Latest banking news, Dec. 23, 2022

CFPB report finds decline in financial health

The Consumer Financial Protection Bureau's "Making Ends Meet in 2002" report found that consumer financial health is lower than it was at the beginning of the pandemic. More specifically, consumers used high-cost credit products at the same level as before the pandemic, after a decline in 2021, and had more difficulty paying their bills this year than in 2021. The report also found that 37% of overall households could not cover their expenses for more than a month if they lost their main source of income, but this number rises to about 50% for Black and Hispanic households. Although racial and ethnic groups applied for credit at similar rates, Black and Hispanic consumers were more likely to be turned down for credit or not receive the amount they requested, as well as even hesitate to apply for credit in the first place. — Miriam Cross

Mid Penn to bulk up in New Jersey with deal for Brunswick Bancorp

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Mid Penn Bancorp in Harrisburg, Pennsylvania, agreed to acquire Brunswick Bancorp in New Brunswick, New Jersey. The $4.3 billion-asset Mid Penn said the acquisition would give it its first branches in central New Jersey. Brunswick Bancorp has five branches, $382 million of assets, $280 million of deposits and $303 million of loans. The cash and stock deal, valued at $53.9 million, was announced Tuesday and is expected to close in the second quarter of 2023. It would create a bank with nearly $5 billion of assets, $4.2 billion of deposits and $3.8 billion of loans. The transaction is expected to be 8.5% accretive to Mid Penn's earnings per share. "We are enthusiastic to partner with Brunswick as our first formal step into the dynamic central New Jersey community," Rory Ritrievi, Mid Penn's chairman and CEO, said in a press release. — Jim Dobbs

Crypto market too dangerous to remain unregulated: Bank of England

Simon Dawson/Bloomberg

The Bank of England said it plans to step up its effort to regulate trading in digital currencies, after the collapse of the exchange FTX underscored the dangers the industry poses to consumers. The central bank is considering new laws to regulate crypto trading in a bid to protect investors and the wider financial system from potential shocks, BOE Deputy Gov. Jon Cunliffe told Sky News on Thursday. "We should think about regulation before it becomes integrated with the financial system and before we could have a potential systemic problem," he said.
Cunliffe is among the most vocal central bankers about the need for more oversight in the crypto market, noting last year that the assets being traded are worth more than the subprime mortgage market before it triggered the global financial crisis a decade ago. His comments echo warnings he gave last month following FTX's collapse, when he said a proper regulatory framework would be needed to support a stable crypto system. — Liza Tetley, Bloomberg News

Binance US explores buying other distressed assets after Voyager

Cryptocurrency Exchange Illustrations As Caution Sweeps Over Crypto

Tiffany Hagler-Geard/Bloomberg

The crypto exchange Binance.US is exploring more acquisition opportunities after agreeing to buy Voyager Digital's assets out of bankruptcy in a deal valued $1.022 billion on Monday. "We are in the data room for many other assets that make sense as we focus on growth," Binance.US CEO Brian Shroder said in an interview. "We are learning about the deals. We are also looking at several firms that are in trouble right now." The purpose for any M&A deal would be to drive new users and assets to the Binance.US platform, Shroder said, as well as adding technology, products or services it currently doesn't have. There's no earmarked amount for acquisitions, and the exchange still has "hundreds of millions of dollars in current assets" from its growth round, he said. Binance.US raised more than $200 million at a $4.5 billion valuation in April. "There was a narrative around Sam being the white knight — turns out the white knight was not genuine," Shroder said of Sam Bankman-Fried, whose earlier deal to buy Voyager assets fell through as the FTX exchange imploded. "That is not what we are interested in being perceived as. My goal is for Binance.US to be perceived as a boring, yet trustworthy and dependable crypto exchange." — Yueqi Yang, Bloomberg News

Finucane steps down, Donofrio takes over as chair of BofA Europe

Anne Finucane.

Brigitte Lacombe

Anne Finucane is stepping down as chair of Bank of America Corp. Europe and passing the torch to Vice Chairman Paul Donofrio.
Finucane will leave her post at the end of the month at the company's European banking subsidiary, which is based in Ireland, people familiar with the matter said. She will also exit her position as board member at Bank of America Securities Europe, but continue on the company's global advisory council, the people said, asking not to be identified discussing a private matter. A representative for Bank of America declined to comment.
Finucane became the firm's first chair of Bank of America Europe in 2018, and was the first female vice chairman at the parent company. She oversaw its transition through Brexit, and led sustainable-finance efforts and global strategy. At the end of 2021, Finucane transitioned to the nonexecutive chairman role at Bank of America Europe. Last month, she announced a carbon climate venture with Bank of America alum Tom Montag. Their new firm, Rubicon Carbon, is looking to raise $1 billion for a business aimed at the market for emissions offsets, and is backed by TPG. Finucane, 70, has worked her way up in the banking industry since 1995, when she was at Bank of America predecessor Fleet Bank. As one of the most senior women at the company, she's been responsible for environmental, social and governance goals, as well as capital deployment and public policy efforts. Donofrio, 62, is vice chairman of Bank of America and was chief financial officer from 2015 until last year, when the bank announced its most significant leadership changes since the financial crisis. He was named vice chairman of Bank of America, overseeing sustainable finance, which he will continue to do. He's also held investment banking roles in Europe. — Katherine Doherty, Bloomberg News, with assistance from Paige Smith

Credit Suisse CLO bankers leave for U.S. investment bank Baird

A sign hangs outside the offices of Credit Suisse headquarters in Zurich, Switzerland.

Chris Ratcliffe/Bloomberg

Two more credit bankers have left Credit Suisse in the last two weeks and are both set to join Robert W Baird & Co, according to a person familiar with the matter. James Gray, an executive director responsible for structured finance sales, and Daniel Bates, a trader in collateralized loan obligations, are joining Baird's fixed income capital markets group, said the person, who asked not to be named as the information was private. Both will remain London-based. The move follows that of Credit Suisse managing director Jeremy Duksin, who will jointly head a new private equity advisory unit at Baird. Both Credit Suisse and Baird declined to comment when contacted by Bloomberg, while Gray and Bates did not respond to messages seeking comment. The Swiss bank has been hemorrhaging staff since announcing a round of job cuts in October as part of its latest overhaul. Those plans included a curtailing of its structured finance operations, leaving the future of its European CLO business in question after it began the process of making the head of its CLO origination and syndication business redundant last month. Baird's fixed income unit is led by Wisconsin-based Patrick S. Lawton and averaged $12.4 billion in monthly securitized trading volume last year, according to the company's website. — Adeola Eribake, Bloomberg News

HSBC wins court fight over billionaire's Ponzi scheme

Hollie Adams/Bloomberg

HSBC Holdings won a battle at the U.K.'s top court in a case over allegations it turned a "blind eye" to suspicious payments made by convicted billionaire swindler Allen Stanford. In a split decision, the country's top judges dismissed an appeal by Stanford International Bank. HSBC fought the claim from the administrators of SIB, who'd previously alleged that the lender should have known of the fraud when it made some £116 million ($140 million) of payments. SIB, which was controlled by Stanford, sold billions of dollars in bogus certificates of deposit to more than 17,000 investors worldwide before it imploded in 2009. At the time, the plot was the second-largest Ponzi scheme prosecuted in the U.S., behind the Bernie Madoff investor fraud, which came to light a few months earlier. HSBC, which acted as the correspondent bank to SIB, had already been successful in a lower court in asserting it had no duty to block the payments. The hearing in the Supreme Court revolved around whether there was any recoverable loss. Stanford is now serving a federal prison sentence of 110 years. SIB's "legal team are giving it careful consideration and will assess ongoing recovery options," a lawyer for the administrators said in an email. A spokesperson for HSBC welcomed the verdict. — Jonathan Browning, Bloomberg News