Daily Archives: December 16, 2015

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NEWS Layoffs Watch 2016: If You Work At A Bank, Gird Your Loins

The bankster layoffs and nickeling and diming reminds me of a Verizon commercial that I saw years ago about a boss who tries to cut back by subleasing some of his office space to a Japanese rock band. The band is called High Teen Boogie:

 

Deal Breaker:

 

According to the Financial Times, Barclays and BNP Paribas will lead the way with big cuts, the news of which they’ll put out there in the next few months. So, mark your calendars.

At Barclays, the axe will fall on March 1 when chief executive Jes Staley unveils a fresh strategy with the bank’s annual results. The announcement will include Barclays’ plans to move more quickly to shrink its investment bank, which employs about 20,000 people…BNP Paribas’s new corporate and institutional banking chief Yann Gérardin will announce a new cost cutting plan in February.

But it’s not the Brits and the French who get to have all the fun. Stateside investment banks will reportedly be doing some house cleaning of their own.

Analysts believe 2016’s misery could be more widespread than just those two banks. New regulations mean all banks must hold more equity, and that means they have to earn higher profits to keep return on equity at the levels investors demand. “I don’t think we can rule out the end of job cuts until RoEs recover to acceptable levels,” said Jon Peace, London-based banks analyst at Nomura…Mike Mayo, New York-based banking analyst at CLSA, said that even though US banks announced fewer cuts than European lenders this year, their employees are still at risk in 2016.

Swiss banks pay $130M to avoid US tax evasion charges

Chump change!

Three Swiss banks, including a unit of France’s Crédit Agricole SA, will pay a total of more than $130 million to the U.S. Justice Department to avoid possible prosecution for helping Americans evade taxes, the department said on Tuesday.

The Zurich-based unit of Crédit Agricole will pay $99.2 million, the largest share of the total penalty. The $130 million sum also includes a $24.2 million from Dreyfus Sons & Co Ltd, and $7.7 million from Baumann & Cie, Banquiers, both in Basel, Switzerland.

Spokespeople for the three banks could not be immediately reached for comment outside of Swiss business hours on Tuesday.

The banks settled under a voluntary program the Justice Department launched in 2013 to allow Swiss banks to resolve potential criminal charges by disclosing cross-border activities that helped U.S. account holders conceal assets.

Under the program, banks also must provide detailed information on the accounts of U.S. taxpayers under investigation. Banks that were already under criminal investigation were excluded from the program.

Read on.

JP Morgan Credit Default Swap Creator Blythe Masters Has Big Wall Street Suitors Lined Up Around Her Blockchain

Remember Blythe Masters?:

Masters joined the bank JP Morgan Chase in 1991 after completing a number of internships there while still a student dating back to 1987. Responsible for credit derivative products at J.P. Morgan, Masters became a managing director at 28, the youngest woman to achieve that status in the firm’s history.[6] She is widely credited with creating the modern credit default swap, a derivative used to manage credit exposure to underlying reference entities.

While we’ve had our fun with Blythe Master’s new Blockchain startup, Digital Asset Holdings, it seems like Blythe is back in the Wall Street in-crowd.

According to the NY Post, DAH is holding a funding round and some of Blythe’s old friends are lining up to write a check.

The 46-year-old finance whiz, once the most powerful woman on Wall Street, is in high-stakes negotiations with investors for a $35 million financing round at the technology startup she now heads that will value the company at $100 million, The Post has learned.

The Post is hearing that DAH wants to close the round before Christmas and that Blythe is emailing people that the round is “quite materially oversubscribed.” But while that’s usually everyday posturing, it might be true in this case because Blythe has broken out the ol’ Masters Rolodex and has had success dialing direct lines for dollars.

While the deal is still being negotiated and could fall apart, JPM is expected to lead the investment round with $7.5 million, according to four sources.
Spanish bank Santander, where Masters is a non-executive chairman, is expected to invest about $3 million. Other potential investors include Markit, Bank of America, Goldman Sachs, Morgan Stanley, Citigroup and Nasdaq.

It makes some sense that Jamie Dimon is interested in DAH, considering that he was once Masters’ mentor and that he has recently spoken glowingly (or at least the Jamie version of glowing) of the Blockchain’s possibility.

Read on.

The Guy Who Warned About Broken Libor Now Sees Fast-Money Financing as the New Risk

Financing from shadow banks is on the rise.

The cash that finances the U.S. economy is now coming from a spigot that is more prone to rapidly turning off in times of stress than the traditional banking system has been, according to the strategist who first brought attention to banks misstating key benchmark lending rates during the financial crisis in 2008.

The warning from Scott Peng, head of global portfolio solutions at Secor Asset Management in New York, comes as investors, analysts, and regulators fret about the recent selloff in the corporate bond market, which the strategist includes in his definition of the so-called “shadow banking system” of nonbank financial intermediaries. Such shadow banking includes all private-sector funding that isn’t provided by deposit-taking banks, so it encompasses bond funds as well as hedge funds, insurance companies, and pension funds, according to Peng.

While rules imposed in the wake of the financial crisis have shored up the banking system, he argues that regulators have swapped one set of systemic risks for another. World Bank data show that the percent of U.S. private-sector funding provided by banks has fallen to almost the lowest point since 1960, illustrating the growing importance of nonbank financing.

Read on.

Citigroup exec says bank’s face same disruption threat as taxis with Uber

The Australian global digital head at international banking giant Citigroup, says the disruption taking place in the financial services industry will be on par with the impact Uber and Airbnb has had on taxis and hotels.

Greg Baxter told The Australian Financial Review that the current wave of fintech disruption would lead to a new-look sector, where incumbents had been forced to innovate and take on industry-wide revenue losses of about 30 per cent drop over a decade, before things picked up again from new market opportunities.

Mr Baxter, who was formerly a partner with Booz and Company and a senior program manager at IBM, said the transformation in financial services would lead to banks being more focused on personal digital experiences for customers.

“Fifteen years is enough time to see banking fully integrated into our lives… In the same way as you use Facebook to stay in touch with people, you’ll have that same sort of integrated experience from a financial services perspective,” he said.

Read more: http://www.afr.com/technology/citigroup-exec-says-banks-face-same-disruption-threat-as-taxis-with-uber-20151211-gllm6a#ixzz3uRSBX2lN
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$2B Forex Class Settlement Between 9 Banks Gets Preliminary OK

Law360, New York (December 15, 2015, 12:45 PM ET) — A New York federal judge on Tuesday gave her preliminary signoff on a $2 billion settlement between nine banks, including JPMorgan Chase & Co. and Citigroup Inc., and investors who say they were victims of manipulation in the foreign exchange market.

JP Morgan Chase is one of nine banks included in the $2 billion forex settlement. (Credit: AP) U.S. District Judge Lorna G. Schofield said that her initial review of the settlement showed that it was up to the standards necessary to move forward, although it…

Read on.

Fannie and Freddie called upon to securitize more low-income loans

Nothing has changed…

The Federal Housing Finance Agency, conservator toFannie Mae and Freddie Mac today unveiled its “Duty to Serve” initiative.

The FHFA is seeking comments on Duty to Serve, which seeks to establish the following:

“This statute requires Fannie Mae and Freddie Mac (the Enterprises) to serve three specified underserved markets:  manufactured housing, affordable housing preservation and rural markets,” said the FHFA in a statement.

“The proposed rule would require the Enterprises to adopt plans to improve the distribution and availability of mortgage financing in a safe and sound manner for residential properties that serve very low-, low-, and moderate-income families in the three specified underserved markets.”

Read on.