March 26 (Bloomberg) -- Executives of China’s largest banks called on regulators to curb the rapid expansion of Internet financing in that nation.
The form of financing has siphoned off so much business from traditional banking that it was labeled a “blood-sucking vampire” by a commentator on state-run television.
One focus of critics’ ire has been Yu’E Bao, the fund pioneered nine months ago by Alibaba Group Holding Ltd.’s online-payment affiliate Alipay. Its ease of use, involving a few taps on a smartphone, has drawn deposits from 81 million customers chasing returns higher than China’s banks can offer.
Bank executives, unable to stop the decline in their cheapest source of funding because interest rates on comparable deposits are fixed by the government at 0.35 percent, are calling for more regulation, saying that lack of oversight and risks related to account security, yield volatility and liquidity management threaten China’s financial stability.
China’s policy makers are pushing for unprecedented changes in the banking system, including deposit insurance and deregulating interest rates, to give markets a bigger role in the economy. Cheap funding costs have enabled banks to fuel industry overcapacity and excessive borrowing by state-owned companies and local governments.
Cigarette Smuggling Prompts Crackdown by States Losing Billions
Higher cigarette taxes are prompting a smuggling trade along routes on the East Coast, and states are trying to stem the contraband to fight crime and regain lost revenue.
Lawmakers in Virginia and Maryland boosted the penalties on smuggling in the past year. A Massachusetts commission released a report March 1 recommending a crackdown on trafficking. Legislation is pending in states including New Jersey and Rhode Island.
As states and the federal government raised tobacco taxes, the profit incentive for smugglers increased. States are trying to prevent the loss of billions of dollars in revenue and to combat an increase in organized crime.
Santander Fined $20.5 Million by U.K. Watchdog on Advice Flaws
Banco Santander SA was fined 12.4 million pounds ($20.5 million) by the U.K. regulator for flaws in investment advice given to customers as the watchdog clamps down on misconduct in consumer lending.
The fine, the biggest for the U.K. arm of Spain’s largest lender, follows a probe by Britain’s Financial Conduct Authority started more than a year ago. The watchdog found that Santander failed to prevent customers from getting misleading information, didn’t carry out regular checks on customers, and didn’t ensure new advisers were properly trained before giving advice.
The Spanish bank received a 30 percent discount from the FCA because it settled at an early stage in the investigation. Santander has closed its investment advice arm as a result of the probe.
“Santander U.K. takes its regulatory obligations very seriously and has cooperated fully with the FCA’s investigation,” the company said in an e-mailed statement.
Hackers Selling Exploits for Bitcoins Thriving in Illicit Market
Hackers from the U.S., Russia and Ukraine hawk computer exploits for as much as $300,000 on an underground market fueled by digital currencies like Bitcoin, a report by Rand Corp. and Juniper Networks Inc. shows.
The trade in software, data or commands that takes advantage of computer bugs generates billions of dollars using digital storefronts that connect sellers and buyers or where mercenaries can be hired to do the job, according to the report released yesterday.
Exploits, as tools for conducting computer attacks are known, can be used for illegal acts from stealing data off a mobile device to breaching corporate databases, according to the report.
Hackers are increasingly using virtual currencies to hide their identities, as well as so-called darknets, or private forums, according to the report.
IRS to Make Limited Use of Offshore Bank Data, Koskinen Says
The Internal Revenue Service initially will make limited use of information supplied by other governments about U.S. citizens’ offshore holdings because of budget constraints, Commissioner John Koskinen said at a conference in Washington.
Major pieces of the Foreign Account Tax Compliance Act, or Fatca, take effect July 1. The law has led to agreements with governments around the world to exchange information.
Koskinen said he was conscious of the potential difficulties foreign banks are having in developing compliance systems. The IRS doesn’t plan to postpone the July 1 deadline, he said.
To contact the reporter on this story: Carla Main in New York at email@example.com
To contact the editors responsible for this story: Michael Hytha at firstname.lastname@example.org Andrew Dunn, Charles Carter