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Square sues San Francisco; Va. banks in deal; NY bank warns of possible fraud

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Square sues San Francisco; Va. banks in deal; NY bank warns of possible fraud

San Francisco-based payments processor Square Inc. filed a lawsuit against the city for a $1.3 million tax refund, The Wall Street Journal reports. In its complaint, the company accused San Francisco of wrongly classifying it as a financial company for tax purposes arguing that it is a technology company and should be subjected to a lower tax rate, according to the report.

In Virginia, First Community Bankshares Inc. agreed to acquire Highlands Bankshares Inc. and unit Highlands Union Bank in an all-stock deal valued at $91.0 million. The deal is expected to close in the fourth quarter and the combined company will have consolidated assets of more than $2.8 billion.

Elsewhere, in Rhode Island, Navigant CU is buying all assets and will absorb members of Kent Hospital FCU in a merger that is expected to close by early 2020, the Providence (R.I.) Business News reported, citing Navigant CU spokesman Tim Draper.

Pioneer Bancorp Inc. (MHC) has recently learned of potentially fraudulent activity involving an established business customer of its unit, Pioneer Bank (MHC). The company said that the alleged fraud was associated with transactions conducted in the quarter ending Sept. 30 and involved deposit and lending relationships with the same customer and related entities. Pioneer Bancorp's potential exposure includes the customer's $16.0 million commercial loan secured by business assets and $19.0 million of deposit activity.

Morgan Stanley CFO Jonathan Pruzan warned of a drop in the investment bank's net interest income due to a "dramatically different" interest rate environment. Speaking at an industry conference, Pruzan noted that client activity in the equity business was still running below 2018 thanks to "a lot of uncertainty around what's going to happen next, particularly in this type of environment where sentiment shifts pretty quickly."

The Federal Housing Finance Agency Director Mark Calabria is "extremely hopeful" that a blueprint for recapitalizing Fannie Mae and Freddie Mac would be released by officials "very soon." Calabria said that he is working along with Treasury Secretary Steven Mnuchin to establish a plan by the end of the year. Regarding the FHFA's 2018 proposal laying out new regulatory capital rules for the government-sponsored enterprises should they be released from federal conservatorship, Calabria said the agency is still weighing whether changes to its proposal are substantial enough to require a re-proposal of the rule.

And the U.S. House Committee on Financial Services has scheduled a hearing on "The Future of Identity in Financial Services: Threats, Challenges, and Opportunities" at 9:30 am today.

In other parts of the world

Asia Pacific: HK bourse proposes to UK exchange; KKR to list Australia fund

Europe: LSE gets £32B bid; HSBC mulls French retail arm sale; Bankia trial delayed

Middle East & Africa: Kenyan rate cap under debate; Access Bank targets unbanked Nigerians

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Morgan Stanley, UBS, Deutsche see worst drops in weak Q2 for i-bank revenues: U.S. group Morgan Stanley, Switzerland-based UBS Group AG, and German peer Deutsche Bank AG recorded the steepest year-over-year declines in second-quarter trading revenues among the top global investment banks.

World's big investment banks poised to keep slashing trading jobs: A handful of U.S. and European investment banks this year have already announced thousands of personnel cuts across their organizations, with many companies taking aim at their trading businesses in particular.

Key capital ratio for US 'advanced approaches' banks ticks up in Q2'19: Eight of 10 U.S. "advanced approaches" banks reported improved common equity Tier 1 capital ratios as of June 30. The median CET1 ratio for the group was 11.93%, up from 11.92% in the linked quarter and 11.74% a year earlier.

The day ahead

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

In Asia, the Hang Seng dropped 0.26% to 27,087.63, and the Nikkei 225 rose 0.75% to 21,759.61.

In Europe, around midday, the FTSE 100 was up 0.02% to 7,339.28, and the Euronext 100 climbed 0.13% to 1,087.33.

On the macro front

The consumer price index, the jobless claims report, EIA natural gas report, the treasury budget 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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