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From: snablogspot 4:11 am
To: LITTLEREDDOT (10 of 10)
56313.10 in reply to 56313.1
>>>> Tony Tan highlights his financial expertise at lunchtime rally<<<<<<<
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Business Times - 30 Jan 2008
GIC has capacity for more investments in troubled banks: Tony Tan
Unusual situation in US and Europe prompted UBS, Citi deals, he explains
By VIKRAM KHANNA
(SINGAPORE) Even after taking significant stakes in UBS and Citigroup, the Government of Singapore Investment Corporation (GIC) could still invest in another distressed bank, if the deal is worthwhile, the agency's deputy chairman Tony Tan revealed in a briefing to BT.
'We will look at any deal that is shown to us. We have a duty to do so. We would still have the capacity if we find it worthwhile to invest,' he said. 'Whether it would be of the same size as what we are now doing is a matter to be decided.'
On Dec 10 last year, GIC took a 9 per cent stake in UBS for 11 billion Swiss francs (S$14.2 billion). That was followed by an investment of US$6.88 billion into Citigroup on Jan 15, which could bring GIC's stake in the troubled US bank to about 4 per cent.
Explaining the rationale for the two investments shortly after the closure of the Citigroup deal, Dr Tan acknowledged that both 'are out of character for GIC', which, he said, prefers to be more of a portfolio investor.
However, what prompted GIC to invest in UBS and Citigroup was 'a very unusual situation in US and European financial stocks, where a combination of events - the sub-prime crisis, a credit squeeze, the possibility of recession - have all come together to create a situation where even sound banks like UBS and Citigroup are temporarily facing significant problems. But their franchises are strong'.
'In the case of UBS, they have a worldwide global wealth management business which is something not replicable by any bank. Citigroup has an international worldwide consumer business which is also unique.'
Dr Tan indicated that the terms on which the two deals were negotiated were fair. 'We do not think that they are unduly favourable to GIC,' he said, adding that 'GIC is not seeking to take advantage of anyone'. He also disclosed that it was Citigroup that approached GIC.
Stressing the safety of the investments, Dr Tan pointed out that 'notwithstanding their large size, the two transactions have been structured with appropriate downside protection and are within GIC's risk management parameters'.
For example, with respect to the Citigroup deal, he said: 'Even if the market should deteriorate further (the deal) is structured in the form of convertible note preferred shares and we would get the 7 per cent share coupon. When we convert the convertible note, or when it is redeemed by Citigroup, then we would have the upside.'
He added, 'Even if the problems continue and it takes longer than people anticipate to resolve the problems . . . the preferred convertible gives us the protection which, in these uncertain times, we regard as being very important.'
Dr Tan pointed out that GIC's investments into UBS and Citigroup would not take the agency beyond its stipulated limits for investments in financial stocks. 'GIC's practice is to try and ensure that our risk is generally well spread out,' he said. '(Our investments in) UBS and Citigroup, plus our present investments in financial companies in the US and Europe, are kept within the risk limits which we have prescribed.'
Addressing the concerns expressed in some quarters about recent high-profile investments by sovereign wealth funds, Dr Tan maintained that such funds contribute to financial stability.
'If you look at the recent investments by sovereign wealth funds in the banks, they show that one benefit of sovereign wealth funds is that they are long-term investors who can provide capital when it's needed,' he said. 'They are not short-term in-and-out dealers like hedge funds, and they can help stabilise financial positions.'
To: LITTLEREDDOT (10 of 10)
56313.10 in reply to 56313.1
>>>> Tony Tan highlights his financial expertise at lunchtime rally<<<<<<<
------------------------------------------------
Business Times - 30 Jan 2008
GIC has capacity for more investments in troubled banks: Tony Tan
Unusual situation in US and Europe prompted UBS, Citi deals, he explains
By VIKRAM KHANNA
(SINGAPORE) Even after taking significant stakes in UBS and Citigroup, the Government of Singapore Investment Corporation (GIC) could still invest in another distressed bank, if the deal is worthwhile, the agency's deputy chairman Tony Tan revealed in a briefing to BT.
'We will look at any deal that is shown to us. We have a duty to do so. We would still have the capacity if we find it worthwhile to invest,' he said. 'Whether it would be of the same size as what we are now doing is a matter to be decided.'
On Dec 10 last year, GIC took a 9 per cent stake in UBS for 11 billion Swiss francs (S$14.2 billion). That was followed by an investment of US$6.88 billion into Citigroup on Jan 15, which could bring GIC's stake in the troubled US bank to about 4 per cent.
Explaining the rationale for the two investments shortly after the closure of the Citigroup deal, Dr Tan acknowledged that both 'are out of character for GIC', which, he said, prefers to be more of a portfolio investor.
However, what prompted GIC to invest in UBS and Citigroup was 'a very unusual situation in US and European financial stocks, where a combination of events - the sub-prime crisis, a credit squeeze, the possibility of recession - have all come together to create a situation where even sound banks like UBS and Citigroup are temporarily facing significant problems. But their franchises are strong'.
'In the case of UBS, they have a worldwide global wealth management business which is something not replicable by any bank. Citigroup has an international worldwide consumer business which is also unique.'
Dr Tan indicated that the terms on which the two deals were negotiated were fair. 'We do not think that they are unduly favourable to GIC,' he said, adding that 'GIC is not seeking to take advantage of anyone'. He also disclosed that it was Citigroup that approached GIC.
Stressing the safety of the investments, Dr Tan pointed out that 'notwithstanding their large size, the two transactions have been structured with appropriate downside protection and are within GIC's risk management parameters'.
For example, with respect to the Citigroup deal, he said: 'Even if the market should deteriorate further (the deal) is structured in the form of convertible note preferred shares and we would get the 7 per cent share coupon. When we convert the convertible note, or when it is redeemed by Citigroup, then we would have the upside.'
He added, 'Even if the problems continue and it takes longer than people anticipate to resolve the problems . . . the preferred convertible gives us the protection which, in these uncertain times, we regard as being very important.'
Dr Tan pointed out that GIC's investments into UBS and Citigroup would not take the agency beyond its stipulated limits for investments in financial stocks. 'GIC's practice is to try and ensure that our risk is generally well spread out,' he said. '(Our investments in) UBS and Citigroup, plus our present investments in financial companies in the US and Europe, are kept within the risk limits which we have prescribed.'
Addressing the concerns expressed in some quarters about recent high-profile investments by sovereign wealth funds, Dr Tan maintained that such funds contribute to financial stability.
'If you look at the recent investments by sovereign wealth funds in the banks, they show that one benefit of sovereign wealth funds is that they are long-term investors who can provide capital when it's needed,' he said. 'They are not short-term in-and-out dealers like hedge funds, and they can help stabilise financial positions.'
