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.
Mar. 20, 2014, 10:35 AM
- The results of the Fed stress tests on the usual banking industry suspects are expected today, but this year's version includes 12 new companies added to last year's list of 18. Newly subjected U.S.-based lenders: DFS, NTRS, HBAN, MTB, ZION. Foreign-owned U.S. bank holding companies: BBVA Compass Bancshares, BMO Financial, HSBC N.A. Holdings, RBS Citizens Financial Group, Santander Holdings USA (SAN), UnionBanCal (MTU).
- The CCAR results - at which the Fed will give a thumbs up/thumbs down on banks' capital return plans - are due on March 26.
Mar. 14, 2014, 3:07 PM| 33 Comments
Mar. 5, 2014, 10:40 AM
- New York resident Kevin Maher files suit against the five banks who set the London gold fix each day, accusing them off price manipulation. The five: Deutsche (DB), Barclays (BCS), Scotiabank (BNS), HSBC, and SocGen (SCGLY).
- The setting of the benchmark occurs twice a day in a teleconference through something resembling open-outcry. There are, of course, a number of investigations ongoing about illegal manipulation, and an academic study has found what it deems to be good evidence of collusion in the afternoon fix.
Mar. 4, 2014, 11:08 AM
- Boston-based Charles River Associates was hired by Deutsche Bank (DB +1.7%) several months ago, reports the WSJ, to assess the extent of the bank's participation in the alleged rigging of the London gold fix.
- Gold is traded around the clock, but there is no central source for prices, and a group of five meets twice a day in London to determine a snapshot, or fix. Other than Deutsche, the others are Barclays (BCS), HSBC, Scotiabank (BNS), and SocGen (SCGLY).
- Deutsche last month announced its exit from the group, and Standard Chartered (SCBFF) reportedly is the front-runner to replace it.
- Last week: A draft research paper finds strong evidence of mischief.
Feb. 25, 2014, 8:55 AM
Feb. 24, 2014, 8:49 AM
- With HSBC the last of the major banks to report earnings, inquiring minds want to know whether the lender is feeling the pain of the selloff in emerging markets. The answer is no, according to CEO Stuart Gulliver who calls the jitters due to "specific circumstances," and not a "generalized threat."
- Nevertheless, earnings missed expectations. Among the issues:
- Costs. 40K job cuts in three years may not be enough. Excluding the money laundering charges, expenses in 2013 actually went up thanks to compliance, wages, and litigation costs.
- Bonus confusion. Winding its way around new EU bonus rules, HSBC introduces a "fixed pay allowance" and designated some of the staff "material risk takers." Referring to this new structure, Gulliver says "we would prefer not to do this."
- Complicated business. HSBC blames part of the earnings miss on one-offs like the bank levy - essentially a tax on the size of the bank's balance sheet. But good luck trying to figure out the effect - depending on which exec you talk to, the levy cost anything from $321M to "over" $450M.
- Previous earnings coverage
- Shares -3.1% premarket
Feb. 24, 2014, 4:39 AM
- HSBC's (HSBC) 2013 pretax profit rose 9% to $22.56B but fell short of consensus of $24.6B.
- Underlying revenue grew to $63.3B from $61.6B, while underlying operating costs dropped 6% to $38B.
- Q4 pretax profit fell to $3.96B from $4.43B a year earlier.
- HSBC increased its dividend to $0.49 a share from $0.45.
- However, the bank warned of "choppy markets" this year as emerging economies adjust to "changing economic circumstances and sentiment."
- Shares are -4.2% in London. (PR)
Feb. 23, 2014, 2:20 AM
- HSBC (HSBC) is set to disclose that it will pay staff bonuses of just under $4B when it releases its full-year results this week, Sky News reports.
- The amount will represent a rise from $3.69B for 2012.
- FY underlying pre-tax profits at HSBC are forecast to have increased to $22.2B from $18.8B, Standard Chartered analysts have said.
- HSBC is also expected to disclose a significant impairment charge in connection with its Mexican operations.
Feb. 16, 2014, 2:18 AM
- Bank of America (BAC) and HSBC (HSBC) have agreed to settle lawsuits that borrowers filed over force-placed property insurance that the banks required them to buy.
- However, there were no details about how much the firms will have to pay.
- The borrowers argued that BofA and HSBC agreed to deals with insurance companies and over-charged for the coverage.
- The deals come after JPMorgan agreed to pay $300M and Citigroup $110M over the same issue.
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