Receiving Wide Coverage ...
Never Christmas: Big banks including Citigroup and JPMorgan Chase are reporting a continued slowdown in trading. Fewer big trades, low volatility, economic uncertainty and pullback from large investors have all contributed to dwindling trading revenue for several quarters, according to news reports of a banking industry conference sponsored by Deutsche Bank on Tuesday. "Some investors have begun to worry that the slowdown may be more than a temporary phenomenon," the Wall Street Journal reports. "Some have expressed concern that the decline could be more permanent as regulators limit banks' own trading and risk-taking in general." John Carney elaborates on this concern in "Heard on the Street," writing that while banks may pin falling revenue on temporary factors, Wall Street seems to be trapped in the "always winter and never Christmas" land of Narnia. Citigroup chief financial officer John Gerspach also said at the conference that global consumer banking revenue will be "roughly flat" in the second quarter, according to the Financial Times.
BofA Investors Easily Impressed: Bank of America resubmitted its capital plan to the Federal Reserve Tuesday after announcing a $4 billion accounting error in late April. Though the bank provided few details about how much capital it proposes to return to investors, its shares gained. "Given that failing to meet the deadline to resubmit would have been unthinkable, the stock-price move suggests expectations for the bank have fallen to a low level," David Reilly writes in "Heard on the Street." Investors were also likely cheered by Bank of America's declaration in its filing with the Securities and Exchange Commission that a third-party review had discovered no additional problems with its capital process, according to Reilly. Shareholders' optimistic reaction to this news has a somewhat rickety foundation, Reilly writes: "the bank declined to identify the 'third party' that provided this clean bill of health, leaving investors no way to gauge the entity's independence or abilities." Wall Street Journal, Financial Times
The Incredible Shrinking RBS: Royal Bank of Scotland plans to cut hundreds of U.S. jobs over the next year and a half in an effort to scale back operations ahead of tougher regulations for foreign banks. The layoffs will be primarily concentrated in the bank's mortgage trading business. The FT says RBS will eliminate roughly 300 positions, while the WSJ says the layoffs could affect up to 400 people. Both papers agree that RBS is trying to get its U.S. assets below the $50 billion mark in order to escape the Federal Reserve's higher capital and liquidity requirements and yearly stress tests for foreign banks.
SEC in the Spotlight: Officials at the Securities and Exchange Commission are frustrated with the agency for moving at a snail's pace on financial reform, according to an FT story that relies largely on anonymice. The SEC's 2014 agenda includes more than 40 rules, many of which arise from Dodd-Frank and the Jobs act. High-level personnel overturn has contributed to the delays, according to the FT. The Times' Dealbook has two unrelated stories on the SEC. Steven Davidoff writes that the agency's Regulation FD, a rule adopted in 2000 to ensure that investors have equal access to information, isn't working the way it's supposed to. " It doesn't seem like small investors are benefiting at all from this 'equal access' to information, instead losing out because of small issuers being denied capital and analyst coverage," Davidoff opines. Meanwhile, a separate article reports that SEC chairwoman Mary Jo White plans to use a new method to pursue violations. The agency will use Section 20(b) of the Exchange Act, which allows it to hold an individual liable for using others to engage in wrongdoing. The provision will permit the SEC to "reach those who have participated in disseminating false or misleading information to investors through offering materials, stock promotional materials, or earnings call transcripts," White said.
Wall Street Journal
Midsize lenders including SunTrust Banks, Fifth Third Bancorp and Regions Financial are subjects of federal investigations into mortgage lending and servicing practices in the years before the financial crisis. "The expansion of the government probes shows how, more than five years after the financial crisis, banks of all sizes are facing increasing scrutiny for their behavior during the inflation of the housing bubble," write Andrew R. Johnson and Alan Zibel. "It also shows that government pressure on banks isn't limited to the fines the biggest banks in the U.S. and Europe have agreed to pay."
Mobile payments company Square is aiming to get in on small business lending. The firm launched by Twitter co-founder Jack Dorsey will offer merchants that use its credit card processor the ability to take out cash advances with a new service called Square Capital.