Banking
All big U.S. banks but Zions Bancorp pass Fed’s health test
WASHINGTON – U.S. big banks have enough capital buffers to withstand a drastic economic downturn, the Federal Reserve said on Thursday, announcing that 29 out of 30 major banks met the minimum hurdle in its annual health check.
All of the big banks except for Zions Bancorp stayed above the 5 percent requirement for top-tier capital in the latest round of stress tests.
The tests aim to show how banks would weather a financial collapse similar to the 2007-2009 crisis. Banks had to show how they would cope with a halving of the stock market, and the eight largest banks had to weigh the impact of the default of their biggest trading counterparty.
“While capital is certainly better than it has been in past years, these firms certainly are subject to drops in capital and earnings when subject to severe stress,” said John Corston, a director in Deloitte’s regulatory group.
Several firms appeared to disagree with the Fed’s scores. Bank of America (BAC.N) and Wells Fargo (WFC.N) released the results of internal stress tests that showed them performing better than they did under the regulators’ tests.
Stress tests are closely watched by financial markets as a sign of the industry’s health, and also because the Fed can reject banks’ plans to return capital to shareholders if they think the banks are not strong enough to carry them out.
European regulators plan to conduct their own stress tests later this year, following a broad review of the asset quality of banks on the continent.
The Fed will announce on March 26 which banks’ plans to pay dividends or buy back shares were approved.
CAPITAL PLAN SPECULATION
For the results released on Thursday, the Fed assumed banks would keep dividends at their current levels and buy back no shares. This release sets off several days of speculation about whether banks with relatively low capital ratios will be allowed to increase dividends.
“The only results that are more nerve racking than stress test results for bankers are their bonus results,” said Dan Ryan, head of PricewaterhouseCoopers’s financial services advisory practice.
“Although almost every bank came above the capital floor in today’s results, we think two to four won’t be able to satisfy the Federal Reserve next week that their planned capital actions are appropriate,” he said.
Zions was the only bank to miss the minimum, with a tier 1 capital ratio of 3.5 percent in the most severe stress scenario. A spokesman for Zions was not immediately available for comment.
Zions said last month that it expected to resubmit its capital plan due to the sale of some securities that contributed to losses under the toughest stress scenario.
The other 29 banks stayed above the minimum levels. But M&T Bank came in relatively low, at 5.9 percent, and Bank of America’s tier 1 ratio was 6 percent.
Bank of America, however, released its own stress tests that showed its capital ratio at a much higher 8.6 percent. A spokesman for the bank declined to comment.
Wells Fargo also released internal test results that were higher than the marks it received from the Fed.
Bank of New York Mellon, Discover Financial Services and State Street had the highest capital ratios. Discover announced shortly after the release on Thursday that it planned to increase its quarterly dividend.
Capital ratios are not always clear indicators of whether the Fed will approve a bank’s capital plan. Last year, regulators directed JPMorgan Chase and Goldman Sachs to redo their proposals due to concerns about their capital planning processes.
The group of 30 banks’ aggregate tier 1 common capital ratio dipped to 7.6 percent under the toughest stress scenario. That ratio was 5.5 percent at the beginning of 2009, the Fed said.
This was the first year that Zions and 11 other banks, among which were Comerica (CMA.N) and Discover, participated in the full stress test regime.
The other 18 banks, among which were JPMorgan, Citigroup (C.N) and Morgan Stanley (MS.N), participated in previous rounds. Together, the 30 banks accounted for about 80 percent of total banking assets in the United States, the Fed said.
– REUTERS
Banking
Millions of customers still stranded worldwide 24 hours after GT Bank online operations suffered attacks
By Yemie ADEOYE
GT Bank, one of Nigeria’s leading banks, with operations across Africa and the United kingdom, and with an asset base of about US$3.11 trillion is under a cyber attack which has left millions of its customers across the world stranded in the last 24 hours.
The bank which was renowned for its seamless online operations at inception has suffered dwindling online efficiency in recent years and this current attack didn’t come as a surprise to many of its numerous customers. However, it is becoming worrisome that over 24 hours after its online operations went down, the bank has not been able to arrest the situation and restore its online services.
Stranded GT Bank customers outside the banks premises
Several customers of the bank took to their X (formerly known as twitter) handles to express their frustrations at the bank, as several of the customers in the diaspora are unable to access their accounts and carry on with their transactions. A customer , Jeff55 who lamented on his X handle about the development, stated that it is a thing of shock that a bank of this size couldn’t afford to have the necessary tools and experts to ensure a full protection of its online operations in this age and time.
Another customer Dimma stated that while Cybersecurity training may seem tedious, the recent #GTBank hack is a stark reminder that everyone is just a click away from a devastating attack.
Several media organisations had reported that hackers have stolen GT Bank website, and intercepted customers Data in massive phishing operation.
At the time of filing this report, Biztellers.com.ng checks on the banks website shows that it is still down and unaccessible, and neither GT Bank media and communications unit nor any of its agencies or surrogates have commented officially on the development.
Says output surge buoyed by reforms he announced in May 2024 to address gaps in PIA
President Bola Ahmed Tinubu on Sunday declared a resurgence in the oil & gas industry, commending the increased crude production to 1.6 million barrels per day.
The president, who said this in a national broadcast, maintained that the resurgence was buoyed by the reforms he announced in May 2024 to address the gaps in the Petroleum Industry Act (PIA).
Nigeria’s crude oil output got a boost to 1.61 million barrels per day in July 2024 through the president’s directive and the industry leadership provided by the Nigerian National Petroleum Company Limited (NNPCL).
Acknowledging what he called a resurgence of the once-declining oil and gas industry in his Sunday-morning broadcast to the nation, President Tinubu said that oil investors are coming back to Nigeria.
He said; “Our once-declining oil and gas industry is experiencing a resurgence on the back of the reforms I announced in May 2024 to address the gaps in the Petroleum Industry Act. Last month, we increased our oil production to 1.61 million barrels per day, and our gas assets are receiving the attention they deserve. Investors are coming back, and we have already seen two Foreign Direct Investments signed of over half a billion dollars since then.
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“Fellow Nigerians, we are a country blessed with both oil and gas resources, but we met a country that had been dependent solely on oil-based petrol, neglecting its gas resources to power the economy.
We were also using our hard-earned foreign exchange to pay for and subsidise its use. To address this, we immediately launched our Compressed Natural Gas Initiative (CNG) to power our transportation economy and bring costs down.
This will save over two trillion Naira a month, being used to import PMS and AGO and free up our resources for more investment in healthcare and education.
“To this end, we will be distributing a million kits of extremely low or no cost to commercial vehicles that transport people and goods and who currently consume 80% of the imported PMS and AGO.
“We have started the distribution of conversion kits and the setting up of conversion centres across the country in conjunction with the private sector. We believe that this CNG initiative will reduce transportation costs by approximately 60 per cent and help to curb inflation.”
Plans are in top gear for the 11th Annual General Meeting (AGM) of the FBN Holdings Plc.
The management made this disclosure in a notice it filed with the Nigerian Exchange Limited (NGX) on Thursday, where it averred that it has not been served with any court order against the proposed AGM.
According to notice, which was signed by the acting Company Secretary, Adewale Arogundade, FBN Holding said, “The attention of FBN Holdings Plc (the Company) has been drawn to recent media reports purporting that the Company has received a Court Order stopping it from holding the Annual General Meeting (AGM) scheduled for August 15, 2023.
“We confirm that this assertion is a false narrative as the Company has, as at the date hereof, not been served with any court order to stop the forthcoming AGM.
“Suffice to mention that the AGM is a statutory meeting of Shareholders that must be held in accordance with the law, further to which the Company will notify the regulators and the public as appropriate if there is any lawful order to restrain the Company from conducting same.
“We hereby assure our esteemed Shareholders that the AGM shall hold on August 15, 2023, as planned and we look forward to their attendance and active participation at the meeting.”
However, court orders published in national dailies showed that the Federal High Court in Lagos had issued an order against the financial institution, barring it from holding its 11th AGM.
The order was entered pursuant to a petition by Olusegun Onagoruwa, in suit No: FHC/L/CP/1271/2022. It was addressed to the bank and some other bank officials.
It read, “Take notice that unless you obey the directives in the judicial order contained in the order made on July 15, 2022, by the Federal High Court, Lagos, by refraining from proceeding with the 11th Annual General Meeting of FBN Holdings Limited proposed for August 15, 2023, from seeking approval to issue or raise share capital in any manner whatsoever, from appointing or confirming the appointment of new directors, or in any other manner taking any step towards implementing, actualising enforcing resolution of the 10th Annual General Meeting of FBN Holdings Plc held on June 20, 2022, or in any other manner overreaching, disobeying or undermining the said order of a court, you will be guilty of contempt of court and you will be liable to be committed to prison and to there imprisoned.”
Biztellers brought you a report that a segment of shareholders had staged a protest at the headquarters of the bank on Monday, calling for the AGM to be held, as well as soliciting regulatory interventions.
It is expected that at the AGM, FHN Holdings is poised to breathe life into plans to seek shareholders’ approval to raise N150bn fresh capital via a rights issue and elect new directors including billionaire, Femi Otedola and Samson Ariyibi among other resolutions.
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