Euromoney’s Post

A bank's business is, primarily, buying and selling money. Interest rate sensitivity is a fancy way of denoting the fact that all banks will measure, forecast and manage the risk of the raw material cost. This great piece in Reuters Breakingviews examines the large banks on this level. Bank treasurers and risk managers must answer not only to shareholders, but also regulators. There is no other sector in the world which must maintain liquidity and capital as per government mandates. And so, banks are performing a utility function, to stay maintain stability, liquidity and access to credit. For large banks the game is more complex because they operate around the world, where economies differ and they also engage in other businesses which supplement pure interest income. Most universal banks have a wealth, investment banking, markets and asset management business. Thus far, large banks have weathered the high velocity inflation well because of this diverse business mix. Interest rate sensitivity has been more difficult for the smaller players, the regional banks. Thei concentration and singular exposure to certain sectors has become a key risk factor. And in some cases, poor leadership and judgement have led to demise. In an aging world, with growing geopolitical risks and more extreme climate changes, persistent inflation and severe unpredicted losses could be the new norm. The risks factors and baselines have shifted dramatically in the last 5 years. Bank treasurers need to rethink their playbooks. #corporatestrategy #banking #investmentbanking #CFOs

It is a very informative study throwing light on growing volatility of retail deposits which is largely considered stable. It has implications for liquidity requirements as well as ALM for banks and such a study may throw light in Indian context.

NEW: The World's 100 Largest Banks by Assets - Totaling Over $110 Trillion 🏦 Many of these banks are the cornerstones of the global financial system and considered "too big to fail." Performance in 2024: - Bank of America: +9% - Goldman Sachs: +4% - J.P. Morgan: +16% - ICBC (Asia): +6% - Citi: +19% On the flip side, the KBW Regional Banking Index has *lost* -12%. Why are big banks outperforming? 1) The biggest banks are "systemically important" - meaning they need to adhere to strict requirements. 2) Cash assets of small banks have declined significantly relative to those of the large ones. 3) The largest banks have much less exposure to commercial and industrial loans. #banks #stocks #investing #economy #finance (Source: Themes ETFs, S&P Global)

Reflecting on the financial landscape: U.S. Banks closed fiscal 2023 with a staggering $192.46 Trillion in derivative notional on their books. Among the 1,185 reporting banks, a mere four institutions account for 87.4% ($168.26T) of these open contracts: 🏦 JPMorgan Chase 🏦 Bank of America 🏦 Goldman Sachs 🏦 Citigroup This data underscores the concentrated nature of derivatives exposure within the banking sector. It's crucial for stakeholders to understand and monitor these dynamics for informed decision-making.

Banks want to play by their own rules. Even when they are over leveraged. "...Required increases in capital for banks like JPMorgan and Goldman Sachs —meant to ensure they have sufficient buffers to absorb potential losses—would on average be about half as much as originally floated. It would be a big win for the banks and Dimon. Banks say the rules as originally proposed would drive up costs and crimp lending. It also represents a shift in the balance of power between big banks and their regulators, turning the page on an era in which the Fed held the upper hand..." https://lnkd.in/erDjP2jS

US Major Banks' Resolution Plans Found Inadequate Banking regulators revealed weaknesses in the 2023 resolution plans of Citigroup, JPMorgan Chase, Goldman Sachs, and Bank of America. The Federal Reserve and FDIC identified significant faults in how these banks planned to unwind their massive derivatives portfolios. Citigroup faced the most serious issues, with regulators noting "material limitations" in its ability to unwind contracts under different conditions. These living wills, crucial for crisis scenarios, must be improved by 2025. Citigroup stated it is fully committed to addressing the issues, while other banks declined to comment. #banking #finance #regulation #federalreserve #FDIC #financialstability source : cnbc

🏦 Global systemically important banks are now positioning themselves tactically pending US regulators’ final decision on increasing how much capital banks put aside. 💸 The Basel Endgame proposal, if implemented in its current form, would hike capital requirements. But if it is watered down, as is mooted, banks that position themselves intelligently could put their shareholders in line for a windfall. 💰 Buoyed by a rise in excess capital, the six biggest banks in the US turbocharged their trading assets to an eye-watering, nine-year high of $2.5tn in the first quarter of this year, writes Nicholas Dunbar of Risky Finance Ltd. 🗣 JPMorgan Chase & Co. Chase CFO Jeremy Barnum explained the tactic to analysts on an earnings call in April. “Where you’re carrying a lot of excess capital for strategic reasons, you have the ability to deploy portions of that into relatively short-duration assets,” he said. 👀 Read more into Nicholas' findings on JPMorgan, Bank of America, Wells Fargo, Citi, Goldman Sachs and Morgan Stanley. https://lnkd.in/eRhf6HRQ

After a year marked by the biggest US bank failures since the 2008 financial crisis, #JPMorganChase continued to set the gold standard for financial institution solvency and balance sheet governance. Many are shocked to learn that the #USBankingSystem is one of the most fragmented in the world, with a vast majority of international structures demonstrating a more consolidated industry. Is that #consolidation path what we should expect for US Banks, and is that the ideal vision for our national banking system? It prompts the question of what regulations we may see our legislators debate. Time will tell. J.P. Morgan Private Bank alone has more deposits on its balance sheet than the entire #FDIC's coverage, demonstrating the conviction our clients have in our #FortressBalanceSheet. This alongside our technology budget highlights the importance of choosing a financial partner that will both be there in the worst of times, while balancing what's required to remain ahead of the #InnovationCurve. #JPMorganPrivateBank #JPMC #BankingIndustry #BankBalanceSheets #JamieDimon #2023Success #CommunityPartner #PackLeader

Dive into the latest industry outlook with Zacks Equity Research on HSBC, Barclays, and Deutsche Bank. Discover why these foreign banks are catching the pros’ attention! 🔍💼 #IndustryOutlook #Finance #ZacksResearch Learn more here: https://okt.to/8kds9M

JPMorgan: Breaking Records with a Strong Performance in 2023 Last year was challenging for many U.S. banks, but not for JPMorgan, the country's largest financial institution. Recently, it announced an astounding profit of US$49.6 billion, marking the highest in U.S. banking history. How did they do it? JPMorgan's success can be attributed to several key factors. Firstly, their fortress-like balance sheet proved crucial in navigating the impact of rising interest rates, unlike some of their counterparts. Additionally, during the mini-banking crisis, they experienced a surge of US$50 billion in deposits as customers sought stability and reliability. Furthermore, JPMorgan made strategic acquisitions, showcasing their ability to make astute business decisions. Unfortunately, other U.S. banks faced challenges due to bad loans and a lending slowdown caused by high interest rates. As we eagerly await the upcoming reports from Canadian banks next month, it will be interesting to see how they fared in comparison. #JPMorgan #BankingIndustry #FinancialPerformance #StrategicAcquisitions #EconomicOutlook #Qweach https://lnkd.in/gDgx55jz