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RBS Posts 2015 Loss: The Royal Bank of Scotland's 2015 earnings suffered from litigation- and regulatory-related costs. The company reported a £2.74 billion ($3.83 billion) during the fourth quarter of 2015, compared with a loss of £5.79 billion ($8.1 billion) the year before. RBS also posted a roughly $2.77 billion full-year loss – it hasn't posted a full-year profit since 2007. The results included nearly $3 billion in costs related to mortgage-backed securities litigation in the U.S. and compensation for the improper selling of payment protection insurance in the U.K. The company did make an appeal to investors, who are likely peeved by its continued poor results. RBS slashed its bonus pool by 11%. And the company made a so-called dividend access share payment to the government – this mechanism was put in place after the British government bailed out banks, and it clears the way for future dividend payments. But the bank also hit the brakes on such capital distribution, warning now that dividends or share buybacks may not occur till 2017. And that could cause some investors to abandon ship – particularly when rival Lloyds Banking Group is increasing its regular dividend.

Wall Street Journal

Congressional Democrats have crafted a new plan to provide relief to community banks struggling amid the cost of ramped-up regulation. The legislation would make nearly half of the banks across the country eligible for relief from regulation, including exemption from stress testing. Some banks would also be allowed to skip submitting quarterly call reports under the legislation. To qualify for these reprieves, a bank must not hold any trading assets or derivative positions other than interest rate and foreign exchange derivatives and must maintain a capital-to-asset ratio of at least 10%. Past relief, introduced by Republicans based exemptions to regulations mainly on size. While the idea of community bank relief has broad support across party lines, already it seems that the legislation may face a tough road to being approved. Previous attempts were scuttled by Republicans' interest in coupling reform with a general rollback of Dodd-Frank.

A veteran financial services investor is sounding the warning call, suggesting the fintech movement will not be smooth sailing for most startups or their investors. Part of the problem, according to J. Christopher Flowers, is that the Silicon Valley mentality of growing big fast and achieving market domination doesn't mesh well with lending. As he put it, "It is one of the oldest adages in our business that the lender that grows fast is the lender with future losses." Flowers, a former Goldman Sachs employee who now manages more than $14 billion of investment in financial-services companies through his private-equity firm J.C. Flowers & Co., made the comments at the Super Return private-equity conference in Berlin. One of the risks, particularly in the area of unsecured consumer loans where many of these fintech startups are focusing their business, is in making poor lending decisions, he said. There's no scenario where banks cease to play an important role, and ultimately far more of these fintech startups will fail than become successful.

Financial Times

German regulators made an unusual move – they gave Deutsche Bank something to smile about. BaFin decided to close multiple investigations, seeing no need to take further action against the bank or its current or former executives. The three audits related to the alleged manipulation of interbank offered rates, the rigging of precious metal markets and the sale of derivatives to Banca Monte dei Paschi di Siena in Italy. While the probes did cost the bank, most of the senior managers involved have since left. Those and other changes prompted BaFin not to seek further redress.

Negative interest rates might be just as much a political decision as an economic one if not more so, according a column. The choice to go negative is typically painted as a result of dreary economic prospects. But here's the rub, the paper argues: negative rates haven't hit most people yet, since banks aren't required to pass them on. "So the question to consider is not just whether the use of negative rates represents the limits of policymakers' ability to stimulate economies but also if they have reached the limit of their authority to try."

Elsewhere ...

Quartz: While the developed world continues to hold onto cash with a clenched fist, technological changes and government instability have turned developing countries like Somalia into cashless societies. Mobile financial technology has had a major impact in the East African country. Although mobile banking was just introduced in the country six years ago, 40% of adults had mobile money accounts as of 2014. One factor driving their adoption is the fear in holding cash, since it's a huge liability when considering the militants and conmen that plague the country, Quartz says. But one of the major contributing factors to the impressive adoption of mobile banking is the large Somali diaspora community, which sends nearly $1.6 billion back to the country in remittances each year. And because traditional banks continue to suffer in the country, particularly amid the unrest caused by the terrorist group Al-Shabaab, these mobile services have achieved significant levels of importance to keep the remittance economy afloat.

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