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HSBC Sells Insurer; EU Banking Problems; Return of the Rebel Regulator

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HSBC Sells Insurer: Well, we knew this was coming. HSBC has sold its entire stake in Chinese insurer Ping An to the Charoen Pokphand Group, a conglomerate backed by Thai billionaire Dhanin Chearavanont. (Interesting to note, as most papers do, the group is primarily known for its agribusiness, not financial services, empire, "particularly the production of livestock feed, chicken farming and rice trading.") The deal netted HSBC $9.4 billion, which means, over the long haul, the bank is "is making six times what it paid for" the insurer. The sale is part of HSBC's ongoing effort to shed assets, cut costs and streamline its business. According to Dealbook, the bank "has sold more than 40 noncore assets and has booked about $4 billion in gains on those sales this year alone" following chief executive Stuart Gulliver's takeover at the beginning of 2011. Following the deal, Gulliver said ''China remains a key market for the group.'' The bank has expressed interest in increasing its stake in China's Bank of Communications, though it will need regulatory approval to do so. Wall Street Journal, Financial Times

Wall Street and the Fiscal Cliff: According to the FT, President Obama will ask senior corporate executives "for their help to persuade Republicans on Capitol Hill to find a solution to avoid a debt ceiling crisis" at today's quarterly meeting of the Business Roundtable lobby group. The group's members include several big bank execs, including JPMorgan Chase CEO Jamie Dimon, Bank of America CEO Brian Moynihan and MasterCard CEO Ajay Banga (who actually chairs its Information and Technology committee), though it's unclear if they will be in attendance. The FT points out it will be interesting to see how senior executives respond to the call for action, given that many of them have "deeply disapproved" of the president's policies in the past. Permanently increasing the U.S.'s borrowing authority remains a key part of the negotiations over the fiscal cliff, a problem big banks execs have been outspoken about solving before. Meanwhile, the Washington Post reports fiscal cliff warnings "have yet to faze Wall Street," at least from a markets perspective. Per the paper, "the stock market has been little changed in the past three weeks, with few wild swings." The market's confidence is attributed to the belief that either federal negotiators are merely posturing, and, therefore, likely to reach a deal by the deadline or the notion that a short-term jump off the cliff won't do any lasting damage to the economy.

EU Problems: The Journal reports EU banks are moving to repay some of the $1.3 trillion in loans they collectively owe to the European Central Bank. This may sound like good news, since it signals healing, but the move has also "generated concerns that banks are moving prematurely and could be vulnerable if the euro-zone crisis intensifies again." Meanwhile, efforts to establish a single banking supervisor for the euro-zone reached an impasse yesterday when deadlocked finance ministers delayed making a decision on a new system. Talks are set to reconvene next week. According to the Times, finance ministers still don't agree on how many banks should be covered, how countries outside the currency can rebuff regulations they don't like and how to ensure the ECB keeps monetary policy and banking regulation policy separate. This FT article does a good job of breaking down the other challenges the EU faces as it tries to establish a single banking supervisor in the euro-zone.

Wall Street Journal

Rebel regulator Benjamin Lawsky has thrown a wrench into Ocwen Financial's plans to purchase subprime processors Homeward Residential Holdings and the mortgage-servicing unit of Residential Capital LLC by refusing to sign off on the deals. Lawsky is demanding Ocwen "bring on a monitor of his choice" to oversee its mortgage operations for two years and recommend changes in business practices. Sources familiar with the issue told the paper the delay is related to discoveries by Lawsky's office of "what it sees as evidence of practices it deemed abusive." Ocwen's lawyer says the firm has yet to receive this evidence and denies any wrongdoing.

Financial Times

JPMorgan has promoted Don McCree to global head of corporate banking and treasury services.

The Federal Reserve is "examining proposals to force the largest and most complex financial institutions to fund themselves with more long-term debt."

New York Times

This op-ed urges President Obama to replace former SEC head Mary Schapiro with "a successful market professional from Wall Street, preferably someone who, like Joseph Kennedy, is not concerned with offending interested constituencies (or with the 'career consequences' thereof)."

A federal appeals court has decided to let former Goldman Sachs director Rajat K. Gupta remain free on bail while he challenges his insider-trading conviction.

We missed this one yesterday: A new study has found that high-speed trading firms "are taking significant profits from traditional investors" making as much as $5.05 each time they go up against "small traders buying and selling one of the most widely used financial contracts."

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(Image: Bloomberg News)

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