Receiving Wide Coverage ...
HSBC Sweats in the Spotlight: The hits keep on coming for HSBC. The U.K. bank on Monday announced subpar earnings for 2014 and lowered its financial targets, while chief executive Stuart Gulliver was pummeled with questions about the $7.7 million he opted to hold in a Swiss bank account through a Panamanian company until 2003. Tax experts tell the Times that Gulliver's arrangement was legal, but it's not terrific press for a bank embroiled in a tax-evasion scandal. Meanwhile, the Wall Street Journal reports HSBC profits fell 15% to $13.7 billion last year as the bank wrestled with climbing regulatory costs and put aside money for settlements related to alleged wrongdoing. The results mean HSBC will "continue to work on simplifying," Gulliver said. Several articles suggest it's worth asking whether HSBC is too big to manage, a point American Banker considered last week. The Journal's Paul J. Davies says there's reason to wonder "whether the structure of such a large, global bank is working against it." Gulliver himself seemed to inadvertently acknowledge the possibility: "Can I know what every one of 257,000 people is doing? Clearly I can't," the CEO said Monday. The Financial Times' Lex team suggests if Gulliver and the rest of HSBC management "team cannot take responsibility for the group's actions at its present size, the answer is simple: they should shrink it until they can." Oh, and one last thing: HSBC has a new subpoena on its plate related to U.S. regulators' probe into precious-metals trading.
Heavy Metal: HSBC is just one of at least 10 major banks under investigation by U.S. regulators' for alleged price-fixing in the precious metals market, according to the Journal. JPMorgan Chase, Goldman Sachs and Deutsche Bank are also among the financial institutions reportedly under investigation. Bloomberg notes the probe "broadens the Justice Department's ongoing scrutiny of banks over manipulation of financial benchmarks."
Wall Street Journal
JPMorgan plans to start charging corporate clients for some deposits, "citing new rules that make holding money for the clients too costly," the paper reports. Recently introduced capital and liquidity rules make it less profitable for banks to hang onto deposits from institutional customers who would be likely to withdraw the funds in the event of a downturn. JPMorgan will offer many affected clients the option of moving their deposits to other kinds of accounts, according to a memo reviewed by the paper, but plans to recommend some customers take the money to a different firm.
Morgan Stanley and Goldman Sachs "are inching closer to resolving U.S. claims that the two Wall Street firms misled investors in mortgage bonds that plummeted in value during the financial crisis," according to the paper. The Morgan Stanley deal will reportedly come to more than $1 billion, while Goldman announced federal prosecutors in California informed it of a possible civil lawsuit in December.
The paper offers a preview of Fed chair Janet Yellen's upcoming testimony on Capitol Hill, predicting she'll face questions about the Volcker rule and regulatory relief for community banks along with the usual interest-rate inquiries.
Tom Braithwaite has a complex argument about how the film Fifty Shades of Grey relates to the Volcker Rule (a sentence this writer did not imagine typing today). He argues the law requires regulators to make tricky calls about what constitutes proprietary trading, just as the movie "negotiated the fine line between titillating and embarrassing cinema goers." The problem, he says, is the blurry distinction between market-making and proprietary trades may render the Volcker rule unenforceable. At this point the Fifty Shades comparison drops off.
Google aims to go toe-to-toe with Apple Pay by teaming up with mobile wallet company Softcard as well as several major telecommunication companies. "Under the deal Google will buy mobile wallet technologies and patents from Softcard, and its wallet will be pre-installed later this year in the U.S. on Android phones sold by AT&T, T-Mobile and Verizon Wireless," the paper reports.
Online marketplace lender OnDeck reported a fourth-quarter loss of $4.3 million in its first period as a publicly traded company.
New York Times
A federal judge last week ruled American Express had violated antitrust laws by including a "nondiscrimination provision" in its contracts with merchants that resulted in higher prices for consumers. But the decision probably won't bring prices down, according to Andrew Ross Sorkin. He suggests credit-card companies "may also end up raising their annual fees and lending rates because they will need to make up revenue lost from the merchant fees in order to pay for the myriad rewards programs they have created."
The paper takes a look at how Securities and Exchange Commission head Mary Jo White's marriage to a corporate law attorney has impacted the agency's cases. "In the nearly two years since Ms. White took over the agency, she has had to recuse herself from more than four dozen enforcement investigations, the interviews and records show, sometimes delaying settlements and opening the door, in at least one case, to a lighter punishment," according to the report. When White recuses herself from a case, SEC commissioners sometimes split along party lines, according to the paper, which can in turn influence settlement negotiations.
Big banks and big law firms are in talks to create an information-sharing group that would help fend off cyberattacks, according to the paper. Anonymice tell the Times the group will likely be up and running by the end of the year.