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NEWS INTERNATIONAL U.S. hopes more quantitative easing will stimulate economy, boost jobs Fed to buy extra US$40 billion of securities a month The United States’ Federal Reserve Board plans to buy an extra US$40 billion in mortgage-backed securities each month to boost the economy. The board, known as the Fed, already buys about US$45 billion a month in long-term treasuries and is hoping a third round of quantitative easing will further stimulate the economy and help relieve unemployment, now at about 8 percent. Unlike the previous two instances of bond buying, where the Fed imposed a limit on the amount of bonds it would purchase, the board this time will continue to buy the securities until the job market shows significant improvement, Reuters reported. “We’re looking for ongoing, sustained improvement in the labour market,” Ben Bernanke, In a bid to boost its slowing economy, India’s government has announced reforms of the country’s retail and aviation sectors by opening them to foreign investors. India’s cabinet last month agreed to allow 51 percent foreign direct investment in multibrand retail stores. Wal-Mart of the United States, Tesco of the United Kingdom and Carrefour of France are expected to make investments. India’s individual states and territories will be given the 6 October 2012 mortgage rates, Eric Rosengren, the president of the Federal Reserve Bank of Boston said on 20 September, Reuters reported. “The actions taken by the [Fed] provide Ben Bernanke significant additional support to the the Fed chairman, said at a press economic recovery,” Rosengren conference last month. “There is said in a speech. not a specific number we have in Some governments opposed a mind [but what] we’ve seen in the new round of quantitative easing. last six months isn’t it,” he said. Guido Mantega, Brazil’s finance The Fed also announced that it minister, warned that the move would continue Operation Twist, would affect the rest of the world. which involves selling short-term Two years ago, the second bonds and using the proceeds to round of quantitative easing by buy longer-term bonds in order to the Fed pushed billions of dollars keep interest rates lower. abroad, leading to the apprecia- The decision is already having tion of many emerging-market a positive effect on wholesale currencies. AFP India opens retail, aviation to foreign investors final say on whether to allow multi-brand retail stores in their respective jurisdictions. So far, nine states, including Andhra Pradesh, Haryana, Maharashtra, Rajasthan and the National Capital Region around Delhi, have agreed to the new arrangement, according to The Times of India. The policy prohibits multibrand retailers with foreign direct investment from trading through e-commerce, preventing Amazon and others from entering India. “We’re glad about the progress that has been made in India, but there are conditions,” Lucy Neville-Rolfe, a director of Tesco, Britain’s biggest retailer, told the Economic Times. “We have to study the impact of the conditions.” India will also permit foreign airlines to buy minority stakes of up to 49 percent in Indian domestic carriers. However, analysts were sceptical that foreign airlines would rush to invest in the ailing Indian aviation sector. Germany pegs cost of bailout at €190 billion Germany is expected to contribute 27 percent, or €190 billion, of the euro zone rescue fund, after the Constitutional Court, the country’s highest judicial body, ruled that the European Stability Mechanism and the European Union’s Fiscal Compact are compatible with the country’s basic law. The court decision, announced last month, removed the last obstacle preventing the deployment of €500 billion. “Germany is fulfilling its full responsibilities as the biggest economy and a trusted partner in Europe,” Chancellor Angela Merkel said after the decision. “This is a good day for Germany and a good day for Europe.” The court ruled that Germany could proceed with its contribution to the mechanism, but required parliamentary approval of any increase in the agreedupon €190 billion. Jean-Claude Juncker, who chairs the Eurogroup, a panel of euro zone finance ministers, said he would call the first meeting of the mechanism’s board on 8 October, the German news agency DPA reported. Some experts saw the ruling as a step toward the common sharing of debt among members of the euro zone. “This may stabilize the currency union, but it will change its character,” Jörg Krämer, chief economist at Commerzbank in Frankfurt, told The New York Times. “This will be the starting point of what I call the union of mutualized debt.”
European Central Bank may gain powers to oversee euro area lenders Germany concerned about European Commission proposals The European Commission last month announced a plan to allow the European Central Bank to supervise all euro zone financial institutions as a first step toward a so-called “banking union.” The commission said it intends to give the central bank new powers to monitor euro zone banks under a single supervisory mechanism. Germany immediately raised objections that the proposals risked overstretching the bank. Chancellor Angela Merkel’s coalition government wants the bank’s new powers to apply only to systemically relevant or crossborder institutions. This coincides with the AFP U.S. pays whistle-blower US$104 million reward Tax authorities in the United States paid out a US$104 million reward to a former UBS banker after information he provided helped recover US$800 million in fines. Bradley Birkenfeld, 47, received the cash reward after divulging schemes that Swissbased UBS used to encourage American citizens to dodge their taxes. The bank subsequently paid a US$790 million fine to avoid criminal prosecution. Birkenfeld was also impli- commission’s plans to give new powers to the European Banking Authority, which currently regulates the euro zone’s banks. Current rules mean that decisions made by the authority’s panel need to receive support from a majority of all 27 European Union countries. The new proposal would see this procedure reversed: the panel’s decisions will be implemented AFP cated and charged with fraud for withholding crucial information from federal investigators. He pleaded guilty in 2008 to one count of conspiracy to defraud and was given a 40-month sentence. The US$104 million payout is said to be the largest ever paid by the U.S. Internal Revenue Service under its whistle-blower programme, which offers informants rewards of up to 30 percent of any fines and unpaid taxes recovered by the government. Angela Merkel automatically unless there is a majority vote against it. In addition, a proposed independent panel of officials would have powers to impose European Union laws and arbitrate disagreements between euro zone and non-euro countries, such as Britain. Germany remains the major obstacle to a European banking union. Michael Grosse-Broemer, the chief whip of Merkel’s conservatives, told Reuters that Germany’s current deposit guarantees would not become part of any EU-wide deposit guarantee scheme. “We need a clear-cut separation of national and European deposit guarantees,” he said. Since the law was strengthened in 2006 it has generated hundreds of claims alleging tens of billions of dollars in tax evasion, reports Bloomberg. Senator Charles Grassley, who sponsored the law, defended the payout, telling The Wall Street Journal, “An award of US$104 million is obviously a great deal of money, but billions of dollars in taxes owed will be collected that otherwise would not have been paid as a result of the whistle-blower information.” Nomura plans cuts after failed takeover Nomura Holdings plans to slash jobs in the Europe and North America to save US$1 billion after the financial institution’s chief executive admitted that the acquisition of Lehman Brothers assets was not a successful manoeuvre. The brokerage firm is taking measures to become an Asiacentred business, undoing ambitious groundwork laid out by the previous management team after the company bought a large part of Lehman Brothers in 2008. The Tokyo-based broker has barely turned a profit since the Lehman acquisition due to tough business conditions amid the European debt crisis. Nomura has chalked up nine consecutive quarterly losses at its overseas operations. Its new chief, Koji Nagai, said of the Lehman deal: “People ask me whether the Lehman acquisition failed… and with this performance, we can’t say it’s been a success.” Nagai replaced former chief Kenichi Watanabe in August as part of a management reshuffle. According to Bloomberg, Nomura has about 12,800 overseas employees, compared with a work force of 22,000 in Japan. About 30 percent of Nomura’s current staff were with Lehman prior to the takeover. Nomura says it will complete the latest round of restructuring by March 2014. It is aiming for pre-tax profits of 250 billion yen, Reuters reported. October 2012 7
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Page 3 and 4: REGULARS 01 President’s message 0
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Page 19 and 20: Making a start Here in Hong Kong, c
Page 21 and 22: Success ingredient Tang Nai Hoi, ch
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Page 25 and 26: In 2000, Tang was appointed CFO of
Page 27 and 28: a convenient place for money launde
Page 29 and 30: affecting bottom lines. A recent KP
Page 31 and 32: Work-life balance Creature comforts
Page 33 and 34: Work-life balance 38 October 2012 R
Page 35 and 36: Work life balance Alfred Chung and
Page 37 and 38: IFRS/HKFRS 8 IASB starts its post-i
Page 39 and 40: IFRS/HKFRS 8 fail the above quantit
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Page 43 and 44: Careers People on the move The late
Page 45 and 46: Romantic Rome To experience Rome is
Page 47 and 48: Beyond port and plonk There’s mor
Page 49: The Gap store recently opened near

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