Losing streak: The S&P 500 Financials Index, which tracks the banking industry, fell for the 12th straight day on Tuesday, its longest losing streak ever, and is down 12% since a recent peak in January. Banks are “facing a rising rate environment, which historically has been fairly positive for banks,” said Mona Mahajan, U.S. investment strategist at Allianz Global Investors. But “a shrinking yield curve is actually not a good sign for the banks. Obviously, they like to borrow short, lend long, and if that yield curve is shrinking, that margin goes down as well.”
Get a move on: Big banks aren’t preparing quickly enough for Brexit, according to European bank regulators. “Banks seem to be hoping that politicians will be forced to give them a pass because finance is too important to suffer major disruption,” the Wall Street Journal says. “But the European Banking Authority, which writes the rules, and the European Central Bank’s regulatory arm, which enforces them, both warned banks this week that time was running out.” Wall Street Journal, Financial Times
Still, the Financial Times says “global banks are pressing ahead with moving people and activities out of the U.K. as business leaders grow increasingly frustrated at the lack of progress in political negotiations on the terms of the country’s exit from the EU next March.” One bank that appears “determined to move faster than its rival U.S. banks in pressing ahead with its Brexit plans” is Bank of America, which is relocating three senior U.K.-based executives to Paris, the new home of its investment banking operations. The bank, which has about 4,500 employees in London, is moving its main post-Brexit headquarters to Dublin.
Wall Street Journal
Big deal: American Express, fresh off its victory before the Supreme Court on Monday, announced the launch of a small business credit card with Amazon. The deal, Amex’s first co-branded partnership with Amazon and Amazon’s first small-business card, “gives Amex a giant partner in its effort to woo more small-business customers and gain a bigger share of their business. Earlier this year [Amex] said it hoped to become the leading payments and working-capital provider for small and middle-market companies.” No details about the card were announced.
The American Express builgin located in the main Avenue Reforma in Mexico city on May 04, 2009. Susana Gonzalez/Bloomberg News
Susana Gonzalez/Susana Gonzalez
The door opens: Facebook has lifted the ban it imposed in January on cryptocurrency ads. However, the company said ad acceptance will be at its discretion, which it didn’t detail, and it will retain its prohibition of ads for initial coin offerings.
Anticipation: JPMorgan Chase in enlarging and reconfiguring its investment banking operations in China in anticipation of regulatory changes and “a swell of new business” from “so-called new-economy companies in China, which are on track to be valued at hundreds of billions of dollars in the next few years.”
Financial Times
Programmed to serve: HSBC unveiled a humanoid robot developed by SoftBank at its Fifth Avenue branch in New York. Named Pepper, the robot helps customers with automated banking services and other things. But “the biggest benefit of these robots could be that they will not try to front-run customers’ foreign exchange trades, sell them dodgy mortgage securities or help them to evade the taxman,” the paper comments.
Loose lips ... : The U.S. Justice Department accused an analyst for S&P Global and two other people of insider trading. The analyst, Sebastian Pinto-Thomaz, allegedly shared information about Sherwin-Williams’ takeover of Valspar Corp. in 2016 with two friends, who reportedly made a $300,000 profit by trading on the information.
New York Times
Named: Morgan Stanley said it has added Mary L. Schapiro, the chairwoman of the Securities and Exchange Commission from 2009 to 2012, to its board of directors, effective Sunday.
Quotable
“The Fed stress tests are proving to be a ‘sell the news’ event as the yield curve collapses.” — Dave Lutz, head of ETFs at JonesTrading Institutional Services.
At a time of mild or nonexistent loan growth, middle-market borrowers in the Lone Star State are providing a boost to Fifth Third Bancorp and Huntington Bancshares.
New details have emerged about the negotiations that culminated in Capital One's blockbuster $35 billion agreement to acquire Discover. At one point last December, the two parties broke off discussions, according to a securities filing.
According to the Federal Reserve Board's latest financial stability report, persistent inflation and policy uncertainty are the primary worries for banks. Survey respondents expressed heightened anxiety over murky policy outlooks due to geopolitical turmoil and rapidly approaching domestic elections.
The Alabama regional lender says it expects expenses to taper off this year and anticipates challenged loans will gradually rise to historically average levels.
Truist Financial's top executive leadership team announces departures; First Horizon's chief credit officer is retiring; Ferry teams with Highnote to roll out a new Visa-branded payroll card; and more in the weekly banking news roundup.
The Dallas-based regional bank tapped a client for its co-pilot capabilities, where employees can message a bot instead of a human to get tech assistance.
