Receiving Wide Coverage ...
Capital News? Deutsche Bank announced Sunday plans to raise $11 billion in capital by selling new stock to shareholders and the royal family of Qatar. The capital raise is intended to ease regulatory concerns about the German lender's ability to weather potential losses; its Tier 1 capital ratio would rise from its current 9.5% to 11.8%. But media coverage suggests that some investors may not be celebrating. Issuing 360 million new shares will reportedly dilute Deutsche's stock value. The bank also pushed its target profit of 12% return-on-equity back by a year, to 2016, and lowered its profit goals for private and business banking and transaction banking. The Financial Times' Lex team suggests investors may want to hold off on supporting the raise, arguing that those who buy new shares will "be backing the view that big is still best in European investment banking." But the Wall Street Journal reports that at least two major Deutsche investors welcome the move to increase capital "because it would put an end to the capital debate." Financial Times, Wall Street Journal, New York Times
Wall Street Journal
Citigroup's troubles with Banamex extend into U.S. territory, according to the Journal. Last year, the company fired two top executives at Banamex USA over concerns about lackluster oversight of money transfers between the U.S. and Mexico. The news of the firings, which were not public until now, comes days after Citigroup fired 12 employees at Banamex in Mexico. The company's Mexican subsidiary lost $400 million after making loans to a troubled oil company despite a number of red flags, according to reports.
Bank of America is sticking with its goal of reaching a 14% return on tangible equity by the end of 2016. "That is a tall order, although not impossible," according to David Reilly.
The Federal Reserve is looking at alternatives to its current system of managing interest rates.
If foreign lenders Credit Suisse and BNP Paribas plead guilty to criminal charges in the U.S., Goldman Sachs chief executive Lloyd Blankfein says that other financial companies will reconsider whether to continue doing business with them.
Banks including Citigroup and JPMorgan Chase seem to be slacking off on their webcasting responsibilities, according to the Journal. The paper said Citi hasn't webcast its annual shareholder meeting, and JPM didn't show an executive's speech in London, claiming everything said was "previously disclosed in its latest securities filing."
What do newspapers and the banking industry have in common? They're both dealing with the decline of once-hallowed revenue sources, according to the Lex team. Over-the-counter derivatives are on their way out for good, the column says, "and it is increasingly costly to pretend otherwise."
Defaults in commercial mortgage-backed securities are still well below credit-bubble levels, but a report from Fitch Ratings suggests that more could be on the way if banks loosen underwriting standards and let down their guard.
Sales of collateralized loan obligations are burning up, and regulators worry that the market could overheat.
New York Times
Paul Krugman's Sunday column criticizes the "save the bankers, save the world" philosophy that he says characterized policymakers' response to the financial crisis. Using Tim Geithner's new memoir Stress Test as a springboard for his censure, Krugman argues the government's response to the crisis can only be counted as a success if victory is measured in financial confidence rather than unemployment rates. He also slams Geithner for opposing mortgage debt relief, writing that the former Treasury secretary was "all for bailing out banks but against bailing out families." Commenter Rima Regas says responsibility for the policy response lies with the "corporate Democrats" who advised the Obama administration and held seats in Congress, while other commenters blame "Wild West capitalism" and regulators' too-big-to-jail mentality.
While Gretchen Morgenson's column takes a slightly more moderate look at Geithner, she's also unpersuaded by his claim that the fate of struggling homeowners mattered to him as much as saving big banks. Geithner argues in his memoir that his interest in rescuing banks was simply about stabilizing the financial system, which in turn benefited all Americans. But Morgenson says this version of events "leaves no room for a middle ground, a series of actions that would have averted catastrophe while awarding Main Street with the same attention and generosity that was heaped on Wall Street."
In the wake of the Target data breach, payments innovations are speeding up. The Times takes a look at the "bad blood" between retailers and credit card companies Visa and MasterCard over processing fees and EMV chip technology.
The Washington Post reports that San Antonio mayor Julian Castro is Obama's pick as the next head of the Department of Housing and Urban Development. Anonymice told the paper that current Housing Secretary Shaun Donovan will be appointed director of the Office of Management and Budget. The 39-year-old Castro is a rising star in the Democratic Party and a possible running-mate contender in the 2016 presidential elections, according to the Post.