The Money Tribe: 2016

Monday 28 November 2016

China Steps Up Mortgage Controls in Some Property Markets

Chinas government is stepping up efforts to contain runaway property prices, with the central bank clamping down further on mortgage lending in areas deemed overheated, people with knowledge of the matter said.

Some lenders in those cities have been asked to suspend distributing new home loans, said the people, who asked not to be named as the change hasnt been made public. Central bank branches in the cities communicated verbally with lenders within their jurisdictions, said the people, who didnt identify the affected cities or say how long the mortgage limits will last.

Banks in Shanghai were told not to increase mortgage lending from the previous month, another person with knowledge of the matter said. The central bank didnt respond to questions sent Monday via fax.

The latest mortgage limits come amid signs that Chinas central government is intensifying curbs to rein in excessive home prices, after relying on local authorities to tighten rules in some two dozen cities since late September. Shanghai, which already imposed restrictions earlier this year, said in a Weibo post on Monday that it will tighten mortgage loan policies starting Nov. 29, while Tianjin has raised minimum mortgage down payments for first homes to at least 30 percent.

The banking regulator earlier this month told lenders in 16 cities to conduct checks on their mortgage lending, including in first-tier hubs like Beijing and Shenzhen. Trust firms were also told to review any business related to home lending.

A wave of Chinese cities from trading centers to regional hubs had their largest price surge in history this year. Even after tightened purchase restrictions, Anhui provincial capital Hefei saw average new-home values rallying 48 percent in October from a year earlier, while prices jumped 31 percent and 32 percent in financial hubs Shanghai and Shenzhen. Local authorities have introduced home-market curbs ranging from raising down-payment requirements for both first and second homes, to ruling some potential buyers ineligible.

With assistance by Heng Xie, Jun Luo, Emma Dong, and Steven Yang

Tuesday 15 November 2016

Spike in Mortgage Rates Throws a Wrench Into U.S. Housing Market

Wednesday 5 October 2016

Pound slides to 31-year low, as FTSE 250 hits record high Business Live

Foreign exchange traders are spooked by Theresa Mays Brexit plan, say analysts, as sterling slides again – pushing share prices higher

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Tuesday 4 October 2016

FTSE 100 soars as pound slides – BBC News

Monday 3 October 2016

Brexit impact: FTSE winners and losers since EU referendum – BBC News

Saturday 1 October 2016

Secret Alpine Gold Vaults Are the New Swiss Bank Accounts

Friday 16 September 2016

Deutsche Bank Rebuffs U.S. Over $14 Billion Mortgage Settlement

Deutsche Bank AG said it wont pay the $14 billion sought by the U.S. Justice Department to settle an investigation into the firms sale of residential mortgage-backed securities, a figure thats more than triple what some analysts estimated could be a potential worst-case.

Deutsche Bank has no intent to settle these potential civil claims anywhere near the number cited, the company said in a statement early Friday in Frankfurt. The negotiations are only just beginning. The bank expects that they will lead to an outcome similar to those of peer banks which have settled at materially lower amounts.

Germanys largest lender confirmed that it had started negotiations with the Justice Department to settle civil claims the U.S. may consider over the banks issuing and underwriting of residential mortgage-backed securities from 2005 to 2007. The $14 billion is considered an opening bid that could go much lower, according to the Wall Street Journal, which reported the figure shortly before Deutsche Bank issued its statement.

U.S. shares of Deutsche Bank tumbled 6.5 percent to $13.80 in extended trading at 7:03 p.m. in New York. The companys stock has plunged 42 percent this year in Germany through the close of trading Thursday.

Justice Department spokesman Peter Carr declined to comment on the negotiations.

Litigation Reserves

JPMorgan Chase & Co. analysts wrote in a note to clients earlier Thursday that a settlement of about $2.4 billion would be taken very positively, and that an agreement exceeding $4 billion would pose questions about the banks capital positions and force it to build additional litigation reserves.

Deutsche Bank Chief Executive Officer John Cryan, 55, has struggled to boost profits as unresolved legal probes and claims compound concerns that the lender will be forced to raise capital or sell assets. Reaching a mortgage deal would clear a major hurdle for the bank, which has paid more than $9 billion in fines and settlements since the start of 2008.

The Justice Department, in concluding previous investigations into the sale of mortgage-backed securities that soured during the financial crisis, typically has presented initial penalties higher than what banks ultimately paid, people familiar with those negotiations have said. The sides may negotiate over the final tab, as well as what conduct the bank will acknowledge and whether individuals will be sanctioned.

Bank of America Corp. paid $17 billion to reach a settlement in a similar case in 2014, the biggest such accord to date. Goldman Sachs Group Inc. agreed to a $5.1 billion settlement with the U.S. earlier this year, including a $2.4 billion civil penalty and $875 million in cash payments, to resolve U.S. allegations that it failed to properly vet mortgage-backed securities before selling them to investors as high-quality debt. The settlement included an admission of wrongdoing.

Deutsche Bank must pay $14bn fine to settle US mortgage case

The embattled German lender says it will fight the near-record demand which will be a fresh blow to investor confidence

Deutsche Bank must pay $14bn to settle a US investigation into its selling of mortgage-backed securities, Germanys flagship lender has said.

The US Department of Justice claim against Deutsche, which the bank said it would dispute strongly, far outstrips the banks and investors expectations for such costs.

While it not clear what the final payment will be, a fine as high as $14bn would be a severe strain for Deutsches fragile finances and would likely further rock investor confidence in the bank. The banks US-listed shares fell 8% in after-hours trading.

Deutsche Bank has no intent to settle these potential civil claims anywhere near the number cited. The negotiations are only just beginning. The bank expects that they will lead to an outcome similar to those of peer banks which have settled at materially lower amounts, Deutsche Bank said in a statement on Friday.

It gave no details about the alleged mis-selling but a source close to the matter told Agence France -Presse that the allegations stemmed from the sale of mortgage securities in the 2008 crisis.

The Department of Justice, which declined to comment on Friday, has taken a tough stance in settlement negotiations with other banks, requesting sums higher than the eventual fine.

In 2014, it asked Citigroup to pay $12bn to resolve an investigation into the sale of shoddy mortgage-backed securities, sources said. The fine eventually came in at $7bn.

In a similar case, rival Goldman Sachs agreed in April to pay $5.06 billion to settle claims that it misled mortgage bond investors during the financial crisis. That settlement included a $2.39bn civil penalty, $1.8bn in other relief, including funds for homeowners whose mortgages exceed the value of their property, and an $875m payment to resolve claims by cooperative and home loan banks among others.

Deutsche Banks settlement will comprise a different list of recipients, a source close to the matter said, adding that the lender had already settled some claims three years ago.

In late 2013, Deutsche Bank agreed to pay $1.9bn to settle claims that it defrauded US government-controlled Fannie Mae and Freddie Mac, Americas biggest providers of housing finance, into buying $14.2bn in mortgage-backed securities before the 2008 financial crisis.

A $14bn fine, or even half that sum, would still rank among one of the largest paid by banks to US authorities in recent years. In 2013, JPMorgan Chase & Co agreed to pay $13bn to settle allegations by the U.S. authorities that it overstated the quality of mortgages it was selling to investors in the run-up to the 2008-2009 financial crisis. In 2014, Bank of America agreed to pay $16.7bn in penalties to settle similar charges.

Deutsche Bank has not said what it has set aside in anticipation of a settlement over the sale and packaging of resident mortgage-backed securities before 2008. Its overall legal provisions stood at 5.5bn at the end of the second quarter.

Deutsche was once one of Europes most successful players on Wall Street. Like many of its peers, it has since faced a slew of lawsuits that often trace back to the boom years before the crash. Its litigation bill since 2012 has already hit more than 12bn.

Claims filed by individuals, companies and regulators against Deutsche, outlined in the banks 2015 annual report, relate to mis-selling of subprime loans and manipulation of foreign exchange rates or gold and silver prices. Other lawsuits are for the rigging of borrowing benchmarks Libor and Euribor, used to set the price of mortgages and derivatives.

In July, chief executive John Cryan said he hoped to close the four largest remaining litigation cases this year.

These are the mortgages and FX cases, an investigation into suspicious equities trades in Russia and allegations of money laundering.

Reuters and AFP contributed to this report.

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