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Relief in Asia as Basel III Eases Capital Fears

This is a transcript of top stories presented by China's CCTV Business Channel as produced by CNBC Asia Pacific.

Hello to our viewers all over China.

You're watching Asia Market Daily, co-produced by CCTV Business Channel and CNBC, first in business worldwide.

I am Saijal Patel and here are the top stories across Asia today.

A solid start to the trading week in Asia as economic data out of China and the U.S. brought much cheer.

Stocks in the region rose, driving the MSCI Asia Pacific benchmark index to a four-month high.

Asian banking stocks also marched higher as the new capital rules unveiled in Basel are in line with expectations. We have more of that in a while.

For now, a look at the closing numbers across the region.

In Japan, the benchmark Nikkei 225 closed 0.9 percent higher led up by financials and exporters.

South Korea's KOSPI also finished 0.9 percent higher, after touching new 27 month highs powered up by autos and shipbuilders, including Hyundai Motors and Samsung Heavy.

In Australia, the S&P ASX 200 closed up by 1.2 percent.

Shares had hit a 2-and-a-half month high as resources stocks advanced on hopes of strong demand from China.

Signed, sealed, delivered.

Global banking regulators have sealed a deal to pad world banks' capital cushions to prevent another global financial crisis.

CNBC's Carolin Schober reports from Basel Switzerland.

The Basel III Accord is widely believed to be the most crucial set of regulations to come out of this financial crisis and now after months of discussions, days of tough negotiations here in the Swiss town of Basel, regulators from across the world have finally released those new rules for banks to prevent another financial crisis.

Now looking at this rules in first glance they look to be in line with the leaks we have gotten over the past couple of days. Yes they are going to be very tough. Just to name a few highlights here -- the minimum core tier one or common equity ratio will have to be raised from 2 to 4.5% on top of that, banks will have to hold a conservation buffer of 2.5%. And that's not all -- regulators have also imposed a counter cyclical buffer with a range of 0-2.5% on banks but that will have to be decided given national circumstances.

Now, some of the countries were very much concerned that the regulators wouldn't give the banks, the countries enough time to implement those rules but they are given sufficient time, about 8 years to implement these rules. Another big concern was that these new rules would choke off the recovery, choke off lending and Jean Claude Trichet, who chairs the oversight committee for Basel banking supervision, he says no, it will not do so, but I guess time will tell. Now one thing is for sure, that is not only Deutsche Bank but other major European banks will have to raise some capital or at least we'll see lower payouts in the form of dividends and bonuses and possibly acquisitions. Carolin Shoeber, Basel, Switzerland, back over to you.

In light of those impending regulatory changes, Deutsche Bank plans to raise $12.4 billion to buy the rest of Deutsche Postbank it doesn't already own.

The move will give Deutsche access to more deposits, reducing its reliance on investment banking.

Deutsche Bank will issue common shares with a preliminary subscription price of around 31.8 euros a share.

That's a 33 percent discount to its current trading price.

Deutsche plans to offer between 24 to 25 euros a share for Deutsche Post.

Meantime, banking analysts have welcomed the Basel III Accord and have hailed it as the most significant set of reforms to emerge from the financial crisis.

(SOT) Kirby Daley, Senior Strategist, Newedge Group:

"I think that it will show some stability to the system going forward, it's going to be welcomed by investors, but the effect on each individual bank is going to have to be taken into account over a period of time. The long period for implementation means there is no shock to the market, obviously we are seeing Deutsche Bank being pre-emptive in conjunction with this announcement, and I think anyone that is looking to raise capital would likely be better off doing it now rather than 3 months or 6 months from now. Certainly, I think the market environment is probably pretty strong now compared to what it will be going forward."

U.S. Treasury Secretary Tim Geithner has come out to say, he is not satisfied with China's progress on the yuan. He adds that they have done, quote "very, very little" to let the currency reflect market forces.

His remarks were published in the Wall Street Journal.

Currency analysts are not expecting the Chinese authorities to budge on those comments.

(SOT) Richard Grace, Chief Currency Strategist, Commonwealth Bank of Australia:

"I think they are happy to sit with the confines the existing framework band and just let the market take the Chinese exchange rate a bit higher, reflecting the local conditions in China, I don't think we are going to see anything as radical as a alteration to that band anytime soon. I think the groundwork has been laid, it is very clear there's gentle appreciation pressure on the yuan."

In other news...

A group of Chinese investors are reportedly considering a takeover offer for Britain's Prudential.

The Sunday Times reported that billionaire investors had earlier supported Prudential's failed $35 billion bid for AIA and later held talks on taking a strategic stake in the Asian arm of AIG.

They could still decide to take a major stake in AIA, but they are also examining the possibility of taking over Prudential's Asian business.

The report indicated senior Prudential sources were aware of the interest but said no discussions had been held.

Among those in the Chinese group were the chairman of Fosun Group and Fred Hu, the former chairman of Goldman Sachs in Greater China.

According to our next guest, China's interest in the global business arena is a growing trend.

(SOT) Jonathan Slone, Chairman and CEO, CLSA:

"The next 15 years will be about China deploying its savings, deploying its cash, and you are seeing this in Brazil, with its bid for commodities, and you are seeing this with Pru (Prudential). And this is not going to stop. I think the only thing is nobody knows the rules yet, people will have to understand that there will be political issues involved here. Once they have figured out what the game-plan is, the Chinese will go out shopping. The policy makers have got to make it very clear to the Chinese, under what circumstances and how they are going to open up the check book, and vice versa, the Chinese have got to make clear to foreigners who want to buy assets in China, and how that's going to work going forward."

Well, that wraps up today's business highlights.

I'm Saijal Patel from CNBC.

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