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Will the derivative quarmire hit Malaya? [Copy link] 中文

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Post time 2008-10-27 12:01:17 |Display all floors
The big 3 banks in Malaya, ie. Singapore's DBS bank, Kuala Lumpur's CIMB bank, Maybank has big derivative exposure as it is big FEE BASED business.

Normally the TREASURY SECTION of such banks would buy and sell hedges, derivative products to generate fee, with what seems to be NO RISK.
However starting with the Lehman Brothers debacle, banks in the Amerikan Regime, European Union and British Club are begining to declare bankruptcy, get nationalized and the derivative products declared DEFAULTED.

The cost is normally the ownership of the banks which gets nationalized and the entire CAPITALIZED ASSETs lost. (Banks are limited by capital, so lost is limited) while bank's deposit are guaranteed backed by the loans, total npl would be unknown.


I was expecting "bad stories" to appear in Korea, Thailand, Indonesia, and maybe Malaya.
What surprises me was SINGAPORE is also affected.

DBS bank has S$1.0 trillion of derivative trades..
CIMB bank has M$220 billion of derivative trades.
Maybank has M$110 billion of derivative trades.

with defaults of so many European, Britiish, Amerikan banks....likely DBS, CIMB, Maybank are now exposed directly to risk.


THE SOLUTION, is limited to their capital, as the Amerikan, European example, declare insolvent, guarantee the savings and nationalized or takeover by other private banks. (unlikely in a crisis situation unless there are deep pocketed banks untouched by the US$55 trillion derivative trade, which normally is not very liquid now)


Malaya and Singapore will be affected but it's controllable.
However there are political repercussions.


Let's watch  "BANK OK DANGEROUS" code. November will be interesting to watch.





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Post time 2008-10-27 12:05:44 |Display all floors

The derivative exposure is the part cause of US$ rise.

China's currency stablity protects much of it's banks.

But, it should start to unwind the hedge positions as the counter trades are with insolvent or missing banks in Europe, Amerikan Regime, and very few British club banks. The US$ would undoubtably rise now but would fall in the longer run as Amerikan Regime needs to spend to solved in 4 major challenges with the other 4 great powers in the FIVE STAR  kongfu.


Losses can be absorbed, but PRESTIGE is affected.
In Malaya, it could mean a lot of "political activity".


Let's watch.


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Post time 2008-10-27 12:07:52 |Display all floors

The igniter is the sub prime crisis, with destroy Dollar stocks.

...igniting the Dollar rise, creating severe losses for banks with opposite bets.

The default expose the rest of the world to risk, especially banks that does a lot of hedging or derivative trades.


gosh!

The Derivative timebomb is exploding.



It's fireworks in November!


Green Dragon
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Post time 2008-10-28 11:42:48 |Display all floors

Don't panic! Watch the politicians toying with ideas...

...of racial riots and violence.

Expect some fireworks if Maybank gets into severe losses.
Told the Riau not to mismanage Maybank, as PNB has big stakes in that company.


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Post time 2008-10-28 17:26:36 |Display all floors

Will the derivative quarmire hit Malaya?

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Post time 2008-10-28 17:36:38 |Display all floors
Originally posted by huang262 at 2008-10-28 17:26
As Tatoo from Fantasy Island once said, "Will a duck make quack quack in the water?"



like a small drop of water in the ocean
What's on your mind now........ooooooooooooooo la la....Kind Regards

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Post time 2008-10-29 11:42:33 |Display all floors

Reply #6 caringhk's post

Singapore and Malaya seems to have some 1.5% of the total derivative trade in the world.

DBS, Maybank, CIMB has ownership of US$0.8 trillion of the total US$55 trillion derivative products,
that's about double of our economy size compare to the world.


no joke!

just look at IOI's hedge on US$, Air Asia hedge on Aviation fuel etc......


just wondering...


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