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from Breakingviews:
Japan lifts Nomura from its lost half decade
By Peter Thal Larsen
(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)
Nomura has spent most of the past five years trying to break out of Japan. So it’s ironic that the investment bank’s best full-year results since 2007 were propelled by a revival at home. As with Japan’s economic renaissance, however, investors’ hopes are running ahead of reality.
In a quarter when Japan’s Topix stock market index jumped 35 percent, the country’s biggest brokerage was always going to clean up. Revenue in Nomura’s retail division in the first three months of 2013 was 50 percent higher than in the same period of 2012 as investors snapped up stocks and mutual funds. Pre-tax profit almost trebled.
Nomura’s wholesale bank, too, had a domestic tinge. Revenue from Japan more than doubled from the same period of last year, and accounted for almost half the division’s total income. In other parts of the world, business in the Americas held up best. Europe and the rest of Asia - the areas Nomura hoped to beef up when it snapped up parts of Lehman Brothers in 2008 - were the laggards.
from Breakingviews:
Radical career move: become a Chinese citizen
By Peter Thal Larsen
(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)
Here’s a radical career choice for investment bankers: become a Chinese citizen. American-born Marshall Nicholson has swapped his U.S. citizenship for a Hong Kong passport. Though the move is largely for family reasons, it will also go down well with clients on the mainland. For Western financiers seeking a local edge, it’s the ultimate display of commitment.
from Breakingviews:
Japan helps Nomura put a bad year behind it
By John Foley
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Who wants to be a global investment bank anyway? Not Nomura. The Japanese financial group delivered a solid quarter-on-quarter boost in underlying pre-tax profit in the final three months of 2012, driven largely by a recovery in its home market. Last year’s insider trading scandal and subsequent resignations punctured the global dreams Nomura was pursuing when it bought parts of bankrupt Lehman Brothers in 2008. For investors, that may be no bad thing.
from Unstructured Finance:
Wall Street channels Charles Dickens in 2012
By Lauren Tara LaCapra
As 2012 comes to an end, it’s clear that Wall Street has had the best-worst year in quite some time.
Bank profits are at record highs and lows, driven by free money from the Fed that they can’t make any money with, and a historically small number of historically huge deals. Facebook’s IPO – among the biggest ever – happened this year, and it was an enormous failure and a terrific success all at once.
from Breakingviews:
UBS points to next banking worry: client risk
By Dominic Elliott
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
UBS’s Libor shame points to a new concern for financial firms – relationship risk.
from Breakingviews:
Barclays’ investment bank is too good to lose
By Dominic Elliott
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Is Barclays’ investment bank too good to lose? Antony Jenkins is wrestling with this question ahead of the UK lender’s strategic D-day next February. Politicians, as well as some regulators and shareholders, wouldn’t mind seeing the hard-charging investment bankers associated with the Bob Diamond debacle cast adrift. But while Jenkins will need to perform open-heart surgery on the unit, it still has value as part of the group.
from Breakingviews:
UBS rethinks the impossible
By Dominic Elliott
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
UBS is going where no bank has yet dared to tread. The Swiss wealth manager and investment bank is poised to reveal a radical strategy that could see it pull out of fixed-income trading. Such a plan would be expensive and slow to execute - that’s why rivals typically think such moves are impossible. But the decision could prove an industry game-changer.
from Breakingviews:
Pandit succumbs to “three strikes you’re out” rule
By Rob Cox
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Vikram Pandit succumbed to the most basic rule of thumb: three strikes and you're out. A trio of Citigroup misfortunes, not all of the chief executive's making - the bank's dividend policy, his own compensation and the sale of Smith Barney - eroded the confidence of shareholders, regulators and the board. And they couldn't have been much fun for Pandit to endure, especially after successfully navigating Citi to stability.
from Financial Regulatory Forum:
Standard Chartered’s big shareholders stay quiet on compliance, say focus is on governance
By Martin Coyle
LONDON/HONG KONG, Aug. 31 (Thomson Reuters Accelus) - Standard Chartered Bank's major shareholders are declining to openly criticise the firm's compliance practices but some cited overall governance issues as their primary interest following its settlement over allegations it breached Iran-sanctions laws. One institutional investor said that it had discussed compliance issues with the bank before this month's $340 million settlement was reached with New York's Department of Financial Services (DFS) for breaches of sanctions with Iran. The UK fund manager, which declined to be named, said that it discussed the allegations in general as well as compliance issues. "Compliance was discussed," the fund manager said without elaboration.
The enforcement action had happened so quickly that the bank had not discussed the issue with Standard Chartered before the matter became public, the source said. Afterwards, he said, several issues connected with the enforcement were raised. Speaking generally, the source said that compliance issues tended to test financial institutions but the investor was more concerned with governance issues "as a whole" rather than individual transactions.
from Financial Regulatory Forum:
U.S. consumer bureau’s mortgage servicing rules are in the right direction despite shortcomings
By Bora Yagiz
NEW YORK, Aug. 31 (Thomson Reuters Accelus) - The Consumer Finance Protection Bureau’s proposed rules earlier this month on mortgage servicing are a step in the right direction in its efforts to uproot the malpractices that were once prevalent in the subprime mortgage market. The proposals suffer from a few shortcomings, however, not the least because the Bureau, with its “one-size-fits-all” approach, seems to have ignored the nuances between the different players within the servicing industry.
On the face of it, mortgage servicing is an administrative and routine business with little scope for profits, aside from the indirect business opportunities through cross-selling, where the lender can offer other products to the same customer.
It is about collecting from and making payments on behalf of mortgage borrowers, including payments for taxes and insurance from escrow accounts, calculating the variable interest rates for the adjustable rate loans, and providing other types of customer service such as negotiating modification of loan terms under hardship or handling the foreclosure process, for which the average annual fee collected is about 0.25% of the loan’s total value.
