Friday, August 26, 2016

Taiwan's CTBC Financial, China CITIC Bank cancel deals

A man stands in front of CITIC bank's branch in Beijing, China, in this March 23, 2016 file photo.   REUTERS/Kim Kyung/File Photo
A man stands in front of CITIC bank's branch in Beijing, China, in this March 23, 2016 file photo. REUTERS/Kim Kyung/File Photo

CTBC Financial Holdings (2891.TW), parent of Taiwan's top credit card issuer, and Chinese state-backed lender China CITIC Bank Corp (601998.SS) have canceled investments in each other amid fresh cross-strait political tensions. It is the first deal collapse since pro-independence Democratic Progressive Party (DPP) leader Tsai Ing-wen became president of Taiwan in May, but China CITIC Bank's president said there was no political aspect to the decision. "There is not a single political element to it. We are a commercial bank. We can’t play a leading role in politics," Sun Deshun told a press conference in Beijing. "This was mainly due to financial regulatory policies in the two locations. And we couldn't reach agreement on some commercial terms." CTBC and China CITIC Bank said in a statement that both parties had agreed to terminate the deal as it had been more than a year since they signed the contract.

Taiwan's Financial Supervisory Commission Vice Chairman Kuei Hsien-nung said CTBC did not submit applications for the deal as China CITIC Bank had failed to meet a key regulatory requirement. The requirement is that Chinese banks which invest in Taiwanese banks must have branches in OECD countries for more than five years, he said. CTBC did not immediately respond to requests for comment. China regards Taiwan as a wayward province and stopped a communication mechanism with the island in June, suspecting Tsai will push for formal independence. The communication mechanism was introduced following an improvement of ties under Taiwan's then-president Ma Ying-jeou, who took office in 2008 and signed a series of trade and tourism deals with China. "The overall environment is not good. These two firms are politically aware ... They knew the deals would not gain regulatory approval given the current political climate," said a PricewaterhouseCoopers executive, who declined to be identified due to the sensitivity of the matter.

DPP lawmaker Lo Chih-cheng disagreed. "I don't think it's connected to politics. It would be far-fetched to link this to cross-strait relations," he said. In May 2015, CTBC agreed to pay T$11.67 billion ($368.63 million) for the 100 percent stake in China CITIC Bank Corp subsidiary CITIC Bank International (China) Ltd. In exchange, China CITIC Bank Corp would buy a 3.8 percent stake in CTBC. No price was disclosed. China's Industrial and Commercial Bank of China (601398.SS) and Taiwan's Sinopac Financial Holdings (2890.TW) in September last year said they would let a $600 million investment deal lapse because curbs against mainland Chinese investment in the sector had not been relaxed as hoped. Earlier this month, CTBC said its subsidiary, CTBC Bank, had canceled a deal to buy a 51 percent stake in the Malaysian branch of Royal Bank of Scotland.
(Additional reporting J.R. Wu, Jeanny Kao and Emily Chan in TAIPEI; Editing by Stephen Coates)
This article was first seen on Reuters

Wall Street falls after Fischer, Yellen comments

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., August 25, 2016. REUTERS/Brendan McDermid
Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., August 25, 2016. REUTERS/Brendan McDermid

U.S. stocks were lower in a choppy session on Friday, with stocks bouncing between gains and losses as investors grappled with the possible timing of a U.S. interest rate hike after comments from Federal Reserve officials, including Chair Janet Yellen. The S&P 500 rose as much as 0.7 percent in the wake of a speech by Yellen in Jackson Hole, Wyoming that said the case for increasing interest rates had strengthened, but did not indicate when the Fed would raise rates. Yellen told the gathering of central bankers from around the world the U.S. economy was nearing the central bank's goals of maximum employment and price stability but she maintained that future hikes should be "gradual". Stocks later reversed course to trade lower after hawkish comments from Fed Vice Chair Stanley Fischer raised the possibility of a rate hike as soon as next month.

The perceived chances of a rate hike in September climbed to 30 percent from 21 percent the previous day, according to CME Group's FedWatch tool. Traders are now pricing in a 60.2 percent likelihood of a hike in December, up from 51.8 percent Thursday. Banking shares, which stand to gain in a higher rate environment, advanced. The KBW Nasdaq bank index .BKX rose 0.2 percent. In contrast, sectors likely to be hurt by higher rates, such as utilities and telecoms, fell. The S&P utilities index .SPLRCU dropped 2.1 percent, on track for its worst day in four months. Telecoms .SPLRCL fell 1.3 percent. "The market ... needed to digest both Yellen and Fischer’s comments and it is reacting in a way that is very consistent with an interest rate move," said David Schiegoleit, managing director at U.S. Bank Private Client Reserve in Los Angeles.

"Taken in balance the market has found a new direction today; it’s just with those comments coming so close together we got bounced around a little bit here." The Dow Jones industrial average .DJI fell 79.58 points, or 0.43 percent, to 18,368.83, the S&P 500 .SPX lost 7.4 points, or 0.34 percent, to 2,165.07 and the Nasdaq Composite .IXIC dropped 10.47 points, or 0.2 percent, to 5,201.73. Mirroring the market's swings, the CBOE Volatility index .VIX, known as Wall Street's "fear gauge", touched a seven-week high of 14.67. It was last up 7.3 percent at 14.63. In company news, Herbalife (HLF.N) lost 3.5 percent to $59.76 after a report said Carl Icahn, the nutritional supplement maker's top shareholder, was looking to sell his stake. Declining issues outnumbered advancing ones on the NYSE by a 1.85-to-1 ratio; on Nasdaq, a 1.49-to-1 ratio favored decliners. The S&P 500 posted 29 new 52-week highs and one new low; the Nasdaq Composite recorded 108 new highs and 23 new lows.
(Reporting by Chuck Mikolajczak; Editing by James Dalgleish)
This article was first seen on Reuters

Judge in Redstone hearing urges attorneys to reach agreements

FILE PHOTO: Sumner Redstone, executive chairman of CBS Corp. and Viacom, arrives at the premiere of 'The Guilt Trip' in Los Angeles December 11, 2012.  REUTERS/Fred Prouser/File Photo
FILE PHOTO: Sumner Redstone, executive chairman of CBS Corp. and Viacom, arrives at the premiere of 'The Guilt Trip' in Los Angeles December 11, 2012. REUTERS/Fred Prouser/File Photo
By Ross Kerber and Jessica Toonkel | CANTON, MASS.

A Massachusetts judge on Friday told attorneys to see if they could agree to resolve at least parts of a lingering family dispute over the fate of the empire built by Sumner Redstone, the controlling shareholder of Viacom Inc (VIAB.O). Judge George Phelan gave the instruction before declaring a break in a hearing on Friday that is part of the ongoing legal saga over whether Redstone was mentally competent when he removed former Viacom CEO Philippe Dauman and board member George Abrams from a trust that will determine the fate of his media empire. The proceedings likely will not affect the removal of Dauman and Abrams from Viacom and Redstone's trust, according to people familiar with the situation. On Saturday, Viacom announced that it had come to an agreement with Redstone, and his privately-held National Amusements Inc, which owns 80 percent of the voting shares of Viacom and CBS Corp (CBS.N).

Dauman has stepped down as CEO and will receive as much as $90 million in cash and stock-based compensation, according to the agreement. But Keryn Redstone, who is Shari Redstone's niece and was replaced as a trustee in 2012, is challenging the validity of the settlement agreement because she believes her grandfather is being manipulated by his daughter Shari. Under the settlement, the board of Viacom added the five directors that National Amusements put forward in June, bringing the board to 15 directors after Dauman departs. Three of those directors are expected to step down after Viacom's annual meeting next year, a source familiar with the situation told Reuters last week. Despite that settlement, Redstone's granddaughter Keryn Redstone has filed a cross-complaint in connection to Dauman's lawsuit. In a filing on Thursday she also questioned if Dauman's side did enough to assure themselves that Redstone had the mental capacity to understand the terms.

At the hearing on Friday in Norfolk County Probate and Family Court in Canton, Massachusetts, Judge Phelan said that he has "some concerns about what information was being given to Sumner." Phelan urged attorneys for the various sides to see if they could resolve some of Keryn Redstone's concerns, such as by amending trust documents or arranging for her to speak with her grandfather via a video link.
This article was first seen on Reuters

Thursday, August 25, 2016

As central bankers gather, some at Fed make rate-hike case

U.S. Federal Reserve Chair Janet Yellen holds a press conference following the Fed’s two-day Federal Open Market Committee (FOMC) policy meeting in Washington June 15, 2016. REUTERS/Kevin Lamarque
U.S. Federal Reserve Chair Janet Yellen holds a press conference following the Fed’s two-day Federal Open Market Committee (FOMC) policy meeting in Washington June 15, 2016. REUTERS/Kevin Lamarque

As central bankers converge on this mountain resort Thursday for an annual conference on monetary policy, a couple of top Federal Reserve officials took the chance to renew a push for interest-rate hikes, citing improvement in employment and inflation. "The case is strengthening" for a rate hike, Dallas Fed President Robert Kaplan told CNBC, whose open-air studio here overlooks the craggy peaks of the Grand Teton National Park. "And you should conclude from that in the not-too-distant future ... I think we're moving toward being able to take another step." Kansas City Fed President Esther George, whose bank has hosted the conference here since 1978, had an even stronger message. "I think it's time to move," she told Bloomberg TV. The Fed raised interest rates for the first time in nearly a decade in December, but has kept them on hold since then on concern that headwinds from abroad and financial market volatility at home could hurt growth.

Recent strong readings on the labor market, and signs that inflation is finally beginning to pick up, have begun to encourage some policymakers that rates should rise, if not as soon as next month's meeting then at least before the end of the year. Investors are awaiting a speech on Friday by Fed Chair Janet Yellen for more definitive clues about the timing of a rate hike. Not all Fed policymakers are on board for a rate hike soon; Chicago Fed President Charles Evans, who is at Jackson Hole for the conference but is not doing TV interviews, has long called for patience in raising rates so as to give inflation a better chance of reaching the Fed's 2-percent target sooner. Traders currently put chances of a December rate hike at about 42 percent.

The call to raise rates stands in stark contrast to the likely next moves from many other global central banks whose representatives are meeting here, including policymakers at the central banks for Europe and Japan, where prolonged economic weakness has all but ruled out any near-term contemplation of tighter monetary policy. It also is anathema to the dozens of activists planning to protest outside of the lodge where the three-day conference begins later on Thursday. Fed Up, a network of community organizations and labor unions, will meet with George and half a dozen other policymakers later in the day to air their concern about the impact higher rates will have on America's poor.
(Reporting by Ann Saphir in Jackson Hole and Jonathan Spicer in New York; Additional reporting by Sam Forgione; Editing by Andrea Ricci)
This article was first seen on Reuters

U.S. agency rolls out refinance program for homeowners

A real estate sign advertising a new home for sale is pictured in Vienna, Virginia, outside of Washington, October 20, 2014.       REUTERS/Larry Downing/File Photo
A real estate sign advertising a new home for sale is pictured in Vienna, Virginia, outside of Washington, October 20, 2014. REUTERS/Larry Downing/File Photo

The regulator of Fannie Mae and Freddie Mac unveiled on Thursday a program aimed at homeowners who are paying their mortgages on time but whose loan-to-value (LTV) ratios are too high to qualify for traditional refinance programs. To be eligible for this program, which Fannie and Freddie will implement, borrowers must have not missed any mortgage payments in the prior six months; must not have skipped more than one payment in the previous 12 months; must have a source of income and must receive a benefit from the refinance such as a reduction in their monthly loan payment, the Federal Housing Finance Agency said. "This new offering will give borrowers the opportunity to refinance when rates are low, making their mortgages more affordable and thus reducing credit risk exposure for Fannie Mae and Freddie Mac," said FHFA Director Melvin Watt in a statement.

Because this program for high LTV borrowers will not be available until October 2017, the agency said it will extend the Home Affordable Refinance Program (HARP) until Sept. 20, 2017 as a bridge to the new high LTV program. HARP was introduced in 2009 to help underwater borrowers following the housing bust. More than 3.4 million homeowners have refinanced their mortgage through the program. More than 300,000 homeowners could still refinance through HARP, FHFA said. Borrowers with existing HARP loans are not eligible for the new offering unless they have refinanced out of HARP using one of the traditional refinance products offered by Fannie and Freddie, FHFA said.

In contrast to HARP, there are no eligibility cut-off dates connected with the new high LTV program, and homeowners will be able to use it more than once to refinance their mortgage, it said.
It was unclear how many homeowners would be eligible for this new loan program. "The population of borrowers eligible for this new program is very small – it’s essentially a subset of the current HARP population," J.P. Morgan analysts wrote in a research note. "More likely, FHFA’s goal is simply to have a program in place in the event of another housing downturn or financial crisis."
(Reporting by Richard Leong; Editing by Meredith Mazzilli)
This article was first seen on Reuters

Apple fixes serious security flaw after UAE dissident's iPhone targeted

A salesman checks a customer's iPhone at a mobile phone store in New Delhi, India, July 27, 2016. REUTERS/Adnan Abidi
A salesman checks a customer's iPhone at a mobile phone store in New Delhi, India, July 27, 2016. REUTERS/Adnan Abidi

Apple Inc (AAPL.O) issued a patch on Thursday to fix a dangerous security hole in iPhones and iPads after researchers discovered that a prominent United Arab Emirates dissident's phone had been targeted with a previously unknown method of hacking. The attack on the dissident, Ahmed Mansoor, used a text message that invited him to click on a web link. Instead of clicking, he forwarded the message to researchers at the University of Toronto's Citizen Lab. Experts there worked with security company Lookout and determined that the link would have installed a program taking advantage of a flaw that Apple and others were not aware of. The researchers disclosed their findings on Thursday. The researchers said that they had alerted Apple, which developed a fix and distributed it as an automatic update to iPhone 6 owners.

Apple spokesman Fred Sainz confirmed that the company had issued the patch after being contacted by researchers about the issue. The Citizen Lab team attributed the attack software to a private seller of monitoring systems, NSO Group, an Israeli company that makes software for governments which can secretly target a user's mobile phone and gather information from it. Such tools, known as remote exploits, cost as much as $1 million. An attack on a fully patched, current-model iPhone 6 had not been detected before, though they had been considered possible for major governments, which generally have more surveillance resources at their disposal.
(Reporting by Joseph Menn; Editing by Peter Henderson and Bill Rigby)
This article was first seen on Reuters

No specific action on OPEC freeze discussed yet: Saudi energy minister

A gas flame is seen in the desert near the Khurais oilfield, about 160 km (99 miles) from Riyadh, Saudi Arabia June 23, 2008. REUTERS/Ali Jarekji/File Photo
A gas flame is seen in the desert near the Khurais oilfield, about 160 km (99 miles) from Riyadh, Saudi Arabia June 23, 2008. REUTERS/Ali Jarekji/File Photo

Saudi Arabian Energy Minister Khalid Al-Falih does not believe it is necessary for any "significant intervention" in oil markets at this time, he told Reuters following a speech on Thursday. The kingdom produced 10.67 million barrels per day of crude oil, the most in its history, in July, and Al-Falih said on Thursday that production has remained around that level. Talks are scheduled in September to discuss a global output freeze pact. Al-Falih said there have not been any specific discussions on a production freeze by the Organization of Petroleum Exporting Countries as of yet, even though world supply remains high. He said demand is "picking up nicely" around the world.
(Reporting by Nichola Groom; Editing by James Dalgleish)
This article was first seen on Reuters