Receiving Wide Coverage ...
Barclays Tells Spain Adios: Barclays plans to sell its Spanish retail bank, wealth and investment management and corporate banking divisions to Caixabank for $1 billion. The move is part of Barclays' larger effort to scale back in unprofitable markets; the Wall Street Journal reports it will lose $830 million in the sale. "Heard on the Street" suggests since the "sale price valued the Spanish business at about half of book value That chunk of tangible book value might have been better sacrificed in cutting trickier assets. The Spain business could have been restructured and made profitable before a sale." The Financial Times takes a rosier view, leading with the fact the sale will allow Barclays chief Antony Jenkins "to hit his year-end target for the rundown of Barclay's so-called bad bank" and noting analysts "welcomed the deal as helping Barclays to bolster its capital, reduce leverage and potentially improve returns faster than expected." The FT's Lex team argues in a separate article the departure of foreign banks like Barclays, Lloyds and Citi is good news for Spain's increasingly strong domestic banking sector, as long as the banks keep leaning into cost-cutting.
Wall Street Journal
The paper ponders whether the New York Stock Exchange is destined to become a shadow of its former bustling, blue-jacketed self. The Big Board's owner, Intercontinental Exchange, has ordered a "bruising, top-to-bottom renovation of the former NYSE Euronext" in order to "shrink the company, simplify its operations and reshape its culture." The owners have already chopped the number of people working for the exchange in half, to roughly 2,000. ICE has also taken the battle for a simplified trading model to legislators: "The market has become too complex, too costly and there's too much operational risk. That's why you see us charging up the Hill," says NYSE president Thomas Farley. Some observers think floor traders may be on their way out altogether or that ICE, which acquired the exchange in 2013, will want to offload it sooner rather than later. But ICE chief Jeffrey Sprecher says he has no plans to sell.
"Banks are sounding the alarm about a proposed global rule aimed at forcing them to fund themselves more safely," the FT reports. Industry lobbyists argue the Net Stable Funding Ratio under Basel III would make it more expensive for banks to offer short-selling services and equity swaps. This reasoning inspired many FT commenters to break out the world's tiniest violin. "The lobbying to water down regulations is a disgraceful act aimed at improving shareholder gains and misses the point of financial system stability entirely," writes one reader. Another writes, "Wrong thing to complain about I am afraid. One might say that it precisely to stop short selling that the rules were invented."
Bail-in plans are a poor solution for the too-big-to-fail problem, writes FT columnist John Plender. "A paradox at the heart of this new approach to systemic crises is that bailing in creditors is likely to have far-reaching effects because, unlike a bailout, it will inflict losses on other systemically important financial institutions," Plender argues. "The Dodd-Frank Act looks to the banking industry to meet any losses in excess of what equity and debt are capable of absorbing. This is a recipe for panic."
Regional and community banks in the U.S. are on a hot streak thanks to lower expenses and improved credit quality, according to the Lex team. Smaller banks are also making more loans, a trend the Lex team says will continue if Congress, "as expected, eases capitalization standards for non-systemically important banks."
Banks must steel themselves for waves of new financial Trojans, according to cybersecurity experts. Hackers are after not only consumer information but also "information on M&A and other stuff along those lines [that] can be potentially interesting for reasons of corporate espionage," one insider tells the FT.
New York Times
U.S. banks including Citigroup, U.S. Bank, JPMorgan Chase, Wells Fargo and Bank of America are stepping up their efforts to recruit military servicemembers and veterans as customers, according to the Times. "Mainstream banks are pursuing service members and veterans because they need the income that customers with secure jobs provide," the paper reports. Some big banks have also been spurred to cater to the military sector after receiving a wave of bad publicity (and millions of dollars in legal penalties) for illegally foreclosing on homes of active-duty servicemembers in violation of the Servicemembers Civil Relief Act. However, the paper suggests major lenders may have a hard time luring veterans away from the military-focused USAA, which is so invested in understanding its armed forces clientele that it even sends volunteer employees to boot camp.
New York Attorney General Eric Schneiderman is expected to file a lawsuit Tuesday accusing the Buffalo, N.Y.-based Evans Bank of denying African-Americans access to mortgages, according to the Times. The lawsuit will argue that Evans "has created a map that defined the 'trade area,' places in the Buffalo metropolitan region where the bank would make mortgages and other loans," according to the Times. The map allegedly excludes Buffalo's East Side, which houses 75% of the city's African-American population. Evans' president and chief executive David Nasca responds the allegations are "unfounded and without substance."
Bitcoin advocate Charles Shrem tells the Times "he will plead guilty on Thursday to resolve federal charges that he helped smooth the way for drug transactions on the online marketplace Silk Road."