Cutting key interest rates:
    • The lowering of mortgage rates and easing second-home purchase rules to target the struggling property sector, as announced on September 24.
    • The lowering of interest rate on its medium-term lending facility (MLF) loans to 2% from 2.3%, as announced on September 25.
    • Increasing transparency in its monetary policy by revealing bid rates for the first time, indicating differing funding needs among financial institutions.

This marks the first time these moves are implemented together in over a decade. Other measures in China include:

  • Recapitalising the nation’s six largest commercial banks for the first time since the 2008 financial crisis, with lenders receiving 100 billion yuan each. This intervention would be funded primarily through new special sovereign bonds, and it aims to address challenges like low profit margins, rising bad debt, and shrinking profits.
  • Encouraging firms to revamp their assets and pursue mergers and acquisitions to improve asset quality.
  • Beijing is urging major commercial banks to increase their investments in struggling startups by allowing their financial asset-investment arms to allocate more funds to unlisted companies. The upper limit for investments in a single private equity fund has been raised from 20% to 30%.

Takeaway: These efforts are part of a broader push to stabilise the real estate market and the economy. Despite recent pressures, the banks still maintain strong capital adequacy ratios, though net interest margins have reached record lows. Analysts are of the view that:

  • Rate Cut: The mortgage rate cut is a positive move for homeowners and may alleviate some immediate financial pressures. However, caution should be exercised as rate cuts alone may be insufficient to address broader challenges, particularly in China’s struggling property sector.
  • RRR: Given that businesses and consumers remain hesitant to borrow due to economic uncertainty, further reductions in the RRR may follow, depending on market conditions.
  • Asset Revamp: The move is believed to attract more investment and improve corporate governance in the long run.
  • Investment in Startups: While this is seen as a significant step to support China’s start-up ecosystem, analysts express uncertainty about whether the large banks are prepared to engage fully in this initiative.

Read the full article about China’s stimulus blitz.

Read the full article about China’s new RRR.

Read the full article about China’s plans to boost banks’ capital.

Read the full article about China’s second interest rate cut.

Read the full article about China’s efforts to encourage asset revamp.

Read the full article about Beijing’s efforts to boost investments in startups.

 

3. Business Moves: Banks

i. DBS to Become Majority Stakeholder in its Chinese Joint Venture

DBS is set to increase its stake in its China securities joint venture from 51% to 91% by acquiring shares from its Chinese partners. This move follows China’s recent economic stimulus measures aimed at boosting its economy and capital markets and is pending regulatory approval. The Chinese shareholders will continue to maintain a minority stake.

Takeaway: The move mirrors that of other foreign banks like JPMorgan and Morgan Stanley, as banks seek to capitalise on China’s relaxed foreign ownership rules in the financial sector.

Read the full article about DBS’s stake in its Chinese joint venture.

 

ii. BNP to Buy HSBC’s German Private Banking Business

BNP Paribas agreed to acquire HSBC’s private banking operations in Germany, a move that will expand BNP’s assets under management in local wealth management to over €40 billion. The sale amount was not disclosed.

Takeaway: This acquisition aligns with BNP’s strategy to grow in Germany, where demand for wealth services is rising, particularly from family-owned businesses. The move mirrors that of other banks like ABN Amro and domestic players like Deutsche Bank and Commerzbank, which are also seeking to capture a greater market share in German private banking.

Read the full article about BNP Paribas’ interest in Germany.

 

iii. Citigroup to Hire More in Singapore

Citigroup is ramping up hiring in its Singapore office, driven by a significant increase in productivity and the city-state’s strategic importance as a global wealth hub. Following earlier layoffs due to restructuring, the bank now sees strong growth in wealth management, particularly from its Citigold programmes and private clients. Singapore, alongside Hong Kong, is a major centre for global wealth creation, attracting family offices from around the world. Citi’s focus on Asia, especially serving high-net-worth clients in China and India from offshore, is proving successful, with revenue up by 20% year-on-year (YoY) globally.

Read the full article about Citigroup’s hiring plans.

 

Iv. JP Morgan to Increase its APAC Corporate Banking Headcount

J.P. Morgan is planning a 10% increase in its corporate banking headcount across Asia in 2025. The headcount will be spread out across the large-cap, mid-cap, innovation economy, and subsidiary banking divisions. This expansion primarily targets Southeast Asia, India, North Asia, Greater China, Japan, and Australia.

Takeaway: The bank’s move reflects its focus on the growing home-based businesses for Asian corporates, as it aligns with the changing pace of investments.

 

4. Business Moves: Financial Services Institutions

i. Visa Acquires AI Payments Protection Firm Featurespace

Visa acquired Featurespace, an AI-driven payments protection firm, as part of its ongoing efforts to enhance fraud detection capabilities. While the acquisition’s value was not disclosed, estimates suggest it could be around £700 million.

Takeaway: The move comes amidst a rise in sophisticated financial crimes, often leveraging generative AI.  The UK-based Featurespace serves major banks like HSBC and NatWest, and is expected to help Visa’s clients manage fraud in real-time.

Read the full article about Visa’s acquisition of Featurespace.

 

ii. Lazada-Backed TNG Digital Eyes Malaysia IPO

Malaysia’s largest fintech company, TNG Digital, is considering a domestic IPO within two to three years, which could potentially raise over $300 million. The company, which operates the popular Touch ‘n Go eWallet that has over 20 million users, could reach unicorn status with a valuation exceeding $1 billion before its IPO. Backed by Lazada and CIMB Group, TNG Digital raised RM750 million in 2022 for expansion. Lazada operates under Chinese technology giant Alibaba Group, while Touch ‘n Go is indirectly owned by Malaysia’s second-largest bank CIMB Group.

Takeaway: Proceeds from the IPO are expected to fuel the company’s further growth across Malaysia and Southeast Asia, although final decisions are still pending.

Read the full article about TNG’s potential IPO.

 

iii. Stashaway Expands Advisory Offerings Into MENA

Digital investment platform StashAway is expanding its “StashAway Reserve” advisory service to the Middle East and North Africa (MENA) region. Originally launched in Singapore and Hong Kong, this offering targets high-net-worth individuals (HNWIs) with $2 million to $10 million in financial wealth. It provides wealth advisory services and low-cost access to private markets. Clients with $100,000 in assets with StashAway will be upgraded to this service.

Takeaway: StashAway’s move addresses a gap that traditional private banks often fail to meet, which may position it to capitalise on the unmet demand in the MENA region.

 

Investment, PE & VC News

1. Market Outlook

APAC Investors Demand for Fixed Income Exposure Grows

APAC investors are increasingly turning to fixed-income assets, with survey results indicating investors’ intention to allocate nearly 46% of their portfolios to this asset class over the next year. This is up from 37% last year. Key findings include:

  • Motivating factors: Income generation (41%), diversification (31%), sustainability goals (30%).
  • Preference:
    • Bond maturities of up to 10 years (64%), with the six to 10 years range being the most popular (46 per cent).
    • For investing intentions in 12 months, 74% said the lowest-rated bonds they are willing to hold are rated A and above, an increase from 66% in 2023.

Takeaway: There’s notable confidence in the Asia ex-Japan market, boosted by the region’s strong economic performance and growing capital and bond market accessibility, particularly in China. While recession and inflation concerns remain, local bond markets offer stability.

Read the full article about APAC investors’ strategies.

 

2. Markets

i. Malaysia Lures Family Offices with 0% Tax

Malaysia is positioning its Forest City Special Financial Zone (SFZ) as a key investment destination by offering a range of tax incentives. These include a 0% tax rate for family offices and reduced corporate taxes for international businesses. The aim is to attract HNW families, fintech companies, and skilled foreign workers by providing competitive tax advantages and a favourable business environment.

Takeaway: This initiative complements the government’s broader effort to integrate the region with Singapore’s economic zone to boost investments in high-growth sectors like venture capital and private equity. However, concerns remain around ensuring legal compliance and creating the right living and business infrastructure to attract global talent.

Read the full article about Malaysia’s Forest City.

 

ii. Shanghai Offers ¥890b Mother Fund and Support for Foreign Funds

Shanghai officially started selecting fund management firms for its 890 billion yuan mother fund, which is aimed at fuelling venture capital and private equity investments in these industries. The initiative seeks to boost its leadership in three key sectors: semiconductors, biopharmaceuticals, and AI. The first batch of sub-funds that will receive the investments include newly established sub-funds and existing ones that have already received additional capital.

Concurrently, Shanghai is increasing support for foreign private equity and venture capital funds to invest in local technology firms to stimulate growth in its financial and tech sectors. The city may expand its Qualified Foreign Limited Partnership (QFLP) quota, allowing foreign asset managers more access to invest in unlisted Chinese start-ups, which have seen a sharp decline in funding over the past few years. Meanwhile, the enhanced support for foreign investors comes as geopolitical tensions and regulatory changes resulted in reduced investment inflows.

Takeaway: The mother fund is likely the biggest source of fresh capital for the venture capital industry this year, and competition to be selected as a sub-fund is expected to be fierce. Both moves reflect Shanghai’s broader strategy to support the development of venture capital. Since the beginning of the year, Shanghai has introduced new policies to support equity investments throughout its lifecycle, create fund hubs, and streamline capital-raising and exit channels for VC/PE firms.

The move reflects the broader trend across China, where billion-dollar government investment funds are continuously emerging as cities compete to attract emerging industries. For instance:

  • The Hunan Provincial Government established the Hunan Province Jin Furong Investment Fund at the beginning of September. This is aimed at consolidating provincial, municipal, and county-level fiscal resources and state-owned enterprise funds over approximately three years to create a fund group with a total scale of about 300 billion yuan.
  • Beijing established four industrial investment funds totalling 50 billion yuan in June, and four industrial guidance funds with a total scale of 50 billion yuan. The funds will target the robotics, information industries, AI, and healthcare.
  • Hong Kong Investment Corporation Limited (HKIC) and humanoid robot company Galaxy Bot officially kickstarted their ecosystem expansion partnership in July. This was HKIC’s third investment in a month, following its collaborations with SmartMore and BioMap.

Read the full article about Shanghai’s support for foreign funds.

 

iii. South Korea to Ease Foreign Exchange Restrictions

South Korea’s National Pension Service (NPS), one of the largest public pension funds globally, is easing foreign exchange restrictions. Starting in October, the NPS can now procure up to $6 billion in foreign currency per quarter and $3 billion per month, up from the previous $1 billion per month limit.

Takeaway: This change is aimed at reducing the negative impact of its dollar buying on the local currency, the won.

Read the full article about NPS’s easing of foreign exchange restrictions.

 

3. Business Moves

i. NTT Group Mulls Data Centre Reit IPO in Singapore

Japan’s Nippon Telegraph & Telephone (NTT) is exploring the option of launching a global data centre real estate investment trust (REIT) in Singapore that could raise up to $1 billion from its first-time share offering. The total value of the data centre assets considered for the REIT ranges from $2 billion to $3 billion. A listing could occur as early as late 2025, although plans remain preliminary, and NTT is currently consulting financial advisers to identify suitable data centres for inclusion in the REIT.

Takeaway: NTT’s potential REIT listing would represent the largest in Singapore since the Netlink NBN Trust raised $1.7 billion in 2017. This move comes at a time when Singapore’s IPO activity is at a low, with only $19.5 million raised so far this year from a single listing.

Read the full article about NTT’s Reit IPO in Singapore.

 

ii. Smartsheet to Privatise in Deal with Blackstone and Vista

Workplace collaboration software provider Smartsheet is being taken private in an $8.4 billion deal with Vista Equity Partners and Blackstone. The buyout offers shareholders $56.50 per share, representing an 8.5% premium. Smartsheet serves 85% of Fortune 500 companies. It has a 45-day “go-shop” period to consider alternative offers, although analysts deem a higher bid unlikely.

Takeaway: The deal reflects a renewed interest in leveraged buyouts, supported by easing US interest rates. Vista’s portfolio alignment with Smartsheet suggests potential for synergies within its project management and collaboration businesses. If successful, it would be one of the biggest take-private transactions of the year.

Read the full article about Smartsheet’s privatisation.

 

iii. Apollo Extends Million-Dollar Offer to Intel

Apollo Global Management is considering a significant investment of up to $5 billion in Intel. The potential equity-like investment comes amid ongoing discussions of a possible acquisition of Intel by Qualcomm, which could result in a landmark merger and acquisition. Intel, under CEO Pat Gelsinger, is currently navigating a challenging transformation strategy aimed at innovating its product offerings. However, this has resulted in disappointing earnings and a decrease in market valuation.

Takeaway: Apollo’s interest signals its strong confidence in Intel’s turnaround strategy.

Read the full article about Apollo’s interest in Intel.

 

iv. African Billionaire to Set Up Family Office in Dubai

Aliko Dangote, Africa’s wealthiest person, is establishing a family office in Dubai to diversify his investments globally. Dangote’s family office will co-invest with partners offering sector expertise and aims to expand beyond his industrial ventures in cement, sugar, and oil.

Takeaway: This move aligns with the trend of ultra-wealthy individuals setting up in Dubai due to its favourable tax environment, low crime rates, and strategic location.

 

People Moves

i. Banks: Citi, UBP, LGT, Bordier, Credit Suisse and Goldman Sachs

Citi: Citi appointed Tokiya Kishie as its new Head of Markets for Japan, effective October 1. Kishie, who has nearly 20 years of global banking experience, will oversee Citi’s markets business in Japan. He has held various senior roles across Tokyo, New York, and London, and was most recently the Head of Fixed Income Structuring in Tokyo. Kishie has been with Citi since 2010 and previously served at Lehman Brothers and Tokyo Star Bank.

UBP: Union Bancaire Privée (UBP) added three experienced professionals from competing private banks to its North Asia team.

  • Ivan Tam joins as the team head. He has over 20 years of wealth management experience from roles at HSBC, Deutsche Bank, and Standard Chartered.
  • Calvin Poon joins as a relationship manager and will be based in Hong Kong with Tam. He also comes from Deutsche Bank and has previously worked at Standard Chartered.
  • Leslie Ching joins as a lead investment consultant for ultra-high net worth (UHNW) clients. He previously served at the Bank of Singapore, HSBC, and EFG.

LGT: LGT, a Liechtenstein-based private bank, added key hires to its onshore India wealth management unit. The newly appointed executive directors—Raveena Yagnik, Samish Patel, Bharat Anantavijayam, Nirav Desai, and Sameer Doshi—have over 20 years of wealth management experience. Yagnik joins from Avendus Wealth, while the other directors helm from Centrum.

Bordier: Evrard Bordier, CEO of Bordier & Cie in Singapore and a fifth-generation leader of the family-owned private bank, is relocating to Geneva after more than 20 years of experience in global financial hubs. His career includes leadership roles in Singapore, Geneva, Hong Kong, Zurich, London, and other major cities, with past positions at UBS and Nomura.

Credit Suisse: Babak Dastmaltschi, a veteran in global banking with over 20 years at Credit Suisse and most recently at UBS, is set to retire in October 2024. Known for managing ultra-high-net-worth (UHNW) clients, including complex and high-profile individuals like Russian oligarchs, Dastmaltschi has built a reputation for addressing both personal and business needs. This is particularly true in investment banking. He played a key role in establishing the “OneBank” collaboration model and the Strategic Client Partners department. At UBS, he ensured continued trust from UHNW clients in the merged UBS-Credit Suisse entity.

Goldman Sachs: Goldman Sachs appointed Rob Drake-Brockman as the new CEO of its Singapore office. Drake-Brockman, who is currently leading equities distribution and execution for the APAC region, will take over from James Ellery once regulatory approvals are complete.

Read the full article about LGT’s new executive directors.

Read the full article about Dastmaltschi’s retirement.

Read the full article about Goldman Sachs’s CEO.

 

ii. Financial Institutions: WRISE, Moonfare and Lendela

WRISE: WRISE Prestige appointed Henry Shin, a 26-year veteran of wealth management, as the CEO of its mass affluent unit. Shin will oversee daily operations and report to Chairman Stephen Yan.

Moonfare: Berlin-based private equity platform Moonfare appointed Adam Banks as the new head of its APAC business. Banks, who will be based in Singapore, has previously served at Blackstone, EQT, and Brookfield. He will lead the company’s efforts to expand access to alternative investments like private equity and hedge funds in the region.

Lendela: Singapore-based loan matching platform Lendela appointed Axel Frändén, its former Chief Marketing Officer, as the new Deputy CEO. In this role, Frändén will continue to oversee marketing while also supporting the company’s growth strategy in Singapore, Hong Kong, and Australia. Frändén has over 10 years of experience in marketing and business development. He will work closely with CEO Nima Karimi and the senior management team to enhance operational efficiency and seek new growth opportunities.

 

iii. Asset Managers: GIC, Amundi and KIC

GIC: Gan Kim Yong, Singapore’s Deputy Prime Minister and Minister for Trade and Industry, will join GIC’s Board of Directors on 1 October 2024. Gan has strong experience in public and private sectors and has held senior positions in various ministries, including education, manpower, and health. He also led NatSteel Ltd as its CEO.

Amundi: Crédit Agricole’s asset management division, Amundi Singapore, appointed Florent Dang Tran as a senior portfolio manager and investment advisor focused on multi-asset investments. Dang Tran started his career at Amundi Paris in 2004 and held various roles, including senior allocator and fund manager in Seoul, before returning to Paris in 2018 to serve as a senior portfolio manager and investment advisor.

KIC: The Korea Investment Corporation (KIC) has appointed Il Young Park as its new CEO and chairman of the Board of Directors, effective Thursday. Park previously served as executive director for the Asia and Pacific Constituency at the World Bank and has held various senior positions within South Korea’s Ministry of Economy and Finance, including Deputy Minister for International Affairs.

Read the full article about KIC and Amundi’s new hires.

 

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Image Sources:

  • Reuters
  • CNA