Earnings season opens: JPMorgan Chase reported second quarter earnings rose 18% to $8.3 billion, or $2.29 a share, beating analysts’ estimates by seven cents a share. Wells Fargo said second quarter profits and revenue both declined compared to the year earlier period. Citigroup said its quarterly profit jumped 16% versus a year earlier as revenue rose 2%.
Receiving Wide Coverage ...
You better shop around: Walmart is talking to Capital One about taking over its store credit card, a move “that could end Synchrony Financial’s nearly 20-year run as the exclusive issuer of Walmart cards,” the Wall Street Journal says. “Losing Walmart would be a blow to Synchrony, which counts the retail giant among its five-largest accounts.” The Walmart portfolio comprises about $10 billion in balances, or about 19% of Synchrony’s retail card outstandings and 13% of its total balances.
Synchrony shares dropped more than 5% Thursday on the news.
Not equal: The U.K.’s plan for “equivalence” in its banking regulations with the European Union “isn’t great [news] for U.S. banks with big offices in London.” Big American banks with a large presence in London had lobbied for a deal “whereby the U.K. and EU would agree to adopt similar banking regulation, essentially preserving something akin to the way banks operate now.” But London’s proposal for a looser agreement “falls far short of something close to the status quo. Lenders don’t like equivalence because it applies to a narrow range of activities and can be pulled by the EU at short notice. That makes it hard to build a business around.” Wall Street Journal, New York Times
Wall Street Journal
Oops: Money transfer apps such as PayPal’s Venmo make it easy to send money to other people. But it’s a lot harder to get it back if you send it to the wrong person, which can happen if you misspell a name. “Many digital payments are irreversible. For the recipient, it’s the equivalent of finding cash on the sidewalk — except it comes with a moral quandary.”
Vulnerable: The rise of “lightning-fast proprietary trading firms” has made the U.S. Treasury securities market “more fragmented and potentially vulnerable to shocks,” according to a report by an industry advisory group to the Federal Reserve Bank of New York. The report by the Treasury Market Practices Group said rules have not kept up with the changing market. “Given its systemic importance, any significant disruption in the Treasury market would likely impact financial stability,” the report says.
System failure: Mastercard’s payments system was down “across much of Europe and America” for about two hours on Thursday, causing “a surge in complaints to banks and other card issuers by frustrated customers unable to complete their payments.” The company “refused to provide an explanation for what caused it,” the paper says. The glitch follows a similar but longer-lasting outage in Visa’s system in Europe in early June.
Something rotten in Denmark?: The head of a Russian investment firm has filed a criminal complaint against Danske Bank charging that Denmark’s largest bank laundered more than $200 million for an associate of Russian president Vladimir Putin. “The story of what took place at Danske Bank is so significant and so scandalous, and there hasn’t been any action from Danish law enforcement so far,” said Bill Browder, chief executive of Hermitage Capital Management. “We hope that this information will lead to a proper criminal investigation in Denmark.”
Browder’s complaint “ratchets up the pressure further on Danske as it deals with a growing money-laundering scandal that has spawned investigations in at least three countries. It focuses on an alleged $8.3 billion of suspicious transactions that flowed through Danske’s Estonian branch between 2007 and 2015.”
“This award makes it pretty clear that they are serious about their program.” — Edward Siedle, a former Securities and Exchange Commission lawyer, discussing $78 million whistleblower awards for conflicts of interest at JPMorgan Chase.