Receiving Wide Coverage ...
U.K. Stress Test Results Are In: U.K. banks passed the Bank of England's stress tests — albeit without flying colors — reducing the pressure on the institutions to hold more capital. Overall, the U.K. banking industry appears prepared to meet all the requirements due by 2019, the Wall Street Journal reports, including more stringent requirements regarding risks in trading and mortgage books. Despite the celebratory notes of the Bank of England's announcement, some banks nevertheless did worse than others. Standard Chartered and the Royal Bank of Scotland fell below the minimum capital requirements in the stress tests, yet were not required to submit a revised capital plan, according to the Financial Times. Standard Chartered fell below its tier one minimum capital requirement by 6%, but its recent moves to restructure and issue $5.1 billion in rights addressed the Bank of England's concerns. RBS, meanwhile, failed to meet an unspecified "individual capital guidance," but its sale of Citizens in the U.S. and plans to issue convertible tier one notes also assuaged the regulator's concerns.
Wall Street's New Battleground...Benefits: Credit Suisse has upped its benefits ante and will now give new parents 20 weeks of paid time off. The move, which applies to the bank's U.S. employees, raised the amount of paternity or maternity leave from 12 weeks and comes as more companies are using benefits and perks to attract employees, the Wall Street Journal writes. Credit Suisse attributes the shift to a review of employees' usage of benefits, dispelling the idea the change is occurring in the realm of an "arms race," according to the Financial Times. Nonetheless, the Swiss bank now beats many of its competitors in paid time off — Goldman Sachs offers 16 weeks for primary caregivers and four for secondary caregivers, while Deutsche Bank and Morgan Stanley both offer a flat 16 weeks paid time off. Of course, banks aren't just competing with other financial institutions in this benefits war — the changes have come as a response to Silicon Valley and its many perks. Just last week, Facebook extended its parental leave to four months for its employees worldwide.
Fed Limits Emergency Lending Powers: In a concession to lawmakers, the Federal Reserve adopted a new rule that will restrict its financial powers to guarantee emergency loans aren't used to prop up broke companies. The new rule fulfills a major goal of the Dodd-Frank Act and had been called for by both Democrats and Republicans, the New York Times notes. The new rule, in particular, stipulates that emergency loan programs must be broadly available to at least five firms and not tailored to just one company — a nod to Sens. Elizabeth Warren, D-Mass., and David Vitter, R-La. While the new rule appears to appease lawmakers who wanted the Fed to curtail its bailout powers, the Wall Street Journal points out it still gives the regulator a great deal of leeway. Banks can still expect Fed support in a bailout scenario — if anything, the new rule may make emergency lending easier, the Wall Street Journal says. Most of the emergency lending facilities created during the financial crisis would likely still be possible despite this new rule, the paper contends. For more on the Fed's decision, check out American Banker's coverage.
Wall Street Journal
JPMorgan Chase & Co. maintained a program through which it hired friends and family members of executives at 75% of the major Chinese companies it took public in Hong Kong. The revelation was made in a document JPMorgan compiled as part of a federal bribery investigation, which the paper obtained and analyzed. In total, 222 candidates were hired between 2004 and 2013 as part of the so-called "Sons and Daughters" program. The document included the names of those hired and who referred them, with nearly half of the referrals coming from the government sources, including regulators. Firms implicated in the hiring scheme include the Agricultural Bank of China and the China Railway Group.
Silicon Valley-backed startups are looking to cellphones to determine creditworthiness. New apps are being created that will assess how creditworthy someone is based on their smartphone usage, using patterns of behavior seen through data from texts, emails, social media, GPS coordinates, retail receipts and even how often a phone is charged, according to the paper. These apps, like Branch.co in Kenya, could help to revolutionize microlending in developing countries, building on the existing popularity of mobile banking in these places.
A federal appeals court has ruled the First Amendment rights of a classified ad website were violated when a sheriff's office pushed credit card companies to stop processing ad sales on the site. The Cook County, Ill., sheriff had pressured Visa and MasterCard to stop serving Backpage.com, claiming the site's adult section supported illegal sex services. The two card companies heeded his warnings and stopped processing transactions for the site. The appeals court decision reversed an earlier lower court ruling that there was no First Amendment violation and stipulated that the sheriff not coerce financial institutions into dropping business with the website. Despite the appeals court ruling though, it appears that neither card company will resume business with Backpage.com.
Hackers have targeted three Greek banks multiple times in the past week, demanding a ransom to be paid in bitcoin. Greek police and Greece's central bank said a group called the Armada Collective has threatened to crash three banks' websites completely if they do not pay a 20,000 bitcoin ransom, equivalent to roughly $7.3 million. So far, the hackers have managed to disrupt electronic transactions for a short period of time, but have not accessed customer information, the paper notes. None of the banks have relented to the hackers' demands. Internet banking is an important aspect of the Greek banking landscape — more than 200,000 new Internet bank accounts have been opened since Greece introduced new capital controls in June.
The Obama administration is gearing up to launch a new campaign to provide greater access to financial services for the 25 million unbanked Americans. The U.S. lags most other developed countries in terms of access to traditional bank accounts — in the U.K. and Canada 99% of adults have bank accounts, versus just 93% in the U.S. Per a conversation with Treasury Secretary Jack Lew, the paper reports many of the unbanked have been deterred from opening accounts because they cannot afford the high minimum balance requirements. Lew told the paper one option being considered is expanded access to mobile banking and payments.
New York Times
New York Gov. Andrew Cuomo hopes to implement new regulations on New York-based banks to stop the flow of funds through Wall Street to militants and criminals. The rules he plans to propose would add to banks' responsibility to stop money laundering and terrorist group financing. Chief compliance officers at the banks would be tasked with certifying that the bank maintains systems to prevent illicit money transfers, and the filing of false certifications to this end could result in criminal charges. The proposal represents yet another source of conflict between New York and federal regulators.