Receiving Wide Coverage ...
Kerry Meets with European Banks: U.S. Secretary of State John Kerry met with European banking leaders Thursday to urge them to increase lawful business ties with Iran and ensure them they won't be punished for doing so. The visit is part of a push to ensure Tehran receives the relief the U.S. pledged in January. Executives at Standard Chartered, HSBC, Barclays, Deutsche Bank, BNP Paribas, Santander, Lloyds Banking Group and Royal Bank of Scotland were in attendance. Western banks have been wary of working with Iranian institutions as they have collectively paid more than $15 billion in fines in the last five years for breaching sanctions. The Financial Action Task Force, deemed Iran "a serious threat to the integrity of the global financial system" in February and urged members to "pay special attention" to transactions made there. Wall Street Journal, Financial Times, New York Times
Panama Paper Redux: The New York State Department of Financial Services has requested Goldman Sachs hand over information about shell companies set up through Mossack Fonseca, the Panamanian law firm that leaked 11.5 million documents exposing 214,000 offshore companies. Last month the DFS sent a similar request to 13 banks – including Deutsche Bank, Credit Suisse Group, Commerzbank, ABN Amro Group and Societe Generale – requesting communications, telephone records and details of other dealings between their New York branches and Mossack Fonseca. None of the banks contacted by NYDFS have been accused of wrongdoing. Meanwhile, BNP Paribas and Crédit Agricole became the latest banks having to deal with being named in the Panama Papers. The report shows Agricole put 1,129 firms in tax havens for its clients since the 1990s to manage bank accounts. 54 are still active. BNP, France's largest-listed bank by assets, set up 468 firms since the 1980s; six are active today.
Wall Street Journal
LendingClub's ex-chief executive Renaud Laplanche had personally invested $4 million in an outside fund called Cirrix Capital LP, which he had failed to disclose to investors despite the company having invested $10 million in it too. Laplanche urged the online lender to invest because it would allow Cirrix to buy more loans from LendingClub. John Mack, LendingClub director and former Morgan Stanley chief, also held a stake in Cirrix. That cycle highlights the complexity of online lenders' relationship with their customers and invites conflicts of interest and accusations of favoritism. "Was there a reason for anyone to even doubt that the loans were being divided up fairly?" asked Brian Weinstein, chief investment officer of Blue Elephant Capital Management, which invests in online loans. "You don't want investors to ever even ask that question."
Jamie Dimon called the head of a community banking trade group a "jerk" for his response to a WSJ opinion piece Dimon wrote last month that called for more symbiosis between large and small banks. Camden R. Fine, president and CEO of Independent Community Bankers Association, called the article "an attempt to link the interests of megabanks to community banks in order to mitigate the political heat that is on them right now." The famously outspoken JPMorgan Chase bank chief responded on CNBC Wednesday. "We are one of the biggest banks to community banks. We do mortgage lending to them, we do securities for them, we do [foreign exchange] for them, we raise money for them… a community bank can't do that," he said.
A small but growing part of the mortgage market is shifting from mainstream banks to private, informal property financiers. As new rules and higher standards came into effect after the financial crisis, cautious banks have taken a step back and begun focusing on lending to wealthier and lower-risk borrowers. Meanwhile, private lenders and startups are stepping up, offering expensive home loans to borrowers rejected by banks. They can earn around 8% on their money if they can stomach that risk. The annual interest rates they charge can triple those of conventional 30-year fixed-rate mortgages. Many private lenders issue too few loans to receive the regulatory oversight traditional lenders endure, but at the very least must register with their states.
The online lending phenomenon is rooted in the understanding that the process of making a loan can be streamlined and combined with a marketplace. But as retail investors, hedge funds, institutional investors and securitizations have brought stress and complexity to the business, marketplace lenders have tried and failed to stay afloat. However, that doesn't necessarily mean the new model of online lending is proving worse than the original. Au contraire, traditional lenders (think: Wells Fargo, Goldman Sachs) have launched their own online lending ventures (in the timeliest manner). "It's the old story of picking the good innovations, and leaving the bad," says an FT columnist. "If the lasting impact of peer-to-peer/marketplace/online lending is just better processes and systems for lending, that would still be a significant achievement. It would also be fintech — financial technology — in the proper sense of the word."
Deutsche Bank, Barclays and UBS have each decided to close the accounts of 20,000 to 35,000 customers in their corporate and investment banking operations that they consider too risky under anti-money laundering rules or not economically worthwhile under new regulations.
Argentina's long, turbulent relationship with Wall Street is being rekindled after Argentinian president Mauricio Macri appointed a number of Wall Street alums to his new government, representing JPMorgan, Deutsche Bank, Goldman Sachs, Barclays and Morgan Stanley. These appointments give the government more credibility with bankers, which will be key to unlocking the potential in Argentina's economy, which is expected to contract this year.
UBS has hired Martin Blessing, former chief executive of Commerzbank, to head its Swiss operations. The move comes as rival Credit Suisse, Switzerland's second-largest bank, strengthens its domestic operations.
New York Times
Swift has told its bank customers they are responsible for their own systems' security and, in light of recent events, securing points of access to the Swift messaging service. In February, cyber thieves stole $81 million from the Bangladesh central bank's account at the Federal Reserve Bank of New York by hacking into and then disabling the Swift interbank-messaging terminal. Bangladesh Bank did not receive inquiries from the Fed about the transfer requests in time to cancel them. The three parties had been playing a blame game since the incident. "Customers are responsible for all messages signed with their certificates and, of course, for protecting their certificates and ensuring only duly authorized operators can use them to sign messages," a Swift spokesperson said. "Swift is not, and cannot be, responsible for messages that are created fraudulently within customer firms."