Las Vegas Sands reaffirms commitment to Singapore Marina Bay Sands project

Las Vegas Sands reaffirms commitment to Singapore Marina Bay Sands project

SINGAPORE: Las Vegas Sands said it is committed to completing the development of the Marina Bay Sands integrated resort in Singapore.

Concerns had been raised about the company’s ability to finish the US$4 billion development after news broke out that it was struggling with a shortage of cash.

In a statement on Friday, Sands said it met with the Singapore government this week and gave the assurance that it will see the Marina Bay Sands project through.

It said the meeting covered a range of subjects, such as the pace of construction of the hotel towers in the resort and the strong response to the marketing efforts by Marina Bay Sands and the Singapore Tourism Board to bring more conventions, exhibitions, and corporate meetings to Singapore.

Sands also said it has complied with regulatory requirements that will allow it to have up to 1,000 gaming tables in the resort’s casino – up from the original figure of 600 tables.

The company said it has received more than 10,000 responses from Singapore job-seekers to its joint recruitment initiative with the National Trades Union Congress’ (NTUC) Employment and Employability Institute and the Singapore Workforce Development Agency.

Sand’s statement came as banks which had provided loans for the project said all signs showed that it is on track. DBS said it has not had any indication that work on the project is faltering.

DBS is one of 40 banks that formed a syndicate to fund the Marina Bay Sands casino development, which is estimated to cost more than four billion US dollars.

“All signals I’m getting from the management of Las Vegas Sands is that they intend to finish the project and move on,” DBS chief executive Richard Stanley said at a news conference on the bank’s third-quarter earnings.

“I have to accept what they say and I have seen in recent days a strong commitment to the project from Las Vegas Sands… There’s been no default, there’s been no indication of default,” he said, adding there was no need to provide for loan provisions.

“As of now, all the equity commitments have been made, the project is proceeding in pace.”

Citi Singapore, which is also providing loans for the project, said the long-term viability of Marina Bay Sands has not changed.

Source : Straits Times - 08 Nov 2008

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Investors to get help with new risk-rating system

Investors to get help with new risk-rating system

By Fiona Chan

AN ASSISTANCE programme is on the way to help investors make better decisions on their own instead of fully relying on relationship managers in financial institutions.
The Securities Investors Association of Singapore (Sias) yesterday said it will work with the institutions to establish a risk rating on all structured products on the market, as well as new products as they are released.

This will enable investors to have a better idea of the risks involved in each product, the organisation said. While stock market investors have guidance through analyst reports, investors of structured products do not have similar information.

Sias, which champions the rights of small investors, will also create a ’standard questionnaire’ to help investors judge if products are suitable for them.

The questionnaire will clarify investors’ goals and risk appetites and help them ask more searching questions about products they are interested in, said Sias president and chief executive David Gerald.

‘In most cases, investors do not make sufficient enquiry as to the suitability and risk profile of the product before parting with their money,’ Sias said in a statement.

‘They need to have a good feel of the product and decide whether it falls within their own risk profile.’

Sias, which organises regular education programmes, will also produce an investment handbook to help investors understand the nature of financial products.

All these initiatives ‘need a bit of time’ to implement but should be rolled out in a month or so, Mr Gerald said.

Sias’ move comes in the wake of the fiasco over structured products linked to investment bank Lehman Brothers, which went bad when the bank filed for bankruptcy in September.

Some investors who bought Lehman-linked products, such as Minibonds and High Notes 5, are now complaining that their relationship managers misinformed them of the risks associated with the investments.

Source : Straits Times - 08 Nov 2008

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US job losses much worse than feared - WASHINGTON

US job losses much worse than feared - WASHINGTON

651,000 people laid off in last three months as jobless rate hits 6.5%

Last month’s report intensifies concerns that the economy is weaker than thought and that rising unemployment will make it worse. — PHOTO: AGENCE FRANCE-PRESSE

: United States employers cut payrolls by 240,000 last month, much more severely than expected, while September registered the biggest monthly loss in jobs in nearly seven years, according to a government report yesterday.
The Labour Department said the national unemployment rate shot up to 6.5 per cent - the highest since March 1994 - from 6.1 per cent in September.

US stocks rose at the opening yesterday, as the steep declines of the past two sessions prompted investors to scour the market for beaten-down shares, offsetting the bleak report on unemployment.

The Dow Jones Industrial Average was up 94.78 points, or 1.09 per cent, at 8,790.57.

October’s job cuts were much worse than anticipated by Wall Street economists who had forecast that 200,000 would be lost.

Even more strikingly, the government revised September’s losses to 284,000 - the highest since November 2001 just after the Sept 11 terrorist attacks. In total, over the three months from August to October, 651,000 jobs have been slashed from payrolls.

Yesterday’s report goes right to the heart of what many fear: That the economy is weaker than forecast - and rising unemployment will only make it worse.

Grim reports this week signalled that the US economy may be heading towards a deep recession.

Retail chains in October rung up the worst monthly sales in more than three decades. The country’s huge services sector contracted more sharply than anticipated, while manufacturing activity fell to its lowest level since September 1982.

‘The downturn is widespread, as both manufacturing and services are all moving backwards,’ said Mr Joel Naroff of Naroff Economic Advisors.

He noted that labour markets tend to lag behind the economy, and predicted that businesses would step up job cuts over the next three to six months.

Job losses are already hitting US workers across all income levels and job categories, and the cuts are swifter and broader than in past recessions.

Just this week alone in the US, Goldman Sachs handed out 3,000 pink slips, Fidelity Investments said it plans to cut 1,290 jobs, toy maker Mattel said it will axe 1,000 worldwide, while thousands of workers will lose theirs as electronics retailer Circuit City shuts down 155 stores.

Civil servants have not been spared. The latest cuts are set to hit New York where Mayor Michael Bloomberg will reportedly lay off 3,000 City workers.

Amid the car industry downturn, Ford Motor said yesterday that it will cut salaried expenses by another 10 per cent, following a programme that cut such costs 15 per cent earlier this year.

AGENCE FRANCE-PRESSE, ASSOCIATED PRESS, BLOOMBERG, REUTERS

Source : Straits Times - 08 Nov 2008

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DBS will do the right thing: CEO

DBS will do the right thing: CEO

When bank sold High Notes, ‘the world was a vastly different place’

By Francis Chan

DBS Group Holdings chief executive Richard Stanley has defended the bank’s sale of now-worthless products linked to bankrupt Lehman Brothers in his first public comments on the furore.
‘DBS would never knowingly do anything that will hurt customers,’ Mr Stanley said, speaking at the release of DBS’ third-quarter results yesterday.

He said that when DBS sold the High Notes 5 product and Constellation Notes in Hong Kong, ‘the world was a vastly different place’.

‘Everywhere, people were seeking higher yields. As a financial institution, we believed we were serving our customers by facilitating and structuring High Notes and Constellation Notes with high quality names…names that no one ever thought would default,’ he said.

Mr Stanley, an ex-Citibanker who took over the reins at DBS only six months ago, said the episode has been ‘extremely painful’ for DBS.

‘I’ve seen our relationship managers - grown men and women - in tears as they broke the bad news to their clients.’

However, he added that the bank will still ‘do the right thing; balancing our fiduciary duties to customers and shareholders alike’.

In recent weeks, Singapore’s largest lender has been under fire from angry customers who accused the bank of misleading them into buying structured products that are now largely worthless.

In Singapore and Hong Kong, more than 4,700 customers invested a total of $360 million in Lehman-related notes. In Singapore, 1,400 customers invested a total of $103 million in DBS High Notes 5 alone.

‘We’ve been very concerned for our customers, so from day one, we spared no effort in being open and transparent with them,’ added Mr Stanley.

He assured customers his team at DBS is ‘working night and day to identify cases where DBS’ standards were not met’ so it can move quickly on compensation.

DBS said earlier it is reviewing all customer complaints while fast-tracking the resolution process for ‘vulnerable’ customers - the elderly and lowly-educated.

To date, the bank is the first and only one among 10 institutions here that sold Lehman-related products to have organised open forums for customers and earmarked funds to compensate them.

DBS has said it will fork out between $70 million and $80 million in compensation to deserving customers in both Singapore and Hong Kong.

Mr Stanley said that customers both here and abroad regard DBS as a ’steward of their hard-earned savings and wealth’.

‘With this privilege comes responsibility and we take this responsibility very seriously,’ he added.

Looking ahead, he said the lessons learnt from the episode will be reflected in the bank’s sales and business practices, which were initially questioned by angry customers.

He also promised to step up the training regime of DBS’ relationship managers with a view to building long-term relationships

‘I have no doubt that when all this is over, the industry will draw up new standards,’ he said. ‘The bar will be raised, and at DBS, we are determined to lead the way.’

Source : Straits Times - 08 Nov 2008

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Sands gives reassurance on Singapore Marina Bay IR

Sands gives reassurance on Singapore Marina Bay IR

By Lim Wei Chean

Sands’ reassurances over the future of the Marina IR follows fresh doubts about the company’s ability to continue operating. Analysts believe the Singapore Government would step in should the company default on its loans. — ST PHOTO: WANG HUI FEN

THE top suit behind troubled casino operator Las Vegas Sands met the Singapore authorities this week, and yesterday gave a fresh commitment to completing the Marina Bay integrated resort (IR).
Mr Sheldon Adelson, chairman and chief executive officer of Las Vegas Sands, said: ‘In the light of recent turmoil in the global markets, I felt the need to personally reaffirm our commitment to the success of Marina Bay Sands. I am pleased to say that the Singapore Government’s support of our project remains strong.’

The statement from Las Vegas Sands did not specify whom Mr Adelson had met.

But the consensus among analysts is that if the project were in trouble, the Government would intervene.

As an assurance that plans were on track, Sands said that it had also received word from the Casino Regulatory Authority of Singapore that it had approved the company’s proposed casino floor plan for up to 1,000 gaming tables, instead of the originally planned 600 tables.

That is still subject to final approval.

Sands’ reassurances over the future of the Marina IR follows fresh doubts raised by its auditors about the company’s ability to continue operating.

In a regulatory filing on Thursday to the United States Securities and Exchange Commission, PricewaterhouseCoopers said the casino operator, which has US$8.8 billion (S$13 billion) in long-term debt at the end of June, would not be able to meet lenders’ requirements unless it cuts spending on developments, boosts earnings at its casinos on the Las Vegas strip and raises more capital.

It was also said to be relooking projects under way in Las Vegas, Pennsylvania, Macau and Singapore.

Las Vegas gaming analyst Bill Eadington said the company has lost over 90per cent of its stock value in 13 months. Flying that close to bottom, the very existence of the company is in question, not just one of its developments, he added.

The Singapore authorities have so far declined to say more. When contacted, the Singapore Tourism Board would only refer to its earlier comment that it was ‘in talks’ to ‘facilitate the success’ of the development.

Singapore’s banks, OCBC, UOB and DBS, which have significant exposure as lead arrangers for the project, remained optimistic.

About half of the $5.4 billion credit facility for Marina Bay Sands has already been drawn upon, according to UOB Kay Hian’s latest report.

OCBC chief executive officer David Conner said the loan is ‘ring-fenced’ with no exposure to the company’s projects in Las Vegas or Macau.

The company has to pledge equity before drawing on the loan and, to date, it has met its commitments.

Mr Conner said: ‘As far as we are concerned, the project is still under construction.’

DBS CEO Richard Stanley also said there had been ‘no default’, and ‘no indication of default’.

At a news conference on the bank’s third-quarter earnings, he said: ‘All signals I’m getting from the management of Las Vegas Sands is that they intend to finish the project and move on.

‘I have to accept what they say and I have seen in recent days a strong commitment to the project from Las Vegas Sands.’ He added that there was no need for loan provisions.

Analysts believe the Government would step in should the company default.

UOB Kay Hian said the banks could seek a new investor, which could ‘likely be Temasek or a Temasek-linked company that has previously bidden for sites at Marina Bay or Sentosa’.

Sources say it is likely the Government has approached Temasek Holdings already. But others argued it was too early to act, with the future for Las Vegas Sands still unwritten.

But the talk has already resulted in worries over Temasek Holdings’ credit worthiness. Its default protection costs rose on concern that the Government may step in to guarantee completion of the Marina IR, reported Bloomberg.

Five-year credit-default swaps on Temasek, which manages about $130 billion, advanced 15 basis points to 113, JPMorgan Chase & Co data shows.

And is there a white knight waiting in the wings for Las Vegas Sands?

When asked, CapitaLand, which had previously bid for the project, referred to what its chief executive officer Liew Mun Leong said in its third-quarter results.

‘With the situation deteriorating rapidly, we are strategically watching the distressed markets, very carefully seeking out opportunities to make the right acquisitions at the right price.’

Source : Straits Times - 08 Nov 2008

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Banks warn of difficult times ahead - Singapore

Banks warn of difficult times ahead - Singapore

Sharply higher provisions for bad loans start eating into profits

By CONRAD TAN

SINGAPORE banks are sounding warnings about the state of the economy, raising provisions sharply in anticipation of bad loans in the months ahead.

FLAGGING PERFORMANCE
UOB posted a 5% dip in net profit y-o-y to $475m for the three months to end-Sept, after loan-impairment charges soared $154m from last year
‘Some months ago, I said that this financial crisis was the worst I’d ever seen. For all my pessimism then, I could not have imagined the extent of the turmoil that would follow on Wall Street, nor the additional stress that would be placed on the world banking system,’ said DBS Group chief executive Richard Stanley yesterday.

DBS’s third-quarter net profit slumped 38 per cent to $379 million compared to a year earlier - its worst quarterly performance since Q4 2005, when it reported a net loss of $441 million due to a one-time goodwill charge of $1.13 billion for its investment in its Hong Kong unit.

The sharp fall in profit was far steeper than analysts expected. Analysts surveyed by Reuters had predicted an average of $475 million in net profit, while those polled by Bloomberg had expected $455 million.

Total allowances for bad loans and soured investments ballooned to $319 million, from $80 million a year earlier and $56 million in the second quarter.

That included specific allowances for bad loans of $106 million - more than double the $52 million in Q2 - mostly due to charges taken for equity-financing loans to private banking customers in Singapore and Hong Kong. Bad-loan charges for loans to small and medium-size companies in Hong Kong and other countries also rose, said the bank.

For the nine months to end-September, net profit dipped 9 per cent to $1.63 billion.

DBS’s results were ‘pretty disappointing’, said Phillip Securities analyst Brandon Ng. ‘We didn’t expect so much impairment, especially on the Hong Kong side.’

The bank will likely see more charges for losses on equity-financing loans to wealthy customers in the fourth quarter, given that October was an even worse month than September for stock markets, he added.

Net interest income for the third quarter rose slightly to $1.07 billion - up 2 per cent from a year earlier and one per cent higher than in Q2 - supported by continued rapid growth in the group’s main lending business.

DBS’s net customer loans rose to $127.5 billion at the end of September, up 22 per cent from a year earlier and 8 per cent over the quarter - the fastest growth among the three banks.

But its net interest margin or NIM - which measures how much profit banks make on loans after deducting funding costs - was the only one among its peers to fall over the year.

‘Among the three banks, OCBC did relatively well because they held up their NIM but DBS was a bit disappointing because their NIM has been coming down since Q4 last year,’ said Mr Ng.

Non-interest income at DBS fell 33 per cent over the year to $327 million, dragged down by sagging fees and commissions from stockbroking, investment banking and wealth management, as well as net trading losses.

All three banks’ results were ‘below my expectations’, said Pauline Lee, an analyst at Kim Eng Securities.

‘DBS is the most unexpected because of the huge impairments that they provided.’

The 900 jobs that DBS is cutting ‘may be a good measure in the short term, but I’m not sure whether it will affect the business momentum in the long term’, said Ms Lee.

On Wednesday, OCBC Bank said its net profit fell 13 per cent to $402 million in the third quarter compared to a year earlier, as allowances for bad loans surged to $156 million from $39 million.

And on Friday last week, United Overseas Bank (UOB) said its net profit dipped 5 per cent year-on-year to $475 million for the three months to end-September, after loan-impairment charges jumped to $158 million from $4 million a year earlier.

Mr Ng said that while OCBC and UOB are unlikely to follow DBS in announcing drastic staff cuts in the near term, ‘in 2009, if the entire economy slows down, we may be facing another recession where in order for businesses to survive, that’s the only way out’.

All three banks warned of difficult times ahead.

‘The impact of deleveraging and credit crunch will be increasingly evident in the real economy,’ said UOB chief executive Wee Ee Cheong.

OCBC CEO David Conner said that the next few quarters ‘are expected to be challenging for individuals and businesses around the world’.

Earlier this week, UOB also told Reuters that demand for loans from small and medium-sized businesses could fall as firms suffer from the economic slowdown.

At DBS, ‘we’re watching our exposures very carefully’, said Mr Stanley yesterday. ‘Our intent is to support our best clients. We haven’t stopped lending, but certainly the growth in lending will slow.’

Annualised basic earnings per share at DBS fell to $1.03 from $1.68 a year earlier and $1.74 in Q2. The group declared a dividend of 20 cents per share for the quarter, unchanged from the previous quarter, to be paid on Dec 4.

Source : Business Times - 08 Nov 2008

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Casino boss turns tables his way

Casino boss turns tables his way

Under-fire Marina Bay IR can increase gaming tables while its boss says project remains on track

By ARTHUR SIM

A SHADOW may have been cast over the prospects of the Marina Bay Sands (MBS) but Las Vegas Sands (LVS) chairman Sheldon Adelson still expects to open on time, and with possibly even more gaming tables than its mega casino at the Venetian Macao.

EARNEST
Mr Adelson said he felt the need to personally reaffirm his commitment to the success of Marina Bay Sands
In response to reports that LVS could be on the brink of bankruptcy, Mr Adelson, who was till recently labelled one of the world’s richest men with an estimated net worth of US$11 billion, said: ‘In light of recent turmoil in the global markets, I felt the need to personally reaffirm our commitment to the success of Marina Bay Sands.’

Mr Sheldon said he had met with Singapore government officials, covering a range of subjects, such as the pace of construction and marketing efforts with the Singapore Tourism Board (STB). But he did not comment on reports that MBS was seeking financial assistance from the Singapore government.

STB assistant chief executive (leisure) and director (integrated resorts) Margaret Teo added: ‘We remain in dialogue with Marina Bay Sands and will continue to work closely with them to facilitate the completion of the integrated resort project.’

The government appears to have made some concessions to MBS already. Mr Adelson said the Casino Regulatory Authority of Singapore (CRA) had accepted the layout for the casino floor plan which will in essence allow for more gaming tables. He added: ‘The acceptance of our proposed casino layout by the Casino Regulatory Authority gives us the flexibility to increase our original table count of 600 to as much as 1,000 to meet demand. This represents a significant milestone as we move aggressively towards our opening.’

CRA head of communications Cheryl Foo confirmed that the proposed number of tables, which was submitted in August, had been accepted and ‘comply with our requirements’.

The casino floor plan is still subject to final approval from CRA when the company applies for a casino license next year. Perhaps more significant is that if MBS does eventually provide 1,000 gaming tables, it will more than rival the Venetian Macao casino, dubbed the world’s largest casino with 750 gaming tables.

A shift in focus would be interesting.

Jonathan Galaviz, a partner at Globalysis, a Nevada-based travel and leisure sector strategy consultancy, notes that the outbound visa restrictions placed on mainland Chinese tourists to Macau, ‘continues to put unnatural pressure on the Asia- based industry’.

He added: ‘The integrated resort (IR) site at Marina Bay has always been seen by the industry as a strong real estate position for the building of a multi-billion-dollar mixed-use tourism facility.’

LVS has said it is working to implement a capital raising programme but in a filing to the New York Stock Exchange on Thursday, it added: ‘If the capital raising programme is unsuccessful and the company does not have access to the available borrowings under the US senior secured credit facility, the company would need to immediately suspend portions, if not all, of its ongoing global development projects and consider other alternatives.’

LVS shares fell US$3.81 on Thursday to US$7.85 per share, a decline of 32.68 per cent.

According to a Bloomberg report, it has a long-term debt of US$8.8 billion.

LVS has also said that its Singapore IR is expected to cost in excess of US$4.5 billion while its Cotai Strip developments in Macau, which includes the Venetian Macao, has a price tag of US$12 billion.

LVS added: ‘If the lenders were to exercise their right to accelerate the indebtedness outstanding, there can be no assurance that the company would be able to refinance any amounts that may become accelerated under such agreements.’

In Singapore, DBS, UOB and OCBC are said to have an exposure to MBS of around $2.2 billion. DBS CEO Richard Stanley said that, so far, there has been no indication of default and that all equity commitments have been made.

A spokesman for UOB said: ‘We are always mindful of concentration risks and are constantly reviewing and rebalancing our portfolio to prevent overexposure to any single project or industry.’

Interestingly, Nomura notes in a recent report that the MBS loans are collateralised on the project itself, with repayment of principal and interest to begin only when construction is completed.

In a report released yesterday, CIMB said: ‘If LVS cannot cough up its share of equity, it is likely that the Singapore government will step in.’ This could be through a GLC, it added.

Source : Business Times - 08 Nov 2008

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SIA and its pilots hammer out pay deal

SIA and its pilots hammer out pay deal

By VEN SREENIVASAN

AFTER a year of tough negotiations and hard bargaining, Singapore Airlines (SIA) and its pilots have sewn up their long overdue Collective Agreement (CA), thereby narrowly avoiding landing in the Industrial Arbitration Court.

BT has learnt that the two sides reached an agreement yesterday evening, ending a year-long battle over pay, benefits and job re-scoping.

Under the new CA, which is backdated to November 2007 and runs for three years, the annual (AVC) and monthly variable components (MVC) of the salaries of pilots and first officers will be built back into their salaries.

In short, captains will have their 16.5 per cent total MVC and AVC built into their salaries, while first officers will get their 11 per cent variable component.

They will now get a standard MVC of 10 per cent just like all other SIA staffers.

The MVC and AVC of the flight crew were set up after the Sars crisis in 2003 - which sent SIA into the red during its July-September quarter. The objective was to bring salaries more in line with the fortunes of the company.

Since then, SIA’s profit and performance have soared, prompting calls for these variable components to be built back into monthly salaries.

Several other contentious issues which had prevented earlier resolution of the CA - such as the company’s ‘cruise captain’ proposal for first officers and multi-fleet piloting - were set aside.

Capt P James, the head of the Airline Pilots Association - Singapore (Alpa-S), who headed the pilots’ negotiating team, said that both management and pilots decided that there was little point in dragging out the negotiations at a time when the aviation operating environment was getting increasingly challenging.

‘We decided that the well-being and the financial health of the company comes first,’ Capt James said. ‘We can revisit the more challenging issues when we get over this turbulence.’

BT also understands that the Ministry of Manpower played a critical role in facilitating the meeting of minds between the two sides.

SIA and its pilots have a chequered history of differences over remuneration and working conditions that goes back more than two decades. The most recent showdown was in 2003/04 when proposed wage restructuring by the airline, in the face of a massive business slowdown, resulted in such wide differences that Minister Mentor Lee Kuan Yew had to finally step in to mediate.

Source : Business Times - 08 Nov 2008

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Racial barrier falls as change comes to America

Racial barrier falls as change comes to America

Obama sweeps to victory as markets, war, demographics produce an electoral earthquake

By LEON HADAR
WASHINGTON CORRESPONDENT

RACIAL prejudices were swept aside as Barack Obama won the White House yesterday - an event whose historic magnitude recalls the landing of the first man on the moon. The Democrat defeated Republican John McCain and will be sworn in on Jan 20 next year as the 44th US president - and the first African-American one.

Family moment: Mr Obama embracing his daughter Malia after his victory speech at a rally in Chicago. He won 349 electoral votes against Mr McCain’s 173, and will have a bigger Democrat majority in Congress
His march became a rout as he captured not only battleground states like Ohio and Florida but also scooped up traditional Republican-leaning ‘red’ states like Virginia and Colorado. With 349 electoral votes against Senator McCain’s 173, it wasn’t even close.

‘Even as we celebrate tonight, we know that the challenges that tomorrow will bring are the greatest in our lifetime,’ said the president-elect. But the change he has repeatedly promised has already signalled itself.

The election of the 47-year-old Mr Obama marks the end of the reign of Baby Boomers like Bill and Hillary Clinton and George W Bush and the coming to power of a new and young generation of Americans who are more diverse in their ethnic and cultural origin and more tolerant in terms of their cultural attitude.

At the same time, the election on Tuesday also turned out to be what political experts refer to as a ‘wave election’. It helped sweep more Democrats into both the Senate and the House of Representatives and will provide Mr Obama with a solid base of support on Capitol Hill to advance his agenda at home and abroad.

‘If there is anyone out there who still doubts that America is a place where all things are possible, who still wonders if the dream of our founders is alive in our time, who still questions the power of our democracy, tonight is your answer.’

- Barack Obama

It was symbolic perhaps that Mr Obama’s landslide victory took place on the same week that American manufacturing activity dropped to its lowest level in more than 25 years with the US auto industry facing the threat of possible extinction. Indeed, it is against the backdrop of rising economic problems - home foreclosures, a credit crunch, growing unemployment, falling consumer spending, and an economic recession that could develop into another Great Depression - that the young and inexperienced first- term Senator from Chicago succeeded in winning the support of a majority of American voters who were intent in challenging the political status-quo in Washington.

In fact, there is little doubt that it was the collapse of Lehman Brothers and other major financial institutions and the dramatic move by Washington to come to the assistance of Wall Street that demonstrated to many white middle class Americans that the economic policies pursued by the Bush Administration and the Republican Party have reached a dead-end.

Members of the new ‘investor class’ that came to being during the roaring 1990s have suddenly discovered that they lost about a third of the value of their homes and the pension plans they had invested in the stock market.

And many of them decided to vote for the Democratic candidate this week, hoping that his leadership qualities and his proposed policies will help save the American economy and prevent a re-run of the Great Depression.

That depressing economic reality explains why both yuppies who reside in the more prosperous suburbs of New York City, Washington, DC, Pennsylvania and Seattle as well as blue-collar workers who live in decaying factory towns in Michigan, Pennsylvania, Ohio, and Minnesota - many of whom have traditionally voted for Republican candidates - decided to switch to the Democratic candidate this year.

In a way, the economic problems that the US is now facing are seen by many Americans as part of the failed Republican agenda that has been pursued by President George W Bush in the last eight years and that have been backed by Senator McCain, the Republican presidential candidate, including the decision to invade Iraq, the handling of Hurricane Katrina disaster, and the mismanagement of many other domestic and foreign policies.

With close to 90 per cent of Americans telling pollsters that they believe that America is now heading on the wrong track, it was inevitable that voters would be attracted to an ‘agent of change’ like Mr Obama and the more progressive policies that the Democratic party represents.

But this week’s dramatic victory by an African-American politician with an exotic background can only be understood in the context of the major demographic changes that have taken place in America in recent years that include not only the strengthening electoral power of African-Americans and the growing population of Hispanics around the country.

Mr Obama and the Democrats are also benefiting from the rising involvement in the political process of thousands of new young voters.

Hence the fact that for the first time since the 1964 presidential election, a Democratic presidential candidate - who also happens to be an African-American - has won the southern state of Virginia, whose capital Richmond had served the capital of the Confederacy during the civil war, was a reflection of these revolutionary demographic changes.

The state has attracted many young high-tech workers and other professionals as well as Hispanic immigrants who together with the members of a large African-American community in Virginia provided Mr Obama with the margin of victory he needed.

The president-elect’s main challenge now would be to form a winning Democratic electoral majority that would bring together blue-collar workers, well-to-do and educated yuppies, Hispanics and African-Americans.

At the same time, the election’s outcome highlighted the failure of the Republican Party to adapt to the new political and demographic realities of the era.

The Republicans have been gradually transformed into a minority political party that represents the mostly shrinking population of conservative white voters in the South and a few small Western states.

The Republicans have succeeded in exploiting the cultural resentment that these ‘real Americans’ - as vice-presidential candidate Sarah Palin described them during the campaign - feel towards the ‘cosmopolitan’ and liberal ‘elites’ in the large cities. But unless the Republicans expand their electoral base beyond white evangelical Christians to include more blacks, Hispanics, and young urban voters, they would find it more difficult to return to power in the White House and Congress any time soon.

Source : Business Times - 06 Nov 2008

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DBS chops 900 jobs

DBS chops 900 jobs

Q3 net profit slumps 38% to $379 million; worst performance since end-2005

By CONRAD TAN

DBS Group will slash 900 jobs or 6 per cent of its work force by the end of the month, the bank said yesterday as it reported its worst quarterly performance since the end of 2005.

MR STANLEY
‘This is a painful decision for DBS and for me personally, but something we’ve had to do in a difficult environment.’
Slightly over half the job losses will come from Singapore. The rest will be from Hong Kong, DBS’s second-largest market, and elsewhere.

Chief executive Richard Stanley said that the cuts will be ‘across the board’ and will include junior and senior staff in all parts of the group - ‘across all business units and functions and at all levels of the organisation’.

This marks the biggest-ever retrenchment by DBS.

‘It’s very quick and swift,’ said Phillip Securities analyst Brandon Ng. ‘It’s depressing. It’s a wake-up call for people working in Singapore that retrenchment may be coming.’

When contacted, United Overseas Bank (UOB) and OCBC Bank said that they had no plans to fire employees at present.

DBS staff were stunned to learn of the impending job cuts at the bank’s regular quarterly meeting to announce its results at The Rock auditorium at Suntec yesterday morning. More than 1,000 employees from Singapore attended the townhall meeting and another 500 staff from DBS’s overseas offices, including Hong Kong, Indonesia, Taiwan and China, listened by video-conference.

Some were in tears, according to people who were there.

AXED staff will likely get one month’s pay for every year of service with the bank, DBS spokeswoman Karen Ngui told reporters at the bank’s results briefing in the afternoon.

DBS’s CEO Richard Stanley said the cuts are needed to make DBS a ‘much leaner and more streamlined organisation, which will benefit us for many years to come’.

‘We’ve no plans to cut beyond this, but going forward we’ll always be watching the situation and aim to run our business in a very efficient manner,’ he added. Estimated cost savings will be reported in the fourth quarter, he said in response to a question. ‘Our goal was to be decisive and quick - to get it over with as soon as possible and move on.’

The group’s Q3 net profit plunged 38 per cent to $379 million from a year earlier, hit by a sharp rise in allowances for bad loans and ‘exceptional market dislocations’, said chief financial officer Chng Sok Hui.

It is the group’s worst quarterly performance since Q4 2005, when it reported a net loss of $441 million due to a one-time goodwill charge of $1.13 billion for its investment in DBS Hong Kong.

The fall in profit in Q3 would have been even steeper but for a $74 million trading gain the group booked after reclassifying $2.3 billion of assets under revised international accounting rules adopted by Singapore’s Accounting Standards Council last week.

Of the three Singapore-listed banks, only DBS has used the rule amendment to reclassify assets so far.

The group had 15,591 staff at end-September, up 13 per cent from a year earlier and 2 per cent from the end of June.

DBS’s last mass retrenchment was in 2001, when it cut some 700 staff or about 5 per cent of its work force across the region due to the economic downturn then and the consolidation of newly merged businesses, including DBS Vickers Securities and DBS Hong Kong.

The latest job cuts are not related to the bank’s current financial position or pressure from angry customers who lost money on structured products linked to bankrupt Lehman Brothers, Mr Stanley said.

‘It is a strategic imperative we’ve been reviewing for some time now, so we may position the bank for the future,’ he said. ‘This is a painful decision for DBS and for me personally, but something we’ve had to do in a difficult environment.’

DBS shares slumped as much as 8.8 per cent yesterday before reversing course to end 2.7 per cent higher at $11.40.

UOB slid 1.8 per cent to $13.14, while OCBC finished 2.3 per cent higher at $5.24. Asked if it was also considering job cuts, UOB said it will ‘examine all avenues, including staff cost’ to manage expenses. It said there are ‘many ways’ to manage staff costs, including reducing salary increments or bonuses, redeploying staff and not replacing employees who leave of their own accord. ‘Job cuts are considered only as a last resort. The bank will continue to be disciplined in managing its costs.’

OCBC spokeswoman Koh Ching Ching said that while the bank is ‘exercising greater prudence in managing our costs now’, staff cuts ‘are not on our agenda at this point’.

Source : Business Times - 08 Nov 2008

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