The Street – Over two dozen Italian banks were downgraded by Moody’s Investors Services Monday as the rating agency kicked off a promised multi-week revision of its assessment of Western-European financials. The downgrades ranged from one to four notches, with banks such as Cassa di Risparmio di Ferrara scraping the ratings basement with a D- and Intesa Sanpaolo SpA hitting the top of the range with a C+. UniCredit SpA — one of the country’s largest institutions — had its rating cut to C-. Read Article
Reuters – The European Central Bank has stopped providing liquidity to some Greek banks as they have not been successfully recapitalized, the ECB said on Wednesday, confirming news earlier reported exclusively by Reuters. The news sent the euro lower against the dollar, fanning concerns among investors and in Greece that the country may have to leave the euro zone. Read Article
CNBC – Greek depositors withdrew 700 million euros ($900 million) from the nation’s local banks recently, said President Karolos Papoulias, though the exact timing of the transfer was unclear. Citing a conversation he had with Greek Central Bank Governor George Provopoulos, Papoulias said “that the strength of banks is very weak right now.” Stocks declined following the report after being up earlier in the day. Read Article
Bloomberg – Goldman Sachs Group Inc. (GS) and Merrill Lynch & Co. employees discussed helping naked short-sales by market-maker clients in e-mails the banks sought to keep secret, including one in which a Merrill official told another to ignore compliance rules, Overstock.com Inc. (OSTK) said in a court filing. The online retailer accused Merrill, now part of Bank of America Corp., and Goldman Sachs of manipulating its stock from 2005 to 2007, causing its shares to fall. Read Article
Bloomberg – JPMorgan Chase & Co. (JPM) Chief Executive Officer Jamie Dimon said the firm suffered a $2 billion trading loss after an “egregious” failure in a unit managing risks, jeopardizing Wall Street banks’ efforts to loosen a federal ban on bets with their own money. The firm’s chief investment office, run by Ina Drew, 55, took flawed positions on synthetic credit securities that remain volatile and may cost an additional $1 billion this quarter or next, Dimon told analysts yesterday. Losses mounted as JPMorgan tried to mitigate transactions designed to hedge credit exposure. Read Article
NY Times – Regulators are investigating potential civil violations surrounding the $2 billion loss that JPMorgan Chase disclosed on Thursday, raising further questions about trading activities at the nation’s biggest bank. The Securities and Exchange Commission recently opened a preliminary investigation into JPMorgan’s accounting practices and public disclosures about the trades, according to people briefed on the matter, who spoke on the condition of anonymity because the case is not public. Read Article
BBC – JPMorgan Chase, the biggest US bank, has revealed a surprise trading loss of at least $2bn (£1.2bn) on complex investments made by its traders. Chief executive Jamie Dimon blamed “errors, sloppiness and bad judgement” for the losses and warned “it could get worse”. The risky hedging strategy could cost the bank an additional $1bn, he added. JPMorgan shares dropped 7% in after-hours trading, and other bank shares also fell. Read Article
BBC – Industrial and Commercial Bank of China (ICBC) has been given the nod to take over a US bank, the first such US approval for a Chinese firm. The US Federal Reserve approved state-owned ICBC’s plans to acquire the US subsidiary of Bank of East Asia. This comes just days after high-level economic talks between the US and China in Beijing. Read Article
Telegraph – Spain has nationalised crippled lender Bankia in a dramatic move to contain the esalating crisis and restore faith in the country’s management. The forced rescue was ordered by premier Mariano Rajoy after auditors Deloitte refused to sign off the bank’s books, amid allegations of €3.5bn (£2.8bn) of inflated assets. Half of the bank’s €37bn of property exposure is deemed “problematic” by regulators. Read Article
IpNews – The Brazilian government of Dilma Rousseff is taking firm steps towards stronger relations with Africa, such as the creation of a special fund to finance development projects together with multilateral lenders like the World Bank. Read article
LA TIMES – Wells Fargo & Co. was bracing for revolts at its annual shareholder meeting as well as in the streets outside, as demonstrators from around the country poured into town to complain about its lofty executive pay, alleged disregard for troubled homeowners and a host of other issues. Organizers said they expected 2,000 to 3,000 protesters to march through the streets early Tuesday to the the Wells meeting at the downtown Merchants Exchange Building, a landmark that survived the great earthquake and fires that devastated San Francisco in 1906. Read Article
The Independent – Afghan Gold, a venture formed by Ian Hannan – the star rainmaker recently accused of market abuse – has been shortlisted for a string of mining licences in the war-torn state. The company was a pet project for Hannan, the JP Morgan Cazenove banker who made his name in mining deals and believes that Afghanistan’s fortunes could be turned by exploiting its potentially vast natural resources. Read Article
Reuters – Federal prosecutors in California are investigating a Goldman Sachs employee for insider trading, according to prosecutors and defense lawyers who attended a hearing in U.S. federal court in New York on Thursday. The employee is suspected of giving inside information on two public companies to former Galleon Group co-founder Raj Rajaratnam, who was convicted last year in one of the largest insider trading cases in Wall Street history. Read Article
Daily Mail – Any mobile phone can be turned into a ‘tap and go’ credit card under a payment system unveiled today.Advocates of the technology argue it could mean the end of small cash payments within five to ten years. The system, which can be used to make purchases up to £15, involves sticking a smart card or PayTag – about a third of the size of a normal credit card – to the back of a handset. Read Article
Editorial Comment – Beware of a cashless society that is sold to you as a benefit to you. Once all your wealth becomes electronic, your obedience can be more assured as there will always be the risk that stepping out of line could mean you wealth disappearing at the mere click of a mouse.
Money News – Greece’s four biggest banks reported a combined loss of 27.9 billion euros ($36.9 billion) for last year after participating in the country’s debt exchange, the largest sovereign restructuring in history. The four, including National Bank of Greece, EFG Eurobank Ergasias SA, Alpha Bank SA and Piraeus Bank SA, said they wrote down about 25 billion euros in the combined value of their Greek government bond holdings. Prime Minister Lucas Papademos is trying to finalize a plan to recapitalize Greek banks, which wrote down more than half the face value of their government bonds and posted an increase in bad loan ratios after five years of recession. Greece’s bank- recapitalization body yesterday got 25 billion euros in a first tranche of funds, or half the total assigned for the purpose, as part of a second bailout by the European Union and International Monetary Fund. Read Article
Bloomberg – Denmark’s biggest banks are firing Moody’s Investors Service as they win assurances from some of the country’s biggest investors that the opinions of ratings companies hold limited value. Nykredit A/S, Denmark’s biggest mortgage lender and Europe’s largest issuer of covered bonds backed by home loans, terminated its contract with Moody’s on April 13, citing its “volatile” views. Danske Bank A/S (DANSKE)’s mortgage unit Realkredit Danmark A/S, the country’s second-largest home-loan provider, dropped Moody’s in June. Read Article
Financial Times – For many it’s all over. But a coterie of investors are patiently biding their time and betting that the Federal Reserve will have little choice but to embark on a third round of large-scale bond purchases later this summer. It’s a stance predicated on the US economy repeating its pattern of the past two summers and entering a soft patch, fanning fears of another flirtation with deflation as consumers and homeowners pay down their debts. Read Article
Guardian – The International Monetary Fund warned today that the European debt crisis could flare up again at any time and send the global economy back into deep recession. Olivier Blanchard, the Fund’s chief economist, said there was currently “an uneasy calm” following the tensions in financial markets at the end of 2011, with hopes of a gradual recovery dependent on keeping the single currency in one piece. Read Article
BBC – US nominee Jim Yong Kim has been chosen as the new president of the World Bank. The Korean-American health expert is president of Dartmouth College in the US state of New Hampshire. He faced a strong challenge for the post, which has traditionally gone to an American, from Nigerian Finance Minister Ngozi Okonjo-Iweala. Dr Kim will succeed Robert Zoellick, serving a five-year term beginning on 1 July, the World Bank said in a statement. Read Article
“The high point was when we started receiving support, first from George Soros who gave us our first grants [to battle tuberculosis] and then we received a huge grant from the Bill and Melinda Gates Foundation.”
Reuters – At Alaa Radhi’s currency exchange shop in central Baghdad, a board showing the rate of Iraqi dinars to the dollar has three question marks next to the price. For weeks now, Iraqi businesses say they have been struggling as the dinar has become increasingly volatile due to fallout from sanctions imposed on neighbouring Iran and Syria and to Iraq’s own political turmoil. Read Article
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Guardian – The reliance of eurozone banks on the European Central Bank was demonstrated on Monday when Portugal revealed that its domestic banks were tapping the central bank for record amounts of funding. The Bank of Portugal said the use by domestic banks for the various facilities available from the ECB rose to €56.3bn in March – up from €47.5bn in February and greater than the previous record level of €49.1bn in August 2010. Read Article
AFP – Spain, sucked back into the centre of the eurozone debt crisis, is headed towards a financial crunch in 2013 that may force it to seek international help, analysts warn. Alarm has spread on the financial markets over Spain’s rising public debt, bulging deficit, fragile banks and a slide into recession at a time of soaring unemployment. Investors pounced in the past week, forcing the government to pay higher borrowing costs at a bond auction and snapping up securities that pay out in the case of a default on sovereign debt. Read Article
Financial Times – The Rothschild family plans to secure “long-term control” over its international banking empire by merging its French and British assets into a single entity and implementing a new form of governance that provides immunity from hostile takeover. The historic reorganisation will reunite the shareholdings of the French and English sides of the family into a single company, listed in Paris. Read Article
Reuters – A U.S. regulator is set to penalize JPMorgan for actions linked to the demise of investment bank Lehman Brothers at the height of the financial crisis in 2008, the New York Times said, citing people briefed on the matter. The Commodity Futures Trading Commission (CFTC) is expected this week to file a civil case against JPMorgan. The bank is expected to settle the Lehman matter and pay a fine of about $20 million (12.6 million pounds), the paper said. Read Article
