Labour chief disappointed with DBS’ sudden retrenchments

Labour chief disappointed with DBS’ sudden retrenchments

By Valerie Tan,

SINGAPORE: Labour chief Lim Swee Say has expressed his disappointment in the sudden decision by DBS Bank to cut 900 jobs.

In a statement, Mr Lim said that the bank had not consulted with the DBS Staff Union on other alternatives to cutting costs. As a result, the perception on the ground is that DBS Bank decided on retrenchment as a first resort.

He added that this has weakened the trust between the management and union, and that the reaction on the ground is critical and highly negative. Mr Lim said that “trust takes a long time to build, but a short time to destroy.”

His message came in an eight-paragraph statement to the media, which urged companies not to use retrenchment as the first resort.

He stressed that whether retrenchment will reach a high of 30,000 next year, like in 1998, will depend on how companies conduct themselves during this downturn.

It was not that the National Trades Union Congress demanded zero retrenchment, but that the company should explore alternatives with the union. For example, ways to cut cost and save jobs include having a shorter work week, reducing the year-end bonus, and re-training of excess manpower.

And if retrenchment is still unavoidable after mutual consultations, Mr Lim pledged that unions will stand by the management to help explain, and “carry the ground”.

In response, DBS defended its decision, and said that the cuts affect 3.5 per cent of junior ranks, compared to 16 per cent of senior management. The bank also said a hiring freeze was already in place before it decided on retrenchments.

It had also thought long and hard about cutting wages, but decided against it due to different labour laws in countries where the bank has branches in.

When contacted, other banks like OCBC said they will engage the union when making major decisions concerning employees.

OCBC Bank and UOB Bank have also denied rumours that they were cutting staff. A week ago, UOB said that it would only use retrenchment as a last resort.

While it was business as usual on Friday, it was D-day for some staff at DBS Bank who had till the end of the week to know if they still had their jobs.

According to some staff members, those who had been retrenched were older employees and holding positions in middle and senior management. Their duties were also expected to be outsourced or taken over by junior officers.

In fact, some junior officers said morale is still “high” amongst their group. One even said that he would “take it in his stride” and find another job if he was axed.

But older bank officers said they were saddened by the news despite the substantial pay packages retrenched staff would receive. They were also “worried” not only for themselves but for colleagues they had worked with for years.

DBS Bank has said that officers asked to leave will get one month’s pay for every year of service, plus medical benefits and staff mortgage benefits for another six months.

Besides advice and counselling, DBS has also given its retrenched staff a list of 20 other companies who are hiring.

Channel NewsAsia also understands that Singapore’s branch of the Royal Bank of Scotland is not seriously affected by the company’s worldwide 3,000 job cut. Those affected are from RBS’ global banking and markets divisions. - CNA/vm

Source : Channel NewsAsia - 15 Nov 2008

Singapore Property - Buy, Sell, Rent, Invest

Mindy Yong

(+65)91002985

mindy@mindyyong.com

World leaders meet to brainstorm financial crisis-Washington

World leaders meet to brainstorm financial crisis-Washington

Bush stops short of far-reaching oversight that Europeans want

(Washington)

WITH economic damage piling ever higher, US President George W Bush and other world leaders are gathering to explore options for relief and to work on ways to prevent similar credit and financial calamities from happening again.

It’s a tall order, but Mr Bush is hopeful that some common ground for action can be found at the extraordinary summit, which began with a dinner yesterday, followed by closed-door deliberations today.

Ahead of the summit, Mr Bush warned his counterparts on Thursday not to crush the global economy under a raft of strict new financial regulations.

‘We must recognise that government intervention is not a cure-all,’ Mr Bush said. ‘Our aim should not be more government. It should be smarter government.’ Mr Bush put forward his own prescription, which includes bolstering accounting rules, reviewing anti-fraud provisions for trading in stocks and other securities, and improving regulatory coordination among countries. But he stopped short of the more far-reaching oversight and regulation that Europeans leaders want.

‘We want to change the rules of the game in the financial world,’ said French President Nicolas Sarkozy prior to the gathering.

The Europeans want to close loopholes that allow some financial institutions to evade regulation and ensure supervision for all major financial players, including credit ratings agencies or funds carrying high amounts of debt.

‘There is a need for urgency,’ said British Prime Minister Gordon Brown, who is seeking a new network of global regulators who would scrutinise the world’s largest financial institutions.

Europeans also are advocating an early warning system that would watch for financial bubbles like the one that enveloped the US housing market.

The housing bubble eventually burst and created the mess that the world leaders are now trying to clean up. They also want a pledge for concrete changes in just 100 days.

Critics blamed lax oversight and failures by regulators in the US and elsewhere to detect problems as one of the prime reasons behind the financial crisis.

The crisis, which erupted in the US around August of last year as mortgage investments soured with the housing market’s collapse, quickly spread to other countries.

Banks and other financial companies suffered huge losses and foreclosures skyrocketed. Troubles then snowballed to other areas, crimping car and student loans and locking up lending for many consumers and businesses worldwide.

All the fallout has pushed the global economy to the brink of recession. Unemployment in the US bolted to 6.5 per cent in October, a 14-year high.

Still, Mr Bush put up a stout defence of capitalism. ‘It is true that this crisis included failures, by lenders and borrowers, by financial firms, by governments and independent regulators,’ he said.

‘But the crisis was not a failure of the free market system. And the answer is not to try to reinvent that system.’

Besides the US, France, Britain and other big industrial powers, the summit also will include leaders from developing economic powers such as Russia, China, Brazil and India. — AP

Source : Straits Times - 15 Nov 2008

Singapore Property - Buy, Sell, Rent, Invest

Mindy Yong

(+65)91002985

mindy@mindyyong.com

No celebration, just relief, from Thursday’s rally

No celebration, just relief, from Thursday’s rally

But some strategists see Dow’s surge as a critical and positive sign for Wall Street

By ANDREW MARKS
NEW YORK CORRESPONDENT

INVESTORS signalled from the opening bell yesterday that they were unlikely to build on Thursday’s extraordinary rally, which saw the Dow rebound from a massive midday sell-off to close the day with a surge of 553 points, or 6.7 per cent.

BAD NEWS
The US government reported on Thursday that the number of workers drawing jobless benefits in the previous week hit a 25-year high
‘It was very reassuring to see investors come charging back into the market as we hit those multi-year lows, but frankly there was as little good reason for the rally as there was for the sell-off in the first three days of the week,’ said Mark Linder, a trader at Acorn Capital Management.

‘I don’t know what we can take away from yesterday’s session, but I’m not ready to say it’s a bullish sign.’

Stocks opened lower, pressured by the release of October retail sales data which fell a record 2.8 per cent, surpassing the old mark of 2.65 per cent in November 2001 following the terrorist attacks that year.

As at 10am in New York, the Dow Jones was off 27 points, or 0.3 per cent, while the S&P 500 was trading down six points, or 0.7 per cent, and the Nasdaq was giving up 26 points or 1.62 per cent.

Still, some market strategists considered Thursday’s comeback a critical and positive sign for the stock market, as investors continue to fear that stocks could sink below their October lows in the face of ongoing gloom.

Carter Worth, chief technical strategist at Oppenheimer, who last April forecast that the post-Bear Stearns rally that stocks were enjoying at the time would not last, sees stocks undergoing a stabilisation process that will eventually lead to gains.

‘On a day-to-day level, volatility remains high, but if you pull back a little and look at what’s happening from week-to-week, you’ll see signs of that stability. We’ve been in a sideways trading range since mid-October, and we’ll stay there from this point on with a bias towards the upside as we get into year-end trading.’

Thursday’s trading was significant insofar as it confirmed his thesis that the stock market hit a bottom last month. ‘I think the possibility of another sharp move downward, that would significantly break through those lows, is remote now, and we’ve got a good chance at a rally in coming weeks that will sustain itself through the end of the year.’

Mr Worth pointed to the market’s reaction to Intel’s guidance of a 10 per cent reduction in revenues for the coming quarter as proof that the selling is exhausting itself.

‘If the market doesn’t break down upon seeing the premier technology company in the world pulling up lame, that tells you there’s not a lot of data left out there that can sink the ship any deeper than it’s gone.’

Mr Worth’s forecast was tested yesterday, as investors were treated to another slew of bad news, both from the slumping economy and the ailing corporate sector.

And just the day before, the government had reported that the number of US workers drawing jobless benefits the previous week hit a 25-year high.

How sharply consumers are cutting back was reaffirmed at the corporate level by luxury retailer Nordstram’s, which reported worse-than-expected earnings and offered bleak guidance for 2009.

The Treasury Department’s Thursday announcement that it was shifting the focus of its bailout plan emphasised how little the US$300 million that the government has pumped into banks in the past month has done to open the credit markets.

Banks are now willing to lend to one another, as shown in the steep fall in the three-month Libor rates, from 4.82 per cent to 2.15 per cent over the past month, and healthy companies are once again able to tap the commercial paper market for short-term loans. But the growing number of companies with ailing balance sheets are continuing to get the cold shoulder, and on the consumer side, mortgage rates remain high, and banks have begun raising credit card rates, too.

The queue of financial institutions asking for government handouts continues to grow longer, and on Wall Street, few analysts believe the US$700 billion that Congress has authorised for the bailout plan will be enough. ‘US$1 trillion is a safe, even a conservative, estimate of how much Treasury will end up needing to inject,’ said Joel Naroff, president of Naroff Economic Advisors.

Source : Straits Times - 15 Nov 2008

Singapore Property - Buy, Sell, Rent, Invest

Mindy Yong

(+65)91002985

mindy@mindyyong.com

China warns of slump ahead of G-20 summit

China warns of slump ahead of G-20 summit

Analysts say warning may be timed to ease pressure on it to help solve global woes

By Peh Shing Huei, China Correspondent

China’s gross domestic product growth slowed to 9 per cent in the third quarter - its weakest in five years. — PHOTO: ASSOCIATED PRESS

BEIJING: China faces a ‘formidable challenge’ to prevent a slump in its economy, warned a senior official yesterday, as President Hu Jintao left for a summit to discuss the financial crisis with the world’s top leaders.
With Mr Hu expected to come under pressure in Washington DC to dish out more money to solve the global woes, Beijing rammed home a point that it has been repeating in the past few weeks: China is a developing country that is also affected by the crisis, and the best thing it can do is to keep its own economy humming.

While stating the official line that China’s ‘economic fundamentals’ are healthy, Mr Mu Hong, a deputy chairman of the powerful National Development and Reform Commission - the country’s top economic planning agency - stressed that China is also facing testing times.

‘This international financial crisis is a new challenge for us. It is a severe challenge,’ he said at a press conference.

‘The downturn trend in our economy is more obvious, especially since September. We hope a rapid downturn in growth will not occur,’ he added.

On the back of a dip in exports, China’s gross domestic product growth slowed to 9 per cent in the third quarter - its weakest in five years.

With its US$3.3 trillion (S$5 trillion) economy accounting for about a quarter of the world’s economic growth last year, Beijing has faced a chorus of calls to do more in the global credit crunch.

Yesterday, it met some of these demands with US$500 million financial aid to long-time ally and neighbour Pakistan, reported the Wall Street Journal.

Beijing hinted, too, that it might pitch in internationally. ‘We will actively participate in rescue activities for this international financial crisis,’ said deputy central bank governor Yi Gang at the same news conference.

‘We can act in many ways - bilaterally, for example, through currency swaps, and also multilaterally, for example, by participating in activities on the platform of the International Monetary Fund (IMF).’

It was the clearest indication yet that China is willing to help the IMF - albeit with the prize of more voting rights in the fund - and it came after Japanese Prime Minister Taro Aso said Tokyo would be willing to lend up to US$100 billion.

Mr Aso, together with Mr Hu, will be among the 20 leaders of the richest developed and developing countries meeting in the American capital today.

Analysts believe that the expected pressure on Mr Hu at the summit accounts for Beijing’s well-timed reminder of its mounting woes at home.

‘I will be very surprised if it was not part of their thinking,’ Professor Michael Pettis of Beijing University told The Straits Times.

Observers had been expecting China to unveil a stimulus package only at the end of this month, but Beijing announced 4 trillion yuan (S$888 billion) worth of measures on Sunday - in time for Mr Hu to take to Washington.

As analysts had expected, about a quarter, or 1.18 trillion yuan, of the package - which focuses on the long-overdue goal of driving up domestic consumption - will be paid for by the central government, Mr Mu said yesterday, with the rest taken up by local governments and the corporate sector.

Officials also said a ‘large part’ of the package was freshly committed funds, but provided no figures.

Mr Mu said Beijing would pump 100 billion yuan into the economy in this fourth quarter, with the bulk of it to be spent in the next fortnight.

True to its aim to boost domestic demand, almost half of that sum will be allocated to low-cost housing and rural development.

‘We have a market of 1.3 billion people which has great potential, and we also have great potential to boost investment and consumption. We still have large room to manoeuvre to ramp up domestic demand,’ said Mr Mu.

And after fighting inflation for most of this year, deflation is now a risk Beijing needs to counter, said Mr Yi.

He said the government aims to ‘avoid potential deflation, allow reasonable growth in money supply and loans, and ensure stable economic growth’.

Source : Straits Times - 15 Nov 2008

Singapore Property - Buy, Sell, Rent, Invest

Mindy Yong

(+65)91002985

mindy@mindyyong.com