China said on Saturday it would cut reserves for banks, as the country seeks to engineer a soft landing for the world’s second largest economy following disappointing data released Friday. The People’s Bank of China, the central bank, said it would cut banks’ reserve requirements by 0.50 per centage points effective from May 18, according to a statement posted on its website.

The move was widely expected after China reported growth in industrial production slumped to a three-year low of 9.3 per cent in April, adding pressure on Beijing to ease monetary policy.

China’s economy grew an annual 8.1 per cent in the first quarter of 2012, its slowest pace in nearly three years.

The government is targeting economic growth of just 7.5 per cent for the whole year, down from actual growth of 9.2 per cent last year and 10.4 per cent in 2010.

Beijing has already cut bank reserve requirements twice since December as it seeks to boost lending to spur growth, but economists have called for more policy support as economic figures continue to disappoint.

After the latest move takes effect, China’s reserve requirement for most large banks will fall to 20 per cent.
Some analysts were predicting a move as early as this month, especially after easing inflation gave the government room to loosen monetary policy by cutting reserve requirements.

China also said Friday that the consumer price index, the main gauge of inflation, rose 3.4 per cent year on year in April, compared with 3.6 per cent in March.

The Independent/ Bangladesh/ 13th May 2012

One of the pillars of Wall Street—bank JPMorgan Chase—faced new scrutiny Saturday after it reported a shocking $2 billion derivatives loss that even its pugnacious chief executive called “egregious.” “It ought to be a concern to the SEC. They are the ones who ought to have a concern about that,” said Senator Carl Levin, referring to the Securities and Exchange Commission, the government’s top financial regulator. “The SEC should surely take a look at it.” added the Democratic lawmaker, who heads the Senate’s Permanent Subcommittee on Investigations.

According to The New York Times, the SEC was already on the case.
The inquiry, which is being run out of New York, will probably examine the bank’s past regulatory filings about the internal unit that placed the trades, as well as recent statements from the firm’s top executives, the paper said, citing unnamed people “briefed on the matter.”

The huge New York-based bank sent shivers through the markets with the loss, after having convinced many that a well-managed bank could manage the risks of complex derivatives that lay behind the 2008 financial crisis.

Politicians called for tightening bank regulation and tough controls on hedging activities, and a Republican senator requested a hearing into the case.

“Are we confident that taxpayers are fully protected from losses at major financial institutions?” asked Senator Bob Corker in a letter to the Senate Banking Committee head.

JPMorgan CEO Jamie Dimon revealed the losses late Thursday in an unscheduled call to analysts, saying they were incurred in the last six weeks by the New York bank’s risk management unit, the Chief Investment Office.

They involved trading in credit default swaps usually meant to offset other risks in the bank’s investments, but Dimon said the strategy “morphed” into trading that was overly complex, poorly executed and badly overseen.

“These were egregious mistakes,” Dimon said. “They were self-inflicted and... this is not how we want to run a business.”

Although he said the bank was still very profitable, Dimon also acknowledged the positions could possibly lead to another $1 billion in trading losses by the end of this quarter.

“Hopefully by the end of the year... this won’t be a significant item for us,” he said.
Investors made their displeasure brazenly apparent, savaging the bank’s shares from the start of Friday’s trading.

The firm’s stock closed down 9.3 per cent at $36.96,
wiping around $14 billion off the market value of the country’s largest bank.

There was little new information about what happened at the bank. Attention focused on the role of a London-based JPMorgan trader, French-born Bruno Michel Iksil, nicknamed “The London Whale” and “Voldemort,” after the villain in the Harry Potter books.

A source close to the matter told AFP that the loss was “related, but not exclusively” attributable to Iksil’s activities, which had been reported out of London in April by The Wall Street Journal.

“Everyone is talking about this, because once again it shows the power that a handful of people can have on the market,” a London trader said.

But others said such a large loss could not have occurred without the knowledge of Iksil’s superiors.
The Wall Street Journal, citing people familiar with the situation, reported Saturday that JPMorgan told traders several months ago to make bets aimed at shielding the bank from the market fallout of Europe’s deepening crisis.

But instead of shrinking the risk, their complicated bets backfired into losses of as much as $200 million a day in late April and early May, the paper pointed out.

Erik Oja, a banking analyst at Standard & Poor’s, condemned the “major embarrassment for the bank” after it survived the 2008 financial crisis relatively unscathed.

JPMorgan was also hit with a downgrade by the rating agency Fitch, and S&P cut its outlook to “negative.”
Dimon has led US banks in fighting the application of the new Volcker Rule, which would ban such proprietary trade. Banks also do not want to see curbs on their hedging activities.

Rick Gorka, spokesman for likely Republican presidential candidate Mitt Romney, said the loss “demonstrates the importance of oversight and transparency in the derivatives market.

If elected, he said, Romney “will push for common-sense regulation that gives regulators tools to do their jobs, and that gives investors more clarity.”

The Independent/ Bangladesh/ 13th May 2012

Bank loans to women entrepreneurs under SME (Small and Medium Enterprises) category increased by 1 percent in the first quarter of the year 2012 compared to the previous year. From January to March, all banks have disbursed Tk 646.59 crore in loans among 4,481 women entrepreneurs across the country. The amount was 5 percent of total SME loans disbursed by banks Tk 14,281 crore in the same period, according to statistics provided by SME and Special Service Department of Bangladesh Bank (BB).

The target set by the central bank for the year 2012 is to disburse Tk 59,012 crore as SME loans.

In 2011, a total of 16,996 women entrepreneurs have received Tk 2048.5 crore which was 4 per cent of total amount disbursed under SME category by banks. In the year 2010, some 13,831 women entrepreneurs have obtained Tk 1,804.92 crore in loans.

Meanwhile, BB statistics suggests that the trading sector is still on the top of priority by banks to endorse loans, though it is maintaining a slightly declining trend year-on-year.

In percentage point share, disbursement of SME loans to trading sector was 66 per cent in 2010 and 64 per cent in 2011. It has come down to 62 per cent in the first quarter of 2012.

Industrial sector followed the next position as the bank loans to this sector increasing slightly year-on-year. The sector has received 28 per cent of total SME loans in 2010, 29.4 per cent in 2011. Data for January-March of 2012 showed that this sector has received 32 per cent, out of total disbursement.

Total disbursement of SME loans in the year 2010 and 2011 was Tk 53, 544 crore and Tk 53,719 crore respectively.   

The share of bank loans to the service sector was 6.6 per cent in 2010 and 2011 while it came down to 6 per cent in first quarter of the year 2012.

A BB official said the central bank has been persuading banks for long to raise loans to productive pursuit which is directly involved in employment generation. “To this effect, the BB authority has separated the SME department with adequate manpower to monitor banks’ performance in this regard,” said Sukumol Sinha Chowdhury, general manager of the department.

He said the central bank believe that SMEs alone can generate huge employment across the country.
“Employment will help grow trade and commerce and industries which are important to accelerate economic growth,” said the official.

The Independent/ Bangladesh/ 13th May 2012

Bangladesh Bank (BB) is going to launch online library and e-news clipping software today.

BB Governor Dr Atiur Rahman will formally inaugurate the modernisation work at the BB conference room at about 11:00 am.

Data on BB, banking sector and socio-economic situation of the country will be available on both the sites.

Central bank officials will be able to log-in to both the sites by using network ID and password in the Bangladesh Bank’s website.

IT operations and Communication Departm- ent of BB has been working to develop the online library and e-news clipping management software. BB sources said presently there are 189 books, 115 Journals, 477 articles and information on 33,682 books in the online library.

The Daily Sun/ Bangladesh/ 13th May 2012

Wasim Akhtar Saifi, global head of Islamic banking of Standard Chartered Bank (SCB), arrives in Dhaka today for a two-day official visit, the Bank said in a statement yesterday.

This is his second visit to Bangladesh. Saifi took up this role in January 2011, and is based in Singapore.

He is expected to meet key regulators, clients, employees and other stakeholders during the visit.

This is Saifi's second stint with SCB, the first being from 1986 to 2003 in numerous roles, including CEO of SCB Sri Lanka and regional head of Transaction Banking, MESA.

The Daily Star/ Bangladesh/ 13th May 2012