Deutsche flags stocks shortfall; Credit Suisse fined; Thomson buys Casetext

TOP NEWS IN GLOBAL FINANCIALS

– Deutsche Bank AG informed investors that it can no longer guarantee full access to their Russian stocks after it identified a shortfall in shares underpinning depositary receipts it issued before the Ukraine invasion, Reuters reported, citing a client note dated June 9. The stocks were held in Russia by a different depositary bank. The German lender said that the shortfall was due to Russia's decision to allow investors to swap some of the depositary receipts into local stock, and that the conversion was conducted without its "involvement or oversight."

– Credit Suisse Group AG will pay a $900,000 fine to the US Financial Industry Regulatory Authority to resolve alleged reporting failures. The US private corporation, which acts as a self-regulatory organization, said the Swiss bank's US unit, Credit Suisse Securities (USA) LLC, was late submitting about 9,000 debt trades to its Trade Reporting and Compliance Engine and "hundreds of thousands of inaccurate reports" from November 2015 through at least March 2023. It also failed to provide timely notice for approximately 190 new issue offerings from July 2016 through June 2021. Credit Suisse, which is now part of UBS Group AG, neither admitted nor denied FINRA's findings.

– Toronto-based Thomson Reuters Corp. agreed to acquire San Francisco-based legal research platform Casetext Inc. for $650 million cash. The transaction would be part of Thomson Reuters' AI road map, under which it will commit more than $100 million each year to AI capabilities and developing new generative AI experiences across its product suite. The transaction is expected to close in the second half of 2023.

➤ UK banks under pressure as BoE speeds up rate hikes to fight inflation

UK banks will start to feel the cost of interest rate hikes as the Bank of England steps up efforts to fight persistent inflation.

➤ Credit card delinquency rate steady in May

Credit card borrowers held out amid rising interest rates in May as delinquency rates were unchanged at major US card issuers tracked by S&P Global Market Intelligence.

➤ U.S. Bancorp contributes most to bank branch closings in May

US banks closed 273 branches and opened 46 in May, with U.S. Bancorp as the largest contributor of shuttered branches.

READ MORE about the liquidity crunch and the fallout for the financial sector in our new Issue in Focus.

AMERICAS

– Robinhood Markets Inc. cut about 7% of its full-time workforce in a third round of layoffs to tackle declining customer trading activity, The Wall Street Journal reported, citing an internal company message. The layoffs, which affected about 150 employees, were made to "adjust to volumes and to better align team structures," the report said, citing CFO Jason Warnick.

– JPMorgan Chase & Co.'s $290 million settlement with an alleged sex trafficking victim of Jeffrey Epstein received preliminary court approval, Reuters reported. US District Judge Jed Rakoff appointed lawyer Simone Lelchuk to consider individual claims and determine payouts in JPMorgan and Deutsche Bank cases, the report said.

– Former Vice Chair for Supervision of the Federal Reserve Board Randal Quarles teamed up with Vivek Tyagi, a former Silicon Valley Bank executive, to launch Currency Reserve, a bank with plans to sell and deliver dollars primarily to local banks outside the US, the Financial Times reported.

Click here for more of the day's essential bank and financial services news in the US and Canada.

EUROPE

– Bank of Ireland Group PLC completed its up to €125 million share buyback program, repurchasing 13,690,346 ordinary shares at a volume-weighted average price of €9.1305 apiece.

– Russian Deputy Finance Minister Alexey Sazanov said Russian banks that report excess profits will pay a windfall tax on their earnings, similar to companies from other sectors, Kommersant reported. The country's banks and other financial institutions could pay roughly 30 billion rubles under the planned windfall tax, according to Kommersant's calculations.

– Russia-based National Bank Trust put up for sale its 99.48% stake in Baltic Leasing JSC, Kommersant reported. The sale will be carried out via an open auction, with the initial price set at 20.4 billion rubles. Investors can submit their applications to participate in the auction until Aug. 10, the newspaper reported.

Click here for more of the day's essential financial news in Europe.

MIDDLE EAST & AFRICA

– The Central Bank of Kenya hiked its key interest rate by 100 basis points to 10.5%, the highest increment in seven years, Bloomberg News reported June 26. The increase is the first key policy action under the leadership of Governor Kamau Thugge, who assumed office on June 19, succeeding Patrick Njoroge, who held the role for eight years.

– The former finance minister of the Republic of Mozambique will be extradited to the US in July for his involvement in a $2 billion bond fraud scandal linked to Credit Suisse Group AG, which is now part of UBS Group AG, Bloomberg News reported June 26, citing a US prosecutor. Manuel Chang, who has been in detention in South Africa since late December 2018, will face US charges in New York, the report said.

ASIA-PACIFIC

– The Hong Kong Monetary Authority issued a public consultation paper proposing to simplify the city's three-tier banking system to a two-tier banking system. Under the new structure, licensed banks will remain first-tier institutions, while deposit-taking companies will become second-tier institutions or restricted license banks. Deposit-taking companies will be given five years to upgrade to first- or second-tier institutions. The public consultation commenced June 26 and will end Sept. 25.

– The State Bank of Pakistan's monetary policy committee convened an emergency meeting and decided to raise the policy rate by 100 basis points to 22%. The move is expected to bring down inflation toward the medium-term target of 5% to 7% by the end of fiscal 2025. Pakistan's central bank also expects the decision to reduce economic uncertainty and address external sector vulnerabilities. The committee reiterated its commitment to closely monitor economic developments and take action to stabilize prices, if needed.

Click here for more of the day's essential financial news in Asia-Pacific.

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