JERUSALEM (Reuters) – Israel approved plans on Tuesday to provide a safety net for institutional investors taking part in late-stage funding rounds by high-tech companies, seeking to encourage them back into a sector vital to the economy.
Burned by the tech bubble that burst in 2000 and hampered by regulatory constraints, Israeli pension funds and other institutions have since shied away from high-tech, during which billions of dollars have been generated by high-profile takeovers or flotations.
An institution that is approved under the new plan will be eligible for investment protection in the event of a decline in the value of the portfolio of Israeli tech firms and would receive 40% of the nominal investment.
Should the value increase, the institution would transfer 10% of the difference between the portfolio’s return and the government’s bond yield for the comparable period to Israel’s Innovation Authority, which is part of the Economy Ministry.
The portfolio would need to be managed for 8-1/2 years and the state’s protection would be provided for investments made during the first 18 months. The Economy Ministry expects the tech sector to gain a boost of 2 billion shekels ($570 million).
In a joint statement, the ministries said the plan serves two aims – to help Israeli tech businesses survive the coronavirus crisis while boosting institutional investment in a sector that is a key economic growth driver.
“It is precisely at this time that we must focus our efforts on moves that will strengthen the high-tech engine to pull the economy out of the economic crisis,” said Aharon Aharon, head of the Innovation Authority.
($1 = 3.5092 shekels)
(Reporting by Steven Scheer; Editing by David Goodman)
Enforcement Notice – Hearing – IIROC to Hold Settlement Hearing for Calgary Investment Advisor Wayne Frederick Workun – Canada NewsWire
CALGARY, AB, Aug. 12, 2020 /CNW/ – A Hearing Panel of the Investment Industry Regulatory Organization of Canada (IIROC) will consider whether to accept a Settlement Agreement entered into between IIROC staff and Wayne Frederick Workun.
The Agreement concerns allegations that Mr. Workun failed to use due diligence to ensure that recommendations were suitable for a client and engaged in discretionary trading in that client’s accounts.
The hearing is not open to the public but will become open if and when the Panel accepts the agreement. Members of the public who are interested to attend the hearing may contact IIROC’s National Hearing Coordinator at [email protected] in advance of the hearing to obtain further details. If the agreement is accepted, the Reasons for Decision and the Settlement Agreement will be made available at www.iiroc.ca.
Appearance Date: The hearing will be held by way of videoconference on August 21, 2020 at 10:00 a.m.
IIROC formally initiated the investigation into Mr. Workun’s conduct in February 2016. The conduct occurred while he was a Registered Representative with the Calgary branch of Leede Jones Gable Inc., an IIROC-regulated firm. Mr. Workun is employed with Leede Jones Gable Inc.
The Notice of Application announcing the settlement hearing is available at: http://www.iiroc.ca/documents/2020/3a7a4aa3-025f-4cdd-be11-565e40f9d0f2_en.pdf
Documents related to ongoing IIROC enforcement proceedings – including Reasons and Decisions of Hearing Panels – are posted on the IIROC website as they become available. Click here to search and access all IIROC enforcement documents.
* * *
IIROC is the pan-Canadian self-regulatory organization that oversees all investment dealers and their trading activity in Canada’s debt and equity markets. IIROC sets high quality regulatory and investment industry standards, protects investors and strengthens market integrity while supporting healthy Canadian capital markets. IIROC carries out its regulatory responsibilities through setting and enforcing rules regarding the proficiency, business and financial conduct of more than 175 Canadian investment dealer firms and their more than 30,000 registered employees, the majority of whom are commonly referred to as investment advisors. IIROC also sets and enforces market integrity rules regarding trading activity on Canadian debt and equity marketplaces.
IIROC investigates possible misconduct by its member firms and/or individual registrants. It can bring disciplinary proceedings which may result in penalties including fines, suspensions, permanent bars, expulsion from membership, or termination of rights and privileges for individuals and firms.
All information about disciplinary proceedings relating to current and former member firms is available in the Enforcement section of the IIROC website. Background information regarding the qualifications and disciplinary history, if any, of advisors currently employed by IIROC-regulated firms is available free of charge through the IIROC AdvisorReport service. Information on how to make investment dealer, advisor or marketplace-related complaints is available by calling 1 877 442-4322.
SOURCE Investment Industry Regulatory Organization of Canada (IIROC) – General News
For further information: Enforcement Contact: Charles Corlett, Director, Enforcement Litigation, 416 646-7253, [email protected]; Media Contact: Andrea Zviedris, Manager, Media Relations, 416 943-6906, [email protected]
ABN Amro Cuts a Third of Investment Bank After Virus Losses – Yahoo Canada Finance
(Bloomberg) — ABN Amro Bank NV will cut its investment bank by about a third and shut down lending outside of Europe as the Dutch bank tries to turn around business hit hard by the market chaos caused by the coronavirus crisis.
ABN Amro will stop providing corporate finance outside Europe and exit trade and commodity financing altogether, the Dutch bank said on Wednesday. As many as 800 jobs could be lost over three to four years as the investment bank pulls back from activities that currently bring in about 45% of client loans.
European lenders including Deutsche Bank AG, Societe Generale SA and BNP Paribas SA have been slashing and refocusing their investment banks as they seek to cut costs and get out of higher-risk businesses. Chief Executive Officer Robert Swaak accelerated his review of the investment bank as volatile markets hit profitability and caused large impairments at the unit.
“The new CEO has essentially delivered what we asked for over a year ago, namely a proper wind-down of the CIB business. A pity that it took a pandemic to do so,” Barclays Bank Plc analyst Omar Fall said in a note. “The focus will now be on how much of the very sizable 2.5 billion euros of CIB wind-down capital will eventually return to shareholders.”
ABN Amro rose as much as 9.4% in Amsterdam trading, the most in two months, and was up 8.3% as of 3:40 a.m. The stock has declined by 46% this year. That compares with a 32% drop by the STOXX 600 Banks Index.
The bank reported a net loss of 5 million euros ($5.9 million) for the quarter on writedowns and a slowdown in lending prompted by the Covid-19 crisis. Provisions for loan losses declined to 703 million euros from 1.1. billion euros in the first quarter. ABN Amro said it expects provisions to total 3 billion euros this year, partly on costs to wind down loans at the investment bank. That’s up from an earlier prediction of 2.5 billion euros.
Corporate banking in the U.S., Asia, Australia and Brazil will be wound down, but the bank will retain its global clearing business, one of the world’s biggest, the company said. The natural resources and transportation and logistics parts of the business will focus on European clients only.
“Clearing has taken several de-risking measures in the past months following a large loss incurred earlier this year,” it said. The bank said it expects additional impairments related to job losses and the wind down of corporate loans.
“It’s a tough decision,” to exit trade and commodity finance, a business that has been historically strong for the Netherlands, Chief Financial Officer Clifford Abrahams said in an interview. “We’ve been in these businesses in some cases for hundreds of years. It’s tough for our clients and our staff, but we are convinced it’s in the best interest for the bank.”
CEO Swaak said that ABN Amro lacks scale in the rest of the world but it is looking to “invest and grow” in its corporate banking business in northwest Europe. The lender is currently also conducting a strategic review on operational efficiency, financial targets and capital distributions, which will be presented in November.
ABN Amro is among the four banks with the highest exposure to Wirecard AG, the defunct payments company that prompted competitors ING Groep NV and Commerzbank AG to take provisions of about 175 million euros each in the second quarter, Bloomberg reported in June. The bank said an “exceptional client file” contributed to the high impairments in the second quarter.
“We don’t comment on specific clients, but the exceptional client file that caused high impairments reflect a potential fraud case in Germany” Abrahams said when asked about the impact of Wirecard.
ABN Amro reported provisions of 616 million euros for three exceptional client files in the first half of this year. Two cases in the first quarter accounted for 460 million euros, leaving 156 million euros for the German case.
The corporate and investment bank accounted for 14.5% of group profit last year and the unit’s headcount was a similar share of the total. The investment bank’s activities carry much more risk than ABN Amro’s retail business and require more capital as well, making it costly to squeeze out decent profits in good times.
In the previous quarter, the lender wrote down 460 million euros on two individual client cases, which contributed to its first loss since 2013. Even before the coronavirus crisis, the investment bank fell short of ABN Amro’s 10% to 13% return on equity target.
Other second quarter earnings highlights:
Net interest income EU1.51 billion, -9.9% y/y, estimate EU1.55 billionCommon equity Tier 1 ratio 17.3% vs. 17.3% q/q, estimate 17.1%2Q cost-to-income Ratio 60.4% vs. 67.6% q/q, estimate 62.3%2Q net fee and commission income EU375 million, -9.2% y/y, estimate EU380 million
(Updates with growth ambitions, strategic review and provision figure for German client)
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P&C insurers' investment income under "strain" | Insurance Business – Insurance Business CA
Dave Smiley, chief operating officer at Unica Insurance, described the “marked drop in the Canadian economy” as one of the big challenges to come out of the pandemic. He told Insurance Business: “It has really impacted our investment income. Insurers rely rather heavily on investment income. As an industry, we’re often happy to pay out $1 in claims and expenses for every dollar we bring in, because we rely on our investment income to make our profits. But when the investment market drops, that puts some real strain on our results.”
Despite experiencing some financial “strain,” Ontario-based Unica Insurance has so far managed to maintain profitability throughout the pandemic. Smiley attributes this “better than planned” performance to the firm’s focused underwriting strategy, and also to improved loss ratios across the firm’s portfolio in niche commercial lines and VIP personal lines – a portfolio with lower exposure relative to the pandemic than some of the more generalist P&C insurers.
The COVID-19 pandemic has struck at an interesting time for the P&C insurance industry. It’s piggybacking a few tough years whereby insurers have experienced increased frequency and severity of losses across multiple lines, in particular auto, property and certain liability lines. To offset this, insurers have been increasing their pricing significantly since 2019, and this trend has continued so far through 2020.
Read next: Aon reports its Q2 results
“The resulting positive impact on underwriting profitability may help mitigate some of the effects of the coronavirus-driven financial market volatility on investment portfolios, as companies may offset investment losses or depressed investment income with higher underwriting revenues,” explained DBRS Morningstar’s Victor Adesanya and Marcos Alvarez in a market commentary entitled ‘Coronavirus: Limited Claims Impact on Certain P&C Lines but Financial Markets’ Volatility will Affect Investment Portfolios’.
But while rates may be up, the pandemic-induced downturn in the Canadian economy has resulted in a decrease in the levels of P&C insurance premiums contracted by families and companies. Marcos Alvarez, senior vice president and head of insurance at DBRS Morningstar, commented: “We consider that a moderate scenario with premiums falling 4%–6% in nominal terms is still manageable for most Canadian insurance companies.
“However, under an adverse scenario with premiums decreasing more than 10% in nominal terms, we anticipate weaker companies experiencing a material deterioration in their credit profiles and financial strength, particularly in the context of a prolonged recession with persistent investment losses and higher coronavirus-related claims.”
Insurance brokerage giant Arthur J. Gallagher reflected on the above scenario its second quarter, first half financial results, released on Thursday, July 30. The broker said it has experienced some decline in client retention and renewal customer exposure units (i.e. insured values) but that those declines were mitigated by rising premium rates in mid-to-high single digits across most geographies.
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