1 Episode results for "Monti Mohammed"

Goldman's Malaysian woes deepen, StanChart plans a share buyback and Bob Diamond explains his investment strategy

FT Banking Weekly

11:39 min | 2 years ago

Goldman's Malaysian woes deepen, StanChart plans a share buyback and Bob Diamond explains his investment strategy

"Welcome to banking weekly from the financial times with me Patrick Jenkins. Joining me in the studio today is David Crowe, our banking editor and down the line from Malaysia we have Stefania Palmer scientist Asia correspondent pulsa from New York. We have Laura Newnan US banking editor this week. We'll be discussing the latest ructions at Goldman Sachs as its Malaysian scandal. Deepens look at Standard Chartered as embarks on a buyback of shares. And finally an interview with Bob diamond, the former head of Barclays who is now investing on his own account through business. Atlas merchant capital, I o to Goldman Sachs and Stefania joins us from Columba. You Burke, a really interesting story on Tuesday morning that the premier-in-waiting and Ebrahim has gone pretty aggressively after Goldman in this long running saga about the one MD. And the agree just payments that were allegedly paid to Goldman Sachs for issuing them. Tell us what happened exactly essentially Anwar Ibrahim who should that been after current prime minister Monti Mohammed about a couple of years, essentially told me set Goldman should absolutely return significantly more than the six hundred million dollars at the Bank was paid for arranging three bone cells of for one MD the Malaysian state investment fund that is obviously now at the heart of one of the biggest financial scandals in history. And the main reasons thoughts on we're gave me or ops first of all the fees which to about ten to eleven percents. He found up to the exorbitant and indefensible, and then you also argued that this entire one of Dubya fear of which took Goldman is a part of is essentially a cost to the image of Malaysia. It's a cost to investments coming into the country, but also burden shouldered by the current government, which ousted not cheap Razaaq, the founder of one MD back in mate, we have to remember that the current coalition is also tackling quite an easy fiscal position. They've had to revise the twenty teen fiscal deficits from two point eight percent to three point seven percent in the latest budget, and they also face up to ten and a half billion dollars. In Dutch repayments actually linked to one MD. Where's this going from here? Do you think? I mean, clearly it's getting noisy all the time. Those various other actions, pending feels if on the ground in Malaysia younger is sent me mainting towards Goldman rather than dissipating the hope. Absolutely. I think they are hoping to target Goldman at the moment because it's obviously a case that is in full public view. It also comes on the back of the league est. Accusations coming from the department of Justice dots, essentially have said ops almost half of the six and a half billion dollars worth of one him to be the were arranged by Goldman where misappropriated the deal Jay has also accused two former bunkers of engaging in bribes toward Malaysian officials in order for the Bank to secure business from one to be. So there's definitely a sense here in Poland poor the top government officials are really just taking advantage into riding the wave of very strong momentum against Goldman, or at least putting very strong spotlight on how the Bank has been involved in all of this affair will. Let's get a perspective now from the other side of the world, Laura. You just heard from Stephania that. The Malaysian authorities are certainly ramping up pressure on Goldman is the same thing happening in New York as well. I think certainly the Bank is coming depression me, they continue to negotiate. With the deal Jay to see while sanctions of finding the firm Glenn to face as a result of this whole scandal. I think it seems reasonably likely will save these some sanctions a lot the control diesel internal work. They will probably look need some kind of a fine. The content of the fine is very much known of this have suggested that the financial penalty to go cooking basing that Goldman house to make up the entire of the to them or so that he's on a candidate for that with taking the one NTV raising mills paint this hundred million fees, which Scott that will get you to figure end she win to two point three billion of the very big number. That's Toby Specter's enough this point we don't know what kind of fine reconcilation the firm will face if any they made their goals other implications the firm, we don't we have a field with us. What we haven't said he's in the last few weeks ago voice has become under pressure. Because of this investors are not worrying vice the fact the global is going to. Business certainly parts of these Asia. Investors are worried about the financial penalty office on that basically taking would in three billion from Gomez coffers getting to some combination of do JV fines than have having button to the Malaysian, by way of compensation will it's clearly going to be a story that runs for some time on by sides of the world, please keep us abreast of it. Thanks. Let's move onto a second topic. David you broken interesting story a few days ago about Standard Chartered looking at significant share buyback Sunday chose of course, the emerging markets focused Bank, which storage has been very focused on growth now looking at buying back. How much it's you you arresting we know the number, and there's a reason for that. Which is the Standard Chartered itself in negotiations with the DOJ about the size of fine. It must pay to settle historic abusive. Abusive sanctions. So they are very nervous about putting a number on it for fear that the J would just say, oh, you have that kind of money sitting around to you. We'll take that. Thank you, very much analysts think that it could be about a billion pounds. The Bank has significantly more capital than that. Even after accounting for the size of the fine. They will have to pay the DOJ, but this is a big strategic departure Standard Chartered. And so a buyback of billion pounds would would be pretty significant. Yeah. And I think some shell certainly will be applauding it. They love the idea of having the kind of windfall, but others who may be invested in thunder as a growth machine, which obviously has been for decades tapped into the will my think hang on. What does this signal? Does it really mean that stunned sheltered has no opportunities that it can find to grow in these fast growth? Markets. Right. And when I started hearing about this. I went back through all the history of Santa to try and find a last time the Bank had done a buyback. Now the backs preference shares in two thousand and two what we consider traditional buyback off to that. It's actually impossible to find the story we say at least twenty years, but that is simply because the institutional knowledge runs out Standard Chartered after twenty years, and nobody really knows when they've ever done one is sort of a sign of the fact that this Bank has always been a growth story capital has been better used to sort of pet against writing new business than handing it back to shoulders and some people think this could be in putting the white flag up. Now when you talk to people who have been working on this plan, they say, well, we don't giving everything back. This is a disciplined approach will get back some and we'll keep some to put towards my business. Well, we'll see if they strike that balance on a rewarded in the stock market accordingly. Thanks, david. Leslie, let's go now to an interview with Bob diamond. Of course is the former Barclays boss who now runs atlas merchant capital an investment fund which last week completed the purchase of a twenty percent stake. In equities has Kepler's Chevra will I caught up with diamond recently at an F T conference. And I started by asking him what the rationale was really behind these kinds of investments and where he saw value in the financial services sector. The only sector of the economy Europe any way, you look at it. We're not higher than they were in two thousand eight in most sectors. Multiple. It's been interesting. We city opportunities to invest in capital intensive businesses below the level of. Broker-dealers insurance companies and banks to be tremendous though, were quite active in. In that regard. I went onto diamond if this was all about regulatory arbitrage and taking business from the big systemically important banks that now just for them become punitively expensive in capital terms. Regular arbitraging pejorative way. I would say, no, never joy. But if you say, no better housed in other words, if it's legacy. Yeah. So there's no new business being visit wise to be holding that risk in a regulated insurance company or is better outside of this. It doesn't need to be regulated not doing. So the point is. Yes, absolutely. We see this really in Europe, we've invested in banking platforms in Greece in Italy, which some people go really, but if you can find platforms without legacy non-performing loans without legacy technology and without legacy talent. If you think of that where you can really have the best and the brightest talent, you can bring in new technology for straight through processing with clients and customers, and if you can go if you can be lending SME's corporates without trying to manage portfolio SME's. It's a tremendously profitable opportunity in Europe. But when we look at Europe, we're looking at most of the big banks. That are so saddled with legacy technology, and therefore costs also non-performing loans, the stomach banks in Greece's example, have sixty three percent non-performing loans of ten years. Well, that's it for this week left for me to do is to thank David here in the studio Estefania in Columba, Laura in New York and also thanks to diamond for talking to us. If you're not ready a subscriber to the FTA do take a look at our latest subscription offer at dot com slash offer. Remember, you can keep up to date with all of the latest banking stories at F T dot com slash banking. Banking weekly was produced by multi doublet until next week. Goodbye.

Bank Goldman Standard Chartered Goldman Sachs David Crowe Malaysia Goldman Laura Newnan Bob diamond New York Patrick Jenkins Europe DOJ Stefania Palmer Barclays Anwar Ibrahim Jay editor Burke