EGRNF China Evergrande Group (CE)

REGULATION

Short Seller Ordered to Disgorge Profit

U.S. short seller Andrew Left must give up profits from a trade betting against a Chinese property company's shares in 2012 and will be barred from trading in securities in Hong Kong for five years, a tribunal in the city ruled.

Mr. Left must give up the 1.6 million Hong Kong dollars (US$210,000) in profits he made on the trade after transaction costs and pay the legal costs incurred by the city's securities regulator, according to the tribunal.

The regulator is seeking about HK$4 million, separate from surrendering the profits. He is also responsible for paying legal costs for the government, which will be calculated later, the tribunal said.

"I do not believe the decision properly reflected the case," Mr. Left said in an email to The Wall Street Journal. "I did an extensive amount of research and am disappointed that the courts have stifled my freedom of speech." He said he is appealing the decision.The decision was "a definite step backwards for efficient markets," Mr. Left said.

In August, the tribunal found that Mr. Left, best known for his critique of drug company Valeant Pharmaceuticals International Inc., was "reckless" or "negligent" for spreading false and misleading information about Chinese property developer China Evergrande Group.

Mr. Left sold short 4.1 million shares of the company before publishing a report on his website on June 21, 2012, saying the property developer was "insolvent" and had used "at least six accounting shenanigans to hide it." The company has denied the allegations.

--Julie Steinberg

HSBC

Leaving Monaco

HSBC Holdings PLC said it would exit Monaco, as the wealthy principality loses its allure for some global banks.

HSBC's Switzerland-based private bank said it would refer Monaco clients to CFM Indosuez Wealth Management, majority-owned by France's Crédit Agricole. Any remaining Monaco business will be wrapped up, HSBC said.

The agreement covers clients with about $9 billion of assets and affects around 200 employees. It is the latest exit for HSBC in a global shake-up of its operations since 2011. The bank has retreated from dozens of countries and businesses and shrunk and restructured its private bank.

The Monaco unit, acquired in 1999 through HSBC's acquisition of two banks from Lebanese financier Edmond Safra, is being shed because it doesn't fit into the bank's fresh focus on families and affiliates of HSBC commercial clients.

"It draws to a close the restructuring of our European private banking operations, with the future focus being on growing our business with strategic clients of the group," HSBC Private Bank said in a statement.

CFM Indosuez Wealth Management, describing itself as Monaco's largest bank, said Wednesday's agreement is part of its strategy to tap ultrahigh-net-worth individuals in key markets.

Monaco is fertile ground for private banks because its lack of income tax draws billionaires and other wealthy individuals.

--Margot Patrick

ING GROEP

CEO: Basel IV Imperils Growth

New rules designed to strengthen the banking sector risk damaging lenders' ability to support the economy, the head of the Netherlands's largest bank by assets said.

Ralph Hamers, chief executive of Dutch bank ING Groep NV, told a Frankfurt journalists club that in some areas, new rules -- which critics refer to as "Basel IV" -- would require capital increases. "The normal reaction of banks is to shrink your balance sheet," he added.

The comments underline tensions between Europe and global regulators only weeks before the new rules are due to be completed.

Banks can't help support the economy "if we don't grow as banks," he said. This scenario isn't "supportive of what Draghi's trying to do and what Juncker's trying to do," he said, referring to European Central Bank President Mario Draghi and European Commission President Jean-Claude Juncker.

Mr. Draghi's institution has for years tried to prod banks to boost lending via ultracheap loans to banks and purchases of assets off banks' balance sheets, in the hope that lenders would pass the new funds to the economy. Mr. Juncker has promoted a EUR315 billion ($345.9 billion) investment plan to support growth on the Continent.

The continent's banks argue that the proposed new rules would hurt European lenders in competition against American rivals. The rules are designed to limit banks' ability to calculate the riskiness of mortgage assets the banks hold.

Unlike their American counterparts, European banks generally hold mortgage loans on their balance sheets. As a result, they have to offset more capital against those loans. Despite the objections, the committee, based in Basel, Switzerland, wants the rules finalized by the end of the year.

Mr. Hamers, who said his bank is "probably the most pan-European bank there is," said that more consolidation in the sector would be good, though he said that it was more likely that this would happen within countries rather than across borders, since there remain restrictions on moving funds across borders.

"There is no freedom to move liquidity around. There is no freedom to move capital around," he said.

Mr. Hamers also cautioned against painting an overly bleak picture of Germany's banking sector, especially its biggest lender, Deutsche Bank, which has faced a litany of regulatory trouble in recent years. "Is it a matter of perception?" he asked, noting that the bank's capital is stronger than it was during the crisis. "I wouldn't be so quick saying German banks are weak," he said. "Deutsche Bank has litigation issues. Italian banks have nonperforming loans. Every bank has a different story, " he said.

--Todd Buell, Hans Bentzien

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(END) Dow Jones Newswires

October 20, 2016 02:47 ET (06:47 GMT)

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