New York Times (August 7)
The “government rescue of one of Portugal’s largest lenders” is another example of “regulatory failure.” Banco Espírito Santo had succeeded in a system that made “it easy for banks to look good and hide their problems.” As the European Central Bank (ECB) moves to assume supervision for some of Europe’s largest banks later this year, it will have to show that it really is serious. “Europe’s economy will not recover until its banking system is truly healthy.”
Tags: Banco Espírito Santo, Banks, ECB, Economy, Europe, Government, Lenders, Portugal, Recover, Regulatory failure, Rescue
Financial Times (July 8)
“Japan has too many banks in the same way as it has too many manufacturers of televisions, fridges and microwave ovens. Yet while chronic oversupply has been one of the main forces depressing prices for consumer electronics over the past couple of decades, the influence of the merger-wary banks has been–arguably–more malign.” It would benefit everyone if the reluctant banks were to “find a partner, and get on with it.”
Wall Street Journal (June 6)
Mario Draghi is again being pressed “to rescue Europe’s politicians from their own economic failures. If only the politicians would give him pro-growth economic reform in return for all of his monetary exertions.” Under Draghi’s leadership, the EU Central Bank taken additional measures to stimulate the economy, including charging banks interest on funds deposited with the central bank, in the hope that bankers will be more inclined to lend their funds to businesses and individuals.
Tags: Banks, Draghi, Economy, EU Central Bank, Europe, Failures, Growth, Interest, Lending, Monetary stimulus, Politicians, Reform
Euromoney (May Issue)
Trading in fixed income, currencies and commodities (FICC) is being transformed in a manner that’s benefiting investors and putting the squeeze on many big banks. “The move to electronic trading is accelerating; margins are getting tighter (no sign of oligopolistic pricing here), as competition and transparency grows, and the costs of maintaining a leading tech platform, once built, never go away.”
Tags: Banks, Commodities, Competition, Currencies, Fixed income, Investors, Margins, Oligopolistic pricing, Tech platform, Trading, Transparency
Institutional Investor (April 24)
To strengthen their balance sheets, large banks (including Deutsche Bank, Royal Bank of Scotland, UBS, Morgan Stanley, JPMorgan Chase and Barclays) have been reducing their commodities businesses, mainly through sales to independent trading companies. With these sales “to smaller players, conflicts of interest remain a potential problem” and nobody’s sure whether new problems will accompany this major shift. Given the skinnier balance sheets of the new players, market liquidity could conceivably suffer. In addition, “concerns abound that the underlying problems that have traditionally beset the commodities markets are simply being pushed onto a new and less tightly regulated set of actors.”
Tags: Balance sheets, Banks, Barclays, Commodities, Conflicts of interest, Deutsche Bank, JPMorgan Chase, Liquidity, Morgan Stanley, Regulated, Royal Bank of Scotland, Shift, Trading, UBS
Euromoney (April Issue)
“There is a strong feeling abroad that Europe is making good progress on the road to banking union, with a credible regulator in the European Central Bank soon subjecting banks to uniform regulation and chipping away at some of the fudges on asset quality that national regulators have previously winked at.”
Tags: Asset quality, Banking union, Banks, ECB, Europe, Feeling, Progress, Regulation, Regulator
Euromoney (February Issue)
Asia “is seen as the growth engine for private banks, but it is not without its trials.” As regulation increases, costs rise and competition heats up, industry “consolidation among private banks in the region is inevitable.”
Tags: Asia, Banks, Competition, Consolidation, Costs, Growth engine, Industry, Private banks, Regulation
Financial Times (January 14, 2014)
“One trend that is prompting parts of Japan Inc to shop abroad is the ageing population. Japanese banks and insurers, for example, are increasingly looking to the younger demographics of southeast Asia to build up their next generation of depositors and policy holders.” And while this was part of the rationale behind Suntory’s acquisition of Beam, a new overseas M&A boom is unlikely given the weak yen, especially as many “companies remain unwilling to borrow for expansion after years of cutting costs and hoarding cash.”
Tags: Acquisition, Ageing, Banks, Beam, Cutting costs, Demographics, Depositors, Expansion, Hoarding cash, Insurers, Japan, M&A boom, Overseas, Policy holders, Population, Southeast Asia, Suntory, Yen
Time (December 30, 2013)
“Despite the hoopla over the approval of the Volcker rule, which restricts banks from making certain types of speculative investments, our financial system isn’t much safer than it was before 2008…. Banks used to be the servants of American business. Now they are its masters.”
Tags: Banks, Business, Financial system, Investment, Safety, Speculation, U.S., Volcker rule
The Economist (August 24)
Since the U.S. Federal Reserve intimated that it would begin tapering its quantitative easing program in 2013, “there has been a great sucking of funds from emerging markets. Currencies and shares have tumbled, from Brazil to Indonesia, but one country has been particularly badly hit.” India is looking less like “an economic miracle” and more like a country teetering on the verge of a full-blown crisis. “The rupee has tumbled by 13% in three months. The stockmarket is down by a quarter in dollar terms. Borrowing rates are at levels last seen after Lehman Brothers’ demise. Bank shares have sunk.”
Tags: Banks, Brazil, Crisis, Currencies, Emerging markets, Fed, India, Indonesia, Lehman Brothers, Miracle, Quantitative easing, Rupee, Shares, Stockmarket, Tapering, U.S.