Kat Hidalgo of Bloomberg tells readers that private credit is booming, and banks are fighting back. She writes: Need a loan for a new factory or a buyout deal, but don’t like the terms your bank is offering? There’s a $1.7 trillion industry that’s ready to help. Private credit came of age after the 2008 financial crisis as an alternative to banks at a time when regulators were clamping down on risky lending by deposit-taking institutions. Today it’s become a serious rival to mainstream lending for all kinds of businesses, from real estate firms to tech startups. Money is pouring into private … [Read more...]
U.S. Banks Ramping Up Purchases Adding Fuel to Credit Markets
Scott Carpenter of Bloomberg tells readers that banks are piling back into everything from mortgage debt to CLOs after two years of cutting back. Carpenter writes: US banks are starting to ramp up purchases of everything from mortgage-backed securities to collateralized loan obligations after nearly two years of cutting back, adding fuel to a multi-month rally across credit markets. Citigroup Inc., JPMorgan Chase & Co. and Bank of America Corp. have been boosting purchases of top-rated CLOs. Commercial bank holdings of mortgage bonds are also on the upswing, climbing 12 of the last … [Read more...]
Bank of America Penalized for Bad Practices
Bank of America has been penalized by the CFPB with a fine of $250 million for infractions such as denying customers promised cash rewards, double-charging them, and damaging their credit scores. Joseph Mackinnon reports for The Blaze: Federal regulators are penalizing Bank of America to the tune of $250 million for allegedly taking advantage of customers. The Consumer Financial Protection Bureau announced Tuesday that the bank will pay over $100 million to the consumers who were adversely impacted and another $150 million in penalties to the CFPB and the Office of the Comptroller of the … [Read more...]
Will Bank Earnings Signal Danger?
After a regional banking crisis gripped the United States earlier this year, Ben Eisen wonders if second-quarter bank earnings reports will signal danger or relief for the sector. Eisen writes: Lenders will sort through the damage from this year’s banking crisis when they report their financial results starting Friday. Earnings for the second quarter will show whether the recent failures of three lenders and a slowing economy are eroding what has been a long period of strength for the industry. Earnings are expected to fall 7% in the quarter from a year earlier, according to Keefe, … [Read more...]
The End Has Come for Credit Suisse
UBS has completed its takeover of embattled bank Credit Suisse. The consolidation of the two Swiss banks is the biggest banking deal since the financial crisis, reports Noele Illien in Reuters. She writes: UBS (UBSG.S) on Monday said it had completed its emergency takeover of embattled local rival Credit Suisse (CSGN.S), creating a giant Swiss bank with a balance sheet of $1.6 trillion and greater muscle in wealth management. Announcing the biggest banking deal since the 2008 global financial crisis, UBS Chief Executive Sergio Ermotti and Chairman Colm Kelleher said it would create … [Read more...]
Money Market Assets Hit Record High: $5.4 Trillion
Investors looking for alternatives to low-interest-rate bank accounts have flooded money market accounts with their cash. Harriet Clarfelt and Kate Duguid report in the Financial Times: US money market fund assets have swelled to a record high this week, as the best yields available in years and the early May collapse of First Republic Bank kept investors piling into the low-risk vehicles. Total net assets in money market funds, which invest in high-quality, short-dated debt, reached almost $5.4tn as of Wednesday, according to data from the Investment Company Institute. The figure is up … [Read more...]
Goldman Sachs Being Probed Over Silicon Valley Bank Collapse
The SEC and US prosecutors are investigating the role of Goldman Sachs in the collapse of Silicon Valley Bank. Joshua Franklin reports in the Financial Times: Goldman Sachs’ work for Silicon Valley Bank is being reviewed as part of government investigations into the tech-focused bank’s collapse in March, the Wall Street bank disclosed on Thursday. Goldman has been criticised for its dual role with SVB, both as a buyer of $21bn in securities sold by the California-based lender and as an adviser on a failed equity raise for the bank days before SVB failed. The bank said it was … [Read more...]
The Too-Big-to-Fail Banks Are Getting Bigger
Over the weekend, the Biden administration negotiated the purchase of the assets of First Republic Bank—America's second largest bank failure—by too-big-to-fail bank, JPMorgan Chase. The process will make JPMorgan even bigger. Is that wise? In The Wall Street Journal, Rachel Louise Ensign and Ben Eisen report on the firesale of First Republic, writing: Regulators seized First Republic Bank and struck a deal to sell the bulk of its operations to JPMorgan Chase & Co., heading off a chaotic collapse that threatened to reignite the recent banking crisis. JPMorgan said it will assume all of … [Read more...]
Regional Banks Steadying Themselves after SVB Collapse
Regional banks are attempting to steady themselves as the volatility in the wake of the collapse of Silicon Valley Bank subsides. Stephen Gandel, Joshua Franklin, and Brooke Masters report for the Financial Times: Regional banks across the US have largely stopped the massive outflow of deposits that threatened their stability after the collapse of Silicon Valley Bank but their profit margins are shrinking unexpectedly quickly. Many of the more than a dozen midsized US banks that reported earnings this week warned the turmoil following SVB’s collapse had heightened competition for deposits, … [Read more...]
Americans Are Fleeing Bank Deposits
After watching the dysfunction surrounding the failures of Silicon Valley Bank and Signature Bank, Americans are withdrawing their bank deposits and placing them in other places, such as money market fund accounts. Brooke Masters, Harriet Clarfelt, and Kate Duguid report for the Financial Times: Goldman Sachs, JPMorgan Chase and Fidelity are the biggest winners from investors pouring cash into US money market funds over the past two weeks, as the collapse of two regional US banks and the rescue deal for Credit Suisse raised concerns about the safety of bank deposits. More than $286bn has … [Read more...]
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