Tuesday, September 4, 2007

HSBC to buy half of South Korean bank KEB for US$6.3b

Source : Channel NewsAsia, 03 September 2007

LONDON: Global banking giant HSBC said Monday it had agreed to buy half of South Korea's sixth-biggest bank, but the deal could face regulatory problems because of legal cases involving the current owner.

HSBC has agreed to pay about 6.3 billion US dollars (4.6 billion euros) in cash for 51.02 per cent of Korea Exchange Bank (KEB) from US private equity fund Lone Star.

HSBC chairman Stephen Green said the deal for South Korea's sixth-largest bank in terms of assets would "provide HSBC with a significant presence in Asia's third-largest economy."

But in Seoul on Tuesday, South Korea's financial watchdog, the Financial Supervisory Commission (FSC), said it would not approve the sale until legal cases were settled involving the purchase of the bank by Lone Star.

"It is difficult to approve the deal" because of the pending case on the legality of Lone Star's 2003 acquisition of KEB, FSC spokesman Hong Young-Man told reporters.

Prosecutors brought charges against six people including a former KEB president last year, accusing them of manipulating figures on KEB's financial health to pave the way for the private equity fund to acquire the bank.

Lone Star was separately accused of manipulating the share price of KEB's credit card unit so it could be acquired cheaply by KEB.

The US firm denies the allegations and says the charges were driven by hostility towards foreign investors. It has indicated it favours an early sale of its controlling stake.

KEB has more than 5.4 million customers with over 350 branches across 18 countries, making it South Korea's leading international bank.

HSBC said Monday that it would not make an offer for the remaining shares in KEB.

Green said the deal reflected the bank's strategy of "expanding HSBC's presence in important growth economies, particularly in Asia, Latin America and the Middle East."

If the acquisition is completed, the Korean bank will continue to be listed on the Korea Exchange.

If the deal is completed after January 31 2008, the purchase price will be increased by 133 million US dollars, also payable in cash, HSBC added.

In 2003, Lone Star bought 50.5 per cent of KEB for some 1.5 billion US dollars and later increased its stake to 64.6 per cent.

But last November the pending court cases forced it to withdraw from a 7.4 billion US dollar deal to sell its entire stake to top lender Kookmin Bank.

In June, Lone Star sold 13.6 per cent of its holding worth 1.3 billion US dollars to buyers including South Korea's Hana Financial Group and the National Agricultural Cooperative Federation. - AFP/ac

Income Ceiling Ensures HDB grant Is For First-Timers

Source : The Straits Times, Forum, Sep 4, 2007

I REFER to the letter, 'Time to review $8,000 HDB income ceiling?' by Ms Lai Ga Wai (ST, Aug 14) and 'How about housing perks for the middle-income?' by Ms Bernice Swee Wern Foong (ST, Aug 22).

Public housing subsidies are primarily meant for citizen families to buy and own their first HDB flat. The purpose of the income ceiling is to ensure the Government's limited housing subsidies are given to those who need them more. With the current income ceiling of $8,000 a month, about eight in 10 Singaporean households are eligible to buy a subsidised HDB flat. As the vast majority of Singaporean families qualify for subsidised public housing, HDB currently has no plans to raise the income ceiling.

Households with incomes beyond $8,000 per month can consider other housing options, including buying resale HDB flats. First-time families with household incomes of up to $10,000 can also consider buying new executive condominium (EC) units, with a subsidy in the form of a $30,000 EC housing grant.

Ms Lai said a couple with $8,000 in monthly income who bought a new five-room flat at $456,000, would not have sufficient CPF savings remaining to meet the CPF Minimum Sum. This is incorrect. She has failed to include the CPF Special Account contributions of the couple which will amount to an additional $294,000 when they reach 62 years, at the prevailing Special Account interest rate of 4 per cent per annum. This is more than sufficient to make up the stipulated Minimum Sum of $180,000 for a married couple in the year 2013.

To supplement their CPF savings, the HDB has also put in place various monetisation options for elderly households to unlock the value of their HDB flats. These include subletting a room, or selling the flat and moving to a smaller flat or studio apartment. The HDB will also implement a Lease Buyback Scheme to buy back part of the lease of smaller flats in return for a steady stream of retirement income for the elderly flat owner.

Leong Chok Keh
Deputy Director (Policy & Property)
for Director (Estate Administration & Property)
Housing & Development Board

No Reason To Suspect Rogue Lawyer Rasif: Expert Witness

Source : The Straits Times, Tuesday, Sep 4, 2007

The quest by an American couple to recover some of their $10.7million pocketed by rogue lawyer David Rasif continued in court today with an expert witness roped in to bolster the case for the defence.

Under persistent grilling from the prosecution, Mr Lim Geok Khoon, a veteran in the jewellery industry maintained that there was no reason for Jewels Defred to suspect David Rasif when they sold him the jewellery.

Ng Kai Ling brings you the exchange in court.

Related Video Link - http://tinyurl.com/23e9e4
No reason to suspect rogue lawyer Rasif: expert witness

DBS Expects To Get Back Jakarta Dealing Licence

Source : The Straits Times, Sep 4, 2007

AN OFFICIAL at DBS Bank's Indonesian unit said yesterday that he expects the bank to have its primary dealing licence reinstated after talks with the authorities.
Last week, DBS Indonesia lost its primary dealing licence, which permits a bank to transact directly with Indonesia's central bank, for instance.

Mr Scott Armstrong, president director of DBS Indonesia, said the loss of the licence would not affect operations or expansion plans. 'While the impact on earnings is not material, we regard the loss as a matter of utmost concern.'

DBS Indonesia said it had been taking action to comply with the requirements of the Indonesian authorities.

Mr Armstrong added: 'We'll undertake rectification as necessary and continue our discussions with the Finance Ministry...We believe that we'll be reinstated as a primary dealer.'

DBS Indonesia said the move 'has no impact on banking operations, which remain strong and in expansion mode'.

Mr Armstrong added that the revocation does not reflect any underlying weakness in its banking operations. DBS Indonesia's banking licence remains intact, he said.

Primary dealers are banks or securities houses which can carry out transactions directly with the central bank and are usually responsible for the direct distribution of new government debt.

The move to curb DBS Indonesia's operations was disclosed on the Indonesian Finance Ministry's website last Friday. DBS Indonesia, which received its primary dealership licence earlier this year, was one of 15 banks and four securities houses holding such licences.

Last Wednesday, the ministry withdrew DBS Indonesia's primary dealership, citing the bank's inability to fulfil licensing requirements in spite of three reminder letters in the past year.

Responsibilities of a primary dealer include submitting a bidding offer on each government bond auction, and participating in the primary auctions of state debt securities by the Finance Ministry, amounting to at least 2 per cent of the total indicative target sales on a three-month rolling average basis.

A DBS spokesman told The Straits Times yesterday: 'We participated in the bond issue on Aug 28, when we picked up about 6 per cent. However, our licence was withdrawn with effect from Aug 29 as we were not able to meet the three-month rolling average of the 2 per cent quota requirement.'

DBS Indonesia said it had initiated the necessary actions to meet its obligations as a primary dealer, but its licence was revoked before these measures were fully in place.

Row Over Board Make-Up At AVJennings Escalates Further

Source : The Straits Times, Sep 4, 2007

Simon Cheong speaks up again to oppose meeting to elect 2 directors

By Lee Su Shyan, Assistant Money Editor

HIGH-PROFILE property developer Simon Cheong has made his toughest comments yet in an escalating row over board membership at the Australian property developer he chairs, AVJennings.

Hostilities are being traded between Mr Cheong and investment group Guinness Peat Group (Australia), or GPG, which has called for a shareholder meeting on Sept 14 to elect two directors.

Mr Cheong, whose SC Global Developments has a 42.3 per cent stake in AVJennings, has criticised the share performance of No. 2 shareholder GPG, which holds an 11.5 per cent stake in AVJennings.

GPG said earlier that Mr Cheong criticised GPG's share performance to divert attention from what it saw as the 'mediocre' performance of AVJennings.

In his latest comments, he told The Straits Times: 'I am very surprised that GPG got so agitated and used such strong language when we made reference to GPG's performance.

'Obviously, it's not so amusing when GPG gets a taste of their own medicine,' he said.

'We are very familiar with corporate agitators, and I think we are the wrong group to be picked on.'

He said GPG, or any other shareholder, could have waited for AVJennings' annual general meeting only two months away, where there would be another opportunity for new directors to be put to a vote.

Mr Cheong said AVJennings' management and board are having to divert precious time away from business to attend to an extraordinary general meeting (EGM).

He said: 'We don't take lightly any shareholder's request for an EGM.'

Calling for such a meeting is 'irresponsible', he said.

An EGM involves direct and indirect expenses for AVJennings, such as flying in directors, paying legal fees and printing circulars.

There are eight members on the board, including its chairman, Mr Cheong. Another two - GPG nominees Graeme Cureton and Jason Ters - will make 10.

The current board, however, is against the pair, saying their appointment would cause a conflict of interest, as both Mr Cureton and Mr Ters work for GPG.

GPG holds a majority stake in a home builder, Canberra Investment, a rival of AVJennings.

Mr Cheong has criticised GPG's share price for having dropped by about 15 per cent over the last year in contrast to the Australian benchmark index.

GPG counters that the compound growth in its net asset value has been 20 per cent a year since 1990.

In comparison, GPG argues, the share price of AVJennings is now 40 per cent below the high achieved in March 2004.

Observers reckon that the basis of GPG's grievance is that it bought into AVJennings in 2004, when the share price was at its peak. y

Mr Cheong says, however, that AVJennings has consistently been profitable and has been paying dividends under its current board and management.

SERIOUS BUSINESS'My message is: Don't take an extraordinary general meeting as entertainment. It is not a joke. It is not a circus. But let's work together and, if you give us a serious proposal, we will consider it and see how we can take the company forward.'

MR CHEONG, reacting to a move by AVJennings' No. 2 shareholder, Guinness Peat Group (Australia), to place two nominees on the property developer's board

'But let's work together and. if you give us a serious proposal, we will consider it and see how we can take the company forward.'

A Lifeline For The Less Fortunate

Source : TODAY, Tuesday, September 4, 2007

Proposed annuity scheme could benefit you just as much as the next person

Letter from TEO CHENG PEOW

I REFER to Christopher Tan’s enlightening article, “Annuities: It’s risk-sharing among all” (Aug 31), which offers readers insights into some essential issues on annuity schemes.

I agree that some Singaporeans are unhappy over the Government’s introduction of the compulsory annuity scheme because of a lack of knowledge and a matter of perception.

The recent comments in the media have also set me thinking, not so much about the scheme but of people’s unwillingness to share!

I hope that only a small group of Singaporeans share this attitude. Admittedly, there is a lack of understanding of how the annuity scheme will work simply because the details have not been finalised.

What we do know is that the scheme will be based on the principle of risk-sharing by all members and will be funded from a portion of the individual’s CPF minimum sum.

But some people are already up in arms, questioning the right of the Government to make the scheme compulsory. It is their money they say, and worse still, they would not want to leave their money to benefit others should they die before they are 85 years old.

However, I think risk-sharing works both ways. What if the very people who are complaining about the annuity scheme live beyond 85? Wouldn’t they benefit from those who died earlier? What about their relatives who may also live to be older han 85 years?

I too do not wish to wait until I am 85 years old to receive my annuity payment, but I am for risk-sharing as it is a sign of cohesiveness within the community.

Our lament that we are not a gracious society is reflected in the fact that we are not prepared to make a small sacrifice for the well-being of our fellow Singaporeans.

I admit that there are many generous Singaporeans who donate money to charities and perform volunteer work.

However, I am saddened to see that some Singaporeans lack compassion for the less fortunate among us.

Singapore may be a young nation but we have come a long way. It would be a pity if we cannot gel as “One People, One Nation”.

The Government has spared no effort in creating strong community bonds through grassroots organisations. But there is only so much the Government can do. We should support these initiatives if we want to live in harmony. Is this asking too much?

Yes, we come from different social and cultural backgrounds and we have gone through good and bad times together.

However, I still feel there is a vital piece missing — we should accept our fellow Singaporeans as members of a big family. We must learn to share and help one another.

Should high-risk individuals with already high premiums be forced to buy an annuity?

Letter from TAN SIEW LIAN

I WISH to applaud Christopher Tan’s article “Annuities: It’s risksharing among all” (Aug 31) and how the scheme has caused unhappiness among some Singaporeans.

This is only natural as much of the scheme has not been finalised. But hopefully all the feedback allows the Government to fine tune the scheme to allay the concerns of Singaporeans.

One question that has been asked by some Singaporeans is whether people who have been rejected by insurance companies or already pay high premiums due to pre-existing medical conditions can be exempted from buying the annuity.

This is a very important issue for the Government to consider.

If insurance companies will not insure someone for fear of that person “cashing in” if they die relatively soon, they should also not sell annuities to this high-risk group for ethical reasons. The Government should also not make the purchase of annuities compulsory for this group.

Apollo Centre Up For Sale For Over $200m

Source : The Business Times, September 4, 2007

Price tag amounts to $1,345 psf of net lettable area By UMA SHANKARI

APOLLO Centre, a commercial building in Havelock Road, is for sale for more than $200 million, the property firm marketing it said yesterday.

The 99-year leasehold property is being sold by Singapore-listed Apollo Enterprises.

And since the sale was announced, there have been many enquiries from potential investors, said marketing agent Knight Frank.

'Given the lack of similar investment buildings in the market and the many interests expressed, a transaction price in excess of $200 million is not unexpected,' it said.

At $200 million, the price would work out to $1,345 per square foot (psf) of net lettable area.

There are shops in the basement and on the first and second storeys and offices on upper floors.

By comparison, almost a whole floor of nearby Chinatown Point was sold recently for about $1,250 psf of net lettable area.

The Apollo Centre, a seven-storey office and retail building, has a land area of about 54,600 sq ft, and a gross floor area of around 217,500 sq ft. At present, the net lettable area is 148,700 sq ft.

There are shops in the basement and on the first and second storeys and offices on the upper floors.

Because of the limited supply of office space in the central business district, Apollo Enterprises has obtained in-principle approval to change the use of the building's second storey from retail to office.

If the whole floor is converted to office space and targeted at a single occupier, the lettable floor area could increase by about 11,000 sq ft, Knight Frank said.

It said rents in the area range from $7.50-$8.00 psf per month (psf pm) for office space and $8.00-$8.50 psf pm for retail space.

The tender for the Apollo Centre is open until 3pm on Oct 16.

Hayden To Build First Ritz-Carlton Condo In Asia

Source : The Business Times, September 4, 2007

Prices for the 58-unit development in Cairnhill have not been fixed yet By ARTHUR SIM

HAYDEN Properties has clinched the rights to build the first Ritz-Carlton Residences in Asia, after pursuing the luxury brand for months.

The Hayden development will be completely managed by Ritz-Carlton.

Hayden director Ong Chih Ching said that negotiations between the two parties stretched over nine months, with over 600 e-mails sent.

Speaking at a press conference to announce the partnership yesterday, she added in good humour that the negotiations had been 'hard work'.

There are currently 16 Ritz-Carlton Residences in the world and Ms Ong said that to be branded one, stringent requirements have to be met, including limiting the number of units an individual can buy.

Prices for the 58-unit development in Cairnhill have not been fixed yet but Ms Ong said it will be priced 'at the top end of the market'.

Ritz-Carlton's regional vice-president (sales and marketing) Asia-Pacific, Simon Manning, said that unlike some other branded residences here, the Hayden development will be completely managed by Ritz-Carlton.

This will involve training and managing the staff who will provide housekeeping, 24-hour concierge, sommeliers and doormen services. It will not, however, have an equity stake in the development.

A relatively new player in the real estate industry here, boutique developer Hayden has already scored a couple of firsts in the market.

Not only has it secured the Ritz-Carlton brand for its Cairnhill property (formerly Horizon View), it earlier announced that it would be the first to provide living room-carparking for its 56-unit Scotts Road condo development, formerly the Hotel Asia.

Launch dates for both developments have not been fixed.

Hayden is a 50/50 joint venture between Singapore-based KOP Capital and Emirates Investment Group-linked Emirates Tarian Capital (ETC).

Hayden director Kunalan Sivapuniam, who is also managing director at ETC, said it was looking for more development opportunities in the region.

Middle-East investors have been increasingly making their presence felt in Singapore recently and Mr Sivapuniam puts this down to a need to 'diversify'.

He also said there is a lot of liquidity in the Middle-East and exposure to the US sub-prime market and the credit crisis is minimal.

'Post 11 September 2001 (9/11), a lot of Middle-East investments were made away from the US,' he explained.

Emirates Investment Group's real estate portfolio is worth over US$500 million and includes Palazzo Versace Gold Coast in Australia

Property Stocks Sink On News Of Higher DC Charges

Source : The Business Times, September 4, 2007

Higher development costs likely to cool en bloc fever By UMA SHANKARI

PROPERTY stocks fell yesterday after Friday's news that the government will increase development charge (DC) charges as much as 112 per cent.

Analysts said the revised DC rates will push up costs and also discourage developers from paying ever-increasing prices for collective sale sites.

The Singapore Property Equities Index - a weighted index of all stocks in the Singapore Exchange's property sector - lost 9.2 points or 0.6 per cent to end at 1,447.6 points yesterday.

The fall was led by Singapore Land which slid 40 cents or 4.0 per cent to close at $9.50.

Guocoland fell 14 cents or 2.9 per cent to end at $4.62 and City Developments lost 10 cents or 0.7 per cent to close at $14.80.

Other property stocks that slipped include Allgreen Properties, Ascott Group, Wing Tai, Wheelock Properties, MCL Land, UOL Group, Ho Bee and SC Global.

The government announced what is possibly the sharpest hike in DC rates, payable for enhancing the use of some sites or building bigger projects on them.

On average, the DC rate for non-landed residential use was raised 58 per cent.

While the move is not expected to derail the rise in housing prices, analysts reckon it will affect developers because the overall cost of redeveloping sites will go up.

'We estimate the revised DC rates could increase average redevelopment costs by 3-4 per cent from July 2007 levels,' said CIMB analyst Donald Chua.

This in turn means that developers will be less willing to fork out record dollars for sites.

'For future en bloc purchases the sentiment is likely to be negative as break-even cost is likely to be higher,' said OCBC Investment Research analyst Winston Liew. 'We do not anticipate any more benchmark prices to be reached.'

CIMB's Mr Chua said developers will be more selective with land-banking, especially in the prime districts, where surging property prices could cause even greater cost pressure. As a substitute, government land sale sites could now attract more interest, he said.

Phillip Securities Research said the DC hikes could affect home prices. It expects they will continue to increase, but at a slower pace from now on compared with the first half of 2007.

'First, the rises in DC rates are likely to slow en bloc sales and reduce the demand for replacement homes,' the firm said in a research note. 'Second, both local and foreign investors are likely to be more cautious when they select homes after the recent steep price increases.'

Also, the credit tightening in US and the economic slowdown there will affect sentiment among buyers here, who may have lost money in global equity and bond markets, Phillip added.

Lee Hsien Yang Tipped To Be F&N Chairman

Source : The Business Times, September 4, 2007

(SINGAPORE) One of Singapore's most high-profile corporate figures could be ready to take up his next challenge.

Former SingTel chief expected to return to corporate world later this year

Mr Lee: Is expected to play a key role in shaping the conglomerate's future expansion plans

Former Singapore Telecommunications chief executive, Lee Hsien Yang, is expected to take over the chairmanship of Fraser & Neave (F&N), the conglomerate with interests in food and beverage, property and publishing.

Mr Lee had caused ripples in July last year when he suddenly announced that he was quitting SingTel at the relatively young age of 48. Since then, many have wondered what assignment he would take up next.

While his new position is not an executive one, Mr Lee is expected to play a key role in shaping the local conglomerate's future expansion plans.

Given Singapore's size, F&N - especially its beer and property subsidiaries - have been expanding aggressively elsewhere over the past few years. Just over half of the group's revenue came from overseas in 1992. In contrast, the latest results for the first half of financial 2007, almost two-thirds of F&N's total revenue of $2.19 billion was from its international operations and sales.

In December last year, Temasek Holdings took a 14.9 per cent stake in F&N for $900 million in cash. It was said then the Temasek money would come in handy to help expand the group's food and beverage business.

Although it has been said there have been a number of suitors for Mr Lee's talents, he is not expected to look for a full-time job in the near future, a source said. 'He is enjoying his current lifestyle, spending more time with his kids and home, and is unlikely to look for a full-time job for now,' the source said.

Mr Lee, who is married to lawyer Lim Suet Fern, the daughter of Prof Lim Chong Yah, has three sons - Shengwu, Huanwu and Shaowu.

Another source said that he is not expected to take up his new position immediately but later in the year.

F&N, which is just one-eighth the size of SingTel, has been on the lookout for a successor to current chairman Michael Fam, 79, for several months now.

In January, Dr Fam gave up his chief executive position but remained as a non-executive chairman pending the appointment of a successor. His deputy, Han Cheng Fong, assumed the post of chief executive.

Dr Fam, who was given a $3 million gratuity when he retired, will, however, remain as an adviser to the blue chip company after Mr Lee assumes the chairmanship.

Mr Lee, a Cambridge University graduate, received the Singapore President's Scholarship and the Singapore Armed Forces Overseas Merit Scholarship. He joined SingTel in April 1994 after leaving the army as a brigadier-general. He became its chief executive a year later in May 1995, and held the position until March this year.

During his tenure, the company expanded aggressively into the international telecommunications arena, investing billions of dollars in fast-growing phone companies in Asia and Australia.

The most notable of these ventures was the then-controversial $13 billion purchase of Australia's second-largest telecoms operator, Optus, in 2001 - SingTel's biggest investment by far to date.

The move drew nationalist and political flak from Down Under while the knee-jerk reaction on the part of investors was to punish SingTel's stock.

Mr Lee must have felt vindicated as Optus started to turn around a year later and is today one of the group's biggest contributors to earnings.

SingTel is South-east Asia's biggest telco with annual revenues of $13 billion and profits exceeding $3 billion.

While Mr Lee has not taken up any high-profile post since his departure from SingTel, he does have some other assignments on his plate. He is chairman of Republic Polytechnic, a member of the governing board of the Lee Kuan Yew School of Public Policy, and a member of British engine-maker Rolls Royce's international advisory board.