Editor's note: Morning Scan will publish next on Nov. 27. Happy Thanksgiving from all of us at American Banker and SourceMedia.
Receiving Wide Coverage ...
A better way to buy: The real estate industry is starting to use bitcoin and the blockchain technology behind it in a development that “could eventually produce important changes in the way property is bought and sold,” the Wall Street Journal reports. Several states have changed their laws to allow blockchain to be used to record and transfer property titles, while some real estate firms are beginning to use cryptocurrencies to make rental payments and buy property.
Meanwhile, Jamie Dimon may believe bitcoin is a “fraud” and people who buy it are “stupid,” but that doesn’t mean his bank is averse to making money on it, albeit indirectly. JPMorgan Chase is “considering whether to provide its clients access to CME’s new bitcoin product through its futures-brokerage unit,” the paper says. “That means the bank’s customers could use it to place bets on whether the digital currency will rise or fall, while J.P. Morgan collects fees for such services.”
Benjamin Lawsky, New York State’s former superintendent of financial services, is joining the board of blockchain start-up Ripple. The “heavy-weight appointment,” the Financial Times said, lends “regulatory gravitas to the company.” Lawsky is credited with designing the BitLicense for digital asset businesses, like Ripple.
Fined: Hong Kong’s Securities and Futures Appeals Tribunal ordered HSBC’s Swiss Private Bank to pay 400 million Hong Kong dollars ($51 million) for selling products to the unit’s clients that included notes issued and/or guaranteed by Lehman Brothers, which later went bankrupt. Hong Kong regulators said the bank failed to warn clients about the risks involved in buying the notes. The fine is reportedly the largest ever imposed by the regulator, which also suspended for one year the unit’s licenses to advise and deal in securities. Wall Street Journal, Financial Times, American Banker
Separately, HSBC hired Mike Warriner, an engineering director at Google, as chief information officer of its retail banking and wealth management digital division. “The appointment highlights a shift in recent years among companies in banking, manufacturing, retail and other industries to hire seasoned leaders from the technology sector,” the Journal said.
Good quarter?: U.S. banks had aggregate net income of $47.9 billion in the third quarter, up 5.2% from the year earlier period, the FDIC reported. But there were some red flags. Loan growth slowed, chargeoffs on credit cards and auto loans rose, and banks continued to have an elevated share of their loans and securities in longer-term maturities, potentially exposing them to greater interest-rate risk. Wall Street Journal, Financial Times, American Banker
Wall Street Journal
Busy schedule: Federal Reserve governor Jerome Powell, President Trump’s nominee to head the central bank, met with an array of Wall Street executives, members of Congress and counterparts at foreign central banks over the past year as he became the Fed’s point person on bank regulation, according to his daily schedule released by the Fed. Powell held “multiple meetings and phone calls” with Wells Fargo CEO Timothy Sloan as well as the CEOs or presidents of JPMorgan Chase, Goldman Sachs and Deutsche Bank.
Failing grade: Citigroup agreed to pay $6.5 million, included customer refunds of $3.75 million and a civil penalty of $2.75 million, to settle accusations by the Consumer Financial Protection Bureau that it mishandled student loans it serviced. The agency said the bank gave customers inaccurate information about their eligibility for an interest tax deduction, failed to refund interest and late fees it incorrectly charged and overstated minimum monthly payments due.
New York Times
Financial freedom: Shareholders of Zions Bancorp should benefit if the bank succeeds in shedding its systemically important financial institution label, the paper says. “First, expenses will probably come down as compliance costs drop. Second, the bank will probably try to hand back more capital, perhaps eventually reducing its current 12.1% tangible common equity ratio to 9%. That would free up $1.6 billion.”
“While overall performance improved from the prior year, the interest rate environment and competitive lending conditions continue to pose challenges for many institutions. In addition, with the economy in the ninth year of an expansion that has been characterized by modest economic growth, the annual rate of loan growth has slowed in recent quarters.” — FDIC Chairman Martin Gruenberg.