Banks told to display 'your money is protected' notices - Daily Telegraph
The notices will also have to state whether banking licences are shared with another brand, as in this case customers who have money in both are still subject to an overall compensation limit of £85,000.
For example, Halifax and Bank of Scotland – which also own BM Savings – count as one group, whereas NatWest and Royal Bank of Scotland are treated as separate entities by the FSCS.
Andrew Bailey, the FSA's director of UK banks and building societies, said: "Customers need to feel confident about their money and to do this they need to know what the compensation limits are and which scheme would provide cover in the event of a bank, building society or credit union failure.
"Too many people assume that because their branch is located on a local high street in the UK, they are covered by the FSCS. This is not true for UK branches of EEA [European Economic Area ] banks where the home country's deposit guarantee scheme applies."
He added: "Banks, building societies and credit unions will have to display these compensation stickers or posters in the branch window along with a sticker at the cashier's window or desk and a further poster in a prominent position inside."
Similar stickers must also be displayed on websites. The rules will take effect on August 31.
Is it time for another Shariah ETF? - ETF News And Commentary - NASDAQ
The concept of Islamic finance, banking and economics has gained tremendous popularity of late. It is appreciated and implemented not only in countries where Islam is the dominant religion, but also in non-Islamic nations. The basic premise of Islamic finance, banking and economics is based on 'hygienic' ways of doing business as prescribed by the Islamic Law or Shariah .
What is a Shariah Compliant financial product?
A Shariah compliant financial product (mutual funds, ETFs etc) is an investment avenue that is fully compliant with the principles of Shariah Law.
Let's have a look at some of the concepts and guidelines of this law. Islamic law basically divides actions into three broad categories. These are farz (compulsory), halal (permissible) and haram (prohibited). Shariah rules of doing business, therefore concentrates only on farz and halal but strictly excludes haram . Companies whose business involves interest on debt, gambling, alcohol, pork-related products, pornography or armaments are prohibited. Since interest on debt ( Riba ) is prohibited, it automatically implies that a conventional commercial bank fails to qualify as permissible business under the Shariah .
So does it mean that Islamic banks and financial institutions are charitable bodies that lend money without any expectation of income?
The answer is that a NO . Profit sharing and fee-based financing is what drives the income streams of these banks. Fee-based financing can be the result of safe deposits, fund transfer, trade financing, property sales and purchases or handling investments. Profit sharing involves partnerships (in businesses funded by the banks) and sharing of profits and losses. This means that in order to comply, the creation of debt is not facilitated through direct lending and borrowing, but through sale or lease of a real asset which is expected to provide a regular cash flow stream for the bank.
Debt financing is indispensable for any company or economy. Even companies that qualify under Shariah and countries governed by the Shariah law, have to resort to debt financing. They do this by the issuance of special types of Islamic bonds. These are sukuks and ijara bonds. These bonds do not consider interest to be the focus of any transaction. However, sukuk and ijara bonds signify ownership of assets which are tied up to a lease contract between the borrower and lender. These bonds (similarly to conventional bonds) are highly flexible and can be traded in the secondary market. Shariah also prevents a person from selling what the individual does not own; therefore Shariah compliant financial institutions abstain from short selling financial securities.
The demand for Shariah- compliant financial products is not limited to a particular community or a group of countries but involves participation of investors all around the world. Investment managers and fund managers worldwide are constantly looking for Shariah- compliant stocks in order to include them in their portfolio.
Mutual funds and exchange traded funds are also fast gaining popularity in this niche segment of the financial world and have constantly witnessed an increase in their assets under management. A recent study by Ernst and Young ( Islamic Funds and Investment Report ) shows that Islamic funds all across the globe witnessed 7% growth in their AUM as of 2011.
A number of Shariah- compliant mutual funds and exchange traded funds are being launched all around the world. The world's leading stock market index provider Standard and Poor (S&P) has a wide range of Shariah investable and benchmark indexes to meet an array of investor needs. There are 15 Shariah- compliant Benchmark Indexes and 11 Tradeable Indexes , all of which bear testimony to the fact that Shariah- Compliant financial products have come of age.
The portfolio of Shariah indexes comprises only of stocks of those companies whose businesses are in alignment with that of the Shariah law. Therefore it is prudent to note that the portfolio of the Shariah index would significantly differ from that of the broader market index. Heavyweight sectors such as financials will be ruled out of the portfolio of the Shariah- compliant Index.
So does this mean that investments in Shariah -compliant financial products will act as a perfect hedge against investments in traditional financial products during economic downturn when the market turns south?
Unfortunately, the answer is no. The broad-based S&P 500 Index and the S&P 500 Shariah index shows a correlation of 0.99 for a period of three years. The graph below shows the relative movement of the two indexes.
The S&P 500 Shariah Index includes stocks of companies whose businesses are in alignment with that of the Shariah law as well as fulfilling the following criteria on a 36 month average basis: 1) A Debt/ Market Value of Equity ratio of < 0.33, 2) Accounts receivable/ Market Value of Equity ratio < 0.49 and 3) (Cash +Interest Bearing securities)/ Market Value of Equity ratio <0.33.
The Shariah compliant financial products are flexible instruments which are open to investments across all investor classes, irrespective of their religious beliefs. Therefore, an ETF approach is always a better alternative for a targeted bet on any market index. Unfortunately, domestic investors cannot boast of many choices in this segment as far as exchange traded funds are concerned.
We would like to discuss a particular fund targeting this space which ceases to exist as of today due to lack of popularity. JETS Dow Jones Islamic Market International Index ( JVS ) intended to match the before-expenses price and yield performance of the Dow Jones Islamic Market International Titans 100 Index . The product intended to provide investors with an option to play the Shariah growth story. it also provided an exposure to Shariah -compliant companies. The ETF debuted in the year 2009 and held 94 securities in all with 31.91% of its assets in the top 10 holdings.
According to Brint Frith, the president and founder of Javelin (The fund managers), they "found it difficult to reach target investors through the marketing channels typically used by ETFs". This clearly shows that the fund was targeted at a particular section of the community, rather than the public at large. It was probably the reason why the product failed.
The article does not intend to compare the ethical and the unethical. Neither does it intend to identify a better investment avenue. But it does aim to highlight Shariah- compliant investments as an asset, solely from a returns and coverage point of view without any geo-political comment. Nevertheless, given the growth and popularity of Shariah- compliant financial products, we can only infer that Shariah ETFs are to be looked out for.
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Spain Runs Out Of Money - Daily Telegraph Blogs
A Spanish protester burns a euro note
El Mundo reports that the country can no longer resist the bond markets as 10-year yields flirt with 6.5pc again, and the spread over Bunds – or `prima de riesgo' — hits a fresh record each day.
Premier Mariano Rajoy and his inner circle have allegedly accepted that Spain will have to call on Europe's EFSF bail-out fund to rescue the banking system, even though this means subjecting his country to foreign suzerainty.
Mr Rajoy denies the story, not surprisingly since it would be a devastating climb-down, and not all options are yet exhausted.
"There will not be any (outside) rescue for the Spanish banking system," he said.
Fine, so where is the €23.5bn for the Bankia rescue going to come from? The state's Fund for Orderly Bank Restructuring (FROB) is down to €5.3bn, and there are many other candidates for that soup kitchen.
Spain must somehow rustle up €20bn or more on the debt markets. This will push the budget deficit back into the danger zone, though Madrid will no doubt try to keep it off books – or seek backdoor funds from the ECB to cap borrowing costs. Nobody will be fooled.
Meanwhile, Bankia's shares crashed 30pc this morning. JP Morgan and Nomura expect a near total wipeout. Investors who bought the new shares at flotation last year may lose almost everything.
This all has a very Irish feel to me, without Irish speed and transparency. Spanish taxpayers are swallowing the losses of the banking elites, sparing creditors their haircuts.
Barclays Capital says Spain's housing crash is only half way through. Home prices will have to fall at least 20pc more to clear the 1m overhang of excess properties. If so, the banking costs for the Spanish state are going to be huge.
The Centre for European Policy Studies in Brussels puts likely write-offs at €270bn. We could see Spain's public debt surge into triple digits in short order.
As I wrote in my column this morning, the Spanish economy is spiralling into debt-deflation. Monetary and fiscal policy are both excruciatingly tight for a country in this condition. The plan to slash the budget deficit from 8.9pc to 5.3pc this year in the middle of an accelerating contraction borders on lunacy.
You cannot do this to a society where unemployment is already running at 24.4pc. Either Europe puts a stop to this very quickly by mobilising the ECB to take all risk of a Spanish (or Italian) sovereign default off the table – and this requires fiscal union to back it up – or it must expect Spanish patriots to take matters into their own hands and start to restore national self-control outside EMU.
Just to be clear to new readers, I am not "calling for" a German bail-out of Spain or any such thing. My view has always been that EMU is a dysfunctional and destructive misadventure – for reasons that have been well-rehearsed for 20 years on these pages.
My point is that if THEY want to save THEIR project and avoid a very nasty denouement, such drastic action is what THEY must do.
If Germany cannot accept the implications of this – and I entirely sympathise with German citizens who balk at these demands, since such an outcome alienates the tax and spending powers of the Bundestag to an EU body and means the evisceration of their democracy – then Germany must leave EMU. It is the least traumatic way to break up the currency bloc (though still traumatic, of course).
My criticism of Germany is the refusal to face up to either of these choices, clinging instead to a ruinous status quo.
The result of Europe's policy paralysis is more likely to be a disorderly break-up as Spain – and others – act desperately in their own national interest. Se salve quien pueda.
I fail to see how Spain gains anything durable from an EFSF loan package. The underlying crisis will grind on. Yes, the current account deficit has dropped from 10pc to 3.5pc of GDP, but chiefly by crushing internal demand and pushing the jobless toll to 5.6 million. The "unemployment adjusted current account equilibrium" — to coin a concept – is frankly frightening.
The FT's Wolfgang Munchau suggested otherwise last week, saying Spain's competitiveness gap has been exaggerated. I can see what he means since Spain's exports are growing even faster than German exports. But this is from a low base. It is not enough to plug the gap.
Spain is quite simply in the wrong currency. That is the root of the crisis. Loan packages merely drag out the agony.
A Spanish economist sent me an email over the weekend after the Bankia details came out saying:
"It looks like game over for the sovereign and the financial sector at the same time. Unless we get a Deus ex Machina, we'll be discussing much more seriously the benefits of a return to the peseta in no time."
It begins.
Money market fund assets fall to $2.569 trillion - Yahoo Finance
NEW YORK (AP) -- Total U.S. money market mutual fund assets fell by $5.35 billion to $2.563 trillion for the week that ended Wednesday, the Investment Company Institute said Thursday.
Assets of the nation's retail money market mutual funds rose $369 million to $889.88 billion, the Washington-based mutual fund trade group said. Assets of taxable money market funds in the retail category rose $390 million to $702.8 billion. Tax-exempt retail fund assets fell $17 million to $187.08 billion.
Meanwhile, assets of institutional money market funds fell $5.72 billion to $1.673 trillion. Among institutional funds, taxable money market fund assets fell $5.61 billion to $1.586 trillion; assets of tax-exempt funds fell $110 million to $86.95 billion.
The seven-day average yield on money market mutual funds was 0.03 percent in the week that ended Tuesday, unchanged from the previous week, said Money Fund Report, a service of iMoneyNet Inc. in Westborough, Mass.
The 30-day average yield was also unchanged from last week at 0.03 percent. The seven-day compounded yield was flat at 0.03 percent. The 30-day compounded yield was unchanged at 0.03 percent, Money Fund Report said.
The average maturity of portfolios held by money market mutual funds rose to 46 days from 45 days in the previous week.
The online service Bankrate.com said its survey of 100 leading commercial banks, savings and loan associations and savings banks in the nation's 10 largest markets showed the annual percentage yield available on money market accounts was unchanged from last week at 0.13 percent.
The North Palm Beach, Fla.-based unit of Bankrate Inc. said the annual percentage yield available on interest-bearing checking accounts was unchanged from the week before at 0.06 percent.
Bankrate.com said the annual percentage yield on six-month certificates of deposit was unchanged from the previous week at 0.22 percent. The yield on one-year CDs was also unchanged at 0.33 percent. It was flat at 0.53 percent on two-and-a-half-year CDs and steady at 1.13 percent on five-year CDs.
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