Please send job moves to
[email protected]SFC takes
action against
eight firms
Hong Kong’s securities regulator is
pursuing disciplinary action against eight
lRMSûFORûALLEGEDûMISCONDUCTûINûTHEIRûROLESû
ASûSPONSORSûOFû)0/SûINûTHEû!SIANûlNANCIALû
HUB ûAûSENIORûOFlCIALûHASûSAID
The move comes days after UBS disclosed
that the Securities and Futures Commission
had blocked it from sponsoring IPOs for
18 months. The suspension is not effective
until the Swiss bank’s appeal against it has
been ruled upon.
The SFC is looking to lift the standards
of sponsors, which are liable for any
misinformation in the IPO prospectuses. It
said in October it was probing “substandard
WORKvûBYûûlRMSûTHATûHADûACTEDûASû
sponsors.
On Wednesday, Thomas Atkinson, the
SFC’s enforcement head, said the work was
“coming to a head”.
h7EûWEREûINVESTIGATINGûûSPONSORûlRMSû
We’ve issued eight proceedings ... and now
we’re looking at the sponsor principals and
we’re moving against those. So, there will
be another round coming up.”
He previously said that the work in
question from the 15 unnamed sponsorshad led to billions of dollars in investment
losses with shortcomings, including basic
issues like not verifying customers or
revenue data for listing candidates.
On Wednesday, Atkinson said the cases
THEû3&#ûWASûPURSUINGûREmECTEDûDIFFERENTû
issues.
“Some of it is negligence, some of it
what I would consider extremely reckless
conduct. There’s a different range of
sanctions that we’ll seek on each of them,”
he said.
“Over the next six months you may see
SOMEûAREûEITHERûRESOLVEDûORûPOINTûlRMLYû
towards a hearing, but I think we’ve really
set the tone in terms of sponsorship and I
hope we’re raising the bar.”
“What we’re trying to show people is
there is serious reputational risk if you
don’t do your job.”
UBS and Standard Chartered disclosed
in 2016 that they were under SFC
investigation for their roles as sponsors of
UNIDENTIlEDû)0/SûINû(ONGû+ONG
In an internal memo, as Reuters reported
last week, UBS estimated that its appeal
would be heard in the fourth quarter of this
year and a decision reached early in 2019.
Hong Kong, the world’s biggest equity
capital-raising centre for four of the last
10 years, is looking to revive its appeal as
a venue for IPOs after its worst period in a
decade for equity raising last year.
JENNIFER HUGHES, SUMEET CHATTERJEEto four offshore PFs and expects to close a
few more within the next couple of weeks.
Deals in which it participated include a
¥4.5bn-equivalent commitment to the High
Speed 1 railway line concession project in
the UK.
Other Japanese insurers are open to
investing in offshore PF either through
primary or secondary markets.
“Secondary deals are likely to be our
MAINûFOCUSûINûTHEûNEXTûlNANCIALûYEAR ûBUTû
we would consider primary deals if there
were any good ones,” said Meiji Yasuda
Life’s spokesman.
A Sumitomo Life spokesman said: “As we
are diversifying our investments, we started
0&ûTHISûlNANCIALûYEARû7EûWOULDûLIKEûTOûSTEPû
up efforts in the area.”
The entry of Japanese life insurers into
the global PF market comes at a time when
banks face growing restraints on lending
and use of their balance sheets due to
stricter capital adequacy norms and rising
costs of dollar funding.
Tomonori Miyagawa, a senior banker
INûTHEû0&ûOFlCEûATû-5&' ûSAIDûLONG
TERMû
loans tended to be expensive for borrowers
relying on the bank market given the short-
term funding structure of the lenders.
“Life insurers manage long-term assets
and they are suitable providers of long-term
lNANCEûFORû0& vûHEûSAID
WAKAKO SATO, TAIGA URANAKA
Indian state
bank AT1 not
equity, says S&P
S&P no longer considers Indian public-sector
bank Additional Tier 1 securities to be equity,
the rating agency has said in a press release.
The move follows the government’s pre-
emptive actions to support PSU banks’ AT
bonds.
Several public sector banks have begun
redeeming their AT1 securities ahead of
schedule, after receiving instructions from
the Reserve Bank of India, because they have
been placed under the Prompt Corrective
Action framework as the government
recapitalises weaker state-owned banks.
“Based on recent events, we now
HAVEûDIMINISHEDûCONlDENCEûTHATû!4û
instruments issued by Indian public sector
banks would absorb losses on a going-
concern basis, if needed, or be a permanent
part of the banks’ capital structure,” saidNikita Anand, a credit analyst at S&P.
S&P has raised its rating on State Bank of
India’s US$300m AT1 securities to BB– from
B+ previously. SBI is the only Indian bank
to sell offshore AT1s so far.
Typically, S&P rates AT1s from
investment-grade banks four notches
below the standalone credit ratings of the
INSTITUTIONS ûTOûREmECTûRISKSûLIKEûCOUPONû
deferral and loss absorption, while the
DIFFERENTIALûISûlVEûNOTCHESûFORûBANKSûWITHû
high-yield issuer ratings. For Indian public-
sector banks, the difference will now be
three notches for those with IG ratings.
S&P has said it expects the government
and regulators to continue to be reluctant
to allow losses on public sector AT1s for at
least the next two years.
“We believe the government is
concerned that loss absorption by an AT- by way of coupon deferral, a principal
write-down, or conversion into common
equity - could potentially have a contagion
IMPACTûONûTHEû)NDIANûlNANCIALûSYSTEMûANDû
hurt stability,” Anand said.
DANIEL STANTON
sheet and mean RMOs do not represent the
lenders’ entire mortgage book.
The ASF has pointed out the Australian
regulators seek to avoid cherry-picking
assets from a bank’s balance sheet to be sold
into a securitisation.
The RBNZ has shown itself to be
very open to market feedback, which
is overwhelmingly opposed to the RMO
model.
“The consensus view is that RMOs are
not a good idea, particularly regarding the
DIFlCULTYûINûMAKINGûINVESTORSûCOMFORTABLEû
with a new instrument not seen anywhere
else in the world,” said one major bank DCM
manager.
He believes the way forward may
be to beef up existing RMBS structures
ANDûSTANDARDSûREGARDINGûCASHmOWûANDû
repayments, etc, and allow banks to sell on
20% to third parties, including subordinated
tranches, to provide true market pricing
levels.
The RBNZ is expected to respond to the
initial feedback within weeks and publish its
lNALûRECOMMENDATIONSûBEFOREûTHEûYEAR
END
JOHN WEAVERS