Receiving Wide Coverage ...
British Stress-Testing: One bank, Co-operative Bank, failed the Bank of England's stress test, while Royal Bank of Scotland and Lloyds Banking Group passed...but barely . The tests were "demanding," but the results show British banks are "significantly more resilient" than last year, Bank of England Governor Mark Carney said. RBS and Lloyds' results were made more palatable by the fact that both have already installed programs to boost their capital levels (although the "Heard on the Street" column raised concerns that those plans may be difficult for the banks to implement). The five other U.K. banks each "passed relatively comfortably," according to the Financial Times: HSBC, Barclays, Standard Chartered, Santander and Nationwide. The Co-operative Bank's failure was expected by analysts, and it has also already submitted a capital-raising plan that has been approved by regulators.
Smith v. Ocwen: Now Ocwen is in trouble with Joseph A. Smith, the monitor of the national mortgage settlement. Smith said early Tuesday his office is looking into possible conflicts of interest in how Ocwen has tried to comply with the national mortgage settlement. Smith, a former North Carolina state banking regulator, said there was not sufficient evidence that an internal committee formed by Ocwen to oversee its mortgage-servicing practices was independent from company management. The concerns with Ocwen's cooperation with the settlement were raised by an unnamed whistle-blower, and other mortgage servicers are expected to be reviewed for some of the same concerns, the Wall Street Journal reported. Smith asked McGladrey, an accounting firm, to review Ocwen's statements and determine if it met the settlement's standards. Ocwen's CEO, Ronald Faris, said it's working to address Smith's concerns. Ocwen became subject to the terms of the national mortgage settlement after it acquired Ally Financial's mortgage-servicing business.
Fare Dodger: An investment banker in London has been banned from the financial services industry because he dodged train fares for years. The Financial Conduct Authority levied the punishment against Jonathan Paul Burrows, who was a managing director for BlackRock Asset Management Investor Services. Burrows was able to get away with his fare dodging for years because there are no ticket barriers at the rural train station he used in East Sussex. Burrows left BlackRock, where he contributed to rate strategies, in July the FT reported.
Wall Street Journal
A New Hampshire real estate developer and restaurant owner is seeking permission to open a new bank. Bill Greiner of Bedford, N.H., has submitted the only de novo bank application this year to federal regulators. Primary Bank, as Greiner has named his proposed institution, would be only the second de novo bank in the U.S. since 2010 (the other being Bank of Bird-in-Hand in Pennsylvania). Greiner has raised $3 million from about 130 investors, the large majority of which are located in New Hampshire. Greiner estimates his bank would collect about $80 million in deposits during its first year, and $130 million in its second year.
Proceeds from a legal settlement with banks are being earmarked for an effort to make public housing units safer. Cyrus Vance, the district attorney of Manhattan, said his office will transfer $101 million from a settlement with BNP Paribas to the New York Housing Authority to buy security cameras, improved lighting and a swipe-card-based security system. The improvements are designated for housing developments that have been troubled by violent crime. BNP Paribas earlier this year pleaded guilty to violating U.S. sanctions against Iran.
Industry-wide returns on equity have improved, according to a McKinsey study. U.S. banks are leading the improvements in return on equity, although McKinsey cautioned that worldwide bank profits are still below pre-crisis levels.
Financial Times
A high-frequency trader in New Jersey is the first person to face criminal prosecution under Dodd-Frank. Michael Coscia, owner of the energy-trading firm Panther Energy Trading, is accused of spoofing: placing and quickly canceling bid orders as a way to move the market. Coscia has already paid $3.7 million in civil penalties.
New York Times
Banks are lining up behind Apple Pay like lemmings to the sea. Banks that recently have, or soon will, officially announce their adoption of Apple Pay include SunTrust, Barclays, USAA, TD Bank and Commerce Bank. Apple says its payments service will cover the cards that represent about 90% of U.S. credit-card purchase volume.
Elsewhere ...
Detroit Free Press: A real estate company controlled by Quicken Loans Chairman Dan Gilbert has purchased the former State Savings Bank building in downtown Detroit, considered one of the city's architectural "gems," and plans to preserve it, the Detroit Free Press reported. Gilbert's company also owns a former building of the Detroit branch of the Federal Reserve Bank of Chicago, located across the street from the State Savings Bank building.
