Wall Street Journal
Diebold confirmed it's in merger talks with Germany's Wincor Nixdorf, under which Diebold would pay $1.8 billion in cash and stock in an acquisition. Diebold will launch its tender offer early next year, with a breakdown of 80% cash and 20% stock. Diebold will raise $2.3 billion in senior secured and unsecured debt to finance the deal; it will also obtain a $500 million revolving credit facility. The combination would surpass NCR as the world's largest ATM maker. But Diebold and Wincor Nixdorf want to combine less for reasons tied to the ATM, and more because they want to beef up their offerings of software and services.
The total loss-absorbing capacity rule proposed by the Fed could take a bite out of banks' earnings. Under the rule, banks will be required to hold more capital relative to their assets, and leverage more long-term debt. "The holders of that debt will be expected to bear the losses if the shareholders are wiped out," the paper says. However, the debt cannot be foreign-law debt; banks had expected to be allowed to use foreign-law debt to meet the rules. If the proposed rule is approved, banks will need to refinance their foreign-law bonds with U.S. debt; banks could be forced to hold excess funding in this situation. Those funds will be invested in low-yielding assets, squeezing net interest margins.
Homeowners aren't tapping the value embedded in their real estate as much as in past periods of economic rebound. For one, homeowners do not realize the value they have accumulated in their homes; many homeowners who had been underwater on their mortgages do not realize they are no longer underwater. Homeowners are also more fiscally conservative than they once were. For another, banks have been less generous in the amounts they're willing to lend off homes. Loan-to-value ratios of 100% were once common, but no longer.
A student debt-forgiveness program, designed to encourage college graduates to take jobs that are typically hard to fill, could end up helping the affluent. more than was intended. The Public Service Loan Forgiveness program has encompassed more workers than initially estimated; moreover, many of them are doctors who will earn six-figure salaries. The Department of Education's PSLF was supposed to fill jobs at schools and nonprofits. Billions of dollars will be forgotten in 2017, the first year the program will forgive loans. The PSLF requires borrowers to pay on the loans for 10 years before it will forgive them.
The Journal takes a closer look at Gery Shalon, the alleged Israeli mastermind behind the cyberattack on JPMorgan Chase and other U.S. corporations. Shalon is charged with running a large criminal operation that reaped hundreds of millions of dollars in profits over eight years; Shalon himself is said to have deposited about $100 million in Swiss bank accounts.
Reuters: BNP Paribas will pay about $60 million to the Justice Department to avoid prosecution for helping U.S. clients evade taxes. BNP Paribas managed about 760 U.S. accounts totaling $1.2 billion in assets under management.
Krebs on Security: Starwood Hotels & Resorts Worldwide reported a possible credit card breach. The operator of Sheraton and Westin hotels said it found malware designed to steal credit and debit card data on some of its point-of-sale registers in North America. Starwood has reached an agreement to be acquired by Marriott International.