Banks discuss cost cuts; Bank stocks threatened

Wall Street Journal

Working together: A group of large American banks, including Goldman Sachs, Morgan Stanley and Bank of America, are discussing ways to try to cut their back-office costs. The paper reports Monday that one effort still in its early stages could eventually lead to "a joint venture that allows banks to share trade processes and technology. The hope is this would be widely used by the industry and eventually trim at least $2 billion from the banks' annual spending."

Be prepared: The Heard on the Street column, fresh from saying the bull market in bank stocks has more room to run, now sounds an alarm: Since the Federal Reserve has raised interest rates again, at some point, customers are going to demand higher rates on their deposits. "Just when this inflection point will come, and how much it will cost banks, is highly uncertain," the column says. "Banks likely have ample runway for now. But when it eventually runs out, investors in bank stocks may get a nasty jolt."

Betting on subprime: Barclaycard sold $1.6 billion of credit card outstandings to Credit Shop, a firm that launched in 2013 and boasts several executives who previously worked at the British bank. The deal is the first time Credit Shop, which mostly focuses on making personal loans to near-prime and subprime borrowers, has purchased credit card accounts, the paper said. "The deal reflects diverging views in the card industry about the future of the U.S. economy and the wisdom of wagering on risky borrowers," the paper commented.

We're flexible: Credit card lenders are nothing if not flexible. More than 80% of customers who ask their credit card lender to reduce their annual fee get it, and most of them have the fee waived entirely, according to a survey by CreditCards.com. Nearly 90% of those who ask that their late fee be waived are also successful, as are almost 70% of those who demand a lower interest rate.

Housing to the rescue: Easing mortgage credit standards to the levels of the early 2000s could help kick-start the housing economy, according to a study to be released Monday by Rosen Consulting Group. The company, headed by Ken Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at the University of California, said the home building industry would have added more than $300 billion, or 1.8%, to GDP, if it returned to the long-term industry average level of construction.

Total spending on housing fell to 15.6% of GDP last year, compared to the average of nearly 19% over the past 60 years, the study says, while spending on new home building and remodeling fell to 3.6% of GDP, half of what it was in 2005. "If you want to get the economy going, housing is typically the flywheel," Rosen said.

Financial Times

Peter Frommenwiler/Bloomberg

Hands on: Deutsche Bank CEO John Cryan is "taking a stronger personal grip" on the German bank's American business, "determined to address a slide that has threatened the bank's position as one of the dominant forces on Wall Street," the paper reports. "The footprint reduction and the product reduction has come to a halt," Cryan recently told investors, and said he plans to shift more of the bank's investment banking business toward corporate rather than institutional clients.

Getting tougher: The Bank of England is adding an "extra assessment" on top of its regular annual stress test of the country's seven largest banks, creating "their toughest ever test of resilience."

New York Times

In memoriam: Gershon Kekst, a longtime public relations adviser to Sanford I. Weill of Citigroup and other Wall Street titans, and a consultant on many of the biggest bank mergers during the boom of the 1980s, died on March 17. Kekst founded the company that still bears his name, which was sold to Publicis in 2008, the paper said.