First Horizon National said it is buying Iberiabank in the year's second biggest bank merger. The combined bank, to be called First Horizon and headquartered in Memphis, will have $75 billion in assets, $57 billion in deposits and $55 billion in loans. The merger is expected to close in the second quarter of next year.
“Demand for business loans weakened in the third quarter as bank customers dialed back their plans for new plant and equipment investment,” according to the Federal Reserve's latest lending survey. “Nearly a third of the senior bank loan officers surveyed by the Fed in October said demand for business loans was moderately weaker in the third quarter for large- and middle-market firms while about 20% saw lower demand from smaller firms. Most respondents said lending standards for business loans were largely unchanged,” the paper says.
“By contrast, demand strengthened for most categories of consumer loans, including credit cards, auto loans and mortgages. Banks tightened their standards for credit card loans, and a significant share said they were less likely than a year ago to approve new credit-card loans for borrowers with a credit score of 620, citing a more uncertain economic outlook and a growing concern about borrowers’ ability to make payments on their loans.”
Nothing to see here
The acting head of the New York Fed’s Markets Desk said the bank’s recent efforts “to calm short-term markets and keep them placid is working well.” In prepared remarks for delivery at the New York Fed’s annual primary dealer meeting, Lorie Logan said the temporary operations “have been effective at restoring calm in money markets and maintaining control over the federal-funds rate.” Logan “explained that while the Fed presses forward with buying Treasury bills it will continue with notable-size temporary operations. But at some point the permanent operations will have added enough reserves to the financial system that tweaking via repos will no longer be needed.”
Soft spots
The recent run on rural banks might not be an indication of a more systemic problem in China. “The most important factor is simply that many rural banks are less intertwined with the banking system as a whole, limiting the risk of contagion. Rural commercial banks also are much less important in the negotiable certificate of deposit market, the corner of China’s money markets where this summer’s troubles began. That isn’t to say that problems at rural lenders are unimportant. For now, though, China’s big vulnerability still looks to be the nonbank financial institutions and city commercial lenders who were tripped up by money market ructions this summer.”
Elsewhere
Better pay
Bank of America said it’s speeding up its plan to raise its minimum wage to $20 an hour, and will do so by the end of the first quarter of next year instead of 2021, CNBC reports. The change is “part of the company’s commitment to delivering sustainable, responsible growth by being a great place to work,” BofA said. “The bank’s move comes as the minimum wage has become a hot-button issue in Washington. In July, the House passed a bill to raise the federal minimum wage to $15 per hour.” The bank raised its minimum wage to $17 an hour earlier this year from $15.
Pedestrians stand in front of a Bank of America Corp. branch in Chicago, Illinois, U.S., on Sunday, July 9, 2017. Bank Of America Corp. is scheduled to release earnings figures on July 18. Photographer: Christopher Dilts/Bloomberg
Christopher Dilts/Bloomberg
Quotable
“Repo operations have successfully offset supply changes and money market pressures associated with big anticipated drops in reserves, such as around mid-month and month-end settlements.” — Lorie Logan, the acting head of the New York Fed’s Markets Desk, about the bank’s recent temporary operations to restore calm in money markets and maintain control over the federal funds rate
The Office of the Attorney General in New York says the bank violated the state's Exempt Income Protection Act, illegally transferring customers' money to debt collectors.
The Providence, Rhode Island, company is having discussions with private wealth management teams elsewhere as it seeks to expand its fledgling private bank. In just three months, private banking deposits doubled to $2.4 billion.
After the Minneapolis-based company reported stubbornly high commercial deposit costs, it reduced its full-year forecast for net interest income by $200 million-$500 million.
The CFPB has dissolved the Office of Supervision, Enforcement and Fair Lending and eliminated the job of associate director in a move that impacts how it designates nonbanks for supervision.
Rising deposit costs have plagued banks in general, and the Tennessee bank had to pay up to bolster liquidity after its failed merger with TD. But First Horizon retained customers in the first quarter while not paying them the special rates they got last year.
U.S. customers who have previously used Sweden-based Klarna's buy now/pay later financing — and paid off their loans in full — will be prequalified for interest-bearing loans through a new version of the Klarna Visa card rolling out later this year.
