Now an exercise in extinguishing multiple fires

Fed's Hope of A Soft Landing Dashed

BankerAdvisor's Ongoing Series of How Fintech is Making Lives Better

Remitting it Forward

Saudia Arabia No Longer Exclusively Selling Oil in US Dollars

Implications of the Expiration of the Petrodollar Agreement

Private Equity Carried Interest Provision Lives On

The Impact of Two Consumer Classes and the Fed Funds Rate Outlook 

A Tale of Two Consumers

Futility Index

Germany, Europe’s New ‘Problem Child,’ Has a Series of Self-Inflicted Issues

Is German Deindustrialization Underway?

Firm to combine asset, wealth and consumer banking into one unit

Goldman Sachs Reorganization 

A new monster has emerged to compete with inflation: broad banking instability, particularly for smaller and regional banks

Pick Your Poison: More Banks in Peril or Prolonged Inflation

Van Lanschot Kempen is large private bank based in Amsterdam founded in 1737. Van Lanschot Kempen offer private banking and wealth management, institutional service for family offices and outsourced chief investment officer services, institutional and wholesale client investment management, and investment banking services.  

Netherlands

Europe

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Van Lanschot Kempen

SWIFT said it is uniquely positioned to interlink the fragmented digital asset landscape with its forthcoming digital currency trials in 2025. Banks in North America, Europe and Asia are preparing to participate in trials involving digital assets by the Society for Worldwide Interbank Financial Telecommunication (SWIFT).  SWIFT announced on Oct. 3 that it will begin digital asset trials on its network in 2025. The trials will involve experiments with transactions that include multiple digital currencies and assets.

Banks to join SWIFT digital asset trials in 2025

ARK Invest founder and CEO Cathie Wood expects that a “changing of the guard” at the United States Securities and Exchange Commission may turbocharge the economy and bring about an influx of innovation and investment in emerging technologies.  “Deregulation, defanging the SEC, FTC, and others, government spending cuts, tax cuts, and a focus on technologically enabled innovation are likely to turbocharge the US economy,” she said, in sharing a video posted by ARK Invest on X on Nov. 11. “We have more clarity now in terms of the investment landscape after the election,” 

‘Defanging the SEC’ may turbocharge US economy: Cathie Wood

Credit ratings agency Moody's unexpectedly downgraded France's rating on Friday, adding pressure on the country's new prime minister to corral divided lawmakers into backing his efforts to rein in the strained public finances. The downgrade, which came outside of Moody's regular review schedule for France, brings its rating to "Aa3" from "Aa2" with a stable outlook for future moves and puts it in line with those from rival agencies Standard & Poor's and Fitch. It comes hours after President Emmanuel Macron named on Friday veteran centrist politician and early ally Francois Bayrou as his fourth prime minister this year.


Moody's hands France surprise downgrade over deteriorating finances

Treasury yields moved higher Tuesday following a poor auction on the five-year note and as investors await fresh data releases on inflation. Yields perked up after a $70 billion Treasury Department auction of 5-year notes was met with weak demand. The bid-to-cover ratio, a widely followed demand gauge, came in at 2.3, below a 10-auction average of 2.45. Investors are hungry for more data on the economic and inflationary picture after the minutes from the Federal Reserve’s latest meeting, released last week, showed uncertainty among policymakers about when to ease policy. On Friday, they will parse the April personal income and expenditures report, which includes a measurement of price movements across a range of consumer expenses.

10-year Treasury yield rises above 4.5% following weak auction

China's central bank said on Thursday it would start accepting applications from financial institutions to join a newly created funding scheme, initially worth 500 billion yuan ($70.62 billion), to aid the capital market. The People's Bank of China (PBOC) said eligible securities firms, fund companies and insurers can apply to join the swap scheme, which gives them easier access to funding to buy stocks.

China kicks off 500 bln yuan swap facility to aid stock market

The turmoil in global markets this past week is causing private credit funds to question whether they should reconsider the ever-tighter loan margins they’re demanding. Industry stalwarts such as Ares Management Corp. and Blackstone Inc. have been charging less for private credit for most of this year, according to data compiled by Bloomberg News, as they try to snatch business away from the syndicated loan market. But that strategy may change after recession fears have risen amid a slew of worrying economic reports. 

Private Credit Is Eyeing Bigger Margins on Loans: Credit Weekly

Companies owned by private equity firms are landing in default more frequently than other speculative-grade borrowers, according to a report from Moody’s Ratings. Private equity-backed companies defaulted at a rate of 17% between January 2022 and August of this year, twice the rate of non-private equity-backed companies, Moody’s said in the report released Thursday. Among the 12 largest private equity sponsors — as ranked by Moody’s — the default rate was slightly lower at around 14%.  Platinum Equity had the highest number and share of defaults, out of Moody’s ranking of the 12 largest sponsors, followed by Apollo Global Management and Clearlake Capital Group. 

PE-Backed Firms Suffering Higher Default Rates, Moody’s Says

Guernsey stock exchange now provides a facility for trading shares in privately held companies. A stock exchange based in the Channel Islands is trying to capitalise on a global drought in initial public offerings with the launch of a facility for buying and selling shares in privately held companies. But this reinvention of its role looks likely to attract stiff competition from larger rivals. The International Stock Exchange (TISE) — which has, for years, specialised in providing a listing venue for corporate debt — last year launched a unit allowing private companies to run auctions in their own shares, without the need for a broker.


TISE finds best place to capitalise on private assets

The European Central Bank on Thursday cut its key interest rate to 3.25%, in its third quarter-percentage-point reduction of the year. The move had been fully priced by markets after policymakers flagged reduced inflation risks and a weakening growth outlook.  It is the first time the ECB has reduced rates at consecutive meetings since December 2011.

European Central Bank lowers key rate to 3.25% in third cut this year: Live updates

Interest rates are coming down, but only after one of the most brutal monetary tightening periods in modern history. And they’re probably coming down too late, too little and too slowly for a lot of smaller companies and the investment funds that chucked money at them over the past few years. Private credit — basically, bilateral corporate loans made by specialist investment funds rather than banks — has been one of the hottest asset classes over the past decade. Possibly the hottest. Depending on who you believe, there’s somewhere between $2tn and $3tn of money in private credit funds.


How is private credit weathering its first big rate hiking cycle?

A Bitcoin-related bill is gaining support in the United States, signaling a potential boost for the cryptocurrency’s value, which could hit $1 million. Former President Donald Trump’s victory in the 2024 presidential election on Nov. 5 has sparked optimism for more crypto-friendly policies.
One of the most anticipated bills is the Bitcoin Act, championed by Wyoming Republican Senator Cynthia Lummis, which proposes the creation of a strategic Bitcoin BTC tickers down $98,418 reserve for the US, making it the first nation to use it as a “savings technology.”

US Bitcoin reserve during Trump presidency could pump BTC to $1M

A group of private credit lenders led by Blue Owl Capital and Ares Management has agreed to take over troubled software company Pluralsight, wiping out $4bn that Vista Equity Partners and other investors had put into the business since they bought it less than four years ago. The closely watched restructuring is one of the biggest in which the creditors that ultimately take control are also so-called direct lenders. The deal values Pluralsight at about $900mn, far below the more than $5bn that Vista, its partners and private lenders had invested or lent to the business. Vista and its co-investors had sunk roughly $4bn into Pluralsight, while lenders provided it with about $1.7bn of debt financing.


Vista and co-investors lose $4bn in Pluralsight restructuring

Blackstone (BX.N), beat Wall Street's expectations on its key quarterly earnings metric on Thursday, as the world's largest alternative investment firm's assets under management (AUM) hit a record $1.1 trillion and the value of its funds rose. New York-based Blackstone said it saw $41 billion of inflows during the third quarter, while it deployed and committed $54 billion of capital - the highest in over two years - amid a revival in dealmaking activity as the U.S. Federal Reserve cut rates and the economic outlook remained sanguine. Over the past few quarters, high interest rates had been a drag on some aspects of Blackstone's business. With the Fed now entering into an easing cycle, the firm saw that weight starting to lift.

Blackstone tops profit estimate as its assets hit record, dealmaking picks up

Ally Financial's credit challenges have intensified over the current quarter as borrowers struggled with high inflation, the consumer lender's finance chief said on Tuesday. Shares of the company fell as much as 19.3%, set for their worst day since March 2020. Consumers have been cutting back on loans amid high interest rates, with the looming economic uncertainty also upping the chances of more loan defaults. In July and August, delinquencies and net charge-offs - that is, debts unlikely to be recovered - rose about 20 and 10 basis points, respectively, in Ally's retail auto business compared with its expectations, Chief Financial Officer Russell Hutchinson told investors at a financial conference in New York. 

Ally Financial warns of 'intensifying' credit challenges, shares slump

In a significant move to counteract international sanctions and reduce dependency on the global financial system Swift, Russia has called on BRICS nations to establish a new cross-border payments network, reported Bloomberg. This initiative is aimed at facilitating transactions in local currencies and strengthening economic ties within the bloc. The proposed network would involve a consortium of commercial banks capable of executing transactions in the respective local currencies of BRICS countries. It also suggests the establishment of direct connections between central banks to further insulate the group from external financial systems.

Russia proposes Swift alternative for cross-border payments

Mastercard introduced a new solution that will enable banks to facilitate commercial cross-border payments that are near real-time, predictable and transparent. The new Mastercard Move Commercial Payments is designed to simplify operations, optimize liquidity, reduce counterparty risk and provide end-to-end visibility for banks and their customers, the company said in a Monday (Oct. 21) press release.

Mastercard Introduces New Commercial Cross-Border Payment Solution for Banks

State Street Global Advisors, the asset management business of State Street Corporation (NYSE: STT), announced today that it is working with Apollo Global Management, Inc. (NYSE: APO), a leading provider of alternative assets and retirement solutions, and its affiliates (collectively, Apollo), to expand investor access to private market opportunities. "Private assets are one of the fastest growing sectors of the financial industry. We are excited to be working with Apollo, a global leader in alternative assets, to continue to increase accessibility to private markets, opening them to an even larger cross section of investors," said Ron O’Hanley, president and chief executive officer of State Street. 

State Street Global Advisors and Apollo Global Management Join Forces to Increase and Broaden Investor Access to Private Markets

Stripe, the FinTech giant, is reportedly in talks to acquire crypto startup Bridge for $1 billion, according to sources familiar with the discussions. This potential acquisition would be the largest to date for Stripe, which was recently valued at $70 billion. However, the deal is still under discussion and subject to regulatory considerations and compensation for employees. 
Bridge, a provider of infrastructure for crypto stablecoins, has previously raised $58 million in funding and has a strong customer base that includes government departments and companies like SpaceX and Coinbase. The startup offers software that enables businesses to accept cross-border payments made with stablecoins. 

Stripe Aims for Largest Acquisition Yet with $1 Billion Deal for Bridge

Growth in the payments industry, which was once characterized by rapid expansion, is now slowing as the shift from cash to digital payments has reached its peak, according to BCG research. The BCG Global Payments Report 2024 found that revenue growth is expected to halve by 2028, with global revenues set to rise at a compound annual growth rate of just 5% to $2.3 trillion. This marks a sharp decline from the 9% growth recorded in the previous five years, which saw revenues to $1.8 trillion in 2023.

Payments Industry Growth Slows as Cash-to-Digital Shift Reaches Peak

BlackRock has a handshake deal to buy private credit group HPS Investment Partners, the Financial Times reported on Wednesday. The final deal value would be closer to $12 billion, which offers a significant premium over HPS's post-IPO valuation of $10 billion, the report said, citing two sources familiar with the matter. The two sides have agreed on the broad outline of the deal with an eye towards announcing general terms after the U.S. Thanksgiving holiday, the report added, citing four people familiar with the matter.

BlackRock has deal to buy private credit manager HPS, FT reports

The ultra-rich run family offices, hire wealth managers and hold stakes in private investment funds. For those who are well-off but hardly jetsetters, however, portfolios look much more mundane. Typically, their largest asset is their home. Other holdings might include a 401(k), a few stocks, a bank account and a car. There’s nothing terrible about this sort of asset assortment. But, given that over the years we’ve seen a persistent pattern of the ultra-wealthy getting wealthier, it’s reasonable to think the bottom 99.9% might also benefit from the tools and investment vehicles the rich have at their disposal. 

Wealth Management Startups See Funding Rise

Recent and upcoming rate cuts will provide relief for private credit borrowers through lower funding costs in 2025, even as many have already benefitted from repricing and improving financing conditions. 

How This Will Shape 2025 
Repricing will continue to change market dynamics. Companies should see a bigger benefit from rate cuts in 2025 than this year. Competition and convergence between public and private markets will continue. With growth and innovations in private markets, some borrowers have the luxury of choice between broadly syndicated or private credit. 

Private Markets: How Will Private Credit Respond To Declining Yields?

 Inflation in the euro area rose from 1.7% to 2% in October, flash figures showed Thursday, coming in slightly higher than the 1.9% forecast. Core inflation and services inflation were both unchanged on the previous month. Markets currently expect the European Central Bank to cut interest rates by another 25 basis points in December, with one analyst saying the latest data would end debate over whether a larger 50-basis-point cut is warranted.

Euro zone inflation rises to higher-than-expected 2%, weakening case for jumbo rate cut

The Bank of England aims to develop the ability to lend to non-bank financial institutions (NBFIs). It is doing so to address potential liquidity challenges in core financial markets that could threaten the United Kingdom’s financial stability, the bank said in a final report on its system-wide exploratory scenario exercise. This exercise explored how the U.K. financial system — including banks, insurers, pension plans, hedge funds, asset managers and central counterparties — would respond to a market shock, it said in the report. It found that while NBFIs have become more resilient in recent years, that could change over time, and those changes could be amplified by the financial system as a whole, according to the report. 

Bank of England Seeks Ability to Lend to Non-Bank Financial Institutions

India’s central bank expectedly kept the benchmark interest rate unchanged at 6.50% on Friday as it struggles to contain rising inflation without hurting growth in Asia’s third-largest economy.
The central bank also announced a cut to banks’ cash reserve ratio by 50 basis points to 4.0% to bolster liquidity in the economy. Reserve Bank of India Governor Shaktikanta Das said the central bank had revised India’s GDP growth outlook for fiscal year 2025 down to 6.6% — RBI had forecast 7.2% growth in October.

Asia Economy India’s central bank revises down economic growth forecast for 2025, keeps interest rate steady

Nearly half of bank leaders believe their institutions will buy another bank in 2025, suggesting a potential uptick in merger activity in the coming year, according to a new survey on M&A by Bank Director. Forty-three percent of bank leaders said their institutions were very or somewhat likely to buy another bank next year, up from 35% a year earlier, Bank Director reported. As for the reasons, respondents cited scale to drive technology and other investments (43%) and geographic expansion (37%) as the two most important factors driving acquisition strategies.

Bank Leaders Expect Merger Activity to Accelerate in 2025

A week’s worth of inflation data showed that price pressures have eased substantially since their meteoric rise in 2021-22. Fed officials head into their two-day policy meeting Tuesday closer to their goal of low inflation, but how much they will ease interest rates remains an open question.  “The federal funds rate has been over 5%, has been there for over a year to fight inflation. That fight is won. They need to start getting out of the way,” economist Claudia Sahm said.

The Fed has the proof it wants that inflation is slowing, but the next move is still up in the air

South Korea’s central bank lowered its key policy rate for a second straight month and said the country’s economy will grow at a slower pace than it initially anticipated. Following a policy meeting, the Bank of Korea cut its benchmark interest rate by a quarter percentage point to 3%. The bank lowered its outlook for the country’s economic growth to 2.2% from 2.4% for this year and to 1.9% from 2.1% for 2025. The bank is taking steps to lower borrowing costs despite the lingering effects of high inflation and alarming levels of household debt, as the economy falters.

South Korea’s central bank cuts key interest rate to nurse a slower economy

The new research looks at the UK’s banking sector and how it compares to other G8 countries. It notes that as a result of deregulation reforms, stable interest rates, and divestment of price equity firms as funds near the five-year mark post-pandemic, 2024 could be a pivotal year for UK banking, especially from a job searcher’s point of view. Since 2022, risk and compliance has consistently been the most in-demand area in banking recruitment. This trend is expected to continue in 2024, with 4,559 vacancies representing 15 percent of all sector roles, despite a 20 percent decrease in vacancies. 

Investment Bank Vacancies Soar While Retail Banks Face Decline Reveals Morgan McKinley

The majority of public pension funds and sovereign wealth funds (58%) expect to increase their infrastructure allocations over the next 12 to 24 months, according to the OMFIF’s Global Public Funds 2024 report. The Official Monetary and Financial Institutions Forum is a forum for central banking, economic policy and public investment. Twenty-eight global public funds with a combined $6.5 trillion in assets. This is up from 53% that had the same expectation in last year’s survey and 42% in 2022. 

Most global public funds plan to increase infrastructure allocations — OMFIF report

The US Department of Justice (DOJ) has filed a civil antitrust lawsuit against Visa over allegations of “monopolisation and other unlawful conduct in debit network markets in violation of Sections 1 and 2 of the Sherman Act”. In a press release announcing the lawsuit on 24 September, the DOJ says: “Filed in the US District Court for the Southern District of New York, the complaint alleges that Visa illegally maintains a monopoly over debit network markets by using its dominance to thwart the growth of its existing competitors and prevent others from developing new and innovative alternatives.”

US Department of Justice files civil antitrust lawsuit against Visa

The National Center for Public Policy Research — a Washington DC-based think tank championing free markets — submitted a shareholder proposal to Amazon saying that a Bitcoin corporate treasury strategy should be considered at the April 2025 shareholder meeting.
According to the proposal, the Consumer Price Index (CPI) used to measure inflation, which currently puts inflation at 4.95%, is a “remarkably poor measure” of true currency debasement. The authors suggested the true inflation rate may be double the reported CPI figure. This greatly erodes Amazon’s $88 billion in cash and short-term cash equivalents, the letter said, and to protect shareholder value, Bitcoin should be used to hedge against this risk. 

National Center for Public Policy Research proposes BTC treasury to Amazon

Wholesale prices rose more than expected in November, adding to a string of sticky inflation prints. Thursday's report from the Bureau of Labor Statistics showed that its producer price index (PPI) — which tracks the price changes companies see — rose 3% from the year prior, up from the 2.4% in October and above the 2.6% increase economists had projected. This marked the highest year-over-year increase since February 2023. On a monthly basis, prices increased 0.4%, compared to the 0.2% seen in October. 

PPI shows wholesale inflation jumped more than expected amid 'extended and bumpy journey' to Fed's target

PayPal Holdings, Inc. (NASDAQ: PYPL) announced it is enabling its U.S. merchants to buy, hold and sell cryptocurrency directly from their PayPal business account.  At launch, this functionality for Business Accounts will not be available in New York State. Today's announcement is PayPal's latest step to increase cryptocurrency's utility by making increased functionality available to millions of merchants in the U.S. 

PayPal lets US business accounts buy and sell crypto

Collectively, Americans now owe a record $1.17 trillion on their credit cards, according to a new report on household debt from the Federal Reserve Bank of New York. Credit card balances rose by $24 billion in the third quarter of 2024 and are 8.1% higher than a year ago.Despite that increase, credit card delinquency rates improved — with 8.8% of balances transitioning to delinquency over the last year, compared with 9.1% in the previous quarter, the New York Fed found. That change could “suggest that rising debt burdens remain manageable,” the New York Fed researchers said on a press call Wednesday.

Credit card debt hits record $1.17 trillion, New York Fed research shows

The U.S. budget deficit swelled in November, putting fiscal 2025 already at a much faster pace than a year ago when the shortfall topped $1.8 trillion, the Treasury Department reported Wednesday. For the month, the deficit totaled $366.8 billion, 17% higher than November 2023 and taking the total for the first two months of the fiscal year more than 64% higher than the same period a year ago on an unadjusted basis. The increase came despite receipts that totaled $301.8 billion, about $27 billion more than last November. Outlays totaled $668.5 billion, or nearly $80 billion more from a year ago. The increase in red ink brought the national debt to $36.1 trillion as the month drew to a close.

Budget deficit swells in November, pushing fiscal 2025 shortfall 64% higher than a year ago

BlackRock is set to acquire full control of London-based private debt manager Kreos Capital, which the investment giant said will accelerate the growth of its credit platform. The acquisition of the firm, which specialises in growth and venture debt lending strategies, "unlocks additional private debt capabilities" for BlackRock's clients to access a larger proportion of the risk/return spectrum, the company said. Kreos Capital has committed over €5.2bn across more than 750 transactions in 19 countries since its inception in 1998. It has provided financing to more than 550 pan-European and Israeli high-growth companies in the technology and healthcare sectors. 

BlackRock acquires private debt manager Kreos Capital in credit platform boost

Federal Reserve Chair Jerome Powell finds himself in a difficult place that no central banker wants to be: working to avert a credit crunch, which calls for looser monetary policy, while fighting high inflation, which demands the opposite. Strains in the banking industry, which followed the collapse of three midsize lenders this spring, help explain why some central bank officials are leaning toward holding interest rates steady at their meeting this week—even though the economy and inflation haven’t slowed as much as they expected.
But current and former central bankers say if stresses worsen, the Fed will face a more difficult trade off. Powell and his colleagues would have to choose between focusing on failing banks or high inflation.

Jerome Powell’s Big Problem Just Got Even More Complicated

Investing.com -- The Federal Reserve may need to implement more aggressive rate cuts as recent data reveals a concerning trend in the labor market, according to Citi analysts in a note Wednesday. The bank said the percentage of individuals finding "jobs hard to get" is increasing, signaling that the rise in unemployment is not merely a sign of a growing labor supply but an indication of weak hiring conditions.  Citi notes that this trend, observed in the Conference Board survey, is reminiscent of the conditions in September 2001, a period when the U.S. economy was already in recession. This situation suggests that a “hard landing” could be imminent, making further aggressive rate cuts from the Fed more likely, says the bank.

Fed may have to cut aggressively as individuals finding jobs hard to get is rising

Banking giant JPMorgan Chase and 40 other US banks are testing the Federal Reserve’s new instant payment infrastructure called FedNow. According to a new Federal Reserve press release, 41 banks and 15 service providers are wrapping up FedNow test trials ahead of an official launch of the service, which is scheduled for late July. According to the Federal Reserve, the FedNow Service aims to enable businesses and individuals to send and receive instant payments anytime.

JPMorgan Chase and 40 Other US Banks Conducting FedNow Trial Runs Ahead of the Instant Payment Service’s Launch

India’s largest private lender HDFC Bank has completed its merger with Housing Development Finance Corporation, the country’s biggest mortgage lender. The merged entity will be the world’s fourth largest bank, behind JPMogran Chase, Industrial and Commercial Bank of China and Bank of America, according to Soumya Rajan, CEO and founder of Mumbai-based Waterfield Advisors.  HDFC Bank announced in April last year that it will be acquiring its parent company Housing Development Finance Corporation, the largest home financing lender in India, in a $40 billion all-stock deal. 

India’s HDFC Bank completes $40 billion takeover of the country’s largest mortgage lender. Here’s what it means

The Consumer Financial Protection Bureau announced the final version of a rule limiting banks’ ability to charge overdraft fees.  It says the rule will save American consumers $5 billion annually.  The CFPB said its overdraft rule will take effect Oct. 1, 2025, though the rule’s ultimate fate is unclear.

CFPB announces rule limiting bank overdraft fees

Rising interest rates, losses on commercial real estate and heightened regulatory scrutiny will pressure regional and midsized banks, leading to a wave of mergers, sources told CNBC. Some of those pressures will be visible as regional banks disclose second-quarter results this month. Firms including Zions and KeyCorp already have warned of sinking revenues. Half the country’s banks will likely be swallowed by competitors in the next decade, according to Fitch analyst Chris Wolfe. “Some of these banks will survive by being the buyer rather than the target,” said incoming Lazard CEO Peter Orszag. “We could see over time fewer, larger regionals.”

The American banking landscape is on the cusp of a seismic shift. Expect more pain to come

A recent article was quoted as saying "that Wall Street is coming for crypto, whether early believers like it or not." Something has changed, and maybe the biggest change is that treasury managers want to use cryptocurrencies. If the customer wants it, then the big banks have to service it and there’s the rub. The big banks have stirred and incorporated digital assets, and specifically cryptocurrencies, into their remit. And then you know that cryptocurrencies are going mainstream when Standard and Poor’s (S&P) start to rate them. They don’t do that today, but they are moving that way. 

The moment you realise crypto has gone mainstream

SVB Financial Group has sued the US Federal Deposit Insurance Corporation in a bid to recover $1.9bn in cash that the regulator has kept since it took over the group’s banking subsidiary in March. SVB Financial Group, a parent holding company, filed for bankruptcy in March after Silicon Valley Bank became the ward of the FDIC following a $42bn bank run. SVB Financial said retention of the cash by the FDIC violated US bankruptcy law.


SVB Financial sues US banking regulator to recover $1.9bn

JPMorgan Chase executives warned that tougher regulations in the wake of bank failures this year would raise costs for consumers and businesses.  JPMorgan CEO Jamie Dimon said that other financial players could end up winners. “This is great news for hedge funds, private equity, private credit, Apollo, Blackstone,” Dimon said, naming two of the largest private equity players. “They’re dancing in the streets.”

Dimon says private equity giants are ‘dancing in the streets’ over tougher bank rules

Fitch Ratings cut the United States’ long-term foreign currency issuer default rating to AA+ from AAA. The agency had placed the country’s rating on negative watch in May, citing the debt ceiling fight in Washington. “The repeated debt-limit political standoffs and last-minute resolutions have eroded confidence in fiscal management,” Fitch said.

Fitch downgrades U.S. long-term rating to AA+ from AAA

Just a day after the Treasury Department released a $1 trillion borrowing estimate for the third quarter, questions are being raised about the extent to which foreign and domestic buyers can continue to keep up their demand for U.S. government debt. Further details about Treasury’s financing need will be released at 8:30 a.m. on Wednesday. For now, the $1 trillion estimate, the largest ever for the July-September period, has analysts concluding that the U.S. is facing a deteriorating fiscal deficit outlook and continuing pressure to borrow.

‘Eye-popping’ $1 trillion third-quarter borrowing need from U.S. Treasury raises risk of buyers’ fatigue 

Minneapolis Federal Reserve President Neel Kashkari favors getting tougher on regional banks, following a crisis earlier this year that he said may not be over. Asked during a town hall whether he agrees with proposals setting higher capital requirements for banks with more than $100 billion in assets, the central bank official said, “My own personal opinion is it doesn’t go far enough. I think it’s a step in the right direction, but I would like to go significantly further.”

Regional banks slide after Fed’s Kashkari advocates ‘significantly further’ capital regulation

Moody’s Investors Services may downgrade its credit ratings on six major U.S. banks, including U.S. Bancorp, State Street Corp., and Bank of New York Mellon Corp., and has downgraded its debt ratings on several small and mid-sized banks as part of the credit ratings agency’s rash of rating actions on U.S. banks late Monday.

Moody’s places credit ratings of 6 major U.S. banks on review for downgrade 

A Fitch Ratings analyst warned that the U.S. banking industry has inched closer to another source of turbulence — the risk of sweeping rating downgrades on dozens of U.S. banks that could even include the likes of JPMorgan Chase. The ratings agency cut its assessment of the industry’s health in June, a move that analyst Chris Wolfe said went largely unnoticed because it didn’t trigger downgrades on banks. But another one-notch downgrade of the industry’s score, to A+ from AA-, would force Fitch to reevaluate ratings on each of the more than 70 U.S. banks it covers, Wolfe told CNBC in an exclusive interview at the firm’s New York headquarters.

Fitch warns it may be forced to downgrade dozens of banks, including JPMorgan Chase

Guggenheim Investments, the asset-management arm of Guggenheim Partners, is seeking to raise at least $1.5 billion for its newest private credit fund, according to people with knowledge of the matter.

Guggenheim Targets $1.5 Billion for New Private Credit Fund

A group of investors led by Boaz Weinstein and other prominent hedge-fund managers has made an improved bid to buy Sculptor Capital Management Inc., which has already agreed to be bought by Rithm Capital Corp., the Wall Street Journal reported Sunday. In July, Sculptor said it had agreed to be acquired by Rithm Capital for $11.15 a share in a deal valued at about $639 million, a premium of 18% for the stock price at the time. Weinstein manages Saba Capital Management, and his group reportedly includes Bill Ackman, founder of Pershing Square Capital Management, and Marc Lasry, chief executive of Avenue Capital Group. 

Group of hedge-fund titans makes renewed bid to buy Sculptor Capital: report 

Goldman Sachs  said Monday that it agreed to sell its personal financial management unit to a competitor named Creative Planning. The transaction is expected to close in the fourth quarter of this year and “result in a gain” for New York-based Goldman. The bank declined to disclose the sale price for its PFM business. Goldman acquired a team of about 220 financial advisors managing $25 billion in assets in May 2019, when it announced the $750 million acquisition of United Capital Financial Partners. 

Goldman Sachs unloads another business acquired under CEO David Solomon

U.S. banking regulators on Tuesday unveiled plans to force regional banks to issue debt to protect depositors in the event of more failures. All American banks with at least $100 billion in assets would be subject to the new requirement, which makes them hold a layer of long-term debt to absorb losses in the event of a government seizure, according to a joint notice from the Treasury, Office of the Comptroller of the Currency, Federal Reserve and Federal Deposit Insurance Corporation.

Regulators unveil plans to force regional banks to raise debt in case of failure

The Bank of England’s losses on bonds bought to shore up the U.K. economy will be “materially higher than projected,” according to Deutsche Bank. In late July, the Bank of England estimated that it would require the U.K. Treasury to backstop £150 billion ($189 billion) of losses on its asset purchase facility.

The Bank of England is facing major losses on its bond purchases — and it’s set to get much worse

The biggest fintech news of the week centered around Better.com’s no good, very bad public market debut. Or as my friend and colleague Alex Wilhelm described it, Better.com had a Miserable.com week. To sum it up, digital mortgage lender Better.com made its public debut on August 24. To no one’s surprise, the stock wasn’t exactly a hit with public investors. In fact, it was a resounding bomb. As of Friday, August 25, the stock had closed a mere $1.19. Shares of SPAC partner, Aurora, were trading at $17.45 on Wednesday, before Better.com officially went public. This is a company that two years ago had planned to go public at a $7.7 billion valuation.

Better.com’s public market debut was Miserable.com

Subprime consumers are falling behind on their credit-card bills. From Generation Z and millennials to Generation X and baby boomers, credit-card delinquency rates have been trending upwards for four generations of borrowers since January 2020, reaching a new high in August, according to new data from VantageScore. Borrowers with a VantageScore between 300 and 600 across these four cohorts experienced an 8.9% delinquency rate — of 30 to 59 days — in July 2023, up from 7.49% a year earlier. Credit-card delinquency rates at smaller banks hit a record high of 7.51% in the second quarter of 2023, up from 6.01% at the same time last year, according to the Federal Reserve Bank. 

Is there a subprime credit-card crisis on the horizon? 

The collapse of Silicon Valley Bank and the US regional banking crisis that followed earlier this year had major economic and regulatory repercussions for lenders across the globe, some of which may be felt for years to come. But now that the more immediate threat of the crisis has dissipated, some clear winners have emerged. Shares of UBS (UBS) are up about 20% since it rescued Credit Suisse from collapse, and just last week the bank reported a $29 billion quarterly profit. The huge figure was almost entirely due to the discrepancy between Credit Suisse’s balance sheet value and the $3.8 billion that UBS paid to acquire the bank. JPMorgan Chase (JPM) shares, meanwhile, have gained more than 6% since it purchased First Republic Bank. 

How big banks won the banking crisis

U.S. banks collectively held more than $1.2 trillion in brokered deposits in the second quarter, according to a Wall Street Journal analysis of data from the Federal Deposit Insurance Corp. The total marked an 86% increase from a year earlier. Brokered deposits are what they sound like: A bank can go to a third-party broker such as Morgan Stanley or Fidelity to find customers to invest in the bank’s high-yielding certificates of deposit. That allows the bank to get big influxes of money at once, rather than customer by customer. Lots of banks are loading up on them—a sign of the distress that continues to afflict many lenders who now must compete for customer funds they long took for granted.  

Banks Load Up on $1.2 Trillion in Risky ‘Hot’ Deposits

Close to a third of all publicly-held, outstanding U.S. government debt is set to mature in the next 12 months, raising questions about where Treasury might go from there to finance the government’s borrowing needs. A total of $7.6 trillion will mature in the next year, approaching the level seen in early 2021. Concerns about Treasury’s increased issuance of T-bills and the potential for volatility or market disruptions emerged following the debt-ceiling fight in May, when angst over the government’s ability to pay all its bills pushed yields above 7% on debt maturing in early June. 

$7.6 trillion of publicly held U.S. government debt matures in next 12 months. What does the Treasury do next? 

The U.S. Federal Reserve launched FedNow in July, the first government real-time payment system in the U.S. The service allows banks and credit unions to transfer money for their customers instantly. Working alongside existing systems like Fedwire and FedACH, FedNow aims to improve the U.S.'s inter-bank and retail transaction infrastructure.

FedNow Has Launched As Blockchain Innovation Delivers Next-Gen Instant Payments

Marathon Asset Management, a leading global credit investment manager, today announced the final close for the third vintage of a closed-end asset-based lending fund with $1.7 billion of capital commitments.  As traditional lenders have downsized their lending programs, Marathon’s ABL strategy is designed to pursue compelling returns for clients by creating a diversified portfolio through sourcing, underwriting, and structuring attractive private investments that exhibit principal protection, robust asset coverage and predictable cashflows. , Marathon also intends to capitalize on the secondary loan market opportunities, as select undercapitalized financial institutions seek to improve their financial condition through asset sales.

Marathon Asset Management Closes $1.7 Billion Asset-Based Lending Fund

Even as the economy has surprised forecasters with its resilience, lenders have cut headcount or announced plans to do so, with the key exception being JPMorgan Chase. The next five largest U.S. banks cut a combined 20,000 positions so far this year, according to company filings. A key factor driving the cuts is that job-hopping in finance slowed drastically from earlier years, leaving banks with more people than they expected.

Big banks are quietly cutting thousands of employees, and more layoffs are coming

U.S. Federal Reserve officials and some investors are increasingly focused on something that can’t be easily explained by the economy or monetary-policy expectations as a likely driver for the relentless selling of government bonds that has brought long-term Treasury yields to their highest levels in more than 16 years. The so-called term premium of Treasurys, or the compensation that investors require for bearing the risk of holding longer-dated bonds, has taken center stage as some Fed officials started to think a rising term premium has driven much of the recent surge in 10-year and 30-year Treasury yields since late September. 

Fed says bond market’s term premium is the reason behind rise in Treasury yields. Why investors should take it with a dose of caution. 

The U.S. financial services division of Chinese bank ICBC was hit by a cyberattack that reportedly affected the trade of U.S. Treasurys. ICBC, the world’s largest lender by assets, said Thursday its financial services arm experienced a ransomware attack “that resulted in disruption to certain” systems. Security expert have said ransomware from the hacking group LockBit was used to carry out the cyberattack on ICBC. 

China’s ICBC, the world’s biggest bank, hit by cyberattack that reportedly disrupted Treasury markets

Back in November, UBS chair Colm Kelleher predicted that the next financial crisis would happen in shadow banking — delightfully infuriating Apollo’s Marc Rowan, speaking at the same conference later that day. So, the Chairman of UBS was asked at the tail end of his presentation, what is the single biggest risk to financial markets? And Colm said, a blow-up in the shadow banking industry. And with that, he got off the stage.


Is private credit a systemic risk?

Federal Reserve Chair Jerome Powell joined a chorus of US officials who have argued that mounting bad commercial real estate loans will likely cause some bank failures, but don’t pose a risk to the overall system.  The central bank chief told lawmakers on the Senate Banking Committee on Thursday that the Fed is talking with lenders to make sure they are on top of potential losses. His comments repeated the assessment of Treasury Secretary Janet Yellen, who last month said there will likely be some failures, but the situation will be “manageable.”

Powell warns commercial real estate woes will lead to bank failures: ‘This is a problem that we’ll be working on for years’

Goldman Sachs Asset Management is reportedly planning a major expansion of its private credit portfolio. The Wall Street giant aims to grow that portfolio to $300 billion in five years, up from $130 billion, a senior executive told Reuters Tuesday (March 12). “It’s a huge opportunity,” said Marc Nachmann, Goldman Sachs’ global head of asset and wealth management. According to the report, Goldman has loftier goals than other banking titans. For example, Morgan Stanley is planning to double its private credit portfolio to $50 billion, while JPMorgan Chase has set aside at least $10 billion for private credit. 

Goldman Sachs Aims for $300 Billion Private Credit Portfolio

New York Community Bancorp Inc.’s stock lost more than a third of its value Wednesday in its steepest one-day drop ever, after it posted a surprise loss, built up its reserves and signaled challenges in the office-space sector with one of two troubled loans. The bank also said it would cut its dividend by more than two-thirds to build up capital to meet regulatory requirements as a larger Category IV bank with assets of $100 billion to $250 billion.  The Hicksville, N.Y.-based bank missed Wall Street’s revenue and net-interest-income estimates and reported an increase in net charge-offs.

New York Community Bancorp’s stock crushed on surprise loss, dividend cut and cost of two loans

Temenos shares were down over 6% on Friday after closing over 28% lower on Thursday.
The Swiss software company said its board of directors “fundamentally refutes” a report by short-seller Hindenburg Research. Short-seller Hindenburg Research made headlines after accusing Indian conglomerate Adani of stock manipulation and accounting fraud in early 2023.

Hindenburg’s latest short target Temenos rejects allegations as share price tumbles

The $1 billion-plus injection that New York Community Bank announced Wednesday is the latest example of private equity players coming to the need of a wounded American lender. Key to these deals is speed and discretion, according to advisors to several recent transactions and external experts. Steven Mnuchin reached out to NYCB directly to offer support amid headlines about the duress it was under, according to a person with knowledge of the matter.

Why private equity has been involved in every recent bank deal

The six largest U.S. banks saw delinquent commercial property loans nearly triple to $9.3 billion in 2023 amid high vacancy rates and increasing borrowing costs. Today, the sector is facing greater scrutiny from regulators amid growing risks to bank stability. In fact, for almost half of all U.S. banks, commercial real estate debt is the largest loan category overall. While commercial loans are more heavily concentrated in small U.S. banks, several major financial institutions have amassed significant commercial loan portfolios.

Visualizing Major U.S. Banks by Commercial Real Estate Exposure

Banks have now regained all deposits they lost following the collapse of Silicon Valley Bank. But that doesn't solve many of the problems still faced by regional lenders. The amount of deposits held by all US banks hit $17.56 trillion during the week ending March 20, according to the latest Federal Reserve data, exceeding pre-SVB levels for the first time since the California regional lender was seized on March 10, 2023.

Bank deposits are back above pre-SVB levels. Regional lenders still have problems.

In the six months following its groundbreaking launch in July 2023, FedNow has emerged as a transformative force in real-time payments, marking a significant departure from the traditional Automated Clearing House (ACH) system.  This shift signifies a pivotal moment in banking innovation, offering instantaneous transaction processing that aligns with the modern financial transaction demands.

How FedNow is Shaping Payments Since its Groundbreaking Launch

The Federal Reserve is stressing the importance of fintechs and core providers for the future expansion of its new instant payments system FedNow. The Federal Reserve won’t provide fintechs with direct access to its new instant payments system FedNow, but it’s still courting their participation in the new real-time ecosystem. 

Fintechs can help the Fed see what’s on the horizon for the new faster payment system and allow the new real-time payments services to be easier to use, said Mollie Markham, a Federal Reserve Bank of Chicago industry specialist who works with nonbanks. Fintechs can also assist the Fed in providing services that make the most of FedNow’s data-rich capabilities, she said during a conference this month.

Fed courts nonbanks for FedNow growth

The first bank failure of 2024 punctuates the discord that has brewed at Republic First for more than two years. Fulton, meanwhile, will double its Philadelphia presence through the deal. Lancaster, Pennsylvania-based Fulton Bank agreed to purchase substantially all of the assets of beleaguered Philadelphia lender Republic First Bank and assume substantially all of its deposits, the Federal Deposit Insurance Corp. said Friday. The Pennsylvania Department of Banking and Securities closed Republic First earlier in the day and appointed the FDIC as receiver.

Republic First is seized, assets sold to Fulton Bank

Private equity firms including Apollo Global, KKR, Blackstone and Brookfield are accelerating efforts to make low-risk loans, encroaching on territory dominated by banks and public debt markets. New York-based group Apollo on Thursday increased its long-term forecasts for its lending business, telling shareholders it expected to be able to originate more than $200bn a year in new loans, up from $150bn previously. This compares with $97bn issued last year including to investment grades European group Vonovia and Air France-KLM. Volumes reached a record $40bn in the first quarter of 2024, it said.


Private equity firms step up plans to edge banks out of low-risk lending

The federal IOU is now at $34.5 trillion, or about $11 trillion higher than where it stood in March 2020. Chatter has spilled into government and finance heavyweights, and has one prominent Wall Street firm wondering if costs associated with the debt pose a risk to the stock market rally. The CBO estimates that debt held by the public compared to GDP will rise to “an amount greater than at any point in the nation’s history.” Fed Chair Jerome Powell said recently that “this is something that elected people need to get their arms around sooner rather than later.”

Soaring debt and deficits causing worry about threats to the economy and markets

The failures of Silicon Valley Bank and First Republic Bank in 2023 caused plenty of finger-pointing at bank regulators. Many US financial institutions including SVB and First Republic were covering large portions of their liabilities with assets such as government bonds that stood to lose value if interest rates rose significantly—which is exactly what happened. As the Federal Reserve hiked interest rates, rumors swirled that the two banks might not have sufficient assets to cover all their deposits. Customers yanked their money out, causing runs at both.

US Bank Regulators Could Have Averted $9 Billion in Losses

Michael Sonnenshein has stepped down from his role as the CEO of Grayscale Investments LLC. Sonnenshein will be replaced by former Goldman Sachs executive Peter Mintzberg as of Aug. 15. Until then, Grayscale’s chief financial officer, Edward McGee, will lead the firm in the interim as the principal executive officer.

Grayscale CEO Michael Sonnenshein steps down

The Consumer Financial Protection Bureau declared on Wednesday that customers of the burgeoning buy now, pay later industry have the same federal protections as users of credit cards. The agency unveiled what it called an “interpretive rule” that deemed BNPL lenders essentially the same as traditional credit card providers under the decades-old Truth in Lending Act. The BNPL market is dominated by fintech firms like Affirm, Klarna and PayPal.

CFPB says buy now, pay later firms must comply with U.S. credit card laws

“Participants observed that while inflation had eased over the past year, in recent months there had been a lack of further progress toward the Committee’s 2 percent objective,” the summary stated. The minutes also showed “various participants mentioned a willingness to tighten policy further should risks to inflation materialize in a way that such an action became appropriate.” The meeting followed a slew of readings that showed inflation was more stubborn than officials had expected to start 2024.

Federal Reserve minutes indicate worries over lack of progress on inflation

JPMorgan Chase CEO Jamie Dimon said private credit could spark turmoil if the opaque sector of financial markets weakens. "There could be hell to pay," he said at a conference on Wednesday. "I've seen a couple of these deals that were rated by a rating agency and, I have to confess, it shocked me what they got rated. So, it reminds me a little bit of mortgages."

Jamie Dimon says there could be 'hell to pay' if the swelling private-credit market starts showing cracks

After months of business leaders and economists urging action, the People’s Bank of China (PBoC)—the central bank of the world’s second biggest economy—finally acquiesced, unleashing a triptych stimulus package aimed at spurring consumer spending to counter persistent deflation. Yet analysts doubt even this “policy bazooka” will have much of an effect. 
On Tuesday, the PBoC unveiled a policy interest rate cut of 0.2 percentage points, combined with a lowering of banks’ reserve requirements and the cutting of existing mortgage interest rates, both by 0.5 percentage points. For the PBoC to unveil three rate cuts at once is itself unprecedented. 

China’s Bold Stimulus Measures Won’t Save Its Flagging Economy

Monetary policy in advanced countries is diverging in a manner that was thought highly unlikely just a few months ago.  A major question facing many central banks around the world is no longer whether interest rate policies in advanced countries will decouple in a manner that was thought highly unlikely just a few months ago. They already have and will do so even more.  The question is the scope and size of the potential divergence, and the implications for reconciling domestic economic priorities with the avoidance of harmful exchange rate volatility.


Europe May Soon Discover the Limits of Decoupling on Rates

The Bank of Canada cut on Wednesday its main interest rate by a quarter-percentage point, becoming the first Group of Seven central bank to provide rate relief after a rapid and aggressive increase in borrowing costs to tame inflation. Canada's central bank said a cut was warranted because of increased confidence that inflation is moving closer to its 2% target. Bank of Canada Gov. Tiff Macklem said more rate cuts could be in the offing should inflation show further signs of slowing. The Bank of Canada lowered its target for the overnight rate to 4.75% from 5%, where it sat for 11 months. 

Bank of Canada Cuts Policy Rate to 4.75%, Signals More Easing Possible

The European Central Bank cut its policy rates by 25 basis points, as expected, on Thursday, its first cut in almost five years amid signs that price pressures have weakened. "Based on an updated assessment of the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission, it is now appropriate to moderate the degree of monetary policy restriction after nine months of holding rates steady," the ECB's Governing Council said in a statement. The ECB is the third major central bank to lower its key policy rates, following the Swiss National Bank's move last month and the Bank of Canada's cut on Wednesday.

ECB cuts key interest rates by 25 bps even as outlook on inflation revised up

Blue Owl has earned a high public market valuation. And the private capital upstart is showing that it is not afraid to use it. So far the manager has announced $1.4bn worth of deals this year, across three acquisitions. This month, in its latest transaction, it acquired the credit manager Atalaya Capital Management, for $450mn.  

Blue Owl is bidding hard for the private capital big leagues

China’s central bank took new steps to shore up the country’s sputtering economy, highlighting officials’ growing anxiety about growth only days after leader Xi Jinping set out his long-term vision to transform China into a technological powerhouse to rival the U.S. The People’s Bank of China said Thursday that it cut a key interest rate and pumped the equivalent of more than $25 billion into China’s banking system. The move caught investors by surprise, as it occurred outside the usual sequence for policy shifts in the PBOC’s complex collection of interest rates and other tools.

Van Lanschot Kempen - Reviews