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China’s Evergrande chairman seeks to reassure investors

China Evergrande’s chairman said that they will make it a top priority to help wealth investors to redeem their products. This is as the investors await a key deadline for a dollar-bond coupon payment. Hui Ka Yan said that the company was striving to ensure quality delivery of properties. He insisted on the importance to resume construction on developments where building had been halted.

Evergrande was founded in 1996. It is now facing a mounting pressure to quell anger among homebuyers and retail investors who have sunk their money into the group’s properties. Their shares, which have plunged around 85% this year, jumped as much as 32% in resumed trade. This marks their biggest single-day percentage rise since 2009. This bounce was mainly as a reaction to the news that an Evergrande unit had resolved a coupon payment with creditors. The chairman’s comments were clearly aimed at stabilizing markets. But there seems to be not much information for bond holders, as well as there is no clear plan as yet but they expect the debt to be restructured at some point.

Global investors have been on tenterhooks. Chinese Estates Holding who is the second-biggest shareholder of Evergrande, said that they had sold $32 million worth of its Evergrande stake and planned to completely exit the holding. The global markets were relieved when the People’s Bank of China’s injected 90 billion yuan into the banking system. Evergrande ran into trouble over the past few months as Beijing tightened regulations in its property sector. Paul Christopher, head of global market strategy at Wells Fargo Investment Institute stated that the company could restructure its debts. And then, the investors in the company’s financial instruments likely would suffer some losses.

A group of Evergrande bondholders had selected investment bank Moelis & Co and law firm Kirkland & Ellis as advisers on a potential restructuring of a tranche of bonds. U.S. Federal Reserve Chair Jerome Powell said that Evergrande’s problems seem particular to China and not as a parallel with the U.S. corporate sector, as per his view. After the Fed’s policy meeting, Powell told that in terms of the implications for them, there’s not a lot of direct United States exposure. The big Chinese banks are not tremendously exposed.


LexisNexis risk solutions study reveals sharp rise of financial crime compliance costs

Decision makers inside banks, investment firms, asset managers and insurance firms identify the drivers impacting financial crime compliance. LexisNexis® Risk Solutions revealed that the results of its annual True Cost of Financial Crime Compliance Study for the U.S. and Canada. The total projected cost of financial crime compliance for the region is approximately $49.9 billion. The survey illustrates the sharp increase in financial crime compliance costs.

The study projects the average annual cost of financial crime compliance for U.S. financial institutions with $10 billion. Pandemic Continues to Spur Growth. The pandemic continues to negatively impact compliance operations. Sixty eight percent of U.S. respondents report longer times required to complete due diligence. Fifty five percent of U.S. respondents report reduced productivity compared.

More U.S. financial institutions now rank real estate and hospitality as top money laundering risk segments. Crime involving digital payments, trade-based money laundering and money mule schemes are on the rise. Digital currency is a growing problem for Canadian firms. Crimes involving digital payments have the greatest impact on compliance costs. Cryptocurrency crimes have the greatest impact on compliance costs for Canadian firms. The survey results demonstrate that financial institutions are battling a broader set of issues.

Survey respondents indicate that a lack of current and extensive data tops the list of Know Your Customer (KYC). Leslie Bailey, vice president of financial crime compliance strategy for LexisNexis Risk Solutions stated that the study shows clear linkages between the pandemic, digital crime and increasing regulations. Hence, financial institutions need to prepare for expanded compliance obligations and risks from emerging financial crime. Bailey added that digital transformation is a game-changer for financial crime compliance operations.

This will require a sophisticated approach that incorporates insight into digital behaviors. This study surveyed 145 decision-makers in the U.S. and Canada. Responses were collected in June 2019, August 2020 and June 2021. Organizations such as banks, investment firms, asset management firms and insurance firms. The total annual cost of compliance across firms was calculated using survey data. The spend amount was generated by multiplying the average percent allocated to financial crime costs.

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COP26 delegates agree on need to deliver on $100 BLN climate finance pledge

Delegates heading to the COP26 U.N. climate summit in Glasgow. These delegates agreed that they must deliver on the $100 billion per year pledge. COP26 president Alok Sharma said that, it is to help most vulnerable nations for tackling the climate change.

After many days of meetings at the pre-COP26 climate event, which happened in Italy, Sharma said that there was a consensus to do more. Which is to keep the 1.5 degrees Celsius target within reach, adding more needed to be done collectively in terms of national climate plans.

The COP26 conference in Glasgow aims to secure more ambitious climate action. This is from nearly 200 countries, those all that have signed the 2015 Paris Agreement for limiting the global warming, well below 2.0 degrees Celsius. And to 1.5 degrees, above pre-industrial levels.

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City’s exposure to Evergrande is very minimal-Hong Kong finance Chief

Hong Kong’s exposure to debt-laden developer China Evergrande Group is very minimal at 0.05%. This is of banking assets, South China Morning Post reported, citing the city’s finance minister. Financial Secretary Paul Chan told the newspaper that it is very minimal and won’t cause them any systemic risks. He added that he had arrived at the conclusion after a recent audit of the local banking sector’s exposure to the company.

Chan also said that the Hong Kong’s stock market was inevitably subject to some volatility. This is amidst a recent mainland crackdown on some industries. But still he believed any setback would be temporary. With liabilities of $305 billion, Evergrande has sparked concerns its cash crunch could spread through China’s financial system. This may reverberate globally and that is a worry that has eased with the Chinese central bank’s vow, to protect homebuyers’ interests. Evergrande has missed two bond interest payments. Bondholders have said this and its offshore debt, amounting to about $20 billion, trades at distressed levels.

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