Lloyd Blankfein, the chairman and chief executive officer of Goldman Sachs Group Inc, said on Tuesday he had a "highly curable" form of cancer and would be able to work mostly as normal during treatment. The veteran Wall Street boss, who steered the U.S. investment bank through the financial crisis, told employees and shareholders he would undergo chemotherapy for lymphoma over the next several months in New York. The bank's shares finished down 1.98 percent at $179.72 a share on the New York Stock Exchange, underperforming a weaker wider market, as the announcement put Goldman's succession plans under the spotlight. While Blankfein, 61, is undergoing treatment, other senior bank officials, including his top deputy, Chief Operating Officer Gary Cohn, will assume some of his responsibilities in dealing with the public, a person familiar with the matter said. Cohn, who is seen as the most likely successor to Blankfein if he left his post in the near future, replaced his boss at the last minute at a public discussion in New York on Monday night. The company has a number of long-serving senior executives, including Vice Chairman Michael Sherwood, investment banking co-head David Solomon, Chief Financial Officer Harvey Schwartz and Chief Strategy Officer Stephen Scherr, who investors said offered stability. "The culture of the firm transcends one person," said Mike Donnelly, senior vice president and portfolio manager at CS McKee, which manages $10.5 billion in assets and owns Goldman shares. "Obviously, Blankfein has done a great job and embodies the culture, but in terms of this changing the investment thesis given the valuation, no, absolutely not." In a statement, Blankfein said he underwent tests after not feeling well over several weeks in late summer. He did not disclose the type of lymphoma, a cancer that affects the immune system, or how advanced it is. He received a final diagnosis on Monday around midday, and informed Goldman's board of directors around 4 p.m. EDT (2000 GMT), the source said. Chemotherapy TreatmentLymphoma is a cancer that begins in the lymphatic system, which is a part of the immune system that carries away waste and transports white-blood cells that attack disease. It can occur as Hodgkin lymphoma; 86 out of 100 people diagnosed with it live for five years or more. For non-Hodgkin lymphoma, 70 out of 100 people will survive for five years or more. Dr. Len Lichtenfeld, an oncologist who is deputy chief medical officer of the American Cancer Society, said chemotherapy is the main treatment for both Hodgkin and non-Hodgkin disease. Individuals in their 60s and 70s are more likely to have the more common and harder-to-treat non-Hodgkin variety of the blood cancer, which affects the body's infection-fighting white blood cells, he said. Depending on where enlarged lymph nodes are found, and their size, he said, doctors may use radiation as well as chemotherapy. There are no specific rules on how publicly listed companies inform investors about a senior executive's health. But investors expect to be informed. "You don't want day-to-day health bulletins, but you do want to know if the prognosis changes," said Chris Niemczewski, managing principal at Marshfield Associates in Washington, which has $2 billion under management and is a Goldman shareholder. "You want to know if it stops being a risk." Blankfein's disclosure comes a little more than a year after JPMorgan Chase & Co CEO Jamie Dimon said he had throat cancer. Dimon continued to lead the bank during treatment, which finished last autumn. Dimon wished his rival a fast recovery on Tuesday, and Blankfein told staff he was confident he would be cured. "There are many people who are dealing with cancer every day," Blankfein said. "I draw on their experiences as I begin my own. I have a lot of energy and I'm anxious to begin the treatment." Blankfein has led what is viewed as the most powerful U.S. investment bank since 2006, and bank executives say he has never hinted at when he might retire or his plans after Goldman. The New Yorker is credited with helping to keep the company afloat during the financial crisis with an early decision to rein in exposure to risky mortgage-backed securities and a successful appeal to Warren Buffett to invest in Goldman during the chaotic days after Lehman Brothers went bust. Goldman's role in the U.S. housing bubble and the billions of dollars paid out in bonuses to its top staffers have made the firm a magnet for popular anger about Wall Street. Rolling Stone magazine once referred to the firm as the "vampire squid" of finance. Blankfein, a former chain-smoking gold trader, has helped improve the bank's public image and aided its transition from a pure investment bank to one with a greater exposure to commercial lending. Blankfein's No. 2, Cohn, has followed a similar career path as his boss. Like Blankfein, Cohn got his start at commodities firm J. Aron & Co, which Goldman then acquired. He has been COO as long as Blankfein has been CEO and is six years younger. Blankfein's life is a classic rags-to-riches story. Born in the South Bronx and raised in a housing project in Brooklyn's East New York neighbourhood, he worked his way through Harvard College and Harvard Law School, helped by financial aid. (Reuters)
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Reserve Bank of India Deputy Governor S.S. Mundra called levels of debt in the domestic corporate sector "a major concern" on Wednesday, while admonishing banks to clean up their bad loans more quickly. Mundra added leverage levels had risen "very substantially in the last few years in the corporate world", calling it a concern that was also felt globally, at an event in Mumbai for chief financial officers. The RBI deputy governor also called on banks to move more quickly to recognise bad loans. "Our simple message is if there is a problem, to recognise it and address it quickly," he said. "Don't pretend and extend."
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Infrastructure finance firm IDFC on Saturday (19 September) said it has got regulatory approval to utilise Rs 2,500 crore non-distributable reserves for provisions against bad loans as part of exercise to clean its book before venturing into universal banking. The regulator has now granted the approval to utilise non-distributable Statutory Reserves up to Rs 2,500 crore for creation of specific provisions against stressed assets, IDFC said in a BSE filing. "These additional provisions are being created after a careful examination of the stressed assets portfolio and in accordance with our philosophy of prudent risk management and transparency," it said. These provisions are far in excess of the regulatory requirement and exceptional in nature as indicated in our investor call post our quarterly results for quarter ended June 30, it said. In an earlier filing, IDFC had said that it will make an additional provision in the second quarter of this fiscal against coal and gas power assets, as it transitions into a bank by the end of the period. IDFC said with these additional provisions, its net worth will reduce by approximately Rs 1,600 crore. It said that the volume of net restructured assets, non- performing assets (NPAs) and security receipts (SRs) as of June 30, 2015 was 8.4 per cent of its loan book. "Almost 80 per cent of our risks relate to coal and gas-based assets," it had said. In line with generally accepted accounting principles, these additional provisions will be charged to the Statement of Profit and Loss in the current quarter resulting in a significant one-time loss for the period, it said. However, this will not impact the distributable profits since an equivalent amount will be transferred from the non distributable statutory reserves, as approved by the regulator, it added.(PTI)
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Domestic fund houses are of the view that the US Fed’s status quo stance on rates is a positive indication for RBI to lower its lending rates. RBI, which has already reduced its key policy rate by 75 basis points so far in the current calendar year, will be reviewing its annual monetary policy on September 29. “The US Fed’s decision to delay raising rates is positive for interest rate here which we are expecting to come down. Our equities continue to be good long-term investments despite emerging market redemptions,” ICICI Prudential MF Managing Director and Chief Executive Nimesh Shah said on Friday (18 September). The central bank of the world’s largest economy kept interest rates (which are at near zero) unchanged last night citing worries about the global economy, financial market volatility and sluggish inflation at home, but left open the possibility of a modest policy tightening later this year. “The ultimate beneficiary of US Fed decision to not hike rates – risk assets – don’t seem to have embraced the Fed’s decision and we are noting mixed signals across emerging markets. The Fed confusion is probably too much for the market to take and this has only induced more future uncertainty,” Tata AMC chief Investment Officer Ritesh Jain said. “We would want to wait and see how gold and the dollar index behave in the next 2-3 days to get more clarity on the future course,” he said. “The language of the Fed has moved to a more accommodative stance given global uncertainty. The long-term expectation of unemployment rate in the US is around 5.1 per cent, at which level the US economy is deemed to have achieved full employment,” Quantum AMC Head-Fixed Income Murthy Nagarajan said.
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Raghu MohanThe Reserve Bank of India (RBI) has issued “in-principle” approval to ten applicants to set up small finance banks (SFBs) to bolster financial inclusion to cover the vast swathes of the unbanked. The idea is akin to the move to set up local area banks (LABs) in the mid-90s which was an unqualified flop. Will its new avatar work? In the current context where size is everything, it remains to be seen how these SFBs fare. While they are designed to be small, in just about every other aspect of regulation, they are to be seen as your regular bank. Again, operationally, it’s anybody’s guess as to what kind of cost advantage they can have – rentals (office and branches) will be on a par with any other bank; as for salaries, just what kind of talent can they attract if it not aligned with the market? Let us also not lose sight of the fact that some of the bigger state-run and private banks have now started to target (in an aggressive manner) the very same audience that the proposed SFBs aspire to cater to, albeit at the top of this pyramid. On paper, the idea is laudable. It was the Committee on Financial Sector Reforms (Chairman: Dr. Raghuram G. Rajan; 2009) which opined on the need to set them up; that the sufficient change (in the environment) warranted experimentation with well-governed deposit-taking SFBs. And to offset their higher risk from being geographically focussed, it was for higher capital, a strict prohibition on related party transactions, and lower allowable concentration norms. It was seconded by the report on `Banking Structure: The Way Forward’ (27th August 2013). Will It Fire?To flashback. In his “Dream Budget of 1997”, then finance minister P Chidambaram made a case for LABs to provide organised finance for rural India – not very different from SFBs. In August 1997, Mint Road allowed them entry -- Manipal LAB (Manipal; Karnataka); Priyadarshini LAB (Aurangabad, Maharashtra)) and Krishna Bhima Samruddhji LAB (in Karnataka and Andhra Pradesh). Later, an “in-principle” nod was given to five more -- Capital LAB (Nakodar, Punjab); Coastal LAB (Vijayawada, Andhra Pradesh); LAB of Kongunadu Ltd (Salem, Tamil Nadu); Central Gujarat LAB (Dabhoi, Gujarat); and Vinayak LAB (Sikar, Rajasthan). The last time we got a full report on the functioning of these banks was from `The Review Group on The Working of LAB Scheme’ (1st September 2002) under the chairmanship of G Ramachandran (Former Finance Secretary). It was critical; and its major findings were: that in their catchment areas, they had a limited footprint, and they were swamped by commercial banks. The Committee concluded that “we are strongly of the view that whether it is rural banking or any other segment of the financial sector, size, whether in terms of capital base or totality of operations as reflected in the balance sheets, is of critical importance. It is size which inspires and retains the confidence of depositors and borrowers alike. It is size of capital which enables a financial entity to cope with unexpected adverse trends in its business and overcome threats to its survival from any panic reaction on the part of its investors”.
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By Sumit Sharma Decision by the US Federal Reserve to leave its key interest rate unchanged may have just opened a window for the Reserve Bank of India (RBI) to bite the bullet and lower its repo rate on its September 29 monetary policy meeting, or even earlier. The RBI has favourable domestic economic parameters to help lower its repo rate. It has been, like other central banks across the world, watching out for guidance from the Fed meeting and its implication on global markets. Any early rate cut by RBI will be welcomed by industry and come very handy as finance minister tries to woo investors in Singapore and Prime Minister visits the US between September 23 and 28. Stock markets across Asia excluding Japan, rose following the Fed decision to hold its rates. The BSE Sensex gained almost 500 points to 26,460. The rupee gained 54 paise to 65.92 per dollar, its highest level in three weeks, and the 10-year government bonds rose, pushing down yield to 7.72 per cent. So, what did the Fed do and why. The Fed by a clear margin of 9-1 decided to hold its funds rate at between zero and 0.25 per cent. Consistent with statutory mandate, the Fed said it seeks to foster maximum employment and price stability. US inflation rate is expected to inch up to its 2 per cent target. "Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term,'' it said. The Fed also cited global concerns about fragile global growth rate, slowdown in China and volatility in financial markets. Central bankers from across the globe, including Governor Rajan, as also IMF and World Bank chiefs, had appealed to the US Fed to take cognizance of the impact of its actions on global economy. An increase in Fed rate would have narrowed interest rate differential between India and the US. and theoretically could have sucked out billions of dollars from all emerging markets. In fact, since the beginning of the year global funds have pulled out money from emerging markets including India fearing Fed rate increase. Fund managers now expect the decision to slow outflows from India though India is unlikely to begin attracting inflows. Yet, India is lucky to have one of the steadiest economic fundamentals including slowing consumer inflation, Asia's best performing currency, narrow current account deficit and fiscal deficit under control, as also an economic growth that may not be galloping away but is not tottering either as in other similar sized economies. Still, India's growth is slower than desired as the government completes almost one and half year of its tenure and many of promises and aims remain unfulfilled. Conditions look ripe for the RBI to do its bit to make cost of borrowing cheaper, and once again focus on growth since inflation is under control. The Fed is expected to revisit its decision either on October 27, 28 Federal Open Market Committee meeting or surely at its December FOMC meeting. ``In determining how long to maintain this target range, the Committee will assess progress--both realized and expected--toward its objectives of maximum employment and 2 percent inflation,'' the Fed said in its post-policy statement. ``When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 per cent.'' India can and should act quickly even though the uncertainty may probably have narrowed.
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By Noor Fathima WarsiaThe connected consumer matters for MasterCard. After all, any conventional definition of the different kinds of audiences changes, when they become active in an always-on world. And for MasterCard, this meant revisiting the strategy in which it spoke to its audiences. Raja Rajamannar, Worldwide Chief Marketing Officer, MasterCard explains this as the journey to creating priceless experiences from MasterCard's initial play of celebrating priceless moments.Technology changed everythingTo understand MasterCard's marketing evolution, it was important to understand the world of the connected consumer, according to Mr Rajamannar. He said, "Factors such as Moore's Law, growth of computing power and nanotechnology has transformed the way in which people are connecting with devices and with each other. From once the thought that the 60 yrs plus generation was slow in adopting to technology, today we are seeing that set of audiences embracing tablets, communicating through Skype and WhatsApp. The younger generation is not only second-screening while consuming media but the smartphone has essentially become a natural extension of their body. The connected consumer is truly always-on, and as a brand, that meant something for us."MasterCard looked at crafting an ecosystem where the brand could thrive in these changing dynamics. The company embarked on a new journey two years ago, where it upped its focus on the consumer, and in understanding consumer behaviour in the context of consumption. "In the past, the brand positioning was the best way to celebrate moments. One key finding for us at the time, which is now obvious in retrospective, was that experience matters. We wanted to transform MasterCard from a payment brand to a lifestyle brand," Mr Rajamannar observed.On The Path Of Enabling ExperiencesMasterCard's path of moving on from celebrating priceless moments to creating and enabling priceless experiences, also meant connecting people with newer, or as Mr Rajamannar puts it, priceless opportunities. A confluence of functions needed to come in play to achieve that. With marketing at the centre, MasterCard put technology, products, innovation and communication in the mix to build platforms that translate the brand into personal experiences.MasterCard chose four platforms to associate itself with at the end of the exercise that included Surprises, Cities, Causes and Specials. "If something did not fit in this, we ruthlessly cut it out," informed Mr Rajamannar implying the streamlining of talking points and marketing activities that MasterCard wanted to engage in.The old marketing advice of 'delighting and surprising' consumers became relevant for MasterCard. Citing the example of some of the experiences co-created with the likes of Justin Timberlake, MasterCard created quarter million surprises in the last 15 months around 112 countries. "Essentially, we were creating a surprise every day, and that comes with a massive creative and executional challenge. We worked with many new ideas to achieve this. Our new strategy has helped us in not only building a brand but in driving business growth," Mr Rajamannar summed up.
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Ahead of the bimonthly monetary policy review, RBI Deputy Governor Urjit Patel on Thursday (18 September) said sustained low inflation over medium- to long-term is necessary to bring down the cost of fund. “Sustained low inflation… at a low enough level is an important ingredient for making the cost apposite to that particular level of inflation and inflationary expectation. “It’s not inflation last week or last month but its medium- to long-term inflation,” he said. Inflation, which RBI takes into account while deciding the interest rate, has remained low for the past several months. While the wholesale price index (WPI) remained in negative territory for 10 months in a row, the retail inflation (CPI) eased to 3.66 per cent in August. RBI is scheduled to announce bimonthly monetary policy review on September 29. In the last policy review on August 4, RBI had kept its policy rates unchanged because of elevated inflation level. Besides, Patel added, fiscal deficit of both the central and state governments also play an important role in determining the cost of fund as the center and states combined together are the largest borrowers in world over. “The other is credible programme of fiscal rectitude by the government… both the central and state governments can help… and the reason is they are in direct competition with other long-term borrowers,” he said, adding the largest borrower across the world is the government. The deputy governor also said that higher cost of restructuring pushes the cost of fund and RBI is trying to address this issue. “The higher the cost of restructuring, the higher the cost of debt workout, the more it builds in the cost of capital from the side of the lender, and this is something we are in middle of addressing,” he said. In addition, he said a competitive, vibrant banking system is important for lowering cost of capital, and a lower taxation too is helpful. As part of efforts to deepen financial inclusion, RBI yesterday granted small finance bank licences to 10 entities. “We announced licences for small finance bank with focus on small borrowers. So, this addresses niche requirement that is there to be addressed for ‘Make In India’ for creating entrepreneurial numbers to create one million jobs per month,” he added. (PTI)
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India is considering raising foreign ownership in private banks to 100 percent, a business newspaper reported on Thursday, citing a senior government official. The measure to hike foreign ownership in private banks from the current 74 per cent is being discussed by the finance ministry, the department of industrial policy & promotion (DIPP) and the Reserve Bank of India, the newspaper said. One of the options being considered is allowing an additional 26 per cent increase through the approval route, the newspaper said. A response from the finance ministry is awaited, the newspaper reported the official as saying.
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ICICI Bank CEO Chanda Kochhar is among three Indians selected for this year's Asia Game Changer awards given by Asia Society to honour "true leaders making a positive contribution to the future of Asia." Indian-American actor Aasif Mandvi, 49, and designer Kiran Bir Sethi, 49, also made it to the list besides Kochhar, 53. Champion Boxer and Philanthropist from the Philippines Manny Pacquiao is the 2015 Asia Game Changer of the Year "for using his sport and his star power as forces for good," Asia Soceity, the leading global cultural organisation, announced. The honorees will be bestowed the honour at the Asia Game Changer Awards dinner and celebration at the UN in October. The New York-based organisation said Kochhar "not only made history" by becoming the first woman to head an Indian bank but she also transformed the entire Indian retail banking industry. "Under Kochhar's leadership, ICICI Bank has achieved great milestones year-after-year by expanding its businesses, leveraging technology to bring value to its urban and rural customers and partnering with the public and private sectors to create new opportunities," it said. By shattering the proverbial "glass ceiling," Kochhar has been an inspiration to many young women and has racked up numerous awards and accolades, it added. Mandvi has become a powerful spokesperson for Muslims and Asian-Americans. Mumbai-born Mandvi has "challenged stereotypes" and provided a voice for Muslim-Americans, changing the game in terms of how Asians are viewed on TV. In 2015, he co-wrote, produced and acted in the web series Halal in the Family for the popular comedy site Funny or Die, using the sitcom format to tackle Islamophobia. "Mandvi aspires not only to provide positive representation for Muslim America he also hopes to challenge non-Muslim audiences," Asia Society said. Interior designer Sethi founded The Riverside School in Ahmedabad in 2001, aiming to provide an alternative model which focuses on "quality of learning," "student well being," and "empathy in education," a game-changing move in India. In 2009, Sethi expanded on the principles practiced at Riverside to found the 'Design for Change' movement with the goal of getting children to drive change in their communities by unleashing what she calls their "I can superpower." The movement to encourage youth volunteerism, which has since spread to more than 300,000 children in 35 countries. The award addresses the lack of recognition for Asians who are transforming ideas into action and improving lives, said Asia Society President Josette Sheeran. The honorees are selected through a global survey of more than 1,000 thought leaders. The other seven honorees include 2014 Nobel Laureates in Physics and inventors of a new energy- efficient light source the blue LED Isamu Akasaki, Hiroshi Amano and Shuji Nakamura "for lighting our world in a groundbreaking and sustainable way." (PTI)
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