Rounding out a week of fourth-quarter results from London,
Standard Chartered and Royal Bank of Scotland are both still clearly struggling to escape their pasts. StanChart, having declared $2.36 billion losses for shareholders in 2015, has been forced to do the same for 2016, albeit for the considerably smaller amount of $478 million. However profits before tax are actually in the black at $409 million. Mis-selling meanwhile has cost RBS dear: losses for last year came to £7 billion, and a new plan to cut costs is on the way for 2017.
Well worth a listen: Michael Lafferty spoke on Share Radio this morning to give sage advice on a way out of the RBS morass.
Across the Irish Sea, Bank of Ireland reported a fall of 16 percent in pre-tax profit, to €1.07bn for last year. Dividends have not been forthcoming since the crash of 2008 and are now delayed by a further year because of Brexit uncertainty.
A report in the South China Morning Post says that Chinese banks might be on the verge of passing on the costs of their loan books to customers. Short-term borrowing rates are on the rise, as are non-performing loans, putting the banks under pressure as Beijing signals any monetary pressure-release is off the cards. Citing the regulator's figures, the report notes that "the average net interest margin, a measure of lending profitability, dropped to 2.22 per cent as of December, the lowest in more than five years."
As readers will know, the Volcker Rule, which forbids proprietary trading by banks that does not benefit customers, has long been disliked by Wall Street and is now under attack from a Trump administration set on dismantling Dodd-Frank reforms in toto. But a curious story this morning shows that frustration with the firewall extends north of the 49th parallel, as news comes of a legal case involving Royal Bank of Canada (RBC) and a former executive dispatched by the bank to the Bahamas (there are worse fates) to skirt the US regulation. Reuters takes up the tale: "The dispute, according to court documents, centres on whether the former executive, Tebogo Phiri, has the right to valuable intellectual property such as data and trading strategies underpinning the business he ran for RBC....An exception to the rule allows non-US banks to engage in proprietary trading activity as long as the trading is conducted outside the United States. But by mid-2016, the bank changed course and decided to shut down the Bahamas operation. RBC terminated Phiri's employment in October, but did not grant him the intellectual property rights he was expecting, according to court papers."
With every passing day come deals involving fintech: now it is Airbnb's turn, with the announcement of a deal now finalised by the homestay rental platform to buy social payments specialist Tilt. Half a decade ago, Tilt was seen by its investors as the future of mobile commerce, and leading Silicon Valley investors poured in $60 million; now the "community-building" aspect of both firms is being cited as a logical reason why the one should swallow the other. Meanwhile Visa is "bridging the gap between brands and fintech", reports the Drum in a round-up of developments at Visa's new Innovation Centre in London.
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