And It’s Gone

What happens when we put our faith in bankers:

Carrie Pan is about as intrepid as they come. Since she began investing in Chinese stocks six years ago, the 29-year-old Shanghai accountant has seen almost half the value of her portfolio evaporate, including a 40 percent loss last year alone. Undeterred, Pan recently bought 1,000 shares of Yang Quan Coal Industry Group. “I believe stocks will rise,” says Pan, watching her holdings on a computer screen in her two-bedroom apartment on a recent afternoon of maternity leave. “Guo has already done lots of things to support the stock market since he took office, and he is very keen on improving the market’s performance.”

That would be Guo Shuqing, who in October was appointed chairman of the China Securities Regulatory Commission, the equivalent of the U.S. Securities & Exchange Commission. A fluent English speaker, Guo is also a former vice governor of the central bank and most recently was chairman of China Construction Bank, the nation’s second-largest lender by market value. His challenge is modernizing China’s capital markets so that they can better support the country’s $6 trillion economy.

On the day in May she was supposed to have appeared before prosecutors for questioning, an executive of a shuttered South Korean savings bank hanged herself with her scarf in a Seoul motel. The woman, identified by the police only as “Kim,” was a credit officer at Mirae Mutual Savings Bank, whose chairman was caught fleeing to China in a fishing boat three weeks earlier. She’s the latest casualty in a scandal hitting the periphery of Korea’s banking industry for more than a year.

Since early 2011, regulators have closed 20 Korean savings banks, where risky real estate bets gone bad have wiped out the savings of many ordinary Koreans. Even the prime minister saw money disappear. Prosecutors’ probes have uncovered cases of illicit lending and lax oversight, leading to the indictments of nearly 200 people and at least two jail sentences. Four bank executives have committed suicide, according to police, while more than 88,000 depositors and bondholders, many of them retirees, saw 1 trillion won ($857 million) vanish. “Everyone’s become a victim,” says Nam Joo Ha, an economics professor at Sogang University in Seoul. “Regulators lost the people’s confidence. The savings bank industry lost trust, a financial company’s most important virtue, and the people lost their money.”

Meanwhile, the elites led by the Queen are doing quite well:

It’s good to be the Queen. British monarch Elizabeth II, who celebrated 60 years on the throne in June, may see her income rise 16 percent after the Crown Estate’s earnings increased and lawmakers changed the way royal finances are calculated. The monarch will be entitled to £36 million ($56 million) for the fiscal year that runs from April 2013 through March 2014, up from £31 million for the current year.

The Crown Estate manages real estate surrendered by the monarchy in 1760 in exchange for annual payments. Its profit increased 4 percent to £240.2 million in fiscal 2012, which ended March 31, thanks in part to revenue from offshore leases for wind farms, which more than doubled. The former landholdings for the royal family include the seabed around Britain extending to 12 nautical miles offshore. “They’re a landmark set of results,” Crown Estate Chief Executive Officer Alison Nimmo said in an interview at the corporation’s office off Regent Street in central London.

The Crown Estate has offered leases for offshore sites since 2000 to companies including Centrica (CNA), Dong Energy, and Siemens (SI). The parks in operation now generate 1.5 percent of the U.K.’s electricity production, and that should double next year as more sites become operational, lifting income. The Crown Estate also oversees 36 sites across the U.K. earmarked for tidal or wave power generation, Nimmo says.

The Queen’s other sources of income are the estates and assets owned by the Duchy of Lancaster as well as her privately owned estates, Balmoral in Scotland and Sandringham in eastern England. The monarch owns the royal palaces, most of the royal art collection, and the Crown Jewels on behalf of the nation and therefore is prohibited from selling them for her personal gain.

The Crown Estate also is the majority owner of Regent Street in central London, along with half the land in the St. James district, as well as shopping centers across the U.K., golf courses, Ascot Racecourse, and farms.

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"It is dangerous to be right in matters on which the established authorities are wrong." - Voltaire

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