Financial Industry 02 (Sep 09 - Sep 10)

[kennynah]

citibank at $4 is considered a penny stock in US context....

but i agree.. there are many of such penny stock "specialists" around...they send emailers to everyone and everyone... needless to say, they aren't to be readily trusted

[iam802]

Basel Committee Softens Bank Capital Rules, Sets Leverage Cap

http://www.bloomberg.com/news/2010-07-2 ... erage.html

The Basel Committee on Banking Supervision softened some of its proposed capital and liquidity rules while introducing new restrictions on how much lenders can borrow in order to rein in their risk-taking.

The panel agreed yesterday to allow certain assets, including minority stakes in other financial firms, to count as capital, according to a statement. The committee set a leverage ratio to apply to banks globally for the first time, which could become binding by 2018, pending further adjustments to the method of calculating banks’ assets.

“Even after all the compromises, the banks aren’t off the hook from tighter capital and liquidity rules,” said Frederick Cannon, chief equity strategist at New York-based Keefe, Bruyette & Woods.

France and Germany have led efforts to weaken rules proposed by the committee in December, concerned that their banks and economies won’t be able to bear the burden of tougher capital requirements until a recovery takes hold, according to bankers, regulators and lobbyists involved in the talks. The U.S., Switzerland and the U.K. have resisted those efforts. The announcement reflects the give and take between the two sides, said Barbara Matthews, managing director of BCM International Regulatory Analytics LLC in Washington.

.....................

So, back in December...they already know about possible issues in their banks.

Back in Dec, is also the time EUR breakdown against USD.

[winston]

Not vested. From Phillips:-


Recommendation and valuation

In all, we think domestic listed banks` profits keeping strong increase and the quality of assets continue to improve, therefore their performance would be outperforming.

CMB owns the better quality of assets, and both profits and assets of BOC maintain stronger growth than others.

The stock price of CITIC dropped mostly as 23.23% in 2010H1, but increased largely by 98.80% compared with the lowest price in 2009, which was only lower than BOC.

According to our previous annual sector report, we concerned about the banks such as BOC, CMBC, CMB and CITIC, the performance of the most banks were in line with our expectation.

Due to the decrease of prices in 2010H1, we find the valuation of domestic listed banks in HK are quite reasonable now, and considering the anticipation of stable increase of banks` profits in 2010, we still hold an optimistic view on listed banks` performance in 2010, and maintain the sector on “Outperforming” rating, especially, we pay close attention to BOC, ABC, CMB and CMBC.

[millionairemind]

Published July 29, 2010

BOA, Citi, Wells Fargo outlook now negative

Downgrade due to lesser govt support for banks: Moody's

(NEW YORK) Moody's Investors Service on Tuesday changed its outlook on Bank of America (BOA), Citigroup and Wells Fargo to negative, from stable, citing lessened government support for the institutions under new US regulations.

A negative outlook indicates the banks are more likely to be downgraded over the next 12 to 18 months. The credit-ratings agency also said it may cut its ratings on 10 regional banks on reduced government support.

Moody's has boosted its debt and bank deposit ratings on large financial institutions by between three and five notches since early 2009 on the assumption that they would receive government support in a time of trouble because of the risks they pose to other financial firms and the economy as a whole.

The new financial reform bill, however, is intended 'clearly to eliminate government - i.e. taxpayer - support to creditors', Moody's said. Some support, however, is likely to remain for large institutions as regulators work to implement new laws, it added.

'Over the next 12 to 24 months . . . we expect that our support assumptions for systemically important banks will likely revert to pre-crisis, or even lower, levels - though we do not anticipate that we would completely eliminate support from these firms' senior debt and deposit ratings,' Moody's said.

Moody's rates BOA's senior debt A2, the sixth highest investment grade, Citigroup A3, the seventh highest investment grade and Wells Fargo A1, the fifth highest investment grade.

Moody's also said it may downgrade subsidiaries of BB&T Corp, Capital One Financial Corp, Fifth Third Bancorp, KeyCorp, PNC Financial Services Group, Popular Inc, Regions Financial Corp, SunTrust Banks, U.S. Bancorp and Zions Bancorp. -- Reuters

[millionairemind]

[LenaHuat]

Hi MM
That bill looks like grandma's rolling pin. As you well know, pins are wooden.

[millionairemind]

Published August 2, 2010

US banks may need US$76b in capital, says IMF

(WASHINGTON) The US financial system remains fragile and banks subjected to additional economic stress might need as much as US$76 billion in capital, according to the results of International Monetary Fund stress tests.

The findings, released on Friday as part of a broader IMF report on the US financial system, suggested that while the nation's banking system is stable, it remains vulnerable. Home prices, commercial real estate loans and economic growth have the potential to cause shocks that could expose banks to more losses.

Under one scenario, small and regional banks as well as subsidiaries of foreign banks would need US$40.5 billion in additional capital to meet a benchmark capital ratio of 6 per cent Tier 1 common equity from 2010 to 2014. Under the adverse scenario, those needs rise to US$76.3 billion, according to the report.

'Pockets of vulnerabilities linger,' the fund said in the report. The US is recovering from what the IMF called 'one of the most devastating financial crises in a century'. Because the economic recovery is proceeding slowly, regulators must be especially vigilant in guarding against risks and weak spots, the report said.

The IMF stopped short of recommending recapitalising the banks it studied in the report. Instead, it urged regulators to monitor conditions, especially for smaller institutions with less market access.

The numbers 'are not frightening', said Christopher Towe, the IMF's deputy director of monetary and capital markets who directed the assessment. The review process was created in the wake of the Asian crisis, and the US is the first major economy to undergo it since the global financial turmoil.

'We are particularly concerned about the situation among the small and medium-sized banks, which are most heavily exposed to the commercial real estate sector,' he told reporters.

The IMF said second-quarter results underscore the balance-sheet risks identified by the stress tests. 'Initial releases of second-quarter earnings results have been disappointing,' the IMF report said.

The IMF said about US$1.4 trillion of commercial real estate loans will mature from 2010 to 2014, almost half of which are already 'seriously delinquent', with payments 90 days or more past due, or 'underwater', with loan values exceeding property values. Home prices are another concern, as are the spillover effects if problems intensify as they spread among institutions.

US regulators will need to step up their efforts to coordinate oversight after the Dodd-Frank legislation that President Barack Obama signed this month, the IMF said. The report generally praised the new law, while also flagging ongoing concerns.

'In some areas we were a little bit disappointed,' Mr Towe said. 'We see the system of regulatory agencies as still remaining exceptionally complex with a very large number of agencies involved and we would have preferred to have seen a much more bold streamlining.' - Bloomberg

[winston]

And what about the other US banks ?


HSBC sees at least $110 million impact from U.S. law By Maria Aspan

NEW YORK (Reuters) - HSBC's (HSBA.L) North American chief executive expects the new U.S. financial reform law to cost it at least $110 million in annual revenue.

The company expects its biggest hit from the Dodd-Frank law to come from restrictions on fees HSBC receives for processing debit card transactions, and from what its North American CEO called "changes to FDIC levies." The law increased the fees that U.S. banks will pay the Federal Deposit Insurance Corp.

http://www.reuters.com/article/idUSTRE6 ... Name=usdai

[millionairemind]

Aug 12, 2010
Barclays mulls over 400 job cuts
LONDON - THE investment banking arm of Barclays is considering axing 400 jobs worldwide, a source close to the bank said.

Barclays Capital had begun a review 'which will result in some job losses,' affecting back-office roles such as IT, a spokesman for the British bank confirmed on Wednesday. 'We continue to hire selectively across those parts of the business that are growing,' he added.

The news came after Barclays announced last week that it had boosted first-half profits by nearly a third thanks to a sharp drop in bad debts, amid signs of revival in the banking sector which suffered in the economic crisis.

Barclays Capital likewise reported strong figures in the six months to June - but trading revenues at the unit fell 15 per cent in the second quarter compared with the previous three months.

The division has a large US business after the purchase of operations from collapsed bank Lehman Brothers in late 2008.

Barclays survived the financial crisis without government support unlike some rivals, because it obtained a seven-billion-pound capital injection largely backed by Abu Dhabi and Qatar - which have both since trimmed their stakes. -- AFP

[millionairemind]

Aug 19, 2010
Top banks face $57b loss
NEW YORK - THE four largest US banks could face as much as US$42 billion (S$57 billion) in losses as they repurchase faulty mortgages from housing finance giants Fannie Mae and Freddie Mac, Fitch Ratings said on Wednesday.

Total repurchases are based on the success of Fannie Mae and Freddie Mac proving their cases, but Fitch said it is concerned that more aggressive requests by the companies could expose banks to greater than expected losses. Under an 'extremely adverse scenario,' the pool of 'at risk' loans for JPMorgan Chase & Co, Citigroup Inc, Bank of America Corp and Wells Fargo & Co could total US$175 billion to US$180 billion, Fitch said.

Fannie Mae and Freddie Mac are pushing to recover losses on loans that failed to meet 'representations and warranties,'which state that loans sold into mortgage bond programs fit strict underwriting requirements. As the government-sponsored enterprises (GSEs) are life support from the US, repurchases would help offset the tens of billions of dollars being laid out by taxpayers.

Banks have responded by increasing reserves for repurchases, but are also challenging the claims. Under an 'adverse but less likely' scenario where Fannie Mae and Freddie Mac successfully put back 50 per cent of bad loans and the banks can still recover 50 per cent of the assets' value, the institutions could lose US$42 billion, Fitch said. If the GSEs put back 25 per cent of the loans, the expected loss could be US$17 billion, it said.

Fitch said a more moderate case is the most likely outcome. Losses for banks if the GSEs put back 35 per cent of loans would be about US$27 billion, it said.

Potential repurchases demanded by investors holding privately-issued mortgage bonds were not factored into the Fitch study. Fannie Mae and Freddie Mac are also among investors in the private mortgage securities. Fannie Mae and Freddie Mac are likely concentrating on loans where some normal documentation, such as proof of income, was not required, Fitch said. -- REUTERS