Receiving Wide Coverage ...
Spanish Bank Launches Big IPO: Spain's Banco Santander is launching an initial public offering of its Mexican unit in an effort to raise up to $4.2 billion as the Spanish economy continues to falter. The Madrid-based bank will sell as much as 24.9% of its aptly named Santander Mexico unit with shares costing between 29.00 and 33.50 pesos each. Santander is one of the few Spanish banks still able to issue debt, but that doesn't mean the bank is thriving. According to the Times, it reported a 93% drop in second-quarter profit "as it set aside more money to cover bad loans in the Spanish market." The FT says the IPO is in line with a strategy Santander has used throughout the financial crisis "to sell stakes in its overseas subsidiaries to raise capital and to establish clearer valuations" in troubled times. The paper also points out that the IPO is the "second-largest in the world this year after Facebook" and, as such, could provide a "welcome jolt" to the U.S. economy. Let's just hope the debut, expected on September 26, goes smoothly.
In related news, the Journal reports the situation with Spain's banks has grown so serious the European Central Bank may be forced to take further action to help them out this week.
Wall Street Journal
Ally Financial has launched a new ad campaign, which reminds consumers "a machine can't give you what a person can," in an attempt to drive business in the increasingly competitive online banking space. Ally also told the Journal neither the entrance of big banks into its market nor the bankruptcy case involving its mortgage subsidiary, Residential Capital, have slowed down growth. It's unclear as to whether this should be at least partially attributed to the fact that, as the new campaign suggests, Ally does not employ robots.
Killer computers aren't the only thing on the Financial Services Authority's hit list. The British regulator is also cracking down on incentive plans that encourage bank employees to "mis-sell" retail products like payment protection insurance. These products — which FSA head Martin Wheatley says "customers do not need or want" — have come under fire in the U.S. as well. As you may recall, Bank of America ceased selling its payment protection plans to credit card customers last month, following the first-ever enforcement action from the Consumer Financial Protection Bureau that required Capital One to pay $210 million for deceptive marketing practices related to this type of product.
The Securities and Exchange Commission has filed civil fraud charges against two Stanford Financial Group officials it believes should have had some knowledge of the now-convicted Allen Sanford's "decades long Ponzi scheme" involving certificates of deposit.
New York Times
ING is selling its stake in Capital One.
States are joining the list of plaintiffs suing banks for claims related to the rigging of benchmark interest rates. Attorneys general in Maryland, Massachusetts, New York and Connecticut and state officials in North Carolina "have all been examining how much their states may have lost as a result of a lowered Libor."
In other kind-of-sort-of Libor news, this Times article suggests prosecutors can better understand how to pursue Libor cases by examining the recent conviction of three former UBS executives who were charged with rigging bids in the municipal bond market.
Issuers, tech companies and retailers are certainly focused on mobile wallets, but the debate persists as to whether consumers are actually willing to adopt them. Not to worry, this CNET article suggests, consumers will come around, but not because they're over their credit cards. Instead, it will be coupons that drive widespread mobile adoption. "With the growth of local daily deals services like Groupon, and with the use of coupons on the rise, consumers are looking for more convenient ways to redeem rewards," the author writes. The article uses Starbucks to support this hypothesis, citing that the coffee chain has "the most successful mobile payment system to date" because it serves as not just a payment method, but also a loyalty card, which consumers would prefer not to carry around in their actual wallets or on a key chain.
Here's a new take on the persistent Glass-Steagall debate: According to Bloomberg, breaking up big banks would be a challenge because Wall Street traders have become so reliant on borrowing money that can be obtained for less when they belong to a conglomerate that gets federally insured deposits. "If you divorce them from the mother ship, you'd also be divorcing them from the government at the same time, and that's where the subsidy is," a source told the website.