Feb. 28, 2014, 8:03 AM
- With Wall Street dealer banks - under pressure on the capital and risk-taking fronts - pulling back from their traditional role as middlemen in corporate bond trades, State Street (STT) (and rival BK soon) is stepping into the $9.6T market.
- Wall Street banks' bondholdings are off more than 70% from their peak in 2007, according to Fed data, raising worry bond investors might find themselves stuck with paper they need to sell in times of market stress, and large investors like AllianceBernstein, BlackRock, and Fidelity have been pushing for new avenues to buy and sell.
- One advantage the trust banks have is that they don't have trading desks of their own, and investors can worry less about their interests leaking out. "Global custodians are in the natural position to have this service," says Eaton Vance's Michael O'Brien.
Feb. 20, 2014, 3:29 PM
- Expecting dividends to grow 49% on average for the banks subject to the Fed's stress tests (about the same as last year), Markit, says Citigroup (C) and Bank of America (BAC) will lead the way with 400% boosts. "They are the last of the major banks paying minimal dividends ... change is overdue."
- While 400% is a big number, Citi and BofA will continue to lag their peers in terms of yield (400% growth on a penny just leads to a nickel).
- Also expected to have a significant pop is Morgan Stanley (MS) - a doubling of the payout to $0.10 per share and a 1.4% yield. Others in the top 5 in increases are Zions Bancorp (ZION) with a 75% boost to $0.07 and Regions Financial (RF) up 67% to $0.05.
- The others: KEY +27%, HBAN +20%, BK +20%, STI +20%, COF +17%, DFS +15%, AXP +13%, STT +12%, JPM +11%, CMA +11%, PNC +9%, USB +9%, GS +9%, FITB +8%, WFC +7%, NTRS +6%, and no soup for BBT and MTB where the dividends are expected to be flat at $0.23 and $0.70 per share, respectively.
- As for ETFs, the dividend jumps are expected to have the biggest impact on the XLF which would see a 25% increase in payout: The ETF has 81 companies, but the top 5 holdings - BofA, Wells, JPM, Citi, USB - make up 41% of assets. In contrast, just two CCAR banks make up the top five holdings of the KBE and it should see a more muted increase of just 18%.
- Related ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, IAT, SEF, IYG, FXO, PFI, KBWB, RKH, QABA, FNCL, FINU, KRU, RWW, KBWR, RYF, PSCF, KRS, FINZ
Jan. 17, 2014, 8:16 AM
- Assets under custody of $27.6T up 5% Y/Y, thanks to higher market values combining with new business. AUM of $1.58T up 14%.
- Investment services fees of $1.68B up 5% Y/Y. Investment management and performance fees of $904M up 6%. FX and other trading revenue of $146M up 5%.
- Net interest revenue of $761M compares to $725M a year ago, with NIM of 1.09% down 7 basis points from last year.
- Conference call is underway
- Press release, Q4 results
- BK -1.4% premarket
Jan. 17, 2014, 6:33 AM| Comment!
Jan. 17, 2014, 12:05 AM
Jan. 16, 2014, 5:30 PM
Jan. 13, 2014, 5:09 AM
- The Basel Committee for Banking Supervision has eased the way banks will have to report leverage ratios, or the amount of capital they hold against their loans and other assets.
- The regulations will not force banks to count 100% of their off-balance-sheet assets, such as much of their exposure to derivatives, and guarantees and letters of credit.
- That alterations will lower the need for banks to sell assets or raise capital to meet the Basel leverage-ratio requirements, which might be set at 3% or higher from 2018.
- The Stoxx Europe 600 Banks index is +1.5%.
- Major banks: RBS, HSBC, BCS, DB, CS, UBS, GS, JPM, C, MS, WFC, USB, BK, SAN, BBVA, LYG, NMR
- ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, EUFN, IPF, SEF, IAT, IYG, PFI, FXO, IXG, KBWB, KME, RKH, QABA, KRU, FINU, RWW, KBWR, RYF, FNCL, PSCF, AXFN, KRS, FINZ, EMFN, KBWX
Jan. 7, 2014, 4:21 AM
- "We Continue to prefer State Street (STT). We expect State Street to stand out and reiterate its desire to deliver positive operating leverage and maximize capital returns for shareholders, and we believe sets up best in the group for 2014 on a relative basis. Bank of New York Mellon (BK) should experience a noisy quarter on the expense front with elevated legal and litigation expenses. Northern Trust (NTRS) should continue to see top-line growth given various investments in the franchise, but in this tough operating environment the focus will be on expenses - and we see most negative estimate revision risk here."
Dec. 17, 2013, 4:19 AM
- The Fed intends to use its own estimates about the effect of a recession on bank balance sheets in its stress tests. Previously, the Fed has relied on data from the firms themselves.
- The central bank could project that bank assets would grow during a slump, as has happened in the past three recessions, rather than fall, as the banks have predicted.
- With such a finding, the Fed could require banks to hold more loss-absorbing capital or limit shareholder payouts. (Fed letter)
- Tickers: GS, JPM, BAC, BK, AXP, COF, C, FITB, MS, PNC, RF, STT, STI, USB, WFC.
- ETFs of interest: KBE, KBWB, KRE, KCE, KBWC, XLF, IYF, PFI, VFH, RYF, RWW, FAS, UYG, FAZ, SKF, SEF, IAI, FXO, PSCF, KBWD, KBWB, IYG, FINU, FINZ.
Dec. 10, 2013, 3:33 AM
- A panoply of regulators are due to disclose the details of the Volcker rule this morning and then formally adopt the measures later in the day.
- The new regulations will ban banks from proprietary trading, and prevent them from owning over 3% of hedge funds and private-equity funds.
- Banks fear that the rules could cost them billions of dollars by making it more difficult to engage in activities that are permitted under the regulation, such as market-making, underwriting and hedging against risks. Expect the lawyers to go through the proposals to see what could be struck down in court.
- Tickers: C, JPM, MS, WFC, BAC, COF, GS, BK, USB
- ETFs: FAS, XLF, FAZ, UYG, KRE, KBE, VFH, IYF, SEF, IAT, IYG, PFI, FXO, KBWB, RKH, QABA, RWW, KRU, FINU, KBWR, RYF, PSCF, FNCL, KRS, FINZ
Nov. 18, 2013, 4:30 AM
- The Federal Reserve could delay by a year the date by which banks will have to comply with all aspects of the Volcker rule. The target at the moment is July 2014.
- Regulators are still finalizing the proposal, which, among other things, would ban banks from proprietary trading using their own money. The regulators are unlikely to release the definitive version until December.
- However, banks would still have to eliminate their pure proprietary trading desks by July next year.
- The sector is concerned that the rule will limit activities such as market making and hedging.
- ETFs: FAS, XLF, FAZ, UYG, VFH, IYF, SEF, IAI, IYG, FXO, PFI, KBWB, KCE, RWW, FINU, RYF, PSCF, FINZ, FNCL, KBWC
- Related tickers: BAC, GS, JPM, C, BK, WFC, MS
Nov. 15, 2013, 7:51 AM
- A check of the stocks of the downgraded banks (GS, JPM, MS, BK) finds them snoozing through the news. Goldman is off 0.4% premarket, but it's one trade for 56 shares. The others have no premarket action. A look at the lender's bond yields finds them little-affected as well.
- A far larger issue is U.S. Attorney General Eric Holder calling the rate-fixing we know about so far "the tip of the iceberg," as U.S. regulators pile into a currency-trading investigation. The DOJ, he says, is "taking a leading role" in a "truly global investigation."
- The above-mentioned banks (maybe excepting BK) are being looked at, but Deutsche (DB), Citigroup (C), Barclays (BCS), and UBS are the gorillas in forex.
Nov. 14, 2013, 5:35 PM
- Moody’s cuts the senior debt ratings of Morgan Stanley (MS), Goldman Sachs (GS), JPMorgan (JPM) and BNY Mellon (BK) by one notch, based on its updated views on U.S. government support and standalone bank considerations.
- The credit ratings of these banks have each benefited from the assumption of government support, Moody's says, and its rating actions reflect strengthened U.S. bank resolution tools, prompted by the Dodd-Frank Act, which affect its assumptions about U.S. government support.
- Ratings for Bank of America (BAC), Citigroup (C), State Street (STT) and Wells Fargo (WFC) are left unchanged.
Nov. 14, 2013, 4:50 PM
- Berkshire Hathaway (BRK.A, BRK.B) takes a new 40.1M-share position in Exxon Mobil (XOM), apparently enough to make Warren Buffett's conglomerate the 6th-biggest holder of XOM shares. (13F)
- Berkshire also added to existing stakes in Bank of New York (BK), DaVita Health Care Partners (DVA), Suncor Energy (SU), U.S. Bancorp (USB) and VeriSign (VRSN); stakes were lowered in ConocoPhillips (COP), DirecTV (DTV), GlaxoSmithKline (GSK) and Sanofi (SNY).
- XOM +0.7% AH.
Nov. 13, 2013, 7:11 AM
- BNY Mellon (BK) launches a new Asia-Pacific Capital Markets business, adding a team of 9 broker-dealer and capital markets specialists to its existing forex services unit in Tokyo.
- "Our immediate focus will be on establishing a strong capital markets business in Japan, as well as starting conversations with our existing investment services clients, who are major players in the Asian capital markets space," says Makoto Saji, president of the bank's Tokyo operations.
- Press release.
Nov. 5, 2013, 12:48 PM
- New CCAR guidelines are largely inline with last year, says the team at Credit Suisse, but some variables pose more onerous assumptions and could keep capital distributions more conservative than otherwise expected, though still improved from last year.
- The incorporation of a large counterparty default scenario is particularly of note for those banks with material trading and custodial operations. The bar for CCAR passage is thus raised for: BAC, BK, C, GS, JPM, MS, STT, and WFC.
- Additionally, the weakening of economic activity in the severely adverse scenario appears worse than last year. Also included is a reversal in the recent improvement in U.S. housing and the European economy.
- Those best-positioned for excess capital deployment: AXP, HBAN, KEY, NTRS, RF, and USB. Bank of New York, Goldman, State Street, and Wells Fargo all have the honor of ending up on both lists.
- ETFs: KBE, KBWB.
BK vs. ETF Alternatives
Bank of New York Mellon Corporation is a global investment company. Its business segments are: Investment Management and Investment Services. Its other segments includes credit-related services, the leasing portfolio, corporate treasury activities.
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