14 theSun | MONDAY JUNE 29 2009

business

‘World financial system

not out of woods yet’
BASEL (Switzerland): The head of the However, he also highlighted the those from the Group of 20 major devel-
market summary
international body tasked with restoring unfinished restructuring of banks and oped and developing countries, as well JUNE 26, 2009
stability to the world’s financial system the fragile credit channels among the as Spain, Switzerland and the European INDICES CHANGE
said on Saturday that the system had “uncertainties”. Commission – in all involving at least
improved significantly but was “not out These features have be restored in 24 states. FBMEMAS 7211.46 12.82
COMPOSITE 1075.77 1.66
of the woods yet”. order to “sustain the recovery”. The G20 agreed in April in London INDUSTRIAL 2346.57 4.31
“We are more or less back at what “When the time will come, we’ll that the FSB should look at new rules CONSUMER PROD 319.74 -0.36
we were before Lehman, but we are have to try to coordinate our exit strate- for ensuring stability in the global INDUSTRIAL PROD 85.01 -0.17
not back to before the crisis,” Financial gies,” Draghi told journalists. financial system so as to avoid a repeat All hail to CONSTRUCTION 206.62 1.21
Stability Board chair and Italian central But he emphasised that the financial of the slump. kindergarten TRADING/SERVICES 143.26 0.33
bank chief Mario Draghi said. and economic climate was still too frag- The meeting in Basel set in motion FINANCE 8523.17 -4.68
He was referring to the sudden ile to unwind the cuts in interest rates, a range of reviews of the international
queens PROPERTIES 720.93 4.79
collapse of US banking giant Lehman stimulus plans and other measures financial system in coordination with pg 17 PLANTATION 5396.00 -2.17
MINING 277.62 -2.03
Brothers last September, which plunged taken to combat the slump and credit other specialist oversight bodies, tack- TECHNOLOGY 14.44 0.05
financial markets and the banking and squeeze. ling bank capital requirements, simpli- FBMSHA 7451.99 6.68
credit system into turmoil. “You have to have the bank system fied accounting, and national regulation FBM2BRD 4798.80 3.08
“An improvement yes, out of the repaired before you run a tight monetary among others.
woods, not yet,” he added after the policy,” the FSB chief pointed out. “Much of this will come to frui- TURNOVER VALUE
FSB’s inaugural meeting, underlining The FSB is meant to a broadened tion before the end of this year,” said 1.203bil RM1.247bil
renewed confidence. and strengthened Financial Stability Draghi.
Draghi pointed to two “positive Forum, bringing together central banks, In several instances the FSB will be
signs”: the way US banks in particular
had managed to raise US$10 billion
the IMF, World Bank, national regula-
tors and governments, tasked with
seeking greater consistency between
the three dominant sets of regulations
Share prices likely to trend
(RM35 billion) in private capital re- permanent oversight of the financial in the international financial world, in higher this week
cently, and the strength of corporate system. the European Union, Japan and the
bond issuance. It is now expanded to include all United States. – AFP SHARE prices on Bursa Malaysia are expected to
trend higher this week with developments at the
Invest Malaysia 2009 conference likely to provide

Aussie banks defy downturn the catalysts.

An analyst said investors were looking forward
to announcements on incentives to attract foreign

at cost to customers: Analysts
MELBOURNE: Australia’s banks are thriving
as their global peers struggle but stand accused
of “gouging” customers to keep themselves in
the black, according to analysts.
Treasurer Wayne Swan has cited the
relative health of the banking sector as one
of the reasons why Australia has handled the
financial crisis better than any other advanced
economy and so far avoided a recession.
“Major financial institutions, some of which
withstood world wars and the Great Depres-
sion, have either collapsed or been bailed out
... (but) our banking sector is among the most
stable in the world,” he said recently.
The country’s ‘Big Four’ banks – Common-
wealth, Westpac, ANZ and NAB – posted a
combined total of A$8.3 billion (RM24 billion)
in interim profits in recent months.
While they all reported writedowns due to
bad debts, there has been no need in Australia
for the huge government bailouts needed in
many other countries to keep banks afloat.
In fact, Australian Bankers Association
chief executive David Bell points out that
Australia’s big banks account for four of the
eight banks in the world rated AA- by credit
agencies.
“Not a bad result when our country is just
two percent of the world economy,” he said.
“Forecasters and commentators agree that
the stability and security of Australia’s bank-
ing system have played an important part in
our economy’s resilience.”
The reason the banks’ have withstood
the downturn so well is because they did not
make themselves vulnerable by handing out
risky loans during the good times, according
to the Reserve Bank of Australia.
“The banking system is soundly capital-
ised, it has only limited exposure to sub-prime
related assets and it continues to record strong
profitability and has low levels of problem
loans,” the central bank said.
But consumer advocacy group Choice
points to another reason for the banks’ health,
saying lack of competition has allowed them
to charge much higher fees than overseas
counterparts.
“It is the abysmal lack of competition that
has allowed the Australian banks to gouge
customers and therefore remain strong in the
face of weak global markets,” Choice senior
policy analyst Elissa Freeman said.
A report from Fujitsu Consulting earlier
this year found that bank fees levied on Aus-
tralian households were 22% higher than
those in Britain and 11% more than in the
United States.
The Reserve Bank estimated that Austral-
ian customers paid US$4.85 billion (RM17
billion) in bank fees in 2008, up 8% on the
previous year.
Freeman said competition in the sector
was set to deteriorate further as the big banks
swallowed up smaller rivals weakened by the
financial crisis.
She said Westpac’s recent merger with St.
George and the Commonwealth’s takeover
of BankWest showed the Big Four would
emerge from the downturn more dominant
than when they entered it.
“The global financial crisis has seen com-
petition in retail banking sacrificed further
in order to deliver stability in the banking
system,” she said. – AFP
investments and the liberalisation measures for the
capital market during the conference.
Invest Malaysia 2009, which will be held on
tomorrow and Wednesday, is hosted by Bursa
Malaysia and CIMB Investment Bank.
Prime Mnister Datuk Seri Najib Abdul Razak will
deliver a keynote address.
During the week just-ended, the market tracked
developments in regional bourses, as share
prices rebounded from a two-day losing streak on
Wednesday on bargain hunting.
It continued its uptrend on Thursday with senti-
ment boosted by Federal Open Market Commit-
tee’s decision to leave key US lending rate at a low
of zero to 0.25%. Shares finished mostly higher on
Friday on profit-taking.
On a Friday-to-Friday basis, the KLCI closed the
week 16.27 points higher at 1,075.77 compared
with 1,059.5 a week earlier. The Finance Index
increased by 29.47 points to 8,523.17 from 8,493.7
previously and Plantation Index increased by 67.37
points to 5,396 from 5,328.63 last Friday. The
Industrial Index, however, declined 7.48 points to
2,346.57 from 2,354.05 previously. The FBMEmas
increased 112.93 points to 7,211.46 from 7,098.53
last Friday and FBM30 increased 110.08 points to
6,905.91 from 6,795.83 previously. – Bernama

briefs
HK yet to emerge from
financial crisis: Tsang
HONGKONG: Hongkong has still to
emerge from the effects of the global
economic slowdown despite early
signs of returning stability, the city’s
chief executive Donald Tsang said
yesterday.
Tsang said that big challenges
remained for the city, whose key
industries of finance and exports have
been hit hard by the crisis.
“There is no doubt we have yet
to emerge from the impact of the
financial tsunami,” he said on local
broadcaster RTHK’s weekly Letter to
Hongkong.
“While recent statistics have shown
some signs of economic stability
returning, there are still many uncer-
tainties in the global market.”
He said reforms put in place after
the Asian Financial Crisis of 1997
meant Hongkong had not suffered
a breakdown in its financial system.
– AFP
Jaguar, Land Rover
enter Indian market
MUMBAI: India’s Tata Motors
yesterday announced the entry of
luxury British marques Jaguar and
Land Rover into India, but insisted
there were no plans to assemble
them in the country for the time
being.
Six models – three each from
Jaguar and Land Rover – will be sold
from today in India, which is among
the world’s fastest-growing global
automobile markets.
“This launch ushers in a new
breed of vehicles in India, which had
been disconnected with consumers
here for some years,” Ratan Tata,
chairman of the Tata Group, told a
news conference in Mumbai.
The Jaguar range includes the XF,
XFR and XKR models while the Land
Rover brands coming to India will
be Rover Discovery 3, Range Rover
Sport and the basic Range Rover.
All models will sell for between 6.3
million rupees (RM458,500) and 9.2
million rupees (RM669,500) at a new
purpose-built showroom in Mumbai.
– AFP
Poll: Optimism grows
among Japanese execs
TOKYO: Japan’s business leaders
have become more optimistic about
economic recovery over the past three
months, a quarterly newspaper poll
said yesterday.
But they also believe that full re-
covery is not likely until some time in
2010, the Nikkei business daily said,
as recent official data began showing
signs of gradual economic improve-
ment.
In a survey this month roughly half
of the presidents and chairmen of 137
major companies said they thought
that the domestic economy had im-
proved or showed signs of recovery
when compared with six months ago.
In the previous survey, taken in
March, only 0.7% of poll participants
said so, the business daily said.
In the Nikkei survey, 63.5% of
business leaders said the domestic
economy’s immediate trend was
holding steady while 27% said it was
worsening. – AFP
GM takes responsibility
for vehicles it built
WASHINGTON: Troubled US
automaker GM has accepted to
maintain its legal responsibility for
vehicles it has built in the past, ac-
cording to legal documents that ap-
peared Saturday on the Internet.
In the documents submitted
by the company to a bankruptcy
court in New York, GM argues the
law does not compel it to assume
responsibility for cars and trucks
sold by the old company.
“Notwithstanding the forego-
ing, to alleviate certain concerns
that have been raised on behalf of
consumers as to future products
liability claims” the post-bank-
ruptcy GM “will expressly assume
all products liability claims arising
from accidents or other discrete
incidents arising from the opera-
tion of GM vehicles ... regardless of
when the product was purchased,”
the documents said.
GM filed for bankruptcy protec-
tion in early June and under a rapid
restructuring plan, the US govern-
ment would become the company’s
principal shareholder with a 60.8%
stake.
Canada would have 11.7%. A
United Auto Workers trust fund
would hold 17.5%. – AFP
German banks under
fire for credit policies
FRANKFURT: German banks are fac-
ing a firestorm of criticism from the
government and industry federations
that accuse them of threatening small
businesses with their tight-fisted credit
policies.
More than 16,600 small and me-
dium-sized companies in Germany
failed in the first half of the year, 14%
more than in the same period of 2008,
the association Creditreform has
estimated.
The bankruptcies affected 250,000
jobs and Creditreform has warned that
a total of 540,000 jobs could be elimi-
nated by the end of the year. – AFP