Financial tips for corporations

Agile property gets critical extension for part of $475 mln loan


HONG KONG Oct 27 Struggling Chinese developer Agile Property Holdings Ltd has obtained a critical 12-month extension to repay what remains of a $475 million loan due in December, the company said in a stock exchange filing. Banks including HSBC Holdings, Standard Chartered and Hang Seng Bank agreed to extend as much as $265 million of the loan, the company said in a filing on Sunday.

The rest of the loan will be repaid by the net proceeds of a $213 million rights issue Agile announced earlier this month.

The company also won the banks' approval to extend another HK$2.7 billion

Bank of korea joins islamic finance body ifsb


March 28 South Korea's central bank has joined the Islamic Financial Services Board (IFSB), one of the main standard-setting bodies for Islamic finance, as regulators across Asia build closer ties to the growing industry. Guidelines issued by the Kuala Lumpur-based IFSB are gaining prominence as the industry takes a greater share of the banking sector in several majority-Muslim countries and expands into new markets. The Bank of Korea is the 59th regulatory body to join the IFSB, bringing total membership to 184, joining the likes of the central banks of Luxembourg and Japan and the monetary authorities of Hong Kong and Singapore. The move could augur stronger links between South Korea and Islamic finance hubs in southeast Asia.

South Korea's Export-Import Bank of Korea already has a bond programme in Malaysia that can issue Islamic bonds, or sukuk, although it has yet to tap the market. This week, Hong Kong lawmakers passed a bill that will allow the AAA-rated government to raise around $500 million via sukuk, or Islamic bonds.

In a separate statement, the IFSB also adopted a revised guideline on the supervision of Islamic finance institutions, helping tighten regulatory oversight of industry practices.

The latest update complements stricter Basel rules, agreed globally to make banks safer after the 2007-09 credit crisis. In the past two years, the IFSB has issued separate guidelines on liquidity risk management, stress testing and capital adequacy.

Bnp paribas loses geneva trade finance head


GENEVA, March 29 French bank BNP Paribas' Geneva-based managing director and head of trade finance, Jacques-Olivier Thomann, has left his role, according to several banking sources. Thomann's decision to leave was a personal choice, and his successor will be revealed shortly, according to a BNP Paribas source, adding that he has accepted an advisory role at the bank's Paris headquarters.

BNP Paribas is one of the most active banks in trade finance, an industry that has come under increasing pressure from Basel regulations on capital adequacy and from a shortage of dollar liquidity among European banks.

Last week Thomann told Reuters the bank was planning to launch a fund this year to drum up new liquidity for trade finance.

Thomann is also president of industry body the Geneva Trading and Shipping Association.

Breakingviews us money market funds cant have it both ways


(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)U.S. money market funds can't have it both ways. Lobbyists are trying to stifle reforms in the $2.7 trillion money market industry, while Bill Dudley, the president of the New York Federal Reserve, is throwing his support behind changes Mary Schapiro, the Securities and Exchange Commission chairman, wants proposed.

For years, money market funds have been hawked as safe but higher-yielding alternatives to traditional bank accounts. Yet the run that began when the Reserve Primary Fund "broke the buck" - meaning it marked down its net asset value from the traditional $1 a share - in September 2008 proved that there were incremental risks, and prompted an industry-wide government rescue. Schapiro wants to make the industry capable of saving itself. The simplest, most transparent way would be to force funds to quote a floating NAV based on the worth of their investments rather than a flat $1 per share. That's logical, but the fund industry is dead against it.

The other regulatory option would let money market funds peg their NAVs, but would require them to build in cushions to ensure they can actually afford to let investors redeem shares at that price. The first layer of protection might be a small capital buffer so there's no question of a fund manager's ability to top up the fund in the event of small losses. In an article for Bloomberg, Dudley also suggests that big investors - those with more than $50,000 in a fund, in his example - could only be allowed to withdraw 95 percent of their cash immediately, with the rest available a month later but subject to losses if the fund loses money on its holdings.

Money market fund folk bristle at the extra costs such rules could bring, but Dudley's financial stability concern is warranted. Money market funds provide nearly $200 billion to the financial sector in short-term loans and about $600 billion to the tri-party repo market, where banks, institutional investors and others go to fund short-term trades, according to Dudley. A run on money markets could, therefore, infect the broader financial system. The SEC mulled proposing reforms by the end of this month, according to news reports. However, several of Schapiro's four SEC commissioner colleagues seem to be skeptical. Dudley's support just might help. Money market funds can't go on claiming ultra low risk while having no obligation to hold a buffer. Something needs to give.

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