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.'