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Wed, Jan. 27, 4:26 AM
- Novartis' (NYSE:NVS) fourth quarter earnings missed expectations as the group prepared to overhaul its Alcon eyecare division.
- Royal Bank of Scotland (NYSE:RBS) warned it would slump to yet another full-year loss after it put aside £2.5B to cover a slew of regulatory issues.
- Strength in its U.K. business helps Santander (NYSE:SAN) offset weakness in Latin America and Spain, with Q4 earnings coming roughly in line with expectations.
- Ericsson (NASDAQ:ERIC) reported a 67% increase in quarterly net profit, helped by a stronger dollar and higher revenue from a new global license deal with Apple.
- BASF (OTCQX:BASFY) issued a profit warning, knocked down by lower oil and gas prices, which have led to write-downs of its energy business.
Fri, Jan. 15, 1:11 PM
- Goldman struck a $5.1B deal with U.S. authorities this week, leaving Royal Bank of Scotland (RBS -7%) as the only other major mortgage case out there.
- Court documents filed over the summer suggested RBS's bill could be as much as $13B, though some analysts see the final figure as lower. A possible catalyst to moving things along is this year's presidential election, with regulators likely hoping to wrap things up before the heat of the campaign.
- It's going to cost the bank plenty (it's already reserved $2.7B), but a settlement will mark another step in RBS's recovery from the financial crisis (the U.K. government still holds a 73% stake). "This is the final step before RBS resumes dividends and potentially returns excess capital. It resolves the biggest tail risk for the bank," says Bernstein's Chirantan Barua.
- Source: Reuters
Dec. 16, 2015, 12:04 PM
- To review, as part of its bailout, Royal Bank of Scotland (RBS +0.1%) was required to spin off 314 branches by the end of 217 - this group has put together under the Williams & Glyn brand.
- The bank had planned to IPO the unit, but now - having received some interest - says it will explore a sale next year.
- At issue will be completing the process of totally separating the branches and their 1.8M customers. A plan to sell the branches to Santander three years ago fell through over technology concerns.
- A sale now would come amid plenty of interest in consolidation among smaller lenders looking to boost market share.
Dec. 14, 2015, 10:38 AM
- "The work in the corporate and institutional bank primarily will be finished by the end of this year,” Royal Bank of Scotland (RBS -0.6%) CEO Ross McEwan tells Bloomberg.
- As for ideas about just getting out of investment banking altogether, McEwan brushes it off, noting "great strategic positions ... where we can make money. We'll show that over the next thee to four years."
- Jefferies' Joseph Dickerson says RBS is "ahead of the curve" versus other banks in restructuring their investment banking divisions.
- Getting back to McEwan, he says the bank's success in shedding assets gives it the room to now go a little slower and maybe get better value going forward. He's still committed to finishing the process by the end of 2016.
Dec. 7, 2015, 7:40 AM
- Royal Bank of Scotland's (NYSE:RBS) Irish units have agreed to sell £1.63B of real estate loans to Lone Star Funds and homebuilder Cairn Homes for £360M. Even at that sizable discount, the sale would mark a gain of about £245M on book value for the failed paper.
- Known as Project Clear, the portfolio includes about 20% of all the space zoned for residential use in Dublin, says Cairn, giving that company the opportunity to build more than 14K homes in coming years.
Dec. 1, 2015, 3:28 AM
- All U.K.-based banks have passed the country's annual stress tests, which measure the British banking sector's ability to handle global financial shocks.
- Although none of the lenders will be required to submit a revised capital plan, StanChart (OTCPK:SCBFF) and RBS only passed the exam after taking steps to improve their capital ratios during the testing process.
- Other banks included in the exercise: HSBC, Barclays (NYSE:BCS), Lloyds (NYSE:LYG), Santander (NYSE:SAN) and Nationwide.
Nov. 19, 2015, 7:49 AM
- The state-owned lender intends to forego all bonuses for 20K staff at its branches, and instead will boost fixed pay by 5%.
- “Our employees will not lose out as a result of this -- they will receive an increase to their annual base pay and the way we pay them will be simpler and fairer," says RBS executive Les Matheson.
Nov. 18, 2015, 3:48 AM
- Federal prosecutors are investigating executives at RBS (NYSE:RBS) and JPMorgan (NYSE:JPM) for their roles in the sales of allegedly flawed mortgage securities prior to the financial crisis, the WSJ reports.
- Investigators are attempting to establish if they can prove that the executives committed fraud by ignoring warnings from associates that they were filling their bond deals with too many dodgy mortgages.
- While major banks have had to pay billions of dollars in settlements over the financial crisis, there has been a notable lack of criminal convictions.
Nov. 11, 2015, 9:06 AM
- The corporate and institutional banking division will have to cut annual costs by £600M-£800M and maintain revenue of £1.3B in order to achieve an ROE of 8-10% by 2019, according to Citigroup. "This looks like a big ask to us," says the team which rates RBS a Sell. "We await more detail."
- The bank's current plan calls already calls for thousands of job cuts, and a shrinkage of risk-weighted assets at the securities unit to £30B from the current £107B.
- Jefferies' Joseph Dickerson - who rates RBS a Buy - calls the securities unit a "loss leader" for the broader corporate bank. "While management might talk about it standing on its own two feet from a returns standpoint, it’s still important for synergies.”
Nov. 9, 2015, 4:24 AM
- The Financial Stability Board has published new rules that aim to stop banks from becoming "too big to fail," confirming its final proposals for Total Loss Absorbing Capacity, or TLAC.
- Under the plan, large lenders will have by January 2019 to hold a financial cushion of at least 16% of their risk-weighted assets in equity and debt that can be written off. That requirement will gradually increase, reaching 18% of assets weighted by risk by January 2022.
- The FSB will put the rules, which will apply to the world's top 30 banks, to the G20 later this month.
Nov. 3, 2015, 3:12 PM
- After more than a decade with the bank, Bob McKillip - RBS's head of Americas and former chief of the region's investment-banking operations - will leave early next year, reports Bloomberg. The move comes as the state-owned bank continues to wind down many operations and return to being a U.K. retail lender.
- RBS has most of its U.S. operations in Stamford, CT, and about half of the 2K who worked there at the start of the year have now departed, according to the report.
- McKillip's former co-head of investment banking in the Americas - Michael Lyublinsky - left in August to join hedge fund firm Brevan Howard.
Oct. 30, 2015, 9:22 AM
- Including capital as of the end of Q3 (reported today), plus money from the sale of its remaining 20% stake in Citizens Financial (reported today), RBS will have £8B ($12.25B) in excess capital, according to Jefferies.
- Of course, there are some big costs ahead, including a £1.2B special dividend owed to the government, another £2.7B in restructuring charges by 2019, and surely more litigation costs.
- Said restructuring though, will also free up more capital - possibly another £8B by the end of next year. A smaller, simpler bank with fewer businesses should also be able to release capital charged against operational risk over the next three to four years. Oh, and RBS might even earn some profits.
- While the bank (still nearly 80% owned by the government) doesn't expect to return any cash to (non-government) shareholders before 2017, it's looking like there will be plenty available when it is able to do so.
- Source: WSJ's Heard on the Street
- Previously: RBS profits climb despite restructuring costs (Oct. 30)
- Shares -1.4% in London action
Oct. 30, 2015, 4:39 AM
- Royal Bank of Scotland (NYSE:RBS) posted a third-quarter profit rise today, despite sustained restructuring costs hitting its bottom line.
- The bank's net income rose 6% to £952M ($1.5B), compared with £896M a year earlier, although it warned that future charges relating to past misconduct could be substantially higher than expected.
- RBS also announced the sale of its remaining shareholding in Citizens Financial Group (NYSE:CFG). The 20.9% stake is worth approximately $2.5B.
Oct. 16, 2015, 4:43 AM
- According to new U.K. rules, Britain's biggest banks will have to hold up to £3.3B of extra capital between them when they are forced to ringfence their investment banking operations in 2019.
- The Bank of England's regulations are also allowing "ringfenced" banks to transfer capital from their retail arms to other parts of their businesses in the form of dividends, a move loudly applauded by the U.K.'s largest lenders.
- Related tickers: RBS, HSBC, LYG, BCS, SAN
Oct. 1, 2015, 5:11 PM
- JPMorgan Chase (NYSE:JPM) will pay almost a third of a $1.86B settlement to resolve accusations that a dozen big banks conspired to limit competition in the credit default swaps market, Bloomberg reports.
- JPM reportedly will pay $595M, followed by Morgan Stanley (NYSE:MS) with $230M, Barclays (NYSE:BCS) at $175M, Goldman Sachs (NYSE:GS) at $164M, Credit Suisse (NYSE:CS) at $160M and Deutsche Bank (NYSE:DB) at $120M; BofA (NYSE:BAC), BNP Paribas (OTC:BNPZY), UBS, Citigroup (NYSE:C), Royal Bank of Scotland (NYSE:RBS) and HSBC would pay less than $100M each.
- The deal would avert a trial and end years of litigation by hedge funds, pension funds, university endowments, small banks and other investors, who sued as a group.
Sep. 15, 2015, 9:05 AM
- Royal Bank of Scotland (NYSE:RBS) is unlikely to pay a dividend, Berenberg says, until it can show regulators two years of profit -- which means until at least 2018, a year later than expected.
- The bank had been promising to return excess capital from divestments as soon as Q1 2017.
- It's got to pass English stress tests first. And settle with U.S. regulators, say the analysts, who have a Sell on RBS. "We would be surprised if the regulator did allow the ‘excess’ capital to be returned before RBS had been profitable for two years."
- The Bank of England is set to publish its look at British lenders' health in December.
- RBS shares are down 17.1% YTD.
Royal Bank of Scotland Group (The) PLC is an international banking and financial services company. The Company through its subsidiaries provides banking products and services to personal, commercial and large corporate and institutional customers.
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