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Kostya Golovan

RBC in the running for Bank of America wealth units - The Globe and Mail - 0 views

www.theglobeandmail.com/...page1

shared by Kostya Golovan on 17 May 12 - No Cached
  • | NATHAN DENETTE/THE CANADIAN PRESS
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    RBC in the running for Bank of America wealth units

    TARA PERKINS AND REUTERS

    Globe and Mail Update
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    Canada’s largest bank, Royal Bank of Canada (RY-T

  • Canada’s largest bank, Royal Bank of Canada (RY-T51.90-1.13-2.13%), is among the financial institutions looking to pick up parts of Bank of America’s wealth management business
  • In 2010 it paid $1.6-billion for U.K.-based Blue Bay Asset Management.
  • ...11 more annotations...
  • Aside from Europe, executives have recently said that RBC has also been looking to buy operations in Asia. The assets that Bank of America is looking to sell include businesses in both those regions, as well as the Middle East and Latin America.
  • they require less capital to back them up.
  • ING Group sold its private banking assets in Europe and Asia in 2010 to Julius Baer and Singapore’s Oversea-Chinese Banking Corp, respectively, for a total of about $1.9-billion.
  • The units manage about $90-billion of an estimated $2-trillion that the wealth division oversees at the second-largest U.S. bank by total assets.
  • Consolidation in the wealth management industry has been a major theme in the banking sector since the 2008 financial crisis
  • Bank of America is selling because it is shrinking the company
  • Bank of America has lagged peers in recovering from the financial crisis, largely because of huge losses and lawsuits tied to its 2008 acquisition of subprime mortgage lender Countrywide Financial.
  • Canada’s largest bank, which will release second-quarter results on May 24, has been growing its wealth management business and made acquisitions that included British fund manager BlueBay Asset Management for $1.5-billion about two years ago.
  • RBC, which has said it wants to expand its wealth operations organically and with small- and medium-sized acquisitions
  • companies generally prefer to sell the entire group in one go
  • My view is that they are going to sell it as a whole and therefore the number of banks that actually can do it will be more limited
  • Kostya Golovan on 18 May 12
     
    RBC, Canada's largest bank, has for years been looking to expand its global wealth management outreach and is now eager to pick up part of Bank of America's wealth management operation which is going on sale. The prospects of such an en devour are great given the predicted growth in number of millionaires in Asia. RBC has for years been interested in such an expansion and is now very interested in acquiring the wealth unit of Bank of America
stefan ayache

12-year-old Ontario girl slams modern banking system, becomes YouTube hit - thestar.com - 1 views

www.thestar.com/...ng-system-becomes-youtube-star

shared by stefan ayache on 17 May 12 - No Cached
  • Canada’s banking system has been the subject of international praise from economists grappling with global turmoil, but one 12-year-old girl begs to differ
  • earning a reputation as a financial pundit after her tirade against her homeland’s borrowing practices
  • already a veteran of the financial lecture circuit
  • ...11 more annotations...
  • reasons why so many of the world’s countries are facing staggering debt
  • aim at Canada’s modern day financial system and champions a greater role for the country’s central bank
  • The banks and the government have colluded to financially enslave the people of Canada
  • a brief history of the Canadian banking system, referencing obscure historical figures
  • governments began borrowing from private banks instead at considerably higher interest rates than those available through the central bank
  • The result, Grant argues, is a rapidly increasing national debt
  • If the Canadian Government needs money, they can borrow it directly from the Bank of Canada
  • arguing borrowing from the Bank of Canada would shore up depleted government resources and usher in an era of prosperity for Canada
  • Such a change in monetary policy, combined with crucial changes in tax policy, would make available tens of billions of dollars that are urgently needed to rebuild our public infrastructure, protect our environment, and strengthen Medicare and other social programs so vital in meeting human needs
  • Critics of Crowell’s arguments contend inflation rates would soar if the central bank was able to lend money below commercial interest rates
  • Others, however, were skeptical that Grant’s words were truly her own
Kevin Mao

Definitions - 12 views

Interest - "1. The charge for the privilege of borrowing money, typically expressed as an annual percentage rate. 2. The amount of ownership a stockholder has in a company, usually expressed as a...

started by Kevin Mao on 18 Apr 12 12 follow-ups, last by Kevin Mao on 18 May 12
stefan ayache

Banking industry faces calls for tougher regulation after massive loss at JPMorgan - Wi... - 0 views

www.winnipegfreepress.com/...-on-investments-151019915.html

banking

shared by stefan ayache on 17 May 12 - No Cached
  • JPMorgan Chase faced intense criticism Friday for claiming that a surprise $2 billion loss
  • the colossal misfire was cited as proof that big banks still do not understand the threats posed by their own speculation
  • It just shows they can't manage risk
  • ...31 more annotations...
  • if JPMorgan can't, no one can
  • JPMorgan is the largest bank in the United States and was the only major bank to remain profitable during the 2008 financial crisis
  • the $2 billion loss came from a hedging strategy that backfired, not an opportunistic bet with the bank's own money
  • the trades were instead a "major bet" on the direction of the economy
  • he did not know whether JPMorgan had broken any laws or regulatory rules
  • the bank was "totally open" to regulators
  • recharged a debate about how to ensure that banks are strong and competitive without allowing them to become so big and complex that they threaten the financial system
  • The JPMorgan loss did not cause anything close to the panic that followed the September 2008 failure of the Lehman Brothers
  • Within minutes after trading began on Wall Street, JPMorgan stock had lost almost 10 per cent
  • about $15 billion in market value
  • It closed down 9.3 per cent
  • Fitch Ratings also downgraded the bank's credit rating by one notch
  • The broader stock market was down only slightly for the day
  • they involved "synthetic credit positions," a type of the complex financial instruments known as derivatives
  • Enhanced oversight of derivatives was a pillar of the 2010 financial overhaul law
  • the implementation has been delayed repeatedly
  • the derivatives market remains too opaque for regulators to oversee
  • Corker, a leader of a failed effort last year to block a Federal Reserve rule that slashed bank profits from debit cards, called for a hearing "as expeditiously as possible"
  • imposible to legislate or regulate risk out of the financial system
  • A mistake was made. Money is going to be lost. It's not customer money. It's not government money. It's JPMorgan's money, the shareholders of JPMorgan
  • No one seemed to suggest Friday that JPMorgan had broken a law
  • changes promoted by the Obama administration were in many cases similar to what the financial industry had sought before the crisis
  • Regulators are still drafting hundreds of rules
  • One is the so-called Volcker rule, which will prohibit banks from trading for their own profit
  • Dimon conceded that the strategy was "egregious" and poorly monitored
  • the trades probably crossed that line because they were making money for JPMorgan
  • At some point it goes from being a hedge to being a moneymaker
  • the only big bank to escape relatively unscathed
  • Dimon said that Paul Volcker, the former Federal Reserve chairman for whom the rule is named "doesn't understand capital markets."
  • "Acting like everyone who's been successful is bad and that everyone who is rich is bad — I just don't get it," he said at a conference earlier this yea
  • sent an email to JPMorgan's 270,000 worldwide employees assuring them that the company was "very strong."
Kevin Mao

Banking rules may encourage riskier trading, warns ratings agency | Business | The Guar... - 0 views

www.guardian.co.uk/...ng-rules-riskier-trading-fitch

banking rules Shadow Regulations Changes

shared by Kevin Mao on 17 May 12 - No Cached
  • 29 biggest banks in the world could be encouraged to embark on riskier trading activities
  • The 29 banks are deemed to be global systemically important financial institutions
  • agency also warned that borrowing costs for customers could rise as banks try to maintain their profitability
  • ...7 more annotations...
  • might even be a shift to the capital markets to raise funds and banks could move into the less regulated areas of finance, known as "shadow banking"
  • Banks need to meet the new capital requirements, known as Basel III and being implemented as a result of the 2008 banking crisis, by the end of 2018,
  • The impact of holding extra capital – about 23% more than their current holding of $2.5tn – could reduce returns on equity to 8.5% from the 10.8% average of the 29 banks during the period 2005-2011
  • in an effort to entice investors the banks may be encouraged to take bigger risks
  • 29 banks will in total need to find $566bn on the assumption that these crucial banks need a 10% capital cushion
  • need for extra capital will reduce the return on equity
  • If the banks did not raise equity it would take them three years to raise the extra capital
  • Kevin Mao on 17 May 12
     
    This article is about new banking rules that may encourage riskier trading.
stefan ayache

Mortgages: More than half of Canadians to carry household debt into retirement | Mortga... - 1 views

business.financialpost.com/...to-retire-with-mortgage-survey

shared by stefan ayache on 17 May 12 - No Cached
  • The one thing Canadians won’t be retiring anytime soon is their mortgage debt
  • Bank of Montreal says 51% of Canadian homeowners plan to carry their mortgage into their retirement
  • times have changed and he believes Canadians can handle the burden
  • ...12 more annotations...
  • People are more sophisticated in their approach to personal finance today than the previous generation
  • People are living longer, working longer and making real estate plans longer or further into their lives
  • Another trend, one which was not considered by the industry before, is people moving into more expensive, upscale homes after retirement
  • Another part of the trend could very well be strategic. With rates on a five-year closed mortgage at about 3.5%, paying down that debt might not seem as high a priority for many homeowners
  • The extremely low level of interest rates is acting both as an inducement for people to take on more debt than they would have in the past and on the flipside not encouraging them to save as in the past
  • People could end up working longer and it might also mean there will be that much less equity in the home you’ll be leaving to heirs
  • could also reflect the longer amortizations the mortgage industry saw
  • Traditionally, mortgages were amortized over 25 years, but that number ballooned to 40
  • the issue is how it’s affecting retirement with half of Canadian homeowners saying their debt load was hindering their ability to plan and save
  • Canadians need about 70% of their pre-retirement income to maintain the same lifestyle
  • By 60 to 69, 25% of those people still have a mortgage
  • real estate prices continue at all-time highs
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