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’Wells Fargo feels the squeeze
Citigroup wasn’t the only US banking giant to report results on Monday.
Wells Fargo, America’s fourth biggest bank by assets and second biggest bank by operating income, also released its quarterly earnings statement.
It’s going to be a miserable third quarter for banks, say banks
US bank reporting season is almost upon us and we’re looking forward to investigating the mysteries surrounding the performance of the bulge bracket since the turn of the year.
To give you a sense of how bad it’s been for the 1 per cent,
What price the banks’ FHFA lawsuit losses?
The lawsuits filed on Friday by the Federal Housing Finance Agency against 17 global banks involved nearly $200bn of mortgage-backed securities but the regulator refused to put a figure on the total losses it was seeking to recover.
Paulson’s BofA-Citi-Wells switcheroo
John Paulson’s quarterly 13F filing was released late on Monday and the headlines make for interesting reading. We may go through it in more detail later but we thought this portfolio change-up was worth noting right away:
US financials still lagging
US stocks are up slightly today, and the rally is happening entirely in the so-called “real” economy.
As per the norm since earnings season kicked off last week, financials are underperforming — here’s a look at the S&P vs the KBW bank index:
‘Focus on the positives’ of the Ibanez case, Amherst says
Should banks be trembling in their boots after Friday’s “Ibanez case” ruling from a Massachusetts High Court — you know, the one that said Wells Fargo and US Bancorp couldn’t foreclose on two properties in the eastern seaboard state.
A court case to challenge securitisation standards [updated]
Currently winding its way through the Massachusetts Supreme Court — a little court case that could end up having big consequences for mortgage securitisations.
It’s called the ‘Ibanez case’ and here’s the story.
Not-so-TAF-tastic
The Fed’s Term Auction Facility — started in 2007 to boost short-term liquidity amongst commercial banks — carried a number of caveats.
This was one of them:
Under the program, the Federal Reserve auctioned 28-day loans,
Deutsche Bank on the perfect mortgage company
Foreclosure fraud! Robosigning! Repurchases!
How, as Mike Konczal noted a couple weeks ago, did mortgage servicers get it so wrong?
To answer the question it’s worth taking a look at a certain mortgage firm that may have got it right.
RepoCDSed
Fears of an extended foreclosure crisis put sizeable pressure on US bank spreads.
WFC five-year CDS is at 128bps (+10) according to Markit prices, Citi at 175bps (+11), and JPM at 96bps (+7). BAC is up 18bps to 197bps — its widest level since July 2009.
Banks’ buyback pain to be $17bn – $42bn, Fitch estimates
While the Firm uses the best information available to it in estimating its repurchase liability, the estimation process is inherently uncertain and requires the application of judgment.
- JP Morgan’s Q2 10-Q filing.
A welcome plunge in rankings for Wall Street’s finest
There is one exclusive ranking in the financial world that Goldman Sachs’ chief executive Lloyd Blankfein and his high-earning counterparts at Citigroup and JPMorgan are very glad to be at the bottom end of — and that is the annual list of the best-paid finance industry CEOs.
Musings on mortgage modification-obfuscation
Here’s something to ponder ahead of the US bank earning season.
Mortgage modifications — that is, changes to the terms of home loans — have been running rampant just as banks’ non-performing loans and net-charge-offs appear to be peaking.
Investment banks, munis and derivatives, redux
Wall Street must be wondering whether the returns on selling derivatives to municipalities (and say, Greece) are really worth the headache.
In the latest development in the saga of investment banks v munis in re derivatives,
The second lien sticking-point
Just a datapoint for you, as the debate over the US Treasury’s Hamp programme rages on.
As a reminder, the Home Affordable Modification Plan aims to help keep people in their houses primarily by lowering interest rate payments.
Spot the odd one out
Related links:
Good banks, bad banks – FT Alphaville
Banks’ coverage ratio capers cont. – FT Alphaville
Great Depression-esque bad debt at banks – FT Alphaville
Wells Fargo beats with Q4 net income of $2.8bn
Wells Fargo announced record full-year earnings on Wednesday on revenues of $22.7bn in the fourth quarter.
Net income for the group came in at $2.8bn or $0.08 per share versus analyst expectations the bank would lose one penny per share on revenue of $21.97bn.
Hamp-ing up the numbers
On Friday the US Treasury released December figures for its Home Affordable Modification Program.
The report makes for interesting reading maths.
For a start, as Calculated Risk notes, you have to wonder why,
The slumbering CLO awakes?
Earlier this month, FT Alphaville asked whether synthetic CLOs were gone for good, or merely hibernating?
This week it looks like the synthetic CLOs’ simpler cousin, your run-of-the-mill business loan-packed CLO,
CDS report: Pulling the TARP back
Markit’s Otis Casey wrote this CDS report
Market focus shifted a bit to events in the US today. Wholesale prices in November were up 1.8% which was well above estimates, sparking renewed inflation
Wells Fargo settles ARS dispute
Wells Fargo has agreed to buy back about $1.4bn of auction-rate securities from investors as part of a settlement with regulators over the collapse of the ARS market. Wells Fargo Investments, a brokerage unit of the San Francisco-based bank,
Bringing it back on balance sheet, by the numbers
First the good news: the following numbers are not as bad as they might have been.
Now the numbers, courtesy of Jason Goldberg at Barcap:
C is expected to have the most assets coming back on balance sheet ($154B),
Wells Fargo Pick-A-Pay, Pick-A-Pray
Extend and pretend. Kicking the can. Fake it till you make it. Band-aided.
Any one of those expressions could be used to describe the latest loan modification technique from Wells Fargo.
Dow Jones,
The perils of instant analysis
It seems Dick Bove has landed himself in a bit of trouble.
Having appeared on CNBC immediately after Wells Fargo’s third-quarter results on Wednesday, saying the bank was a “standout” among financial institutions,
Merger savings boost Wells’ profit
Wells Fargo, the fourth-largest US bank by assets, on Wednesday posted record Q3 profits as revenues outstripped loan losses, and savings from its merger with East coast rival Wachovia began to materialise.