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Banking Goes Sandy Basic, HSBC Prepares to Pay Up

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Receiving Wide Coverage ...

Banks Take Back Seat: Wide coverage? That'd be the election and the hurricane, of course. The only banking story covered by more than one major paper is HSBC's $800 million additional reserve for its U.S. money laundering case. That brings the tab to $1.5 billion, and it could rise "significantly higher." CEO Stuart Gulliver acknowledged the rising tab and correlated reputational damage. The bank lost money in its European and North American businesses, relying on emerging markets for the good news. The brightest spot in was HSBC's performance in Hong Kong, which brought the bank a profit of $1.8 billion.

The Wall Street Journal

Manhattan has the majority of its lights back on and the subways are mostly running, but "Banks Going Low Tech in Aftermath of Sandy" pretty much sums up this disaster response roundup from the Journal. The paper interviewed executives at nine banks in areas hit by the storm and finds that many are slogging it out along with their customers. "We see a lot of activity…because everything reverts to pretty much a cash economy," an executive at OceanFirst Bank of Toms River, N.J. declared. Meanwhile, (very) basic banking is making a comeback: "Two River Community Bank, the Middletown, N.J., subsidiary of Community Partners Bancorp, is operating some branches without any power beyond sunlight, said Robert Werner, its chief operating officer. The bank is using ledgers and keeps records of withdrawals with written checks that carry customer and account information."

The Financial Times

The Financial Stability Board's capital standards announcement last week put JPMorgan Chase and Citigroup emphatically on the TBTF list by slapping them with a 2.5% capital surcharge. The FT focuses on the winner in the designations, Bank of America. Because it's facing just a 1% capital surcharge, the bank is much better positioned to meet its Basel capital requirements — and therefore much better positioned to finally send some money back to its shareholders. Don't expect any triumphant announcements, however — B of A has already learned not to try to front run regulatory determinations on dividends and share buybacks. "At a conference on Friday, Bruce Thompson, chief financial officer, said the company needed to wait for guidance from the Fed, due later this month, before submitting a plan."

The FT has an important story on infighting among rating agencies, with Jules Kroll — head of the corporate intelligence giant and rating startup Kroll Bond Ratings — leading off the vitriol. Referring to a DBRS report as a "doily" and an S&P report as "crap," Kroll's approach fits into an industry that's turned decidedly internecine. "The rating agencies are at war," the FT announces, noting fights over S&P's commercial mortgage backed securities methodologies and attacks on both of the largest rating agencies by Fitch. "The hope, for investors, is that a vigorous debate between the rating agencies over their methods for rating these complex securities will underpin standards," the paper says.

New York Times

"Dodd-Frank actually widened the federal safety net for big institutions," Gretchen Morgenson writes in her fair game column, decrying the arrival of clearinghouses in the TBTF camp. Entities like the Chicago Mercantile Exchange and Intercontinental Exchange don't live up to their "financial utility" billing, she writes, because they take on risk and reward executives in private-sector fashion. The CME has fought to win access to emergency lending from the Fed and to exempt it from the FDIC's orderly liquidation authority. While the FDIC hasn't made a call on that request, other regulators seem to be ceding ground, Morgenson says, arguing that clearinghouses "appear to have won the daily double — access to federal money, without the accountability."

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Comments (1)
HSBC a continuing criminal enterprise. Why isn't this bank put to death?
Posted by Ban KKiller | Monday, November 05 2012 at 1:43PM ET
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