The Goldman Sachs & Co. logo is displayed at the company's booth on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Friday, July 19, 2013. U.S. stocks fell after benchmark equities gauges rose to records yesterday, as worse-than-estimated profit from Google Inc. and Microsoft Corp. (MSFT) overshadowed China’s plan to remove the floor on lending rates. Photographer: Scott Eells/Bloomberg
Scott Eells/Bloomberg
Hitting the heights: Bank stocks reached milestones Tuesday as their share prices continued to rise. Goldman Sachs and JPMorgan Chase both hit all-time highs, with Goldman recouping all it had lost since the 2007 financial crisis. Bank of America traded in line with its book value for the first time since late 2008; it had traded as low as 15% of book value back in March 2009.
Ambitious move: Japan's SoftBank, which despite its name isn't a bank but a technology and communications conglomerate, made a big step into becoming a serious player in the financial services business Tuesday when it agreed to buy asset manager Fortress Investment Group for $3.3 billion. The acquisition of Fortress, which manages about $70 billion in assets in real estate, credit and private equity, fits Softbank chief Masayoshi Son's "ambitious long-term plans to become one of the world's biggest asset managers, focusing on technology but with a broader platform to raise money and shepherd companies across different sectors," the Wall Street Journal said.
The asset management business "is a radical departure from the technology and telecommunications holdings for which the Japanese company is known," the New York Times noted. "But the acquisition is intended to bolster SoftBank's other enormous new endeavor: a $100 billion technology investment fund that threatens to roil the private equity world."
Wall Street Journal
PayPal deals: PayPal agreed to acquire Canadian bill-payment company TIO Networks for about $233 million. The deal is "designed to broaden the digital-payments company's reach among consumers who lack traditional financial accounts," the Journal reported. TIO customers make regular payments in cash to utility companies and other service providers through a network of retail locations and kiosks across the U.S.
Be careful what you ask for: While big banks mostly favor the Trump administration's plans to dismantle Dodd-Frank, they would like to retain a small part of it, namely the "orderly liquidation authority," the Journal reports. OLA, as it's more commonly known, empowers the federal government to take over and wind down a failing bank. Conservatives want to get rid of it. But big banks "fear an OLA replacement would be more draconian regulation, both in the U.S. and in other countries where officials view OLA as an important backstop."
Financial Times
Bad news, good news: First the bad news. Lending Club lost money for a third year in a row last year, reporting a $146 million loss for 2016, well above projections, which sent the stock down sharply in after-hours trading Tuesday.
But the good news: the online marketplace lender did report an increase in loan originations in the fourth quarter, to almost $2 billion, "surviving a key test of investor demand despite rising losses and lingering fears over its business model," the paper commented. "Last quarter we accomplished the foundational work required to prepare Lending Club for the growth to come," said Scott Sanborn, the company's CEO. "With a diverse, stable and scalable mix of investors, and an enhanced control environment, we are entering 2017 in a stronger position than ever to serve the needs of our customers."
Quick loans: Royal Bank of Scotland is planning to offer loans online to small businesses in the U.K. "within hours" of application. The loans will be offered through a digital site called "Esme" – for small and medium-sized enterprises – under RBS's NatWest brand. "The last thing SMEs want is to spend hours filling in paper work, so this allows them to quickly complete a digital process," said Alison Rose, head of the bank's commercial and private banking unit.
Quotable ...
"They've come out of this thing lean and mean." – Bank investor Ed Wachenheim of Greenhaven Associates commenting on bank stock prices
Some last-minute drama has derailed planned votes on crypto and stablecoin in the House, but the political maneuvering isn't likely to improve the long list of criticisms that bankers have raised about the legislation before it heads to President Donald Trump's desk.
The global bank reported solid second-quarter results as executives maintain confidence in the bank's ability to achieve a return on tangible common equity of 10-11% next year. But an analyst said Citi's progress on reducing expenses will hinge on its ability to get freed from various enforcement actions.
The U.K. challenger bank would follow London fintech Wise in emphasizing New York over London in an effort to boost valuation and establish a foothold in the U.S. Plus, Lloyds is in talks to buy all-in-one card fintech Curve; and more news in the global payments and fintech roundup.
The Federal Reserve governor said the uptick in buy now pay later repayment issues is likely a sign that consumers don't understand the terms of the emerging credit offering.
