Wall Street Journal
Royal Bank of Canada has big plans for wooing the wealthy now that it's locked up City National Bank. After closing its $5.4 billion purchase of the Los Angeles lender, the Canadian bank plans to rework its jumbo-mortgage product, in an attempt to lure more high-net-worth clients. It's not a novel concept. Other banks have used jumbo mortgages as bait to reel in the rich and sell them other products, such as investment management, trust services and more.
Jumbo mortgages are defined as loans of at least $417,000 in most markets, and at least $625,000 in more-affluent markets. City National, which was already known for its wealth management offerings, curiously had not already been using jumbo mortgages as an incentive, RBC's chief executive, Dave McKay, said. Furthermore, City National isn't a big player in jumbo mortgages.
As for the broader mortgage market, the rate of home sales has picked up considerably over the past months. But, the sales have been largely confined to borrowers with high credit scores. Borrowers with low credit scores have been absent from the purchase-mortgage market. Lenders and regulators speculate this group doesn't have enough money saved for a downpayment (a problem exacerbated by companies' unwillingness to give employees a raise) or they simply can't qualify for a loan with any kind of blemish on their credit reports.
The "Heard on the Street" team assessed Visa's purchase agreement for Visa Europe and said it's not overpaying, despite the $23.4 billion price tag. The conclusion is based on Visa's plans to close the gap between its own operating margin and Visa Europe's. The Visa Europe group should be able to ditch some of its own technology and hop on board U.S. Visa's IT, as well as its processing and clearing systems. Then there's the fact that Visa Europe's customers are its owners. That gives it an incentive to undercharge. Freed from that burden, Visa Europe should be able to raise rates.
The agriculture market is suffering through a glut of used tractors, combines and other heavy equipment. As a result, farmers are increasingly interested in leasing machinery, rather than acquiring it, said a sales executive with the $2.6 billion-asset John Deere Financial, an OCC-regulated thrift in Madison, Wis.
New York Times
Standard Chartered is the latest U.K. bank to take a hacksaw to its operations. It plans to cut 15,000 jobs and reduce costs in other areas, while also raising about $5.1 billion in new capital. Standard Chartered is exiting some businesses. Its exposure to commodities and challenging conditions in China led to a loss in its latest quarter.
The Economist: Credit unions are surging in popularity worldwide. Experts cite several reasons for the surge. In the U.S., changes in the law have allowed credit unions to have multiple "common bonds" and thus allowed more institutions to merge, according to the Credit Union National Association. The bigger the CU, the more products it can offer customers. The $72 billion-asset Navy Federal Credit Union in Vienna, Va., for example, has six million members.
Credit unions were also more resilient than banks during the financial crisis. And they tend to offer better rates than banks. One example: credit unions in the U.S. charge an average rate of 2.66% for a three-year loan on a used car; banks charge an average of 5.13%, according to SNL Financial. (Insert here bankers' complaints about credit unions' tax treatment.)
The Hill: Rob Nichols, the new CEO of the American Bankers Association, is profiled. Nichols has spent most of his first two-and-a-half months on the job traveling to visit with ABA board members and state banking executives and attending banking industry conferences. Nichols said the ABA's top enemies are nonbank lenders and "the technology convergence." The former head of the Financial Services Forum succeeded Frank Keating.
Des Moines Register: Ron Hansen, chairman and CEO of the $148 million-asset Liberty Trust & Savings Bank in Durant, Iowa, has been named superintendent of the Iowa Division of Banking. Hansen on Nov. 16 will succeed James Schipper, who left last month.