The global banking regulators have made a breakthrough in negotiations to tighten capital requirements for banks and the imposition of new standards liquidity and leverage, but relaxed some of the proposals, others delayed until early 2018, writes Financial Times. Basel Committee on Banking Supervision (Basel Committee on Banking Supervision) announced on Monday that all but one of the 27 member states of the organization sign the new document to limit the capital that banks may adopt a capital first-order ( tire-1) – the only assets that are disregarded in absorbing losses. Abstaining party as familiar with the negotiations is Germany, announced that it will decide whether to join the agreement later this year. The new rules aim to prevent the recurrence of financial crisis, but also may restrict lending. The real effect of the new regulations will depend largely on the subsequent decision of the Committee scheduled for autumn in which will determine the ratio between capital and tier one risk-weighted assets. The greater the ratio, the greater will be the effect. The Committee postponed a few of the more radical proposals, such as reporting “net ratio for stability of funding – first of its kind rule of liquidity, which will require banks to more closely link the timing estimates of assets and liabilities.
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In the event that stress testing of banks in Europe were made based on examination of the entire portfolio of government bonds to banks, 24 financial institutions it would not be able to withstand successfully. Such is the opinion of analysts of U.S. bank Citigroup. Such a scenario would have shown that the financial institutions need to raise capital amounting to 15 billion euros to be stable at any shock to the system, reported Financial Times. The problem with stress testing, which was attended by 91 banks, is that called were tested. commercial paper, rather than purchased in order to hold to maturity government bonds. The difference between them is that first used for commerce in the short and medium term, while others show real risk that government securities carry. Analysts say the U.S. Spanish bank financial institutions had the greatest benefit from such testing in this way. The reason is that they have significant positions in the Portuguese and Spanish government bonds, many of which fall under the heading hold to maturity, the newspaper added.
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Increasingly central role as Asia takes a global hub for financial services may gain even more weight to the imposition of U.S. and European governments for new taxes on the profits of banks, “said Josef Ackermann, CEO of Deutsche Bank, quoted by the Wall Street Journal. “The relative weight of Asia will increase as a result of regulatory action against the banks in the West, says Ackerman. “Asian countries know very well that you should not copy the new taxes, so popular in other parts of the world.” Taxes could be a serious blow to credit institutions with operations in many countries such as Deutsche Bank, which generates about three quarters of its revenue abroad, “says Ackerman. Emerging markets may even benefit from the negative reaction of the financial sector to the banking regulation in the West and to gain market share in the financial sector “Many governments, including China, are committed to building financial centers in times when many other countries demonstrate skepticism financial sector, “said Ackerman, noting that it is trying to make Turkey and Russia. Like other banks, evaluating prospects global economy, Asia is a priority for Deutsche Bank.
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The end of the working week has brought the closing of eight more American banks. Thus the number of bank failures in the country since the beginning of the year was rounded to 50. Six of the closed banks are quite small, but two are medium sized for the U.S. market. Three financial institutions are located in Florida, two in California and one bank was closed in Massachusetts, Michigan and Washington. Closed banks in Florida Riverside National Bank, which had assets of 3.4 billion dollars, First Federal Bank of North Florida with assets of 393.3 million dollars and AmericanFirst Bank, which had assets of 90.5 million dollars. By Federal deposit insurance corporation in (FDIC) announced that the division of the Canadian Bank TD Bank – TD Bank Financial Group, has agreed to accept all the deposits and almost all the assets of the three financial institutions. The cost of the insurance fund of the FDIC from the three banks is estimated at about 505 million dollars. Were still closed Innovative Bank, which had assets of 269 million dollars and Tamalpais Bank with assets of 629 million dollars. Both financial institutions are based in California, but their failure will cost the FDIC a total of about 120 million dollars.
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The European Central Bank not surprise anyone leave the level of the interest rate on main refinancing operations to a record low of 1%. We recall that it is not altered by May 2009. The study on Bloomberg shows that the bank will probably raise the level of the indicator only in the last quarter of this year and is expected to change not exceed 0.5 percentage points. Efforts of the ECB President Jean-Claude Trichet met resistance from the growing unemployment in the euro area, as well as concerns about the fiscal stability of Greece. After the ECB gradually tightened the conditions for granting loans to banks in Germany’s economy began to feel the signs of stagnation, the agency said. From there cited expectations of vehicle manufacturer Renault, which according to the European market for new cars will shrink by 10% this year. Moreover, the data for November showed that retail sales in the euro area in November with the most reduction of 13 months now. Trichet said after the meeting, the data suggest that the enhanced economic activity is expected moderate economic growth for the Eurozone in 2010.
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The Sovereign wealth fund Kuwait announced that it has sold its stake in U.S. bank Citigroup. The price of the transaction is 4.1 billion dollars. This means that the fund has achieved a net profit of 1,1 billion dollars, or nearly 37 per cent for two years, submitted AR. Less than two years the State of Kuwait Investment Fund bought preferred shares of Citigroup for $ 3 billion. These shares have been converted into ordinary, after which they were sold. Currently no comment from both of Citigroup, and by the investment fund. Together with shares of Citigroup and acquired fund shares for $ 2 billion of capital from Merrill Lynch. However, because of problems the bank was acquired by Bank of America. Analysts said the fund soon as possible to sell those shares because their price was raised substantially in recent months. The deal to sell of Citigroup came as a surprise to the markets.
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After exit from the strongest global recession in decades, analysts expect Citibank persistent, albeit uneven global recovery. Almost all major economies from recession came in second and third quarter and the recovery will be strongest in Asia, excluding Japan, and slowest in Europe, notably Japan, said in a report the bank to the global economic outlook. Citibank forecasts a steady recovery in the U.S. in 2010-11, but warned that fiscal state of the medium-term management may face serious challenges. The strengthening of economic growth many emerging markets, especially in Asia and Latin America is likely to raise its main interest rates. Due to low inflation and some continuing concerns about the stability of the economic recovery of Citibank believe that increasing the basic interest rate in the United States will become a fact in the last quarter of 2010 and not bank as previously thought – in the second quarter of that year. Citibank and revise their expectations about the time when it will happen eventually raise its main interest rate in the euro area. The current estimate is that to happen in the first quarter of 2011 instead of the last of 2010 In the UK base rate will probably be increased in the second or third quarter of 2010, while Japan is expected to remain unchanged throughout 2010.
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The Banks in Britain should be obliged to disclose the number and names of employees with a salary of over 1 million pounds annually. That says a proposal by the government commission that deals with control of the banking system. The document, whose author is the former head of Morgan Stanley International, David Walker, offers other measures to reduce the risk of the banks operations. It recommends strengthening the role of shareholders and employees who are not related to the operational management of banks submitted AR. “Institutional investors should not be so passive and be ready to intervene at an early stage in the event that they see weaknesses in management,” said Walter. “Early preventive measures on the part of shareholders can save considerable money and time at a later stage,” he said.
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Goldman Sachs is best managed company in the U.S. financial sector, says banking analyst at Rochdale Securities Richard Bouv. However, the most promising and undervalued share in the sector is that of Citigroup, is confident the specialist. According to him, Citigroup shares have the potential to reach a price of $ 20 per piece, which means that within 2-3 years it has risen to four. Yesterday the bank’s shares lost 5 percent of its value to 4.75 per dollar. The reason for this report gave the financial institution, which showed a profit of 101 million dollars. “It’s more than Goldman Sachs can bring to investors, although the company is much better,” said Bouv. Shares of Goldman Sachs fell by 1,9 per cent yesterday and closed trading session at 188.63 dollars cash. This happened despite the strong statements of the company and reported profit growth of 300 percent on an annual basis. Richard Bouv leveled criticism at those who launched sales of the shares of Goldman since the publication of quarterly results. They greatly exceeded forecasts of analysts, but many were left disappointed as expected surprisingly high performance.
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U.S. indexes are traded in the Range near at its highest levels for the year. Retention of the upturn came after depreciated on the basis of profits that disappointed investors. Citigroup was down by 5.4 percent to 4.73 dollars. Bank from which the U.S. government owns 34%, has 101 million profit for the third quarter. For its part, Goldman Sachs fell 2.39 percent to 187.65 dollars. The Bank reported a profit for the third quarter amounted to 3.19 billion dollars, thanks to better management of personal assets. However, the bank does not meet the expectations of analysts. JPMorgan lost 0.7 percent to 46.82 dollars, while Bank of America fell by 3.3 percent to 17.98 dollars. Capital One Financial Corp. also decreased by 4.7 percent to 37.5 dollars. Positive news from the labor market in the U.S. also could not help the market to continue its strong upward trend. Applications for unemployment benefits fell to 514 thousand in the last week at 524 thousand a week earlier. Long-term unemployed also fell to below 6 million USD. Energy companies were traded in positive territory, with Chevron Corp. rose 1.4 percent to 76.5 dollars, and Exxon Mobile added 1.32 percent to 72.79 dollars after oil futures rose above $ 78 a barrel. Ministry of Energy of the United States reported an unexpected drop in gasoline stocks due to closure of refining capacity for technical review.
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