Swiss hit: UBS reported a better-than-expected net profit of 1.28 billion Swiss francs ($1.29 billion) for the second quarter, up 9.4% versus a year earlier. Wall Street Journal, Financial Times
Wall Street Journal
Changing of the guard: Fannie Mae CEO and President Timothy J. Mayopoulos, who has led the firm since 2012, is planning to step down at the end of the year. Chief Financial Officer David Benson will become president and Celeste Brown was promoted to CFO, both effective August 6. Fannie said it is still searching for a new CEO.
A Fannie Mae logo is pictured outside their headquarters in Washington, DC, on Wednesday, December 29, 2004. Fannie Mae, the biggest provider of money for the U.S. mortgage industry, will sell as much as $4 billion of preferred stock after its regulator said it broke accounting rules and is ``significantly undercapitalized.'' Photographer: Jay Mallin / Bloomberg News
Jay Mallin/Bloomberg News
Financial Times
Let’s be Pals: Daniel Loeb’s activist hedge fund, Third Point, has taken a stake in PayPal and is predicting a 40% jump in the stock over the next 18 months, from $88 to $125. “We see parallels between PayPal and other best-in-class internet platforms like Netflix and Amazon: high and rising market share, untapped pricing power, and significant margin expansion potential,” the fund wrote in a letter to investors. PayPal reports earnings on Wednesday.
Competitive disadvantage: American banks are demanding that the British government cut taxes and regulations to staunch the expected flow of financial assets and jobs out of London after Brexit. The bankers say the city of London “is losing its competitive edge against New York, especially since U.S. president Donald Trump slashed corporation tax and pushed for looser regulations.”
Something new: Barclays has become the flagship customer of artificial intelligence firm Simudyne Technology, which helps banks “create computer models that simulate millions of possible future scenarios, allowing them to test how individual factors will perform and interact with each other in a vast array of situations.” The U.K. bank plans to use the technology to power “a new way of making decisions” in its trading, lending and risk management divisions.
Back in the game: Corrado Passera, a long-time Italian banker and former government minister, is getting back into the banking business with the launch of a digital lender “that would leapfrog the problems hobbling traditional banks by specializing in the soured loans thrown off by small and mid-sized family companies, the backbone of the Italian economy.” The bank will focus on “unlikely-to-pay loans and loans to low-rated companies” as well as “the worst kind of soured debt, non-performing loans.”
New York Times
It's who you know: Signature Bank, previously “a small player occupying unglamorous niches,” has become “an unlikely go-to lender” for President Trump and his extended family. “The bank helped finance Mr. Trump’s Florida golf course. It lent money to Jared Kushner, Mr. Trump’s son-in-law, and to Mr. Kushner’s father, Charles. It provided Mr. Trump and his business with checking accounts. And Ivanka Trump sat on Signature’s board of directors while the bank was lending to her father and her husband, Mr. Kushner.”
Now, with the president’s former personal lawyer, Michael D. Cohen — who initiated the relationship between Trump and the bank — “under criminal investigation, Signature’s interactions with some of its most famous clients are attracting attention from regulators,” the paper reports.
Unlevel playing field: A decade after the financial crisis, “regulators still have an incomplete picture of who holds what” in the $600 trillion derivatives market. One of the problems is the Dodd-Frank Act, enacted after the crisis, “contained a big gap: Banks don’t have to disclose to American regulators their holdings of derivatives housed in certain offshore entities.” As a result, two units of the same bank — such as the similarly named Goldman Sachs International and Goldman Sachs International Bank — have different reporting requirements. The first one reports, the second one doesn’t.
Quotable
“Competitiveness is a big agenda, and the tax cuts and deregulation in the U.S. have put this firmly on the radar. There is a perception that this is still a relatively hostile business and regulatory environment.” — Stephen Jones, CEO of UK Finance, about the relative competitiveness between New York and London.
At a time of mild or nonexistent loan growth, middle-market borrowers in the Lone Star State are providing a boost to Fifth Third Bancorp and Huntington Bancshares.
New details have emerged about the negotiations that culminated in Capital One's blockbuster $35 billion agreement to acquire Discover. At one point last December, the two parties broke off discussions, according to a securities filing.
According to the Federal Reserve Board's latest financial stability report, persistent inflation and policy uncertainty are the primary worries for banks. Survey respondents expressed heightened anxiety over murky policy outlooks due to geopolitical turmoil and rapidly approaching domestic elections.
The Alabama regional lender says it expects expenses to taper off this year and anticipates challenged loans will gradually rise to historically average levels.
Truist Financial's top executive leadership team announces departures; First Horizon's chief credit officer is retiring; Ferry teams with Highnote to roll out a new Visa-branded payroll card; and more in the weekly banking news roundup.
The Dallas-based regional bank tapped a client for its co-pilot capabilities, where employees can message a bot instead of a human to get tech assistance.
