|Bid||10.61 x 3200|
|Ask||10.62 x 27000|
|Day's range||10.58 - 10.66|
|52-week range||9.22 - 13.77|
|Beta (3Y monthly)||1.35|
|PE ratio (TTM)||7.99|
|Forward dividend & yield||0.77 (7.35%)|
|1y target est||16.00|
(Bloomberg Opinion) -- Ever wonder why some global banks are still failing in the fight against money laundering? An account of Standard Chartered Plc’s latest shortcomings is a stark reminder of how much needs to improve in the industry.A review by Dubai regulators of the London-based emerging markets lender found that it wasn’t able to prove how some of its wealthy clients had made their money — not an uncommon position for banks to find themselves in. Astonishingly, though, StanChart was also found in some cases to have lacked even the most basic details for rich customers such as their current addresses and phone numbers, Bloomberg News reported.As a result the bank is reviewing (with the help of Deloitte LLC) all of the 8,000 or so clients at its private banking unit, which oversees about $65 billion of money. As my Bloomberg News colleagues noted, collecting some of that information won’t be easy; it means gathering paperwork from long ago that may never have existed in the first place.It’s no great surprise that yet another major financial institution is struggling to vet clients. From Deutsche Bank AG to the Dutch-based ING Groep NV, plenty of others have been scolded by regulators for similar. But the procedures at StanChart’s private bank appear to be flawed to a troubling degree for anyone hoping to make it more difficult for people to misuse the banking system.Regulators expect lenders to know who their customers are, with good reason. How can you be truly serious about detecting illicit money flows otherwise? When banks fail to have adequate processes for even basic stuff like this, you wouldn’t be surprised by more big fines for the industry further down the line.StanChart has been in trouble before, paying a $1.1 billion settlement to U.S. and U.K. regulators over its handling of transactions that violated economic sanctions on Iran. Britain’s Financial Conduct Authority, which imposed a 102 million-pound ($127 million) fine on the bank as part of that settlement, cited anti-money laundering breaches at StanChart’s network of correspondent banks (which provide services on a lender’s behalf) and its branches in the United Arab Emirates.In one incident StanChart took cash from a suitcase with “little evidence” of the money’s origin being examined, according to the FCA. It’s not clear whether the private bank was included in that FCA review or if the parent might be exposed to any more penalties, but Bloomberg News said there was no evidence that the private bank had been involved in wrongdoing.Yet this is a company that has been under scrutiny for years. When StanChart was found to be moving billions of dollars through the U.S. on behalf of Iranian clients in 2012, it agreed to have an outside monitor as part of a deferred prosecution arrangement. Bill Winters, the bank’s chief executive officer, vowed to overhaul the firm’s compliance processes and to root out bad habit when he took over in 2015. That the bank is still addressing what appear to be fundamental errors is a concern.Knowing your customer, or “KYC” in the jargon of tackling dirty cash, is at the heart of the effort to prevent criminals from accessing the financial system. Without it there’s little hope of the industry ever starting to get to grips with the $2 trillion-a-year money laundering problem, let alone being able to preempt how and where criminals will attempt to move their funds next. There are still too many weak links connecting key parts of the global banking network.To contact the author of this story: Elisa Martinuzzi at email@example.comTo contact the editor responsible for this story: James Boxell at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Elisa Martinuzzi is a Bloomberg Opinion columnist covering finance. She is a former managing editor for European finance at Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here. The Philippine economy is likely to recover in the second half of the year, allowing the central bank to differentiate its policy from peers that are also cutting interest rates, a deputy governor said.While most other economies are slowing, growth in the Philippines is set to pick up as government spending ramps up after a budget standoff was resolved in April, Francis Dakila said in an interview Monday in Manila, his first with foreign media since taking office in July.“I want to differentiate the Philippines compared to other economies on easing cycle,” he said. In many other countries, “their economies are slowing down. In the Philippines what we had is slower-than-expected growth, but there’s an identifiable reason for that, which is the budget delay.”A global slowdown and the U.S.-China trade war have taken a toll on emerging Asia, where many countries depend on exports to drive growth. Central banks across the region have taken advantage of the benign inflation environment to ease monetary policy, including the Bangko Sentral ng Pilipinas, which has cut its benchmark interest rate by 50 basis points so far this year.‘Normalizing’ RatesDakila described the rate cuts as a process of “normalization” to undo some of last year’s tightening, when the BSP raised rates by 175 basis points.The four-month delay in passing the budget dragged Philippine growth to 5.5% in the second quarter, its slowest pace in more than four years. With the impasse now resolved, government spending is expected to accelerate in the second half of the year.“Indications are that for the second half of the year, growth numbers would be better,” Dakila said.Recovering domestic growth means the central bank might not have to provide too much monetary support.“A 25-basis-point key rate cut for the rest of the year would be enough to support the economy,” said Nicholas Mapa, a senior economist at ING Groep NV in Manila. “That also leaves the central bank space to cut further in 2020 if all hell breaks loose.”Policy makers next meet on interest rates Sept. 26. Governor Benjamin Diokno has promised another quarter-point cut by the end of the year, as well as continued reductions in the proportion of deposits banks must hold in reserve, a step designed to push more money into the economy.“Let’s leave it at the forward guidance of the governor,” Dakila said. “I wouldn’t characterize the economy as slowing down. So you can think of that as a signal.”Subdued InflationDakila, 59, became deputy governor in charge of monetary policy when Diwa Guinigundo retired in July. A former assistant governor, Dakila has been at the BSP for 23 years and was part of the team that prepared the bank for its shift to an inflation-targeting regime in 2002.The deputy governor said inflation for the rest of the year will likely come in below the bank’s 2%-4% target, partly due to base effects and lower oil and rice prices. Inflation will remain within the target range throughout 2020, he said.Data due Thursday will likely show consumer prices rose 1.8% in August, according to a Bloomberg survey of economists. That would be the first reading below 2% in nearly three years.Other points Dakila made in the interview:The central bank remains on track to cut banks’ reserve requirement ratio to below 10% by 2023 from 16% now. Further reductions will depend on how low and stable inflation is and whether banks are using funds from previous RRR cuts to boost lending to productive industriesBSP aims to issue its own securities in the second quarter of 2020 as a tool to mop up excess liquidity in the financial system, allowing the bank to better influence market interest rates. It’s considering issuing securities with tenors of one month to one year, with the frequency of sales depending on the money supply(Updates with economist’s comment in ninth paragraph)To contact the reporter on this story: Siegfrid Alegado in Manila at email@example.comTo contact the editors responsible for this story: Cecilia Yap at firstname.lastname@example.org, ;Nasreen Seria at email@example.com, Michael S. ArnoldFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.Within an hour of Prime Minister-designate Giuseppe Conte being granted a mandate to form a coalition, Italy locked in record-low borrowing costs for the next 10 years at a bond auction.Should he succeed in pulling together a new government, it would mark a brightening outlook for Italy’s embattled investors ahead of fresh budget negotiations with the European Union this fall.“What we are now seeing is a virtuous circle,” Holger Schmieding told Bloomberg Television Thursday. “Bond yields are falling, which in turn means Italy has more fiscal space, which then reduces the risk of a big confrontation with Brussels that could spook markets.”Italy’s bonds have surged this week as the Five Star Movement and Democratic Party looked set to form an alliance that although may be fragile, will be less hostile toward the EU. Ten-year yields dropped below 1% for the first time on record, significantly lowering borrowing costs for the nation and easing the pressure on its burgeoning fiscal deficit.The agreement also locks the leader of the far-right League, Matteo Salvini, out of government by postponing the possibility of fresh elections in which the party would likely gain a majority. Salvini has frequently locked horns with EU officials and pledged to bring tax cuts, which threatened to push the deficit through the bloc’s limits.Full AllotmentThe euro area’s third-biggest economy sold its full allotment of 6.25 billion euros ($6.9 billion) of securities. While pricing was weak, it was distorted by a surge in demand going into the auction, according to ING Groep NV. The decline in yields could save the Treasury more than 1% of gross domestic product on an annual basis, said Banque Pictet & Cie.“The market jumped into the auction so in reality the results are healthy,” said Antoine Bouvet, a senior rates strategist at ING. “If the market takes a very optimistic view on the prospects for the current coalition, 10-year Italy yields could reach 0.60%.”Democratic Party leader Nicola Zingaretti was quick to highlight the savings for the government from the lower auction yields. “That will now go into the pockets of Italians,” he wrote in a post on Facebook.Ten-year yields fell eight basis points after touching a record low 0.92%, with the spread over those on German securities at 166 basis points, the lowest level since the forming of the previous coalition in May last year. The drop in yields lifted shares of Italian banks, with Banca Monte dei Paschi di Siena SpA jumping 13%. The FTSE MIB Index is on track for its biggest weekly advance since February.Budget DeficitConte has until next week to forge a coalition that would avert the possibility of fresh elections. The new Five Star-PD government will seek to keep Italy’s 2020 budget deficit within EU limits, according to officials who asked not to be named discussing confidential plans, but any agreement is likely to be a shaky one given they have few issues that unite them.Even those who have long been bearish on Italian debt are showing a change of heart as the new coalition nears fruition. James Athey, a money manager at Aberdeen Standard Investments, was shorting the country’s bonds for much of the past 18 months, but is now buying higher-yielding longer-dated notes versus their short-dated peers, known as a curve flattening trade.“Whatever you think about the longevity of this potential coalition that we’re seeing at the moment, it’s certainly more centrist and less scary looking with respect to budgetary policy,” Athey said. “The stars are somewhat aligned at the moment.”(Updates with Democratic Party leader Zingaretti in eighth paragraph.)\--With assistance from James Hirai, Namitha Jagadeesh, Alessandro Speciale, Phil Serafino and John Follain.To contact the reporter on this story: John Ainger in London at firstname.lastname@example.orgTo contact the editors responsible for this story: Ven Ram at email@example.com, Michael Hunter, Neil ChatterjeeFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Follow @Brexit, sign up to our Brexit Bulletin, and tell us your Brexit story. The pound slid as Prime Minister Boris Johnson sought to suspend the U.K.’s Parliament, raising the risk of a no-deal Brexit.Sterling was the worst performer among major currencies as Johnson confirmed an earlier BBC report, while U.K. government bonds rallied on expectations of an earlier Bank of England interest-rate cut. With the U.K. set to leave the European Union on Oct. 31, suspending Parliament would mean less time for lawmakers to attempt to block a no-deal.A no-deal Brexit is the worst-case scenario for the pound, driving it down to $1.10, according to a recent Bloomberg survey. The U.K. currency erased Tuesday’s gains that came thanks to the positive tone struck by European leaders at the Group-of-Seven meeting and efforts by the opposition Labour party to attempt to block no-deal.“It just underscores the veil of uncertainty the pound is facing, the still non-negligible risk of no-deal Brexit and the vulnerability of the currency to negative headline news,” said Petr Krpata, a currency strategist at ING Groep NV.The pound fell as much as 1.1%, the most in a month, before paring the drop to be 0.7% lower at $1.2206. It weakened 0.7% to 90.85 pence per euro. The yield on U.K. 10-year government bonds fell four basis points to 0.46%, as money markets brought forward expectations of a U.K. rate cut to March from May.The FTSE 100 Index rose 0.3% to buck regional losses. Companies that make most of their money in U.S. dollars, including firms like catering giant Compass Group Plc and medical equipment maker Smith & Nephew Plc both jumped. U.K. stocks sensitive to the twists and turns of Brexit, particularly housebuilders like Barratt Developments Plc and Taylor Wimpey Plc, fell.Parliament is due to return from a summer break on Sept. 3. Johnson said he’ll ask Queen Elizabeth II to suspend Parliament from the week of Sept. 9 to Oct. 14. for a Queen’s Speech on his domestic agenda. That will still leave “ample time” to debate Brexit, he said.“Boris looks to be making the time for Parliament much more constrained but they are not completely out of the game,” said Jordan Rochester, a strategist at Nomura International Plc. “This will raise the odds of a no-deal Brexit in the meantime.”The move by Johnson’s government is likely to lead to further tumult and could even trigger a constitutional crisis, with some lawmakers previously talking of continuing to meet in another building if Johnson attempted to suspend Parliament.“We expect euro-sterling to re-test the 0.9300 level in coming weeks, even going towards 0.95 if the stand off between PM Johnson and the U.K. parliament and the EU intensifies,” Krpata said.(Updates throughout.)\--With assistance from Sam Unsted.To contact the reporters on this story: Charlotte Ryan in London at firstname.lastname@example.org;Anooja Debnath in London at email@example.comTo contact the editors responsible for this story: Ven Ram at firstname.lastname@example.org, Neil ChatterjeeFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- Since getting burned in the financial crisis, HSBC Holdings Plc has been in sell rather than buy mode. But now that it’s out shopping, the bank is looking to splurge. HSBC is eyeing the Asian assets of struggling British insurer Aviva Plc, which could be worth between $3 billion and $4 billion, Bloomberg reporters Dinesh Nair, Manuel Baigorri and Stefania Spezzati wrote Thursday. That would make it one of the bank’s largest purchases since it bought subprime lender Household International for $15.5 billion in 2003.The London-based lender should be prepared to pay even more: Aviva is sure to have many suitors. While the company had a difficult run in Asia, a buyer with more regional presence could better navigate the regulatory hurdles of a fractured market. The bulk of Aviva’s Asian assets are in Singapore, where a large pool of affluent residents has helped gross written premiums rise 13% per year industry-wide, according to Bain & Co. Aviva has 885,000 customers in the Southeast Asian country and was the sixth-largest insurer in Singapore last year – ahead of HSBC. The company accounted for 4.2% of the city-state’s insurance assets in 2018, says Bloomberg Intelligence analyst Steven Lam.A rare, large asset like Aviva is bound to pique the interest of FWD Group Ltd., which Hong Kong billionaire Richard Li built from the ashes of Dutch insurer ING Groep NV’s Asian businesses. FWD, widely believed to be preparing for an initial public offering, has been busy buying assets: Late last year, it snapped up an 80% stake in Commonwealth Bank of Australia’s Indonesian life insurance arm for A$426 million ($302 million). The Japanese, meanwhile, have been avid acquirers of Southeast Asian insurance assets for years, as low growth and negative bond yields at home crimp the savings of its aging population. Just this week, Japan's Taiyo Life Insurance Co. said it will buy 35% of Myanmar's Capital Life Insurance Ltd. Tokio Marine Holdings Inc. bought the Thai and Indonesian businesses of Sydney-based Insurance Australia Group Ltd. for about A$525 million ($355 million) last year, and has been open about its Southeast Asian ambitions.It makes sense that HSBC is eager to jump in: Its chairman, Mark Tucker, is an insurance supremo, having run AIA Group Ltd. and Prudential Plc previously. The recent protests in Hong Kong are pressuring the bank, which gets more than half of its pretax profit from the former British colony, to diversify, as other firms with big bases in the city have done. On Thursday, HSBC broke its silence and called for a peaceful resolution to the tensions in a newspaper ad.With the midpoint of the $3 billion to $4 billion price range amounting to 22 times Aviva's 2018 adjusted operating profit, these jewels aren’t coming cheap. That’s the same level at which AIA, Asia’s biggest insurer, trades. Bidders should prepare for a price war.To contact the author of this story: Nisha Gopalan at email@example.comTo contact the editor responsible for this story: Rachel Rosenthal at firstname.lastname@example.orgThis 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/opinion©2019 Bloomberg L.P.
(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.The world’s first 30-year bond featuring zero income struggled to find buyers, prompting Germany’s debt agency to admit the sale may have been “too large.”The nation failed to meet a 2-billion-euro target ($2.2 billion) for the auction of notes maturing in 2050, signaling that negative yields across Europe may finally be taking their toll on demand. It’s another sign that the global bond rally may be coming to a halt now that more than $16 trillion of securities have negative yields.“The broader conclusion is that this is an ominous sign for cash bonds,” said Antoine Bouvet, a rates strategist at ING Groep NV, looking ahead to the end of a summer lull in European issuance next month. The jury is still out on whether this is “a turning point in the long-end rates rally, as the fundamental driver of lack of faith in central banks’ ability to reflate the economy is still there.”Dwindling expectations for inflation and growth in coming years has led the European Central Bank to hint at a new wave of monetary stimulus next month, driving a rally across the region’s bond markets. The whole of Germany’s yield curve is now below zero -- among the first major markets exhibiting such a trait -- meaning the government is effectively being paid to borrow out to 30 years.That drew the attention of U.S. President Donald Trump, who used it to launch another push on Twitter for the Federal Reserve to lower U.S. borrowing costs. Markets are waiting for comments by Fed Chair Jerome Powell and other central bankers meeting from Friday to discuss stimulus for the global economy at a gathering in Jackson Hole, Wyoming.The German sale comes as Europe’s largest economy is priming the pumps for extra spending in the event of a crisis. While the nation is confined to strict laws on running a fiscal deficit, Finance Minister Olaf Scholz suggested Germany could muster 50 billion euros ($55 billion) should a recession hit. The economy contracted in the second quarter.The country only sold 824 million euros of the zero coupon bond at a record-low average yield of -0.11%, while the Bundesbank retained nearly two-thirds of the debt on offer. The real subscription rate -- a gauge of demand that accounts for retentions by the Bundesbank -- fell to 0.43 times against 0.86 times at the previous sale of similar maturity bonds on July 17.“This shows that there is less demand for 30-year bonds at negative yields,” said Marco Meijer, a senior fixed-income strategist at BNP Paribas SA. Still, Meijer doesn’t “see yields rising a lot in Europe.”Germany’s debt agency said it was aware that the auction with a zero coupon might fail to drum up large investor interest.“In the current environment it is difficult to issue in large volume a bond of this maturity,” said spokeswoman Alexandra Beust in Frankfurt. The agency “doesn’t view the sale as a failure -- it doesn’t cause us a problem as we can take the remainder on our own books.”Tantrum RiskGerman 30-year bonds erased declines after the comments, with yields steady at -0.15% after having risen three basis points earlier in the day. Those on 10-year securities also steadied at -0.69%, near a record low touched earlier this month.One of the triggers for a German bond selloff in 2015, after benchmark yields first neared 0%, was a poor 10-year auction that highlighted a loss of demand at low yield levels.This time around, Commerzbank AG had expected demand to come from life insurers and macro investors, despite the yield curve flattening in recent weeks to drive down long-dated yields. German 30-year bonds are still attractive for U.S. investors, when hedged for currency swings, offering around a 2.6% yield, relative to around 2% on a 30-year Treasury.“It is technically a failed auction,” said Jens Peter Sorensen, chief analyst at Danske Bank AS. “I am not all worried about this -- as investors can always just buy in the future and do not need to participate in auctions.”(Updates with German debt agency comments.)\--With assistance from James Hirai, Charlotte Ryan and Brian Parkin.To contact the reporter on this story: John Ainger in London at email@example.comTo contact the editors responsible for this story: Ven Ram at firstname.lastname@example.org, Neil ChatterjeeFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- The bond market used to like the idea of Matteo Salvini as Italy’s leader. Now it’s becoming worried.As League party leader Salvini attempts to force fresh elections, investors fear victory would embolden a new government to ramp up spending and clash with the European Union again over budget deficit limits. With the nation’s bonds having seen the biggest one-week selloff since the current coalition was formed in May last year, more turmoil is expected and could lead its borrowing costs to return to levels that could rattle global markets.With the League topping opinion polls, Salvini has pledged that a government led by him would cut income tax for most Italians, start a large program of public works, and stop the introduction of an automatic VAT increase in 2020. The political risk comes at a time when the economy has almost ground to a halt, suggesting that Italy’s debt burden will continue to rise.“It’s going to be a hot Italian summer for bond markets,” said Andrea Iannelli, a London-based investment director at Fidelity International, which has an underweight position in Italian bonds. “The plan that the League has is not strictly conservative from a fiscal point of view.”Italian lawmakers have summoned Prime Minister Giuseppe Conte to appear before the senate on Aug. 20, from which Salvini is pushing for a quick confidence vote that would lead to a snap ballot. The way forward will ultimately be decided by President Sergio Mattarella, who can seek to form an alternate ruling coalition in parliament, or call a general election.Italian 10-year yields jumped 26 basis points last week to touch 1.83%, the highest level in over a month. The premium investors need to pay over those on their German peers, a key gauge of risk sentiment in the country, hit a six-week high of 238 basis points. The flushing out of long positions may widen it further in the short term to 250 basis points, according to ING Groep NV.Levels in “lo spread” above 300 made the front pages in Italy last year, and that is probably the “pain threshold” now, according to Fidelity’s Iannelli. The spread could climb to between 275 basis points and 300 basis points if Salvini seeks to form a government with other parties on the right such as the Brothers of Italy, according to AllianceBernstein.“The most likely outcome is a coalition with center-right, but the probability of an outright League win or a coalition with the harder-right has definitely increased in recent weeks,” said John Taylor, a money manager at AllianceBernstein. “We’re in for a period of more volatility.”Budget BusterThe League would get about 38% of the vote if elections were held now, according to pollster Noto Sondaggi. Salvini proposes simplifying income tax by lowering the rate to 15%, while stopping the VAT increase would cost the Treasury around 23 billion euros ($25.7 billion) or 1.3% of GDP. The nation is already the euro-area’s second-most indebted, after Greece, and Brussels threatened sanctions against Rome last year for a wider budget deficit.The debt risk in the bloc’s third-biggest economy is weighing on the euro and helping boost demand for havens such as the Swiss franc and German bonds. Italy’s benchmark stock index has slid to hit a two-month low this week, while the cost of insuring the nation against default has surged to the highest this year.QE HelpOne boon for Italian bondholders though is the prospect of a fresh program of quantitative easing from the European Central Bank -- potentially starting in September. While the ECB is up against limits in countries such as Germany, it still has room to buy debt from Italy.For Danske Bank AS, Italy also retains the appeal of being one of the few nations in the euro area that doesn’t have most of its debt market offering negative returns. For Axa Investment Managers, low summer volumes mean it’s too early to see which direction the market will go.“Now is probably not the right time to make decisions,” said Alessandro Tentori, chief investment officer at Axa Investment Managers, adding he wasn’t sure if Salvini’s reform agenda would be better or worse for markets than the existing government’s plans.The prospect of the League governing without its current coalition partner, the anti-establishment Five Star Movement, had previously been seen as positive for the nation’s financial markets given their constant sparring and conflicting priorities over tax cuts. But over the last few months, Salvini has sounded the most forceful over ramping up spending on infrastructure.Italy won’t be able to contain the budget deficit below 2% -- seen as a potential line in the sand for the European Commission in the last dispute -- if it’s going to deliver promised investments and tax cuts, Salvini has said. To avoid disciplinary action by the Commission, Rome agreed to keep this year’s shortfall at 2.04%, with talks about the 2020 budget due to start next month.“The prospect of a more assertive, and more powerful, Salvini raises the prospect of protracted tensions with the EU,” said ING strategists including Antoine Bouvet. “The build-up to the Italian election would coincide with the build-up to Brexit. If we get that, we see the 10-year Italy-Germany spread testing 300 basis points.”(Updates with ECB buying in 11th paragraph, Axa in 12th.)To contact the reporter on this story: John Ainger in London at email@example.comTo contact the editors responsible for this story: Ven Ram at firstname.lastname@example.org, Neil Chatterjee, Alessandro SpecialeFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- European Union officials called for a further tightening of the bloc’s anti-money laundering rules after identifying a host of failures that led to scandals across the financial system.Banks at times completely ignored requirements to stop illicit financial flows and supervisors were ill-equipped and often slow to deal with the issues, the European Commission said on Wednesday. Handing some powers to a common EU body could be one way to improve supervision and avoid a repeat of the situation, it said.The EU’s executive arm conducted a “post-mortem” exercise after banks such as Danske Bank A/S, Nordea Bank Abp and ING Groep NV were caught up in high-profile scandals. Russian criminals often used the Baltic units of Nordic banks to channel money into the West, exploiting weaknesses in the EU’s defense against money laundering.“We have a structural problem in the Union’s capacity to prevent that the financial system is used for illegitimate purposes,” Valdis Dombrovskis, the EU commissioner in charge of financial-services policy, said in a statement. “This problem has to be addressed and solved sooner rather than later.”Estonia and Latvia, two EU countries that served as conduits for illicit funds, have vowed to clean up their act. But policy makers are facing a steady stream of calls for more fundamental reforms of the bloc’s framework, such as putting a Europe-wide authority in charge of fighting money laundering.Another measure floated by the commission is to turn the EU’s anti-money laundering rules into directly applicable regulations, reducing the scope for member states to tinker with the laws. Integration of the bloc’s banking market means more work is required on developing cross-border policies, it said.To contact the reporter on this story: Alexander Weber in Brussels at email@example.comTo contact the editors responsible for this story: Dale Crofts at firstname.lastname@example.org, Ross Larsen, Nikos ChrysolorasFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.At the heart of Chief Executive Officer Christian Sewing’s turnaround plan for Deutsche Bank AG is a contrarian bet: that he can cut spending on technology while gaining ground on the competition.Even with the digital revolution in finance accelerating, Deutsche Bank expects to trim its annual outlays on tech to 2.9 billion euros ($3.3 billion) in 2022 from a peak of 4.2 billion euros this year.“Deutsche Bank would probably love to be spending more on technology, but they need money for other parts of their restructuring,” said Pierre Drach, managing director of Independent Research in Frankfurt. “It’s pretty much impossible for European banks to catch up with the Americans at this stage.”Sewing’s team says it’s made progress in fixing information networks that his predecessor called “antiquated and inadequate.” Years of expansion left it with systems that couldn’t communicate with each other and didn’t adequately track its business. The bank, which has spent almost $18.5 billion on legal settlements and fines since 2008, has also suggested that the past breakdown in controls stemmed in part from weak systems.The 4.2 billion euros Deutsche Bank has budgeted this year to maintain and modernize its systems represents a fraction of the $11.5 billion JPMorgan Chase & Co. shells out. "You have to spend to win" with new technologies, Jamie Dimon, the bank’s CEO, said Tuesday.The gap is set to widen as the German chief executive wants to cut technology costs by almost a quarter. European banks, meanwhile, are forecast to increase tech spending at a 4.8% annual rate through 2022, according to the consulting firm Celent.“We continue to invest in IT to serve clients better, become safer, more efficient and better controlled,” Senthuran Shanmugasivam, a Deutsche Bank spokesman, said in response to questions from Bloomberg. “Despite our smaller footprint, our investment plans in 2019 are broadly unchanged as we reallocate resources to our core businesses.”It’s all part of a retrenchment Sewing announced last week to exit equities sales and trading and eliminate 18,000 jobs. Deutsche Bank aims to cut adjusted costs to 17 billion euros in 2022 from 22.8 billion euros last year; the share of technology expenses would remain stable over that time period.The company can modernize systems while spending less, for example by moving most of its applications to the cloud, according to Frank Kuhnke, who oversees its technology. He said Deutsche Bank has already cut the cost of crunching data by more than 30% since 2016 even as it increased computing capacity by about 12% a year to meet regulatory demands.Still, Deutsche Bank needs “to make a further step change in embracing technology,” Sewing told analysts last week.New HiresThe CEO has brought in new talent to do that. Bernd Leukert, who left the management board of software company SAP SE earlier this year, will start in September. Neal Pawar will join as chief information officer from AQR Capital Management the same month.Hiring outsiders hasn’t been a panacea in the past. Kim Hammonds, a former Boeing Co. executive, spent about four and a half years rebuilding the bank’s systems only to be ousted in 2018 after reportedly calling the bank “the most dysfunctional company” she’d ever worked for.Deutsche Bank expects its retrenchment from businesses to allow it to focus on its core operations. It will also save about 300 million euros by 2022 by shedding almost 5,000 external IT contractors and replacing them with internal staff at a lower cost. The integration of consumer lender Postbank will avoid duplication of expenses.The digital revolution is upending all aspects of finance -- from taking deposits to bond trading, a traditional Deutsche Bank strength. Citigroup Inc. has created a fintech division to invest in debt-market technologies while Spain’s Banco Bilbao Vizcaya Argentaria SA has created a unit to automate trade processes and generate intelligence from data. Dutch bank ING Groep NV has used artificial intelligence to win 20% more bond trades and cut costs.Cutting tech costs is also notoriously difficult.A three-year initiative announced in 2012 failed to stop technology spending from ballooning 44% by 2015. That was the year that then-CEO John Cryan said he would reduce the number of operating systems from 45 to four in 2020. Deutsche Bank still has 26, Sewing told investors in May. He kept the goal of eventually cutting them to four, but says the lender will need to run 10 to 15 systems for the foreseeable future.“Everyone knows that Deutsche Bank’s systems are a mess and I think they will have to end up spending more,” said Drach. “The fact that their new technology head hasn’t come on board yet gives them a good narrative for increasing the ultimate amount.”\--With assistance from Katie Linsell.To contact the reporter on this story: Nicholas Comfort in Frankfurt at email@example.comTo contact the editors responsible for this story: Dale Crofts at firstname.lastname@example.org, James Hertling, Giles TurnerFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- The Belgian unit of ING Groep NV was fined 350,000 euros ($394,485) by the central bank of Belgium for violating legislation against money laundering.ING Belgium was hit with the penalty on April 24, Julie Kerremans, a Brussels-based spokeswoman for the unit, said in an emailed statement on Sunday.Kerremans was responding to a Bloomberg News request for comment on a July 13 report by Belgian newspaper De Standaard that ING Belgium had a link with a Russian customer whom the bank didn’t properly identify.The paper said the case covered dates in 2000 and 2013.To contact the reporters on this story: Jonathan Stearns in Brussels at email@example.com;Joost Akkermans in Amsterdam at firstname.lastname@example.orgTo contact the editors responsible for this story: Ben Sills at email@example.com, ;Chad Thomas at firstname.lastname@example.org, Flavia Krause-Jackson, Tony CzuczkaFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Emerging-markets are set to shift their focus to the outlook for global growth after a trade truce between the U.S. and China alleviated the immediate risk of a cold war between the two nations.Investors welcomed President Donald Trump’s decision to put on hold new tariffs on Chinese goods and allow U.S. suppliers to sell some products to Huawei Technologies Co., but it’s still unclear whether Beijing and Washington can overcome their differences. While the easing of tension is positive for global growth and will reduce some of the urgency in central banks’ swing back to policy easing, existing tariffs and continued uncertainty will remain a drag, according to Bloomberg Economics.“Given the meeting was light on details, heavy on Trump optimism, coupled with the Chinese comments being reserved and benign, EM currencies are unlikely to benefit from the new truce,” Jason Daw, the head of emerging-markets strategy at Societe Generale in Singapore, wrote in a report. “A substantial risk premium will remain in market pricing related to two negative growth scenarios: first, a long-term stalemate or, second, a no-deal outcome. From a tactical perspective, there is more likely to be a short-term pop higher” in the dollar versus Asian currencies, he said.Listen here to Emerging Markets Weekly PodcastData on Sunday and Monday showed the outlook for China’s manufacturing sector continued to deteriorate in June, highlighting the pressure from tariffs the U.S. imposed the previous month on Chinese goods. A slew of manufacturing data will be keenly watched by investors. Similar readings on Monday from the trade-dependent economies of South Korea and Taiwan followed the trend in China.Emerging-market currencies and stocks jumped last month by the most since January, while local-currency bonds staged their best performance in more than three years following a dovish turn by the Federal Reserve and the European Central Bank. The U.S. jobs report on Friday will likely give clues on whether the Fed will cut rates on July 31 for the first time in more than a decade.“Aside from trade-war newsflow, the primary drivers of EM currencies have been growth and liquidity,” Daw said. “Low rates could prevent meaningful currency weakness for a while longer, but if the delta on economic activity remains negative, growth should ultimately win out in the liquidity-growth tug-of-war.”Clues on RatesIn Poland, the highlight of the week will be the central bank’s policy announcement on Wednesday, where all of the analysts surveyed by Bloomberg expect the monetary authority to hold borrowing costs at 1.5%But unexpectedly strong inflation data on Friday points to more entrenched inflation pressure that could eventually drive price growth beyond the upper end of the central bank’s target rangeIn Russia, traders will be looking for clues on the rate path from Elvira Nabiullina, when the central-bank governor attends the International Financial Congress in St. Petersburg from July 3-5The Bank of Russia shifted solidly to monetary easing at its meeting in June, saying its first interest rate cut in more than a year could be followed by two more in 2019 as inflation slows and growth sputtersBudget and Economic DataIndia’s new Finance Minister Nirmala Sitharaman will present the budget for the calendar year ending March 2020 at a time when the economy is slowingMore fiscal stimulus is probably on the way and while the budget deficit is likely to remain at 3.4% of gross-domestic-product as planned in the pre-election interim budget, sticking to this target will be challenging, Prakash Sakpal, an economist at ING Groep NV in Singapore, wrote in a noteAny slippage in the fiscal-deficit target can be unsettling for markets, particularly bonds, Rini Sen, an economist in Bengaluru at Australia & New Zealand Banking Group Ltd, wrote in a noteWhile the Indian rupee advanced in June, it was one of the smallest increases among peersSouth Korea reported on Monday exports fell for a seventh straight month in June, highlighting the ongoing weakness in tech demand and the economy’s sensitivity to global trade tensions. Overseas shipments dropped 13.5% from a year earlierMalaysia is due to report trade data for May on ThursdayA batch of inflation figures was kicked off on Monday by Indonesia and Thailand, to be followed by South Korea on Tuesday, and Turkey on WednesdayIndonesian consumer prices rose at a slower pace in June than the previous month, while core inflation accelerated to its highest level in more than two yearsThailand’s CPI eased to a four-month low, below the central bank’s targetConsumer prices in Asia remain relatively benign, which gives scope for their central banks to cut interest rates should the global slowdown deepenWhile Turkey’s June PMI data released Monday showed contraction at 47.9, it’s the best reading in almost a yearInflation data on Wednesday will likely show that consumer prices plummeted in June, bolstering the case for rate cuts to help resuscitate the economyThe lira and Turkish stocks advanced after Trump indicated he may reassess his threats to sanction Turkey over its purchase of a Russian missile defense system, fueling speculation that any penalty imposed will be benignMexico’s consumer confidence figures due on Thursday will be in focus as investors watch for insight into the slowing economyAfter jumping since President Andres Manuel Lopez Obrador was elected last year, it’s dipped slightly since FebruaryBrazil’s monthly industrial production data on Tuesday is expected to show a decline, underlining pressure on President Jair Bolsonaro as he struggles to push through a pension reform bill amid a slowing economy and stubbornly high unemployment\--With assistance from Tomoko Yamazaki, Alec D.B. McCabe, Philip Sanders and Justin Villamil.To contact the reporters on this story: Netty Ismail in Dubai at email@example.com;Lilian Karunungan in Singapore at firstname.lastname@example.org;Constantine Courcoulas in Istanbul at email@example.comTo contact the editors responsible for this story: Dana El Baltaji at firstname.lastname@example.org, Srinivasan SivabalanFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.