You can bring a horse to water. But can you stop it from drinking (too much)? In the upcoming year of the horse, China’s leaders need to figure out exactly that, as its local governments thirst for debt threatens to derail the economy. Will they succeed?
Liu Mingkang, former chairman of China’s Banking Regulatory Commission (pictured), left no doubt about the government’s intention to stop the flood of lending: “The signal is clear cut,” he told beyondbrics in an exclusive interview. “The torrent [of local government debt] is becoming quite limited.” Read more
It’s not often that banking regulators are on the receiving end of praise. More often than not they’re only noticed after something goes badly wrong. But Poland’s regulator has got a lot right in its approach to foreign exchange mortgages – allowing Polish borrowers to deal rather better with forex loans than their near neighbours in Hungary. Read more
You may have felt sorry for the hundreds of thousands of Hungarians who found out this week that they won’t be entitled to a borrower relief scheme. Don’t. Read more
In the second part of a beyondbrics series on India and gold, we look at the surge in gold loans – a market that highlights the country’s obession with the metal, and serves to reinforce demand.
See part one: India’s jewellers in a desperate spot. Coming on Friday: India and gold in charts. Read more
After long discussion, a battle in India’s government between the imperatives of boosting the economy and supporting the currency has been decided.
Late on Monday, the Reserve Bank of India (RBI) announced a package of measures to tighten liquidity. It hopes to stem the depreciation of the rupee and prevent its current account deficit from spiralling out of control – but it has done so at the risk of limiting India’s already meager economic growth. Read more
It’s a busy time for Nigerian finance ministry officials. This week they celebrated the launch of eurobonds worth $1bn. On Monday they’re off to China to sign off on $3bn of loans from the government in Beijing.
What’s with all the borrowing? In a word: infrastructure. Read more
Hungary’s new central bank president Gyorgy Matolcsy has unveiled a new 250bn forint (€831m) lending plan which allows banks to borrow at zero per cent from the central bank.
The banks can then lend to businesses with the funds at a maximum 2 per cent rate of interest, a measure aimed at getting loans to small and medium-sized businesses to help them replace their foreign currency loans with forint loans. The forint initially depreciated on Thursday, to around 303.8 to the euro, before reversing to around 300.6 to the euro at 1pm CET, an appreciation of 0.6 per cent. Read more
Luxurious homes around the world, highly collectable cars, a stud farm, some very classy yachts famous for their “king sized parties”… Anyone would be happy to get their hands on Vijay Mallya’s assets.
Now that his creditors have run out of patience and are calling in loans to Mallya’s Kingfisher Airlines, some of them bearing the billionaire tycoon’s personal guarantee, you’d think a few of these playthings might be about to change hands. Well, maybe just a few… Read more
By David Creighton of Cordiant Capital
With record flows into emerging market bonds you could be forgiven for thinking growth economies were awash with credit, and that they had avoided the fallout from the eurozone crisis.
Unfortunately this is not the case. The benefits of the boom in EM bonds have not been evenly spread. Not only is issuing bonds an option available uniquely to the very largest class of emerging market enterprises, but these bond issuers are generally concentrated within limited geographies like Brazil, China and Russia, and in the energy, mining and telecom sectors. Read more
When it comes to loans, Africa has a clear preference: lots from China, a little less from the World Bank please.
According to data compiled by rating agency Fitch, loans from China’s Exim bank to Africa in 2011 were double that of the World Bank, cementing a trend which started around 2005. Read more
On Thursday, State Bank of India and HDFC bank agreed to loan Tata Steel and Hindalco Industries around $6.6bn and $1.9bn, respectively – a development that may suggest the Indian economy, after a rough 18 months, is in for a turnaround.
Two big loans don’t make an Indian summer – but greater access to loans would help smaller businesses a great deal. The SME Rating Agency of India has noted that greater access to liquidity from banks – sometimes at the lowest interest rates in the last decade – has caused Indian SME ratings to improve over the past couple months. Read more
Short-term online loans company Wonga, based in London, has opened for business in South Africa, the home of its founders Errol Damelin and Jonty Hurwitz. The UK business has generated a lot of headlines, both good and bad.
The company has just launched a new business service in the UK – with the usual debates over the high level of interest levied (The men who made £50 million from other people’s cash woes is one typical example). So will the South African arm cause the same angst? Read more
Bahrian’s Arcapita bank has thrown creditors a bit of a curve ball. The bank has decided to file for bankruptcy protection in the US after talks over an upcoming bank maturity of $1.1bn on March 28 broke down.
It’s the first time a Gulf company has sought Chapter 11 refuge in US courts, and creates a new level of public scrutiny for the bank – as well as an uncertain outcome for those wanting their money back. Read more
Give credit where it’s due. That’s the latest policy from Vietnam’s central bank to try to resolve the deep-seated problems in the banking sector.
Years of rapid credit growth have led to persistently high inflation and rising bad debts in the corporate sector. Last year, the State Bank of Vietnam, the central bank, introduced a 20 per cent cap on credit growth for every bank, in an attempt to stabilise the financial system. This year the SBV has opted for differential credit growth limits, depending on the respective strength of the financial institution. Read more
The growth of non-performing assets on the balance sheets of Indian banks has been a huge concern for investors over the last year – so much so that analysts cite it as a major reason the Bombay Stock Exchange’s banking index fell 31.6 per cent in 2011.
But there’s one player that doesn’t seem all that concerned about it: the Reserve Bank of India. Read more
Asian companies are worried about the unfolding eurozone crisis, but few are doing much about it beyond hoarding cash, according to a new survey from Citigroup.
Most companies in Asia have been increasing their cash levels or liquidity, and a quarter have shifted bank deposits to diversify risk. But 80 per cent have not planned for a eurozone break-up – deeming it either too unlikely or too difficult to plan for. Read more
Brazil’s central bank has released figures for October showing the highest vehicle loan default rate in two years. As reported by Bloomberg:
Default rates on cars, motorcycles and trucks in October rose to 4.7 per cent, the highest since September 2009, compared with 3.1 per cent a year earlier and 4.4 per cent in September, the central bank said Nov 23. Loans that were 15 to 90 days overdue increased to 8.6 per cent from 7.9 per cent a month ago.