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from Breakingviews:

China’s capital flight may be banks’ next headache

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By Peter Thal Larsen

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Western banks’ next regulatory headache could be made in China. Most of the recent scrutiny of financial institutions’ business practices has come from the developed world – particularly the United States. But as Chinese citizens become more aware of the offshore wealth held by the country’s elites, banks are increasingly at risk of a regulatory backlash.

Despite China’s supposedly strict capital controls, large amounts of cash have leaked out of the country in recent years. Macau’s booming casinos, the rising price of prime real estate from Hong Kong to San Francisco, and the growing number of Chinese students at top Western schools and universities show the well-off are able to move large amounts of cash across the border. Members of the Chinese elite have also become enthusiastic users of offshore tax havens like the British Virgin Islands, as highlighted by a new report by the International Consortium of Investigative Journalists.

So far, the People’s Republic has shown limited interest in stemming the outflows. But that could change quickly. China’s Communist Party is investigating a number of senior officials for corruption: if tainted cash was moved overseas, the banks, accountants and law firms involved could soon find themselves in the firing line. It would be easy for Chinese regulators to make an example of a global bank – after all, Western watchdogs have been doing little else in recent years.

from Breakingviews:

Deutsche is wasting its Libor crisis

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By Dominic Elliott and Olaf Storbeck

The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

Deutsche Bank is wasting a crisis. In September 2012, newly appointed co-Chief Executives Juergen Fitschen and Anshu Jain said the German lender would be at the forefront of cultural change in the banking industry. That goal keeps moving away from them.

from Breakingviews:

China’s bureaucrats play online war games

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By Robyn Mak 

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

Who governs the internet? Authorities in China can’t decide. The Ministry of Culture, a relatively unknown agency, staked a claim by clamping down on online games on Dec. 13. China’s leaders say they want to foster an innovative economy, but the tussle between the young internet sector and an outdated bureaucracy raises questions about whether they really mean it.

from Breakingviews:

Benefits of being “G-SIFI” seem to outweigh costs

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By Peter Thal Larsen

The author is a Reuters Breakingviews columnist.  The opinions expressed are his own.

The benefits of being labeled “too big to fail” may just outweigh the costs. Since regulators first published their list of global systemically important financial institutions, or G-SIFIs, the banks concerned have boosted capital and tamped down balance sheets. But smaller lenders, particularly in Europe, have done the same without joining the club. And shareholders seem not to notice much of a difference.

from The Great Debate:

Antisocial genesis of the social cost of carbon

The day after his 2009 inauguration, President Barack Obama committed to “creating an unprecedented level of openness in government.”

He vowed to build on “transparency [that] promotes accountability by providing the public with information about what the government is doing,” “participation [that] allows members of the public to contribute ideas and expertise,” and “collaboration [that] actively engages Americans in the work of their government.”

from Breakingviews:

Indonesia biggest loser from bank merger flop

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By Peter Thal Larsen

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

There are no winners from DBS’s failed takeover of Indonesia’s Danamon. But the biggest loser is Indonesia’s attractiveness as a destination for foreign investment.

from Breakingviews:

Singapore’s creative bank penalty may be a one-off

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By Peter Thal Larsen

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)

Singapore has come up with a creative way of penalising rate-rigging banks. Regulators are forcing lenders implicated in manipulating the city-state’s borrowing and currency rates to set aside up to S$12 billion ($9.6 billion) in extra central bank reserves. With rates low, however, the costs will be much lower than recent mega-fines.

from Breakingviews:

China-U.S. audit truce wisely avoids big issues

By John Foley

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)

Deng Xiaoping used to say that ideological disputes were best left for future generations to solve. Audit authorities in China and the United States are wisely following the former Chinese leader’s advice. Their compromise on inspecting the audits of Chinese companies listed overseas, a non-binding memorandum announced on May 24, leaves the biggest questions unanswered. That’s exactly as it should be.

from Breakingviews:

Crackdowns only make M&A leaks more tempting

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By Jeffrey Goldfarb
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

 

Cracking down on M&A leaks may only make them more tempting. Merger practitioners say fresh research showing that news is trickling out less often about companies for sale can partly be attributed to tougher rules and enforcement. Though loose lips come with less chance of deals closing, they also coincide with much higher premiums. Some bankers will always fancy that mix of risk and reward.

from Breakingviews:

China’s new market watchdog may lack teeth

By John Foley

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)

As head of China’s new market watchdog, Xiao Gang has a tough mission: to bite the hand that fed him. While head of Bank of China, he oversaw an unprecedented lending spree that helped get China’s economy out of a hole. His next mission, as boss of the China Securities Regulatory Commission, will be to beef up the country’s capital markets - weakening the big banks’ stranglehold.

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