BANKTHINK

morning scan

Morning Scan: HSBC in Hot Water; How CEOs Tangle with Activist Investors

Receiving Wide Coverage ... HSBC in Regulators' Crosshairs: Loose lips sink ships, as American propaganda posters during World War II once proclaimed, but it seems some bank employees are unaware of the idiom. The Wall Street Journal reports the Justice Department has launched a probe into allegations that an HSBC trader alerted a major hedge fund to confidential details about an imminent currency exchange deal in 2010. The probe "suggests that the U.S. is eyeing a…

Morning Scan: Santander to Replace CEO; Citi's Stock Tip Specials

Receiving Wide Coverage ... Shakeup at Santander: Santander's recently elected chairman Ana Botín made some big changes to the bank's leadership in a move to make her mark on the family-run Spanish lender, according to the papers. The bank's longtime chief financial officer Jose Antonio Álvarez has been named chief executive. He replaces Javier Marín, who had served in the role for less than two years. Santander also named three new independent board directors and appointed…

Morning Scan: Fed Oversight Under Fire; BofA Investors Protest CEO's Dual Role

Receiving Wide Coverage ... Fed on the Hot Seat: The Federal Reserve's public image took a few hits last week as the Senate held hearings questioning whether the regulator is too lenient on the banks it oversees. The New York Times' Gretchen Morgenson writes these inquiries are "absolutely justified" and suggests policymakers seize the moment to push for more transparency around bank examinations. A Yale professor tells Morgenson that if the Fed made public the mathematical…

Morning Scan: Fed Wonders if It's 'Captured'; Commodity Holdings Questioned

Receiving Wide Coverage ... Too Cozy?: The Fed established a team in Washington to review whether it's too cozy with the banks it regulates. The New York Times described the review as a "surprise announcement." The Fed's inspector general will simultaneously conduct a similar review, looking specifically at whether "top officials were hearing all the opinions of Fed bank examiners." The moves were announced Thursday, ahead of Fed Governor Daniel Tarullo's and New York Fed President…

Morning Scan: Fed-Goldman Sachs Revolving Door?; Commodities Update

Receiving Wide Coverage ... Revolving Door?: More evidence has emerged of conflicts of interest involving the New York Fed and Goldman Sachs. This time it's an indication of a revolving door between the two institutions, in which an employee leaves one and quickly joins the other, bringing sensitive market information along for the ride. Goldman fired two workers after the bank learned that one had shared confidential information with his colleagues about the New York Fed's…

Morning Scan: More Fallout from Sanctions Violations

Receiving Wide Coverage ... French Twist: Thought the story about BNP Paribas violating U.S. sanctions against Sudan, Iran and China was over? Not so much. Five months after the French bank agreed to plead guilty and fork over almost $9 billion, home-country prosecutors are investigating whether senior officials at the bank violated insider trading laws by selling stock while the U.S. sanctions probe was under way. The story was broken Tuesday by a French news outlet,…

Morning Scan: FHA Returns to the Black; Civil Case Against Mozilo?

Receiving Wide Coverage ... Housing Rebound?: The Wall Street Journal and Washington Post both have articles noting the significance of the Federal Housing Administration returning to the black for the first time since 2011. The FHA served as a backstop for the housing market during the financial crisis, when other lending sources dried up. But that resulted in a sharp increase in the FHA's default rate. Now the agency has recovered, at least in one sense.…

Morning Scan: Supercharged Spending on Cybersecurity; Robo-Signers Return

Wall Street Journal Banks and other financial-services companies will increase spending on cybersecurity by $2 billion over the next two years, according to a PricewaterhouseCoopers study. Citigroup, for example, now spends about $300 million yearly on cybersecurity, an anonymous source told the Journal. Wells Fargo spends about $250 million per year. JPMorgan Chase now spends about $250 million, but that could double over the next years, CEO Jamie Dimon has said. JPMorgan has about 1,000 workers…

Morning Scan: Ocwen, Wells Fargo Scrap Deal; De-Risking as 'Fig Leaf' for Banks

Receiving Wide Coverage ... The Rate Hike Waiting Game: The Federal Reserve may push its timeline for raising interest rates back from mid-2015 if wage growth fails to improve, according to articles in both the Wall Street Journal and the New York Times. The fact that more people are quitting their jobs suggests the labor market may be tightening, according to the Journal, but there are other signs that strong pay increases may be a ways…

Morning Scan: Banks' Consumer Debt Reporting Probed; Were Forex Deals Too Soft?

Receiving Wide Coverage ... Regulators' Weak Sauce: U.S. and foreign regulators fined six big banks a cumulative $4.3 billion Wednesday in a round of settlements charging them with conspiring to manipulate the foreign exchange market, and the peanut gallery is unimpressed. The Financial Times points out the fines "are less stunning than the scale of the conspiracy against the banks' customers and the catastrophic failure of oversight on the part of bank executives." Bank executives and…

Morning Scan: Five Banks Reach $3.3B Forex Deal; Is Lawsky Eying the Exit?

Receiving Wide Coverage ... First Forex Deal Reached: Five banks have agreed to shell out a total of $3.3 billion to U.S., British and Swiss authorities to settle charges that they tried to manipulated the foreign exchange market. The banks included in the settlement were Citigroup, JPMorgan Chase, HSBC, Royal Bank of Scotland and UBS; Barclays had been in talks with regulators but got cold feet as the announcement neared, the New York Times reports. The…

Morning Scan: Postal Service Hacked; CFTC to Join in Forex Settlements

Receiving Wide Coverage ... Second Takes on FSB Rules: The Financial Stability Board's newly proposed capital requirements for the world's largest banks may make banks safer, but they won't end the debate over too big to fail, according to the Wall Street Journal. Analysts estimate big U.S. banks would have to issue billions of dollars in new long-term debt in order to meet the FSB requirements and predict banks will "face a modest earnings headwind" on…

Morning Scan: FSB Proposes Capital Rules; AG Pick Has History with Big Banks

Receiving Wide Coverage ... Beating Back Bailouts: The Financial Stability Board has taken a fresh stab at ending too big to fail with a newly proposed set of rules for the world's largest banks. Banks would be obliged to hold capital equal to 16-20% of their risk-weighted assets and to meet a capital leverage ratio twice the size of the Basel III requirement under the proposal. The New York Times notes the rules would have a…

Morning Scan: Emails Stolen in Home Depot Attack; JPMorgan Whistleblower Speaks

Receiving Wide Coverage ... Emails Stolen: You thought just your account information was stolen by the Home Depot hackers? Think again. The orange-clad home-improvement retailer said hackers that broke into its computer networks stole not only 56 million credit-card accounts, but also 53 million customer email addresses. While email addresses are already somewhat publicly available, the nefarious-minded can use the email address to trick people into signing up or agreeing to things they probably don't want.…

Morning Scan: Banks' High Hopes After GOP Win; Russian Money Laundering?

Receiving Wide Coverage ... Not So Fast My Friend: Both the Wall Street Journal's "Heard on the Street" column and the Financial Times's "Lex" column caution bank investors to not get their hopes up after the boffo Republican showing in this year's elections. The costs of reeling in some of the bank-reform laws deemed most egregious by GOP leaders are likely too high. The FT notes any gifts to the financial industry will likely go to…

Morning Scan: Republicans' Big Night; Leveraged Loan Worries

Receiving Wide Coverage ... 'Watch Out': The results of Tuesday's elections are scrutinized as an attempt is made to extrapolate what it all means to business, with one likely outcome being an improved policy climate for banks. (For a look at how the Senate Banking Committee is likely to proceed under probable chairman Richard Shelby, read American Banker's coverage.) Sen. Mitch McConnell of Kentucky is in the spotlight, as he'll have a long list of items…

Morning Scan: JPMorgan Chase Ups Legal Exposure; Virgin Money Readies IPO

Receiving Wide Coverage ... JPMorgan Widens Legal Exposure: Legal settlements continue to plague the banking industry. JPMorgan Chase is the latest, as on Monday night the bank reported its potential top end of legal costs are $1.3 billion higher, thanks to a Justice Department probe into how its traders may have manipulated foreign-exchange markets. In total, JPMorgan said it might be forced to pay out as much as $5.9 billion to cover legal settlements and investigations.…

Morning Scan: HSBC's Billion-Dollar Legal Tab; Ex-B of A Banker Arrested in Hong Kong

Receiving Wide Coverage ... HSBC Woes: Legal matters pounded HSBC, as the British bank reported quarterly earnings. HSBC set aside $1.6 billion, according to the Financial Times, or $1.7 billlion, according to the Wall Street Journal, to cover legal settlements, including resolving a probe into rigging foreign-exchange markets, and the cost of reimbursing customers. The set-aside also included $550 million to cover a settlement with the U.S. Federal Housing Finance Authority to resolve a probe into…

Morning Scan: Citi Adds $600M for Legal Costs; BofA Faces Shareholder Wrath

Receiving Wide Coverage ... Coming Down the Pike: Citigroup's move to increase its third-quarter legal provisions by an additional $600 million suggests the bank may soon reach a settlement over charges that it manipulated foreign-exchange rates, the papers report. The adjustment, made in response to "very recent communications with certain regulatory agencies" according to the bank's regulatory filing, lowered Citigroup's quarterly earnings by nearly 18%, to $2.84 billion. The Wall Street Journal's anonymice say Citi and…

Morning Scan: What the End of QE Means for Banks; CurrentC Hacked

Receiving Wide Coverage ... Que Sera, QE: The Federal Reserve's bond-purchasing program is officially over, but that's no reason to stop the fun of debating the legacy of quantitative easing. The major papers all give the program mixed reviews. "While it clearly didn't cause the inflation outbreak some predicted, it also didn't clearly lead to a surge of economic output or hiring," the Wall Street Journal reports. The New York Times says QE definitely helped the…

Morning Scan: Deutsche Names New CFO; Report Links Russian Government to Hacks

Receiving Wide Coverage ... New CFO in the Haus: Deutsche Bank has tapped Goldman Sachs partner Marcus Schenck as its future chief financial officer, with plans for current CFO Stefan Krause to take on a newly created position at the company. The change comes as investors pressure the German lender to improve its financial strength, according to the Wall Street Journal. The papers all note Krause has made slow progress in strengthening the bank's regulatory reporting;…

Morning Scan: SEC Stalemate on BofA Waivers; Should the Fed Tackle Inequality?

Receiving Wide Coverage ... Making the Grade: If European regulators were being graded on their newly released banking stress tests, what kind of marks would they receive? The European Central Bank would probably have a few points shaved off for the errors and inconsistencies reported by the Wall Street Journal: it misstated the capital ratio of a "large Italian bank" and failed to report on a review of Polish banks' balance sheets because the data was…

Morning Scan: Banks Beef Up Cybersecurity; Can We Trust Europe's Stress Tests?

Receiving Wide Coverage ... The Results Are In: Most of the eurozone's big banks have enough capital to survive an economic upset, according to the results of regulators' long-awaited stress tests. Of the 130 banks under review, 13 were identified as needing to shore up $12 billion in additional capital. Italy had the largest share of financial flunkies, with Greece and Cyprus next in line. The Wall Street Journal applauds the European Central Bank for including…

Morning Scan: Stress Tests to Get Tough on Leveraged Loans; QRM Rule Bashed

Receiving Wide Coverage ... Prepping for Stress Tests: The Financial Times and Wall Street Journal each serves up a curtain raiser on next year's Fed-conducted stress tests, playing off the instructions the Fed released on Thursday, as well as the European Central Bank's stress test results that are due to be released on Sunday. Among the stressful scenarios to which U.S. banks will be theoretically tested are oil prices rising to $110 per barrel, and increased…

Morning Scan: New Mortgage Rules Approved; JPMorgan's China Hiring

Receiving Wide Coverage ... New Mortgage Rules: Two Republicans on the Securities and Exchange Commission objected to relaxed mortgage rules, but the SEC approved the new rules regardless on Wednesday, as did the Federal Reserve and the Department of Housing and Urban Development. "Today's rule-making takes the untenable housing policy that injected irrational exuberance into mortgage lending and, as a result, caused a catastrophic financial crisis and chisels that failed policy into the stone tablets of…

Morning Scan: Mortgage Lending Debate; London Whale Blame Game

Receiving Wide Coverage ... New QRM Rule Assessed: The reviews are coming in on the final QRM rule and reaction is mixed. The American Bankers Association indicated it could live with the new rule, which doesn't require a down payment in its criteria for being exempted from risk retention, saying it "might have been more restrictive." Former FDIC Chairman Sheila Bair, however, described the final version of the risk retention rule as "unfortunate" because "if the…

Morning Scan: Bankers Warned at New York Fed; Watt's Mortgage Plan

Receiving Wide Coverage ... Bankers Warned: Big banks, be warned (again). In closed-door meetings Monday, Federal Reserve Gov. Daniel Tarullo and New York Fed President William Dudley said big banks must clean up their acts, or face repercussions. Those consequences could include things like "performance bonds," limits on executive compensation and a central registry to track the hiring and firing of traders and other top finance officials, all of which were reported by the Wall Street…

Morning Scan: The End of QE Approaches; Apple Pay Debuts

Receiving Wide Coverage ... To QE, or Not to QE: Wild stock market swings, unexpected volatility in the 10-year Treasury note, and emerging global crises ranging from the Ebola virus to unrest in the Middle East won't sway the Fed from its plan to end its bond-buying program. Ahead of the Fed's Oct. 28-29 meeting, the Wall Street Journal, Financial Times and New York Times all take a look at whether the Fed intends to stick…

Morning Scan: Trading Makes a Comeback; Protecting Personal Data

Receiving Wide Coverage... Credit Suisse Shake-Up: Credit Suisse has switched around top management in its investment banking and Asia-Pacific divisions. The investment bank now has three leaders: Gaël de Boissard and new additions Jim Amine and Tim O'Hara. The triple-threat lineup suggests that Credit Suisse isn't looking to slim down its investment banking division anytime soon, according to the Financial Times. Credit Suisse also appointed Helman Sitohang, the head of its Asia-Pacific investment bank, as chief…

Morning Scan: Stock Swings Hit Banks Hard; "No Objective Reality" on Earnings

Receiving Wide Coverage.... Banks Take Beating in Stock Market: Wednesday's stock market swings hit banks hard as fears of a sputtering global economy took hold. "U.S. bank stocks suffered their worst one-day fall in almost two years," tumbling 3.4%, according to the Financial Times. Bank shareholders are worried that the sluggish global recovery and potential for deflation in the U.S. and Europe could keep interest rates low even longer than expected, the papers report. "People are…

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