|Bid||22.29 x 2200|
|Ask||22.30 x 2200|
|Day's range||22.13 - 22.32|
|52-week range||20.98 - 39.69|
|Beta (5Y monthly)||0.49|
|PE ratio (TTM)||N/A|
|Forward dividend & yield||N/A (N/A)|
|Ex-dividend date||27 Feb 2020|
|1y target est||23.89|
(Bloomberg Opinion) -- King dollar still reigns supreme. And that means there are two ways for banks to go: the U.S. way, or the highway.Hong Kong and Chinese officials scoffed when the Trump administration imposed sanctions last weekend on 11 individuals deemed to have played a role in undermining the city’s autonomy. Luo Huining, director of the central government’s Liaison Office, noted that he had no assets abroad and offered to “send $100 to Mr. Trump for him to freeze.” Chief Executive Carrie Lam said she wouldn’t be intimidated and derided the U.S. notice for getting her address wrong. The Hong Kong Monetary Authority gave banks in the city a pass, saying they had no obligation to follow U.S. sanctions under local law.The actions of lenders tell a different story. China’s largest state-run banks in Hong Kong are taking tentative steps to comply with the sanctions, Bloomberg News reported Wednesday, citing people familiar with the matter. Major lenders with operations in the U.S. including Bank of China Ltd., China Construction Bank Corp. and China Merchants Bank Co. have turned cautious on opening new accounts for the sanctioned officials, and at least one has suspended such activity.It’s another demonstration of the realpolitik of the dollar system and the financial power that comes with being the issuer of the world’s dominant reserve currency. China’s state-controlled lenders would be the last to willingly follow a directive condemned as “clowning actions” and “shameless and despicable” by the Chinese and Hong Kong governments. HSBC Holdings Plc, Standard Chartered Plc, Citigroup Inc. and other lenders with operations in Hong Kong and ambitions in China will look on with relief. Squeezed between the conflicting demands of Hong Kong’s national security law and U.S. sanctions, they have been given political cover.For banks with international operations, the threat of having their access to dollar funding and overseas networks curtailed cannot be countenanced. Just look at how the U.S. has been able to impose its will via sanctions on Iran, despite resistance from Europe.Dealing in currencies other than the dollar provides little cover, as China’s Bank of Kunlun Co. found out. The country’s main lender for processing Iran-China payments, Kunlun was sanctioned by the U.S. Treasury Department in 2012. The bank responded by starting to handle payments from Iran in yuan and euro instead, yet halted even these in 2018 under sanctions pressure, according to Reuters.It’s little wonder that China wants to challenge the dollar’s global dominance. While officials have spoken frequently of their ambition to give the yuan a bigger role, there’s little sign of progress. The dollar’s share of international payments rose in the past year, while the proportion of payments in yuan remains negligible, according to data from the Brussels-based Society for Worldwide Interbank Financial Telecommunication, or Swift.As my colleague Andy Mukherjee and I have argued, banks are cogs in a giant financial machine that Washington keeps aligned with its foreign policy goals. Take the case of Huawei Technologies Co.’s finance chief Meng Wanzhou. The daughter of Huawei’s founder is currently battling extradition from Canada to the U.S. on charges that she misled HSBC into clearing transactions that potentially violated Iran sanctions. Lawyers for Meng, who has denied the charges, have argued HSBC could have avoided making the payments through the U.S. HSBC routed the money through New York’s Clearing House Interbank Payments System, or Chips, which handles 95% of all dollar transactions, or $1.6 trillion a day.While it’s technically feasible to clear payments in the much smaller offshore dollar market in Hong Kong, when money crosses borders it is accompanied by instructions transmitted by Swift. Since the September 2001 terrorist attacks, the U.S. has watched over financial flows through the organization. In practice, it would have been almost impossible for money destined for Iran to avoid scrutiny.The message ringing from China’s banks is louder and clearer than the contrary protestations of the country’s officials. Like it or not, it’s still a dollar world. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Nisha Gopalan is a Bloomberg Opinion columnist covering deals and banking. She previously worked for the Wall Street Journal and Dow Jones as an editor and a reporter.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) -- Turkey moved to slow lending to businesses in an attempt to stabilize the lira.The banking regulator, known as BDDK, said Monday that its asset ratio formula, which compels banks to extend more loans, will be reduced by 5 percentage points to 95% for commercial lenders, and to 75% for Islamic lenders. The regulator also fine-tuned some rules for calculating the ratio and allowed banks to use average levels of the foreign exchange rate for the previous month.Turkey is unwinding policies designed to shield the economy from the coronavirus pandemic that had unleashed a credit boom. The latest decision follows upheaval in financial markets last week that sent the lira to a record low against the dollar. The sell-off is showing little sign of letting up, with the Turkish currency suffering the second-biggest fall in emerging markets on Monday.The asset ratio was introduced earlier this year to push financial institutions to step up lending, purchase government bonds and engage in swap transactions with the central bank. Commercial lenders asked the regulator to ease the rule at a meeting last week after days of lira weakness.‘Relatively Small’The size of the change is “relatively small” but it will help banks that were slightly below the asset ratio limit, according to Evren Kirikoglu, an independent market strategist in Istanbul. Even if the change isn’t large, the move is striking as it signals a “return to normalcy,” he said.Banks have already started to raise rates on loans and deposits, reduced maturities on mortgage loans and canceled a grace period for second-hand homes. The central bank’s data show loan growth over the past 13 weeks slowed to around 35% after peaking at 50% in May, the fastest since at least 2008.Turkey’s currency was trading 0.5% weaker at 7.3128 per dollar at 3:38 p.m. in Istanbul, after falling to a record 7.4084 earlier on Monday. The benchmark Borsa Istanbul 100 Index fell as much as 2% before erasing losses to trade 0.7% higher.“No cocktail of these banking system tinkering or partial capital control measures is capable of turning the lira trend around,” Commerzbank AG economist Tatha Ghose said in a report. “The underlying weakness arises out of an inconsistent monetary policy framework, featuring no inflation targeting -- and this will continue to build up stress in the background until it ultimately forces fundamental change.”Bank FinesThe regulator slapped fines totaling 200.6 million liras ($27.4 million) on two lenders -- HSBC Holding Plc’s Turkey unit and Islamic lender Albaraka Turk Katilim Bankasi AS -- for breaching the rule in July, when the minimum asset ratio was at 100% for regular lenders and 80% for Islamic banks.A spokesperson for HSBC’s local unit declined to comment when asked if the eased requirements would have any impact on the fine.An Albaraka Turk executive -- who asked not to be named, in line with policy -- said the lender had already adjusted its books to comply with the rule after the fine and will now hold talks with the regulator to see if the adjustment has any impact on the penalty. The new 75% ratio threshold is an achievable level for Islamic lenders, the executive said.(Updates with information on fined banks for missing the ratio in final three paragraphs)For 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) -- The Bank of England risks being in a category of one. On Thursday, in its quarterly monetary policy report, it presented a surprisingly chipper assessment of how it expects the U.K. to recover from the pandemic lockdown.Its relative optimism was in jarring contrast to the gloom that’s engulfed Britain’s big lending banks. BOE Governor Andrew Bailey has had a decent crisis up until now, but he’ll dent his credibility if he’s seen as being too much of a cheerleader.Barclays Plc, HSBC Holdings Plc, Lloyds Banking Group Plc and Natwest Group Plc presented an unremittingly pessimistic outlook for the U.K. with their earnings results over the past couple of weeks. Collectively, the big lenders have taken 17.2 billion pounds ($23 billion) of cumulative writedowns this year, mostly in anticipation of future loan losses caused by the Covid lockdowns and the subsequent economic damage.By contrast, the BOE’s recovery scenario looks positively heroic, with an expectation that Gross Domestic Product will grow by a whopping 18% in the third quarter. The central bank also expects overall U.K. loan losses this year to be somewhat less than the 80 billion pounds it anticipated in May.This divergence of economic views between Bailey’s team and Britain’s top bankers is unusual. A central bank typically tries to provide balanced economic forecasts, finding a mid-point between the worst and best possible outcomes. But most of the risk in this one appears to be on the downside, something the governor acknowledged on Thursday.The biggest leap of faith is the BOE’s year-end unemployment forecast of 7.5%. That is nearly double its pre-Covid level, but NatWest expects an increase to 9.2%-9.8%, with a worst-case estimate of 14.4%. High unemployment is a very serious problem for Britain’s banks, who are heavily exposed to consumer and mortgage lending.You can see why Bailey would want to make the banks feel less despondent. The BOE needs them to lend, as that is its main transmission mechanism for getting money into the real economy. The banks have funds available but that doesn’t make them willing lenders when they fear the specter of bad loans, a phenomenon the European Central Bank has long struggled with. The sensible thing would be further enticements to get banks to use the BOE’s super-cheap borrowing pot — the so-called term funding scheme. Lenders can use this tool to get loans from the central bank, which they can in turn lend to small and medium-sized businesses. Bailey could make this more widely available or even make the loans essentially free to the banks.At the moment, the banking sector is hearing mixed messages from different parts of the BOE. The monetary policy committee may well be saying now that loan losses will be less severe than forecast in May, but the central bank is also the regulatory supervisor for the industry and lenders are fearful about getting into trouble by eating into their capital buffers.In fairness to Bailey, it’s natural that the commercial banks will be as conservative as possible in their assumptions, given that they can’t be blamed for the pandemic. But it still feels odd that these two parts of the City are singing such different tunes. The BOE has often acted in lockstep with the U.K. government, via the Treasury, in its response to the crisis. It’s troubling that it’s so out of sync with the bankers.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Marcus Ashworth is a Bloomberg Opinion columnist covering European markets. He spent three decades in the banking industry, most recently as chief markets strategist at Haitong Securities in London.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.