Morning Coffee: Leveling the Playing Field Could Mean Fewer Jobs
Sorry foreign banks; the loophole is soon to be closed. The Federal Reserve is prepping a set of strict new regulations that will force foreign banks operating in the U.S. to hold more capital within their subsidiaries. The move is aimed at limiting risk, but it could force firms like Deutsche Bank and Barclays to cut U.S. operating expenses even further.
Under the proposed rules, foreign firms will be required to establish an intermediate holding company for all their U.S. subsidiaries, according to Bloomberg. The holding companies will be required to follow the same capital and liquidity rules as U.S.-based banks, stopping firms like Deutsche Bank from operating aggressively in the U.S. while leaving their cash safe at home.
“Our regulatory system must recognize that while internationally active banks live globally, they may well die locally," Federal Reserve Governor Daniel Tarullo said yesterday.
A firm like Canadian-based Toronto-Dominion Bank may need to add as much as $5 billion in capital to comply with the rules, one analyst told Bloomberg.
One thing has become clear in 2012: stricter caps means banks have less money to play with. And that often means fewer jobs.
With civil insider trading charges looming, SAC Capital Advisors is more vulnerable than ever before, fueling speculation amongst traders on Wall Street that founder Steven Cohen may eventually call it quits and return investor money.
The Bank of England has questioned whether U.K. banks are providing an accurate picture of their capital ratios, disguising their true health.
Trading Dancing Partners (WSJ)
Mitsubishi UFJ Financial Group, Japan's biggest bank by assets, is in advanced talks to buy out Bank of America Merrill Lynch's share of the firms’ joint private-banking venture. The move could allow Morgan Stanley to further develop its partnership with the Japanese firm.
Initial jobless claims decreased by 23,000 last week, although much of the decrease can be attributed to the Eastern seaboard’s gradual recovery from Hurricane Sandy. Consumer spending disappointed, growing less than expected.
Another One Bites the Dust (Financial News)
Ridley Park Paragon, a hedge fund launched in 2010 by former Polar Capital all-star Julian Barnett, is the latest European firm to close its doors, citing a tumultuous last year and “an investor base [that] does not share [Barnett’s] philosophy.”
Barclays held an offsite meeting recently where Rich Ricci, chief executive of the firm’s corporate and investment bank, asked employees to consider Barclays’ reputation using at least one terribly odd comparison.
Where Are They At? (The Mirror)
Who said there are no open finance jobs in London? The Mirror found 20,031 of them.
Times Aren’t a Changin’ (The Star)
Bankers would prefer to hire someone who has the same social and cultural makeup, namely being upper class, male and white, according to a new study.
Buzz Around the Office
How Not to Impress Your Employer (Michigan Live)
Detroit Redwings prospect Riley Sheahan was arrested and charged with DUI this week. What gave him away? He was wearing a purple, full-body Tinky Winky Teletubby costume at the time.
List of the Day: Startup Companies
Working at a small startup can be risky, but it provides some terrific non-monetary benefits.
- The satisfaction of influence.
- Minimal red tape.
- Direct validation.