Displaying items by tag: Banks

UPDATED -It is beyond a hallucinogenic-induced pipe dream to even consider that the Eurozone will come out of this attempt at replicating the US "extend and pretend" policy intact and unscathed. The mere concept of global equity rallies should have macro traders and fundamental investors chomping at the bit. The US won't even get away with it, and we have the world's reserve currency printing press in our basement running with an ink-based, inter-cooled, twin-turbo supercharger strapped on that will make those German engineers green with envy, not to mention green with splattered printer ink as the presses go berserk!

In part 2 of my series on the Pan-European Sovereign Debt Crisis, we will review Italy and Ireland in comparison to the whipping child of the media - Greece (see "The Coming Pan-European Sovereign Debt Crisis" for part one covering Greece and Spain along with tear sheets for the Spanish banks at risk for subscribers).

UPDATED -It is beyond a hallucinogenic-induced pipe dream to even consider that the Eurozone will come out of this attempt at replicating the US "extend and pretend" policy intact and unscathed. The mere concept of global equity rallies should have macro traders and fundamental investors chomping at the bit. The US won't even get away with it, and we have the world's reserve currency printing press in our basement running with an ink-based, inter-cooled, twin-turbo supercharger strapped on that will make those German engineers green with envy, not to mention green with splattered printer ink as the presses go berserk!

In part 2 of my series on the Pan-European Sovereign Debt Crisis, we will review Italy and Ireland in comparison to the whipping child of the media - Greece (see "The Coming Pan-European Sovereign Debt Crisis" for part one covering Greece and Spain along with tear sheets for the Spanish banks at risk for subscribers).

Senator Corker challenged Mr. Volcker's stance in today's congressional hearings on the Volker Rule by saying that no financial holding company that had a commercial bank failed while performing proprietary trading. It appears as if Mr. Cofker may have received his information from the banking lobby, and did not do his own homework.
Let's reference the largest commercial bank/thrift failure of the all. First off, a little historical reference courtesy of WSJ.com:

 WaMu Is Seized, Sold Off to J.P. Morgan, In Largest Failure in the History of the US!!!

 In what is by far the largest bank failure in U.S. history, federal regulators seized Washington Mutual Inc. and struck a deal to sell the bulk of its operations to J.P. Morgan Chase & Co...

The collapse of the Seattle thrift, which was triggered by a wave of deposit withdrawals, marks a new low point in the country's financial crisis...

Senator Corker challenged Mr. Volcker's stance in today's congressional hearings on the Volker Rule by saying that no financial holding company that had a commercial bank failed while performing proprietary trading. It appears as if Mr. Cofker may have received his information from the banking lobby, and did not do his own homework.
Let's reference the largest commercial bank/thrift failure of the all. First off, a little historical reference courtesy of WSJ.com:

 WaMu Is Seized, Sold Off to J.P. Morgan, In Largest Failure in the History of the US!!!

 In what is by far the largest bank failure in U.S. history, federal regulators seized Washington Mutual Inc. and struck a deal to sell the bulk of its operations to J.P. Morgan Chase & Co...

The collapse of the Seattle thrift, which was triggered by a wave of deposit withdrawals, marks a new low point in the country's financial crisis...

Volcker is correct in that banks conflicts of interests need to be stemmed. One would not have to worry about over regulation if one does not attempt to regulate every single act or attempt to guess what might go wrong. What needs to be done is to use regulation to disincentivize banks from engaging in activities that engender systemic risks and/or harm clients. By putting everybody on the same side of the table, you don't have to worry about outsmarting the private sector. 

Volcker is correct in that banks conflicts of interests need to be stemmed. One would not have to worry about over regulation if one does not attempt to regulate every single act or attempt to guess what might go wrong. What needs to be done is to use regulation to disincentivize banks from engaging in activities that engender systemic risks and/or harm clients. By putting everybody on the same side of the table, you don't have to worry about outsmarting the private sector. 

Now, it is time to see if fundamentals return to the market. 

From Bloomberg: BBVA Fourth-Quarter Profit Plunges 94% to $44 Million on Asset Writedowns

 Jan. 27 (Bloomberg) -- Banco Bilbao Vizcaya Argentaria SA said fourth-quarter profit slumped to 31 million euros from 519 million euros a year earlier as the lender wrote down the value of some assets.

BBVA fell the most in eight months in Madrid trading after saying net income fell to 31 million euros ($43.6 million) from 519 million euros a year earlier, the Bilbao, Spain-based bank said in a filing today. That missed the 1.05 billion-euro median estimate in a Bloomberg survey of nine analysts as the bank took a 704 million-euro writedown for its U.S. franchise.

BBVA said it took the writedowns after analyzing its “most problematic portfolios” as it prepares for a tough year with recessions in its biggest markets of Spain and Mexico.

“Whenever there are writedowns like this, there must be a clear negative message behind that,” said Peter Braendle, who oversees about $57 billion at Swisscanto Asset Management in Zurich and holds BBVA shares. “My concern is that the worst may not be over, especially in Spain.”

Extra Provisions

The bank took 1.05 billion in charges as it adjusted the value of its U.S. business. Other writedowns included 200 million euros of provisioning charges for assets acquired in Spain as it reported additional losses on its Iberian consumer loan book, BBVA said.

Today’s writedown represents about 15 percent of the goodwill attached to the U.S. business, according to estimates by Banco BPI SA. U.S. provisions were 715 million euros higher than in the third quarter as the bank adjusted the value of commercial real estate collateral. The bank also took a charge of 73 million euros on its Mexican cards business and a 90 million-euro charge to account for Venezuelan inflation.

Bad loans as a proportion of total lending climbed to 4.3 percent from 2.3 percent a year ago. “Doubtful risks” on BBVA’s books leapt to 15.6 billion euros from 12.5 billion euros in September and 8.6 billion euros a year ago.

Loan Losses

“I don’t think the U.S. goodwill writedown is as important as all the new non-performing loans,” said Simon Maughan, an analyst at MF Global Securities Ltd. in London. “It’s catch-up time for loan losses. For those people who may have had their doubts about the Spanish methodology for timely reporting of NPLs, here is some strong evidence to support their view.” Let it be known that I issued this warning one year ago! [Reggie]

Profit from Spain and Portugal fell 24 percent to 496 million euros from a year ago, the bank said. Bad loans as a proportion of total lending almost doubled to 5.1 percent from 2.6 percent as lending shrank 1.2 percent.

Earnings from Mexico dropped 29 percent to 268 million euros, the bank said. BBVA booked a loss of 122 million euros from its U.S. business compared with a 21 million-euro gain a year ago.

Net interest income climbed to 3.59 billion euros from 3.09 billion euros a year ago.

The bank had a core capital ratio of 8 percent compared with 6.2 percent a year ago. BBVA said it would keep its commitment to distribute 30 percent of 2009 profit in dividend payments.

 This was foreseen nearly one year ago, to date. This bank got caught up in the bear rally and apparently (like many banks) was not deserving of the outrageous boost in the share price. Reference the past analysis.

Fourth quarter operating results opinions are available for Morgan Stanley and Suntrust for paying subscribers( STI 4Q09_Review

MS 4Q09 result).

Of particular note is the difference between some readers perception of the Suntrust results and mine. If you take a close look at the results, you will see credit performance and asset quality is still deteriorating. The perception of a reprieve or moderation is potentially misleading due to the fact that Suntrust (like most other large banks) is actively shrinking their loan portfolio and transferring bad assets from one category to another.

To the credit of the CEO, he actually appears to tell it like it is and does not appear to be on a marketing binge to sugarcoat reality. This is an impressive, and increasingly rare trait among the C-suite crowd!

Some highlights from the Sun Trust Review: