2. RBS ADMITS RETAIL ARM WAS A CASH COW TO FUND
ACQUISITIONS
Royal Bank of Scotland head Brian Hartzer has alleged the bank’s former management of making
use of the business as a “cash cow” for financing the remainder of the group’s increasing while he
unveiled his plans of reducing further expenses.
RBS is having a a good franchise with loads of opportunities but with a business which has been
badly managed for several years, being managed as a cash cow to finance acquisitions for several
years.
He said that their business had focused on short term profits and took advantage of their customers.
As a result, the customers became extremely dissatisfied with their quality of service. They lost faith
that the industry had any consideration for them at heart and shareholders started diminishing by
numbers to almost nil.
Now RBS plans to spend £800 million in the next five years over 65 projects so as to make the retail
bank progress.
3. RBI HIKES KEY INTEREST RATES BY 25 BASIS
POINTS
The Reserve Bank of India (RBI) hiked its short-term borrowing and lending rates by 25
basis points, continuing with its tight monetary policy stance to tame inflation, but hinted
that the rates would not undergo any more changes in the immediate future.
The repurchase rate now stands revised to 6.25 percent from the earlier 6 percent, while
the reverse repurchase rate has been hiked to 5.25 percent from 5 percent. The cash
reserve ratio (CRR) has been kept unchanged.
In the previous mid-quarter review Sep 16, the central bank had hiked its short-term
borrowing and lending rates by 50 basis points and 25 basis points.Inflation has been the
driving force behind the tweaking of interest rates, something the central bank has now
done six times this year.
The overall annual inflation rate has fallen in recent months, but is still at a high level of
8.62 percent as recorded in September. The 52-week rise in food prices is also in double-
digits at 13.75 percent.
4. UNION BANK POSTS DISAPPOINTING RESULTS
One of the leading names in the Indian banking industry, Union Bank of India
has recently posted disappointing Q2 results in the Indian market wherein the
banking giant has said that it net profits have fallen by close to 40%.
According to the numbers posted by the bank, the earnings stood at Rs 304
crore, which was much down from the Rs 505 crore earned by the bank in a
year ago period.
In fact, the stock market also reacted harshly to the dismal numbers as the
shares of the company fell 5.9% to Rs 392.80. Union Bank chairman and
managing director MV Nair said that the bank expects the pace of slippage to
moderate in the coming quarters.
He also said that the bank has sought capital from the government with a view
to boost its Tier I capital which is currently fallen below the targeted 8% level.
The operating profit of the bank grew by 40% on the rising loans.
5. US STOCKS RISE ACROSS BOARD ON G20 PLEDGE
The three US benchmark stock indexes rose Monday, buoyed by agreement among the
Group of 20 nations in South Korea to prevent a currency war and stronger home sales.
The gathering of G20 finance ministers and central bank chiefs in Kyongju, South
Korea, over the weekend produced a call to move towards exchange rates determined by
the market.
The agreement follows months of allegations aimed mainly at China of exchange rates
being kept artificially low in order to boost their own economies.
The blue-chip Dow Jones Industrial Average climbed 31.49 points, or 0.28 percent, to
11,164.05. The broader Standard and Poor's 500 Index gained 2.54 points, or 0.21
percent, to 1,185.62. The technology-heavy Nasdaq Composite Index climbed 11.46
points, or 0.46 percent, to 2,490.85.
The US currency fell against the euro to 71.57 euro cents from 71.71 euro cents Friday,
and against the Japanese currency to 80.80 yen from 81.36 yen. (dpa)
6. THE REALTY DILEMMA FOR RBI
Experts are of a view that the central bank of the country, The Reserve Bank of
India (RBI) should give its decision of not granting licenses to players who
have exposure to realty sector a second thought.
For the records, the central bank has passed on this information in the
discussion paper which indicated that the groups that have exposure to the real
estate sector may not be able to obtain the about to be issued banking licenses.
But as there may be a lot of protest and unhappiness regarding this decision, it
is expected that the RBI will have to make strict norms in case of issuing new
banking applicants with exposure to the real estate sector.
An official who was at the meeting has said that close to three fourth of the
meeting went in discussing the fact that whether RBI should allow realty groups
to enter into the banking industry.
