Asian stocks down on recovery, Ebola worriesAssociated Press 12:56 pm | Thursday, October 2nd, 2014
SEOUL — Asian stocks fell Thursday amid worries about the strength of US and European recoveries and the first American case of Ebola.
Keeping Score: Japan’s Nikkei 225 index lost 1.7 percent to 15,815.45 points and South Korea’s Kospi fell 0.9 percent to 1,973.31. Australia’s S&P/ASX 200 declined 0.7 percent to 5,295.7. Stocks in Southeast Asia also lost ground. Markets in Hong Kong and China were closed for a public holiday.
Slow German Data: A survey showed German manufacturing unexpectedly contracted in September for the first time in 15 months, the latest sign Europe is being hurt by sanctions imposed on Russia over its role in Ukraine.
US Manufacturing: A closely watched monthly survey by the Institute for Supply Management came in below expectations, helping to drive a selloff on Wall Street.
Ebola: US airlines were among the hardest hit as investors fretted people would be discouraged from traveling after reports of the country’s first case of Ebola.
Analyst Take: “Confirmation of a case of Ebola in the US has joined a growing list of bad news stories with geo-political tensions in Ukraine and Hong Kong, and growth concerns around China and Europe sapping risk appetite,” said Niall King of CMC Markets in a commentary.
Wall Street: The Dow Jones industrial average index lost 1.4 percent to 16,804.71. The broader Standard & Poor’s 500 declined 1.3 percent to 1,946.16 and the Nasdaq composite fell 1.6 percent to 4,422.09.
European Central Bank Focus: Caution prevailed among investors ahead of a meeting of European Central Bank policymakers. Though no change in interest rates is anticipated, there will be great interest in what ECB President Mario Draghi says about possible monetary stimulus following recent weak economic news in Europe.
US Data: The US Labor Department is due to report the number of people who applied for unemployment benefits last week. Economists forecast that weekly applications rose a slight 5,000 to a seasonally adjusted 298,000. The Commerce Department will report August factory orders. Orders in July rose 10.5 percent in their biggest one-month gain since 1992.
Energy: Benchmark US oil added 17 cents to $90.90 per barrel in electronic trading in New York. The contract fell 43 cents to settle at $90.73 on Wednesday. The price of oil was pushed down by plentiful supplies and a rise in the U.S. dollar — in which oil sales are priced — against other currencies.
Currencies: The dollar fell to 108.65 yen from 109.07 yen. The euro rose to $1.266 from $1.262.
Asian stocks mostly down after Fed meeting
Asian shares mixed, dollar breaks 110 yen mark
More women joining top management of PH firmsPhilippine Daily Inquirer 7:57 am | Thursday, October 2nd, 2014
MANILA, Philippines–More and more women are joining the top management of Philippine-based companies, according to the research arm of global financial services giant Credit Suisse Group.
According to “The CS Gender 3000: Women in Senior Management” report of the Credit Suisse Research Institute published last September, the percentage of women seated on the boards of Philippine firms rose to 11.9 percent in 2013, up from 10.1 percent in 2012. In 2011, 9.8 percent of local board seats were occupied by women, while the ratio in 2010 was higher at 10.5 percent.
The global average of female board representation was 12.7 percent in 2013, up from 11.3 percent in 2012, 10.3 percent in 2011 and 9.6 percent in 2010.
“Between 2012 and 2013, we have seen a drop from 39 percent to 34 percent in the number of companies, globally, without any women on their boards, most notably in EMEA [Europe, Middle East and Africa], Latin America and Asia,” the report stated.
Among the 43 countries covered by the study, the biggest percentages of women seated on company boards in 2013 were recorded in the Scandinavian region—Norway posted the highest with 39.7 percent, followed by Sweden with 30.3 percent, and Finland with 29.5 percent. In the United States, female board representation was at 13.7 percent last year.
“Europe, with quota and target initiatives, is the furthest down the path of diversity with 19 percent of boards having 30 percent or more female directors and only 10 percent, having zero female representation. Over 50 percent of European companies have more than 20 percent women on their boards, almost double the level in North America. Again this probably stems from the European policy initiatives,” Credit Suisse noted.
In the Philippines, almost one out of every four senior management positions are held by women in 2013, it showed.
Credit Suisse said 24.6 percent of senior management positions in Philippine companies were held by women last year. The ratio in the Philippines was double the global total of 12.9 percent.
According to Credit Suisse, 3.6 percent of chief executive officers (CEOs) in Philippines firms are women. Also, 23.1 percent are on top of operations, 32.9 percent are chief financial officers (CFOs) or into strategic management, while 28.6 percent head shared services functions.
In terms of the number of women in senior management positions, “[t]he notable standouts are in Europe (Sweden and Norway) and in Emerging Asia (Malaysia, Philippines, Singapore, Taiwan and Thailand which are all clustered around 25 percent),” Credit Suisse noted.–Ben O. de Vera
Preparing the banking industry for Asean integrationBy Francis Lim | Philippine Daily Inquirer 7:55 am | Thursday, October 2nd, 2014
A concrete reform initiative by Congress to prepare the Philippines for Asean economic integration is Republic Act No. 10641, which amended Republic Act No. 7721, whose policy objective is to build a stronger banking industry by further liberalizing the entry of foreign banks in the Philippines. The law became effective on August 7, 2014.
Under the new law, foreign banks may be allowed to operate in the Philippines through any one of the following modes of entry:
(i) by acquiring, purchasing or owning up to 100 percent of the voting stock of an existing bank;
(ii) by investing in up to 100 percent of the voting stock of a new banking subsidiary incorporated under the laws of the Philippines; or
(iii) by establishing branches with full banking authority.
Under the old law, a foreign bank could acquire only up to 60 percent of the voting stock of an existing bank. Also, a foreign bank could invest only in up to 60 percent of the voting stock of a locally incorporated new banking subsidiary. The new law now authorizes a foreign bank to own 100 percent of a domestic bank.
On branches of foreign banks, the old law limited the number of branches to three additional branches. The new law increased the number to five. In addition, the new law removed the restriction that foreign banks must establish their branches within five years from the effectivity of the law. It also removed the restriction that during the five-year period, only six new foreign banks can be allowed to establish branches, with an additional four foreign banks allowed entry by the President of the Philippines as the national interest may require.
Locally incorporated subsidiaries of foreign banks shall have the same branching privileges as domestic banks of the same category.
Furthermore, the new law removed the restriction in the old law that “a foreign bank may avail itself of only one mode of entry.” It also removed the restriction that “a foreign bank or a Philippine corporation may own up to 60 percent of the voting stock of only one domestic bank or new banking subsidiary.”
However, the new law provides that the Monetary Board shall adopt such measures as may be necessary to ensure that the control of at least 60 percent of the resources or assets of the entire banking system is held by domestic banks, which are majority-owned by Filipinos.
The new law also provides that only “established, reputable and financially sound foreign banks” shall be allowed entry into the Philippines.
Furthermore, like the old law, the foreign bank must be “widely-owned and publicly listed in its country of origin, unless the foreign bank applicant is owned and controlled by the government of its country of origin.”
Some restrictions stay
Of course, nothwithstanding the new law, restrictions under the Constitution and other laws of the Philippines still apply. For example, if the local bank owns land, the following restrictions still apply notwithstanding the new law:
- A foreign bank can only own up to 40 percent of the capital of the local bank;
- The election of aliens as members of the board of directors of the domestic bank shall be limited to their allowable participation or share in the capital; in other words, foreign directors cannot exceed forty percent of the board membership of the bank.
- No foreigner may intervene in the management, operation, administration or control of the local bank, whether as an officer, employee or laborer, except technical personnel whose employment should be specifically authorized by the Secretary of Justice.
Furthermore, the liberalization under the new law applies only to foreign banks. Hence, non-bank foreign investors must still observe the restrictions under the General Banking Law.
Section 11 provides that foreign individuals and non-bank corporations may own or control only up to 40 percent of the voting stock of a domestic bank. In this regard, the grandfather rule (not the control test) applies to determine the level of the foreign ownership of the bank.
Under this test, the percentage of foreign-owned voting stocks in a bank shall be determined by the citizenship of the individual stockholders in that bank. The citizenship of the corporation which is a stockholder in a bank shall follow the citizenship of the controlling stockholders of the corporation, irrespective of the place of incorporation.
The Bangko Sentral ng Pilipinas is expected to issue the circulars to implement the new law soon.
(The author is a senior partner of the Angara Abello Concepcion Regala & Cruz Law Offices (Accralaw) and is the president of the Shareholders’ Association of the Philippines (SharePHIL). The views in this column are exclusively his, and should not be attributed in any way to the institutions with which he is currently affiliated. He may be contacted through email@example.com.)
Typhoon-affected banks get reprieveBy Paolo G. Montecillo | Philippine Daily Inquirer 7:49 am | Thursday, October 2nd, 2014
MANILA, Philippines–Banks affected by recent natural calamities have been given a temporary reprieve as regulators approved relief measures to help these lenders get back on their feet.
In a statement, the Bangko Sentral ng Pilipinas (BSP) said it recently approved regulatory relief measures for banks whose operations were affected by Typhoon “Luis” and Tropical Storm “Mario.”
“Similar relief measures were extended to thrift, rural, and cooperative banks in cities and provinces that were affected by natural calamities such as Typhoon “Glenda,” and tropical storm Agaton in 2014,” the BSP said.
The same relief measures, which among others allow banks to exclude loans of storm-hit borrowers from the computation of past-due ratios, were also extended to firms affected by Typhoons’ “Santi,” “Labuyo,” and “Yolanda” last year.
Covering banks in nearly all of Luzon and parts of Visayas, the relief measures were approved on Sept. 25. The areas covered were those on the list of badly affected provinces provided by the National Disaster Risk Reduction and Management Council (NDRRMC).
Among the measures for thrift, rural and cooperative banks are the exclusion of existing loans of borrowers in affected areas from the computation of past-due ratios, and the reduction to 1 percent from 5 percent of the BSP’s required general loan-loss provision for restructured loans of borrowers in the affected areas.
The BSP said it would also waive penalties on legal reserves deficiencies of thrift, rural and cooperative banks in affected areas. A moratorium on monthly payments due to the BSP for banks under rehab would also be implemented.
Banks will also be allowed to provide financial assistance to their officers and employees who were affected by the calamity, including benefits and other forms of assistance that may not be within the scope of the existing BSP-approved fringe benefits.
The BSP said it would also grant a 60-day grace period for the settlement of outstanding rediscounting obligations to the central bank. Rediscounting loans may also be restructured, on a case-to-case basis.
Taiwan insurer buys 20% of RCBC for P18BPhilippine Daily Inquirer 7:47 am | Thursday, October 2nd, 2014
MANILA, Philippines–Cathay Life Insurance Co. Ltd., Taiwan’s largest life insurer, is buying a 20-percent stake in Yuchengco-led Rizal Commercial Banking Corp. for P17.92 billion, boosting the local bank’s capital build-up program.
In a disclosure to the Philippine Stock Exchange on Tuesday, RCBC also said it was shelving its planned P4.5-billion stock rights offering as its board had selected Cathay Life as the “preferred bidder” for a mix of primary and secondary shares in RCBC.
The Taiwanese insurer is buying about 280 million shares of RCBC at P64 a share, of which 124.34 million will be primary common shares. This primary portion will raise P7.96 billion in fresh capital, boosting RCBC’s common equity tier 1 capital under Basel 3 framework from 10.9 percent to P13.5 percent.
Basel 3 introduces a complex package of reforms designed to improve the ability of banks to absorb losses. It also extends the coverage of financial risks and puts in place stronger firewalls against periods of stress.
RCBC is now working on a definitive agreement with Cathay Life, a wholly owned subsidiary of Cathay Financial Holding Co. Ltd., which is the largest publicly listed financial holding company in Taiwan, and a leading provider of financial products with a 50-year history.
Out of this relationship with Cathay Financial, RCBC expects to derive significant value-add in the following areas: capital, consumer banking, wealth management, digital banking, corporate relationships across Cathay Financial’s network across Taiwan, greater China and Southeast Asian presence and cross-selling opportunities.
On the other hand, the secondary common shares will be sold by the following: Hexagon Investments BV advised by CVC Asia Pacific Ltd. (118.935 million) and International Finance Corp. (36.724 million).
After the transaction, Hexagon—which invested in RCBC in 2011 at P29 a share—will retain only 1.45 percent while IFC will keep 7.71 percent.–Doris C. Dumlao