Receiving Wide Coverage ...
Co-op Bank 'Bails In' Bondholders: As part of its efforts to raise an additional $2.4 billion in capital, U.K. lender Co-operative Bank is asking subordinated bondholders to swap their debt securities for shares in the bank. "By requiring bondholders to exchange their debt securities for shares, Co-operative Bank is trying to avoid turning to the British government for help," Dealbook notes. Participation in the swap is currently voluntary. Analysts tell the Journal "there could be legal issues" if bondholders are forced to participate. Few details are being offered about the exchange, which is expected to take place in October. Co-op Bank CEO Euan Sutherland did issue this statement: "This solution, under which [bondholders] will own a significant minority stake in the bank, will then allow them to share in the upside of the transformation of the bank." The bank will gain a quote on the London Stock Exchange for shares given to debtholders, according to the FT's Lombard column, which notes "the Rochdale Pioneers, who created the Co-op in the 19th century as a proto-socialist counter balance to proprietary businesses, must be spinning in their nonconformist graves."
JPM Expands and Contracts: JPMorgan Chase is launching an asset tracking service, called "Collateral Central," intended to help businesses manage "the billions of dollars worth of cash and securities" that regulation requires be held against their derivatives trades, reports the FT. The paper calls the service "part of chief executive Jamie Dimon's attempts to increase profits" and notes that other Wall Street banks are getting into the collateral management business "after some traditional moneymakers shrank or disappeared." The new service isn't the only change at JPM. On Friday, news broke that the bank planned to spin off its private-equity unit, One Equity Partners, as an independent firm. An anonymous source tells Dealbook that decision has nothing to do with regulatory pressure and, instead, "is a reflection of JPMorgan's emphasis on its client businesses rather than making investments off the firm's balance sheet."
Stay Tuned: All eyes are on the Federal Reserve, which is scheduled to hold a policy meeting on Tuesday. Investors are "hoping for further clarity" on the central bank's plans for its ongoing monetary stimulus, notes the FT. "Fed officials are unlikely at this meeting to change their $85-billion-per-month bond-buying program," the Journal predicts, but "if they maintain confidence in their economic forecasts, it could signal they think they're on track to begin pulling back the program later this year."
Wall Street Journal
Well, this isn't all that surprising. Wells Fargo will discontinue offering its deposit advance loans, should regulators' plan to implement tougher rules around the product become finalized. In a comment letter filed with the OCC last month, the bank wrote, the regulators' proposal "will force Wells Fargo to discontinue the Direct Deposit Advance Service, leaving many customers only more expensive alternatives." U.S. Bancorp and Regions also indicated they will have to cut back on offering the product to consumers.
JPMorgan will begin "disclosing to investors the amount of liquid assets held in its U.S. money-market-mutual funds each day on its website" starting Tuesday in an effort to increase transparency.
JPMorgan and Morgan Stanley have ditched plans to sell synthetic collateralized debt obligations otherwise known as "notorious credit boom-era securities blamed for exacerbating the global financial crisis" after they were unable to find investors for all of their deal's different pieces.
And here's why you don't take a nap on the job: A German banker inadvertently caused a $293 million banking error when he momentarily dozed off at his computer while accidentally pressing down on the "2" button, reports Time. The mistake was ultimately corrected, but the supervisor who approved the transaction temporarily lost her job after a review of records revealed she had spent less than 1.4 seconds to examine a total of 603 payments. She was rehired after bringing her case to court. The banker was given "a slap on the wrist."