Receiving Wide Coverage ...
Upping the Ant-e: Ant Financial, China’s giant mobile payments and financial services provider, raised $14 billion in equity Friday, putting a $150 billion value on the company, a bigger market cap than Goldman Sachs. It was the first time foreign investors could buy shares in the company, an affiliate of Alibaba. Wall Street Journal, Financial Times
Wall Street Journal
OCC review digs up no more Wells: The Office of the Comptroller of the Currency’s review of other banks’ retail sales practices in the wake of the Wells Fargo fake accounts scandal found no “systemic issues” at other banks, although it did find some cases where banks opened accounts without customers’ permission. The review — reported first by American Banker earlier this week — offered only general details and didn’t name other banks. The OCC said it has no intention of releasing the review.
While most bankers like the agency’s head, former banker Joseph Otting, there are detractors. “To others, regulators calling banks partners is cause for alarm. The idea that banks and markets will regulate themselves, critics say, was a cause of the financial crisis and the subsequent bailouts of big banks.” Otting is scheduled to testify before Congress for the first time next week.
Net effect: More than 60% of economists surveyed by the paper believe the economy will be “modestly stronger” in the medium term due to the recent bank regulation reform bill signed by President Trump, while a third see no effect at all. But 40% said they think the law could modestly weaken the stability of the financial system.
Think long-term: JPMorgan CEO Jamie Dimon and Warren Buffett are publicly urging public companies to stop providing quarterly earnings guidance. “In our experience, quarterly earnings guidance often leads to an unhealthy focus on short-term profits at the expense of long-term strategy, growth and sustainability,” the two say in an op-ed.
“The pressure to meet short-term earnings estimates has contributed to the decline in the number of public companies in America over the past two decades,” the op-ed says. “Short-term-oriented capital markets have discouraged companies with a longer-term view from going public at all, depriving the economy of innovation and opportunity. Fewer public companies has also meant fewer opportunities for retail investors to create wealth through their 401ks and individual retirement accounts.”
No go: Two American banks refused Obama administration efforts to help Iran convert nearly $6 billion in Iranian funds held in an Omani bank into euros in 2016. The unnamed banks were worried about reputational and legal risks.
Orders from the top: Two executives at Société Générale ordered underlings at the bank to try to manipulate the Libor rate, according to evidence obtained by the U.S. Department of Justice and shared with French authorities. The department said it has evidence that “indicates that the directives to submit these falsely low rates came from” Michel Péretié, the former head of corporate and investment banking, and Didier Valet, former deputy CEO. On Monday the bank agreed to pay $475 million to settle American charges that it tried to manipulate the Libor rate.
No confidence: The head of a parliamentary committee is calling on TSB to consider whether Paul Pester should retain his job as the bank’s CEO following April’s massive IT glitch that compromised thousands of accounts. Nicky Morgan, the chair of a Treasury select committee, wrote in a letter to Richard Meddings, TSB’s chairman: “The TSB board should give serious consideration as to whether Dr Pester’s position as chief executive of TSB is sustainable.”
Silver lining: The recent high-profile scandals at Australia’s big banks, and the government’s response to them, are “likely to be a good thing,” the paper says in a editorial. “It is to be hoped that regulatory crackdown and the softness in Australia’s economy combine to force change at the big four [banks]. Excess profits at banks impose a cost on the economy, and further delays to reform will mean that the required fixes will have to be made during a crisis, as opposed to a slowdown. Australia managed to secure financial stability in the crisis, but at a cost to competition and therefore consumers. Time to right the balance.”
Holy debate: The payday lending conversation has come to church. “Payday proponents in the church say the industry provides an important service after years of national banks pulling back from offering loans in regions with large minority or poor populations and black-owned banks all but disappearing,” the paper reports. “Longtime opponents of payday lending have sometimes been blindsided by the advocacy of their religious brethren. They say that payday proponents are misreading not only the financial realities of borrowing at dangerously high rates but also biblical teachings — and are being co-opted or bought by an industry with a long history of exploiting African Americans.”
“The banks left us years ago. The credit unions left us years ago. Payday lenders are the only ones stepping up to fill the need.” — Aaron Phillips, a Cleveland pastor who supports payday lenders.