Sunday 17 August 2014

OCBC Seeks $2.7 Billion Via Rights Issue After Wing Hang

The company will sell as many as 440 million new shares at a ratio of one share for every eight held in a rights offer at S$7.65 each, Singapore-based OCBC said in a statement to the city-state’s exchange today. The price represents a 25 percent discount to the stock’s close last week of S$10.20. The shares fell 0.1 percent to S$10.19 at 9:41 a.m. local time today.
“The market was expecting a much higher capital issue to pay for Wing Hang,” said Jim Antos, a Hong Kong-based analyst at Mizuho Securities Asia Ltd. “The 25 percent price discount is irresistible, in our view, and the highest we have seen in years of following Asian banks. We would be buyers at this attractive price.”
The lender bought most of Wing Hang last month in a $5 billion takeover that allows it to delist the Hong Kong bank and combine operations. The purchase gives OCBC increased access to the Greater China region, enabling the lender to offer more banking services to Chinese companies inSoutheast Asia and target Wing Hang’s customers for its private bank.
Photographer: Munshi Ahmed/Bloomberg
Customers line up at service counters inside the Oversea-Chinese Banking Corp. bank... Read More
The share sale is aimed at bolstering its balance sheet following the acquisition, OCBC said in the statement today.

Risk Buffers

Moody’s Investors Service placed OCBC’s debt ratings on review for a possible downgrade on April 3, citing a potential drop in risk-buffers and problems in replenishing capital following the acquisition. The review will be completed after the bank clarifies the extent and composition of the fundraising, Moody’s said in a statement that day.
OCBC appointed Bank of America Corp.’s Merrill Lynch, HSBC Holdings Plc and JPMorgan Chase & Co. to manage the rights offer.
The Singapore bank’s common equity Tier 1 capital adequacy ratio, a measure of financial strength under international Basel III banking guidelines, was 14.5 percent at the end of 2013 and would have been 11 percent if the Wing Hang purchase was taken into account, OCBC said in an April 1 statement.
The ratio primarily measures the sum of common shares and retained earnings as a proportion of a bank’s risk-weighted assets. The purchase will reduce the capital ratio because the goodwill OCBC pays for the acquisition will be deducted from common equity and the lender will also have to absorb additional risk-weighted assets from Wing Hang.

Basel Rules

The Monetary Authority of Singapore requires banks incorporated in the country to have a minimum Tier 1 ratio of 6.5 percent from Jan. 1, 2015. The Basel III minimum by that date is 4.5 percent.
OCBC intends to keep its capital ratios above regulatory requirements and comparable to other Singapore banks, Chief Executive Officer Samuel Tsien said at a briefing for the lender’s second-quarter financial results on Aug. 5.
Based on fully phased-in Basel III rules that will apply from 2019, OCBC’s ratio excluding the Wing Hang purchase is the lowest among Singaporean banks at 11.3 percent, Sanford C. Bernstein & Co. analysts led by Kevin Kwek wrote in an Aug. 5 note. The levels for its two domestic rivals, DBS Group Holdings Ltd. and United Overseas Bank Ltd., exceeded 12 percent, the analysts said.
The Wing Hang purchase is the largest takeover of a Hong Kong bank since DBS, OCBC’s biggest domestic rival, offered $5.4 billion for Dao Heng Bank Group Ltd. in April 2001.
Hong Kong lenders are luring foreign buyers seeking to tap China-related business in a city that is the biggest center for offshore yuan trading. Outstanding loans in Hong Kong made in China’s currency surged 46 percent last year to 115.6 billion yuan ($18.8 billion), Hong Kong Monetary Authority data show.

Signs that your crappy job is holding you back from your true potential and greatness

Ari Gold’s long-suffering assistant Lloyd knew when it was time to get out. (Image: HBO) Source: Supplied
LET’S face it: We all need money.
Anybody who says money isn’t important is either crazy rich or lives in a cult somewhere. What’s also important is our time. That is something we will never be able to get back, regardless of what our savings look like.
The 9-to-5 culture has come a long way since the 1960s. Back then, you could get away with working for the same company for 40 years, with all of the job security one could desire.
Not only does that make us Millennials want to run away, far away, but that path has become just as unstable as becoming a Hollywood screenwriter.
In our current economy, companies expel workers by the thousands, and with the competition we face in 2014, we’re more expendable than we’ve ever been.
So why not go after what you really want instead of doing what you think you should be doing for work? After all, the risk of failure could be virtually the same.
The good news is that we are the generation of entrepreneurs. We are the products of the Baby Boomers of the 40s and 50s, and those Baby Boomers pumped out business-minded creatives that crave to scream, “I’m CEO, bitch!”
Hey, and since you were born with that mentality, you might as well live up to it, right? But, how fed up with your job are you really? The question shouldn’t be how much you dislike your current role, but how inspired you are to embrace your true calling and say to hell with the rest.
For those of you who complain constantly about that bloodsucking job, here are six signs you need to leave:
“I’m gonna need you to go ahead and come in tomorrow.” (Image: 20th Century Fox)
“I’m gonna need you to go ahead and come in tomorrow.” (Image: 20th Century Fox) Source: Supplied
YOU DREAM OF WORKING FEWER HOURS
It happened: That moment in the movie “Office Space” finally played out in your life.
They’ve got you working Sundays (and 60 other hours during the week), and your relationship has been on the rocks, because your schedules are on opposite ends of the earth, and your kids can’t distinguish you from the nanny anymore.
When you open your pay slip, you think, “Is this all I’m worth?”. You no longer have control over your time (or life) and it’s slowly breaking you inside. Ask the boss to scale you down or find something that is more your speed.
YOU DREAM OF WORKING REMOTELY
Perhaps you love what you do, but that two-hour commute isn’t worth it. Or you just don’t want to look at your boss’ smug gaze across the conference table again at the gazillionth meeting you have this week. Wouldn’t it be nice to do your work from home to spend time with the kids?
Or, better yet, from the beach? You mean people actually can make good money working away from an office?
Absolutely, and the opportunities have skyrocketed, especially since the birth of social media. Take the weekend and do some research in your desired field. You may be surprised.
YOU DREAM OF BEING YOUR OWN BOSS
It’s never been easier to start your own company. If that seems a little intimidating as a first step, try network marketing. No, I’m serious.
Network marketing is a great way to get your feet wet with the entrepreneurial mindset. The fun part about it is some of your friends are already doing it, and maybe making some extra income on the side. Join their business if they ask you, even if it’s for a couple of months. The personal development by itself that comes with the company training is worth it (and it’s free!).
I know, I know, it sounds ridiculous, but how bad do you want that change? This is one avenue that can help get your mind prepared for it.
If this is you, it’s time to assess your career choices.
If this is you, it’s time to assess your career choices. Source: Supplied
YOU SUFFER FROM “YOU’RE STILL THERE?” SYNDROME
Ever have that moment at a family dinner when your Uncle Gary interrupted you talking about your crappy job and said, “You’re still there?”
As a waiter in Los Angeles for many years, I used to have my own regular customers come in, sit at my tables and say to me, “Oh, you’re still here?” Nothing makes you want to take a tequila shot faster, especially when you feel you should be somewhere else.
If that phrase is a repetitive one in your brain, it’s time to make the jump to the next phase of your life. No need to let it fester into anger and resentment for not making the decision sooner.
YOUR BOSS AND COWORKERS DON’T SHARE YOUR VISION
Ever notice how the conversations have changed radically since senior year of high school? Your besties went to Duke, Northwestern and even Yale. You were supposed to take over the world together!
But, somewhere in our 20s, we began reducing our dreams to fit the size of the box that are current income fits. Now, it’s “OMG, I took this amazing three-hour nap on Sunday!” or “I don’t have to work overtime next week!”
Your boss and co-workers might like you, but they don’t always have your best interest at heart. No need to force your “bigger picture” ideas on them. Chances are, they’ve given up on that or aren’t willing to change their routine enough to make that happen for themselves.
YOU’RE WILLING TO WALK AWAY OR GET FIRED BASED ON YOUR PRINCIPLES
If you’ve gotten to this one, you’re probably so over it that you’re ready to shake things up. Ever show up late to work or miss that meeting on purpose? Yup, the apathy has reached an all-time high and you couldn’t care less.
If they won’t give you that pay rise, the holiday you were told you’d get, or fair consideration for a much-earned promotion, give them your notice and get the hell out of there. Know when it’s time to walk and be professional about it.
We’re only here for so long. Is that job really getting you where you need to go? Can you set some resources aside to start a side business to leverage your time and income?
There’s no longer any reason to have all of your eggs in the “Work Sucks, I Hate My Life” basket. What do you really want to leave behind in this world? Your life starts now.

Thursday 14 August 2014

Government breaks up ring that circulated counterfeit $100s for 15 years

For the last 15 years, at least $77 million in sophisticated counterfeit $100 bills have flooded into the country from Israel.

The Secret Service says it has now broken up the ring believed responsible for bringing the bills here, just as the counterfeiters were starting to produce the bills at a new plant in New Jersey.
According to a court affidavit, the bills had many of the security features designed to thwart counterfeiting, including watermarks and a security thread. They were printed on high-quality offset presses.
Criminals would pay about 40% of the face value of the bills for a "10 stack," or $10,000 worth of the bills, and then pass the notes at everything from local CVS drugstores to car washes to Lowe's home improvement stores. Most of the bills were circulated along the Interstate-95 corridor in the East.
The Secret Service got on the trail of the counterfeiters in spring 2012 when four of the bills showed up at a Loan Max in Woodbridge, Va.
Most of the bills are believed to have been printed in Israel. But this January, officials say, counterfeiters set up a printing operation in a Cherry Hill, N.J., warehouse they had purchased. Authorities eventually found a Heidelberg offset printing press along with four smaller printing presses and computer equipment.
By May, the Secret Service was ready to start making arrests. It executed search warrants in five states and arrested four Israelis, seven residents of New York State and two other defendants from Georgia. The indictments against the ring were revealed by the agency last week.
While the Secret Service is best known protecting the President and other federal officials, the agency was started in 1865 for the purpose of combating counterfeiting

Wages are falling in this booming economy

Britain's economy is growing faster than any other developed nation, but you wouldn't know it by looking at your pay packet.

Latest official figures show total pay, including bonuses, shrank by 0.2% in the three months ended in June, even as unemployment continued to fall sharply.
"Wages growth declined on the quarter for the first time in five years, which is a warning sign that the economic recovery, although on the right track, is still fragile," said David Kern, chief economist at the British Chambers of Commerce.
The U.K. economy shrank by 7% during the Great Recession and has taken longer than most to recover, surpassing its pre-crisis level only in recent months.
Thanks to a housing boom and consumer spending, it's now motoring: the Bank of England on Wednesday upped its growth forecast for 2014 to 3.5%.
But the central bank also halved its forecast for wage growth to just 1.25%.
With inflation running at 1.9%, that means household incomes are still going backwards.
Bank of England Governor Mark Carney described pay growth as "remarkably weak."
So with record growth in employment -- more than 800,000 jobs have been created in the past year -- why aren't people making more money?
There are several possible reasons. Salaries tend to lag. Most pay reviews happen only once a year and many workers haven't had one since unemployment started falling rapidly in late 2013.
Then there are changes in the labor market. Economists say more people are looking for work, including some who are putting off their retirement.
That could be because of changes to state pension rules, or because they're worried about servicing debts. Others on part-time contracts might want more hours.

Japan GDP growth collapses amid sales tax shock

japan gdp 2
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Japan's economy suffered its worst contraction since 2011 in the second quarter as consumer spending on big items slumped in the wake of a sales tax rise.

Gross domestic product shrank by an annualized 6.8% in the three months ended June, Japan's Cabinet Office said Wednesday. The result was actually better than the 7% contraction expected by economists.
On a quarterly basis, Japan's GDP dropped by 1.7% as business and housing investment declined. Japan's economy last suffered a hit of this magnitude after the 2011 tsunami and nuclear disaster.
The performance is the second half of a boom and bust cycle resulting from the sales tax hike that drastically changed consumer spending patterns.
Japan's consumption tax was increased to 8% in April in a bid to improve the country's fiscal position. If needed, the government has the option to implement an additional increase to 10% by 2015.
Earlier in the year, consumers responded in a big way, bringing forward big purchases -- and all the extra shopping contributed to the strong first quarter numbers. But now that the sugar rush is over, economists had expected Japan's growth rate to return to Earth in the second quarter.
Japanese robots look like real people
Marcel Thieliant, an economist at Capital Economics, said it was always unlikely that the impact of the consumption tax hike would fade overnight.
But consumer spending is already improving, Thieliant said, and other indicators suggest business investment in machinery and equipment should increase.
"The upshot is that we still expect the recovery to resume in coming months," Thieliant said.
Japan is facing a crucial period as the government presses ahead with its much-ballyhooed Abenomics revival strategy.
The country has been mired in a malaise brought on by falling prices and a strong yen for years. But the economy's prospects have brightened since Prime Minister Shinzo Abe announced fresh spending by the government and encouraged the central bank to unleash a wave of asset purchases.
Under his leadership, the yen has fallen sharply and stocks have risen dramatically. The IMF has endorsed the plan and Japan has largely avoided charges of currency manipulation.
But the third pillar of the Abenomics plan -- structural reforms -- has been tougher to implement.
Abe's government has proposed reforms that would make the labor market more flexible, encourage immigration, bring nuclear power plants back online and draw more Japanese women into the workforce.
Many of those proposals have foundered, or have been slow to develop.

7 things you absolutely must know about corporate taxes

corporate tax code
Want to sound smart at your next Washington cocktail party when everyone is talking about "inversions?" Read on ...

Politicians are hopping mad because a spate of big U.S. companies are trying to escape higher tax bills by proposing mergers with foreign firms.

But the real problem, most agree, is the corporate tax code, which hasn't kept pace with the transformation of global business over the past 30 years.
Some people think next year might be the year when Congress finally reworks how companies are taxed.
A wonk can dream.
In the meantime, there will be plenty of rhetoric about the issue. Here are 7 key facts to help you keep things straight.
1. Corporate tax revenue accounted for 10% of all federal tax revenue last year. That's less than a third of what it was at its post-war peak, in 1952, according to theCongressional Research Service.
There are a few reasons for the drop-off, CRS notes. Among them, corporations' profits and the percent of their profits paid in taxes have fallen.
Also, many businesses (partnerships, limited liability companies and so-called S corps) have chosen to file under the individual tax code because they get a better deal that way.
2. Only 6% of businesses file under the corporate tax code. And they account for less than half of all business income, according to CRS.
By contrast, in 1980, 17% of businesses paid the corporate tax and generated nearly 80% of business income.
3. Corporate tax breaks cost U.S. coffers about $150 billion last year. That's a lot. But it's a fraction of the more than $1 trillion of individuals' tax breaks in 2013.
One way both are similar: The 10 biggest breaks account for a large majority of the total cost.
4. The U.S. has the highest tax rate among developed economies. Most U.S. corporate income is subject to a 35% federal tax rate. But the "effective" rate companies pay is often lower after accounting for a company's tax credits, deductions and exemptions.
What's more, companies owe U.S. tax on profits they make in the United States and abroad, minus whatever foreign tax they've paid. But a company can put off paying U.S. tax on foreign profits indefinitely, so long as it doesn't bring those profits back to U.S. shores and reinvest them in the business.
Critics say this high-rate, "worldwide" tax system hurts U.S. companies with foreign rivals.In many other countries, companies typically not only face lower rates but don't owe their home country tax on earnings made offshore.
5. U.S. corporations are not taxed equitably. The tax code favors some activities and investments over others, and creates opportunities for certain firms that others can't use.
For instance, it's good to be a U.S. company working abroad.
"They have opportunities to shift profits from U.S. operations to tax havens that wholly domestic businesses do not," said Martin Sullivan, chief economist at the publisher Tax Analysts.
Even among U.S. multinationals, the playing field isn't quite level.
"Companies with lots of patents, trademarks and other intellectual property have the greatest ability to shift profits to tax havens. That's why tech, pharma and medical device companies all tend to have such low effective tax rates," Sullivan said.
(See, for example, how Apple lowers its rate.)
6. Many big U.S. companies are swimming in untaxed cash. Since U.S. multinationals only owe U.S. tax on foreign earnings when they bring them back to the United States, there'sserious incentive to put off that day of reckoning.
End result: Many companies have built up a serious offshore cash stash. Apple (AAPL,Tech30), for instance, has more than $100 billion sitting outside the United States.Microsoft (MSFTTech30) has roughly $93 billion, while Pfizer (PFE) has an estimated $69 billion, according to Mindy Herzfeld, a contributing editor at Tax Notes International.
Obama on tax inversion: 'It's not fair'
7. The pace of U.S. companies looking to leave has picked up dramatically. Between 1983 and 2003, 29 U.S. companies reincorporated abroad in a process known as "inversion." From 2004 to 2013, there have been 47, according to CRS. And this year alone there have been at least 15 proposed inversion deals, Tax Notes reports.
Many lawmakers believe a lower U.S. corporate tax rate could help deter companies from leaving.
Some in Congress are also pushing for the United States to move away from a "worldwide" tax system to a "territorial" one. In a territorial system, corporations would only owe U.S. tax on profits made in the United States. Any profits they make offshore would be taxed by the countries where those profits were made.
In any case, the tax reform proposals put forth so far by some key lawmakers "would leave considerable advantages" for U.S. companies that move abroad, Sullivan said. "So there probably will still be incentive to invert after tax reform."

Mexico puts out the welcome mat for Big Oil

Mexico's landmark energy reform -- so long in the making -- is starting to take shape.

On Monday, President Enrique Pena Nieto signed into law a framework for private investment, ending a 76-year state monopoly. Days later, and earlier than expected, his government made a key announcement about what areas of Mexico's vast reserves would be open to foreign oil companies.
State energy company Pemex is being awarded 83% of known and probable reserves. Pemex hopes the grant can help it boost dwindling production levels.
But crucially, the company was only granted one-fifth of Mexico's future potential oil and gas reserves. The rest will be put up for auction, starting next year. Pemex had wanted to receive more without the need to compete.
"Of the prospective resources, we have received indeed 67% of what we asked for," CEO Emilio Lozoya told CNN. "But that is plenty for the next decades. And Pemex will be able to bid in round one, round two, round three when the government auctions acreage for exploration."
The scene is set for a hotly contested auction: In addition to shale gas, bidders will be vying for the estimated 27 billion barrels of oil deep beneath the Gulf of Mexico. Mexico's side of the maritime border is largely unexplored and has no oil in production -- a striking contrast to the level of activity in US waters.
Pemex has been granted a slice of the deepwater game, and intends to bring in partners with expertise in drilling up to 3,000 meters below sea level.
"We will create a competitive environment, therefore I cannot name players today," said Lozoya. "But what I can tell you is we will be wanting to work with world-class players."
One obvious candidate is Exxon Mobil (XOM), the world's largest public energy company, which broke its silence this week to hail Mexico's "historic" changes.
"We will pursue potential investment opportunities in Mexico that are competitive with other opportunities around the world," the corporate giant told CNN in a statement.
Partnering with such a major player may also inject greater transparency into Pemex, currently the world's seventh largest oil producer. While the firm is modernizing, it is still struggling to shed an old image of an opaque and sometimes corrupt monolith.
"Competition means we will need to partner on projects," said Lozoya. "This is a great benefit to our organization."
Lozoya believes large private companies will ensure Pemex isn't overpaying.
"They will make sure we minimize costs and therefore maximize profits," he said