Author: News Room

Investors’ fear about the financial health of banks globally was palpable today. As they swarm bank after bank, Deutsche Bank was next on their list. They pummeled Deutsche Bank’s stocks and bonds. And the price for protection against a Deutsche Bank’s bond default rose significantly as evidenced in the credit derivatives market. Nothing new, in particular, came out about Deutsche Bank today. It is not as if market participants only discovered today that Deutsche Bank has a long history of weak risk controls and a list of scandals rivaling Credit Suisse. Every time that there have been scandals about Deutsche…

Topline The chairman of Saudi National Bank, which was the largest shareholder of Credit Suisse, has resigned, according to a statement published Monday on the Saudi stock exchange, weeks after his comments helped tip the beleaguered Swiss bank’s share price into freefall, spooking already skittish financial markets and ultimately leading to a takeover by its compatriot rival UBS. Key Facts SNB’s board said in a statement it has “accepted” Ammar Al Khudairy’s resignation, which was “due to personal reasons.” The move comes days after Al Khudairy said SNB would “absolutely not” pump any more money into the struggling Swiss bank,…

Topline First Citizens Bank announced it will be buying Silicon Valley Bank in a government-backed deal making First Citizens Bank one of the top 15 U.S. banks, according to Bloomberg. Key Facts First Citizens Bank is to purchase $72 billion dollars worth of assets from SVB at a deeply discounted price of $16.5 billion, while also handling $56 billion of the failed bank’s deposits. Before edging its way up to become one of the top 15 banks in the U.S., First Citizens was previously ranked as the 30th top operating bank in the country, according to the Federal Reserve. First…

Apple’s Buy Now, Pay Later Plan Launches, Allowing Users Loans for Purchases Apple launched Tuesday Apple Pay Later, a buy now, pay later feature that allows users to split purchases into four payments over the course of six weeks. For now, the service will be available only to randomly selected users who will get early access to a prerelease version of Apple Pay Later. Apple plans to offer the feature to all eligible users in the coming months. Apple Pay users will be able to apply for Apple Pay Later loans of $50 to $1,000, which can be used for…

In this environment of high inflation and uncertainty about the banking sector’s financial health, market participants should scrutinize U.S. leveraged finance markets carefully. This asset class, comprised of leveraged loans and high-yield bonds, is very sensitive to rising interest rates and current uncertainty about the direction of the banking sector. In 2022, leveraged loan issuance declined and default rates rose given rising interest rate pressures. Recent bank turmoil influenced leveraged loan underwriting volume to be at it lowest level since 2016. U.S. Leveraged Markets Have Grown Significantly According to Eric Rosenthal, Senior Director of Leveraged Finance at FitchRatings, the “leveraged…

Topline The banking crisis is far from over, JPMorgan Chase CEO Jamie Dimon wrote Tuesday morning in an annual letter to shareholders, offering the most in-depth insight into recent industry-wide turbulence from the head of the country’s biggest bank yet. Key Facts “Repercussions” from the ongoing banking calamity will linger “for years to come,” Dimon wrote, referring to the failures of American banks Silicon Valley Bank and Signature Bank and the unraveling of Swiss stalwart Credit Suisse over a two-week period last month. Dimon pointed to shortcomings among bank management at the collapsed institutions, federal regulators and venture capitalists pushing…

When Central Banks gathered in Washington, Frankfurt, and London last week, they explored response strategies to contain a double-headed crisis: hard-to-abate inflation and the potential onset of a global financial crisis. The focus was particularly sharp on monetary aggregates, financial conditions in the credit default swap markets and, in the case of the Fed in Washington, the volume uptake of the Bank Term Funding program. This collateralized relief program was created by the Fed in the aftermath of the Silicon Valley Bank collapse. That same weekend Bern-based Swiss FINMA regulators and the Swiss Central Bank, in close cooperation with shareholders,…

OBSERVATIONS FROM THE FINTECH SNARK TANK April is Financial Literacy Month in the US, but it doesn’t matter what month it falls under because most efforts to improve “financial literacy” do little to improve the financial health of Americans. Financial Education Isn’t The Answer Conventional wisdom holds that Americans’ level of financial literacy is low and that therefore we need more financial education. There are problems with that “wisdom.” Problem #1: Financial education isn’t effective. Martha Menard found that, “One-size-fits-all financial education has little to no effect on changing real-world financial behaviors. A meta-analysis of more than 200 studies found…

When the Federal Reserve launches its real-time payments network, FedNow in July, it will be a major catalyst for growth in instant payments, said ACI Worldwide in a recent announcement. Real-time transactions in North America are expected to grow from 3.9 billion in 2022 to 13 billion by 2027, a compound annual growth rate of 27.3%, it added. But that will still leave North America well behind the rest of the world. “As a proportion of electronic payments, RTPs are forecast to be just 5% by 2027 in North America — lower than in all other global regions: Europe (13%),…

California-based fintech Aspiration plans to let go of 180 employees in a company-wide restructuring. The reduction in force will affect both remote staff and employees based out of Aspiration’s Marina Del Rey, California, headquarters. Aspiration’s last layoff was in December, when the company cut about 100 employees. The company declined Forbes’ request for comment. “The layoff is necessitated by the need to streamline and restructure the business in light of current economic conditions and the limited capital available to the Company,” a Worker Adjustment and Retraining Notification letter filed by the company and signed by CEO Olivia Albrecht reads. “The…