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Moody's cuts i-banks' 2019 outlook; Kentucky banks in deal

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Moody's cuts i-banks' 2019 outlook; Kentucky banks in deal

Moody's downgraded its 2019 outlook on global investment banks to stable from positive. The rating agency said elevated corporate leverage, combined with the global growth slowdown, will result in modestly higher credit costs, and the low-rate environment, along with a very flat or inverted yield curve, will pressure profitability.

King Harris Bancorp Inc. agreed to acquire a controlling stake in Community Financial of Kentucky Inc., the parent company of Peoples Bank, The Lebanon Enterprise reports. Financial terms of the deal, expected to close by the fourth quarter, were not disclosed. According to S&P Global Market Intelligence data, Peoples Bank had $57.9 million in assets as of June 30.

Apollo Global Management LLC and Athene Holding Ltd. agreed to acquire PK AirFinance SA, an aviation lending business from GE Capital Aviation Services Inc. Financial details of the transaction were not disclosed, but a Bloomberg News earlier said the business could be valued at $4 billion. The $3.6 billion of PK AirFinance financing receivables that were held for sale in the second quarter are being sold at a premium to book value in the transaction, according to the press release.

As investors continue to remain cautious of recent developments in Europe, JPMorgan Chase & Co. saw an outflow of more than $450 million from its $3.8 billion BetaBuilders Europe exchange-traded fund, a Bloomberg News report notes. The exit marked the biggest outflow since the ETF launched in June 2018, according to the report.

Wells Fargo & Co. may make use of its arbitration clause to resolve a lawsuit filed by a New Jersey pastor for being falsely accused by the bank's employees, American Banker reports. In 2017, the Consumer Financial Protection Bureau had barred the use of mandatory arbitration clauses by banks and credit unions but the rule was later overturned by Congress and the Trump administration. Consumer groups have expressed concerns over mandatory arbitration saying consumers are less likely to get compensation in an arbitration, the report said

The 11th Circuit Court of Appeals rescinded a 2017 court ruling, which dismissed a potential class-action lawsuit against LGE Community CU accusing the Marietta, Ga.-based of improperly charging overdraft fees, CUToday reported.

In light of the upcoming September meeting, Federal Reserve Bank of San Francisco President Mary Daly has adopted a "watch-and-see" stance. Daly, who supported the Fed's July 31 interest rate cut, said with a few more meetings to go before the end of the year, officials have a chance to look at how its rate cut is affecting the economy and to what extent slower global growth and trade uncertainty continue to weigh on the outlook.

In other parts of the world

Asia Pacific: China Construction Bank H1 profit up 4.87% YOY; Shinhan Card issues ESG bonds

Europe: Johnson to suspend UK Parliament; UBS reshuffles; Italian parties strike deal

Middle East & Africa: Tadawul's full inclusion on MSCI emerging markets index; Israel holds rate

Now featured on S&P Global Market Intelligence

De novo banks class of 2019 — Washington, DC-based Founders Bank files : Washington, D.C.-based Founders Bank filed to form a new bank on Aug. 22, marking the 12th de novo application of 2019 and the city's first application in 2019.

Deposit costs rose higher still for US community banks, credit unions in Q2'19: Community banks continued to face high funding costs in the second quarter, with the 20 largest by total loans all seeing deposit costs rise year over year.

Not all small banks willing to wait for Fed's real-time payments launch date : Many community banks may hold off on offering real-time payment transfers until 2023 or 2024, when the Federal Reserve launches a new platform enabling instant payments.

The day ahead

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

In Asia, the Hang Seng rose 0.34% to 25,703.50, and the Nikkei 225 fell 0.09% to 20,460.93.

In Europe, around midday, the FTSE 100 was up 1.07% to 7,190.97, and the Euronext 100 rose 1.47% to 1,057.66.

On the macro front

The GDP report, the international trade in goods report, the jobless claims report, the corporate profits report, the retail inventories [Advance], the wholesale inventories [Advance], the Pending home sales index, the EIA natural gas report, the Fed balance sheet and the money supply report are due out today.

Click here to read about today's financial markets, setting out the factors driving stocks, bonds and currencies around the world ahead of the New York open.

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