Banking
China’s Central Bank Leads Effort to Regulate Internet Finance
BEIJING — China’s technology giants are marching onto the turf of the country’s state-controlled banks, soaking up tens of billions of dollars’ worth of investor money.
Now, Chinese regulators are taking notice.
China’s central bank is leading a government effort to stem potential risk from a new generation of popular online Chinese investment products, according to people with direct knowledge of the matter. Officials are looking to develop regulations aimed squarely at products offered by an affiliate of e-commerce giant Alibaba Group Holding Ltd. as well as by rivals Tencent Holdings Ltd. TCEHY -0.12% and Baidu Inc. BIDU +1.92%
The products offer higher yields than bank deposits and are easy to access with smartphones and other gadgets. But some Chinese officials worry that investors often don’t know where their money is being placed and are vulnerable to personal information theft. The worries come amid broader concerns about potential disruptions in China’s vast but opaque shadow banking system.
Officials stressed that they hope the Internet companies could still play a role in making China’s creaky financial system more competitive, improving the flow of lending to small businesses and encouraging greater competition from China’s stodgy state-run banks. “The goal is not to crack down on the sector, but to foster its healthy development,” said an official at the People’s Bank of China, China’s central bank.
Still, how tightly the government regulates tech firms’ financial offerings could indicate Beijing’s willingness to relax its decades-long hold in China’s banking system.
“If Internet finance products cause [financial] problems, no doubt the banking regulator and the PBOC will step in,” said He Fan, a senior economist at the Chinese Academy of Social Sciences. “If the products are successful, the banking regulator and the PBOC will step in in the name of fair play. They will be pushed by the commercial banks.”
The amounts are small compared with China’s massive 46 trillion yuan ($7.59 trillion) in bank deposits but growing rapidly. Yu’E Bao, or “leftover treasure,” a money market fund-like product offered by Alibaba online payment affiliate Alipay, was launched last summer but had more than 49 million customers with more than $40 billion in investments as of mid-January, according to the firm. According to investment research firm Morningstar Inc., the fund’s $30.6 billion as of the end of December made it the world’s fourth-largest money-market fund.
Currently Yu’E Bao offers rates of about 6%, compared with the current maximum of 3.3% banks can offer on deposits under Chinese regulations. Alipay says the money is invested in debt, currencies, deposits and other liquid assets. Tencent and Baidu now offer their own Yu’E Bao-like investments.
This week Alipay moved to offer online its first wealth-management product, a popular type of investment in China similar to bank deposits but with higher yields. On Friday it is set to roll a one-year, principal-guaranteed product with an advertised annualized return of 7%. Wealth-management products are typically a staple of banks, which compete with higher returns to win investor money. Alipay said the product would invest in bank deposits, the property sector, equities and other instruments.
Alipay processes payments for Alibaba’s Taobao and Tmall online shopping services, so it is already familiar to China’s legions of online shoppers.
The PBOC—working with China’s banking, securities and insurance regulators—is trying to put in place this year measures that would protect consumer information from being stolen or misused, ensure adequate risk disclosure over the Internet-based investment products, and prohibit illegal fundraising activities, said the people knowledgeable about the talks.
They also said Chinese officials are responding to the recent collapses among a separate group of small Internet-based lending firms. Those firms, known as peer-to-peer lenders, link individuals looking for better returns on their funds with borrowers starved for cash.
Big Chinese banks, including Industrial & Commercial Bank of China Ltd. and Bank of China Ltd., are moving to counterattack by offering money-market funds or slightly raising rates on cash deposits. ICBC and Bank of China declined to comment. Deposit rates in China are set by the government, with limited competition allowed, and banks often pay interest rates near or below the rate of inflation—whetting the appetite of depositors for higher yields.
Fostering Internet finance could help change the politics on one of the central bank’s major priorities: liberalizing interest rates. For decades, China’s largest banks have opposed liberalizing deposit rates because that would increase their costs. But the pressure from Internet financing could turn the banks into proponents of liberalization, say advisers to China’s central bank, because that would give the banks a way to compete for funds.
The PBOC has been trying to move China to a system where interest rates are set more by the market, figuring that would force financial institutions to make lending decisions based on potential payoff. That could direct more lending to smaller, newer firms, rather than to the banks’ largest customers, namely big state-owned companies.
So far, the tech firms have been targeting a demographic underserved by those large state-run banks: small businesses and the average consumer. In the past two years, Alibaba has been extending loans to the hundreds of thousands of merchants on its e-commerce websites based on the company’s records of the performance of those merchants. The company said it had a loan book of about $2 billion as of the end of last year. Less than 2% of those loans were nonperforming as of July, it said.
“Creative disruptions to the traditional banking sector will gain, not fade, in the coming year,” predicted Steve Wang, head of China research at Reorient Financial Markets Ltd., a Hong Kong-based investment bank.
– WALLSTREET JOURNAL
Banking
Millions of customers still stranded worldwide 24 hours after GT Bank online operations suffered attacks
By Yemie ADEOYE
GT Bank, one of Nigeria’s leading banks, with operations across Africa and the United kingdom, and with an asset base of about US$3.11 trillion is under a cyber attack which has left millions of its customers across the world stranded in the last 24 hours.
The bank which was renowned for its seamless online operations at inception has suffered dwindling online efficiency in recent years and this current attack didn’t come as a surprise to many of its numerous customers. However, it is becoming worrisome that over 24 hours after its online operations went down, the bank has not been able to arrest the situation and restore its online services.
Stranded GT Bank customers outside the banks premises
Several customers of the bank took to their X (formerly known as twitter) handles to express their frustrations at the bank, as several of the customers in the diaspora are unable to access their accounts and carry on with their transactions. A customer , Jeff55 who lamented on his X handle about the development, stated that it is a thing of shock that a bank of this size couldn’t afford to have the necessary tools and experts to ensure a full protection of its online operations in this age and time.
Another customer Dimma stated that while Cybersecurity training may seem tedious, the recent #GTBank hack is a stark reminder that everyone is just a click away from a devastating attack.
Several media organisations had reported that hackers have stolen GT Bank website, and intercepted customers Data in massive phishing operation.
At the time of filing this report, Biztellers.com.ng checks on the banks website shows that it is still down and unaccessible, and neither GT Bank media and communications unit nor any of its agencies or surrogates have commented officially on the development.
Says output surge buoyed by reforms he announced in May 2024 to address gaps in PIA
President Bola Ahmed Tinubu on Sunday declared a resurgence in the oil & gas industry, commending the increased crude production to 1.6 million barrels per day.
The president, who said this in a national broadcast, maintained that the resurgence was buoyed by the reforms he announced in May 2024 to address the gaps in the Petroleum Industry Act (PIA).
Nigeria’s crude oil output got a boost to 1.61 million barrels per day in July 2024 through the president’s directive and the industry leadership provided by the Nigerian National Petroleum Company Limited (NNPCL).
Acknowledging what he called a resurgence of the once-declining oil and gas industry in his Sunday-morning broadcast to the nation, President Tinubu said that oil investors are coming back to Nigeria.
He said; “Our once-declining oil and gas industry is experiencing a resurgence on the back of the reforms I announced in May 2024 to address the gaps in the Petroleum Industry Act. Last month, we increased our oil production to 1.61 million barrels per day, and our gas assets are receiving the attention they deserve. Investors are coming back, and we have already seen two Foreign Direct Investments signed of over half a billion dollars since then.
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“Fellow Nigerians, we are a country blessed with both oil and gas resources, but we met a country that had been dependent solely on oil-based petrol, neglecting its gas resources to power the economy.
We were also using our hard-earned foreign exchange to pay for and subsidise its use. To address this, we immediately launched our Compressed Natural Gas Initiative (CNG) to power our transportation economy and bring costs down.
This will save over two trillion Naira a month, being used to import PMS and AGO and free up our resources for more investment in healthcare and education.
“To this end, we will be distributing a million kits of extremely low or no cost to commercial vehicles that transport people and goods and who currently consume 80% of the imported PMS and AGO.
“We have started the distribution of conversion kits and the setting up of conversion centres across the country in conjunction with the private sector. We believe that this CNG initiative will reduce transportation costs by approximately 60 per cent and help to curb inflation.”
Plans are in top gear for the 11th Annual General Meeting (AGM) of the FBN Holdings Plc.
The management made this disclosure in a notice it filed with the Nigerian Exchange Limited (NGX) on Thursday, where it averred that it has not been served with any court order against the proposed AGM.
According to notice, which was signed by the acting Company Secretary, Adewale Arogundade, FBN Holding said, “The attention of FBN Holdings Plc (the Company) has been drawn to recent media reports purporting that the Company has received a Court Order stopping it from holding the Annual General Meeting (AGM) scheduled for August 15, 2023.
“We confirm that this assertion is a false narrative as the Company has, as at the date hereof, not been served with any court order to stop the forthcoming AGM.
“Suffice to mention that the AGM is a statutory meeting of Shareholders that must be held in accordance with the law, further to which the Company will notify the regulators and the public as appropriate if there is any lawful order to restrain the Company from conducting same.
“We hereby assure our esteemed Shareholders that the AGM shall hold on August 15, 2023, as planned and we look forward to their attendance and active participation at the meeting.”
However, court orders published in national dailies showed that the Federal High Court in Lagos had issued an order against the financial institution, barring it from holding its 11th AGM.
The order was entered pursuant to a petition by Olusegun Onagoruwa, in suit No: FHC/L/CP/1271/2022. It was addressed to the bank and some other bank officials.
It read, “Take notice that unless you obey the directives in the judicial order contained in the order made on July 15, 2022, by the Federal High Court, Lagos, by refraining from proceeding with the 11th Annual General Meeting of FBN Holdings Limited proposed for August 15, 2023, from seeking approval to issue or raise share capital in any manner whatsoever, from appointing or confirming the appointment of new directors, or in any other manner taking any step towards implementing, actualising enforcing resolution of the 10th Annual General Meeting of FBN Holdings Plc held on June 20, 2022, or in any other manner overreaching, disobeying or undermining the said order of a court, you will be guilty of contempt of court and you will be liable to be committed to prison and to there imprisoned.”
Biztellers brought you a report that a segment of shareholders had staged a protest at the headquarters of the bank on Monday, calling for the AGM to be held, as well as soliciting regulatory interventions.
It is expected that at the AGM, FHN Holdings is poised to breathe life into plans to seek shareholders’ approval to raise N150bn fresh capital via a rights issue and elect new directors including billionaire, Femi Otedola and Samson Ariyibi among other resolutions.
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