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☆ US bank preferred capital issuance makes a tentative comeback
▼ + stars: | 2023-07-28 | by ( Shankar Ramakrishnan | ) www.reuters.com time to read: +4 min

So-called preferred securities, which are one of the riskiest forms of debt but also have some characteristics of stocks, are popular among banks as a way to boost their capital for regulatory purposes. More than $160 billion of preferreds were issued in 2020 and 2021 each, when rates were low. Volume dropped last year to $70 billion as the U.S. Federal Reserve embarked on an interest rate hiking cycle. When Wells Fargo & Co (WFC.N) issued a new public preferred security earlier this month, investor demand far outweighed supply. The $1.725 billion deal received orders of over $6 billion, bringing total issuance for the year to $37 billion.

Persons: preferreds, Wells, ”, Daniel Botoff, Allie Quine, Cohen, Steers, Quine, WELLS, Wells Fargo, RBC's Botoff, Shankar Ramakrishnan, Paritosh Bansal, Matthew Lewis Organizations: U.S . Federal Reserve, Credit Suisse, UBS Group, Wells Fargo & Co, Treasury, RBC Capital Markets, Informa Global, Thomson Locations: U.S, preferreds, New York

☆ U.S. banks point to resilient but slowing economy, flag risks ahead
▼ + stars: | 2023-07-14 | by ( ) www.reuters.com time to read: +3 min

U.S. consumers still have a healthy balance sheet, the banks said, but warned spending was slowing and there had been a modest deterioration in some consumer debt. "The U.S. economy continues to be resilient," JPMorgan Chief Executive Jamie Dimon said. Investors have worried that high interest rates could push the economy into a recession, but the outlook remains uncertain. Wells CEO Charlie Scharf said the range of scenarios for the economy should narrow over the next few quarters. For now, the economy is performing better than many expected but will likely continue slowing.

Persons: JPMorgan Chase, Wells Fargo WFC.N, Wells, Jamie Dimon, Jeremy Barnum, Charlie Scharf, Larry Fink, Wells Fargo, Scharf, Morgan Stanley, Goldman Sachs, Niket Nishant, Noor Zainab Hussain, Mehnaz Yasmin, Manya, Nupur Anand, Saeed Azhar, Megan Davies, Paritosh Bansal, Nick Zieminski Organizations: JPMorgan, Citigroup, Citi, Federal Reserve, CNBC, Wells, Bank of America, Manya Saini, Thomson Locations: Wells, U.S, Bengaluru, New York

In recent weeks, banks have stepped up efforts to prevent such losses, according to commercial real estate (CRE) analysts and industry data. The 23 largest U.S. banks held 20% of office and downtown retail CRE loans, according to the U.S. Federal Reserve. Small banks also have high exposure to CRE loans as a percentage of their assets. About $2.1 billion of office loans pooled in CMBS matured in May, almost double the total amount from January through April, for example. If borrowers agreed to loan extensions, some $10.8 billion of office loans maturing this year would be pushed to later years, Moody's said.

Persons: Shaishav Agarwal, Agarwal, Steve Jellinek, Moody's, Kevin Fagan, Fagan, ” Fagan, Eliasaf, ”, Banks, Shankar Ramakrishnan, Matt Tracy, Paritosh Bansal, Nick Zieminski Organizations: U.S, Deutsche Bank, U.S . Federal, Manhattan, Northwind, Thomson Locations: York

☆ Focus: UBS goes on hiring spree for wealth managers catering to rich Americans
▼ + stars: | 2023-07-03 | by ( Tatiana Bautzer | ) www.reuters.com time to read: +4 min

Of those, 30 came after the Credit Suisse deal was announced in March. With the Credit Suisse deal, UBS became the world's second-largest wealth manager. “The U.S. is the largest wealth market globally, and in recent years there has been unprecedented growth," Iqbal Khan, UBS' president of global wealth management, told Reuters. Reuters GraphicsUBS' ranks of financial advisers in the U.S. have swelled by more than 25% in the last three years. “Over the next 20 years, we'll see the greatest transfer of wealth in history," said Khan, who joined UBS from Credit Suisse in 2019.

Persons: Bank of America's Merrill Lynch, Iqbal Khan, ”, Khan, Wells, John Mathews, We’ve, Johann Scholtz, we'll, Tatiana Bautzer, Paritosh Bansal, Lananh Nguyen Organizations: YORK, UBS, Credit Suisse, Bank of America's, JPMorgan Chase's, First Republic Bank, Citigroup, BG Group, Merrill, Reuters, Reuters Graphics UBS, Wealth, Thomson Locations: Wells Fargo, Europe, Asia, U.S, California, Americas, New York

Morgan Stanley co-presidents Ted Pick and Andy Saperstein are widely viewed as the front-runners for the top job, with Pick seen as having a slight edge, the person said. A Morgan Stanley spokesperson declined to comment, as did Gorman, Pick, Saperstein and Simkowitz when contacted directly. SUCCESSION PLANNINGSince taking the helm, Australian-born Gorman, 64, has transformed Morgan Stanley through a series of major deals into a wealth management powerhouse that aims to manage $10 trillion in assets. Pick, 54, heads Morgan Stanley's institutional securities group, overseeing areas including investment banking, equities and fixed income. Saperstein, 56, is in charge of the wealth management unit that has bolstered Morgan Stanley's profits in recent years.

Persons: Morgan Stanley's, James Gorman's, Gorman, Morgan Stanley, Ted Pick, Andy Saperstein, Pick, Dan Simkowitz, Morgan, Merrill Lynch, You've, you've, Peter Orszag, Kenneth Jacobs, JPMorgan Chase, Jamie Dimon, Brian Moynihan, Lananh Nguyen, Paritosh Bansal, Megan Davies, Jamie Freed Organizations: YORK, U.S . Securities, Exchange Commission, U.S, Attorney's, Southern, of, McKinsey, White House, JPMorgan, Bank of America, Thomson Locations: London, New York, of New York, Australian

Some billionaires rocketed into space as Branson and Amazon founder Jeff Bezos have. Other rich travelers journeyed on a submersible to explore the wreckage of the ocean liner Titanic. For $250,000 to $300,000 a trip, Kent sometimes fields unusual requests including helping a Saudi prince fulfill his dream of flying a plane onto and off of an aircraft carrier. The experience was so demanding that Ackman's father expressed concern about the intended trip, not for his son but for another fund manager who had signed up to go. One person familiar with that excursion said it probably wouldn't happen again, in part because it was such a potentially risky undertaking.

Persons: Eric Gaillard, Richard Branson, Branson, Jeff Bezos, ”, Alexandre Cymbalista, Geoffrey Kent, Kent, Goldman Sachs, Monica Heslington, Goldman, Melissa Biggs Bradley, Massimo Bottura, Bill Ackman, Whitney Tilson, Tilson, Ackman, Svea Herbst, Bayliss, Tatiana Bautzer, Julia Harte, Nupur Anand, Paritosh Bansal, Anna Driver Organizations: REUTERS, Twitter, Virgin Galactic, Virgin Group, Amazon, Wall Street, Abercrombie, Kent, Credit Suisse, SPECIAL, Goldman, Art Basel, Rubell Museum, Bank of America, Indagare, Ferrari, Navy, Svea, Thomson Locations: Nice, France, New York City, Branson, safaris, Botswana, Kent, Saudi, Africa, Miami, Art Basel, Modena, Italian, Mongolia, California

☆ Nasdaq expects expanded markets to justify $10.5 bln Adenza merger price tag
▼ + stars: | 2023-06-22 | by ( John Mccrank | ) www.reuters.com time to read: +5 min

By one metric, Nasdaq paid around what Thoma Bravo spent on creating Adenza through the merger of two software firms, the sources familiar with the deal said. Nasdaq also hopes to cut overlapping costs, which would boost profitability and make the deal look cheaper, one of the sources said. With Adenza, Nasdaq's recurring revenues, which investors like for their predictability, will comprise around 77% of overall revenues, up from 71%. A director at one of Nasdaq's largest shareholders, whose firm supports the Adenza deal, said there were few good companies left that could be synergistic to Nasdaq. One of the sources said once Nasdaq also cuts out costs, the multiple will be closer to the mid-20s.

Persons: Thoma, Adena, Thoma Bravo, Friedman, Rosenblatt, Andrew Bond, Adena's, she's, Bond, Morningstar, Michael Miller, pushback, Adenza, Verafin, John McCrank, Paritosh Bansal, David Gregorio Our Organizations: YORK, Nasdaq, Thoma Bravo, Adenza, Rosenblatt Securities, BBB, Adenza's, Thomson Locations: United States, Europe, Adenza

As of end-March, the three banks had total credit exposure of about $64 billion to China, or roughly 1% of their total assets, according to their financial statements. The FSA's request to look into China-related geopolitical risk was made in May, said two other sources. At a meeting last month, one of the banks was asked by the FSA how it is assessing risk related to China operations, one of them said. China claims democratically governed Taiwan as its territory and has never renounced the use of force to bring it under its control. Dealing with China sanctions would be extremely complex, the executive added.

Persons: Banks, SMFG, Antony Blinken, Wang Yi, Takaya Yamaguchi, Makiko Yamazaki, Sumeet Chatterjee, Jamie Freed Organizations: Financial Services, Mitsubishi UFJ Financial, Sumitomo Mitsui Financial Group, Mizuho Financial Group, Mizuho, American Chamber of Commerce, Reuters, Thomson Locations: China, TOKYO, Ukraine, Russia, United States, China . U.S, Beijing, West, Taiwan, U.S, Tokyo, New York

☆ In the Market: For firms, China policy semantics are not the point
▼ + stars: | 2023-06-12 | by ( Paritosh Bansal | Thomson Reuters | Paritosh Oversees The Work Of More Than Journalists Across The Globe Who Write About Finance | ) www.reuters.com time to read: +6 min

June 12 (Reuters) - 'De-risk, not decouple' are the new buzzwords for Western policy toward China, drawing skepticism from Beijing about whether there is any difference between the two. Whether that involves a complete separation or something short of that depends on the business and its direct and indirect exposure to China, the executives said. So while Sequoia took the route of separation, many other major business executives have traveled to China in recent weeks to meet staff, clients and officials. SMALL YARD, TALL FENCEWashington is putting export controls on sensitive technologies and encouraging Western companies to reassess supply chains. The financial firm's CEO said there had not been enough focus on the costs of the new policy.

Persons: ”, Henrietta Fore, “, Sequoia, Jamie Dimon, Jane Fraser, Tesla's, Elon Musk, he's, they'd, Paritosh Bansal, Anna Driver Organizations: UNICEF, Sequoia, JPMorgan's, chipmaker Micron Technology, Companies, Thomson Locations: China, Beijing, Russia, Taiwan, U.S, Washington

☆ In the Market: Amid the calm, the Fed brews the next storm
▼ + stars: | 2023-05-29 | by ( Paritosh Bansal | ) www.reuters.com time to read: +4 min

Earlier this month, Chairman Jay Powell said the Fed's monetary policy and financial stability tools were "working well together," allowing it to support banks and pursue price stability. But several people in the market believe not only is the regional banking sector still under stress, multiple other risks to financial stability also remain. Tighter monetary policy could well cause them to blow up or worsen the impact of other shocks, such as debt ceiling negotiations. "The Fed has no desire to conduct monetary policy through financial crises," said Wendy Edelberg, director of The Hamilton Project at the Brookings Institution. In its most recent financial stability report earlier this month, the Fed listed several areas of concern, including life insurance and some types of bond and loan funds.

May 28 (Reuters) - Good news of a tentative deal for the U.S. debt ceiling impasse may quickly turn out to be bad news for financial markets. "That's where the debt ceiling matters." In that case, "the impact on broader financial markets would likely be relatively muted," Daniel Krieter, director of fixed income strategy, BMO Capital Markets, said in a report. Some bankers said they fear financial markets may not have accounted for the risk of a liquidity drain from banks' reserves. Bankers put it to hope that the debt ceiling impasse would be resolved without significant dislocation to markets, but warn that's a risky strategy.

Deutsche swapped billions of euros in securities for cash and government bonds, the sources told Reuters, which count towards its liquidity coverage ratio (LCR). This is meant to determine the extent of a bank's access to ready cash to fund outflows such as depositor withdrawals. The trades caught the attention of European Central Bank (ECB) supervisors, who questioned Germany's largest lender about them during routine exchanges, the sources said. Even without the trades, Deutsche would have far exceeded a 100% LCR regulatory requirement and overshot its own target, the sources said, adding that its liquidity is not a concern. Deutsche's trades helped it raise its LCR to 143% at March 31, its first-quarter earnings report published in April showed.

Shareholders of Credit Suisse and UBS were not granted a vote on the deal that was sealed over one weekend in March. Officials for QIA, UBS, the Swiss finance ministry and Credit Suisse declined to comment. QIA's investment in Credit Suisse dates back to the global financial crisis of 2008. The sovereign wealth fund had increased its stake in Credit Suisse to just under 7%, only trailing largest shareholder Saudi National Bank's roughly 10% stake, according to a January filing. Among them, Middle Eastern backers which own more than 20% of Credit Suisse face the largest hit.

☆ Credit Suisse faces restrictions on business till deal closure
▼ + stars: | 2023-05-17 | by ( ) www.reuters.com time to read: +1 min

May 16 (Reuters) - Credit Suisse Group AG faces certain restrictions in its ability to do business until its acquisition by rival UBS Group AG (UBSG.S) is completed, according to a regulatory filing on Tuesday. In certain cases, without prior UBS approval, Credit Suisse cannot grant a new credit facility or credit line in an amount exceeding 100 million Swiss francs ($113 million) to investment grade borrowers or more than 50 million francs to non-investment grade borrowers, the filing showed. In addition, Credit Suisse cannot undertake any capital expenditure of more than 10 million francs or enter into certain contracts worth more than 3 million francs per year. The filing also showed Credit Suisse cannot order any "material amendments" to its employee terms and conditions, including remuneration and pension entitlements, while the merger is underway. UBS estimated a "negative goodwill" of $34.8 billion from its acquisition of Credit Suisse.

☆ In the Market: Why US regional banks are doomed to a doom loop
▼ + stars: | 2023-05-15 | by ( Paritosh Bansal | ) www.reuters.com time to read: +4 min

REUTERS/Brian SnyderMay 15 (Reuters) - Banking regulators have been pushed by market volatility in recent weeks into doing things that they haven't really wanted to do, like letting the largest U.S. bank get even bigger. Take the case of the Federal Deposit Insurance Corp (FDIC), one of the main banking regulators. These banks provide credit to vast sections of the U.S. economy, and deposit flight has forced them to pull back on lending. They have provided banks with lifelines that give them enough cash to meet deposit withdrawals, for example. Treasury Secretary Janet Yellen said on Saturday that nearly all banks had access to sufficient liquidity but pressure on earnings may lead to some midsize bank deals.

The deal talks went down to the wire, according to two sources familiar with the situation. Four bidders, including JPMorgan, made it to the final rounds of the auction on Sunday night, one of the sources said. The final deal, announced around 3:30 a.m., cements Dimon's reputation as one of Wall Street's most powerful bankers. JPMorgan started a process internally, which looked at various options for First Republic, including an acquisition, according to a source familiar with the matter. The auction dragged out through the night as the FDIC's advisors examined each bid on its merits, a source familiar with the matter said.

NEW YORK, April 30 (Reuters) - PNC Financial Services Group (PNC.N) and JPMorgan Chase & Co (JPM.N) were among banks set to submit final bids for First Republic Bank (FRC.N) by midday Sunday in an auction being run by U.S. regulators, sources familiar with the matter said. Citizens Financial Group Inc (CFG.N) was another bidder in the final phase of the process, according to one of the sources familiar with the matter. Guggenheim Securities is advising the FDIC, two sources familiar with the matter said on Saturday. Citizens Financial Group Inc (CFG.N) was another bidder vying for the bank, according to sources familiar with the matter on Saturday. But fearing further bank runs, regulators took the exceptional step of insuring all deposits at both Silicon Valley Bank and Signature.

NEW YORK, April 30 (Reuters) - PNC Financial Services Group (PNC.N) and JPMorgan Chase & Co (JPM.N) were among banks set to submit final bids for First Republic Bank (FRC.N) by midday Sunday in an auction being run by U.S. regulators, sources familiar with the matter. FDIC was not immediately available for comment. The banks declined to comment. Citizens Financial Group Inc (CFG.N) was another bidder vying for the bank, according to sources familiar with the matter on Saturday. Reporting by Chris Prentice and Nupur Anand, writing by Megan Davies; Editing by Paritosh BansalOur Standards: The Thomson Reuters Trust Principles.

Guggenheim Securities is advising the U.S. Federal Deposit Insurance Corp (FDIC) on the sale process, two sources familiar with the matter said. The process kicked off this week after First Republic, which got swept up in a banking crisis last month, failed to come up with a deal without government help, three of the sources familiar with the situation said. A deal for First Republic would come less then two months after Silicon Valley Bank and Signature Bank failed amid a deposit flight from U.S. lenders, forcing the Federal Reserve to step in with emergency measures to calm markets. A sale would bring to an end a weeks-long effort by First Republic to survive the market rout. When that deal failed to stabilize First Republic, the lender, known best for its rich clientele, tried to find other private-sector solutions.

☆ Exclusive: US regulators worried about uninsured deposits before March crisis
▼ + stars: | 2023-04-27 | by ( Douglas Gillison | ) www.reuters.com time to read: +3 min

Officials had yet to do the same for regional banks, some of which had grown to considerable size and complexity, said Gruenberg. One member, Timothy Mayopoulos, who within months would quickly be named chief executive of Silicon Valley Bank after it failed in March, queried regulators about dealing with regional banks' high proportion of uninsured deposits. Banking regulators have come under criticism since March for failing to stave off the crisis triggered by a run on Silicon Valley Bank, most of whose deposit base was uninsured. The Fed and FDIC are expected to release reports on Friday on their supervision of Silicon Valley and Signature Bank. The meeting was the first since the creation of the panel more than a decade ago to consider policy responses to failures in the middle-tier of large financial institutions.

"Weakness continues to develop in commercial real estate office," Wells Fargo Chief Executive Charlie Scharf said on a call with analysts. Stress in the commercial real estate sector could have broad implications for banks and the economy, as losses emanating there can tighten credit availability and exacerbate a downturn. More than $1.4 trillion in U.S. CRE loans will mature by 2027, with some $270 billion coming due this year, according to real estate data provider Trepp. As the epicenter for the technology industry downturn, California's CRE market has been hit hard. Citigroup and Wells Fargo declined to comment for this article.

☆ Analysis: Heroes or villains: Short sellers' role in the U.S. bank crisis
▼ + stars: | 2023-04-09 | by ( Lawrence Delevingne | ) www.reuters.com time to read: +7 min

How much short sellers contributed to the downward spiral reprises the debate about whether so-called shorts are market watchdogs or opportunistic investors who profit from others’ misery. In the case of the banking crisis, a review of data and interviews with short sellers and their critics show, the answer may be both. Some high profile short sellers were later celebrated as making prophetic calls about the U.S. housing market. Even so, interviews and public postings show at least some short sellers had placed bets against regional banks well before the crisis hit. SHORT POSITIONSSuch early short sellers, however, were in the small minority.

WASHINGTON/NEW YORK, March 25 (Reuters) - The banking crisis set off by the swift collapse of Silicon Valley Bank (SIVB.O) has exposed a sharp disconnect between Washington and Wall Street. Some critics are asking whether the Biden administration could have contained the crisis with aggressive actions at the start. FINDING A BUYER FOR SVBThe failure of the nation's 16th largest bank caught regulators off guard. The banking industry itself is not united on how to reassure depositors. The banking industry is searching for sweeping relief to calm markets, while Washington is discussing how to prevent the next crisis.

The fallout from the crisis of confidence in Credit Suisse Group AG (CSGN.S) and the failure of two U.S. banks could continue to ripple through the financial system next week, the two executives separately told Reuters on Sunday. The two banks have held their own internal deliberations on how soon the European Central Bank should weigh in to highlight banks' resilience, specifically their capital and liquidity positions, the people said. The executives said that their banks and the sector are well capitalized and liquidity is strong, but they fear that the crisis of confidence will sweep up more lenders. But it stressed it was monitoring market tensions and would respond as necessary to preserve price stability and financial stability in the currency bloc. As one of 30 global systemically important banks, Credit Suisse's problems could ripple throughout the entire financial system, industry executives have said.

FRANKFURT/LONDON, March 19 (Reuters) - Swiss authorities are examining imposing losses on Credit Suisse (CSGN.S) bondholders as part of a rescue of the bank, two sources with knowledge of the matter said on Sunday. Losses on bondholders may need to be larger if Credit Suisse were wound down rather than if it were taken over by UBS, one of the sources said. Authorities are trying to engineer a UBS takeover of Credit Suisse before financial markets reopen on Monday. A $1 billion deal would mean Credit Suisse shareholders getting a fraction of what their shares were worth on Friday. "I would be surprised if Credit Suisse bondholders, including AT1 investors, weren’t made whole.

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