Daily briefing - 31 January 2017
Fin Keegan: 31st January 2017 11:38am
Yesterday on Lafferty News we reported on Italy's largest bank, UniCredit, struggling to right a balance sheet marred by bad loans, the kind of problem that has already seen Banca Monte dei Paschi di Siena taken into state hands. Daniele Nouy, charged with supervising the eurozone's largest banks, says of Italian banks that "very few have moved on impaired loans." In neighbouring Slovenia, bad loans shot up by 6.5 percent in November, and Greece, Cyprus and Portugal all labour under the same yolk. Klaus Regling, who manages the zone's permanent bailout fund (rejoicing under a characteristically grey moniker: the European Stability Mechanism) agrees with the European Banking Authority's new proposal that the EU needs to create a bad bank for the €1 trillion toxic loan pile that has built up. If it is created, Italian banks will be the major beneficiary.
Deutsche Bank remains proud of its founders' mission to finance Germany's foreign trade. Unfortunately trade has provided the petard by which the firm is now hoist, as the Financial Conduct Authority in London has found anti-money laundering control at the bank to be inadequate and levied a £163 million fine as a result. The action comes as a result of 'mirror trades' involving its Russian subsidiary which saw stocks bought in roubles and simultaneously sold in dollars: over $6 billion worth passed through the Deutsche Bank system. Throw in a fine yesterday for the same trades from the banking regulator in New York and the German banking giant is down by well over half a billion dollars with the week not yet half over.
As readers will know, the regulatory system in the United States makes for a complex scene, with several agencies and systems brought to bear on what remains the world's most multifarious banking system. Now the Federal Reserve has announced that smaller banks will be exempt from certain stress tests, though large banks remain subject to the full battery of checks. In other American news, Citigroup is getting out of the mortgage servicing business and is reportedly nearing deals on the sale of both customer and non-customer servicing portfolios. "The buyer, New Residential Investment, which is managed by an affiliate of the investment group Fortress, is paying about $980m for the assets", reports the Financial Times
Finally, the burgeoning Indian e-commerce market has been catching the eye of many in the West. With mobile penetration high and the Modi government pushing hard on digital payments, Mastercard has "increased [its] investments in India by over 30 percent in the last two years and we are going to increase it even more," the scheme's Sam Ahmed told the Economic Times. Digital innovations including face recognition, online payment methods and Masterpass are in the works. Ingenico meanwhile is also making a move in the country: it is acquiring payment processor TechProcess.