Banks turn to blockchain; commercial loan growth

Receiving Wide Coverage ...

Blockchain update: JPMorgan Chase demonstrated a prototype of its blockchain-based capital markets platform, which the bank hopes can help reduce costs and facilitate transactions. “We think the technology has the potential to be transformative,” said Christine Moy, executive director of the bank’s Blockchain Center of Excellence.

Santander said it has become not only the first bank but the first company in the world to use blockchain to make it easier for investors to vote at an annual meeting. The bank and Broadridge Financial Solutions tested the system at Santander’s annual meeting in March. Voting took place normally while blockchain was used to produce a shadow register. “The bank said its pioneering move could help revolutionize corporate democracy,” the Financial Times says.

Wall Street Journal

The search begins: The Federal Reserve Bank of San Francisco has begun its search for a successor to President John Williams, who is set to become head of the New York Fed next month. The San Francisco Fed said the search would be “broad and inclusive” and will be implemented by Diversified Search, which the bank said is the largest female-owned executive search firm. Williams’ selection to replace the retiring William Dudley at the New York Fed was met with criticism by some people who felt the bank should have made a more diverse choice.

Green shoots: Corporate loan growth is showing signs of life, “potentially boosting growth and bank profits.” Commercial and industrial loans outstanding at banks rose 3.1% for the week ended May 2 compared to a year earlier, up from 0.9% at the end of January. “It’s early, it’s only been a couple of months, but we’re bullish on what that means for aggregate C&I loan growth for us,” SunTrust Banks CFO Allison Dukes said. “For investors in bank shares this is very welcome news,” the Heard on the Street column notes.

Gotcha!: The Securities and Exchange Commission has set up a website touting a fake initial coin offering as a way of warning investors that many ICOs are scams and that buyers need to be wary of them. People who click on the “Buy Coins Now!” link on the HoweyCoins website are taken to an SEC webpage that says: “If you responded to an investment offer like this, you could have been scammed — HoweyCoins are completely fake!”

“The fact that our staff could put together something that looks just like an ICO in very little time and with very little resources shows how little you have to put into this to market a token,” SEC chairman Jay Clayton said.

AML fine: In more serious matters, the SEC and the Financial Industry Regulatory Authority fined the New York-based brokerage unit of Industrial and Commercial Bank of China, China’s biggest bank, for anti-money laundering compliance failures. The unit was fined $5.3 million by Finra and agreed to pay $860,000 to the SEC.

Financial Times

Bigger and bigger: Ant Financial now ranks as the world’s largest consumer wealth management platform, according to an internal document. The company has assets under management of $345 billion, more than half of which is in the firm’s online money market fund. The document “underscores the extent to which the fintech arm of Jack Ma’s internet group Alibaba dominates online finance in China, as well as the challenge it poses to the country’s banks,” the paper says.

Let’s chat: WeChat, the Chinese social media giant owned by Tencent, is looking to develop a service that would allow international bankers to discuss bond trades with China-based bankers while staying within compliance rules.

Positive signs: The vice president of the European Central Bank said the eurozone’s southern countries have reformed their economies and reduced risk in their financial systems enough to permit moving forward with a banking union. “Enough risk reduction has been achieved to justify introducing common elements of risk-sharing in the banking union project,” said Vítor Constâncio. However, Germany and some other northern European states are skeptical of the progress and remain worried that financial risks would be pushed onto them if the countries again run into financial trouble.

Washington Post

Repo madness: Business is booming at an unexpected time for the “familiar angel of financial calamity” — also known as the repo man. “Although the U.S. economy recently entered its second-longest-ever period of expansion, the auto loan delinquency rate last year reached its highest point since 2012, driven by souring subprime auto loans,” the paper reports. “It’s evidence of how the economic recovery has not been evenly felt, with some of Americans’ biggest purchases — automobiles — being fueled by unsustainable borrowing rather than rising wages.”

Quotable

“So much of America is just a heartbeat away from a repossession — even good people, decent people who aren’t deadbeats. It seems like a different environment than it’s ever been.” — Patrick Altes, a repossession agent in Daytona Beach.