India bars
defaulters from
assets buyback
INDIA tightened its fledgling bankruptcy and
insolvency rules on Thursday, potentially
barring owners of 12 of the country’s
biggest loan defaulters from bidding to buy
back assets when they are auctioned as part
of bankruptcy proceedings.
The government passed an executive
order intended to “keep-out such persons
who have wilfully defaulted, are associated
with non-performing assets, or are
habitually non-compliant and, therefore,
are likely to be a risk to successful
resolution of insolvency of a company”,
the corporate affairs ministry said in a
statement.
Under the revised rules, borrowers with
loan accounts classed as non-performing fora year or more would not be eligible to bid
for the assets in bankruptcy proceedings,
the ministry said.
The revised rules also bar “wilful”
defaulters and associates of the defaulting
borrowers from bidding for the assets,
according to the statement.
In June, India’s central bank ordered 12
of the country’s biggest loan defaulters to
be forced into bankruptcy courts as it tried
to cut the record US$147bn soured loans
accumulated in the country’s banking
sector.
Experts appointed to steer the
companies through a possible sale or
eventual liquidation have sought interest
from potential suitors to take over
the defaulter companies as part of the
resolution process.
Media reports have said that, in some
cases, the companies’ estwhile promoters,
or the main shareholders, may be looking
to bid for the companies again.
The Reserve Bank of India has also askedbanks to take nearly 30 more companies to
bankruptcy proceedings if any other form
of loan resolution does not take place by
around mid-December.
Steel-to-cement JSW Group chairman
Sajjan Jindal, who had lobbied against big
defaulters wanting to bid for their own
insolvent assets, welcomed the move.
“This will facilitate healthy competition
in maximising value to lenders, which is in
the public interest,” Jindal said in a post on
Twitter.
JSW Steel, in which JFE Holdings had
a stake, was preparing to bid jointly with
the Japanese company for the assets of
insolvent Bhushan Steel, sources told
Reuters this week.
Rajnish Kumar, chairman of State
Bank of India, said on Thursday the top
lender expected considerable interest
from investors other than the promoters
or major shareholders for the assets in
bankruptcy.
DEVIDUTTA TRIPATHY, TOMMY WILKES16 International Financing Review Asia November 25 2017People
&Markets
HK tribunal
fines HSBC
private bank
A Hong Kong tribunal last Tuesday
imposed a record fine of HK$400m
(US$51m) on the private-banking unit
of HSBC in a case related to the sale of
Lehman Brothers-linked structured
financial products between 2003 and
2008.
The Securities and Futures Commission
had originally imposed a penalty of
HK$605m in 2015 on the bank for
its failure to meet “principles-based
regulatory standards” at that time. HSBC
had later appealed against the penalty.
The securities regulator had started its
investigation into the matter after some
HSBC PB clients complained of losses
arising from investments in structured
financial products linked to Lehman
Brothers, which filed for bankruptcy in
2008.
The SFC said last Tuesday the US$51m
fine was the highest imposed on a
financial institution in Hong Kong.
The Hong Kong Securities and
Futures Appeals Tribunal said in its order
that HSBC’s PB unit was “culpable of
material systemic failings in its marketing
and sale of derivative products” in that
period.The tribunal also said the HSBC PB
unit’s registration for Type 4 regulated
activity, related to advising on securities,
would be suspended for a period of one
year beginning Tuesday.
It also “partially suspended” its
registration for dealing in securities for a
period of one year, according to a copy of
the order seen by Reuters.
HSBC said the suspension of licenses
would not affect its current PB operations
in Hong Kong, as the business no longer
operated under the sanctioned entity
and the “legal transfer” to the existing
division was completed in 2013.
“HSBC Private Banking has stringent
processes and controls ... and has
enhanced its investment advisory
model to further align investments
to client needs and to deepen clients’
understanding of the nature and risks of
the products,” it said.
On the financial penalty, the bank said
the tribunal would hear submissions from
the Hong Kong securities regulator and
HSBC.
SFC chief executive Ashley Alder said
in a statement: “The message should
be clear - our standards are designed to
protect all investors, including clients of
retail or private banks. When breaches
of these standards occur, the SFC will
take action to enforce them and strive to
achieve outcomes that are in the interest
of the investing public.”
SUMEET CHATTERJEEWHO’S MOVING WHERE...
CREDIT SUISSE has made 11 new hires for its
equity research team in Hong Kong in an effort
to bolster research capabilities, particularly for
China.
Thomas Chong has joined the Swiss investment
bank as head of internet for non-Japan Asia,
with a focus on Chinese internet companies.
He was previously with Citigroup and had also
worked at BOC International, Royal Bank of
Scotland and Bank of America Merrill Lynch.
Alex Xie has also joined the internet team as a
research analyst. He worked in Beijing for JD
Finance, a subsidiary of Chinese e-commerce
giant JD.com.
Greg Zhu has joined the team from China
International Capital Corp. He was previously a
management consultant at Boston Consulting
Group.
Charlie Chen has came aboard as head of China
consumer research, having previously been a
director with Deutsche Bank and BNP Paribas.
He started his career in equity research with
Macquarie Group.
Credit Suisse has hired Serena Shao as head of
China healthcare research from CLSA. She has
also worked at Bank of America Merrill Lynch.
She will have support from Katherine Fu, who
also joins from the same brokerage. Previously,
she was with Jefferies.
Yang Luo has joined as head of China basic
materials research, covering metals and mining.
He has 10 years of experience covering Chinese
steel, coal and cement companies at UBS and
Nomura.1019_05 People and Markets.indd 16 24/11/2017 22:03: