TWO former senior employees of UOB Kay Hian Private Limited (UOBKH) were charged on Wednesday for allegedly lying to the Monetary Authority of Singapore (MAS) in relation to reports on a then Catalist aspirant. Lan Kang Ming, 38, and Wee Toon Lee, 34, each face three charges of providing MAS with false information in October 2018 in relation to due diligence reports on an unidentified company applying to list on the Catalist board of the Singapore Exchange. MAS said in a media statement on Wednesday that it was performing an onsite inspection of UOBKH between June and August 2018, to assess the latter's controls, policies and procedures in relation to its role as an issue manager for Initial Public Offering (IPOs). During the examination, Lan and Wee were said to have provided different versions of a due diligence report relating to background checks on a company applying to be listed on the Catalist board of the Singapore Exchange. UOBKH had acted as the issue manager
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Shares of lenders slump in Shanghai trading, reflecting panic in the market, particularly in banks with a large proportion of interbank assets
Jane Cai in Beijing
24 June 2013
Bank shares slumped yesterday after small and medium-sized lenders were singled out by analysts as being worst hit by the liquidity crunch in the mainland’s interbank market.
Shares in China Minsheng Banking Corp, Industrial Bank and Ping An Bank almost hit the 10 per cent daily downside cap in Shanghai as the Shanghai Composite Index lost 5.3 per cent, its biggest drop in four years.
“The slump reflected panic over a liquidity crunch, especially in banks with large proportion of interbank assets,” said Luo Yi, an analyst with China Merchants Securities.
Interbank rates have been surging this month owing to a slowdown in foreign exchange inflows, tightening of regulatory controls over the interbank bond market and banks’ wealth management products, and the central bank’s reluctance to inject liquidity, among other reasons.
Medium-sized banks could be most vulnerable to a liquidity squeeze in the interbank market because they generally operate at the regulatory ceiling of 75 per cent loan to deposit ratio (LDR), said May Yan, an analyst at Barclays Capital.
Small and medium-sized banks have been aggressive in the interbank business, using it as an alternative lending channel to get round the lending quota, LDR and capital constraints, and they are more dependent on interbank funding to support their business growth, Yan said.
At the end of last year, Minsheng’s reverse repos - which includes discounted bills, bonds and finance lease receivables - surged 419.5 per cent from the previous year to 732.66 billion yuan, (HK$917.25 billion) or 22.8 per cent of its total assets. It compares to the 35 per cent expansion of total interbank assets on the mainland last year.
In Industrial Bank, reserve repos rose 50.4 per cent year on year to 792.8 billion yuan last year, or 24.4 per cent of assets.
While the interbank funding cost increases faster than interbank asset yield, the spread in the interbank business could fall. If the interbank market spread drops by 50 basis points, the average net profit of H-share listed mainland banks could drop by 2.1 per cent this year and Minsheng’s net earnings could fall by 3.7 per cent, says Barclays.
As active players in the reverse repo guarantee business, medium-sized joint stock banks would see their fee income hit more severely than large banks, analysts said.
In the past few days, small banks seem to have been offering higher bidding rates than larger ones. Bank of Shanghai apparently has tight short-term liquidity, followed by Industrial Bank and Shanghai Pudong Development Bank, Macquarie analysts said. Prolonged high interbank rates will result in the unwinding or failure of some highly leveraged operations, they said.