The Zacks Analyst Blog Highlights: JPMorgan Chase, Citigroup, E*TRADE Financial, Regions Financial and Bank of New York Mellon
For Immediate Release
Chicago, IL – October 13, 2014 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the JPMorgan Chase & Co. (JPM-Free Report), Citigroup Inc. (C-Free Report), E*TRADE Financial Corp. (ETFC-Free Report), Regions Financial Corp. (RF-Free Report) and Bank of New York Mellon Corp. (BK-Free Report).
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Here are highlights from Friday’s Analyst Blog:
Bank Stock Roundup
Cyber-attacks on financial institutions remained in focus over the last five trading days. JPMorgan Chase & Co. (JPM-Free Report) came up with a regulatory filing, disclosing the extent of the data breached. The numbers were shocking, with nearly 76 million households and 7 million small businesses affected by the transgression.
Later in the week, it was revealed that there were at least a dozen more firms whose cyber security systems were attacked by the same hackers. All this has resulted in an increasing concern about cyber security among customers. This has also led to pessimism among investors, which was reflected in the downward movement of the share prices.
Additionally, global banking regulators are planning more stringent capital regulations owing to apprehensions related to the ‘too-big-to-fail’ risk. Nonetheless, banks continued with their efforts to streamline and restructure operations, focusing primarily on core businesses and alleviation of revenue pressure. Also, efforts to resolve legacy litigation issues remained prominent.
(Read last to last week’s developments: Bank Stock Round up for Sep 26, 2014)
Recap of the Week’s Major Developments:
1. It seems that hackers were preying upon the systems of the U.S. financial institutions for quite some time. Gradually emergent information reveals that JPMorgan was not the only firm to be victimized by the cyber-attack.
Other firms including Citigroup Inc. (C-Free Report), E*TRADE Financial Corp. (ETFC-Free Report), HSBC Holdings plc, Regions Financial Corp. (RF-Free Report), Fidelity Investments, Bank of the West and Automatic Data Processing, Inc. also faced cyber assaults. However, as per these firms, hackers were not able to penetrate deep into their systems and no data was breached unlike JPMorgan. (Read More: More Banks Face Cyber Attacks: Time to Review Safety?)
2. In an attempt to avoid a recurrence of the 2008 financial crisis, banking regulators across the world continue to formulate and impose new rules on ‘too-big-to-fail’ institutions. As per the documents (sent to G-20 group for comments) obtained by Bloomberg News, the Financial Stability Board (:FSB) is planning to propose an additional capital buffer for 29 global systemically important banks (:GSIBs).
As per the FSB’s proposal, banks will be required to hold a total capital buffer – as high as 25% of risk-weighted assets (:RWAs) – that could be spontaneously written down during a crisis. The FSB plans to present this proposal to a G-20 summit that will be held in Australia in Nov 2014. Expected to be finalized by the end of 2015, the proposals will be fully implemented by 2019. (Read More: Banks to Hold Extra Capital Buffer: Will It Hurt Revenues?)
3. JPMorgan completed the previously announced partial sale of its physical commodities business to Mercuria Energy Group Limited. Despite paying lower than the original price of $3.5 billion, the deal remains the largest acquisition made till date by the privately held Swiss international commodity trading company.
JPMorgan completed the partial divestiture through an all-cash deal. Also, it agreed to sell other buyers the physical commodity assets that had been included in the original transaction. (Read More: JPMorgan Divests Part of Commodities Assets to Mercuria).
4. As part of its plan to continue boosting core operations, The Bank of New York Mellon Corp. (BK-Free Report) announced a deal to acquire Cutwater Asset Management, a wholly owned subsidiary of MBIA Inc. Based in Armonk , NY , Cutwater is a fixed income and solutions specialist with approximately $23 billion in assets under management.
The terms of the deal were not disclosed by either party. The transaction, which is expected to close in the beginning of first-quarter 2015, is subject to regulatory approvals. (Read More: BNY Mellon to Buy Cutwater Asset Management from MBIA).
5. Citigroup is making amends for overcharging of advisory fees on certain investment accounts. The banking giant will pay back $16 million to customers in compensation for overcharging them. A formal agreement will be reached next week with the state of New York .
According to the New York Attorney General’s Office, probe on this overcharging issue has its roots in a 2012 complaint lodged by a Westchester Country resident. She complained against the bank for charging 0.3% more than the negotiated rate of 1.2%, which cost her $3,000 extra over three years.
After subsequent investigation, it was revealed that many other customers were also being overcharged even after negotiating lower fees. In fact, according to the pact with the state of New York , over 31,000 customers of this New York-based bank are eligible for refund.
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