Banks

Chinese banks’ half-truths hinder mortgage fix

19 Jul 2022

Banks say homebuyers' refusal to pay instalments warrants little concern but the unfolding pain might double the underreported bad debt ratio to 3%. Coming clean on the mess in a big and traditionally safe part of the loan book is a prerequisite to stemming systemic risk.

Australian bank deal puts shareholders in suspense

18 Jul 2022

ANZ is paying $3.3 bln for insurer Suncorp’s lending business, but there are concerns. Most synergies will take years to materialise. The target’s own cost-cutting plans may warrant a higher price. And a regulatory blessing is uncertain. Signed and sealed isn’t yet delivered.

Wells Fargo battles forces it chose not to control

15 Jul 2022

Higher interest rates lifted the scandal-plagued U.S. lender’s second-quarter income. But a mortgage slowdown, private-equity losses and the cost of past bad behavior erased the benefits. Under it all is a bank worth more than the current $147 bln, but it’s still well hidden.

Capital Calls: Citi’s luck, BlackRock’s blues

15 Jul 2022

Concise views on global finance: Citigroup’s second-quarter earnings were buoyed by its focus on trade flows and helping companies. Meanwhile, the world’s largest asset manager thinks investments will shift further into bonds but that business is less lucrative.

Investment bankers wait for the axe to fall

14 Jul 2022

JPMorgan and Morgan Stanley reported big drops in deal fees, offset by trading gains. M&A won’t recover quickly, and market volatility may not last. A return to more normal levels of revenue, but with the higher profitability investors now expect, means painful trade-offs ahead.

Capital Calls: Deal gamblers miss 2020’s lesson

14 Jul 2022

Concise views on global finance: Hedge fund giant Millennium has closed a group that bets on mergers. As similarly painful times in 2020 showed, the problem isn’t returns, it’s bailing on bets too soon.

China property crisis enters dangerous next phase

14 Jul 2022

Homebuyers in 22 cities are refusing to make mortgage payments on unfinished homes. It extends the risk of defaults from offshore developer bonds to banks with $6 trln of mortgages. The fat tail risk of deleveraging the sector is emerging, and puts Beijing in a very tight spot.

Anti-woke ETFs will ape all y’all’s ESG blunders

13 Jul 2022

An exchange-traded fund called God Bless America with a slang term for “you all” as its ticker promises to avoid companies it deems too politically and or socially active. Such funds are likely to have the same blurred lines and mixed returns as their ESG nemeses.

Where banks see Goldilocks, the Fed sees wolf

13 Jul 2022

Second-quarter earnings from big U.S. lenders will show consumers spending healthily and borrowing modestly, with little sign of credit strain. That’s normally what bank investors want to see. But to rate-setters seeking to tame inflation, it’s an invitation to clamp down harder.

Spain’s ropey bank tax will have European copycats

13 Jul 2022

The country’s left-wing government is raiding banks for 1.5 bln euros a year. Taxing lenders based on their future benefits from rising interest rates represents shaky logic. But with inflation soaring across Europe, such populist measures will become more enticing.

Capital Calls: Delta’s earnings are bad and worse

13 Jul 2022

Concise views on global finance: Shares in the company fell 7% after the company missed earnings expectations. That’s bad, but worse is that its main strength – pricing power – has limits.

Wall Street hates to love watchdog Rohit Chopra

12 Jul 2022

The head of the U.S. consumer finance agency has an expansive view of his role, to the chagrin of lenders he regulates. But banks are going overboard in attacks on the CFPB’s bid to reduce discrimination and vet mergers. Chopra may be their best bet for reining in fintech rivals.

China’s rural bank scandal has $300 bln tail risk

12 Jul 2022

Authorities in Henan province will finally cover customer deposits caught up in a possible fraud tied to third-party apps. It’s a cautionary tale for the 1,600-odd village banks that lend to small businesses, are most exposed if GDP tanks, and receive less regulatory oversight.

Hong Kong banks are slow to gain from rate rises

7 Jul 2022

The Asian hub must track the Fed’s rate hikes to preserve its currency peg, but commercial lenders can’t follow so quickly. That reflects China’s weak growth and long term, the awkwardness of the 39-year-old system. Near term, it’s a profit drag for HSBC and Standard Chartered.

EU crypto rules will cheer banks and deter minnows

6 Jul 2022

Europe’s digital asset legislation set clearer guidelines on cross-border transactions. That’s good for big banks keen to mix it with the likes of Coinbase and Binance. But while those bigger crypto beasts are able to swallow higher compliance costs, smaller fry will struggle.

Henan displays China’s economic cracks all at once

6 Jul 2022

The province of 100 million is clumsily covering up economic stress. Local officials hacked Covid-19 tracking apps to conceal bank runs and silence investors even as they report rosy data. Beijing’s push to deliver 5.5% GDP growth this year implies more misdirection to come.

Capital Calls: EU bank windfalls

4 Jul 2022

Concise views on global finance: The European Central Bank is worried banks will pocket a windfall on special loans when it starts raising rates. But deciding whether the bonanza is too big is a political choice.

Cosseted bank bondholders need to feel more pain

4 Jul 2022

Credit Suisse’s repayment of a hybrid bond at its first call despite the higher cost of replacing it highlights flaws in the $212 bln market. Post-2008 reforms were meant to make such capital permanent, but lenders fear angering investors. Bank watchdogs can take a harder stance.

Barclays adds risky spice to insipid valuation

24 Jun 2022

The UK bank is scooping up specialist lender Kensington for nearly $3 bln. It’s small, and CEO C. S. Venkatakrishnan is right to try to gee up his low-valued shares with retail assets. Still, he’s also bulking up in the riskier end of the market amid a potential house price dip.

Gulf pot of gold, China’s unemployment problem

23 Jun 2022

Investment banks like HSBC and Citigroup are beefing up teams in the Middle East to rake in juicy IPO and M&A fees. In this Viewsroom podcast, Breakingviews columnists discuss why early investment is paying off. Also, the People’s Republic’s jobs crisis is likely to worsen.