US banks beat stress test expectations; BNP to enter talks over Orange Bank

TOP NEWS IN GLOBAL FINANCIALS

– The annual regulatory stress test of the biggest banks in the US showed smaller hypothetical losses compared with the year prior, bucking expectations that they would put broad upward pressure on capital standards. Analysts had expected a worse performance, citing tough macroeconomic and financial parameters used in the exercise and signals from regulators that more capital is needed to support banks' stability. "Today's results confirm that the banking system remains strong and resilient," Fed Vice Chair for Supervision Michael Barr said in a news release. The US units of European banks Barclays PLC, Deutsche Bank AG and UBS Group AG have passed the stress test.

– French telecoms operator Orange SA will enter into exclusive talks with BNP Paribas SA with a view for the latter to take over Orange Bank SA's domestic customer portfolio and its business in Spain. The negotiations are part of Orange's wider intention to progressively withdraw Orange Bank from the retail banking market in France and Spain. Orange Bank has more than 2 million customers.

➤ 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.

➤ Large Asian banks maintain strong capital buffers as economic slowdown looms

Large Asia-Pacific banks have strong capital buffers that could come in handy as global economic growth cools, S&P Global Market Intelligence data shows.

➤ US banks' AOCI improves for 2nd consecutive quarter in Q1

The majority of US banks again saw sequential improvements in accumulated other comprehensive income and adjusted tangible common equity in the first quarter.

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

AMERICAS

– FTX Trading Ltd. has begun the process of soliciting interested parties for the reboot of its flagship international cryptocurrency exchange, The Wall Street Journal reported, quoting CEO John Ray III, who took over in November 2022 when the exchange filed for bankruptcy. Despite regulators' heightened scrutiny of the cryptocurrency sector, FTX has gone ahead with holding early talks with investors about its potential restart, the report said, citing sources. FTX would likely rebrand, the sources told the news outlet.

– US payments giant Visa Inc. agreed to acquire Brazilian financial technology company Pismo Soluções Tecnologicas Ltda. for $1 billion in cash, Reuters reported.

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EUROPE

– Nordea Bank Abp said its common equity Tier 1 requirement will increase by 50 basis points following the Finnish Financial Supervisory Authority's decision to partially reciprocate Norway's implementation of a systemic risk buffer at a level of 3.5% in the capital requirement for Finnish banks. The increased requirement, which will apply from July 1, 2024, is not expected to impact the bank's capital return plans, it noted.

– Swiss asset manager GAM Holding AG is selling its third-party fund management services businesses in Luxembourg and Switzerland to Carne Global Fund Services Ltd. for €2.25 million and CHF500,000, respectively. The transactions, expected to close in the fourth quarter, will see the release of CHF12.1 million of regulatory capital to be retained by GAM, resulting in a total financial benefit of roughly CHF15 million. GAM said the deal is a material step toward fulfilling a condition of the offer by Liontrust Asset Management PLC for all of the company's publicly held shares, which GAM's board unanimously recommends.

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

MIDDLE EAST & AFRICA

– South African Reserve Bank Governor Lesetja Kganyago said the central bank's tight monetary policy will stay longer than expected to curb inflation, Bloomberg News reported. South Africa's central bank has raised the benchmark rate by a total 475 basis points over its past 10 meetings in hopes of returning inflation to its target range.

– Israeli Prime Minister Benjamin Netanyahu suspended the preliminary reading of a bank bill proposed by parliament member Yinon Azulay, Reuters reported. The move came after Bank of Israel Governor Amir Yaron said the bill crossed a "red line" and would put the central bank's independence at risk, according to the report.

ASIA-PACIFIC

– Japan's three megabanks will tighten screening processes of loan recipients regarding human rights infringements in their supply chains amid increasing global awareness, Nikkei Asia reported.

– Mitsubishi UFJ Financial Group Inc. revised its guidelines and will look into supply chains in paper manufacturing, palm oil and forestry. Sumitomo Mitsui Financial Group Inc. may reduce credit if there is no improvement in a borrower's human rights compliance. Mizuho Financial Group Inc. used external data to find evidence of human rights violations by four companies and demanded preventive measures.

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

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