European banks are experiencing a bit of turmoil, and it looks like Deutsche Bank is the next victim. Martha Muir, Katie Martin, and Sam Fleming report in the Financial Times: Bank stocks took a heavy hit on Friday, with Deutsche Bank falling 10 per cent, as policymakers struggled to calm nerves after failures on both sides of the Atlantic. The Stoxx 600 banks index, which contains Europe’s biggest lenders, fell 3.6 per cent by mid-afternoon, outstripping weakness in broad national indices. Germany’s Commerzbank fell 5 per cent while France’s Société Générale lost 5.6 per cent. “Europe … [Read more...]
Who’s to Blame for Banking Vulnerability?
In Barron's, Viral V. Acharya and Raghuram Rajan explain how quantitative easing may have left the banking system vulnerable to volatility. They conclude: There is plenty of blame to go around. But leaving aside the banks’ risk management and bank supervisors’ apparent failures, there are deeper questions. Why did uninsured deposits grow so rapidly during the pandemic? Why are banks so heavily invested in long-term securities portfolios? Why are we seeing bank runs so soon after the Fed flooded the system with liquidity? Part of the answer lies in quantitative easing, a form of monetary … [Read more...]
The Education of Barney Frank
After authoring one of the banking industry's largest regulatory bills, Barney Frank, ironically, has found himself on the regulated end of a bank failure. Frank, who has been on the board of Signature Bank, which just failed, is now learning just how difficult life can be for regulated businesses. The editors of The Wall Street Journal write: Life is full of irony, but it’s hard to think of a richer one than Barney Frank sitting on the board of the failed Signature Bank. The former Congressman who was the scourge of Wall Street, the co-author of the Dodd-Frank Act that was supposed to keep … [Read more...]
Credit Suisse Announced “Material Weaknesses” In Its Internal Controls
Owen Walker reports for the Financial Times that Credit Suisse has announced: “'material weaknesses' in its internal controls over financial reporting." Walker writes: Credit Suisse said it had identified “material weaknesses” in its internal controls over financial reporting, the latest blow to a bank battling to revive its fortunes. In its annual report on Tuesday, Credit Suisse said “management did not design and maintain an effective risk assessment process to identify and analyse the risk of material misstatements in its financial statements”. The bank said its full-year 2022 … [Read more...]
Can Banks Compete with Apple Pay and PayPal?
Banks are tired of sharing their customer experience with Apple and PayPal. Now, they want to develop their own digital wallets to compete. AnnaMaria Andriotis reports in The Wall Street Journal: Big banks are teaming up to launch a digital wallet that people can use to shop online. Wells Fargo, Bank of America Corp., JPMorgan Chase & Co. and four other banks are working on a new product that will allow shoppers to pay at merchants’ online checkout with a wallet that will be linked to their debit and credit cards. The digital wallet will be managed by Early Warning Services LLC, the … [Read more...]
Is This the End of the M&A Supercycle?
Mergers and acquisitions have been in a "supercycle" for years, regularly beating records for volume. Could 2022 be the year that all ends? James Fontanella-Khan reports in the Financial Times: It has been bonus season on Wall Street this month and for the ranks of bankers who work on mergers and acquisitions, it is about as good as it gets. A record boom in deal activity last year has translated to big gains for bankers. Investment banks have announced bonus increases ranging from 20 to 49 per cent on the back of record fees. That should make sellers of Hamptons property, fine wine and … [Read more...]
Chinese Companies Driving Emerging Markets’ Leapfrog Past America on Cashless Payments
Chinese companies like Alipay and WeChat are helping emerging economies leapfrog past the United States with electronic payments. Nick Huber reports at the Financial Times: Although digital wallets are not new, they grew in prominence during the pandemic amid a decline in cash and in-store card payments using point-of-sale terminals — and a rise in consumers’ preference for contactless transactions. Globally, cash was used for 20.5 per cent of in-store “point-of-sale” transactions in 2020, one-third lower than in 2019, according to research by Worldpay, a payments group. An increasing … [Read more...]
AMERICAN DEBT CRISIS: Don’t Hold Back Your Life With Debt
Your survival depends on you doing the right things at the right time. Getting out of debt is one of my most important recommendations as US household debt climbs to a new record. Americans are in more debt now than they've ever been. Anneken Tappe reports for CNN Business: American households are carrying record amounts of debt as home and auto prices surge, Covid infections continue to fall and people get out their credit cards again. Between July and September, US household debt climbed to a new record of $15.24 trillion, the Federal Reserve Bank of New York said Tuesday. It was an … [Read more...]
Big Banks Brewing Buyback Bonanza
America's big banks are preparing to buyback shares from investors once they pass government stress tests. Joshua Franklin explains in the Financial Times: America’s biggest banks will learn the results of their latest stress tests from the US Federal Reserve this week, with a passing grade expected to be a catalyst for billions of dollars in stock buybacks and dividends. The expectation that banks will return more money to shareholders is a sign of how well the US banking sector has fared during the pandemic. The likes of Goldman Sachs and JPMorgan Chase have been bolstered by government … [Read more...]
Banks Prepare for Boom
Ben Eisen reports in The Wall Street Journal that banks are preparing to loosen up money they've been holding for lending into a major economic boom. He writes: The accelerating economic recovery is likely to boost bank profits. Encouraged by government efforts to pump money into the economy and signs that Americans are spending more, the largest financial institutions are expected to release some of the rainy-day money they set aside after the coronavirus pandemic hit. That will offer a jolt to their income in the first three months of the year. JPMorgan Chase JPM -1.65% & Co., … [Read more...]