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Wells Fargo seen as tax bill's top winner; Gulf Coast B&T buys SBA lender


Banking Essentials Newsletter: 7th February Edition

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Wells Fargo seen as tax bill's top winner; Gulf Coast B&T buys SBA lender

The banking industry would emerge as the clear winner under the tax reform bill, which would slash corporate tax rate to 21% from 35%. Estimates by Goldman Sachs Group Inc. analysts pegged Wells Fargo & Co. as the biggest beneficiary, getting an 18% increase in earnings per share. The analysts also estimated EPS boosts of 16% for Bank of America Corp. and PNC Financial Services Group Inc., 13% for JPMorgan Chase & Co. and U.S. Bancorp, and 11% for Morgan Stanley.

The proposed tax cut, however, would force some financial institutions to write down the value of their "deferred tax assets," the Financial Times reports. Citigroup Inc. is expected to take a $16 billion hit should the bill pass into law. Other estimated writedowns include $6.5 billion for American International Group Inc. and $3 billion for BofA.

In M&A news, New Orleans-based Gulf Coast Bank and Trust Co. purchased Dallas-based American Business Lending Inc. This was the second specialty lender that Gulf Coast bought this year.

Hedge fund managers expect a 39% year-over-year jump in their year-end bonuses, Bloomberg News reports, citing a survey of 500 buy-side investors by recruitment firm Odyssey Search Partners. A partner at Odyssey, however, said that the expectation may be too optimistic, noting that assets have not substantially increased and that fees continue to be under pressure, the report adds.

OHA Investment Corp. has denied a third-party report claiming the asset manager was involved in a blockchain loan platform.

In other parts of the world

Asia Pacific: HK fines StanChart unit; AMP Capital to buy stake in US investment manager

Europe: Old Mutual agrees to sell unit; MPS gets new chair; Bankia eyes 2,500 job cuts

Middle East & Africa: South Africa's ANC picks new leader; National Bank of Kuwait plots expansion

The day ahead

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

In Asia, the Hang Seng increased 0.70% to 29,253.66, while the Nikkei 225 dropped 0.15% to 22,868.00.

In Europe, around midday, the FTSE 100 rose 0.11% to 7,545.49, and the Euronext 100 inched up 0.01% to 1,051.09.

On the macro front

The housing starts report, the current account report and the Redbook are due out today.

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