HSBC’s third quarter numbers are out. We got a relatively unexciting underlying profit figure of $5bn but a whack of extra provisions totalling $1.15bn, including $800m more to cover the bank’s money laundering troubles in the US on top of the $700m already put aside.
From HSBC (our emphasis): Read more
Remember the frustrating old days when a cloud of uncertainty hanging over bank balance sheets was due to illiquid structured products and mortgage security holdings? When one was left to look out the window and wonder just how much of a payout would a bank ultimately get on its credit default swap protection on super-senior CDO tranches from ailing monolines? Sigh. Read more
Monday morning’s FT covered this announcement:
Lloyds Banking Group has launched a scheme that scraps all incentives linked to product sales in the latest attempt to clean up bad practices that have been blamed for causing mis-selling scandals.
Oh yay, Chinese consumer price inflation for July came in at a nicely subdued looking 1.8 per cent. And industrial production growth continued to slow. Q2 wasn’t the bottom after all. More easing ahoy! Right?
Not so fast… Read more
We’re fascinated by Provident Financial, the
doorstep lender to low-income households, and its credit card business Vanquis Bank.
Earlier this week, the company hosted an investor day for this fast-growing business, which drip-feeds credit to people with poor repayment histories. The presentation slides are available on the Provident Financial website. Read more
Did you know? 0.4 per cent of British consumer spending could be coming from the banks this year.
To figure out why, all you have to do is look at the recently announced pay-outs on the Payment Protection Insurance sold by UK banks. As much as £6-9bn could be winding its way to the pockets of British consumers. Though, as UBS notes, the amount is likely to be somewhat smaller. Read more
Breaking pre-market news on Thursday,
- Morgan Stanley gives pre-stabilisation notice on Glencore IPO – statement. Read more
In a sign that UK bank executives will increasingly be held accountable for their bank’s performance, Lloyds Banking Group on Wednesday signalled it could claw back part of the bonuses given to executives after taking a £3.2bn hit for mis-selling loan insurance, reports the FT. At the bank’s annual shareholder meeting, Sir Win Bischoff, chairman, said the part-nationalised bank was considering whether losses on payment protection insurance (PPI) should affect the pay of those responsible. No UK bank is believed to have reclaimed bonuses since new “clawback” rules were introduced last year. Lloyds emphasised no decision had been taken but said there could be cuts in bonuses that vest in future years. TheSource meanwhile says Lloyds new CEO Antonio Horta-Osorio “laid on much charm but little substance” in his first shareholders meeting. Read more
Royal Bank of Scotland on Monday joined its rivals in conceding the cost of years of mis-selling loan insurance, revealing an £850m provision as part of the UK’s second-largest customer compensation settlement, reports the FT. The part-nationalised bank gave in to demands to quantify its compensation bill after the industry dropped a six-month legal dispute over payment protection insurance, which covers loan repayments when borrowers fall ill or lose their jobs. Barclays had said earlier in the day it would take a £1bn hit for PPI repayments, while HSBC, a smaller provider, set aside £270m. These followed a larger-than-expected £3.2bn charge taken last week by Lloyds, the UK’s biggest PPI provider. RBS had insisted in its results announcement on May 6 it was too early to estimate likely PPI losses. RBS’s disclosure took total provisions by the four banks to £5.3bn, making PPI the second-biggest compensation payment recorded by the UK financial regulators. Read more
Breaking pre-market news on Monday,
- Barclays takes £1bn provision to cover the costs of miss-selling payment protection insurance (PPI) — statement. Read more
Lloyds Banking Group admitted defeat in the UK’s worst consumer mis-selling scandal in a decade as it made a surprise provision of £3.2bn to compensate customers who took out loan insurance cover, reports the FT. Its move to start refunding holders of much-criticised payment protection insurance policies is a blow to the industry’s hopes of reversing regulatory changes to the way the product is sold. The charge, more than double the amount analysts had expected, was revealed by António Horta-Osório, Lloyds’ new chief executive, alongside a disappointing set of first-quarter results. Including the PPI hit and £1.1bn of impairments relating to its deteriorating Irish portfolio, Lloyds reported a 1Q pre-tax loss of £3.5bn, rendering its return to profit last year short-lived. FT Alphaville looks at more bad news – and a bit of good – from Lloyds. Read more
Lloyds Banking Group was thrust back into the red in the first quarter of this year after taking a £3.2bn provision for potential compensation claims arising from payment protection insurance, a controversial type of loan cover, the FT reports. The bank – the biggest provider of PPI – is the first to take a hit following last month’s decision by the High Court to throw out an appeal from the industry against regulatory changes that would force lenders to refund past policies. The provision by Lloyds is far larger than expected – the Financial Services Authority had estimated that the changes could cost the whole industry £4.5bn and analysts had expected Lloyds’ share to be about £1.5bn. The hit, along with higher than expected loan losses from its tattered Irish real estate portfolio – higher than analysts had anticipated, at £1.1bn – pushed Lloyds into a first-quarter pre-tax loss of £3.47bn, compared with a £721m profit a year ago. Read more
Millions of consumers are set to share in the largest UK compensation pay-out in almost a decade, after the banking sector lost a High Court challenge over the sale of controversial loan insurance, the FT reports. In the latest twist in a long-running dispute over payment protection insurance, the court dismissed an appeal brought by the banks against regulatory changes that would force them to refund past policies worth billions of pounds. Read more
On Wednesday, official data showed that Eurozone producer prices in January had risen at their highest rate since the launch of the single currency.
As Reuters reported, prices at factory gates in the zone’s 17 countries rose 1.5 per cent month-on-month in January achieving a 6.1 per cent year-on-year rise. Read more
You wait all morning for the 0.8 bus and then three come along at once.
Three US indicators were released on Monday all showing 0.8 per cent increases in advance of the final FOMC meeting of the year. Read more
Yet another freaking economic indicator that you can file under “getting more attention than unusual because it’s the last one before QE2 blah blah fine great” is Friday’s consumer price inflation index for September
We’ll start with a couple of new graphs from the Cleveland Fed, both using data released since Wednesday: Read more
News just in for the deflation mongers out there: the US Producer Price Index fell an unexpected 1.2 per cent in March — the sharpest decline in three months. The market had been expecting a flat number.
Here’s the latest from Reuters: Read more