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Tuesday Express: Rate cuts scenario hurts banks' outlook; NY CUs merging

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Tuesday Express: Rate cuts scenario hurts banks' outlook; NY CUs merging

* Citigroup is lowering its 2019 net interest revenue growth projection a bit to a range of 3% to 4% from the bank's reported guidance of 4% in the second quarter, CFO Mark Mason said. The reason, he told investors Sept. 9, is the flattening interest rate curve and the prospect of multiple Federal Reserve rate cuts.

* Wells Fargo is likewise trimming its forecast net interest income for 2019 amid current market expectations on interest rates. Wells Fargo CFO John Shrewsberry said the bank is now expecting an even bigger decline of 6% in its 2019 net interest income year on year, from its previously projected 5% decline in July when it reported its second-quarter earnings.

* Treasury Secretary Steven Mnuchin said the Trump government will proceed with its planned housing finance reforms on the administrative front if Congress will not act on the matter within the next three to six months, American Banker reports. The Treasury Department is set to clinch a deal as early as September with the Federal Housing Finance Agency to let government-sponsored enterprises Freddie Mac and Fannie Mae retain their earnings before they are finally set free from their 11-year federal conservatorships, Mnuchin said. Meanwhile, the GSE's investors just won a long battle to get their gains from Freddie and Fannie after a panel of New Orleans federal appeals court judges reversed a previous court ruling that backed the government's right to sweep all of the mortgage finance giants' profits.

* After having "fallen too far" with an 11% drop in investment banking income last year, Bank of America is bent on bouncing back by focusing more on its middle-market clients, Reuters reports, citing BofA COO Tom Montag's comments at the Barclays Financial Services Conference Sept. 9. BofA's revenue from this segment grew 17% in the first seven months of 2019, the news outlet notes.

* To regain a hold on the Middle East, where the fallout of the 1MDB scandal has hurt its business, Goldman Sachs is aiming for a comeback in the region by putting international banking head Richard Gnodde and former Trump strategist Dina Powell at the forefront, focusing in Saudi Arabia, sources tell Bloomberg News. The bank is now reportedly close to bagging a lead role in the IPO of Saudi Aramco.

* KeyCorp CFO Donald Kimble Jr. said the adoption of the current expected credit loss or CECL, the proposed new accounting model for companies, would require a tripling of loan loss reserves for retail loans while resulting in flat or lower reserves for commercial assets.

* The $473 million merger of Ohio banks First Defiance Financial and United Community Financial is the first to show how the CECL model will affect banks' accounting for acquisitions. The new accounting model had to be taken into account in disclosing the impact on the companies' finances of the merger, which is set to close in the first quarter of 2020, when large public companies begin adopting CECL.

* In New York, credit unions Finger Lakes and Fairport are planning to merge in a deal expected to close in the fourth quarter, WHEC reports.

* On the insurance front, the country's commercial insurance sector saw prices increase by nearly 4% in the second quarter, about 1% higher than in the same period last year, according to Willis Towers Watson.

* MBIA subsidiary National Public Finance Guarantee agreed to join the restructuring support agreement between the Puerto Rico Electric Power Authority and the bondholders and other parties.

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