Costs of bitcoin; Bank ends NRA connection

Receiving Wide Coverage ...

Early warning: Bank of America warned “for the first time” in its annual Securities and Exchange Commission filing that it could face “substantial” costs as it deals with cryptocurrencies and technology, “a sign of the potential threat to the world’s largest financial institutions posed by the rise of bitcoin and its alternatives,” the Financial Times reports. “The widespread adoption of new technologies, including internet services, cryptocurrencies and payment systems, could require substantial expenditures to modify or adapt our existing products and services,” B of A said.

“B of A’s decision to include the warnings shows how banking executives are taking the bitcoin craze seriously — and are having to acknowledge the possibility, however unlikely, that it will upend their business models,” the paper says.

While the prices of bitcoin and other cryptocurrencies have dropped sharply from their all-time highs last December, investors haven’t lost their appetite for initial coin offerings. Companies have raised more than $1.6 billion through ICOs so far this year and are on a pace to easily top last year’s total of $6.5 billion, according to the Token Report.

That doesn’t make Federal Reserve Bank of New York President William Dudley any less wary of cybercurrencies. “There is a bit of a, I would say, speculative mania around cryptocurrencies in terms of their valuations, which I view as pretty dangerous because I don’t really see what the actual true underlying value of some of these cryptocurrencies actually is in practice,” Dudley said. “I’m a little bit skeptical we actually have this tremendous need for a cryptocurrency in the United States,” he added.

Meanwhile, the debate over regulation continues,

Yawning gap: Barclays said women working in its investment banking operation are paid about half what their male colleagues make. There were more than four men to every woman in the highest 25% of earners in its international division, but almost two women for every man in the lowest 25%. British companies with more than 250 workers are now required to publish gender pay gap data by April.

The gender gap at Royal Bank of Scotland was nearly as bad: women there make an average of 37.2% less than men. “The gender pay gap is not where we want it to be,” RBS chief executive Ross McEwan told reporters. “What it shows is that we need to have more females in senior roles ... That’s what fixes the gender pay gap.”

Speaking of Barclays, the Wall Street Journal’s Heard on the Street column is skeptical that CEO Jes Staley will be able to come through on his promise to double the bank’s dividend by the end of this year after reporting a £1.9 billion ($2.64 billion) loss for 2017. The bank is defending itself in several court cases and has nothing put aside if it loses. “The planned 2018 dividend would cost Barclays just more than £1 billion and the bank could generate capital of more than £3 billion over the year,” it says. “But that could be wiped out” if the bank is forced to settle the cases and “investors could end 2018 with another bitter taste of dividend disappointment.” Wall Street Journal, Financial Times

Financial Times

Money talks: While Democrats in Congress are usually united in opposing measures that help the biggest banks, a bill that would raise the threshold for systemically important banks from $50 billion to $250 billion in assets has opened up a split within Democrat ranks, the paper reports. And campaign contributions may be playing a role.

“A number of key Democrats in the U.S. Senate are finding pockets of financial support for re-election races this year from a cluster of banks that have stepped up campaign contributions ahead of a vote on industry deregulation,” the paper says. For example, individuals connected to Signature Bank, which is just beneath the threshold, have donated $112,000 to Democrat senators so far in the 2017-2018 election cycle, about eight times what they donated in the entire 2015-2016 cycle.

New York Times

Promising?: The Trump administration’s proposal to force failing banks to file for a new form of bankruptcy protection rather than be rescued by taxpayers is “designed to make life harder for the big banks” and “could be hugely consequential” in a financial crisis, the paper comments. But the plan also just might work, the paper notes, since banks now have living wills.

Parting ways: Following what the paper says was a “barrage of customer complaints this week,” First National Bank of Omaha announced it will end its Visa-branded affinity credit card with the National Rifle Association.

Washington Post

Easing the American dream: Mortgage lenders are reducing their requirements for prospective home buyers, the paper reports. Among the main changes are “the availability of low downpayment loans, a loosening of the debt-to-income ratio requirements and easing of rules about how student loan payments are calculated.”

Quotable

“Customer feedback has caused us to review our relationship with the N.R.A. As a result, First National Bank of Omaha will not renew its contract with the National Rifle Association to issue the N.R.A. Visa Card.” — Bank spokesman Kevin C. Langin.