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Essential IR Insights Newsletter - February 2023

Citi to take $20B hit from tax reform; Mississippi bank buying Florida bank

Citigroup Inc. CFO John Gerspach said that the bank expects to take an accounting hit of roughly $20 billion should Congress pass tax reform that would reduce corporate tax rate to 20%. A large part of the hit, from $16 billion to $17 billion, would come from a write-down of the bank's deferred tax assets. Some $3 billion to $4 billion would come from the payment of repatriation tax to bring profits held overseas into the U.S. In a Reuters report, Gerspach said that Citi expects a reduction "in the high teens percentage" in fourth-quarter trading revenues amid a decline in fixed income trading and against an especially strong period the previous year.

On the M&A front, Hattiesburg, Miss.-based First Bancshares Inc. is buying Tallahassee, Fla.-based Sunshine Financial Inc. in a cash-and-stock deal valued at approximately $32.1 million. The agreement, which is expected to close in the second quarter of 2018, includes a $1.2 million termination fee, payable by Sunshine Financial.

And New Jersey-based Audubon Savings Bank is merging into Levittown, Pa.-based William Penn Bank (MHC). Deal completion is slated for the second quarter of 2018.

In litigation-related news, insurer Patriot National Inc.'s former chairman and CEO, Steven Mariano, is accusing Fifth Third Bank of impeding the sale of a 57-meter "superyacht." Mariano, Guarantee Insurance Group Inc. and various other defendants are battling Fifth Third's claims that the defendants are in default under the terms of the $32.3 million mortgage on the "Lady Sara."

In government and regulatory news, Comptroller of the Currency Joseph Otting has canceled plans to move onsite examiners out of large banks' offices, saying that transferring personnel out would not be "practical," Bloomberg News reports.

The Financial Institutions and Consumer Credit Subcommittee will hold a hearing at 2 p.m. ET today titled "Legislative Proposals for a More Efficient Federal Financial Regulatory Regime: Part II."

After nearly a yearlong delay, the Group of Governors and Heads of Supervision is set to meet today to review proposals from the Basel Committee on Banking Supervision for "Basel IV."

In other parts of the world

Asia Pacific: Ping An becomes 2nd biggest HSBC shareholder; India keeps rates steady

Europe: Ping An ups stake in HSBC; US tax plan could hit Swiss banks

Middle East & Africa: Bahrain banks launch fintech firm; Ghana asks banks to submit bad-loan plans

The day ahead

Early morning futures indicators pointed to a mixed opening for the U.S. market.

In Asia, the Hang Seng rose 0.28% to 28,303.19 and the Nikkei 225 was up 1.45% to 22,498.03.

In Europe, as of midday, the FTSE 100 climbed 0.12% to 7,356.88 and the Euronext 100 rose 0.04% to 1,040.58.

On the macro front

The jobless claims report, the EIA natural gas report, the Fed balance sheet and the money supply report are due out today.

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