Lending Club financial innovations skipped culture 28 Jun 2016 The cratered online loan marketplace says its founder and ex-CEO inflated loan volumes on top of other failings. Only 18 months after its IPO, the supposed disruptor is retrenching. To move fast and break things is risky in finance – especially so when mixed with self-dealing.
Bank stress exams may test investor patience 28 Jun 2016 Results are due this week from the Fed on how 33 financial institutions performed in a simulated bad economic downturn. Countercyclical factors included this year could mean even banks that ace the tests will be required to keep more profit rather than pay out bigger dividends.
Sterling destined for more measured misery 27 Jun 2016 After voting to quit the EU, Britain faces an economic slowdown that will warrant more monetary easing, a pickup in inflation, and huge political uncertainty. It’s a toxic mix for any currency. Spectacular plunges in the pound will give way to steady falls to new lows.
Austerity has no place in post-Brexit Britain 27 Jun 2016 Chancellor George Osborne has since 2010 aimed to cut public debt and deficits in the name of financial stability. He may now need to row back to cope with any post-vote economic slowdown. Investors’ reaction so far suggests his fiscal rigour was over-zealous in the first place.
The City’s future is in lap of EU gods 27 Jun 2016 Britain’s Leave vote could strip so-called passporting rights from domestic banks and asset managers. One solution is to claim the UK merits equivalent status as its rules match Europe’s. But even if euro peers okay that, London will lose control over future policy-making.
Italy best to avoid sneaky bank bailout 27 Jun 2016 The chaos from Britain’s vote to leave the EU could be a prime opportunity for Italy to dodge European rules on recapitalising lenders. Yet such a move might undermine the idea that creditors not taxpayers should stomach losses, and weaken the region’s half-baked banking union.
Bank shares take a bit of a random Brexit walk 24 Jun 2016 Globally, they’re down about 8 pct. Local pain explains Lloyds and Bank of Ireland. Sovereign debt exposure is a problem for Intesa Sanpaolo and others. Santander has a Spanish election to worry about. The likes of BofA and SocGen, though, seem swept up in a sea of confusion.
UK stocks brace for self-inflicted recession 24 Jun 2016 Shares in banks and homebuilders fell sharply as investors reacted to Britain’s referendum vote. As leveraged bets on the domestic economy, the selloff reflects fears of a contraction. But at least lenders are now better equipped to deal with financial turmoil than a decade ago.
Stars may finally align against buyout-baron taxes 23 Jun 2016 A group of self-proclaimed “patriotic millionaires” wants to close a loophole that allows private-equity partners to pay lower taxes on investment profit. Clinton and Trump both back the idea, too. Though efforts in Congress have failed for years, fresh momentum is building.
Swedish solvency scuffle ominous for EU bank peers 23 Jun 2016 Sweden’s regulator has played down a report that Nordea faces a $9.8 bln capital hole. But fears of solvency standardisation still riled investors, who had assumed watchdogs were rolling over. With global standard-setters mulling “capital floors”, expect more discombobulation.
UK banks have range of Brexit shock absorbers 23 Jun 2016 British lenders can weather the storm if Britons vote to leave the EU. Banks will no doubt be hit should the economy slow. But it’s harder for them to go bust than it was in 2008. They have bigger liquidity backstops to cope with any bank run - and so does the Bank of England.
Going Dutch is the future for European brokerage 21 Jun 2016 Rabobank and Kepler Cheuvreux have agreed to let the Netherlands-based bank keep client relationships while using the French equity house’s research and sales. New European rules will make the cost of sellside analysis explicit and thus often uneconomic. Such tie-ups make sense.
AXA outsources upside to Mario Draghi 21 Jun 2016 The French insurer’s new five-year strategy expects annual earnings growth of 8 percent. If rates don’t rise, however, that will be more like 3 percent. Unless the ECB can gee up the euro zone economy, matching assets with liabilities will remain a struggle for all insurers.
Abu Dhabi bank M&A could ease state’s fiscal fix 20 Jun 2016 A union of state-held National Bank of Abu Dhabi and the smaller First Gulf Bank makes sense in an era of low oil prices. But with public spending cut 20 pct last year, Abu Dhabi could also use the cash. A value-creative merger could in due course herald a Saudi Aramco-style IPO.
Brexit is trigger for market liquidity migraine 20 Jun 2016 If asset managers are anxious before Britain’s EU vote, traders who handle their orders are just as troubled. Sterling’s 1992 ERM exit made them huge profits. In 2016, too-high volatility and growing illiquidity mean market-makers could struggle even to ensure normal service.
Pro-Brexit bankers risk repeating past errors 17 Jun 2016 The City may well suffer if Britain quits the EU, yet some financiers plan to vote Leave. Hopes the economy will flourish, as after sterling’s 1992 ERM exit, look optimistic. Betting that London can gain from a euro implosion, meanwhile, may just repeat wrong calls made pre-1999.
New U.S. exchange won’t fix unfairness in markets 16 Jun 2016 IEX is pitching a “speed bump” to level the playing field for regular players and high-frequency traders. SEC staffers want their bosses to approve the plan. But the upstart’s approach might just fuel the race for a trading edge. Retail investors could still be left behind.
Review: Blockchain hopes go well beyond finance 10 Jun 2016 The distributed-ledger concept is linked to the bitcoin cryptocurrency, and more recently potential financial uses have taken wing. A new book, “Blockchain Revolution,” explores democratic and humanitarian applications. It’s both eye-opening and, at times, a bit wide-eyed.
Bankers can learn from miners about culture change 15 Jun 2016 Rio Tinto, BHP and their peers have spent years improving their safety records. The finance industry can learn a thing or two from the way that miners have tried to clean up their act. Not least is the ambition to attain higher standards than absolutely required by the law.
Giving watchdog algorithm keys is slippery slope 14 Jun 2016 The CFTC wants to inspect source codes of trading firms without a subpoena. The U.S. agency says it’s needed for records retention. Unclear is whether the regulator can safeguard such intellectual property, and it opens the door for other officials to request similar access.