Schwab reports US$19.4 billion unrealized losses (pre-tax) on US mortgage securities held under held-to-maturity accounting. Plus US$11.8 billion unrealized losses on available-for-sale portfolio. Compares to US$28.3 billion common equity & US$9.7 billion average tangible equity. "The low yield on HTM bond portfolios could weigh on the returns at Schwab and many banks for years". "Schwab’s deposit base fell 30% in the past year to US$291 billion".
Bank of Canada "ultra-low interest rates may not return"
Portugal approves 30% cut in mortgage rates for struggling borrowers
“Portugal's government said on Thursday that banks must discount the benchmark six-month Euribor rate by 30% when calculating mortgage interest rates if asked to do so by borrowers struggling to deal with rising interest rates and avoid default. Around 90% of Portugal's stock of 1.4 million mortgages have variable rates indexed to euro interbank offered rates (Euribor) , one of the highest levels in the euro zone.”
Canada inflation jumps to 4%. October rate hike bets rise
Borrowers at TD, BMO, CIBC see their mortgages balloon due to sharp rise in interest rates
Shawbrook vies for £3.5bn Co-operative Bank merger
Fitch downgrades US credit rating from AAA to AA+
Glasgow Credit Union debuts new financial literacy podcast
Swiss National Bank hit by $15 billion second quarter loss
FDIC launches sale of $18.5 billion of Signature Bank loans
Financial regulator OSFI raises minimum capital amount that big banks must have on hand to cover losses
“Canada's financial regulator is raising the amount of capital the country's major banks need to have on hand to cover potential losses as it says financial system vulnerabilities remain elevated and in some cases have continued to increase. The Office of the Superintendent of Financial Institutions said Tuesday that the domestic stability buffer will increase by half a percentage point to 3.5 per cent, effective Nov. 1.”
FDIC Floats Proposal of Higher Insurance for Business Bank Accounts
Why the shadow banking sector is keeping Canada's financial regulators up at night
“OSFI concerned banks have hidden exposure to unregulated private lending sector … The concerns are thought to have risen higher on the regulator’s radar due, at least in part, to a perception of growing valuation risk in privately held commercial real estate, particularly the office segment where publicly traded assets have declined by as much as 50 per cent as remote work leaves buildings with vacancies.”
Lawmaker Blasts First Republic, Other Failed Banks Chiefs: You Were ‘3 Worst-Run Banks’ In U.S.
First Republic is seized and bulk sold to JP Morgan
First Republic Bank, recently US$233bn assets, seized by FDIC & sold to JP Morgan. US$13bn loss to FDIC on off-market loans. "It was a run on the business model" of reliance on high-service, low-rate deposits to fund low-rate loans.
Following large, rapid deposit withdrawals then subsequent wholesale funding had materially higher cost than legacy deposits.
At current interest rates, loan portfolio included large unrealized losses due to their origination at historically lower interest rates
US approach to financial regulation is set up to fail
Interesting opinion piece. Will be interesting to see regulatory response to recent banking collapses. Refocus to principles-based regulation? Bolstered governance expectations? Elevated QRM? Escalated capital requirements for strategic risks? Reset of regulatory intensity or proportionality hurdles? Re-weighting of industry vs entity regulatory risks? Executive compensation clawbacks? Mandated independent board directors?
Principal-agent theory. There will probably always be bad actor CEOs that prioritize professional glory; personal compensation; office/industry politics; and/or short-term performance over long-term organizational sustainability and owner/member interests.