GIC is the biggest shareholder of UBS

[Merl Haggard]

S'pore gahmen is the biggest shareholder of UBS!

 

[soikee]

UBS Made Trading Loss of $2 Billion on Unauthorized Trading

By Paul Verschuur

Sept. 15 (Bloomberg) -- UBS AG said it made a trading loss of about $2 billion because of unauthorized trading at its investment bank.

The lender may book a loss in the third quarter of 2011, it said today in an e-mailed statement.

UBS AG fell as much as 9.6 percent in Zurich trading after announcing a trading loss of about $2 billion because of unauthorized deals at its investment bank.

 

[scroobal]

There are thousands of businesses to invest but we seem to strike the wrong one. One or twice is fine but the consistent trend seems to be pretty much established. Note also when it comes to Rogue trading we already have 3 of the 5 biggies with Leeson leading the charge.

 

[Merl Haggard]

There are thousands of businesses to invest but we seem to strike the wrong one. One or twice is fine but the consistent trend seems to be pretty much established. Note also when it comes to Rogue trading we already have 3 of the 5 biggies with Leeson leading the charge.

The decision to invest in UBS was made by Tony Tan in 2007 and backed by LKY, and yet 35 percent of Sinkies were dumb enuff to elect Tony Tan to be their President.

 

[refulgence]

The decision to invest in UBS was made by Tony Tan in 2007 and backed by LKY, and yet 35 percent of Sinkies were dumb enuff to elect Tony Tan to be their President.

TT must be laughing at his good fortune. Imagine the ruckus TJS would have raised if he had been elected instead.

 

[jixiaolan]

It has nothing to do with bad luck or the consistency in lack of luck. It has to do with poor governance, reckless and irresponsible way of managing sovereign fund. Which fund manager will be that imbecile to inject ten of billions into a failing bank and yet voluntarily decline board seats?

 

[Forvendet]

I hope that I'm not breaching OSA but that's what I know from my years in the banking industry. The GIC investments are primarily rescue funds for UBS, but to be fair enough, some decent returns are expected "in the long run." You must understand UBS relation to Singapore in 1970s and 80s. During those years, Switzerland, UBS, SBC and CS (if you don't understand these acronyms, you probably won't understand what I'm writing about) were backing Singapore to the hilt at the upstart of Singapore as a country and an economy.

Nowadays people talk about reserves being mis-invested. Where do they think the reserves come from? By digging oil or gold from Singapore soil? By the hard works of the folks? 2 million folks with average $400 income? Think back what are the taxes 70-80s. Confiscating all your grandparents' and parents' incomes also can't build up reserves as large as now. Most of the reserves came from international trade and transport and entreport, and later oil refinery, not our own oil since we have none, but just refinery service.

The Swiss banks in the earlier years backed Singapore with all their trading connections. How the hell else you think Keppel and Tanjong Pagar got so many ships and containers for 2 million population until it ranks alongside Amsterdam for Holland and Europe and New York for USA? Those in or have been in banking, trading or shipping business should know. Most businesses generated have nothing much to do with Singaporeans except that profits and jobs are generated for services, and in general, expanding economy beyond inherent weight.

That's the incoming side of the equation. What about the outgoing? That is, goods manufactured in Singapore for export. That also, Swiss banks played a pivotal role for introduction and credit facilitation. The way I read is, GIC, TT and LKY are not stupid. Why would they want to waste money? The money is spent on rescuing good friends in the past, partly repayment in gratitude and also to save them because good friends are hard to find.

 

[mojito]

Reverse Midas Touch at work?

 

[Merl Haggard]

I hope that I'm not breaching OSA but that's what I know from my years in the banking industry. The GIC investments are primarily rescue funds for UBS, but to be fair enough, some decent returns are expected "in the long run." You must understand UBS relation to Singapore in 1970s and 80s. During those years, Switzerland, UBS, SBC and CS (if you don't understand these acronyms, you probably won't understand what I'm writing about) were backing Singapore to the hilt at the upstart of Singapore as a country and an economy.

Nowadays people talk about reserves being mis-invested. Where do they think the reserves come from? By digging oil or gold from Singapore soil? By the hard works of the folks? 2 million folks with average $400 income? Think back what are the taxes 70-80s. Confiscating all your grandparents' and parents' incomes also can't build up reserves as large as now. Most of the reserves came from international trade and transport and entreport, and later oil refinery, not our own oil since we have none, but just refinery service.

The Swiss banks in the earlier years backed Singapore with all their trading connections. How the hell else you think Keppel and Tanjong Pagar got so many ships and containers for 2 million population until it ranks alongside Amsterdam for Holland and Europe and New York for USA? Those in or have been in banking, trading or shipping business should know. Most businesses generated have nothing much to do with Singaporeans except that profits and jobs are generated for services, and in general, expanding economy beyond inherent weight.

That's the incoming side of the equation. What about the outgoing? That is, goods manufactured in Singapore for export. That also, Swiss banks played a pivotal role for introduction and credit facilitation. The way I read is, GIC, TT and LKY are not stupid. Why would they want to waste money? The money is spent on rescuing good friends in the past, partly repayment in gratitude and also to save them because good friends are hard to find.

The biggest contribution to our current huge reserves is from the compulsory acquisition of land.

A family friend of ours whose land ownership stretched from Bedok to Changi (where Changi airport is situated) was acquired in the late 70's and compensated with $20m. According to their valuers today its value is worth more than $25b.

Compared to the descendants of Lim Nee Soon and Lim Chong Pang, our friend's loss was small in comparison.

 

[Forvendet]

The biggest contribution to our current huge reserves is from the compulsory acquisition of land.

Yes, the operative word is "current." What I was talking about was "startup."

 

[mojito]

That's the incoming side of the equation. What about the outgoing? That is, goods manufactured in Singapore for export. That also, Swiss banks played a pivotal role for introduction and credit facilitation. The way I read is, GIC, TT and LKY are not stupid. Why would they want to waste money? The money is spent on rescuing good friends in the past, partly repayment in gratitude and also to save them because good friends are hard to find.

Good friends are hard to find, eh?

According to a clarification on GIC's relationship with the Government of Singapore found in its FAQ, I quote:

Is GIC a private company or a government body?

We are a private company wholly owned by the Government of Singapore. It was set up with the sole purpose of managing Singapore’s foreign reserves. The Government, which is represented by the Ministry of Finance in its dealings with GIC, neither directs nor interferes in the company’s investment decisions. It holds the board accountable for the overall portfolio performance.

Although we are government-owned and manage government funds, our relationship with the government is that of a fund manager to a client. We operate, invest and measure our performance in the same way as any global fund management company.

It is either operates independently of political considerations or it does not. If GIC made the investments on a political or strategic basis, then it is in breach of its own charter, and had lied to the US Congress (Correction: It was Temasek that testified to US House of Representatives). Bro Forvendet, the powers that be will never admit it even if this is true, because doing so means admitting a lack of independence. Their only feasible solution is to take responsibilities for not doing sufficient due diligence before making such a large, concentrated bet on the financial institution.

I would be placated to see GIC make a statement clarifying that they have done sufficient due diligence (prove it) but it just wasn't adequate, and then promise to refine the process, improve risk management and transparency. By saying nothing is wrong and nothing needs to be changed, it will only anger people more.

Still not quite enough to kick up a ruckus in parliament, because its just your conjecture atm.

 

[Forvendet]

Yes, you may call it just a conjecture from my past experience in the industry. I have no objection to that. I'm not insisting that I'm right. I'm just offering an opinion, and in my own words "it was my reading" of the situtaion.

 

[longbow]

That's the incoming side of the equation. What about the outgoing? That is, goods manufactured in Singapore for export. That also, Swiss banks played a pivotal role for introduction and credit facilitation. The way I read is, GIC, TT and LKY are not stupid. Why would they want to waste money? The money is spent on rescuing good friends in the past, partly repayment in gratitude and also to save them because good friends are hard to find.

Aiyoh - there is no ulterior motive lah. It is all business.

1) Singapore was well situtated as a port and the global sea and trade power then - the Brits - knew this. As global trade increased, shipping transactions increased and our ports prospered - that alone generated lots of revenue (ship repair, supply, oil refining, transshipment, legal, insurance etc etc).

2) then we opened up to MNCs to come set up factories and our sell was cheap labor, decent infrastructure (JTC), special tax incentives and of course our shipping facilities - the money part is not too big of an issue since MNCs had the money!

3) With MNCs coming in land prices increases and that is $ into JTC coffers. With better pay (MNC jobs paid better than farming) housing prices increases and as Merl said, the land grab by the Gov was just money in the coffers.

4) Reclaimation - It cost about S$250 per square meter to reclaim land. That is $25 per sf cost. They sells this reclaimed land (60 to 99 years lease) for up to $2K per sf. Just go see how many sf of reclaimed land there is and you can see the profit. Merl is right it is the land! BTW HK Gov's Rev is from land sales!

5) Why buy UBS shares - nothing sinisters. Swiss under pressure from EU/US on secrecy issues. Singapore wanted this business (and see booming potential from newly minted rich Chinese and Indian) and UBS is the biggest of the big fish in this business. We wanted to be next Swiss and can offer the laws needed. Investing in UBS guarantees a download of the DNA to Singapore. Of course they did not expect expect the economic downturn.

 

[Forvendet]

Fine. I'll accept this version along with other versions I find valid. There's no single reason for things like this. There's always a myriad of reasons coming together.