SINGAPORE (Reuters) – Singapore wealth fund Temasek warned of further contagion from the global credit crisis after it doubled its full-year profit by selling billions of dollars of assets.

The fund, which poured more than $5 billion into Merrill Lynch in December, said it saw value in the banking industry, despite the U.S. subprime disaster that has forced banks to write off more than $500 billion.

“The fallout of the credit crisis will continue to dampen the global economy over the next 24 months, with sharply escalated oil and food prices beginning to test inflation expectations,” Chairman S. Dhanabalan said in the firm’s annual report.

But Temasek sees opportunities in financials and said it would not cap its investments in that sector, which grew to 40 percent of its portfolio in the year to end-March from 38 percent previously.

“The financial service industry is one we believe in,” Manish Kejriwal, Temasek’s senior managing director for investment, International and India, told reporters at its annual briefing on Tuesday. “It’s a proxy to the economic growth.”

Read the full article at Yahoo!News

- This is a totally super high risk investment portfolio that Temasek is venturing into the “unknown”.

These fund managers or advisers may or may not know what is going on on the energy crisis that propagated into property markets. The talks about dropping property prices started many years ago when oil prices starts to goes up since 2002.

Many mortgages sub-prime loans are invented for the property investors to “flip” their properties in a short span of time at low starting interest rates. This allow investors to cash in on the lower interest rates on the first few years of loan and manage to sell off at a profit before the higher interest rates kicks in.

When the cost of living went up due to higher oil prices that spike transportation cost, suburbs living suddenly loses economic value and collapse in prices crashing the property market in the thousands.

Property owners & investors are caught in the high interest mortgage loan and low selling prices of their properties. When these people declare bankruptcies, the bank will foreclose the properties to recover as much as possible. Loss is inevitable to the banks now and had to write off these bad loans.

Banks tried to sell off these sub-prime loans to many other banks to gain liquidity to “loan” more money out hence affecting other major banks as well.

The ripple effects had spread across the world financial industry causing many banks to lose billions or trillions of dollars.

What Temasek are betting on is the revival of the property market in United States that may be pretty tough unless the cost of oil goes down substantially.

This may means Temasek is investing blindly without knowledge of oil prices possible future, with talks about world oil supply peaking in production and ever increasing demand may make Temasek in the losing end of the “roulette table”.

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YOU could say he was a bank robber with a difference.

Instead of a gun, he hit banks with just a simple plan. And it made him $2.1 million richer – until the law caught up with him.

Quah Lai Meng, 33, was working in a handphone shop when he noticed what he thought was a chink in the armour of the banking industry – the cashline facility.

Through this facility, banks provide ready cash to consumers who then repay the amount with interest.

In November 2007, Quah forged an application form for a DBS Cashline facility using the particulars of his friend, Luah Kian Hing. Luah has been charged and his case is pending.

DBS issued a credit card and cashline cheque book in Luah’s name but sent them to Quah’s address.

The credit limit was $5,000.

Quah, who has only PSLE qualifications, then executed his plan to defraud DBS, according to court documents.

Quah, who is single and was engaged to be married, withdrew the maximum $5,000 from the DBS Cashline account.

LIMIT REACHED

He knew that before he could make more withdrawals, he had to make repayments into the account since the credit limit had been reached.

He prepared several cheques, which belonged to some friends, to make payments into the account.

Court documents did not identify these friends nor explain the role they played in this scam.

These dud cheques belonged to accounts that had no money. His plan was to dupe DBS into thinking he had already settled his outstanding debts.

Quah knew it would take one to two days for the bank to realise this.

On 27 Dec 2007, he deposited a UOB cheque for $46,700 into the DBS Cashline account. Two days later, he went to the POSB branch at Hougang Central and withdrew $3,000.

It was easy money for him and he did it again on 9 Jan this year.

He deposited an OCBC cheque for $570,000 into the DBS Cashline account.

The next day, he got his sister-in-law, Lim Wee Ching, to withdraw $128,000 from the POSB branch at Hougang Central. He then got her to keep the money for him.

On another occasion, Quah got his brother, Lai Huat, to keep $200,000 for him. He had got the money as a result of cheating DBS.

Quah struck again on 15 Jan, at the POSB branch at Funan DigitaLife Mall. He left the branch with $240,000 in cash.

DBS finally got wind of what he was up to and lodged a police report.

- He is the Singapore lousy version of “Catch Me If You Can” the only difference is he did not forge the cheques, all these cheques belong to someone else which contains no money.

The weird thing is there is no alarm when he bank in cheques from empty accounts to his cash line account.

Does that means we can cash in a cheque from empty account to cash line account and the money will be available again to withdraw? Who is suppose to check if the cheque is valid?

27 Dec 2007 – deposited dud cheque of $46,700 into the DBS Cashline account

29 Dec 2007 – withdraw $3,000 himself

9 Jan 2008 – deposited dud cheque of $570,000 into the DBS Cashline account

10 Jan 2008 – withdraw $128,000 by his sister

15 Jan 2008 – withdraw $240,000 himself

DBS finally found out after 15 Jan 2008…

So, it took slightly more then 2 weeks to detect that the dud cheque that he deposited previously on the 27 Dec 2007 (After Christmas – must be overloaded with cheques) are invalid and quickly filed an police report!

From this case it had shown that one department is faster then the others.

Department A – Cheque clearing
—Data enter the $$$ amount into the stipulated account stated in the cheque quickly…obviously overloaded with cheques…they did not check the source balance before depositing the amount into the account. (Took about 1 working day to see pending balance in the ATM)

Department B – Fund transfer
—The guy trying to transfer funds from the source account are fighting fire as the source account(s) are empty!! They took more then 2 weeks to realize this!!? Maybe it’s not a human that does it…probably it’s automatic and some kind of warning pop-up are ignored by the bank officers?

“Error! Source account have inssuficient funds! Unable to deduct!”
“Error! Source account have inssuficient funds! Unable to deduct!”
“Error! Source account have inssuficient funds! Unable to deduct!”

Bank guys might just says “Yay! Another bounce cheque to penalize the guy! Bill the guy in the next bill!” then they wait for 1 month…by then…it’s too late.

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“Our exposure to Fannie Mae and Freddie Mac is not material,” a United Overseas Bank spokeswoman said in a statement. No. 1 bank DBS also said earlier its exposure to the two mortgage firms overall was immaterial.

“…$49 million of the CDOs contain 3 percent exposure to Fannie Mae and Freddie Mac,” OCBC said in a statement.

OCBC said its insurance subsidiary, Great Eastern Holdings GELA.SI, has a total exposure of S$37 million ($27.5 million) to Fannie Mae via investments in debt securities and credit-linked notes.

See full article at Reuters

- Government of Singapore Investment Corp (GIC) and Temasek involvement in their previous investment spree includes UBS, Citigroup, Merrill Lynch & Co., Standard Chartered Plc and many more.

Government of Singapore Investment Corp (GIC) had declined to comment on specific details of its holdings according to The Straits Times (16 July 2008)

I do hope the MAS can shed some lights in this “mysterious dark hole” on the exposure by the local banks (DBS+POSB), GIC and Temasek.

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HE applied for a study loan and was angry when it was rejected. But a nastier surprise was in store when he tried to find out the reason for the rejection.

It seemed he was overdue in his payments for his overdraft account.

The shock: He had no idea he had an overdraft account or, for that matter, two credit card accounts in his name.

It was then that MrBenny Wong discovered that someone had used his particulars to open the three accounts illegally with United Overseas Bank (UOB), in July 2006.

The 28-year-old marketing executive found out about the accounts when he got a Credit Bureau report on 24 Jun, after his loan was rejected.

He called UOB immediately and a customer service officer confirmed he had active accounts with the bank.

Mr Wong has since made a police report.

Last month, he applied for a study loan of $17,000. When it was not approved, he said, he had to suspend his studies in a private school here for a bachelor’s degree in business and marketing after two weeks of classes.

‘I was quite angry and shocked,’ he said. Explaining why he decided to get a credit report done, he said: ‘If I hadn’t done so, I might not have known till I’m 50 or lawyers come knocking on my door,’ he said.

The Credit Bureau Singapore records all credit card payment behaviour, and helps credit providers make faster and more objective lending decisions.

You can get a copy of your credit report online, at a SingPost branch or directly at the bureau’s office, for $5 plus GST.

Mr Wong believed the reason for the rejection of his loan application was the state of the overdraft account, for which the payment was many months overdue, according to the credit report.

Only one of the two credit card accounts saw some use. Strangely, a full payment was made on that.

But this wasn’t his first experience with credit card fraud.

In December 2006, he received a lawyer’s letter sent on behalf of Standard Chartered Bank. It said he owed the bank $1,355.

But he did not have an account with the bank. When he called Standard Chartered’s fraud department, he was told someone had opened an account in his name.

He made a police report.

- He is one unlucky Singaporean but I myself will make my way down to Singpost soon to find out anyone had misused my account for anything illegal like getting a fund transfer or loan. I had once worked for DBS’s out sourced credit card and line of credit company that work in road shows during weekend and poach ATM users at banks. The problem is we get to have access to customer’s credit card details, NRIC photocopy and they fill up all their particulars in the application form on the spot to get freebies.

All these information including their payslip or CPF history may be pass to the outsourced company that can be easily replaced easily. I know their plight as they usually hire temporary contract workers that does not have any kind of benifits that a ordinary permanent bank staff enjoys and their pay sucks.

Imagine any kind of outsource company of banks, charity organization, lucky draws and etc getting photocopy of your credit card or NRIC information!! They can easily misused the information for illegal application of loans or fund transfer (line of credit).

The key point is they can change the billing address to alternative address to avoid detection by the original owner of the identity via the bank with a simple phone call, all they need is some simple personal details for verification such as account numbers, date of birth, home address or even the expiry date of the ATM card.

The usage for a photocopy of NRIC varies from application of bank loan, borrowing library books using the bar code behind the NRIC, application for one or multiple new mobile accounts to sell the sim card to foreign workers to call overseas at a cheap one time payment to borrowing money from illegal loan sharks.

The usage for a photocopy Credit Card is even worst as exisiting credit card can easily becomes the “approval requirement” for a supplementary credit card or bank loan, the last 3 digit of the credit card number on the card can be used to purchase things online without your knowledge until you check your transaction history, they can go for a shopping spree if they happen to copy your credit card digital details using a special slide scanner and use the information to made a illegal clone of your credit card.

Key points to this article is -

1. Never ever let anyone handle your credit card & NRIC unless they are located inside the bank.
2. Always know the person’s name who handle your details.
3. Never discloses your own details on the phone even if they claim you won a lottery and need your addresses/date of birth/full name/father’s name/credit card number
4. Never ever photocopy your NRIC with the bar code behind intact…use a marker to strike the bar code off the photocopy just in case they use it to borrow library books.
5. Check your account balances regularly.
6. Choose a PIN or password that cannot be easily guessed.
7. Never throw your bills into the public dust bins as these people can easily pick it up and locate your address, full name and a simple check on the telephone book to find your home contact number, they can call you and pretend to be bank staff and extract more details from you using a fake verification reasons. (If possible file your bills at home or shred them totally)
8. Never ever believe in emails from banks that ask for your username & passwords.
9. If things are too good to be true, it usually is. Refuse to enter those lucky draw application that requires NRIC numbers, full name and mobile numbers.
10. Don’t believe in lucky draw winning that you had never participated in.
11. Always be aware of new scams by reading the news.

That’s all I can think of right now but I do apologize if what I had mentioned here affect any legit commercial contest or businesses. Frankly, there will be more scams in time of economic downturn so always be prepared and alert. Don’t get conned!

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The profitability of Singaporean banks could be hurt by renewed concerns over the US subprime mortgage crisis, or if the world’s biggest economy slips into a recession, the central bank here said.

Three local banks have already set aside 434 million Singapore dollars (301.39 million US) in extra provisioning for losses on collateralised debt, the Monetary Authority of Singapore (MAS) said late Monday.

It said a renewal of risk aversion could impact further on local banks, resulting in trading losses and further writedowns on assets held as collateralised debt obligations (CDO).

“In addition, interest income may decline should a US recession materialise and dampen loan demand,” it said in a review of the local financial system.

CDOs are securities backed by a range of assets including bonds, mortgages, car loans and credit card debt.

MAS also held its view that next year’s outlook was “more uncertain” due to a sluggish US economy which would impact on Singapore’s trade-led economy.

“The external outlook for 2008 is more uncertain,” MAS said. “The housing sector-induced weakening of the US economy will weigh somewhat on the global and hence Singapore’s growth outlook.”

For 2008, Singapore is tipped to grow by 4.5 to 6.5 percent compared with a 7.5 to 8.0 percent expansion this year, the MAS said.

“The slower growth largely reflects the anticipated short-term weakness in external demand, particularly in the first-half of the year.“

Last month, Singapore lifted its 2007 growth targets to 7.5 to 8.0 percent from 7.0 to 8.0 percent after the economy grew at a faster pace in the three months to September.

The city-state also raised its growth outlook for 2008 to 4.5 to 6.5 percent from 4.0 to 6.0 percent. — AFP

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