28 Jun, 2023

EU OKs final Basel reforms; Mizuho allows AI use; BofA seeks Texas muni revival

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By Maricris Irene V. Tamolang


TOP NEWS IN GLOBAL FINANCIALS

– The European Union reached a provisional agreement to implement the final batch of international bank capital rules known as Basel III. The deal covers the implementation of the so-called output floor, which limits the degree to which banks can use their own internal models to quantify risks, as well as a transitional prudential regime for crypto-assets and amendments to enhance banks' management of environmental, social and governance risks.

– Mizuho Financial Group Inc. will make Microsoft Corp.'s Azure OpenAI service accessible to all 45,000 employees at its core lending units in Japan, Bloomberg News reported, citing Toshitake Ushiwatari, general manager at Mizuho Financial's digital planning department. Managers and other employees have begun pitching ways to use the technology, according to the report. Ushiwatari is aware of the risks associated with generative AI, and the bank will introduce guidelines when it rolls out the technology.

– Bank of America Corp. intends to resume its municipal-bond underwriting in Texas following a two-year gap that started when a Republican-backed law barring the state from doing business with companies that had policies against firearm entities came into effect, Bloomberg News reported, citing a May 17 letter from the firm's lawyer Ed Burbach to Texas Attorney General Ken Paxton and Leslie Brock, head of the office's public finance division. Burbach said in the letter that the bank was not on the list of companies boycotted by Texas for their policies against fossil-fuel companies, nor does it "discriminate against a firearm entity or firearm trade association."

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Japan's banks face uphill struggle to meet stock exchange's valuation targets

Japanese banks' low price-to-book value ratios make it challenging for them to raise their valuations in line with a directive given to all listed companies by the Tokyo bourse.

US banks' collateralized loan obligation balances hit record high in Q1

US banks' collateralized loan obligation balances hit another record high in the first quarter amid the recent banking turmoil and the upward pressure on capital requirements.

US dollar falls as biggest Fed rate hikes have likely passed

The US dollar is falling against its G10 peers, a boon for domestic companies with relatively high exposure to overseas markets, as the Federal Reserve has likely already enacted its largest increases to benchmark interest rates, even with future rate hikes expected later in 2023.

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

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AMERICAS

– The Credit Union National Association will oppose any potential rulemaking activity concerning climate-related financial risks beyond the request for information the National Credit Union Administration issued. The agency plans to oppose activities that lead to "mandatory reporting procedures for credit unions" or that prevent them from making independent business decisions.

– Bank of America will start a multiyear retail banking expansion across nine new markets and four new US states, namely Nebraska, Wisconsin, Alabama and Louisiana.

Brazil's central bank, Banco Central do Brasil, said an August rate cut is in the cards as annual inflation in the country gradually moves closer to target, Bloomberg News reported. Following President Luiz Inácio Lula da Silva and his economic team's demand for clarity regarding a monetary easing cycle, policymakers, who kept the key rate steady at 13.75%, issued a statement indicating the possibility of future rate cuts.

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

EUROPE

– UBS Group AG is poised to slash more than half of Credit Suisse Group AG's 45,000-strong workforce, with the first of the three rounds of cuts set to begin by July-end, insiders told Bloomberg News. The staff culls will mostly affect bankers, traders and support staff at Credit Suisse's investment bank in London, New York and some parts of Asia, according to the report. The Credit Suisse takeover resulted in a combined workforce of about 120,000 roles, and UBS aims to reduce that number by about 30%, or 35,000 roles, two of the sources said. A UBS spokesperson declined to comment. UBS, meanwhile, will announce further management changes within the next 20 days, Reuters cited CEO Sergio Ermotti as saying.

UK-based financial technology firm CAB Payments Holdings Ltd. set the offer price for its planned London IPO at 335 pence share, implying a valuation of roughly £851.4 million. Its issued share capital upon admission is expected to comprise 254,143,218 shares, with a free float expected to be a minimum of roughly 40%, including the exercise of the overallotment option.

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

MIDDLE EAST & AFRICA

Nigeria could recoup up to $5.10 billion in savings from the removal of its petrol subsidy and reforms on its foreign exchange market, according to the World Bank, which for years, along with the IMF, had been advising the African country to consider such a move, Reuters reported. The bank also warned of rising inflation after the reforms, the report said.

– Bank of Israel Governor Amir Yaron said a proposed bank law granting the finance minister a "decisive sway" concerning interest rates on consumer bank accounts was "a serious blow to the central bank's independence," Reuters reported. Yaron in a letter to Israeli Prime Minister Benjamin Netanyahu called for the removal of the bill from the agenda, the report said.

ASIA-PACIFIC

– State Bank of India said in a bourse filing that it plans to acquire the entire 20% stake held by SBI Capital Markets Ltd. in its SBI Pension Funds Pvt. Ltd. unit, subject to regulatory approval.

– Bank of Hangzhou Co. Ltd. said in a stock exchange filing it will only raise 8 billion yuan in a private placement, a day after announcing an up to 12.5 billion yuan fundraise. The bank told the China Securities Journal it adjusted the rate based on the market's reaction to the previous announcement as well as its own situation and that of the sector.

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

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