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California bans use of forced arbitration; Citi plans equities biz in China

Banking Essentials Newsletter - November Edition

Online Brokerage Space Should Remain Rich Source Of M&A

University Essentials | COVID-19 Economic Outlook in Banking: Rates and Long-Term Expectations: Q&A with the Experts

Estimating Credit Losses Under COVID-19 and the Post-Crisis Recovery


California bans use of forced arbitration; Citi plans equities biz in China

Conflicting actions of the Consumer Financial Protection Bureau and the OCC could create opportunity for banks in the deposit advance products market. On Oct. 5, the CFPB issued its payday loan rule, which also covers deposit advance products, while the OCC repealed its 2013 guidance on such products that could encourage banks to offer the product to compete with nonbanks in the small-dollar credit space. Although banks would still be subjected to the CFPB rule, Jeremy Rosenblum, a partner with Ballard Spahr, said they would have "built-in advantages" over nonbank installment lenders.

California Gov. Jerry Brown signed a measure preventing financial institutions from imposing closed-door arbitration to settle disputes whenever employees use customer information to commit fraud. The move is prompted by Wells Fargo & Co.'s fake-accounts scandal, Bloomberg News notes.

Speaking about Wells, U.S. District Judge Jon Tigar dismissed complaints against its CEO Timothy Sloan, Chief Risk Officer Michael Loughlin, former CEO John Stumpf and former community banking head Carrie Tolstedt over allegations of insider trading to boost cross-sales. Tigar, however, said it is "implausible" the senior executives were unaware of the fraud given that they were involved in day-to-day operations and had greater access to cross-selling metrics and whistleblower complaints.

Citigroup Inc. is planning to establish an onshore cash equities business in China, as well as expand its research coverage of Chinese stocks to boost business in Asia, Richard Heyes, head of regional equities, told Reuters. The bank is also planning to hire at least 10 people, including bankers and technology staff, to join mainly its Hong Kong and Singapore locations.

Bankruptcy Judge Christopher Klein rejected the proposed settlement that would end the mortgage dispute between Bank of America Corp. and Erik and Renee Sundquist, The Wall Street Journal reports. He has ordered both the parties to renegotiate parts of the agreement. Klein will review the revised settlement terms during an Oct. 18 hearing. BofA lawyer Jonathan Hacker said the settlement was "a very substantial amount of money."

And JPMorgan Chase & Co.' board adopted amendments to the company's bylaws, including a new section defining what constitutes a quorum in an emergency resulting from "an attack on the United States" or a "nuclear or atomic disaster."

Citizens Financial Group Inc. estimates it would record a cumulative net pretax loss of $8.3 billion after nine quarters of a hypothetical severely adverse scenario. The projection is the result of the company's mid-cycle stress test, required under Dodd-Frank and covering the period from July 1, 2017, through Sept. 30, 2019.

Meanwhile, Ally Financial Inc. estimated a pretax net loss of $2.9 billion in a similar adverse scenario. The company expects sales of light vehicles to drop.

And Vanderbilt Mortgage & Finance Inc. is establishing a commercial lending division, which will offer commercial financing in select states that will focus on generating loans within the $1 million to $5 million range.

In other parts of the world

Asia Pacific: MS&AD Insurance to buy UK insurer stake; Mastercard to invest in India

Europe: Banks leave Catalonia; Old Mutual to focus on Africa; Italy objects to NPL rules

Middle East & Africa: Saudi Arabia rethinks reforms; Kenya extends Chase Bank receivership

The day ahead

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

In Asia, the Hang Seng increased 0.28% to 28,458.04, and the Nikkei 225 rose 0.30% to 20,690.71.

In Europe, around midday, the FTSE 100 was up 0.21% to 7,524.04, and the Euronext 100 was down 0.15% to 1,046.54.

On the macro front

The employment situation report, the wholesale trade report, the consumer credit report and the Baker-Hughes Rig Count report are due out today.

The Daily Dose is updated as of 7:30 a.m. ET. Some external links may require a subscription.