Category: Reuters

Deutsche Bank’s U.S. operations deemed ‘troubled’ by the Federal Reserve last year, says report

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The United States Federal Reserve last year designated Deutsche Bank AG’s  U.S. operations to be in “troubled condition”, The Wall Street Journal reported on Thursday, citing people familiar with the matter.

The Fed‘s assessment has not previously been made public, it said, sending shares in the German lender down 7.2 percent to 9.16 euros, their lowest level in more than a year and a half.

The “troubled condition” status is one of the lowest designations employed by the Fed, The WSJ said.

The report comes a month after Deutsche Bank’s new Chief Executive Christian Sewing announced plans to cut back bond and equities trading, where it has been unable to compete with U.S. powerhouses such as Goldman Sachs  and JP Morgan.

Deutsche Bank’s attempts to break into the U.S. markets, which are seen as an essential plank for delivering a global investment banking platform, proved to be costly as it ended up paying out billions of dollars to settle regulatory breaches, prompting speculation at one point of a bailout by Berlin.

The WSJ said that the Fed downgrade of Deutsche Bank’s U.S. operations caused the U.S. Federal Deposit Insurance Corporation (FDIC) to put Deutsche Bank Trust Company Americas on its list of “Problem Banks”.

The U.S. Federal Reserve declined to comment on the report. The FDIC was not immediately available for comment.

NO CONCERNS

Deutsche Bank declined to comment on the WSJ report and on its relations with the Fed, but said it was working to remedy weaknesses in its U.S. business identified by regulators, which it said did not affects its ability to serve clients.

The three U.S. subsidiaries mentioned by the WSJ report – DB USA Corp, Deutsche Bank Trust Corporation, andDeutsche Bank Trust Company Americas – account for less than 10 percent of the overall balance sheet of DeutscheBank Group, it said in a statement.

Despite potential weaknesses in parts of its U.S. operations, the parent Deutsche Bank AG remains well capitalised and has adequate liquidity reserves, it said.

“There are no concerns with regard to the financial stability of Deutsche Bank AG,” it said.

Thomas Hallett, banking analyst at Keefe, Bruyette & Woods, said while Deutsche Bank has in the meantime started to cut costs and shift capital away from the United States, the news indicated the pressure the group was under from U.S. regulators.

“The bank has failed to sufficiently restructure the business to operate in a low interest rate and regulatory constrained environment,” he said.

Deutsche Bank said the recently announced strategic shift was not the result of the regulatory actions but part of a programme to increase the profitability of the firm.

“We are fully committed to our Corporate & Investment Bank, Wealth Management and Asset Management businesses in the U.S.,” it added.

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Who is Kim Yong Chol? The man who turned from bodyguard in to North Korea’s envoy to the US

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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When Kim Yong Chol lands in New York this week, he will become the most senior North Korean envoy to hold talks with American officials on U.S. soil in 18 years.

The former spy chief is a trusted adviser to North Korean leader Kim Jong Un, playing a pivotal role in preparations for an historic summit between Kim and U.S. President Donald Trump.

In a sign of his importance, Trump announced Kim Yong Chol’s New York trip on Twitter on Tuesday.

The White House said he would meet U.S. Secretary of State Mike Pompeo later this week, the most high-level contact between the two countries in the United States since Jo Myong Rok, a marshal, met President Bill Clinton in 2000.

DIPLOMATIC HEAVYWEIGHT

Kim Yong Chol is a four-star general, vice chairman of the ruling Workers’ Party’s Central Committee, and director of the United Front Department, which is responsible for inter-Korean relations.

Such positions, and his omnipresence before and during inter-Korean summits in April and on Saturday, make him one of the most powerful people in North Korea, South Korean officials say.

He has played a central role in the recent thaw in relations between the North and South Korea, as well as the United States.

Sent as Kim Jong Un’s envoy to the Winter Olympics in South Korea in February, Kim Yong Chol told South Korean President Moon Jae-in Pyongyang was open to talks with Washington, the first indication North Korea was changing course after months of trading threats and insults with the United States.

He and Kim Jong Un’s sister, Kim Yo Jong, were the only two officials to join the North Korean leader at the two inter-Korean summits.

He also coordinated Kim Jong Un’s two meetings with Pompeo in Pyongyang.

SPY UNDER SANCTIONS

Kim Yong Chol was previously chief of the Reconnaissance General Bureau, a top North Korean military intelligence agency, and has spent nearly 30 years as a senior member of the intelligence community.

The United States and South Korea blacklisted him for supporting the North’s nuclear and missile programmes in 2010 and 2016, respectively. A visit to the United States would indicate a waiver was granted.

He was accused by South Korea of masterminding deadly attacks on a South Korean navy ship and an island in 2010. He was also linked by U.S. intelligence to a devastating cyber attack on Sony Pictures in 2014.

North Korea denied any involvement in either incident.

Kim Yong Chol “stormed out of the room” during military talks in 2014 when the South demanded an apology for the 2010 attacks, according to South Korean officials.

“He is a tough negotiator and an expert on inter-Korean talks, but it is true that he had been a symbol of hawks rather than harmony and reconciliation until this year,” said Moon Sang-gyun, a former South Korean defence official.

BODYGUARD TO KIM’S FATHER

Kim Yong Chol served in the military police in the demilitarized zone on the border of the two Koreas. He was also a bodyguard to Kim Jong Il, the former leader and late father of Kim Jong Un, according to North Korea Leadership Watch, an affiliate of the 38 North think tank.

He has been closely linked to Kim Jong Un’s succession and has been seen flanking the leader on several public visits.

Kim Yong Chol is known to be difficult to work with, sarcastic and not sufficiently deferential to his superiors, Leadership Watch said.

He has also suffered tough times. South Korea‘s intelligence agency said in 2015 Kim Yong Chol was demoted to a three-star general after dozing off during a meeting.

In 2016, Seoul’s unification ministry said he was briefly sent to a re-education camp for his “overbearing” manner and abuse of power.

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Gold prices fall after hopes of US- North Korea summit re-emerge

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Gold prices fell on Monday on revived hopes of a U.S.-North Korea summit, while a strong dollar also weighed on the market.

Spot gold was down 0.3 percent at $1,297.71 per ounce at 0243 GMT, while U.S. gold futures for June delivery fell 0.5 percent to $1,297.10 per ounce.

“It looks like there is some chance of a meeting between the U.S. and North Korea leaders, that would lower the geopolitical risks and lessen the appeal of gold,” said John Sharma, an economist with National Australia Bank, adding that a strong dollar was also pressuring prices.

The dollar index, which measures the greenback against a basket of six major currencies, stood at 93.996, not far from 94.248 hit on Friday, its highest since Nov. 14.

Donald Trump said on Sunday that a U.S. team had arrived in North Korea to prepare for a proposed summit between him and Kim Jong Un.

“Risk sentiment has opened in a much friendly place this morning as a relief rally has ensued with the Trump-Kim summit back on, while the EU is in the midst of a relief rally after Paolo Savona was not endorsed for finance minister in Italy,” said Stephen Innes, APAC trading head at OANDA.

Efforts to form a coalition government in Italy collapsed on Sunday after its president rejected a eurosceptic pick for the key economy ministry, triggering a possible constitutional crisis and opening the prospect of fresh elections.

Meanwhile, holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.42 percent to 848.50 tonnes on Friday.

Speculators trimmed their net long position in COMEX gold by 3,800 contracts to 27,527 contracts in the week to May 22, U.S. Commodity Futures Trading Commission (CFTC) data showed on Friday. This was the smallest position since July 2017.

In other precious metals, silver was steady at $16.47 per ounce.

Platinum gained 0.4 percent to $900.10 per ounce, while palladium eased 0.1 percent to $978.97.

Trading volumes are expected to be low as the New York and London markets are closed on Monday for public holidays.

(Reporting by Swati Verma in Bengaluru; Editing by Joseph Radford and Subhranshu Sahu)

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

India’s cotton exports for 2017-18 could see 30% growth

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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India’s 2017/18 cotton exports are likely to jump nearly 30 percent from the year before to a four-year high of 7.5 million bales, as climbing global prices and a weaker rupee boost overseas demand, the head of an industry body told Reuters.

Increased supply from India could drag on a rally in international prices for the commodity and would likely compete with shipments to Asia from exporters like the United States, Brazil and Australia.

“We can end the season with exports of 7.5 million bales,” said Atul Ganatra, president of the Cotton Association of India (CAI), adding that higher international prices would drive up shipments.

The country has exported 6.3 million bales so far in the marketing year that started on Oct. 1 , he added. Each bale contains 170 kg of cotton.

India shipped 5.82 million bales of cotton overseas last marketing year, according to data compiled by the state-run textile commissioner’s office.

ICE cotton futures hit four-year highs earlier this week on buying from Chinese hedge funds, amid expectations of an increase in exports from the United States after trade war fears with China receded.

The Indian rupee has fallen more than 6 percent in 2018, making Indian cotton cheaper for overseas buyers, said Nayan Mirani, partner at leading cotton exporter Khimji Visram & Sons.

“There is export demand but supply of good quality cotton is limited as the season is coming to an end,” he said.

Pakistan, Bangladesh, China and Vietnam are the main buyers of Indian fibre.

Indian cotton is being offered around 84 to 86 cents per lb on a cost and freight basis (C&F) to buyers in Bangladesh and Vietnam, compared to over 92 cents from the United Sates and Brazil, said a Mumbai-based dealer with a global trading firm. He declined to be identified as he was not authorised to speak with media.

Meanwhile, the country’s cotton imports could drop to 1.2 million bales in 2017/18 from 3 million bales the year before, said Ganatra at CAI.

The South Asian country usually imports long staple cotton from the United States and Egypt.

And a pick-up in local consumption amid higher exports is likely to erode India’s cotton stockpile, Mirani said.

India’s cotton consumption is likely to rise 5.3 percent in 2017/18 from the year before to 32.4 million bales, CAI estimates.

The country could end the 2017/18 season with closing stocks of less than 2 million tonnes, the lowest in decades, Ganatra estimates.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Prime Minister Modi to inaugurate hydro project in Kashmir, Pakistan protests

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Prime Minister Narendra Modi will inaugurate on Saturday a hydroelectric power plant in the state of Jammu and Kashmir, prompting protest from neighbour Pakistan that says the project on a river flowing into Pakistan will disrupt water supplies.

The 330 megawatt Kishanganga hydropower station, work on which started in 2009, is one of the projects that India has fast-tracked in the volatile state under Modi amid frosty ties between the nuclear-armed countries.

Pakistan has opposed some of these projects, saying they violate a World Bank-mediated treaty on the sharing of the Indus river and its tributaries upon which 80 percent of its irrigated agriculture depends.

“Pakistan is seriously concerned about the inauguration (of the Kishanganga plant),” its foreign ministry said in a statement on Friday. “Pakistan believes that the inauguration of the project without the resolution of the dispute is tantamount to violation of the Indus Waters Treaty (IWT).”

The Kishanganga project was delayed for several years as Pakistan dragged India to the International Court of Arbitration, which ruled in India’s favour in 2013.

India has said the hydropower projects underway in Jammu and Kashmir are “run-of-the-river” schemes that use the river’s flow and elevation to generate electricity rather than large reservoirs, and do not contravene the treaty.

A day before Modi’s trip to the northern state, at least nine people were killed on both sides of the border due to firing by each other’s security forces, officials said.

The two countries have fought three wars, two over Kashmir that they rule in part but claim in full.

India accuses Pakistan of promoting militancy in Kashmir, a charge that Islamabad denies.

Modi’s nationalist party has formed a government in Jammu and Kashmir for the first time, and the federal interior ministry announced on Wednesday it would suspend all operations against militants in the region during the holy Muslim month of Ramadan.

More than 130 people have been killed this year in militant violence in the Kashmir valley.

Modi, who is on a day-long visit to the state, will also flag off the construction of the 14 kilometre-long Zojila tunnel to provide all-weather connectivity between Srinagar, Kargil and Leh cities.

The government said it would be the longest road tunnel in India and Asia’s longest bidirectional tunnel, to be constructed at a cost of $1 billion.

($1 = 67.9850 Indian rupees)

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow