Over the last four trading days, global turmoil due to the Greece debt crisis and a continuous fall in Chinese markets impacted the performance of domestic stocks, and banks were not immune from the same. Despite banks’ efforts to expand operations and resolve legal issues, investor sentiments were adversely impacted by several problems on the global front.
Moreover, stark details about how big banks including Bank of America Corporation BAC, Citigroup Inc. C and JPMorgan Chase & Co. JPM, along with the U.S. units of certain major foreign banks will manage potential bankruptcies, were revealed. The public disclosure of information related to ‘Living Wills’ made it evident that banks, in their attempt to rectify the flaws highlighted by the regulators last August, have incorporated several new details.
Notably, the regulators will be reviewing ‘Living Wills’ of banks in the coming months and the result will likely be out by year-end. Only time will tell whether banks have been able to satisfy the regulators, with adequately modified ‘Living Wills’.
(Read the last Bank Stock Roundup for Jul 3, 2015)
Recap of the Week’s Most Important Developments:
1. JPMorgan, along with Texas-based private wealth manager Lone Star Funds, purchased a European portfolio with a face value of €2.2 billion from the German lender Commerzbank AG. The commercial real estate (“CREâ€) portfolio comprised non-performing loans as well as other loans in Central and Eastern Europe, Turkey and Nordic countries.
On a separate note, as per a Wall Street Journal report, JPMorgan is planning to shift more than 2,100 jobs out of New York to New Jersey. We believe the latest move is in sync with JPMorgan’s aim to cut expenses and improve efficiency.
In yet another development, JPMorgan was penalized by the Consumer Financial Protection Bureau (“CFPBâ€) along with Attorneys General of 47 states and the District of Columbia over violations related to sale and collection of credit card debt. The bank will have to shell out $136 million in fines to resolve the multi-year probe.
