Breaking News This Morning ...
Earnings: Citizens Financial Group, First Niagara Financial Group, Prosperity Bancshares
Wall Street Journal
Barclays and Credit Suisse Group are in talks to pay a combined $150 million to settle a lawsuit that alleges wrongdoing in the operation of dark pools, the private stock-trading platforms that have come under regulatory scrutiny. The Securities and Exchange Commission and the New York State Attorney General are in discussions with the banks about the settlement, unnamed sources said.
Officials have said dark pools favor professional traders over big institutions; they allege the banks misled clients about the extent of high-frequency trading in dark pools. Barclays has denied wrongdoing but now has entered settlement talks.
In other Credit Suisse news, the Zrich bank plans to raise about $6.3 billion in capital, return excess capital to investors and slim down its investment banking business. The Federal Deposit Insurance Corp. approved a rule that would require banks to collect more collateral for swaps transactions. The idea is to prevent risk-taking behavior that could lead to another bailout.
The FDIC's move could make swaps transactions much more expensive; however, the rule approved Thursday was seen as less burdensome for banks than earlier versions. Also on Thursday, the FDIC took steps to reduce banks' insurance premiums, perhaps as soon as the end of this year. Get the scoop from American Banker.
Citigroup is in talks to sell its minority stake in China Guangfa Bank. Citi was the leader of a group of five investors that bought an 85.6% stake in the provincial bank in 2006. It couldn't be determined by the Journal's unnamed sources how much Citi could fetch for the stake, though in 2006 it was valued at about $620 million.
Activist investors got an assist from the Securities and Exchange Commission on Thursday. The SEC has made it more difficult for companies to block shareholder proposals from coming to a vote.
Financial Times
Please, can you raise interest rates now? That's what the 17th version of the Geneva Report asks of central banks. Otherwise, asset bubbles will be created, as investors move farther out on the risk curve in the hunt for yield, making it more difficult to respond to the next financial crisis. The report was commissioned by the International Centre for Monetary and Banking Studies and the Centre for Economic Policy Research.
Europe's biggest bank, HSBC, has its eyes on the U.S. for its next headquarters. Unnamed sources told the paper the U.S. has now emerged as a serious alternative to Hong Kong as the site of HSBC's possible new domicile. But the risk ending up under Chinese control if it moves to Hong Kong has the bank worried. Additionally, HSBC is worried the U.S. could yank its dollar-clearing operations if it moves to Hong Kong. HSBC has said it's likely to bolt from the U.K., because of excessive taxes and regulation. However, it's not a certainty that HSBC will move.
New York Times
Perhaps no one will ever go to jail for the financial crisis. But the least the U.S. could do is ban ex-financial industry leaders from government work, an op-ed in the Times argues. The concept of “exclusion” seems to have been forgotten by policymakers, but it's an appropriate punishment to dole out to the financiers who caused the financial crisis, said the op-ed's author, Eric Havian, a former assistant U.S. attorney. It's easier to exclude someone than to convict him or her of a crime. Yes, former Countrywide chieftain Angelo Mozilo was banned for life by the SEC from serving as an officer or director of a public company. But many more rule breakers have escaped serious punishment.
Elsewhere ...
Bloomberg: Square is out, JPMorgan Chase is in at Starbucks. The coffee slinger said JPMorgan will process its payments once its contract with Square ends. JPMorgan will install EMV chip-card readers at Starbucks locations.
Charlotte Observer: Now comes an attempt to replace tellers with a “tech bar.” Sharonview Federal Credit Union has opened a Gastonia, N.C., branch in which tellers have been swapped out for a self-service area in which consumers can conduct transactions. The branch will still have employees (between five and 10) who could help out with the tech bar, if needed.
