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☆ 'Call of duty': With Sergio Ermotti, Switzerland gets a cost-cutting local to restore its reputation
▼ + stars: | 2023-03-29 | by ( Elliot Smith | ) www.cnbc.com time to read: +4 min

UBS announced on Wednesday that the former CEO would replace Ralph Hamers from April 5, as the Swiss bank undertakes the mammoth task of integrating fallen rival Credit Suisse into its business. Incoming UBS CEO Sergio Ermotti on Wednesday said his return to the helm was "a call of duty," as the Swiss veteran takes on the task of restoring order to the country's battered financial reputation . Kelleher emphasized that Ermotti's task — the successful integration of Credit Suisse into UBS — was "essential for both banks' clients, people and investors, for Switzerland and for the global financial system in general." Asked by CNBC during Wednesday's press conference about his motivation for returning to UBS, Ermotti said there was "a call of duty aspect" to his decision. "I'm fully aware that we need to work very hard here to avoid any consequence for the taxpayers in Switzerland.

☆ The Federal Reserve is still expected to go through with a rate hike. What that means for you
▼ + stars: | 2023-03-20 | by ( Jessica Dickler | ) www.cnbc.com time to read: +3 min

The federal funds rate, which is set by the central bank, is the interest rate at which banks borrow and lend to one another overnight. As the federal funds rate rises, the prime rate does, too, and credit card rates follow suit. After a prolonged period of rate hikes, the average credit card rate is now over 20%, on average — an all-time high — up from 16.34% one year ago. As the federal funds rate rises, the prime rate does, as well, and these rates follow suit. Federal student loans are already at 4.99%Federal student loan rates are also fixed, so most borrowers aren't immediately affected by rate hikes.

☆ Analysis: Clock ticking for loan market as Libor nears its end
▼ + stars: | 2023-02-16 | by ( John Mccrank | ) www.reuters.com time to read: +5 min

REUTERS/Dado Ruvic/IllustrationNEW YORK, Feb 16 (Reuters) - It's crunch time for the corporate loan market. "The shot clock is on," said Tal Reback, who leads KKR's global Libor transition efforts. The Libor transition began in 2017 and had been smooth until 2022, when rising interest rates, decades-high inflation, Russia's war on Ukraine and recessionary fears rocked markets. "The new issue market shut down," said Ian Walker, head of legal innovation at financial information provider Covenant Review. Libor was phased out for new contracts at the end of 2021, though most existing U.S. dollar-denominated contracts have until June 30 to switch.

☆ Here's what the Federal Reserve's 25 basis point interest rate hike means for your money
▼ + stars: | 2023-02-01 | by ( Jessica Dickler | ) www.cnbc.com time to read: +7 min

The federal funds rate, which is set by the U.S. central bank, is the interest rate at which banks borrow and lend to one another overnight. "Credit card interest rates are already as high as they've been in decades," said Matt Schulz, chief credit analyst at LendingTree. As the federal funds rate rises, the prime rate does, as well, and your credit card rate follows suit within one or two billing cycles. "A 0% balance transfer credit card remains one of the best weapons Americans have in the battle against credit card debt," Schulz advised. The average interest rate for a 30-year fixed-rate mortgage is now around 6.4% — up almost 3 full percentage points from 3.55% a year ago.

☆ The Federal Reserve is likely to hike interest rates again. What that means for you
▼ + stars: | 2023-01-30 | by ( Jessica Dickler | ) www.cnbc.com time to read: +5 min

What the Fed's rate hike means for youThe federal funds rate, which is set by the central bank, is the interest rate at which banks borrow and lend to one another overnight. As the federal funds rate rises, the prime rate does, too, and credit card rates follow suit. After rising at the steepest annual pace ever, the average credit card rate is now 19.9%, on average — an all-time high. Student loans Federal student loan rates are also fixed, so most borrowers won't be impacted immediately by a rate hike. Savings accounts On the upside, the interest rates on some savings accounts are higher after a run of rate hikes.

☆ Exonerated Deutsche Bank trader accuses bank of 'malicious prosecution'
▼ + stars: | 2023-01-26 | by ( Jonathan Stempel | ) www.reuters.com time to read: +2 min

Gavin Black, who worked on the bank's money market and derivatives desk in London, said Deutsche Bank and others conspired to commit "malicious prosecution and abuse of process," leading to his unjustified conviction. Deutsche Bank did not immediately respond to requests for comment. The legal action came two months after Matthew Connolly, who lead Deutsche Bank's pool trading desk in New York, filed a $150 million lawsuit also accusing the bank of malicious prosecution. Deutsche Bank asked a judge on Jan. 13 to dismiss Connolly's case. Investigations worldwide into Libor manipulation resulted in about $9 billion of fines for banks, including $2.5 billion for Deutsche Bank in 2015.

☆ Companies, Lenders Clash Over Loan Spreads in Switch From Libor
▼ + stars: | 2023-01-13 | by ( Mark Maurer | ) www.wsj.com time to read: +7 min

As part of the shift, companies typically propose changes to their loan agreements with lenders, adjusting for the price difference between SOFR and Libor. The adjustment of the credit spread adds basis points to the interest rate on a loan to make up for the fact that SOFR has traded lower than Libor. The difference between SOFR and Libor can be as much as 25 basis points for loans with maturities of five to seven years. There will likely be more disagreements over credit spread adjustments as companies stop using Libor prior to its end. “There’s no reason to burn bridges over a few basis points,” Mr. Kerschner said.

☆ Here’s what the Federal Reserve’s half-point rate hike means for you
▼ + stars: | 2022-12-14 | by ( Jessica Dickler | ) www.cnbc.com time to read: +5 min

watch nowWhat the federal funds rate means for youThe federal funds rate, which is set by the central bank, is the interest rate at which banks borrow and lend to one another overnight. Consumers with an adjustable-rate mortgage or home equity lines of credit may also want to switch to a fixed rate. However, the average interest rate for a 30-year fixed-rate mortgage is around 6.33% this week — up more than 3 full percentage points from 3.11% a year ago. Federal student loan rates are also fixed, so most borrowers won't be impacted immediately by a rate hike. Thanks, in part, to lower overhead expenses, the average online savings account rate is closer to 4%, much higher than the average rate from a traditional, brick-and-mortar bank.

☆ Breakingviews: Sam Bankman-Fried lacks cover of systemic risk
▼ + stars: | 2022-12-13 | by ( Antony Currie | ) www.reuters.com time to read: +4 min

MELBOURNE, Dec 13 (Reuters Breakingviews) - Sam Bankman-Fried couldn’t be blamed for mulling over past financial scandals with a degree of envy. The former boss of bankrupt crypto exchange-cum-hedge-fund FTX was arrested on Monday in the Bahamas at the request of U.S. prosecutors. No senior executives ended up facing criminal charges, or were hauled off in handcuffs even, though several Libor traders went to jail. loadingCONTEXT NEWSSam Bankman-Fried, the former chief executive of now-bankrupt crypto firm FTX, was arrested in the Bahamas on Dec. 12. The attorney general’s office for the Caribbean state said it took Bankman-Fried into custody after receiving formal confirmation of criminal charges from U.S. prosecutors.

Deutsche Bank's scapegoating ruined the reputation and career of Connolly, a married father of two, and caused the "destruction of his life," the complaint said. Investigations worldwide into Libor manipulation resulted in about $9 billion of fines for banks, including $2.5 billion for Deutsche Bank in 2015. Connolly sued Deutsche Bank four weeks after a New York judge tossed a Libor-rigging indictment against former UBS (UBSG.S) and Citigroup (C.N) trader Tom Hayes and another trader. Hayes had already served more than five years in prison in Britain for rigging Libor. The case is Connolly v. Deutsche Bank AG, U.S. District Court, Southern District of New York, No.

REUTERS/Maja Smiejkowska/File PhotoCommodity trade finance covers many types of loans, typically from banks, that facilitate global movement of goods from wheat to gasoline. Most trade finance loans are short-term, less than a year. Traders’ credit lines became strained last year when natural gas prices sky-rocketed in the fourth quarter. ‘DESIRE TO DIVERSIFY’Lending for commodity trade finance has become more diverse, with non-bank financial institutions (NBFI) stepping in. The underlying issue was the retreat of major banks from commodity financing after some 2020 defaults in the sector while Russian banks Sberbank and Gazprombank that were set to expand have now been shut out of Europe.

Commodity trade finance covers many types of loans, typically from banks, that facilitate global movement of goods from wheat to gasoline. Most trade finance loans are short-term, less than a year. The involvement of hedge funds in commodity trade finance has created a lifeline for smaller firms, deemed to be higher risk for banks due to strict capital requirements and clean energy goals. 'DESIRE TO DIVERSIFY'Lending for commodity trade finance has become more diverse, with non-bank financial institutions (NBFI) stepping in. The Swiss firm specialises in financing small to mid-sized commodity merchants and has achieved returns between 6% to 10% over the last 10 years.

☆ Businesses Rush to Sidestep Rate Shock by Paying Down Debt
▼ + stars: | 2022-11-09 | by ( Kristin Broughton | ) www.wsj.com time to read: +7 min

Executives are aggressively paying down debt as higher interest rates increase the cost associated with having debt and businesses face the prospect of a recession. As a result, some are taking steps to rein in expenses and cut interest costs, while others are looking to put cash reserves to work as their bank deposits continue to generate minimal yields. Beauty paid an annual interest rate of 4.9% on the loan, according to Mandy Fields, the company’s chief financial officer. About two-thirds of the loan carried a 5% interest rate that was fixed through a swap, which was set to expire in 2025. The two transactions reduced KAR’s annual interest costs by $70 million, to an estimated $15 million a year, Mr. Loughmiller said.

☆ Here's what the Federal Reserve's fourth 0.75 percentage point interest rate hike means for you
▼ + stars: | 2022-11-02 | by ( Jessica Dickler | ) www.cnbc.com time to read: +7 min

The Federal Reserve raised the target federal funds rate by 0.75 percentage point for the fourth time in a row on Wednesday, marking an unprecedented pace of rate hikes. The federal funds rate, which is set by the central bank, is the interest rate at which banks borrow and lend to one another overnight. As the federal funds rate rises, the prime rate does, as well, and your credit card rate follows suit within one or two billing cycles. Still, it's not the interest rate but the sticker price of the vehicle that's causing an affordability problem, McBride said. Federal student loan rates are also fixed, so most borrowers won't be impacted immediately by a rate hike.

☆ U.S. throws out Libor-rigging charges against Hayes
▼ + stars: | 2022-10-31 | by ( Reuters Staff | ) www.reuters.com time to read: +1 min

FILE PHOTO: Tom Hayes, the first former trader convicted by a jury of manipulating Libor benchmark interest rates, poses for a picture, after being released from HM Prison Ford, in Arundel, Britain January 29, 2021. REUTERS/Toby MelvilleLONDON (Reuters) - A New York judge has dismissed criminal charges against Tom Hayes, the British trader who became the face of the global Libor interest rate scandal. Hayes was released from prison in Britain in January 2021 after serving half an 11-year sentence. Hayes’ legal team is considering further legal options to clear his name, a representative for Hayes said in a statement. “The U.S. Department of Justice has seen fit to dismiss charges based on the same facts, evidence and case in law that the UK courts used to justify my 11-year prison sentence,” Hayes said.

☆ Another interest rate hike from the Federal Reserve is on the way: Here's how it may affect you
▼ + stars: | 2022-10-31 | by ( Jessica Dickler | ) www.cnbc.com time to read: +5 min

watch nowWhat a rate hike means to youThe federal funds rate, which is set by the central bank, is the interest rate at which banks borrow and lend to one another overnight. From your credit card and car loan to mortgage rate, student debt and savings, here's a breakdown of some of the major ways rate increases impact you:1. Still, it's not the interest rate but the sticker price of the vehicle that's causing an affordability crunch, McBride said. It won't budge until next summer: Congress sets the rate for federal student loans each May for the upcoming academic year based on the 10-year Treasury rate. Of course, anyone with existing education debt should see where they stand with federal student loan forgiveness.

☆ Libor demise and Brexit reshape derivatives market, says BIS
▼ + stars: | 2022-10-27 | by ( Huw Jones | ) www.reuters.com time to read: +2 min

"The most significant factor contributing to the decline in turnover is the continuing shift away from Libor for major currencies," the BIS said in its latest triennial snapshot of the global OTC interest rate derivatives market. Banks and their clients use interest rate swaps to insure themselves against unexpected moves in borrowing costs. Replacing Libor shrank turnover in forward rate agreements or FRAs, a type of derivatives contract, with turnover in dollar FRAs tumbling by 98%. BIS OTC Derivatives Graphic 1Sales desks in Britain recorded the highest turnover of interest rate derivatives, at $2.6 trillion, or 46% of global 'net-gross' turnover, down from 51% in 2019. BIS OTC Derivatives Graphic 2Reporting by Huw Jones; Editing by Toby ChopraOur Standards: The Thomson Reuters Trust Principles.

☆ FASB Extends Accounting Relief as Companies Switch From Libor
▼ + stars: | 2022-10-05 | by ( Mark Maurer | ) www.wsj.com time to read: +4 min

The Financial Accounting Standards Board allowed companies to continue ignoring certain rules around modifying loan contracts and accounting for hedges of interest-rate risks as they move away from the London interbank offered rate. Libor and other benchmarks underpin trillions of dollars of financial contracts, including corporate loans, mortgages and interest-rate derivatives. PREVIEWThe FASB initially gave companies relief in March 2020, in an effort to help them work through the large volumes of financial contracts they needed to update or renegotiate as part of their preparations to abandon Libor. U.S. banks stopped issuing new financial contracts using Libor at the end of last year. Companies are considering which version of SOFR to switch to from Libor.

☆ Here's what the Federal Reserve's third 75-basis point interest rate hike means for you
▼ + stars: | 2022-09-21 | by ( Jessica Dickler | ) www.cnbc.com time to read: +6 min

The federal funds rate, which is set by the U.S. central bank, is the interest rate at which banks borrow and lend to one another overnight. As the federal funds rate rises, the prime rate does, as well, and your credit card rate follows suit within one or two billing cycles. "A 0% balance transfer credit card may be your best weapon in the battle against credit card debt and rising interest rates," he advised. Federal student loan rates are also fixed, so most borrowers won't be impacted immediately by a rate hike. Of course, anyone with existing education debt should check whether they are eligible for federal student loan forgiveness.

☆ Another interest rate hike is coming from the Federal Reserve: Here's how it could affect you
▼ + stars: | 2022-09-19 | by ( Jessica Dickler | ) www.cnbc.com time to read: +6 min

The U.S. central bank has already raised interest rates four times this year, for a total of 2.25 percentage points. As the federal funds rate rises, the prime rate does as well, and credit card rates follow suit. Student loans The interest rate on federal student loans taken out for the 2022-2023 academic year already rose to 4.99%, up from 3.73% last year and 2.75% in 2020-2021. It won't budge until next summer: Congress sets the rate for federal student loans each May for the upcoming academic year based on the 10-year Treasury rate. Of course, anyone with existing education debt should check whether they are eligible for federal student loan forgiveness.

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