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Trump becoming 45th US president; Sen. Warren reaches out to banks


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Trump becoming 45th US president; Sen. Warren reaches out to banks

Donald Trump will be sworn in as president today. Yesterday, Steven Mnuchin fielded lawmakers' questions about the kind of Treasury secretary he might be in the new administration. Mnuchin seemed in favor of the Volcker rule, but not too much of how it is enforced; he was interested in a modern Glass-Steagall; said Fannie Mae and Freddie Mac have been run well; and wants to do away with Dodd-Frank's Title II. The Wall Street Journal, American Banker and Vanity Fair also covered his remarks.

In the meantime, Adam Szubin serves as acting Treasury secretary. He intends to leave government service when the new secretary is appointed.

The day before Trump's inauguration, Sen. Elizabeth Warren reached out to Wall Street. In a letter to 33 firms, the Democratic lawmaker said she "wanted to find out whether [they] will support the next administration's efforts to reverse" progress already made in meeting the "higher standard" of the Labor Department's new fiduciary rule. The firms that got the letter include JPMorgan Chase & Co., Wells Fargo & Co., Morgan Stanley, Bank of America Merrill Lynch, BlackRock Inc., Charles Schwab Corp., Ameriprise Financial Services Inc., Fidelity Investments, Legg Mason Inc., LPL Financial LLC, Raymond James Financial Inc., Royal Bank of Canada and U.S. Bancorp.

But even as Warren tries to drum up support, Trump is expected to move quickly to deregulate, say sources for the WSJ. Some changes may take years, of course, but lobbyists who have spoken with the transition team think a postponement of the FHFA's planned insurance premium cuts might soon be handed down, and that a six-month delay to the fiduciary rule will be ordered.

On the earnings front: Regions Financial Corp. reported fourth-quarter 2016 net income available to common shareholders of $279 million, or 23 cents per share, compared to $269 million, or 21 cents per share, in the fourth quarter of 2015. It incurred $17 million of expenses related to the previously announced consolidation of 70 branches during the fourth quarter.

SunTrust Banks Inc., meanwhile, reported net income available to common shareholders of $448 million, or 90 cents per share in the fourth quarter. In comparison, it was $467 million, or 91 cents per share, a year ago. Net charge-offs amounted to $136 million, up by $10 million sequentially and by $53 million year over year. The increase was attributed not only to energy, but to commercial real estate and indirect auto as well.

Citizens Financial Group Inc. reported net income available to common stockholders of $282 million, or 55 cents per share in the fourth quarter. A year ago, it was $221 million, or 42 cents per share. Total revenue for the quarter was $1.36 billion, up almost 11% from $1.23 billion a year ago, reflecting year-over-year growth in both net interest income and noninterest income.

And at Synchrony Financial, EPS rose by almost 8% year over year to 70 cents.

The U.K. Prime Minister's meeting in Davos with Wall Street CEOs included JPMorgan's Jamie Dimon, Morgan Stanley's James Gorman and Goldman Sachs Group Inc.'s Lloyd Blankfein, say sources for the WSJ. And "executives from some of the biggest U.S. banks" have come up with a two-stage process for dealing with a hard Brexit, the Financial Times reports. Their transition plans involve "hundreds of millions of dollars" in costs, the FT quotes one banker as saying, but lessen the need to relocate people. That said, they may still end up with huge job cuts and transfers when new trade agreements are finally reached. Bloomberg News' own sources — "four top bankers in Davos" — say derivatives clearing at least will probably stay in Britain.

Back in the U.S., Wells Fargo has actually "been moving away from the cross-sell metric for some time," CEO Tim Sloan told the company yesterday, according to prepared remarks. He noted that the controversial performance indicator hadn't been reported since early last year in its Wealth and Investment Management and Wholesale businesses.

Sloan's mention of cross-sell was part of an update on Wells' efforts to rebuild trust in the aftermath of its fake-accounts scandal. Those efforts include the creation of a Rebuilding Trust Office and an Office of Ethics, Oversight and Integrity.

On the fintech front, Affirm Inc, Betterment LLC, Digit, Envestnet | Yodlee, Kabbage, Personal Capital Advisors Corp., Ripple and Varo Money Inc. are some of the founding members of the Consumer Financial Data Rights group. The CFDR hopes to partner with banks to promote "consumers' right to unfettered access to their financial data" — and their right to share it with third-party fintech firms.

In other parts of the world

Asia-Pacific: Indonesia holds benchmark rate; Lloyd's India branch gets regulatory nod

Europe: Deutsche faces $3B Jewish trust lawsuit; Sberbank headcount could halve by 2025

Middle East & Africa: More banks report Q4'16 results; Saudi Arabia cash crunch over?

The day ahead

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

In Asia, the Hang Seng slipped 0.71% to 22,885.91, while the Nikkei 225 increased 0.34% to 19,137.91.

In Europe, around midday, the FTSE 100 increased 0.03% to 7,210.73, and the Euronext 100 was up 0.42% to 937.37.

On the macro front

No notable reports are due out today.

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