Breaking News This Morning ...
HSBC reports: Shares of HSBC jumped 4% Monday after the bank said its main capital ratio rose to 13.9% at the end of the third quarter from 12.1% at the end of June, raising hopes of a dividend increase. Still, it was hardly a great quarter for the bank, as it reported a $204 million net loss versus a $5.23 billion net profit a year earlier. The results included a $1.7 billion charge for selling its Brazil business. Wall Street Journal, Financial Times
Receiving Wide Coverage ...
Bonuses Cut: Wall Street year-end bonuses are expected to be down 5% to 10% from last year, the third decline in a row, and a 30% drop since 2009, according to the consulting firm Johnson Associates. "If you listen to politicians, you'd think bankers are still making money like it's 2007. They're not," said Alan Johnson, who runs the firm that bears his name. "I don't see it changing for the next year or two, either. The pressures in the industry on profit and fees are going to continue, and I think pay will likely continue to decline in 2017." Wall Street Journal, New York Times
Wall Street Journal
Bad behavior: An anonymous letter from a Wells Fargo bank manager obtained by the Wall Street Journal "claims that regional executives who oversaw bank branches in Arizona encouraged bankers to lead customers to open multiple products or to find ways to open accounts without customers' specific knowledge." The letter, which was sent late last month to Mary Mack, Wells' new head of retail banking, "suggests how bad behavior in one part of the bank may have spread to other parts of the country, fueling its sales-practices scandal," the Journal said. Arizona was one "epicenter of questionable practices" at the bank. Be sure to watch American Banker's slideshow on Wells' sales culture.
Weighing its options: Struggling First NBC Bank said it is considering strategic options, including raising new capital by selling stock or an outright sale of the bank, according to the paper. The New Orleans-based bank's market value has dropped to about $106 million from more than $700 million at the end of last year and currently trades at just 29% of book value.
Ready to rebound: Bank stocks "could be poised to march higher," the Journal's Heard on the Street column speculates. After falling amid fears of a global economic slowdown at the start of this year and the Brexit panic, bank stocks may be poised to recover "thanks to a rebound in both growth and inflation in the U.S. economy, which lead to higher interest rates. This will help commercial banks earn more on loans." Bank of America's balance sheet is in the best position to benefit from rising rates, the paper says, "thanks to a large, low-cost deposit base and big holdings of mortgage-backed securities." Higher rates would also generate more trading revenue for Wall Street banks, including JPMorgan, Citigroup and Goldman Sachs.
"The satisfaction of being '#1, second to no one,' has [evolved] into an addiction" — An anonymous Wells Fargo Arizona banker to the bank's head of retail banking, Mary Mack.