Daily briefing - 30 January 2017
Fin Keegan: 30th January 2017 12:00pm
Italian banks continue to struggle to keep their balance sheets healthy: now the biggest bank in Italy, UniCredit, has revealed that it will not be able to meet capital ratio requirements set by the European Central Bank. Fourth-quarter provisions of €12.2 billion for bad loans are being held as the reason; non-performing loans remain a problem more widely in the country. UniCredit has launched a €13 billion capital raising program and 14,000 jobs are being cut in a bid to right the ship.
Across the Mediterranean, Spanish banks are feeling a different drag on their results: December's mortgage floor ruling handed down by the European Court of Justice, which the central bank in Madrid reckons will cost the country's banks almost €4 billion, with banks given three months to settle with customers. Now Bankia is reporting a 23 percent fall in profit for 2016, with a competitive, low-interest rate environment also proving a costly factor. Before leaving Europe, one final story to note: the British government has reduced its stake in Lloyds Banking Group, to just under five percent.
Last week Lafferty News pointed out that trade wars result only in mutual impoverishment: keen students of history, Citigroup, Banco Santander and BBVA, are notably unswayed by protectionist policies now being set in motion in Washington DC: all three banks are pushing ahead with their plans to invest in Mexico. Citigroup has also launched a new website for small business loans, up to $1 million in value. And there have been revealing online changes too at the US Labor Department, where a site dedicated to helping Wells Fargo whistleblowers has been taken down by authorities.
Commonwealth Bank of Australia, ANZ, Westpac and National Australia Bank — the "Big Four" of Australian banking — plan to usher in a $1 billion real-time transfers and faster payments system as part of their 'Better Banking' push. "While all these steps are welcome, there is no substitute for a genuinely independent review of competition in Australia's banking sector, a review commissioned by government, not the banks themselves," responded Tom Godfrey of consumer advocacy group CHOICE.