Hackers hit ATMs; Santander Holdings progresses

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Wall Street Journal

One to go ... : Santander Holdings USA was released from Federal Reserve oversight restrictions that were imposed three years ago “when the bank was sharply rebuked for failing to meet regulatory standards across several of its business operations.”

“We look forward to building on our momentum as we seek to cement a culture focused on the highest levels of compliance and customer service,” CEO Scott Powell said.

Santander is still subject to one other written agreement with the Fed, issued in 2017.

Slimmer recovery: Junk-rated corporate loans “are no longer as safe as their owners may think.” Moody’s Investors Service is warning the quality of leveraged loans has deteriorated recently and investors stand to recover “far less in a future economic downturn than they have historically.” The rating agency says the typical recovery on leveraged loans will likely fall to 61% of face value, down from the historical average of 77%.

Stop the boom: The Department of Housing and Urban Development needs to “take immediate steps to slow the unsustainable home price boom that is being fueled by excessive leverage” and increase the supply of affordable housing. An op-ed offers some ideas about how it can be done.

Financial Times

Now that's growth: Monzo, the online British bank that “has grown rapidly by capitalizing on disenchantment with traditional banks,” is set to be valued at up to $1.5 billion, four times what it was valued at last November, following its latest $150 million fundraising round. The digital bank has been signing up 18,000 customers a week.

Surfing the banks: Nearly seven out of 10 U.K. residents bank online, nearly double the percentage of 10 years ago, according to a survey by the Office for National Statistics. Online banking is the fastest-growing reason why people use the internet.

Next wave: DE Shaw, the $50 billion quantitative hedge fund, “has set up a new research group dedicated to machine learning — one of the hottest subjects in finance.” The company has hired Pedro Domingos, a professor of computer science and engineering at the University of Washington and “a prominent academic in the field of artificial intelligence,” to lead the group. “This new, independent venture reflects the importance we attach to gaining fresh perspectives and insights as technology evolves,” said Eric Wepsic, a DE Shaw managing director.

Elsewhere

They were warned: Cyber criminals stole more than $13 million from an Indian bank by hacking into cash machines in 28 countries last weekend. Cosmos Bank said the thieves made nearly 15,000 withdrawals in a little over two hours in the coordinated attack. They also transferred money to a Hong Kong company’s account through three unauthorized transactions using the SWIFT global payments network.

“The hackers infected the bank's credit card payment system with malware,” then used fake credit cards at the ATMs to dispense cash until they were empty. The heist took place just days after the FBI issued a global warning to banks that such an attack might take place.

Balancing act: “Initiatives are popping up all over the United States to help young people, lower-income communities and those lacking a formal banking relationship improve their interactions with the financial services industry,” Reuters reports. For example, JPMorgan Chase, Santander Bank and Bank of America have partnered with nonprofits and local governments to offer “accounts for summer youth employment program participants as they are coached on their finances.” However, the banks “worry that a heavy-handed sales pitch will push customers away.”

Quotable

“One of the things we’re trying to alert investors to is that what you thought your outcome might have been in the past is likely to be different, and presumably worse, in the future.” — Christina Padgett, an analyst at Moody’s, about the growing riskiness of junk-rated leveraged loans.

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