Exclusive: Wal-Mart not considering a bid for Whole Foods - source
Wal-Mart Stores Inc is not actively considering making an offer for Whole Foods Market Inc, a source familiar with the matter told Reuters on Friday.
HONG KONG China's Big Four banks' reported weaker-than-expected first-quarter earnings on Friday, with the sector facing growing pressure from a slowing economy and rising funding costs.
Regulators have also closed in on the banks' freewheeling practice of charging fees and commissions, after the volume of complaints from customers and politicians grew louder in the last year.
Industrial and Commercial Bank of China Ltd (1398.HK), the world's biggest bank by market value, reported on Friday a slower 14 percent rise in first-quarter profit, hit by weaker-than-expected fee and commission income.
Agricultural Bank of China (1288.HK), the nation's No. 4 bank by market value, posted a net profit of 43.5 billion yuan but was the fourth Chinese bank in a row to miss analysts' expectations.
Bank of China (3988.HK), the country's No. 3 by market cap, posted first-quarter numbers on Thursday that also fell short of the consensus view, hit by flat net interest margins. China Construction Bank (0939.HK), the last of the Big Four to report on Friday, also missed expectations.
"For the large banks, margins should all come under pressure because of rising funding costs," said Stanley Li, an analyst at Mirae Asset Management in Hong Kong. "Depositors are looking for higher-yielding places to put their money, and that means funds cost more for banks."
Eager to escape the negative real interest rates that are centrally set by Beijing, many depositors have taken to investing in other areas such as real estate or wealth management products instead, crimping banks' ability to lend.
China's regulator only allows banks to lend out 75 percent of the deposits they take in, which means the banks can't grow their loan book freely to meet demand for credit.
The sheer size that China's banks have grown to is astonishing, when factoring in that the Big Four - Bank of China (601988.SS), ICBC (601398.SS), China Construction Bank (601939.SS) and Agricultural Bank of China (601288.SS) - were technically insolvent institutions less than a decade ago.
ICBC's market capitalization of $240 billion is slightly less than the combined value of Goldman Sachs (GS.N), Morgan Stanley (MS.N), Citigroup (C.N) and Bank of America (BAC.N). ICBC's 2011 net profit alone is nearly equal to Morgan Stanley's entire market worth.
ICBC, AgBank and Bank of China's first-quarter profits totaled around $22.5 billion, or roughly three times that of J.P. Morgan (JPM.N), Citigroup and Wells Fargo (WFC.N) put together. ICBC's first-quarter profit alone was larger than the combined net income of the three U.S. banks.
The Big Four reported a combined 14 percent rise in total assets, to 51.3 trillion yuan last year, roughly the size of the German, French and British economies combined, the New York Times pointed out earlier this week.
But the huge growth spurt for the Big Four may be set for a downshift.
Analysts are divided on whether China has seen its worst for the year, but they are confident its economy will pull through with growth of at least 7.5 percent, if not over 8 percent, as Beijing relaxes monetary policy to foster activity.
And in a sign that Beijing is loosening policy reins to support the economy, Chinese banks lent a whopping 1.01 trillion yuan in March in their biggest lending surge in 14 months as the government relaxed credit restrictions.
The spike in loans underlined easier credit conditions in China this year, with lending rates in the grey market pulling back from sky-high levels of as steep as over 80 percent last year when Beijing was still tightening policy.
But the costs of the loans are beginning to eat into the banks' bottom line with greater force.
Bernstein Research senior analyst Mike Werner said in a research note this week the brokerage forecasts the group will report first-quarter net income growth of 13-14 percent, 2 percent below consensus estimates on the back of higher credit costs.
Following a widely publicized visit to the entrepreneurial hotspot of the eastern coastal city Wenzhou on October 5, premier Wen Jiabao spoke about the need for financial support for the small- and medium-sized businesses that were being strangled by a liquidity squeeze. A spate of suicides by small business owners in the city threw the issue into sharp relief.
As part of its response, the government has been cracking down on the fees that banks can charge these businesses, including the so-called 'consulting fee' banks were able to levy just for maintaining a lending relationship with a company.
"It was encouraging to see Bank of China growing fee income," said Alexander Lee, an analyst at DBS Vickers. "There were expectations that fees might decline due to the increasing controls that regulators have put in place."
This move can be seen in the broader context of increasingly direct public comments by senior party officials both within and outside the banking system, aimed at shaking up the big banks' cosy monopoly and appeasing growing public dismay over their big profits.
Some delegates attending China's annual parliamentary meetings in Beijing in March openly criticized rising bank profits, taking a public stand that is rare for the country's normally docile legislature.
These comments foreshadowed a speech in early April where premier Wen said the country's state banks act as a monopoly that make money "far too easily".
Jiang Jianqing, chairman of ICBC, the world's biggest bank by market value, said in a taped CNBC interview on Thursday he wanted to see "a healthier, more diversified and more multi-ownership financial system" including more "anti-monopoly enforcement."
He also said profit growth at Chinese banks will come down to reasonable levels starting this year as the economy slows.
The concerted nature of these public remarks hint at possible reform of China's interest rate policy, which puts a ceiling on the interest rates banks can pay to attract deposits and sets a floor on lending rates, ensuring a healthy interest rate spread that is currently hovering around 270 basis points.
Liberalizing these rates would almost certainly narrow that spread by pushing up the rate paid on deposits as banks compete more freely with each other.
This reform is unlikely to take place too quickly, however, and in the short term analysts see the smaller banks which have the highest loan-to-deposit ratios hit harder by rising funding costs affecting the whole sector.
For the entire sector, though, the expectation is for a slowdown in fee growth, as Bernstein's Werner points out.
"We forecast that fee income growth will decelerate further... due to the continued government restrictions on the type of fees the banks can charge to small enterprises," he said in the note.
(Additional reporting by Twinnie Su and Vikram Subhedar in Hong Kong, Koh Gui Qing in Beijing; Editing by John Mair, Michael Flaherty and Muralikumar Anantharaman)
MILAN/ROME Italy began winding up two failed regional banks on Sunday in a deal that could cost the state up to 17 billion euros ($19 billion) and will leave the lenders' good assets in the hands of the nation's biggest retail bank, Intesa Sanpaolo.