Receiving Wide Coverage ...
India to Reform State Banks: India is betting that a private-sector mindset can help restore its public banks. The country has hired former top executives from Microsoft and Citigroup to take charge of the state banks' recapitalization efforts and reforms. Writing for Quartz, professor T.T. Ram Mohan sounds a bit skeptical about the plan: "It's hard to see why the best professionals in the private sector would want the job," he writes, adding that it will be particularly challenging for the new recruits to "deliver within a host of constraints."
On the other hand, the move seems to be of a piece with the Indian government's plan of bringing its state banks more in line with private competition. The Financial Times reports that the state banks "will be henceforth be judged on 'key performance indicators,' including quantitative targets such as return on equity and the proportion of fee-based income and subjective ones such as the level of skill development."
Wall Street Journal
Looks like Promontory Financial Group will go head-to-head with New York's financial regulator in court. The financial consulting behemoth reportedly plans to ask a New York state judge to block a ban that would prevent Promontory from advising banks based in the state. The ban was imposed by New York's Department of Financial Services as punishment for a Promontory report that allegedly whitewashed sanctions violations by Standard Chartered. "
It is rare for companies to openly challenge a regulator in court, much less a firm whose business is built on telling clients how to stay out of regulatory trouble," the paper notes. "But Promontory sees the ban as a serious challenge to its business."
John Carney of "Heard on the Street" says investors may want to temper their expectations about the effect of a Fed rate hike on bank profits. For one thing, the initial rate increase is likely to be practically miniscule; for another, "[v]ery low inflation and a shaky global economic climate will likely mean subsequent boosts are small and take longer to materialize."
Financial Times
The Toronto-based TD Bank continues to back a strong brick-and-mortar presence, the paper reports. Covering the streets of New York City and other East Coast strongholds in its trademark green-and-white signage has long been a big part of TD's U.S. strategy. But the paper points out this approach has become more noteworthy as other big banks like JPMorgan Chase and Citigroup are paring down their branch footprints.
In another article to come out of what was likely one interview with TD head Bharat Masrani, the paper reports that the bank is taking a hit on falling oil prices and may therefore curb its pace of expansion in the U.S.
The European Central Bank is giving itself plenty of time to review banks' risk models. The ECB's move to extend the review timeline from one to four years seems likely to be popular with eurozone banks, since the ones eventually found lacking could face stiffer capital requirements. But one banker tells the paper he'd rather just get the review over with, since right now investors don't trust banks' calculations of their risk-weighted assets.
Bond investors are getting antsy about the health of the U.S. student loan market, the paper reports.
New York Times
The bull market is looking a little less robust these days, Gretchen Morgenson writes her latest column. She suggests that investors are beginning to question the basis of companies' "sky-high valuations" and to suspect that share buybacks may be inflating corporate earnings. Investors' growing skepticism could spell trouble if enough of them sell their shares all at once.
The British trader accused of setting off the 2010 "flash crash" has been released from jail after a judge reduced his bail from 5 million pounds to a more easily achievable £50,000.
A Middle Eastern bank has reached a settlement with hundreds of Americans who were victims of Hamas terrorist attacks or relatives of those who were killed. The American plaintiffs won a lawsuit last year that found Arab Bank liable for financing terrorism. The amount of the settlement was not disclosed. The paper notes that banking executives were made nervous by the outcome of the lawsuit, "since Arab Bank seemed to follow standard screening procedures to check that its customers were not listed as terrorists."
Antony Currie raises an eyebrow at Goldman Sachs' move to expand its deposit base by purchasing $16 billion in online deposits from GE Capital. He suggests that Goldman will become more and more like complex institutions JPMorgan Chase and Bank of America as it builds retail deposits, with the attendant problem of posing greater systemic risk. American Banker's Kevin Wack offers more context on Goldman's strategy.
The paper's editorial board has some harsh words for Citizens Bank, which last week was ordered to refund $14 million to customers and pay $20.5 million in penalties for failing to correct discrepancies in customer deposits. Citizens' blunder "is a reminder that no corner of banking should go unpoliced and that bank regulators like the Consumer Financial Protection Bureau are a necessary defense against a system prone to abuses," the authors write.
