Breaking News This Morning ...
RBS posts Q2 loss: Royal Bank of Scotland reported a loss of £1.08 billion, or $1.43 billion, in the second quarter versus a profit of £280 million in the year ago quarter. The bank, which is 73% owned by the U.K. government, blamed most of the loss on costs for litigation and potential settlements, which nearly tripled to £1.28 billion in the quarter. Wall Street Journal, Financial Times, New York Times
Wall Street Journal
P2P lender gets financing: Online lender Prosper Marketplace Inc. is in advanced talks to sell $5 billion worth of loans to a group of investment firms over the next two years. The buyers include Fortress Investment Group, Soros Fund Management, Third Point and Jefferies LLC. Prosper has also started selling loans to BBVA Compass, the U.S. banking unit of Spanish lender Banco Bilbao Vizcaya Argentaria. If completed, the deal would help resolve concerns about how online lenders like Prosper can fund their operations while emphasizing the critical role traditional financial institutions will play in so-called peer-to-peer lending.
BOE plan may help U.K. bank margins: Largely overlooked in Thursday's Bank of England interest rate announcement was the introduction of a new lending facility that could help British banks' bottom line more than their lending customers. The Term Funding Scheme will allow financial institutions to borrow from the central bank for four years at cheaper rates than they could get elsewhere. The cost of the borrowing will depend on how much the banks lend to households and businesses. "The immediate effect is a subsidy to banks," said one fund manager.
Citigroup continues to divest: The head of Citigroup's Brazilian unit said the bank plans to announce the sale of some of its South American retail operations by the middle of next month. The bank said back in February that it planned to sell its consumer operations in Brazil, Argentina and Colombia. The top five banks in Brazil together have about a 70% market share of assets; Citi controls about 1%.
Mission accomplished: BNP Paribas sold a 15% stake in its U.S. subsidiary First Hawaiian Bank for nearly $500 million, the biggest bank initial public offering in almost two years. The sale reflects regulatory pressures on banks to increase capital and liquidity while making them subject to more rigorous stress tests. That makes it more expensive for foreign banks to compete in the American market. The French bank previously considered a sale before switching to a spinoff using the IPO.
U.K. credit card battle: The average interest-free balance transfer offer in the U.K. has jumped to 18 months, the longest in at least four years, as banks compete aggressively for customers. At least half a dozen banks are willing to go out as long as 40 months or more, although they are charging steep transfer fees: as much as 4% of the balance and high rates after the introductory period ends. The average introductory interest-free period for new customers is 12 months. This comes just after the Financial Conduct Authority warned that too many Britons have too much debt.