BofA, IBM eye compliance in cloud for banks; Dimon seeks permanent liquidity fix

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Wall Street Journal

Head in the cloud

Bank of America and IBM will unveil Wednesday a “public-cloud computing service for banks that features measures designed to meet the banking sector’s regulatory and compliance requirements, including automated security tools and top-level encryption. Banks have been reluctant to store customers’ financial data outside their in-house systems.”

Cathy Bessant, Bank of America's chief technology officer, told American Banker that public cloud computing is bound to become the most cost-efficient option.“While the economics [of an internal cloud] are great today, they're not going to be great forever for us,” Bessant said.

Less bang

The president of the Federal Reserve Bank of Richmond said “an uncertain economic and political environment” may be making it harder for the Fed to influence the economy through monetary policy. “Accommodative monetary policy stimulates the economy. But in the presence of high uncertainty — nearly all of which is generated by forces extraneous to what the FOMC does — we risk not getting the same ‘bang for the buck,’” Thomas Barkin said in prepared remarks for a speech he gave Tuesday in Baltimore.

Financial Times

Now on board

German Finance Minister Olaf Scholz said he now supports the creation of a “full eurozone banking union, ending Berlin’s iron opposition to a common scheme to protect savers’ deposits.”

“The need to deepen and complete European banking union is undeniable,” Scholz wrote in an op-ed.

“The plan to centralize oversight of eurozone banks was conceived seven years ago in response to the region’s deep sovereign debt crisis. The European Central Bank and EU chiefs in Brussels have long urged governments to end political divisions over further banking union. They have argued that the project is vital to ensure that bankrupt banks can be safely wound down without the need for large taxpayer bailouts, and to make the eurozone more resilient to economic shocks.”

“It is in all our interests to have a fair, well-designed and secure banking union that guarantees stability and enhances growth in all member states, while at the same time protecting taxpayers’ money,” Scholz wrote.

Social graces

Royal Bank of Scotland “plans to issue what it says is the first ‘social bond’ by a U.K. financial institution. The bond proceeds would back lending to small- and medium-sized companies in areas with high unemployment, the bank said, as well as to refinance outstanding loans to such businesses.” RBS plans to price the issue this week.

“Investors are increasingly hungry for bonds that are issued to fund sustainable projects. The primary market for sustainable bonds has seen issues several times oversubscribed by investors.”

On hold

“Rising anti-Chinese sentiment” in Hong Kong is “throwing into doubt” the plans of several large China-based technology companies — including Alibaba, Tencent and Xiaomi — “to tap into Hong Kong’s $15 billion virtual banking market," the paper reports.

“The Chinese companies had hoped to replicate in Hong Kong their success in mainland China when they won seven of eight new virtual bank licenses awarded by the Hong Kong Monetary Authority, the city’s financial regulator, between March and May this year. The new virtual, or digital, banks plan to offer similar services to traditional banks but at a lower cost," the paper says. "The most important difference is that they operate online only and may not open physical branches. But the political chaos in Hong Kong, which, in turn, has helped send the territory into recession, was likely to delay these plans.”

Elsewhere

Long-term fix needed

JPMorgan Chase CEO Jamie Dimon said “the kinds of problems that sent short-term lending rates soaring in mid-September could happen more often if permanent fixes aren’t found.”

“I think you’re going to see issues like this happen increasingly if we’re not careful because of certain constraints that were put in place,” Dimon said in a CNBC interview, referring to the tighter capital requirements imposed on large banks after the financial crisis. “I think there should be more permanent fixes, not just temporary fixes,” he said, although he “did not expressly call for a change in the rules.”

Dimon also “waded into the ongoing feud between Sen. Elizabeth Warren and American billionaires.”

“She uses some pretty harsh words, you know, some would say vilifies successful people,” Dimon, himself a billionaire, said. “I don’t like vilifying anybody. I think we should applaud successful people.”

Quotable

“This is not going to be a thing that spreads like a social network. This is going to be the work not of years but of decades, and it’s worth making. Today we have 21 fantastic committed organizations that are members of the Libra Association; a bunch more that are looking to be involved. So expect that number to continue to grow.” — Kevin Weil, vice president of product at Facebook’s Calibra digital wallet unit, about the company’s planned Libra digital currency project, speaking at the Web Summit technology conference in Portugal

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Compliance Compliance systems Cloud hosting Cloud computing Monetary policy Fintech Liquidity Jamie Dimon
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