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DealBook: BNP Paribas Earnings Fall on Write-Downs

February 15, 2013 by NewsMaker Leave a Comment

Jacky Naegelen/ReutersA branch of BNP Paribas in Paris.

PARIS – BNP Paribas, France’s largest bank, posted a fourth-quarter profit far below estimates on Thursday as it wrote down the value of its Italian unit and booked an accounting charge on its own debt.

The bank said net income fell to 514 million euros ($688 million) in the three months ended Dec. 31, a 33 percent decline from the period a year earlier. The quarterly earnings were well below the figure of about 1 billion euros anticipated by analysts surveyed by Reuters, while revenue fell 3 percent, to 9.4 billion euros.

BNP Paribas, based in Paris, said it had recorded a good will impairment of 298 million euros on the value of its Banca Nazionale del Lavoro division because of expectations that the Italian central bank would raise capital requirements. It also booked a 286 million euro charge to revalue its own debt, an accounting requirement, as the market value of the debt had improved.

Still, BNP Paribas noted, its 2012 net income of 6.5 billion euros, up 8.3 percent from 2011, was third among the world’s biggest lenders, behind only JPMorgan Chase and Wells Fargo.

The bank’s results were the second disappointment for French investors this week, after Société Générale – the country’s second-largest listed bank – posted a fourth-quarter net loss of 476 million euros on Wednesday, roughly double what analysts had been expecting.

Jean-Laurent Bonnafé, the BNP Paribas chief executive, said in a statement that despite a weak economy, the bank had achieved “solid results.” Under Mr. Bonnafé, the bank’s share price has risen by a third in the last year, as BNP Paribas, like other euro zone banks, has sought to reduce its reliance on dollar investors, raised its reliance on deposits and restructured in response to the sovereign debt crisis.

With Europe moribund, the bank said it planned to focus on providing services in higher-growth markets, including Turkey and the Asia-Pacific region, while strengthening its investment banking offerings in the United States. Next year, it said it would begin restructuring to “simplify the way the group functions and improve operating efficiency,” with 1.5 billion euros “in transformation costs spread out over three years.”

The bank said the plans would allow it to save 2 billion euros a year beginning in 2015, without closing any businesses. Shares in BNP Paribas rose 2.8 percent in morning trading in Paris on Thursday.

BNP Paribas said its investment banking business had cut its dollar funding needs by $65 billion. And it noted that it was ahead of most global peers in adapting to new capital regulations, attaining a common equity Tier 1 ratio, a measure of an institution’s ability to withstand financial shocks, of 9.9 percent by the end of 2012 under the accounting rules known as the Basel III regime. The bank said it had cut its risk-weighted assets by 62 billion euros during 2012.

Despite the weaker-than-expected profit, analysts generally welcomed the results.

Credit Suisse analysts said the “results showed significant progress in terms of group strategy.” Jon Peace, an analyst at Nomura in London, said in a research note that the bank’s efforts to improve its capital position had left it with “a superior balance sheet.”

Pretax profit earned by the bank’s investment banking business rose nearly sixfold to 266 million euros, from 46 million euros. The bank said the unit’s bad loan provisions rose to 206 million euros, compared with 72 million euros in the third quarter of 2012. The increase, it said, was the result of “a provision set aside for one specific loan.” It did not provide further details.

This post has been revised to reflect the following correction:

Correction: February 14, 2013

An earlier version of this article misstated the magnitude of the increase of the fourth-quarter pretax profit at the bank’s investment banking business. The unit’s profit rose nearly sixfold, to 266 million euros, from 46 million euros; it did not rise 29 percent from a year earlier.

Article source: http://dealbook.nytimes.com/2013/02/14/bnp-paribas-profit-falls-on-write-down-costs/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: chase, fourth quarter, wells fargo

DealBook: Banks Reach Settlements on Mortgages

January 7, 2013 by NewsMaker Leave a Comment

Kevork Djansezian/Associated PressBank of America bought Countrywide in 2008.

11:38 a.m. | Updated

Bank of America agreed on Monday to pay more than $10 billion to Fannie Mae to settle claims over troubled mortgages that soured during the housing crash, mostly loans issued by the bank’s Countrywide Financial subsidiary.

Separately, federal regulators reached an $8.5 billion settlement on Monday to resolve claims of foreclosure abuses that included flawed paperwork used in foreclosures and bungled loan modifications by 10 major lenders, including JPMorgan Chase, Bank of America and Citibank. About $3.3 billion of that settlement amount will go toward Americans who went through foreclosure in 2009 and 2010, while $5.2 billion will address other assistance to troubled borrowers, including loan modifications and reductions of principal balances. Eligible homeowners could get up to $125,000 in compensation.

The two agreements are not directly related, but they illustrate the extent of the banks’ role in the excesses of the credit boom, from the making of loans to the seizure of homes.

U.S. and 14 Lenders Said to Be Near Deal of Foreclosure Claims

January 7, 2013 by NewsMaker Leave a Comment

A $10 billion settlement to resolve claims of foreclosure abuses by 14 major lenders was expected to be announced as early as Monday, several people with knowledge of the discussions said on Sunday.

The settlement would come after weeks of negotiations between federal regulators and the banks, and covers abuses like flawed paperwork and botched loan modifications, said these people, who spoke on condition of anonymity because the deal had not been made public.

An estimated $3.75 billion of the $10 billion would be distributed in cash relief to Americans who went through foreclosure in 2009 and 2010, these people said. An additional $6 billion would be directed toward homeowners in danger of losing their homes after falling behind on their monthly payments.

All 14 banks, including JPMorgan Chase, Bank of America and Citigroup, were expected to sign on.

The agreement would come almost a year after a sweeping deal in February between state attorneys general and five large mortgage lenders.

The settlement almost fell apart over the weekend. Some officials at the Federal Reserve threatened to scuttle the deal unless the banks agreed to pay an additional $300 million for their role in the 2008 financial crisis, which upended the housing market and led to millions of foreclosures.

The Fed officials argued for additional aid for homeowners ensnared in a flawed foreclosure process, according to several people briefed on the negotiations who spoke on condition of anonymity. The $300 million demand was to come on top of the $10 billion payout, but was met with resistance from the banks, especially because it was raised late in the day on Friday, according to these people.

The Federal Reserve officials backed down, allowing the $10 billion pact to move forward ahead of bank earnings releases this month, these people said.

During the last week, officials from the Federal Reserve met with community groups and consumer advocates to gather comments about a settlement. It was those talks that induced the Fed to forgo the request for additional money, according to three people familiar with the matter. The thinking, these people said, was that broad relief was better than a lengthy review process that had not yielded much relief.

Representatives from the Federal Reserve and the Office of the Comptroller of the Currency, which led banking regulators in the negotiations, declined to provide further details on the settlement.

Still, some housing advocates said the settlement did not go far enough in providing relief. Bruce Marks, chief executive of the Neighborhood Assistance Corporation of America, expressed cautious optimism about the deal, but added that the “devil is in the details.”

It is still unclear how the monetary relief will be distributed among homeowners, but one immediate result of the settlement is the end of a troubled review of millions of loan files.

As part of a consent order in April 2011, the comptroller’s office and the Federal Reserve established the Independent Foreclosure Review, which mandated that banks hire independent consultants to audit loan files and look for illegal fees, bungled loan modifications and instances where borrowers lost their homes even though they were current on their payments. Only 323,000 homeowners submitted claims for their files to be reviewed.

Within the comptroller’s office, senior officials raised concerns that the reviews had grown bloated and inefficient, especially after each loan took more than 20 hours to review, up from original estimates of eight hours a file.

The mounting costs of the reviews, up to $250 an hour, began to worry the banking regulators, according to several of the people with knowledge of the matter. So far, the foreclosure review program has cost the banks an estimated $1.5 billion, according to these people.

Banking regulators grew concerned that the reviews were not producing meaningful instances of banks wrongfully seizing the homes of borrowers who were current on their payments, according to these people.

Told last week of the plans to stop the foreclosure reviews, some consumer advocates expressed concern that the full extent of the damage to homeowners would never be known. Some of the advocates have questioned whether the banks were getting off too easily because they selected and paid the consultants charged with examining their loans.

Article source: http://www.nytimes.com/2013/01/07/business/lenders-said-to-be-near-deal-of-foreclosure-claims.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: chase, fed officials, federal reserve

RIM’s Delay Caused by Poor Performance, Analysts Say

January 3, 2012 by NewsMaker Leave a Comment

Shock because even RIM acknowledges that the new phones are vital to reversing its rapid loss of market share in North America. At the same time, analysts were skeptical about the company’s explanation that the delay stemmed from its decision to wait for a new, improved microprocessor.

Instead, many analysts say that both the new phones and RIM’s new operating system, BlackBerry 10, may have significant performance problems and are delaying the project.

“They can’t get the infrastructure and the operating system ready in time,” said Peter Misek, an analyst with Jefferies Company. Alkesh Shah, an analyst at Evercore Partners, agreed. “Waiting for the chipset is a contributing factor in a number of factors that led to the delay,” he said. “Creating the ecosystem for the phones is the bigger problem.”

Mr. Shah and several other analysts said that delays in the development of BlackBerry 10 and poor battery performance in prototype versions of the new phones were behind the decision to further delay production until faster, smaller and more power-efficient chips became available in late 2012. Those delays made it impossible for RIM to begin selling the new phones early in 2012, as it first promised.

“One of the problems is the delay in the BB 10 software and that may have led to the selection of chips that caused the most recent delay,” said Rod Hall, an analyst with JPMorgan Chase.

While the analysts’ skepticism is partly based on speculation, it has also been fueled by RIM’s general loss of credibility with them. For more than a year, the company has been forced to repeatedly restate financial forecasts and failed to deliver some critical, new products on time.

“They don’t have a firm grasp of the issues and realities of bringing these phones to market,” said Colin Gillis, an analyst with BGC Partners. “There are not many believers right now,”

RIM has declined to identify the new chip. RIM also declined to comment directly about development problems with BlackBerry 10 or the battery life of the new phones.

It reiterated the earlier remarks of its co-chief executives, Jim Balsillie and Mike Lazaridis, that the delay was simply the result of its decision to wait for an improved chipset. “RIM made a strategic decision to launch BlackBerry 10 devices with a new, LTE-based dual core chipset architecture,” the company said, referring to a chip that supports a high-speed wireless service known as LTE that is now available in some parts of the United States. “As explained on our earnings call, the broad engineering impact of this decision and certain other factors significantly influenced the anticipated timing for the BlackBerry 10 devices.”

But it is no secret that RIM has been struggling with its new operating system, which is based on technology from QNX Software Systems, a company based in Ottawa that RIM acquired in 2010. The BlackBerry PlayBook, RIM’s money-losing tablet computer, was the company’s first product to use a QNX operating system. Despite the BlackBerry brand’s strong association with e-mail, it arrived in April 2011 without e-mail software or the ability to directly synchronize users’ address books and calendars.

Software that was supposed to remedy those issues and others has been delayed and is now promised for February.

Mr. Misek, said that RIM initially tried to merge, or thread, some of its current operating system with QNX to speed up the development timetable. But that proved unsuccessful, forcing RIM to create more software code from scratch than it initially anticipated.

Michael Morgan, the senior analyst for mobile devices at ABI Research, said that many problems with BlackBerry 10 came from making it work on RIM’s network, which moves all BlackBerry data, giving corporate e-mail a high level of security and all users lower wireless data bills.

To accommodate people with both BlackBerry phones and PlayBook tablets, RIM had to redesign security features on its network, which currently allow only one hand-held device access to any given user’s account, Mr. Morgan said.

“When you change something that low level in an operating system, it has ramifications which affect every function,” Mr. Morgan said. “I’m really shocked by a nine-month delay.”

Like many analysts, Mr. Morgan also says he thinks that RIM is struggling to bring the long battery life that has been a hallmark of BlackBerrys to the new phones.

While the QNX operating system has a reputation for reliability, he said, it has been mainly used in situations where power consumption is not a significant concern. Many touch-screen navigation and control systems in cars, for example, use QNX. But automobiles carry large batteries and alternators that recharge them.

When ABI’s researchers disassembled PlayBook tablets, Mr. Morgan said, they found several systems to reduce power consumption. He said, however, that those measures might not be enough for phones that will have much smaller batteries than the PlayBook.

“QNX is being applied now in a place it hasn’t been before,” he said.

Adding to the problem is RIM’s decision to make the new phones operate on LTE networks. Most current chips that operate on those high-speed networks have a reputation for quickly draining batteries.

While LTE networks are relatively scarce today, they are likely to be an important selling point for new phones a year from now.

Article source: http://feeds.nytimes.com/click.phdo?i=ea617b9d79b782a2ce5857bdf5f26931

Filed Under: Business News Tagged With: chase, evercore partners, gillis

Bucks Blog: Friday Reading: Rise in Medicare Premiums Lower Than Predicted

October 29, 2011 by NewsMaker Leave a Comment

October 28

Chase Bank Won’t Impose Debit Card Fee

Chase, which had been testing a $3 monthly fee, has decided not to introduce a monthly fee for debit card purchases.

Article source: http://feeds.nytimes.com/click.phdo?i=452d688c49627c4821963a3a31446cfc

Filed Under: Your Money Tagged With: chase, debit card purchases, medicare premiums

Bucks Blog: Banks Adding Debit Card Fees

September 29, 2011 by NewsMaker Leave a Comment

Michael Stravato for The New York TimesA customer pays by swiping a debit card.

Starting Saturday, big banks must comply with a new regulation that caps the fees they can charge merchants for processing debit card purchases. But some consumers are already seeing the impact of the change, in the form of higher fees charged on their checking accounts, as banks seek to recoup lost revenue.

Bank of America is the latest bank to say it will begin charging a monthly fee for checking accounts that use debit cards. Starting early next year, the bank will charge $5 a month, in any month that the customer uses a debit card to make a purchase. (If customers have a debit card, but don’t use it, they won’t incur the fee). The fee won’t apply to A.T.M. transactions, and it won’t be charged to customers with certain premium accounts, a bank spokeswoman, Betty Riess, said. “The economics of offering a debit card have changed with recent regulations,” she said.

Bank of America joins banks including SunTrust and Regions in charging the fees. Other institutions, like Wells Fargo and Chase, are testing them, too. And over all, bank fees have crept up to record levels, a recent survey found.

The added fees have come even though the limit on the merchant fees wasn’t as low as banks initially had feared. (The Federal Reserve originally considered a cap of 12 cents, or half of what it finally set.)

While consumers are seeing the impact of the change in their bank accounts, any potential savings benefit at stores is likely to be muted. “I don’t expect there to be any visible effects at the cash register,” said Aaron McPherson, practice director for payments at IDC Financial Insights. When similar caps were implemented in Australia, he said, merchants there didn’t pass along savings, so it’s unlikely that will happen here either.

That’s because, retail groups say, stores aren’t going to benefit as much as they had originally hoped under the new cap, and some merchants may actually pay higher fees.

The Fed earlier this year lowered the average maximum “swipe,” or interchange, fee to roughly half of what it had been previously. (Shoppers don’t pay the fees directly; banks collect them from merchants on behalf of payment networks like MasterCard and Visa, which set the rates. The rates very depending on the type of merchant.)

Retail groups say the new cap is a “critical step” in reining in fees that contribute to higher prices for shoppers. But Brian Dodge, a spokesman for the Retail Industry Leaders Association, said the Fed, under pressure from banks, set a “deeply flawed” formula for the cap that will actually result in some retailers paying higher fees for small-dollar transactions — say, drinks sold at coffee shops.

The formula sets the cap at 21 cents, plus .05 percent of the transaction amount, plus another penny in certain cases, for fraud-control measures. That means the maximum fee on the average debit transaction of $38 will be about 24 cents, compared with 44 cents previously.

But the payment networks have indicated they will treat the cap as more of a floor in some cases, Mr. Dodge said. In short, he said, to help make up for lost revenue on big-ticket items, the networks will increase fees on smaller transactions, to bring them up to the new limit.

Retailers do retain some flexibility, he said, to steer customers away from more expensive forms of payment, like rewards credit cards, and toward less expensive methods. So consumers may eventually see some merchants, like gas stations, offer discounts for using a debit card, as some do now for payments in cash.

One impact is clear, said Paul Bragan of Wakefield Research, which has studied consumer opinion about the swipe fee debate: Consumers are much more aware of the process by which banks charge stores for the use of plastic cards, and are in favor of more disclosure of such fees. “They’re looking for greater transparency in the process, so they can understand how it will affect them,” he said.

If you see any signs of changed retail prices or bank fees, after Oct. 1, please let us know in the comments section.

Article source: http://feeds.nytimes.com/click.phdo?i=be574af7f5d84be4038c943cf274f4a6

Filed Under: Business News Tagged With: chase, retail groups, suntrust

Bucks: Chase Ends Test of $5 A.T.M. Fees

May 5, 2011 by NewsMaker Leave a Comment

Scott Olson/Getty Images

JPMorgan Chase quietly ended a test in which it was charging a hefty $4 or $5 fee for non-Chase customers in two states for access to its A.T.M.’s.

The change was noted this week by The Consumerist and others, although the pilot ended more than a month ago. The test began Feb. 8 and ended at the end of March, said Tom Kelly, a Chase spokesman. Non-Chase customers in Illinois were charged $5, and those in Texas were charged $4. The bank has gone back to the $3 fee it charged earlier.

Mr. Kelly wouldn’t say why the pilot was halted or what the bank learned from it — or whether higher fees might be coming nationally. Other big banks, including Wells Fargo, Bank of America and Citibank, also charge $3 to noncustomers for using their A.T.M.s. But smaller banks charge less and the average is less than $2.50, according to credit.com.

Banks are looking for ways to increase fee income ahead of the federal limit on so-called swipe fees, which merchants pay banks to help process credit and debit card payments. Banks tend to see higher fees for noncustomers as one way to raise fee revenue while avoiding alienating their own customers.

But there may be a limit on how much people will pay for convenience. I may grimace at a $2 or $3 fee to use another bank’s A.T.M., but I’ll pay it if I’m in a hurry — say, when I’m running to catch a flight — and another bank’s machine is handy. But I might try harder to find one of my own bank’s A.T.M.’s if the fee starts inching above $3. Or I might hunt for a new bank that has more A.T.M.s in my area — which is probably part of the plan when banks raise their fees.

At what point would a fee make you walk a few extra blocks? Or switch banks?

Article source: http://feeds.nytimes.com/click.phdo?i=250044d773f362d1826e276ae50d3c21

Filed Under: Your Money Tagged With: bank of america, chase, wells fargo