Jun. 12, 2014, 7:51 AM
- In the next several weeks, the Supreme Court is expected to rule on a case involving a shareholders' class action lawsuit against Haliburton (HAL). If it rules in favor of the company, it will set a higher bar for plaintiffs to achieve class certification. Currently, a judge holds a certification hearing to decide whether class status is appropriate. One criterion is that the people must have common issues. If HAL prevails, then the defendants will be able to file a brief with the court demanding that the shareholders have to again seek court approval for class status under a new, tougher standard. If they fail the gain the approval, the case ends.
- HAL is trying to overturn a 1988 decision, Basic v. Levinson, which is based on "fraud on the market theory," which postulates that a defendant's material misrepresentation that affects the price of publicly traded securities is assumed to have been relied upon by a buyer who suffered a loss. In HAL's case, shareholders alleged that it understated its asbestos liabilities while overstating revenues and the benefits of its merger with Dresser Industries.
- Other firms facing class action suits that would benefit from a favorable ruling are Pfizer (PFE), Merck (MRK), HSBC Holdings Plc (HSBC), Regions Financial (RF) and Las Vegas Sands (LVS).
Jun. 11, 2014, 8:06 AM
May. 27, 2014, 7:38 AM
- Feeling its oats after getting Credit Suisse to plead guilty to tax evasion, the DOJ looks set to quicken the pace on investigations of 13 others Swiss lenders, including the Swiss unit of HSBC. Of the 13 under the scope, only HSBC has substantial U.S. operations.
- “It looks like DOJ has a plan in certain cases where they can get a guilty plea but not destroy the bank,” says former IRS deputy commissioner Mark Matthews. “I’m sure that any bank confronted with that can hardly take comfort.”
May. 23, 2014, 12:12 PM
- A last-ditch effort by HSBC to hold off a revolt on executive pay by cutting the chairman's bonus proves little help as more than 20% of votes cast at the annual meeting today were against the bank's three-year pay policy.
- Among the issues is the bank's policy on granting fixed pay "allowances" as a way of getting around a new EU bonus cap. Unlike other lenders, HSBC hasn't capped these allowances, but instead made them variable to reflect the size of bonus schemes.
- Sir Simon Robertson - the head of HSBC's pay committee - notes the bank is paying less than U.S. rivals like JPMorgan and Citigroup even as it tries to compete with them.
May. 20, 2014, 8:19 AM
May. 7, 2014, 9:16 AM
- HSBC Holdings net profit of $5.2B falls from $6.4B a year ago. Underlying revenue of $15.7B off 8%. Underlying costs up 2% as higher compliance costs win out over trims elsewhere.
- Investment banking pretax profit off 20%. FICC (slowing throughout the industry) accounts for 25% of unit's revenue.
- Asian pretax profit off 32%, at least some of that due to a $1.8B gain from Ping An and Industrial Bank a year ago. HSBC says April activity has been "muted."
- Shares -1.2% premarket
- Press release
Apr. 29, 2014, 8:03 AM
- Among the severe scenarios under which U.K. bank balance sheets will be tested for are a 35% fall in house prices, a sharp rise in interest rates over three years to 4%, GDP slumping 3.5% below its current level, and an unemployment rate peaking at 12%.
- Among those subject to the test: HSBC, RBS, BCS, LYG.
- The exams are being run alongside European-wide stress tests, with results expected to be published in Q4.
- Even banks who "pass" the test could be requested to boost their capital, warns the BOE.
Apr. 7, 2014, 1:13 PM
- Nine months ago, the European Commission accused 13 banks of blocking Deutshce Boerse (DBOEY) and CME from entering the lucrative CDS business between 2006-09, but the banks, reports Reuters, are set to fight those charges at a closed-door hearing next month.
- Should they lose, the banks could be subject to fines of up to 10% of their global CDS turnover - not a small amount given the size of the market.
- Those charged and expected to fight: C, GS, DB, BAC, BCS, BNPQY, CS, HSBC, JPM, MS, RBS, and UBS.
Apr. 1, 2014, 12:17 PM
- Compliance monitor Michael Cherkasky believes HSBC is "appropriately committed" to improving its anti-money-laundering program, but found the systems "lack integration, coordination, and standardization."
- HSBC agreed to the monitoring and regular reporting as part of its late-2012 $1.9B settlement over money-laundering violations. Today's report is the first one filed.
- Cherkasky recommends the bank develop global strategy and implementation plans, with timelines and accountability provisions, suggesting the compensation committee have the power to dock 100% of senior executives' bonuses if they fail to develop an effective program. The filing says HSBC agreed "in principle" with most of the recommendations.
- HSBC has already spent plenty on compliance, boosting staff in the are by 1.6K in 2013. It looks like it will have to spend plenty more.
Apr. 1, 2014, 4:43 AM
- A group of investors from across the U.S. and Caribbean have filed a class-action lawsuit against 12 banks for allegedly colluding to manipulate currency rates.
- The firms being sued include Bank of America (BAC), Barclays (BCS), Citigroup (C), Credit Suisse (CS), Deutsche Bank (DB), Goldman Sachs (GS), HSBC (HSBC), JPMorgan (JPM), Morgan Stanley (MS) and RBS (RBS).
- The investors include city and state pension plans such as the City of Philadelphia and the State-Boston Retirement System.
- The suit adds to multiple investigations by international authorities into forex manipulation, the latest being the Hong Kong Monetary Authority.
Mar. 31, 2014, 12:27 PM
- Absent reforms, another financial crisis is likely to leave taxpayers on the hook for hundreds of billions, warns the IMF, estimating the world's biggest banks receive up to $590B in implicit public subsidies because of their TBTF status.
- Said subsidies include bankers who still have a "heads I win, tails you lose" attitude, and investors who lend at lower cost to banks than they might otherwise. The IMF calculated the size of the subsidies by comparing the CDS prices and credit ratings across larger and smaller banks. While the amount has fallen since the crisis, it still remains sizable. "All in all ... the expected probability that systemically important banks will be bailed out remains high in all regions."
- Subsidies for the biggest players are "like insurance for which banks don't need to pay a premium," says senior IMF analyst Gaston Gelos.
- Full report (starting on pg. 34)
- Among the usual suspects: BBVA, BBD, BAC, BCS, BK, BNS, C, CS, DB, GS, HSBC, IBN, ING, JPM, LYG, MS, NBG, RY, STT, TD, UBS, WFC, WBK.
Mar. 31, 2014, 9:34 AM
- HSBC did have an agreement to sell its Uruguay operation to Banco GNB Sudameris, but it has expired with no action. The bank is exploring alternative options for the sale. LIke the rest of the large banks, HSBC is focused on whittling back non-core businesses.
Mar. 26, 2014, 6:06 PM
- BBVA Compass is approved for semi-annual $51M dividend payments to parent BBVA. (PR)
- As previously reported, HSBC North America was rejected from paying dividends to parent HSBC for "qualitative" reasons relating to weaknesses in its capital planning processes. HSBC N.A. expects to resubmit its plan incorporating enhancements in its processes.
- RBS CItizens (RBS), and Santander Holdings (SAN) were rejected from sending money upstairs for similar reasons, and will be resubmitting as well.
Mar. 26, 2014, 4:04 PM
- The Fed approves 25 out of 30 capital return plans from the nation's largest lenders, but rejects those from Citigroup (C), RBS Citizens, HSBC North America, Santander Holdings (SAN), and, of course, Zions Bancorp (ZION).
- Press release
- Citi -3.3%, RBS -0.2%, HSBC -1.4%, Santander -1.5%, Zions -1.3% in after-hours trade.
Mar. 26, 2014, 12:27 PM
- "You have to be the grit in the oyster, you have to be the person who asks the difficult questions," says "corporate philosopher" Roger Steare, aka "Weirdy Beardy," the man tapped by U.K. lenders like RBS, HSBC, and Barclays (BCS) to help improve banker behavior.
- He's also been called upon by the U.K. Financial Conduct Authority which - after observing that banks simply circumvent many new rules - is trying a new tack: Stop making so many, and instead put the onus on banks to create self-regulatory work environments. "Red tape is more easily hurdled than principles," says FCA boss Martin Wheatley.
- A former banker who quit because it was too boring, Steare eventually moved into executive coaching. "Banks are medieval institutions, they are not democracies," he says. "Their clients are the peasants."
Mar. 20, 2014, 5:07 PM
- Again, all 30 lenders subject to the Fed stress test passed with the exception of Zions Bancorp. Checking the individual results:
- Regional banks passing: BB&T Corp. (BBT), Comerica (CMA), Fifth Third (FITB), Huntington (HBAN), KeyCorp (KEY), M&T (MTB), PNC, Regions (RF), SunTrust (STI), U.S. Bancorp (USB).
- Credit card lenders: American Express (AXP), Discover (see here), Capital One (COF).
- Those controlled by overseas holding companies: BBVA Compass, BMO FInancial, HSBC North America, RBS Citizens Financial, Santander Holdings USA (SAN), UnionBanCal (MTU).
- Trust banks: Bank of New York (BK), State Street (STT), Northern Trust (NTRS).
- TBTFs: See here.
- More on Zions (ZION): The failure likely has something to do with CDOs on its books backed by trust-preferred securities. The bank signaled earlier this year it would likely resubmit its capital plan to the Fed as the test's calculation of its capital ratio wouldn't reflect Zion's planned sale of these.
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