Breaking News This Morning ...
Earnings: KeyCorp, Huntington, BB&T, BankUnited
Receiving Wide Coverage ...
European QE: The European Central Bank is expected to launch a quantitative-easing program that could include the purchase of about 50 billion euros worth of bonds each month (equivalent to about $58 billion). Europe hasn't embarked on a QE program during the recent years of economic tumult. But the state of the continent's fragile economy prompted the move, said Matteo Renzi, Italy's prime minister. The program is "decisive and crucial for the European economy." Europe's unemployment rate, for example, was 11.5% in November, and deflation is also a major concern. The New York Times points out that quantitative easing will be much more complicated than in the U.S., since Europe doesn't have a Pan-European, widely traded bond like U.S. Treasury securities. The Financial Times notes there's plenty of tension within the European Union over the QE program. France's finance minister voiced frustration with Germany over its resistance to the plan. "The Germans have taught us to respect the ECB's independence. They need to remember this too now, for themselves," Michel Sapin said.
Wall Street Journal
Regional bankers are being peppered with questions from the investment community about how falling oil prices are affecting their business. To put a finer point on the situation, KBW analyst Brady Gailey said investors are "panicking." It's easy to see why. Executives at banks on the Gulf Coast and in Texas and Oklahoma are not giving very comforting answers to the questions. Texas Capital Bancshares CEO Keith Cargill, in one example, said the Dallas bank is going "loan by loan" in "real time" to assess its vulnerability (although Cargill said, Texas Capital "[doesn't] see any big issues today.") Three-quarters of the questions posed to Comerica executives during a call dealt with oil. Still, CLSA analyst Mike Mayo said the banking industry is currently well-positioned to absorb losses from the collapse in oil prices. "We're not on the cusp of a big disaster right now," Mayo said.
U.S. Bancorp has been too successful, the "Heard on the Street" column argues. Keep in mind "Heard on the Street" is written for stock investors. So what the Journal columnist means is U.S. Bancorp's stock is too pricey, since the Minneapolis bank is so well-managed and it outperforms its peers by a wide margin, therefore investors should stay away from until shares get cheaper. So, yeah, you don't want to manage your company too well. As Richard Bove, the loquacious analyst at Rafferty Capital Markets said during a conference call on Wednesday, U.S. Bancorp is "as perfect as a company can get in this industry."
American Express plans to fire about 4,000 workers, or about 6% of its workforce, as the card network deals with tough competition, a rising dollar, and higher expenses. In its latest earnings report, AmEx said its expenses grew 3% from the prior quarter.
The Journal covered the Thursday meeting of the Financial Stability Oversight Council, in which the topic of systemically important financial institutions was discussed, with the Journal's piece touching on most of the same points as American Banker's article. FSOC members, amid criticism from MetLife (which has sued to block its SIFI designation) and other SIFI-designated firms, said they would try to give more advance notice to institutions about decisions, make more of the information public and conduct more in-depth reviews of their decisions.
New York Times
Less than five years after bailing on its attempt to conquer the U.S. market through RBC Centura and RBC Bank, the Royal Bank of Canada has decided to take another shot in America. Early Thursday morning, RBC announced it had agreed to acquire City National in Los Angeles for $5.4 billion. The $32 billion-asset City National has more than 70 offices on the West Coast, plus a couple of wealth-management-centric branches in New York and Nashville, which play off City National's traditional strength in the entertainment business. No word on whether Canada's favorite entertainer son, Justin Bieber, is a client of City National or RBC.
Elsewhere ...
CBC: In other Royal Bank of Canada news, the company filed a lawsuit against two former employees in Vancouver for allegedly conspiring to steal more than C$200,000 through "elaborate inside-job bank heists," the CBC reported. One man knew the combination for an upper lock on a vault and the other man knew the combination for the lower lock and they conspired to enter the vault, RBC's lawsuit alleged.
Pittsburgh Post-Gazette: James Rohr, the former CEO of PNC Financial Services Group, was named chairman of the board of trustees of Carnegie Mellon University in Pittsburgh, effective July 1.
