The Fed's censure, according to the Journal, stemmed from concerns about Deutsche Bank's procedures for measuring its exposure to its clients and for valuing the collateral backing its loans. Regulators require efficient and accurate controls so that banks can assess their financial strength and the risks they face, especially through difficult times in the economy. Subpar controls could hamper Deutsche Bank's ability to pass two crucial upcoming tests in the U.S. The first is the Fed's stress tests, which are used to determine whether large banks can survive a severe economic downturn. Until now, only Deutsche Bank's small U.S. trust bank had gone through the tests – and even that failed. Commenting on the 2016 test, the Fed slammed the subsidiary for continuing "to have material unresolved supervisory issues that critically undermine its capital planning process."
Asia's super rich suddenly have lots of time on their hands. The coronavirus has forced many of them to work from home, cancel travel and avoid the golf course. That's left them more time to trade stocks amid the turmoil, boosting revenue for Citigroup Inc. and other banks in the region. "Clients are getting restless," said Jyrki Rauhio, South Asia head of private banking for Citigroup. "They're traveling less and have more time to look at the markets and review their portfolios."
Major banks last week reported mixed first-quarter results, with JPMorgan's net earnings dropping by 42%, while Wells Fargo & Co. missing revenue estimates. Still, the leadership of the two banks hailed the results while warning of the downside risks ahead. "JPMorgan Chase generated a healthy $30 billion of revenue, $8.3 billion of earnings and an ROTCE of 16% in the first quarter after adding $902 million in credit reserves largely due to higher probabilities of downside risks," said Jamie Dimon, chairman and CEO of JPMorgan. "Lending strength continued with average firmwide loans up 5% while credit losses are still at historically low levels. We remain optimistic on the economy, at least for the short term – consumer and business balance sheets as well as consumer spending remain at healthy levels – but see significant geopolitical and economic challenges ahead due to high inflation, supply chain issues and the war in Ukraine."
Citigroup said Thursday it set aside $1.9 billion in reserves due to Russia's invasion of Ukraine as large US banks reported mixed results amid a backdrop of geopolitical upheaval and fast-changing monetary policy. About $1 billion in the Citi reserves are for direct exposure to Russia, while the $900 million relate to broader economic risks following the invasion, Citi Chief Financial Officer Mark Mason said on a conference call with reporters. Since the end of 2021, Citi has reduced its overall exposure to Russia from $9.8 billion to $7.8 billion, Mason said. Citi was one of several banks to report lower quarterly earnings compared with the year-ago period, when results were boosted by the release of reserves taken at the outset of the Covid-19 pandemic. Both Goldman Sachs and Wells Fargo also reported lower profits.
For decades, global finance firms eagerly catered to Russian firms, billionaires and the government. Then tanks started rolling into Ukraine. Citigroup Inc., which has thousands of staff and billions of dollars of assets in Russia, has said it will cut back much of its business in the country. Goldman Sachs Group Inc., JPMorgan Chase & Co. and Deutsche Bank AG are also heading for the exit, with some financiers relocating to other hubs such as Dubai. They're being followed by lawyers and other professionals.