Standard Chartered probed in U.S. for Indonesia 'bribes'

Standard Chartered acknowledged Tuesday it was being investigated by the U.S. Department of Justice over claims that an Indonesian subsidiary had paid bribes to secure contracts.

The London-based, Asia-focused bank said in a statement that it had referred the matter to the "appropriate authorities" and launched its own review.

The Wall Street Journal newspaper said that an internal audit at Indonesian energy company Maxpower Group found evidence of possible bribery and US prosecutors were examining whether Standard Chartered was culpable for not stopping it.

"Standard Chartered takes very seriously allegations of impropriety in any of our private equity investments," the bank told AFP in a statement when asked about the report.

"We proactively referred this matter to the appropriate authorities and have conducted our own review.

"When we receive allegations of improper behaviour in an investee company, we pursue those allegations vigorously and act appropriately, including sharing information and cooperating fully with government authorities and addressing any issues of internal conduct and accountability."

The Department of Justice did not comment when contacted by AFP.

The Wall Street Journal said the Maxpower internal audit found that more than $750,000 in cash advances needed to be examined as possible bribes, while lawyers who reviewed the audit found indications that employees made inappropriate payments to Indonesian government officials between 2012 and 2015.

Standard Chartered began investing in Maxpower in 2012 and is the majority shareholder.

There was no immediate comment from Maxpower.

But a source close to the case told AFP the US authorities were indeed examining whether Standard Chartered, via its representatives on the Maxpower board, was aware of alleged bribes to win government contracts.

The investigation would also look at why the bank's alert procedures for spotting such matters had not been triggered.

But the probe will focus on whether Standard Chartered has violated the terms of its 2012 deferred prosecution agreements with the Department of Justice.

Standard Chartered paid $667 million in 2012 to settle charges it violated US sanctions by handling thousands of money transactions involving Iran, Myanmar, Libya and Sudan.

In August 2014, the bank was hit by US regulators with a $300 million fine and restrictions on its dollar-clearing business for failing to detect possible money-laundering.

source: www.abs-cbnnews.com

Expert reveals biggest concerns of world's top CEOs

Marios Maratheftis, the Global Chief Economist of Standard Chartered Bank, is the person sought by top-level CEOs for advice on big industrial leaps.

Nowadays, he says, three of the biggest concerns for them are the Fed’s interest rate hikes, the deceleration of the Chinese economy, and the big drop of oil prices.

The 25 basis points that the U.S. Federal Reserve has hiked may seem a small movement, but Maratheftis notes that after nine and a half years of cutting rates, the first hike in December 2015 indicates that there's more to come.

“It signals a change in the regime and in the world order. And it has been significant. We’ve seen a lot of currencies, especially in emerging markets, moving quite rapidly in anticipation of a hike,” he tells Cathy Yang on The Boss.

He also says the U.S. economy will probably slow down this year and could see a shallow, short-term recession in 2017.

He predicts, however, that after one more hike this month, the Fed’s next move will be a cut. While this decline is always a bad thing, the interest cuts mean more capital flow into emerging markets.

The second biggest economy in the world has also seen a slowdown the previous year. The Chinese economy, however, is slowing down by design, with their policy-makers opting to shift their economic model from manufacturing and construction to a more sustainable model of services and construction.

Maratheftis says it is inevitable that there will be a slowdown, but the market’s reaction to it is much ado about nothing.

“The Chinese have the tools to maintain growth of up to 7%. They can cut interest rates, they can cut their reserve requirement ratio if they want to, and they can use fiscal policy and spend more in their economy. They’ve implemented these measures already.”

Problems in the petroleum industry, Maratheftis maintains, is rooted on the huge drop in prices over very little surplus in oil. With only a million barrels in excess per day, the supply can deplete quickly.

Standard Chartered estimates the price of oil to rise from $30 per barrel to $60-$70 per barrel should this continue. He adds that “the question isn’t the demand, because people are still buying; but are there going to be enough sellers or suppliers to satisfy that demand? Our answer is no.”

Considering all of the aforementioned, his recommendation to the captains of industry for years 2016 and 2017 is to "retreat, regroup, rebound."

Although financial markets are in the retreat phase, the fundamentals indicate, according to Maratheftis, that the current situation is not as bad as the markets have expected.

source: www.abs-cbnnews.com

Standard Chartered to cut 4,000 retail bank jobs

HONG KONG - Standard Chartered will axe around 4,000 jobs worldwide at its retail banking division, according to an internal memo reviewed by Reuters on Thursday, in a push to achieve the cost cuts that chief executive Peter Sands hopes will return the bank to past glory.

The memo said 2000 of the cuts have already been made or announced, with 2000 more to come.

The memo also confirmed a Reuters report on Thursday that the bank is exiting its global equities business, seen as non-core and underperforming.

The cost cuts in the retail banking segment will deliver cost savings of around $200 million in 2015, half of the total savings identified by Sands as essential to turn the bank around.

The exit from the equities business will generate $100 million of savings next year, the memo also said.

source: www.abs-cbnnews.com