Breaking News This Morning ...
Libor no more: The head of the U.K.'s Financial Conduct Authority called for phasing out the London Interbank Offered Rate, commonly known as Libor, over the next five years. We do not think markets can rely on Libor continuing to be available indefinitely," the official, Andrew Bailey, said. "Libor came under the spotlight after evidence emerged that it was being manipulated by some of the largest global banks during the financial crisis," the FT noted. The "scandal-plagued benchmark is used to set the price of trillions of dollars of loans across the world," the Journal said. Wall Street Journal, Financial Times, New York Times
Receiving Wide Coverage ...
Gearing for a challenge: Many of the companies planning initial digital coin offerings to raise money said they wouldn't be put off by the Securities and Exchange Commission's warning Tuesday that it may look to regulate the nascent market just as it does traditional securities sales. But that could set up a showdown with the agency, including provoking an enforcement action against a firm that proceeds with one.
"Make no mistake, it will come," Kathryn Haun, a former federal prosecutor, wrote on Twitter. "And there are plenty to choose from." Wall Street Journal, Financial Times, New York Times, American Banker
Closer to free: The British government is moving closer to selling part of its 71% stake in Royal Bank of Scotland. On Wednesday the European Commission approved a plan in which RBS will transfer a 3% market share in the country's small business banking market to competing banks, a move that will cost the bank £833 million ($1.085 billion). The deal was a condition of the bank being bailed out during the financial crisis. Wall Street Journal, Financial Times
Wall Street Journal
Exodus: A growing swell of financial firms and their employees is forsaking the traditional finance capitals on the east and west coasts for America's inland cities. "Traditional finance hubs have yet to recover all the jobs lost during the recession, but the industry is booming in places like Phoenix, Salt Lake City and Dallas," the Journal reports. "The migration has accelerated as investment firms face declining profitability and soaring real estate costs. The market's shift to low-cost passive investing compounds those difficulties, pushing firms to look for new ways to cut costs."
Automation is accelerating the shift, as a "new breed of competitors" such as Betterment, Wealthfront and Vanguard offer personal financial advice with fees as low as zero, compared to the 1% traditional financial advisers charge.
On the Hill: Randal Quarles, President Trump's nominee to be vice chairman of supervision at the Federal Reserve, is expected to tell the Senate Banking Committee at a hearing Thursday that current banking regulations need "some refinements." Joseph Otting, the prospective Comptroller of the Currency, is also scheduled to testify.
All systems go: State Street chairman and CEO Joseph Hooley said "all engines were firing" at the bank in the second quarter, when revenue growth rose by nearly double digits and profits beat analysts' estimates. The bank also raised its expectations for full-year results.
Separately, the bank's money management unit, State Street Global Advisors, has been trying to push gender diversity on the boards of companies in which it owns shares. The company found 468 companies that had no female board members, and 400 of those failed to address the gender issue. So the company voted against the re-election of directors responsible for nominating new board members at each of the firms.
Careful: Citigroup CEO Michael Corbat made bold promises to shareholders at Tuesday's investor day, including the return of $60 billion of capital over the next three years and $20 billion of annual profits. But the bank won't be taking any big risks to get there. "We are in the risk-taking business — but none of those risks should be outsized," he said.
"To be successful in this or anything else you have to know the content of your business, but you also have to be the kind of person that people want to want to talk to and be friends with and find interesting. The people who are most successful have interests." — Goldman Sachs CEO Lloyd Blankfein in a town hall for the company's summer interns.