Reg changes drive Chemical-TCF union; Fed seeks stress-test input

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Wall Street Journal

Right time
The proposed merger of Chemical Financial and TCF Financial “likely wouldn’t have happened before a new financial bill was passed that relaxes regulations for midsize banks.” Last May, President Trump signed into law a bill that aims to ease regulatory scrutiny for banks with between $50 billion and $250 billion in assets. “The regulatory change was critical to TCF and Chemical agreeing to combine,” Chemical CEO David Provost said. “We would not have had a conversation about getting together in a merger like this if that impediment had been in our way.”

American Banker's Hilary Burns reports the deal makes sense for both banks. "By coming together, we are able to accelerate the growth of our business in way neither company could have done alone in the near term," said Craig Dahl, TCF president and CEO.

A penny saved ...
Acorns Grow, which has developed a smartphone app that automatically invests small change from consumers into exchange-traded funds, is now valued at $860 million following a $105 million fundraising round. That makes it worth more than Betterment, which has more than $14 billion of customer assets under management. Acorns, which is backed by BlackRock and PayPal, among others, has about $1 billion in assets. “Its latest fundraising round is being led by an unconventional investor for financial-tech startups: media conglomerate NBCUniversal,” which is now the company’s largest shareholder, and the venture capital arm of its parent company, Comcast.

Promise kept
The People's Bank of China has granted S&P Global approval to offer credit rating services in China through a wholly owned unit. “With the permission, S&P becomes the first of the big global rating agencies to win approval for a wholly owned business in China, a move Beijing had pledged to make in discussions with the Trump administration in May 2017. While foreign banks have been allowed to set up wholly owned subsidiaries in China, global rating houses were required until now to pair with local partners in conducting credit ratings in Chinese markets.”

Only as old as you feel
Hank Greenberg, who has been at odds with American International Group ever since it forced him out as CEO in 2005, is at it again, this time over the exact age of the company. While the company is celebrating its founding in Shanghai 100 years ago, the 93-year-old Greenberg insists the company only dates back to 1967, when he put it together and took it public. “This is plain BS,” he says of AIG’s claim.

Crypto heist
Two groups of “highly sophisticated cyber criminals” may have have stolen about $1 billion through cryptocurrency hacks, “a sum that accounts for the majority of the money lost in such scams,” according Chainalysis, which makes software that tracks cryptocurrency transactions. Chainalysis said the two hacker groups, which may still be active, “employed an extensive network of digital wallets to hide their tracks and later converted the money to physical cash through online exchanges and individual transactions.”

Closer watch
“For the first time in recent memory,” the Government National Mortgage Association is asking nonbank mortgage lenders to improve some of their financial metrics before allowing them to continue issuing Ginnie-backed mortgage bonds. The added scrutiny results from concern "that some may not have the financial heft needed to overcome stressed conditions.” It’s also begun its first stress tests of these lenders, which now service 61% of loans backed by Ginnie Mae securities, nearly double the percentage from 2014.

Financial Times

Promoted
HSBC has appointed Georges Elhedery as its head of global markets “as it seeks to bolster the unit following the sudden departure of the previous executive in charge,” Thibaut de Roux, who retired in September. Elhedery “takes the helm as the banking industry grapples with poor performance across its trading floors, especially in fixed-income products such as bonds, foreign exchange and interest rate derivatives.” Elhedery had previously headed the bank’s operations in the Middle East, North Africa and Turkey.

No nationalization
A London jury heard testimony Monday that former Barclays CEO John Varley was “scared to death” about a potential nationalization of the bank by the U.K, government during the 2008 financial crisis. Varley and three other former Barclays executives have been charged by U.K.’s Serious Fraud Office with secretly paying £322 million to Qatar in return for its investment in the bank that allowed Barclays to avoid a U.K. government bailout, which might have jeopardized their bonuses and jobs.

Not gonna take it
Andrea Orcel, the former UBS banker who was offered the CEO job at Santander before it rescinded the offer because it would have to pay him tens of millions of dollars to compensate for deferred compensation he would lose from UBS, is preparing to sue the Spanish bank. “He is close to hiring representation but has had some difficulty finding a high-profile firm that is not conflicted by having advised Santander in the past.”

Elsewhere

Stress test checkup
The Federal Reserve plans to hold a conference in July to discuss the effectiveness of its stress tests for large banks as it considers making changes to them. “This outreach effort will help the public better understand how stress tests work and will help us learn how we can improve and refine the program,” Randal Quarles, the Fed's vice chair for supervision, said. The conference, which will focus on the “transparency and effectiveness” of the tests, will be held July 9 at the Boston Fed.

Quotable

“You think I’m going to sit quietly by and let them take credit for being 100 years old? They’re not, and I know the answer to that because I formed AIG.” — Former AIG CEO Hank Greenberg, who claims he created the insurance company in 1967.

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