|Day's range||15.67 - 15.67|
The banking industry hopes to lean on its investment banking and cost-cutting efforts in an otherwise ugly second quarter.
Bank of America Corporation today announced the Board of Directors has authorized regular cash dividends on the outstanding shares or depositary shares of the following series of preferred stock:
(Bloomberg Opinion) -- Judging by the performance of emerging markets, you’d hardly know the world was suffering from a deadly pandemic. After a horrible March, according to the Institute for International Finance, non-resident portfolio flows into emerging markets increased tenfold to $32.9 billion in June. MSCI’s EM currency index hit a one-month high last Thursday. Even currencies as weak as the South African rand are seeing a bit of a rally.Of course, that doesn’t mean things are going well in developing nations themselves. If anything, many of them face longer and more troublesome recoveries than was anticipated at the depth of the market panic in March. Earnings aren’t expected to recover anytime soon. Here in India, the ratio of price to one-year forward earnings for stocks in the Nifty50 index is the highest it has been for a decade.Behind this decoupling of markets and Main Street lies a familiar culprit: rich-world central banks. As they did after the 2008 financial crisis, the Federal Reserve, European Central Bank, Bank of England and Bank of Japan have pumped massive amounts of liquidity into their domestic markets. Those markets have rallied as intended and domestic investors, terrified at the prospect of missing out, have piled in. That in turn has forced institutional investors to search for yield in emerging markets.If the entire process is disconnected from reality, that’s by design. The very purpose of unconventional monetary policy is to impose irrationality on markets.Market insiders take this disconnect for granted; as Ajay Kumar of Bank of America Securities told Bloomberg TV, “sentiment and liquidity account for the bulk of your returns” at times like these. But the rest of the world doesn’t. And they’re right not to do so because, the last time this happened, emerging markets wound up badly damaged by the monetary policy of developed nations.Yes, the Fed and others have done well to reverse the near-catastrophic outflows of capital from emerging markets that were visible in the early weeks of the pandemic. Though it wasn’t their intent, their actions helped EMs raise, by early June, more than $83 billion on global bond markets.But, emerging markets should have learned by now that this is a poisoned chalice. Over the medium- and long-term, the West’s money printing will burden the developing world with volatility, instability, and subdued growth and investment.Consider India’s experience. In the years after 2008, the country enjoyed a sharp liquidity- and stimulus-driven rebound. But then commodity prices shot up. That increased inflation, drained foreign-exchange reserves and caused inflationary expectations to drift up unanchored.Asset-price inflation caused endless pain domestically; real estate prices, for example, shot up so high that the market is still not working properly. And, worst of all, cheap liquidity led to indiscriminate lending and a bad-loan crisis that has crippled Indian growth and investment.Nor were we masters of our own fate: In the infamous taper tantrum, a word from former Fed chairman Ben Bernanke drove the Indian rupee down to record lows. The Fed’s actions had political consequences as well, as voters took out their anger on the hapless incumbent government.Naturally, this process won’t unfold the same way twice. The driver won’t be oil prices this time, and perhaps not real estate. All we can say for certain is that something of the sort will indeed happen again. All that liquidity will have to settle somewhere and it will probably wind up flowing to whichever real asset is seen as being scarcest and most future-proofed on the margin. Rare earths, perhaps, in our new digital world?The fact that share prices and currency indices are so detached from reality is the surest sign that the process is underway. These are the first conduits through which the irrationality of central bank actions elsewhere begins to affect emerging economies. The MSCI index of EM equities has had a great quarter but remember, the last time it had such a good quarter was 2009.Inevitably, the combination of unrestrained liquidity and a crisis mentality will weaken already fragile governance structures in both financial markets and the real economy. Central banks in the West have been warned of this often. Raghuram Rajan, who as governor of the Reserve Bank of India had to deal with the consequences for India of unconventional monetary policy elsewhere, has constantly argued for setting “rules of the game” for central banks so that they don’t destabilize emerging markets.Rajan makes a simple, if under-appreciated point: “The bottom line is that simply because a policy is called monetary, unconventional or otherwise, it may not be beneficial on net for the world.” The failure to learn the lessons of the last stimulus may now doom emerging markets to another decade of subpar growth and political instability.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Mihir Sharma is a Bloomberg Opinion columnist. He was a columnist for the Indian Express and the Business Standard, and he is the author of “Restart: The Last Chance for the Indian Economy.”For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Market participants are bracing for the start of what will likely be the weakest corporate earnings season since the global financial crisis, as the coronavirus pandemic and measures to contain it hit business activity especially hard in the second quarter.
(Bloomberg Opinion) -- The Federal Reserve’s towering $7 trillion balance sheet looks small in comparison to the U.S. defined-benefit pension industry. With more than $12 trillion of retirement assets across corporate America and state and local governments, these liability-driven investors have enough firepower to move financial markets if they so choose.Their next potential target just might be the world’s biggest bond market.By now, it’s no secret that long-term U.S. Treasury yields are pinned near record lows. Before the coronavirus crisis, 10-year yields never fell below 1.32%, while the 30-year bond bottomed out last year around 1.9%. For almost four months, the 10-year note has traded between 0.54% and 0.95%, while 30-year Treasuries haven’t come close to climbing back to their previous low. All the while, inflation expectations are creeping higher, leaving real inflation-adjusted rates about as negative as they have ever been.For defined-benefit pension managers who are expected to deliver annual returns in the high single digits, this won’t cut it. Bank of America Corp. strategists Ralph Axel and Olivia Lima wrote recently that pension funds and other liability-focused investors such as insurance companies probably won’t buy into the Treasury market until yields rise by “at least” 50 basis points, if not 75 to 100 basis points. In other words, the 10-year rate would have to double and the 30-year would have to breach 2% again.Their thesis stems from a correlation analysis of moves in 10-year yields and the change in Treasury holdings reported in the Fed’s quarterly flow of funds data. When adjusted for the sharp increase in bond prices in the first three months of 2020, Axel and Lima found that both private defined-benefit pension funds and the general accounts of insurance companies reduced their Treasury holdings in the first quarter.Judging by the sharp decline in Treasury Strips — an acronym for Separate Trading of Registered Interest and Principal of Securities — they probably steered clear in the past three months as well. The amount of the ultra-long duration debt outstanding has fallen for four consecutive months, a first since 2012, around the same time real yields hit record lows.Now, even if pensions weren’t buyers of Treasuries in recent months, benchmark yields remained suppressed for the entire second quarter. Credit the Fed’s bond-buying efforts for that: At one point in March, the Fed was buying $75 billion of Treasuries each day. It has since committed to purchasing about $80 billion a month, which, while still a large sum, is nonetheless a pullback and comes as the Treasury Department is widely expected to continue ramping up the size of its auctions to finance the government’s fiscal relief measures.Put together, it would suggest the potential for some fireworks at the long end of the yield curve. Here’s how Bank of America concludes 10-year yields will be back at 1% by the end of the year:The question is who will step up to buy in the second half when we expect coupon supply to be significantly higher than Fed purchases. This leaves a gap in Treasury supply vs. Fed demand that will need to be absorbed by other investors and increases the potential for higher long-end rates, i.e., a bear steepening of the rates curve, unless demand picks up for long duration Treasuries, or the macro outlook deteriorates. Because pension and insurance companies are the main buyers in the long end, this leads to the question of whether LDI demand will be strong enough to keep yields stable as coupon bond supply ramps up for the next several months.The forecast is all the more striking given Bank of America’s history in analyzing defined-benefit pensions. In July 2016, when Treasury yields set record lows, I interviewed Shyam Rajan, then the bank’s head of U.S. rates strategy and now its head of U.S. Treasury trading. With the benchmark 10-year yield at about 1.4%, he reckoned retirement funds might throw in the towel. “As a pension fund, you’ve got to be scared that rates could actually go lower,” he said at the time.Obviously, rates eventually fell below that level but not before gradually climbing through late 2018, when the 10-year yield topped 3% for the first time in seven years. With yields much higher, managers could simply aim to buy enough long-dated bonds to align principal and interest payments with payouts to retirees in a process known as immunization. Now, the funds are known more for risky gambits in alternative strategies — and for being chronically underfunded.As Bank of America’s strategists put it, purchasing Treasuries now only serves to “lock in such large funding gaps and also lock in low rates of return on the bonds.” The latest auction of 10-year notes this week offered a yield of 0.653%, the lowest on record, while a sale of 30-year bonds priced to yield just 1.33%. That’s not going to move the needle for state pension funds that widely assume an annual return of 7% to 8%.Yet even with almost $1 trillion in Treasuries owned among insurance companies and defined-benefit pensions, it’s unclear how much they can steer long-term rates. Thursday’s $19 billion long-bond auction was nothing short of spectacular, with nonprimary dealer buyers taking the second-largest share ever. Some strategists speculated that foreign investors swooped in with hedging costs low relative to recent history.“It seems that investors used this auction as a liquidity opportunity to put on flatteners,” noted Thomas Simons at Jefferies LLC. “There’s no reason to believe the move will subside any time soon as there is clearly a lot of momentum behind it.” For those wagering on a steeper yield curve, this recent jolt just creates a better entry point.For some sense of pensions’ influence, in September 2018, Citigroup Inc. estimated the funds alone reduced the spread between five- and 30-year Treasuries by as much as 32 basis points over 12 months. Even if they could exert similar influence in the opposite direction this time, in a market that has since grown by $4 trillion, that would still fall far short of Bank of America’s threshold.The biggest wild card, as usual, is the Fed itself. Just how far would policy makers allow the U.S. yield curve to steepen before intervening with something like Operation Twist? Judging by their rebuke of negative-rate policy, it seems as if they realize the strains that near-zero yields place on banks, insurers and pensions. So it would stand to reason that they’d be fine with the yield curve from five to 30 years at least steepening by an additional 40 to 50 basis points to align with its 10-year average of roughly 150 basis points and put the long bond right around its 2% inflation target. On the other hand, all it would take is a worsening economic outlook or a sharp drop in the price of risk assets for the central bank to swoop in with another dose of easing. It’s because of the central bank’s heavy hand in the $19.2 trillion Treasury market that I’ve argued typical supply-demand dynamics don’t carry much weight. While I still believe that’s the case, the lack of enthusiastic buying from anyone but the Fed might be enough to tip the scales. As in 2016, pensions have ample reason to fear that rates will move even lower. But at these levels, they’re left with virtually no choice but to revolt and hope for better days ahead.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
U.S. stocks are set to open lower Friday, amid continuing concerns about the growth of coronavirus cases and its impact on the prospects for economic recovery ahead of the upcoming earnings season. At 7:10 AM ET (1110 GMT), S&P 500 Futures traded 5 points, or 0.2%, lower, Nasdaq Futures down 5 points, or 0.1%. The Dow Futures contract fell 55 points, or 0.2%.
Bank of America, N.A. announced today that it will redeem all $1,500,000,000 principal amount outstanding of its Floating Rate Senior Bank Notes, due July 2021 (CUSIP No. 06050TMN9) (the "Notes"), on July 27, 2020, at a redemption price equal to 100% of the principal amount of the Notes, plus accrued and unpaid interest to but excluding the redemption date of July 27, 2020.
Bank of America (BAC) possesses the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.
As previously announced, Bank of America will report its second-quarter 2020 financial results on Thursday, July 16. The results will be released at approximately 6:45 a.m. ET, followed by an investor presentation at 8:30 a.m. ET.
(Bloomberg Opinion) -- In the past six months, investors across the globe witnessed the world turn upside down. Then, just as suddenly, sweeping coordinated action by central banks and governments left many major financial markets unchanged at worst — and at record highs at best. Just from looking at asset prices, things appear mostly right-sided, even though millions are unemployed, bankruptcies are piling up and new coronavirus outbreaks raise doubts about reopening efforts.After experiencing such a whipsaw, could you blame investors for heading into the second half of 2020 wanting to bet against something? Anything? While it’s still early days, U.S. high-yield corporate bonds are starting to look like the flashpoint for this anxiety. Investors pulled a whopping $5.55 billion from junk debt funds in the week ended July 1, the fourth-biggest outflow ever and the largest in more than two years, according to data compiled by Refinitiv Lipper. An additional $2.6 billion left exchange-traded funds tracking speculative-grade bonds last week, Bloomberg News’s Katherine Greifeld reported. Generally, high-yield pros are chalking this up to individual investors taking profits after the strongest quarter in more than a decade.Some other troubling signs are starting to crop up, however. Traders are taking bearish options positions on the $27.3 billion iShares iBoxx High Yield Corporate Bond ETF (ticker: HYG), with about $2.5 billion in notional put volume changing hands on July 6, the most since June 11. Total call volume, by contrast, slid to the lowest in a month. Whether for hedging or just outright speculation, these wagers would suggest limited upside and potentially large losses ahead.I admit, this is a tempting narrative. Maybe U.S. stocks can keep climbing thanks to the near-invincible large technology companies. Perhaps total returns on investment-grade bonds should be at a record high with the Federal Reserve buying a broad index of the securities and pledging to keep benchmark interest rates near zero for the foreseeable future, pegging borrowing costs at rock-bottom levels for creditworthy companies. But if the world is in for a slow and uneven recovery, what exactly is the case for junk bonds? They’re a natural asset class to show the first signs of skittishness.Indeed, U.S. bonds and loans trading at distressed levels rose for a second consecutive week through July 2, by 5.9% to $369 billion, according to data compiled by Bloomberg. Before that stretch, that figure hadn’t expanded since April. While it’s still a far cry from the peak of $930 billion in March, this week-by-week chart of bankruptcies from Bloomberg’s Josh Saul shows that corporate America’s struggles are far from over:The superlatives are stunning. More airlines sought U.S. bankruptcy protection this year than at any time since the global financial crisis. Energy filings grew at the fastest pace since oil prices collapsed in 2016. More retail companies turned to court protection in the first half of 2020 than in any other comparable period ever, with Brooks Brothers Group Inc. adding to that tally this week and the owner of the brands Ann Taylor and Lane Bryant reportedly soon to follow. Not all of these companies have unsecured bonds on their books, but the pace is nonetheless ominous.Could the past few months have been a Fed-induced head-fake before the real storm? “Sharp corrections are common in highly volatile distressed cycles, and we think the exuberance may mirror spring 2008’s similar two-month window of calm, which didn’t last,” wrote Philip Brendel, a senior credit analyst at Bloomberg Intelligence. “That correction also reveled in Fed largesse as the central bank stood behind JPMorgan’s Bear Stearns acquisition in March 2008.”Hearing comparisons to the global financial crisis might make an investor rush to a new ETF that Tabula Investment Management introduced this week (ticker: TABS), which effectively bets against 100 high-yield bonds by tracking the performance of the CDX North American High Yield Credit Short Index. “Investors need to review their exposure to high-yield U.S. debt and consider strategies for protecting against any rise in defaults,” said Jason Smith, Tabula’s chief investment officer.For individual investors, it’s one thing to take profits after a blockbuster quarter. It’s quite another to make an outright bet against high-yield bonds. There are several reasons to doubt a full-scale collapse is in the offing, starting with the fact that junk-debt issuance reached $58 billion in June, the busiest month ever. That suggests a large swath of companies, particularly those rated double-B like the preponderance of the CDX index, have successfully raised funds to offset any immediate revenue shortfalls, which in turn lowers the stakes for the coming months if mutual-fund withdrawals persist.Moreover, as I’ve noted before, distressed-debt investors have raised tens of billions of dollars for an opportunity to snap up cheap bonds and loans when companies run into trouble. Some already missed out on the biggest bargains in March; it stands to reason that they’ll be more eager to pounce at the first hint of another selloff, or attractive businesses falling on temporary hard times. On top of that, Bank of America Corp. estimates these investors might sell $200 billion of investment-grade securities in the next several months — money that would likely be deployed into riskier securities.This wall of cash alone won’t save every company from bankruptcy, of course. But one reason that Hertz Global Holdings Inc. went bust while Avis Budget Group Inc. hasn’t is because investors lined up in early May to lend Avis $500 million for five years in exchange for a huge 10.5% coupon. Since then, Avis’s longest-dated bonds have rallied to 84 cents on the dollar from 56 cents, while the new securities trade at 114 cents to yield 6.3%, about the same as the Bloomberg Barclays high-yield index. It went from a company on the brink to an average speculative-grade borrower in just two months.This kind of resolution seems more likely than a 2008 redux. Plus, the Fed wasn’t buying corporate debt and ETFs in 2008, nor was Congress so quick to extend lifelines to businesses and individuals alike. By all accounts, we’re living through a unique economic recession and recovery.Investors shouldn’t assume anything about the behavior of speculative-grade debt in this environment. By all means, take some chips off the table if the persistent drip of bankruptcy filings is unnerving. But bet against the broad junk-bond market at your own risk.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Bank of America was also the only bank to be listed as a lender in all 50 states, plus Washington D.C. Beyond Bank of America, only one other top 10 bank, Truist (NYSE: TFC), was on the list of participating banks.
(Bloomberg Opinion) -- The Berkeley Center for Law and Business held its annual “fraud fest” a few weeks ago — virtually, of course — and there was a new item on the agenda. Along with the usual panels about whistle-blowers and short sellers, the organizers added a panel titled “Fraud and Covid-19.” “The pandemic is the perfect storm for fraud,” one of the panelists said, and who can doubt it? The federal government hastily pushed hundreds of billions of dollars out the door in the largest bailout in U.S. history with only the most vague requirements for recipients; bankers working from home doled out those billions to small businesses; regulators loosened rules to help institutions get through the crisis. As my colleagues Timothy L. O’Brien and Nir Kaissar noted recently, “the White House has made it easier for government insiders to obtain bailout loans from the Small Business Administration, creating a raft of conflicts of interest.”That certainly sounds like a recipe for financial fraud. “A crisis is like the fog of war,” said Thomas Curry, the former comptroller of the currency during President Barack Obama’s administration. “Banks redirect resources to critical areas and neglect other risks that bite you down the road.”Before becoming comptroller, Curry was on the board of the Federal Deposit Insurance Corporation. It was from that perch that he watched the financial crisis unfold — and became one of the financial regulators frantically trying to keep the U.S. financial system from melting down. The government ultimately gave the big banks billions in bailout loans and other forms of support, such as buying their toxic securities. But once the crisis was averted, Congress, regulators, and the press all began to dig into scandals that were previously unnoticed: the abuse of subprime mortgages by the big financial players; the craven behavior of the credit-rating companies; the willingness to mislead investors who bought those toxic securities, and so on. According to the boutique investment bank Keefe, Bruyette & Woods, banks were fined a staggering $243 billion for their misdeeds during the financial crisis. (Bank of America leads the pack with $76.1 billion in fines.)Those fines inflicted some pain, but they weren’t the most consequential result of the financial misdeeds that were exposed. The larger issue was the enormous resentment and anger they generated in a broad swath of the country. People on both sides of the political divide were furious that the big banks were being saved despite bad behavior that helped create the financial crisis. Meanwhile, millions of bank customers lost their homes to foreclosure. The financial crisis and its aftermath helped bring about the Tea Party and Occupy Wall Street movements and helped pave the way for Donald Trump’s presidency.So here we are again, in the middle of another crisis, only this one is being overseen by an administration that doesn’t seem to care much about corruption or fraud. Early on, Trump removed Glenn Fine, the acting Pentagon inspector general, from taking charge of a group that was supposed to monitor the pandemic relief effort, replacing him with someone more to his liking. Nobody is monitoring the White House’s involvement in procuring N-95 masks and other scarce personal protective equipment. And only on Monday did the Treasury Department finally release the names of companies that received PPP funds. Guess what? One recipient was the law firm of Kasowitz Benson Torres, where one of the name partners, Marc Kasowitz, has represented Trump for years. The firm received between $5 million and $10 million, according to the New York Times.As for the banks, the SBA has put them in a terrible spot, giving them the responsibility of hastily vetting the hundreds of thousands of businesses seeking PPP funds. Even with the best of intentions, it is inevitable that scam artists found ways to bilk the banks out of PPP loans. Indeed, prosecutors have already arrested a handful of executives for doing so.The larger issue is that, just like in 2008, regulators aren’t focused on preventing misconduct. Instead, their focus is on making sure banks have the ability to lend — even if it means loosening rules that were designed to make banks safer. In late March, for instance, the Federal Reserve relaxed several lending rules, including one that measured counterparty credit risk. And in early April it loosened capital requirements. “The Fed has been trying to say to the banking community that in this crisis environment we don’t want the constraints we normally put on you. We don’t want to hamper your ability to lend to clients,” said Gary Cohn, the former Goldman Sachs executive who served as Trump’s first chief economic adviser.What’s more, Cohn said, banking is not a business that is meant to be conducted from home. “Banks need people to be working together in a cooperative fashion and watching and listening to each other,” he told me. “That is what the Fed would call a first line of defense: Overhearing conversations, looking at presentations, or looking at the way you talk to a client. Or calling a compliance officer – ‘Can you guys look at this?’ When people are sitting in their bedrooms,” he added, “there is no one there to look over their shoulder.” Bankers operating on their own is a recipe for trouble.When the pandemic finally ends, there are going to congressional investigations, newspaper exposes and special commissions all taking a look back at what happened to the trillions of dollars the federal government spent to keep the economy from collapsing. Indeed, if the Democrats sweep the White House and Congress, the reckoning could well begin even before the virus has been conquered. (Can you just imagine Elizabeth Warren as chair of the Senate Banking Committee?)For starters, they’ll want to know whether bankers siphoned off money to their friends, whether they threw people who should have been granted mortgage forbearance out of their homes and whether money meant for small businesses wound up helping any of the president’s businesses. Banks will be especially vulnerable because they were the villains during the last crisis. If significant bank misconduct is uncovered during a Covid-19 post-mortem, said Stephen Scott, the founder of Starling Trust Sciences, a risk-management company, “there will be pitchforks.” The country is much more polarized than it was in 2008, and much angrier, too. If it turns out that the billions of dollars intended to help out-of-work Americans was diverted by fraud, it will make the aftermath of the financial crisis look like a picnic.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Joe Nocera is a Bloomberg Opinion columnist covering business. He has written business columns for Esquire, GQ and the New York Times, and is the former editorial director of Fortune. His latest project is the Bloomberg-Wondery podcast "The Shrink Next Door."For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- A rally in the shares of Square Inc. over the past few months has pushed the market valuation of the digital-payment company into the ranks of some of the biggest U.S. banks.Square has a market capitalization of about $55 billion after doubling since May, making it worth more than Truist Financial Corp. and all but four banks in the KBW Bank Index. While it’s still dwarfed by JPMorgan Chase & Co. and Bank of America Corp., Square is less than $20 billion shy of Goldman Sachs Group Inc.’s market valuation, which stands at $74 billion.Square shares have continued to set records in recent weeks as optimism swells over the growth of digital payments, and as the coronavirus pandemic changes consumer and corporate spending behavior.The San Francisco-based company has benefited in particular from positive sentiment about its popular cash app, its handling of pandemic-related government stimulus payments and its ability to garner deposits from traditional banks with fewer digital offerings.Technology stocks have soared this year, while banks have sunk. The tech-heavy Nasdaq 100 Index has gained 21% and the KBW Bank Index has fallen 35%.Square rallied as much as 13% on Monday after an analyst suggested it could eventually win as much as 20% of U.S. direct deposit accounts.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Bank of America Corporation announced today that it will redeem on July 21, 2020 all $1,000,000,000 principal amount outstanding of its Floating Rate Senior Notes, due July 2021 (CUSIP No. 06051GGN3) (the "Floating Rate Notes"), and all $2,500,000,000 principal amount outstanding of its 2.369% Fixed/Floating Rate Senior Notes, due July 2021 (CUSIP No. 06051GGP8) (the "Fixed/Floating Rate Notes" and, together with the Floating Rate Notes, the "Senior Notes").
Former CFPB head Richard Cordray says Monday's Supreme Court ruling would mean quick removal of the agency's Trump-appointed director if the Democrats win the White House.
(Bloomberg Opinion) -- As Keith Skeoch prepares to step down as chief executive officer of Standard Life Aberdeen Plc, the report card on his tenure reads: “A for Effort, B for Achievement.”By the time he leaves in the third quarter, it will have been three years since he and former Aberdeen Asset Management CEO Martin Gilbert engineered the merger of their respective firms in August 2017. The deal was designed to create an asset manager that could compete in what Gilbert dubbed “the $1 trillion club.” The reality has turned out to be somewhat different.Size has proven to offer scant defense against the trends buffeting the fund management industry, including money flowing away from active managers and into low-cost, index-tracking products, increased regulatory scrutiny and relentless downward pressure on what firms can charge for managing other people’s money.It’s impossible to test the counterfactual Skeoch has stressed: that Standard Life and Aberdeen would have fared even worse as standalone firms. But for shareholders, the union has been less than blessed.Douglas Flint, who took over as chairman in January 2019, has been a catalyst for change. Two months after his arrival, the company abandoned the dual CEO structure it had operated since the merger, with Skeoch taking sole control. Gilbert said he wanted to avoid having Flint “tap me on the shoulder and say ‘come on, it’s time to go.’” Flint’s previous role as chairman of HSBC Holdings Plc was probably instrumental in the choice of Skeoch’s successor, Stephen Bird, who ruled himself out as a potential candidate for the top job at HSBC earlier this year. Bird’s career experience during 21 years at Citigroup Inc., most recently as head of its global consumer banking unit, after acting as the bank’s top executive in Asia, gives a strong hint as to where Standard Life Aberdeen expects its future growth to come from.Geographically, Asia is at the top of every fund manager’s list of potential customer growth; Bird’s contact book should help open doors in the region. And Standard Life Aberdeen’s wealth management division, which “has not lived up to potential,” according to a Tuesday research note from Hubert Lam at Bank of America Corp., will be in renewed focus.I wrote in December that Flint might be tempted to tap Skeoch on the shoulder if the firm’s performance didn’t improve. Still, his departure is a surprise, and it’s a shame he couldn’t go out on a higher note by delivering a boost to assets under management and a share price worth more than half its value since the merger. Whether his successor’s lack of asset management experience will prove a blessing or a curse remains to be seen.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Mark Gilbert is a Bloomberg Opinion columnist covering asset management. He previously was the London bureau chief for Bloomberg News. He is also the author of "Complicit: How Greed and Collusion Made the Credit Crisis Unstoppable."For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Bank of America today commented on the results of the Federal Reserve’s 2020 Comprehensive Capital Analysis and Review (CCAR). The company continues to be well capitalized and able to serve clients, communities and businesses, even during times of severe economic and financial market stress.
(Bloomberg) -- Spiking Covid-19 cases in Florida, Texas, California, Arizona and Georgia may mean “significant stress” for businesses operating there, especially if governors halt reopening plans, according to Morgan Stanley. That may in turn pressure credit quality, analysts led by Ken Zerbe and Betsy Graseck wrote in a note.Zerbe and Graseck highlighted banks with the greatest dollar exposure in the “epicenter” of the pandemic. They include the biggest lenders: Bank of America Corp., with $618 billion in deposits across those five states, as per 2019 data; Wells Fargo & Co., with $467 billion; JPMorgan Chase & Co., with $420 billion, and Truist Financial Corp., with $140 billion.Non-U.S. based institutions like Mitsubishi UFJ Financial Group, BNP Paribas SA and Banco Bilbao Vizcaya Argentaria SA are also exposed, he said.The analysts flagged other exposed banks, including California-weighted First Republic Bank, CIT Group, East West Bancorp, Synovus Financial and SVB Financial Group, though the data for the Silicon Valley lender may be “misleading,” given its unique customer base and lack of traditional branch structure, Zerbe and Graseck said.Forty-two banks have at least 50% of total deposits located in those states. That includes Cullen/Frost Bankers Inc. and SVB, which have 100% of deposits in those markets, and Prosperity Bancshares Inc., East West, CIT, Synovus, Cadence BanCorp., First Republic Bank, BankUnited Inc. and Zions Bancorp, they said.Separately, Morgan Stanley biotech analysts led by Matthew Harrison wrote that the trend and scope of new virus cases was worsening in the U.S. “Data from this week will be critical in determining the trend for Arizona and California,” they wrote, cautioning that “if Texas and Florida do not break their exponential growth in the next 10 days we would expect the outbreak to become uncontrollable without more aggressive measures.”Earlier, deaths from the virus surpassed 500,000 worldwide, confirmed cases exceeded 10 million, and the World Health Organization said that the worst is yet to come.Bank stocks briefly rebounded on Monday after sinking on Friday. Before paring back gains, the KBW Bank Index rose as much as 2.8%, led by CIT, People’s United Financial, Comerica Inc. and First Horizon. JPMorgan trimmed a rally of as much as 2.1%; while Wells Fargo and BofA nearly erased gains of more than 2.2%.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Not everyone in the market is buying hand over fist. Interactive Brokers founder and chairman Thomas Peterffy joins Yahoo Finance to discuss markets.
Bank of America announced today its first 10-year structured renewable energy agreement for solar power in Texas. In partnership with Reliant, an NRG Energy company, the deal will contribute to Bank of America’s commitment to purchase 100% of electricity from renewable sources and builds on the company’s carbon-neutral efforts. The project will provide electricity through the Electric Reliability Council of Texas (ERCOT) region to 345 facilities, which include office sites, financial centers and ATMs. Bank of America will receive both electricity and Green-e®-certified renewable energy certificates (RECs).