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Tuesday, Dec 33:50 PMBanks about to get clarity on prop trading
Tuesday, Dec 33:50 PM| 8 Comments
- The CFTC sets a December 10 vote on the so-called Volcker rule which is supposed to ban banks from prop trading. It sounded so simple when politicians trumpeted it in 2010, but the reality of what banks do is slightly more complex and the text of the rule has mushroomed to 1K pages. GS, MS, JPM, BAC, and C, among others, will be eager to see what the regulations entail.
- Any hopes for a watering-down of the rule likely ended with JPMorgan's $6B London Whale loss.
- The SEC indicates it will act on the rule around the same time as the CFTC (3 other agencies must approve as well).
- Related ETFs: FAS, XLF, FAZ, UYG, VFH, IYF, SEF, IAI, IYG, PFI, FXO, KBWB, KCE, RWW, FINU, RYF, PSCF, FNCL, FINZ, KBWC
Wednesday, Nov 271:42 PMCCAR to be tougher in 2014, but banks in better shape too
Wednesday, Nov 271:42 PM| 1 Comment
- American Express (AXP +0.4%), Discover (DFS +0.3%), U.S. Bancorp (USB +0.2%), and Wells Fargo (WFC -0.1%) are best positioned to be allowed large capital returns (about 70%) after the Fed's early 2014 stress tests, says Credit Suisse's Moshe Orenbuch, while Ciitgroup (C +0.2%) and PNC Financial (PNC +0.9%) are likely to show the biggest improvement from last year.
- Overall, his team expects large cap bank capital returns to be 65% next year vs. about 48% in 2013. The median dividend payout ratio is expected at 22%, level with this year.
- Orenbuch notes the CCAR will be tougher this time around - notably by assuming a global, not just domestic meltdown, and assuming a significant reversal in the property market - with commercial real estate exposure particularly harshly judged.
- Balanced against that and likely winning, however, are far stronger capital positions of the banks, says Orenbuch.
- Financial and banking ETFs: FAS, XLF, FAZ, UYG, KRE, KBE, VFH, IYF, IPF, SEF, IAI, IAT, IYG, FXO, PFI, IXG, KBWB, RKH, QABA, KCE, FINU, RWW, KRU, RYF, KBWR, AXFN, PSCF, KRS, FNCL, FINZ, KBWX, KBWC
Wednesday, Nov 279:22 AMAdditional legal tab for banks could exceed $100B
Wednesday, Nov 279:22 AM| 7 Comments
- "Mortgage-related litigation has recently gotten a second wind and has expanded beyond investor claims,” says S&P, now estimating legal tab for U.S. banks could be another $56.5B-$104B. The good news is banks have gotten ahead of even these crazy numbers by boosting litigation reserves to nearly $155B.
- The bad news would be if Bank of America's (BAC) $8.5B mortgage settlement with private parties gets tossed out by a federal judge (see Article 77 hearing coverage), the litigation losses could "escalate significantly ... the ability of US banks with the largest exposures to withstand additional expenses is not unlimited.”
- C, WFC, MS, JPM, and GS declined to comment for the story.
- From the Department of Legal Issues Are Going Nowhere: The Federal Home Loan Bank of Pittsburgh - claiming its losses of more than $1B are not covered by the JPMorgan global settlement - asks a judge to force JPM to turn over the draft complain from the DOJ which includes the name of a bank employee described as a cooperating witness for the government.
- Related ETFs: FAS, XLF, FAZ, UYG, VFH, IYF, SEF, IAI, IYG, FXO, PFI, KBWB, KCE, FINU, RWW, RYF, PSCF, FNCL, FINZ, KBWC
Monday, Nov 1811:56 AMXLF back to pre-Lehman level
Monday, Nov 1811:56 AM| 8 Comments
- Led by a big move in the TBTFs, the Financial Sector SPDR (XLF +0.6%) hits its highest level since September 2008, though it remains far below the mid-2007 peak.
- Has the easy money been made? Drexel Hamilton's David Hilder notes Bank of America (BAC +1.5%), Citigroup (C +1.8%), and Morgan Stanley (MS +1.2%) all traded well below tangible book value one year ago, and Raymond James' Anthony Polini thinks the 10-year Treasury yield will have to move above 3% and stay there before you'll begin seeing earnings estimates ratcheted up.
- Bank of America hit its highest level in nearly 3 year today and JPMorgan (JPM +1.7%) - for all of its legal troubles - is only about 2% below prices not seen since 2000.
- The relatively clean Wells Fargo (WFC +0.3%) is the group laggard this session.
- Financial sector ETFs: FAS, XLF, FAZ, UYG, KRE, KBE, VFH, IYF, SEF, IAT, IAI, IYG, FXO, PFI, KBWB, RKH, QABA, KCE, RWW, FINU, RYF, KRU, KBWR, PSCF, KRS, FINZ, FNCL, KBWC
Monday, Nov 184:30 AMFed mulls delay to Volcker rule
Monday, Nov 184:30 AM| 6 Comments
- 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
Thursday, Nov 1411:57 AMKBW: Global banks face additional $100B legal tab
Thursday, Nov 1411:57 AM| Comment!
- Litigation has cost global investment banks $44B since the start of last year and $13.8B alone in the last quarter, says the team at KBW, and the civil claims could drag on for another decade and cost another $100B. The probes into interest rate and foreign exchange manipulation are likely to sum to the area of $72B, and still un-resolved mortgage issues could add another $24B.
- As loud as that $100B sounds, it would be a notable slow-down from the run rate of the past 22 months, says KBW's Andrew Stimpson, who adds litigation costs are now "part of the fabric of investment banking costs."
- Everybody's favorite legal target, JPMorgan (JPM) is KBW's favorite bank pick as it looks to start 2014 "with a cleaner slate" than its peers (SocGen SCGLY is also a top pick).
- Related ETFs: IAI, KCE, KBWC
Monday, Sep 162:18 PMBofA and others easily pass stress tests
Monday, Sep 162:18 PM| 6 Comments
- Bank of America's (BAC +0.7%) Tier 1 common capital ratio would remain above the regulatory minimum, falling to 9.2% by mid-2015 in the "severely adverse scenario" of its self-administered stress test, which - like Citigroup and Goldman - models for a number of Armageddon-like scenarios with the exception of one: sharply higher interest rates. Is the Fed really that omnipotent?
- The Fed's own stress test results - the CCARs - are due in March of next year.
- BofA's Mid-Cycle Stress Test Results.
- Earlier: Citigroup and Goldman.
- More: Keycorp (KEY) says it will come in at 10%, Capital One (COF) at 12.5%.
- 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.
Friday, Jul 132012, 2:32 PMJPMorgan (JPM +5.4%) CIO Risk Manager Irvin Goldman has resigned in response to major trading losses and a criminal investigation. Bank stocks continue to shoot higher (XLF +2.4%), as the Street gives a thumbs-up to JPMorgan and Wells Fargo's (WFC +3.1%) Q2 reports (I, II). (more on JPM) |Friday, Jul 132012, 2:32 PM| 9 Comments
Monday, Jan 232012, 3:06 AMFrance and Germany will reportedly call today for a relaxation of global bank capital rules to ensure lending isn't choked off. The countries will urge special treatment for banks that own insurance companies, and call for a three-year delay to the mandatory deadline to disclose leverage ratios. |Monday, Jan 232012, 3:06 AM| 6 Comments
Thursday, Jan 192012, 9:40 AMDefining overbought as being more than 5% above a 50-day moving average, Bespoke says 24% of tracked ETFs fit the bill. Leading the list is the homebuilders (XHB), more than 13% above its 50 day MA; Brazil (EWZ) leads the country ETFs, 8.2% above. A few more days of market gains and look for talk about the entire market being overbought. |Thursday, Jan 192012, 9:40 AM| Comment!
Thursday, Dec 152011, 3:20 AMA new study suggests European banks will need to raise nearly €200B in new capital, or cut their balance sheets by nearly 20%, in order to meet Basel III requirements that start taking effect in 2013. With credit markets increasingly tight, this will be no small feat. (U.S. and Asia banks face a collective shortfall of less than €70B.) |Thursday, Dec 152011, 3:20 AM| 3 Comments
Thursday, Oct 62011, 10:30 AMProfessional bear Bill Fleckenstein turns bullish on banks. "I'm going to risk looking really stupid. I think the drama in the U.S. banks is overdone .. Lots of people who didn't see 2008 coming are now sure they will see a replay. If the ECB starts to print finally, we will see an absolutely hellacious rally." |Thursday, Oct 62011, 10:30 AM| 3 Comments
Tuesday, Aug 92011, 11:35 AMThe market's plunge is disrupting what's been a very strong year for financial dealmaking. In addition to postponed IPOs, M&A deals such as Cooper Industries' (CBE) acquisition of Laird (LARRF.PK) have been put on hold. With trading revenues having already crashed, reduced deal activity is the last thing major Wall Street banks need to see. |Tuesday, Aug 92011, 11:35 AM| Comment!
Tuesday, Aug 92011, 5:56 AMMarket turmoil is hitting investment banking activity. Cornerstone OnDemand (CSOD) withdrew its Goldman (GS) led secondary offering, despite reporting 90% bookings growth in Q2. IPOs are off the table. But i-banks and broker dealers (IAI, KCE) can still benefit from heavy trading. |Tuesday, Aug 92011, 5:56 AM| Comment!
Monday, Aug 12011, 4:49 AMMajor European hedge fund Lansdowne Partners has reportedly sold its entire $850M stake in Goldman Sachs (GS), underlining concerns about banking prospects due to regulatory changes. The divestiture has echoes of Lansdowne's exit from the industry in 2008, ahead of the financial crisis. |Monday, Aug 12011, 4:49 AM| Comment!
Tuesday, Jun 142011, 10:57 AMThe FDIC approves subjecting big banks to the same minimum capital standards as community banks, doing away with big banks' ability to substitute "internal management assumptions" about how much capital they need around. It won't require new capital, Sheila Bair says, but will act as insurance "when the crisis is forgotten" that levels will be safe. |Tuesday, Jun 142011, 10:57 AM| 1 Comment