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Deutsche Bank May Take More Heat From Regulators This Summer: DealBook Briefing


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 โ€“ 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 stuck-at-home millionaires boost trading at private banks

The Japan Times

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."

JPMorgan, Wells Fargo See A Rocky Road Ahead For The Banking Industry

International Business Times

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 โ€“ consumer and business balance sheets as well as consumer spending remain at healthy levels โ€“ but see significant geopolitical and economic challenges ahead due to high inflation, supply chain issues and the war in Ukraine."

Citigroup Sets Aside $1.9 Bn For Russia As US Banks Report Mixed Results

International Business Times

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.

Biggest U.S. banks are strong enough to weather a recession, Fed stress test finds

Los Angeles Times

All of the 34 largest U.S. banks are fortified enough to withstand a severe U.S. and global recession and continue lending, the Federal Reserve said Thursday. The first round of the central bank's annual "stress tests" showed that as a group, the 34 big banks have gained strength thanks to a steadily recovering economy. The banks undergoing the seventh annual checkup included JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc. and Wells Fargo & Co. -- the four biggest U.S. banks by assets. The banks were tested to determine if they have large enough capital buffers to keep lending, even if hit with billions of dollars in losses brought on by a financial crisis and severe economic downturn. Capital is the cushion a bank holds against losses.