October 8, 2024

Back-to-Back Losses, the First in a Month

A gloomy earnings report and outlook on Wednesday from Caterpillar, the world’s largest construction equipment company, helped to pull two of the three major American indexes lower.

The drop for the Dow and the Standard Poor’s 500-stock index gave the stock market two consecutive days of losses, for the first time in a month.

Caterpillar’s earnings fell 43 percent in the second quarter as China’s economy slowed and commodity prices sank. The company also warned of slowing revenue and profit, and its stock dropped $2.08, or 2 percent, to $83.44.

Nine of 10 industry groups in the S. P. 500 ended lower.

The holdouts were technology companies, which got a lift from Apple’s surging stock. Apple shares jumped $21.52, or 5 percent, to $440.51. The Nasdaq composite index, which lists many technology companies, edged up 0.33 of a point, or less than 0.1 percent, to 3,579.60.

The Dow Jones industrial average fell 25.50 points, or 0.2 percent, at 15,542.24.

The S. P. 500-stock index fell 6.45 points, or 0.4 percent, to 1,685.94. Although far from a blockbuster earnings season, the larger trend for corporate profits appears strong. Analysts forecast that second-quarter earnings for companies in the S. P. 500 increased 4.2 percent over the same period last year, according to SP Capital IQ. At the start of the month, those analysts were looking for earnings to rise 2.8 percent. More than six out of every 10 companies have surpassed Wall Street’s profit targets.

“Yes, they’re beating expectations, but expectations are so low,” said Brad McMillan, chief investment officer at Commonwealth Financial.

But financial firms, like Goldman Sachs and Capital One, have posted the highest rate of earnings growth of any industry. Ignore their results, however, and earnings are on track to slump 3.5 percent, according to FactSet.

“You can’t call this a blowout quarter so far,” Mr. McMillan said.

In the market for government bonds, the benchmark 10-year Treasury note fell 21/32 to 92 26/32, to yield 2.58 percent, up from 2.51 percent late Tuesday.

Article source: http://www.nytimes.com/2013/07/25/business/daily-stock-market-activity.html?partner=rss&emc=rss

Bucks Blog: Keeping an Eye on Savings Account Transfers

Back in January, I fulfilled a New Year’s resolution by setting up automatic online transfers for my children’s weekly allowances. So far, so good — or, so I thought.

Last week, I got a stern e-mail from Capital One 360 (formerly ING Direct), warning me that I was making too many withdrawals from my savings account. If I didn’t stop, they’d have to close the account, “since this isn’t your first offense,” the e-mail said. I could practically see the finger wagging.

What, I wondered, had I done wrong? I vaguely recalled another e-mail from the bank last month, but I didn’t open it. I don’t ever “withdraw” money from my account. Since I had previously set up a monthly transfer from my outside checking account into my Capital One account (actually, ING Direct, when I’d first done it), I’d simply set up automatic transfers of $5 a week from my savings account to the girls’ subaccounts, for their allowances.

The problem, according to the helpful representative I spoke to on the phone, is that federal rules (Regulation D, to be precise) permit just six withdrawals a month for savings accounts. Transfers out — even to “subaccounts” within the bank, like those I had created for my girls’ allowances — count as withdrawals. And I was doing eight a month.

So to solve the problem, I’d have to reduce the number of transfers — say, to twice a month for each girl — or have the weekly $5 deposits made directly from my outside checking account. (There’s no limits on funds coming in, just going out.) Or, I could open a new Capital One 360 checking account, which doesn’t limit withdrawals.

I chose the second option. The point of the online transfers is for my children to watch the balance grow week by week, and I fear I’d lose an incentive to discuss their money with them regularly if I reduced the frequency of deposits. As it is, I sometimes forget to show them their balances anyway.

The representative canceled the existing transfers for me, and then I went online and set up the new, weekly transfers from my outside account.

The switch was a minor inconvenience, and actually reminded me to be more active in discussing finances with the girls, so in the end it all worked out fine. At least, I think it did. We’ll see.

Have you encountered any glitches when setting up online accounts for your children’s allowances? Or have you had any problems in setting up transfers to or from a savings account for yourself?

Article source: http://bucks.blogs.nytimes.com/2013/04/02/keeping-an-eye-on-savings-account-transfers/?partner=rss&emc=rss

Bits Blog: U.S. Banks Again Hit by Wave of Cyberattacks

For the last week, hackers have — once again — attacked the online banking sites of several American banks.

The attacks appear to be the second stage of a campaign that began in September, when a hacker group calling itself Izz ad-Din al-Qassam Cyber Fighters took credit for a series of attacks on the Web sites of Bank of America, Citigroup, U.S. Bank, Wells Fargo and PNC  that caused intermittent delays.

The group said it had attacked the banks in retaliation for an anti-Islam video that mocked the Prophet Muhammad and pledged to continue its campaign until the video was removed from the Internet. They called the campaign Operation Ababil, a Koran reference to the swallows Allah sent to attack an army of elephants dispatched by the King of Yemen to attack Mecca in 571 A.D.

In an online post on Tuesday, the group said that it had resumed Operation Ababil and that, over the last several weeks, it had focused on nine banks: JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, U.S. Bancorp, PNC, BBT, Suntrust and Regions Financial.

“Our aim of this operation is removal of that insulting and absurd film,” the hackers wrote in an online post.

Of the nine banks, representatives of PNC, BBT and Citigroup confirmed that their online banking sites had experienced intermittent disruptions because of a high volume of Web traffic, but they said that bank accounts and customer information had not been affected. Though they were not mentioned in the group’s online hit list, Capital One and Fifth Third Bank also experienced brief disruptions.

Customers at Bank of America, Wells Fargo, U.S. Bancorp and JPMorgan did not appear to have had any trouble reaching their accounts.

In an e-mail to customers, PNC said it had experienced “an unusually high volume of traffic” to its site. “This volume of traffic is consistent with threatened cyberattacks on the U.S. banking system and is designed to cause access delays for legitimate Internet customers,” the statement said.

Debra DeCourcy, a spokeswoman for Fifth Third Bank, said that from 11 a.m. to 3 p.m. on Thursday, Fifth Third also had a high volume of traffic to its site. “We believe it was a denial of service attack designed to disrupt access to our site,” Ms. DeCourcy said. “This was an access issue, not a security issue: No customer information or data was compromised.”

In a denial of service attack, hackers bombard a site with traffic until it collapses under the load. Though banks take great pains to absorb large volumes of traffic, many experienced  unprecedented levels. Typically such attacks are deployed through a Web application, in which hackers recruit volunteers to click on a link that sends signals from their computers to a victim’s site, or through botnets, networks of infected computers and devices that do hackers’ work for them.

But security researchers who studied the attacks on banking sites last fall said hackers had used a new weapon: data centers.

Researchers at Radware who investigated the attacks for several banks found that the traffic was coming from data centers around the world that had been infected with a sophisticated form of malware that was designed to evade detection by antivirus solutions. The attackers used those infected servers to simultaneously fire traffic at each banking site until it slowed or collapsed. By infecting data centers instead of computers, attackers obtained the horsepower to mount an enormous denial of service attack.

Jenny Shearer, a spokeswoman for the Federal Bureau of Investigation, declined to comment on the source of the attacks on Friday.

In an online post, hackers said the attacks had not been sponsored by a country.

Government and intelligence officials have blamed Iran for the fall attacks and for a destructive cyberattack on computers at Saudi Aramco in August, though they have not presented any evidence to back up their claims. Tracing cyberattacks back to one particular country is difficult, security experts say, because traffic can be routed through different Internet addresses to mask their true origin.

Security researchers still do not know how the data centers used in the first wave of attacks were infected in the first place, how widespread the infection rate was and — perhaps most troubling  — whether the servers could be used to damage other sensitive targets in the future.

On Tuesday, the hackers said they had no intention of halting their campaign. “Officials of American banks must expect our massive attacks,” they wrote. “From now on, none of the U.S. banks will be safe.”

Article source: http://bits.blogs.nytimes.com/2013/01/04/u-s-banks-again-hit-by-wave-of-cyberattacks/?partner=rss&emc=rss

DealBook: ING to Sell Canadian Unit to Scotiabank for $3.1 Billion

Rick Waugh, left, chief of Scotiabank, and John Mayberry, the bank's chairmanMichael Creagan/ReutersRichard E. Waugh, left, chief of Scotiabank, and John T. Mayberry, the bank’s chairman.

The ING Group said on Wednesday that it would sell its Canadian unit to Scotiabank for about $3.1 billion in cash, as the Dutch bank continues to sell assets to pay for its government bailout.

The transaction comes a year after ING agreed to sell its ING Direct online banking unit in the United States to Capital One Financial for about $9 billion, in one of the largest banking deals since the financial crisis.

ING said this year that its primary goals remained bolstering its Tier 1 capital ratio and repaying the rescue of 10 billion euros that it received from the Dutch government in 2008.

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The deal on Wednesday will give Scotiabank control of one of Canada’s 10 biggest banks: The ING unit has $30 billion in deposits and 1.8 million customers. The ING business also has what it describes as a strong home loan portfolio, with 59 percent of the mortgages insured. And for uninsured mortgages, the loans cover about half the price of the purchased property.

Yet the business’ low-margin model deterred some would-be buyers from bidding for the unit.

In a nod to the ING unit’s strong consumer brand awareness, Scotiabank said that it would keep the division’s ING Direct name.

“Scotiabank is committed to preserving what ING Direct’s customers have come to love about it,” Anatol von Hahn, Scotiabank’s group head of Canadian banking, said in a statement. “ING Direct will continue to operate separately and customers will be able to interact the way they do now using their existing account numbers and passwords, served by the same familiar team.”

Scotiabank said that it would stay within its Tier 1 capital ratio of 7 percent to 7.5 percent through the first quarter of next year.

The Canadian bank will finance the deal in part by issuing 29 million shares at $52 each, raising about $1.5 billion in new equity. That stock sale could be expanded up to $1.7 billion if demand proves strong enough.

Shares in Scotiabank fell 2.6 percent in after-hours trading, to $52.75. They have risen about 1 percent over the last 12 months.

The deal is expected to close by December, pending regulatory approval.

Scotiabank advised itself, while ING was advised by JPMorgan Chase.

Ian Austen contributed reporting.

Article source: http://dealbook.nytimes.com/2012/08/29/ing-to-sell-its-canadian-unit-to-scotiabank-for-3-1-billion/?partner=rss&emc=rss

DealBook: Despite a Spurt of Banking Deals, Pace Ahead Looks Slow

Judging by the last week, one could be forgiven for thinking that banking deals were back in vogue. Last Thursday, Capital One Financial announced that it was buying the American online banking business of the ING Group for $9 billion. Four days later, PNC Financial said that it would pay $3.45 billion for the Royal Bank of Canada’s retail banking network.

And on Wednesday, Regions Financial disclosed that it was exploring a potential sale of its Morgan Keegan brokerage firm.

But that spate of deal announcements doesn’t herald a coming surge in bank transactions anytime soon, according to merger specialists and analysts.

The pace of mergers is instead expected to remain slow as long as questions like the shape of financial regulation and the value of home mortgages hover over financial institutions.

“Until there are signs of a robust M. A. market, many sellers are going to choose to wait,” said Lee A. Meyerson, a partner at the law firm Simpson Thacher Bartlett and the head of the firm’s mergers and financial institutions practices.

Shortly after the financial crisis, many experts had forecast an upswing in deals as failing banks were matched up with rescuers and smaller institutions sought to gain much-needed scale.

Even now, banks face considerable pressure on their profitability. Fewer businesses are seeking loans, reducing the prices that banks can charge. The Dodd-Frank overhaul, which includes the so-called Durbin amendment that would cut debit card transaction fees, also threaten to cut into revenue.

Larger institutions, including SunTrust Banks and Regions, are also likely to face higher capital requirements that could constrain their lending.

Those factors make consolidation more attractive, as institutions look for ways to gain scale and squeeze out cost savings by combining back-office systems and cross-selling products.

While regulators have long been concerned about limiting the number of “too big to fail” institutions, some dealmakers say, the opposite problem of “too small to succeed” will continue to drive today’s bank mergers.

Yet the number of bank mergers in the country remains well below its peak in late 2008 and early 2009, with just 123 mergers announced this year through Wednesday, according to data from Thomson Reuters. By contrast, 277 deals were announced during the same time in 2009.

The number of bank transactions assisted by the Federal Deposit Insurance Corporation has slowed in recent months as well, as it has seized fewer failing institutions.

Few merger specialists expect the sort of transformative mergers that previously defined banking consolidation, like the union of Bank of America and NationsBank or even the fire sales of Wachovia and Washington Mutual.

“Near term, the days of blockbuster, mega-bank deals appear to be over,” said J. Kenneth McPhail, a managing director in Bank of America Merrill Lynch’s financial institutions group.

Many of the deals struck recently were asset sales, including the ING and R.B.C. transactions, rather than wholesale takeovers. ING said this week that it planned to continue selling other businesses, like its car lease unit, as part of the terms of its bailout by the Dutch government.

HSBC Holdings is also pursuing a sale of its 175 upstate New York branches.

And Citigroup has sold several assets as part of its revamping, including its student loan business. Its consumer finance unit, CitiFinancial, remains on the auction block.

Unlike in years past, the nation’s four-biggest banks are unlikely to pursue big acquisitions this year. Most of them are bumping up against a regulatory cap on owning more than 10 percent of the nation’s deposits.

That has left the next tier of institutions as among the most likely bidders for sizable deals that may arise. Other than PNC and Capital One, US Bancorp, which is well known for its merger appetite, and BBT and MT Bank as possible buyers. MT has already notched a sizable deal, agreeing to buy Wilmington Trust late last year for about $351 million.

In its latest weekly tally of potential bank deals, Keefe Bruyette Woods listed 22 institutions that could be sellers. The list included Marshall Ilsley, which agreed earlier this year to sell itself to Canada’s BMO Financial Group for $4.1 billion.

“There are a number of sellers who need to assess the new economic, regulatory, and competitive realities of the industry,” John Simmons, the co-head of JPMorgan Chase’s financial institutions group for North America, said.

Article source: http://feeds.nytimes.com/click.phdo?i=6593b1b8ac9c2f394abde097e0f08ac9

Bucks: Card Protections for Small Businesses

Bank of America's business card doesn't charge over-the-limit feesCourtesy Bank of AmericaBank of America’s business card doesn’t charge over-the-limit fees.

Each month, Americans get more than 10 million business credit card pitches in their home mailboxes. The cards are aimed at small businesses and sole proprietors, but they generally lack the new protections that apply to consumer cards, a new report from the Pew Charitable Trusts says.

That means holders of the cards are subject to a host of potentially harmful terms, like high-interest penalty rates imposed without warning. The Card Act of 2009 banned such practices for cards marketed primarily as consumer accounts, but it doesn’t apply to those labeled for “business” use — even though the holders are individually liable for the account balances, just as “ordinary” consumers are. The impact of higher rates can be significant with a business card because the small business owner usually is responsible for charges on any card linked to the account.

Nick Bourke, director of Pew’s Safe Credit Cards Project and the main author of the report, says in a video that Pew “is urging policy makers to extend the protections of the Credit Card Act whenever a credit card account can hold a person individually liable.”

The report analyzed disclosure documents from the 12 largest credit card issuers, which control about 85 percent of the small business credit card market.

Some issuers, notably, Bank of America and Capital One, have voluntarily applied some consumer protections from the Card Act to their business cards. Bank of America, for instance, has eliminated over-the-limit fees on its business cards. And both companies have adopted procedures that apply payments first to balances with higher interest rates, like cash advances. Those banks are the exception, however. That means, in general, the Pew report says, “Households that use these products remain vulnerable to potentially harmful practices.”

For instance, 67 percent of business cards charged an over-the-limit fee, typically $39. And an equal percentage applied penalty rates for late payments or over-the-limit spending. The typical penalty rate was 29.4 percent.

Older, more affluent people get a higher percentage of business card pitches. But even households with annual incomes of less than $25,000 — a level near the federal poverty rate for a family of five — got a significant volume of solicitations.

The authors of the Pew report recommend that issuers should at least be required to alert applicants that the business cards don’t carry the same protections as consumer cards do.

It’s likely, Mr. Bourke said in a brief interview, that some individuals end up using “business” cards as their personal plastic, but it’s unclear how often that actually happens.

Have you responded to a business credit card solicitation that arrived in your mailbox? Have you encountered any of the penalties associated with them?

Article source: http://feeds.nytimes.com/click.phdo?i=1a3d5c10d6a98ca1c29955f112729ac9

The Right Plastic for Perks

Tim Winship, publisher of FrequentFlier.com, said credit card issuers had gone “from no activity to a frenzy of activity” in the last year or two. “They’ve turned up the wick in the intensity,” he said, in marketing to business travelers.

“The frequent-traveler demographic tends to be someone with a higher household income, and a better job and credit rating,” he added. “That’s why issuers are focusing so aggressively on this segment of the market.”

Mr. Winship recommended that travelers determine where they are on the credit continuum before choosing a card. “Are you a frequent buyer or a frequent flier? If you’re a frequent buyer and earn the majority of your miles by using your credit card and not traveling, there’s no compelling reason to sign up for an airline co-branded card. You’re probably better off with a Capital One Venture card, an American Express or Citi ThankYou Premier card — you won’t face restrictions getting reward flights because they buy the tickets.”

But frequent fliers who opt for cards issued by their airline loyalty program can also earn miles from hotel stays, car rentals and even mortgage payments. “If you earn a significant number of miles through traveling, you’re better off sticking with an airline-linked card, since miles you get from purchases can be linked with miles you get from traveling,” Mr. Winship said.

Another option is the Starwood Preferred Guest American Express card, which lets travelers earn points that can be redeemed for stays at Starwood hotels or converted into mileage for airline tickets; the American Express Membership Rewards program offers similar flexibility. There are also cards that give users a cash rebate on their purchases, which also affords flexibility.

According to an analysis by Mr. Winship, certain cards are better for specific perks than others. Here is a sampling:

FOR AIRPORT LOUNGE ACCESS He suggested American Express Platinum and Centurion cards, whose annual fees cover entry into lounges of American Airlines, Delta Air Lines and US Airways, and annual membership in Priority Pass Select, a program that provides access to 600 lounges worldwide. Certain Continental and United cards also offer annual memberships to their lounges. All cards have annual fees of $375 or more.

TO AVOID FOREIGN FEES Mr. Winship estimated that foreign transaction fees could add as much as 3 percent to the cost of goods and services purchased overseas. He said travelers should consider cards that have eliminated these fees, including American Express Platinum and Centurion cards; certain Visa cards issued by Continental, British Airways, IHG, Marriott and Hyatt; Chase’s Sapphire Preferred; and Citi’s ThankYou Premier and ThankYou Prestige cards. Some cards charge hefty annual fees, but others — like Marriott’s $30 charge and IHG’s $49 — are minimal.

TO WAIVE BAG-CHECKING FEES Depending on restrictions, Continental’s various MasterCards as well as Delta’s SkyMiles credit cards will cover one or two bags per traveler per flight. The American Express Platinum and Centurion cards also give users a $200 annual credit toward miscellaneous airline fees, including baggage-checking fees.

TO CUT MILEAGE REQUIREMENTS Look into American Airlines’ Citi cards and USAirways’ MasterCards, which offer discounts on the number of miles required to book an award ticket.

TO EARN QUALIFYING MILES Consider the top-tier credit cards offered by Continental, Delta, United and US Airways to build up the miles that help travelers qualify for elite status in airline loyalty programs. These cards let holders earn elite miles if they spend a certain amount of money, though they also limit the number of elite miles that can be earned this way.

One other significant perk is automatic loyalty program status upgrades, available through Marriott, Hilton and IHG co-branded cards. The American Express Platinum and Centurion cards also reimburse holders for the $100 application fee for Global Entry, a program that expedites customs and immigration clearance at airports in the United States.

Many business travelers carry more than one credit card, using each differently.

Article source: http://feeds.nytimes.com/click.phdo?i=4bfe1b673498d7c61775dbb4975caa3c