Sterling surges to highest in a year on Bank of England rate hike warning

Sterling jumped after the Bank of England warned it could raise interest rates for the first time in a decade in the coming months while the dollar rose after above-forecast inflation data that could allow the Federal Reserve to hike for a third time this year.

Wall Street was set to open lower, index futures showed after the inflation data. Earlier, weak Chinese data had weighed on European and Asian shares and pulled an MSCI measure of world stock prices down from record highs hit on Wednesday.

Britain's blue-chip FTSE 100 share index fell sharply after the BoE warning, which followed a monetary policy meeting, and was last down 0.7 percent at a two-week low.

Policymakers kept rates unchanged at a record low 0.25 percent but warned a hike was likely to be needed in coming months if the economy keeps growing and inflationary pressures continue to build.

Britain's vote last year to leave the European Union has raised doubts about the long-term health of the economy and strong short-term inflationary pressures.

Sterling rose to as high as $1.3358, adding a cent and a half to touch its strongest in more than a year, and to 89.11 pence per euro after the decision.
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China's Silk Road dealmakers eye Europe's banks, insurers, asset managers

After ports and industrial parks, the dealmakers leading China's trillion-dollar push to build a modern Silk Road are turning to the financial sector, targeting Europe's banks, insurers and asset managers to tap funds and expertise.

Last week, sources familiar with the matter said two of China's most acquisitive conglomerates, HNA Group and Anbang Insurance Group, had separately considered bidding for the German insurer Allianz SE.

Neither of the two made an offer, but the talks marked a new level of ambition for China: Allianz is a German stalwart, a pillar for local pensions and a global powerhouse with 1.9 trillion euros ($2.3 trillion) of assets under management.

HNA already owns a stake of just under 10 per cent in Deutsche Bank.

Bankers, lawyers, and company executives say more financial deals will come, led by state behemoths such as China Life and China Everbright, as well as private firms, including Legend Holdings and China Minsheng Financial.
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US asks Pakistan's Habib Bank to shut shop over terror funding concerns

US banking regulators ordered Pakistan's Habib Bank to shutter its New York office after nearly 40 years, for repeatedly failing to heed concerns over possible terrorist financing and money laundering, officials said today.

Habib, Pakistan's largest private bank, neglected to watch for compliance problems and red flags on transactions that potentially could have promoted terrorism, money laundering or other illicit ends, New York banking officials said.

The state's Department of Financial Services, which regulates foreign banks, also slapped a $225 million fine on the bank, although that is much smaller than the $629.6 million penalty initially proposed.

Habib has operated in the United States since 1978, and in 2006 was ordered to tighten its oversight of potentially illegal transactions but failed to comply.

New York regulators said Habib facilitated billions of dollars of transactions with Saudi private bank, Al Rajhi Bank, which reportedly has links to al Qaeda, and failed to do enough to ensure that the funds were not laundered or used for terrorism.

"DFS will not tolerate inadequate risk and compliance functions that open the door to the financing of terrorist activities that pose a grave threat to the people of this State and the financial system as a whole," DFS Superintendent Maria Vullo said in a news release..

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ECB keeps policy, guidance unchanged

The European Central Bank reaffirmed its ultra-easy policy stance on Thursday, even keeping the door open to increasing bond purchases, dashing hopes it would formally signal its intent to claw back stimulus from next year.

The ECB kept rates at their record lows, confirmed that asset buys would continue at 60 billion euros ($71.76 billion) per month at least until December and said it could even increase or expand the asset purchases if needed, sticking with its long-held super easy stance.

The statement is likely to rattle some investors who expected the ECB to start laying the groundwork for a cut in monetary stimulus because growth is robust, the threat of deflation long gone and unemployment falling fast -- all supporting the case for removing at least some of the bank's extraordinary measures.

Investor attention now turns to ECB President Mario Draghi's 1230 GMT news conference, during which he may still offer at least some clues to the evolution of the bank's view on stimulus and will also detail new economic projections.

"If the outlook becomes less favourable...the Governing Council stands ready to increase the programme in terms of size and/or duration," the ECB said in a statement.

The euro remained roughly 0.5 percent higher against the dollar after the ECB's decision.
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IMF to launch new aid with no money to support govts in financial trouble

The International Monetary Fund announced it will launch a new tool to support governments in financial trouble -- but one that involves no money -- formalising a step it took last week for Greece.

Instead of providing cheap loans to member countries, the new IMF tool will serve as a good housekeeping seal of approval for a government's reform program.

With that approval in hand governments would be more likely to be able to access other forms of financing from banks and bond markets, the IMF said in a statement.

"The new instrument is designed to help countries unlock financing from official and private donors and creditors," the IMF said.

"It enables them to signal commitment to reforms and catalyze financing from other sources."

The IMF last week revived a rarely-used mechanism under which it approved a one-year loan to Greece but withheld the disbursement of funds until the country receives significant debt relief from its eurozone partners.

That had a similar effect as the new tool: allowing Greece to return to markets this week to issue three billion euros (USD 3.5 billion) worth of five-year bonds, and removing a major roadblock in the negotiations with the euro area.

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Gold retreats from one-month high ahead of Fed meeting

Gold prices retreated from a one-month high on Tuesday as equities gained ahead of a US Federal Reserve meeting that is expected to provide more clues about monetary policy.

The market is not expecting an interest rate increase at the Fed's two-day meeting starting on Tuesday but it is looking for hints on the timing and extent of future moves.

Spot gold was 0.2 per cent lower at $1,252.59 an ounce by 1326 GMT, not far from the previous session's peak of $1,258.79, its highest since June 23.

US gold futures fell 0.2 per cent to $1,252.

"The market is looking for clarity on the Fed's tightening cycle and when they are going to start with the tapering (of monetary stimulus)," said ETF Securities analyst Martin Arnold.

Taking the shine off gold slightly, investors climbed into European equities after a string of solid corporate updates. The US dollar hovered near a 13-month low against a basket of currencies on Tuesday, with traders not expecting the Fed meeting to alter the currency's recent weakness.

Markets give a less than 50 per cent probability of a US interest rate increase before the end of the year, according to CME's Fedwatch tool.

Also supporting gold were hurdles standing in the way of US President Donald Trump's economic stimulus and tax reform agenda.
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JPMorgan Q2 net income up 13.4% to $7.03 billion on better loan growth

JPMorgan Chase & Co, the biggest US bank by assets, reported a better-than-expected quarterly profit on Friday as gains from higher interest rates and loan growth more than offset a drop in bond trading.

Trading revenue fell for the first time in five quarters as volatility hit multi-year lows, but the drop was not as bad as expected by a company executive in the run-up to the results.

Executives at big banks warned in recent weeks that trading revenue for the quarter would be down from a year earlier, when client trading surged around UK's Brexit vote.

The quarter benefited from the Federal Reserve raising interest rates for the second time this year in June. The target range for overnight interest rate now stands at 1 percent to 1.25 percent, compared with 0.25 percent to 0.50 percent a year earlier.

"We continued to post very solid results against a stable-to improving global economic backdrop. The U.S. consumer remains healthy," Chief Executive Jamie Dimon, 61, said in a statement.

The bank's net income rose 13.4 percent to $7.03 billion in the second quarter ended June 30.

Excluding a gain from a legal settlement, the company earned $1.71 per share, compared with analysts' average estimate of $1.58 per share, according to Thomson Reuters I/B/E/S.

Markets revenue fell 14 percent, led by a 19 percent decrease in fixed income markets revenue to $3.22 billion.
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Fed policymakers hint tensions on inflation, divided over debt holdings

Federal Reserve policymakers were increasingly split on the outlook for inflation and how it might affect the future pace of interest rate rises, according to the minutes of the Fed's last policy meeting on June 13-14 released on Wednesday.

The details of the meeting, at which the US central bank voted to raise interest rates, also showed that several officials wanted to announce a start to the process of reducing the Fed's large portfolio of Treasury bonds and mortgage-backed securities by the end of August but others wanted to wait until later in the year.

"Most participants viewed the recent softness in these price data as largely reflecting idiosyncratic factors...however, several participants expressed concern that progress...might have slowed and that the recent softness in inflation might persist," the Fed said in the minutes.

The committee questioned why financial conditions had not tightened despite recent rate rises and a few said equity prices were elevated.

US stock prices were up slightly at the close of trade while yields on US government debt dipped. The dollar was little changed against a basket of currencies.

Last month's 8-1 vote to lift the benchmark interest rate another quarter per centage point, its second this year, signalled the Fed's confidence in a growing US economy and the eventual inflationary effects of low unemployment.

In a press conference at the time, Fed Chair Janet Yellen described a recent decline in inflation as temporary and the central bank kept its forecast of one more rate rise this year and three the next.

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Banks rush to buy cyber security cover as digital payments rise

RBI Governor Urjit Patel nudges banks to reduce lending rates

Latest News - Reserve Bank of India (RBI) Governor Urjit Patel on Saturday exhorted banks to reduce their lending rates to push credit demand in laggard segments, saying banks have benefited from influx of low-cost deposits and its previous repo rate cuts.

"One the amount of reduction in the repo rate that we have undertaken combined with the fact that banks have benefited immensely from the influx of deposits which are CASA deposits, that has come into the system. And the weighted average lending rate reduction has been considerably less, given that we feel that there is some scope for further reduction in lending rates and if you see that for sectors like housing, personal etc the reduction has been much more than for other sectors by the same bank," he said.

He expressed hope that there could be a cut in lending rates in some sectors where reduction has been relatively lower so far.

Earlier this week, RBI retained the repo rate, at which it lends to the (Read More)

Bank of India sees further improvement in bad loans in Dec quarter

Latest News - Bank of India Ltd does not expect any additional bad loans in the current quarter on a net basis, its chief said on Thursday, as India's sixth-biggest lender by assets reported its second consecutive quarter of profit after a stretch of losses.

The state-run lender booked a net profit of 1.02 billion rupees ($15 million) for the three months ending in December, compared with a net loss of 15.06 billion rupees a year earlier.

Gross bad loans as a percentage of total loans as at the end of December eased to 13.38 per cent from 13.45 per cent as at September-end.

For the fourth quarter through March, the bank expects gross bad loan additions of (Read More)

Job alert: RBI hiring cyber security experts, applications close on Feb 7

Latest News - The Reserve Bank of India (RBI) is strengthening its information technology (IT) and cyber security cell. It is in the process of hiring specialists for the four divisions of its new unit- cyber security, systems audit, research & innovation, project management and administration.

On Wednesday, it offered the jobs through an advertisement on its website. Reserve Bank Information Technology Pvt Ltd (ReBIT) was set up in May last year as a separate subsidiary of the central bank. 

This is the first time a mass hiring drive is being initiated. The final date for applying is February 7.

Headed by Nandkumar Sarvade- a retired officer of the Indian Police Service with expertise on(Read More)