Financial Services

India - India's Slowing Growth Will Test Banks' Resilience

Source: The Wall Street Journal, 29 December 2011

After the peak of the financial crisis in 2009, India's banks opened the floodgates with loans to already over-leveraged companies. A weakening economy adds to the pressure. In October, India's industrial output contracted 5.1% from a year earlier. A slump in demand from Europe and a slow recovery in the U.S. don't help.

The RBI says the banks' capital to risk-weighted assets ratio fell from 14.5% at the end of March 2010 to 13.5% at the end of the latest fiscal year. That's still quite conservative, but the downward trend is a concern. At the very least, profits will come under pressure. Banks seldom perform better than the economy they serve. With India's economy heading into a testing time, its banks will suffer too.

Taiwan - Taiwan central bank leaves interest rate unchanged

Source: Channel News Asia, 29 December 2011

Taiwan's central bank on Thursday left its key interest rate unchanged, saying the island's economy was being hit by weakening overseas demand.

"The global slowdown is affecting our economy... and the central bank will maintain the current rate in order to boost economic growth and stabilise consumer prices," it said in a statement after its quarterly board meeting.

Japan - Japan's SMFG Eyeing Deals

Source: The Wall Street Journal, 29 December 2011

Sumitomo Mitsui Financial Group Inc. hopes to take advantage of Japan Inc.'s growing appetite for global deals, with a broad range of services including financing, capital-raising and advising on mergers and acquisitions, the group's president said Thursday.

To enhance its brokerage platform, Japan's second-largest bank by market value may consider an acquisition of, or tie-up with, an investment bank abroad, President Koichi Miyata said in an interview. But he added that his firm will first strengthen its own brokerage unit, SMBC Nikko Securities, by hiring staff, some from Western investment banks in Tokyo.

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