Besides, the dollar has gained strength against other currencies in the overseas market.
The rupee resumed lower at 57.06 per dollar as against the last closing level of 57.02 per dollar at the Interbank Foreign Exchange (Forex) market and dropped further to a low of 57.17 before quoting at 57.14 at 1100hrs.
Persistent dollar demand from banks and importers on the back of higher dollar in the overseas market mainly affected the rupee value against the dollar, a forex dealer.
In global market, the euro fell to its lowest against the dollar in more than two weeks yesterday.
Meanwhile, the BSE 30-scrip index, Sensex, was up 80 points or 0.47 per cent.
Money's retreat home threatens globalisation - Reuters UK
LONDON |
LONDON (Reuters) - The European banking shock and its aftermath have sent finance and investment running for home, a process that could hurt world growth, globalisation and developing economies for years to come.
"There has been massive deleveraging with some home bias, not just in our region but in general. We see a clear and present danger," said Piroska Nagy, director for country strategy at the European Bank for Reconstruction and Development, which monitors private sector financing across the former communist countries of central and eastern Europe.
Policymakers explained the surge in globalisation and world growth through the 1990s and 2000s and the parallel rise in accounting imbalances between major economies partly by banks and investors lifting their sights beyond their home countries.
Most famously, former Federal Reserve chief Alan Greenspan regularly trumpeted the steep decline in home country investing to defend bloated U.S. current account deficits that had chilled many economists in the years leading up to the credit crisis.
This decline in home bias was catalysed by the erosion of cross-border capital controls worldwide but also by events like the collapse of the Berlin Wall in eastern Europe, the launch of the euro across western Europe and the advance of the internet.
For at least some of these reasons, European banks were in the vanguard of cross border finance -- most obviously within the new single currency area but also in the emerging economies of central and eastern Europe as well as Asia and Latin America.
Last year European banks had 10 times the amount of loans outstanding in emerging markets than U.S. banks and lend as much to developing countries as they do to the United States.
But, reeling from years of property, credit and sovereign debt slumps, a deepening euro crisis and stiff new international rules on bank balance sheets designed to prevent future taxpayer rescues, European banks are rapidly retrenching.
TEMPORARY EBB?
Global lending by banks fell by a whopping $799 billion in the fourth quarter of last year, or 2.5 percent, the biggest fall since the drop seen after the collapse of U.S. investment bank Lehman Brothers three years ago, Bank for International Settlements data showed earlier this month.
The drop was led by deleveraging euro zone banks, who cut loans by $584 billion, or 4.7 percent and the lion's share of the pullback was from French, German and Spanish banks who all cut lending by about 5 percent.
The process intensified within the euro zone itself in the first quarter of this year and European Central Bank data shows euro zone banks' cross-border holdings of the bloc's government and corporate bonds fell to their lowest in a decade.
The IMF forecast in April that European banks could further shrink collective balance sheets by as much $2.6 trillion by the end of 2013 - almost 7 percent of total assets - and about a quarter of this could come by a reduction of lending on top of the sale of securities and overseas assets.
The question for many economists is whether this retreat in global finance is merely a temporary ebb that knocks the froth off the worst credit excess, a peculiarity related to the existential euro crisis or a longer-term decline in international finance that could stall globalisation.
Philip Lane, a professor at Trinity College Dublin who specialises in globalisation, said the initial post credit crisis debate was like distinguishing between "good cholesterol and bad cholesterol", separating productive cross-border flows from more dangerous sorts of lending to offshore bank vehicles and conduits that supercharged and destabilised the credit boom.
But he said it was now important the authorities addressed the return to more domestic financing, and initiatives such as a European banking union could be critical to that.
"The incredible boom in cross-border finance in 2002-07 period was just not sustainable and we had that sudden stop in 2008-09. But in the reconstruction of these flows, international institutions need to support them or a return to more national financing is possible," Lane said.
EMERGING MARKETS IN FIRING LINE
Together with the International Monetary Fund, the EBRD has, since 2008, been trying to slow the retreat of euro banks from the emerging European economies to the east, where euro zone banks have lent heavily and also have many subsidiaries.
"If we do not have this home-host country coordination, host countries are starting to have their own bias, they are starting to ring fence," EBRD's Nagy said. "There is a very strong desire for the host countries to lock in capital and liquidity."
The hope among the IMF and others is that the 20 percent drop in euro bank lending to emerging markets in the year after the Lehman collapse would not be as severe this time around as less-affected regional and domestic banks in Asia or Latin America step into the breach.
But they also acknowledge that, unlike the 2008-2009 shock, much of the retreat looks structural this time around due to regulation and could have a longer-lasting impact.
Lars Thunell, head of the World Bank's International Finance Corporation, which helps finance private sector development in emerging economies, says the European bank pullback from trade financing in particular was still a big worry and new bank rules such as Basel III were a key problem.
"There is a credit crunch or something very close to that going on. Basel III is aggravating the problem by asking for even more capital, disproportionately increasing the capital ratios for trade finance," he said, adding that trade finance should be classified as a low risk activity.
"Total bank deleveraging was $500 billion in the first quarter of this year. These are big numbers. We are trying desperately to get Asian bank syndication, to get them involved. It's proving difficult."
Yet some question whether the passing of high watermark in global finance was necessarily all bad and questioned whether the Greenspan faith in more efficient allocation of world resources as a result of more global finance was misplaced.
BIS Economic Advisor Steve Cecchetti told the central bank forum's annual meeting at the weekend that financial globalisation was only great up to a point.
"For most people, the term globalisation means cross-border trade in real goods and services -something that we would all agree has brought the greatest benefits to a large number of people."
"But this real side of globalisation relies on financial intermediaries to fund the trading of all this stuff across borders. And the recent crisis showed how problems both on and off the intermediaries' balance sheets can have very large, very real and very bad implications. Many of us have started to ask if finance has a dark side."
(Additional reporting by Carolyn Cohn, Andrew Callus, Steve Slater, Kirsten Donovan; Graphics by Scott Barber/Vincent Flasseur; editing by Philippa Fletcher)
MONEY MARKETS-ECB borrowing rise suggests Greek banks return - Reuters UK
* Three-month ECB borrowing rises
* Suggests Greek banks extending funding maturity
By Kirsten Donovan
LONDON, June 27 (Reuters) - An increase in borrowing of three-month funds from the European Central Bank on Thursday points to recapitalised Greek banks shifting back to the ECB for their longer-term funding after being forced to rely on domestic emergency liquidity facilities.
Banks borrowed 26.3 billion euros in three-month funds , versus a maturing amount of 18.1 billion euros . That number is not the whole story however, as the maturing operation had originally totalled 25 billion euros but 7 billion euros was repaid in May.
Analysts believe this repayment was by Greek banks no longer eligible to take part in ECB tenders.
Weekly borrowing also rose at the ECB's regular Tuesday tender, with 180 billion euros taken up compared with 167 billion the previous week and up fourfold in the last month.
"The increase...alongside the recent drop in emergency lending fits with the notion Greek banks who were shut out of the ECB are now returning," said Rabobank rate strategist Richard McGuire.
"But that does nothing to change the fact that financial institutions in Greece and indeed the wider periphery face ongoing significant restraints, and their sole lifeline is the public sector."
Wednesday's three-month tender is the first that some Greek banks have been able to take part in since being recapitalised at the end of May.
The early repayment of more than 30 billion euros of longer-term ECB financing earlier this year - including from the recent three-year funding operations - suggested some banks were no longer eligible to borrow from the central bank.
At the same time there was a sharp rise in the use of Emergency Liquidity Assistance (ELA) which analysts said pointed to Greek banks having to change their source of funding after being left undercapitalised in the wake of the country's debt swap.
Since the Greek banks have been recapitalised and are again eligible for ECB funding, take-up at the one-week operations has soared.
For example, in the last week of May, banks borrowed 51 billion euros in seven-day funds, which more than doubled to 119 billion in the first week of June, according to ECB data.
At the same time, ELA borrowing has decreased by over 60 billion euros during June.
The take-up at Wednesday's three-month operation suggests the Greek banks are now replenishing their longer-term ECB borrowing.
However, steady usage of the central bank's deposit facility indicates that overall banks are not hoarding more cash.
"Over the past few weeks we've seen a continual rise in the weekly tender and consistent with this are indications of ELA facility usage declining," said RBS rate strategist Simon Peck.
"As excess reserves remain fairly stable, it's just a change of funding source rather than an increasing need for cash."
The RBS-NatWest computer shambles: All you need to know in the Money Mail survival guide - Daily Mail
By Ruth Lythe
|
From missing money to black marks on your credit score, even house moves that fell through – here’s what you need to know about the RBS-NatWest IT meltdown...
Out of pocket: Margaret Jones, pictured with her grandson Caleb, is waiting for tens of thousands of pounds from the sale of her late mother-in-law's property
WHEN A BANK WENT INTO MELTDOWN
The crisis that hit customers at Royal Bank of Scotland was sparked by a technical glitch last Tuesday.
As the bank was installing a software update the computer system froze, stopping payments in and out of accounts on Wednesday. The problem happened again on Thursday.
The bank announced the software was fixed at 3pm on Saturday, but by that time a backlog of 100 million transactions had built up.
Experts blame the problems on chronic staff shortages in the bank’s IT department.
RBS has laid off thousands of technology workers’ jobs in the past four years. Many of these positions have been replaced with roles based in India or the Far East.
A typical IT expert in those areas with more than five years’ experience would be typically paid just 9,000 a year. By contrast, someone doing a similar role in the UK would be paid up to 50,000.
Although it is understood the software fault developed in RBS’s IT headquarters in Edinburgh, computer experts say staff monitoring the equipment are based in Hyderabad in India.
WHY LIGHTNING COULD STRIKE TWICE
In theory there is nothing preventing a repeat at any of Britain’s biggest banks.
Computer experts say most computer systems are similar to those at RBS. Britain’s other major banks have also shed thousands of IT jobs over the past five years and sent them to India.
Bryan Glick, editor of technology magazine Computer Weekly, says: ‘It’s impossible to say this won’t happen somewhere else. The banks all use similar methods to process people’s transactions.
‘However, the problems at RBS are certainly a wake-up call to the other banks to make sure they have contingency plans in place around what they might consider to be routine operations.’
Many banks also have outdated computer systems. Experts warn there could be more problems in the pipeline when banks eventually pull the plug on these old computers.
In the meantime you can minimise the impact of a future meltdown by splitting your cash between different banks.
DON’T LET RBS LEAVE YOU OUT OF POCKET
You need to visit your branch. There are three numbers to call: 08457 77 77 66; 0161 931 9959; or 0800 656 9639 — the first two are charging numbers.
There will also be compensation forms on the RBS website, where you can apply to get money back.
If you have been affected, it’s also vital to keep a record of the costs you’ve racked up and any payments you’ve missed. This includes interest on overdrafts, phone charges and any other penalties. Keep a record of any rent or mortgage payments which should have gone through.
In case the bank decides to offer compensation, you should also keep a note of any inconvenience or distress you’ve suffered.
If your problem isn’t resolved with a branch visit, lodge a formal complaint with RBS. If the bank fails to solve your problem with eight weeks, take your complaint to the Financial Ombudsman Service.
MISSING MONEY MAY BE GONE FOR DAYS
RBS has promised to restore all missing payments in the next few days. But that doesn’t mean you shouldn’t carefully monitor your account, RBS said it would give cash payments of up to 300 to those who could make it to the bank and prove it was their payday.
This money will be deducted from your account. But if it takes you into your overdraft, interest will be waived for a month.
NatWest, RBS or Mint creditcard holders can also spend 100 over their limit and postpone paying the interest until next month.
The bank says it will also automatically refund any charges or credit card penalties.
If any charges slip through the net, contact the bank immediately.
If your employer still hasn’t paid you because they bank with RBS, ask them for help.
Readers overseas have been left struggling to get help.
Nicky Cockburn, from Cockermouth, Cumbria, says she is furious with RBS after her daughter Casey, 21, ran out of money while on holiday in Santorini, Greece.
Miss Cockburn had headed off on holiday with friends to celebrate graduating with a degree in criminology from Liverpool John Moores University. She had saved wages from a holiday job waitressing, but the chaos at NatWest meant she was unable to access her cash.
Mrs Cockburn says: ‘I am furious with RBS. This should have been a holiday to remember for Casey as reward for years of study. Instead, she has had to make do with the little bits of cash she took with her.’
STAY ALERT FOR ANY UNFAIR CHARGES
Millions of customers of other High Street banks face charges because of the RBS chaos.
They may have been expecting a payment from someone with an RBS account, regular transfer money between two of their own, or have a credit card with a non-RBS bank.
But when the money didn’t materialise and cash was taken from their account at the other bank, they may have gone overdrawn.
Those with credit cards may get late payment penalties, and even have special offers — such as interest-free periods — cancelled.
RBS has pledged to review more complex cases as quickly as possible. If you have run up charges with a company and not a bank — for example estate agents’ fees from a failed house sale — you should contact the bank immediately.
You should also contact your own bank, which will cover charges from late payments.
Take evidence that a payment was delayed by RBS.
YOUR DISTRESS MAY GET YOU NOTHING
You definitely won’t be left out of pocket — but RBS has not yet said whether it will pay compensation for distress and inconvenience.
It also won’t confirm whether its millions of customers who pay up to 155 a year for a packaged account will have fees waived.
Gary Greenwood, of analyst Shore Capital, reckons if just one in every 100 RBS customers claimed 500 compensation, RBS would be left with an 85 million bill.
Add on the overtime bill for staff and the cost comes to 100 million.
FIGHT BLACK MARKS ON YOUR CREDIT RECORD
Your credit file is a record of all the payments you make with different organisations. It tells companies and other banks whether you are a reliable payer. Banks use this information when approving loans, credit cards and mortgages.
Money Mail would like RBS to pay for, or at the very least, refund the cost of a credit check for its customers who fear they may have gone into the red. RBS says it is working with the major credit agencies to make sure customers who miss vital payments or go into the red because of crisis are not penalised.
A basic check with one of the leading agencies Experian, Equifax and Callcredit will cost you 2, but RBS says it will refund this fee.
Only a company that puts a black mark against your name can remove it, so you will need to go to them with proof that NatWest failed to make your payment. If they refuse to remove a late payment from your record, you can add an explanation to the report, called a Notice of Correction.
FOR CUSTOMERS WHO VOWED TO LEAVE
Many RBS customers have sworn to leave the bank after the latest chaos. Despite what most people believe, this is a relatively easy process.
Today, banks and building societies have strict rules to make switching easy. All you need to do is find an account you like, fill in an application and transfer form at that bank and provide some proof of identity.
Your new bank is responsible for checking which payments you want moved across and sets them up. It will also pay for any charges incurred during the move.
Your balance will be transferred and your old account closed within ten days. Many banks offer cash incentives to switch — but you should only pick an account which suits your needs. Ask yourself these questions:
- Do you need local branches?
- Have you got an overdraft?
- Is customer service vital to you?
- Do you like perks?
For customer service, First Direct wins hands down, closely followed by Nationwide.
First Direct doesn’t suit everyone — it is run only online, though you can visit HSBC branches — and you must pay in 1,500 a month to avoid a 10 monthly charge.
However, Money Mail very rarely receives a complaint about the bank — and its call centres and online service are excellent.
Nationwide has the advantage of having around 800 branches. Its Flexaccount will give you free European travel insurance if you pay in 750 a month.
For perks, the new Santander 123 account is the best.
It charges 2 per month but pays cashback of 1 per cent on water and council tax bills, 2 per cent on gas and electricity bills and 3 per cent on communications bills (landline, broadband, TV etc).
It then also pays interest on balances of 1 per cent on balances above 1,000, 2 per cent above 2,000 and 3 per cent above 3,000.
The Cooperative Bank has one of the lowest overdraft charges at 15.90 per cent. However, this is to increase to 18.9 per cent from August.
VITAL CONTACT NUMBERS
RBS: Visit any branch if you need to get emergency cash.
Or call 0161 931 9959, 08457 77 77 66 or 0800 656 9639. Or you can go online at rbs.co.uk, natwest.com, ulsterbank.co.uk
The Financial Ombudsman: Call 0800 023 4567 or go to financial-ombudsman. org.uk
Callcredit: 0845 366 0071 or go to callcredit.co.uk
Experian: 0844 481 8000 or go to experian.co.uk
Equifax: 0844 335 0550 or go to equifax.co.uk
I’VE LOST TENS OF THOUSANDS OF POUNDS
Margaret Jones from Ealing, West London, is waiting for tens of thousands of pounds from the sale of her late mother-in-law’s property.
The cash failed to arrive in their solicitor’s RBS account because of the chaos at the bank. Five days later, it still hasn’t appeared.
Despite regular checks and repeated efforts to go online and find out what had happened, she was unable to discover where the money had gone in the system. Mrs Jones, 65, says: ‘When the solicitor telephoned to warn us the money had failed to arrive, we were extremely nervous — it’s a lot of money to go missing.’
The delay threatened to scupper the sale of the property, as the money vanished on the day before the deal was due for completion. It was the last straw after a painful, long drawn-out property sale.
‘Without our solicitor’s help, we’d have been totally in the dark.’
MY FLAT MOVE IS ON HOLD
Sara Branch’s house move was almost wrecked by the IT failure.
A property chain she was tied in to threatened to collapse because one buyer was an RBS customer, whose funds vanished.
Going nowhere: Sara Branch's move to a new property almost collapsed thanks to the IT blunder
Ms Branch, 49, is selling her house to move in to a rented flat and may lose her 2,000 deposit if the chain collapses.
The charity worker from Peterborough says: ‘RBS will refund its customers, but what about the people suffering indirectly?’
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Its very telling that after repeated requests made to the Natwest help line for unequivocal guarantees over reimbursement for collateral costs incurred, they will no longer discuss general points on a public forum such as their IdeasBank web site. Late this morning Natwest sent me an personal email asking me to call one of their premium rate lines to discuss matters further rather than answer my general questions in public. No doubt they'll claim its a private matter although my questions were of a public nature, so what are they trying to hide unless its limiting compensation exposure at others expense. Perhaps they don't want anything in writing that could bite them in the rear later on, go figure but do you trust any bank these days ?
- mike, alicante, 27/6/2012 11:42
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