Aurora Taylor’s Post

🤑 When 60 CEOs from the world's biggest banks gather privately to combat the threats of open banking and the increased competition it prompts from fintechs, that should tell you all you need to know about whether open banking is good for Canadians. You can tell Ottawa to keep their promise to modernize Canada's banking system in 2024 here: https://lnkd.in/gw7JvZq2 #openbanking #consumerdrivenbanking #choosemore

🔮 As we predicted accurately last May in our InSights Newsletter, we currently see many #US regional banks faced with a heavy exposure to Commercial Real Estate (CRE) loans, posing an existential threat. And, this is just one of their problems... 👨🏫 Inspite of that, and only 1 year after the latest global #bankingcrisis, many investors seem unconcerned over more bank failures. ✔ This is arguably defensible when it comes to international banking giants, at least for the moment. 🔎 But, let's take a closer look at how smaller banks are doing! InSights Newsletter, May 2023: https://lnkd.in/erSXgfTn #custody #assetprotection #wealthmanagement #investing

Has the regional banking crises made a comeback? Was it ever gone?! ⬇️ About 10 months ago the regional banking crises was supposed to be "ended". However, recently the New York Community bank, which bought the collapsed Signature Bank, announced a 70% cut of their dividend. As a result, its stock price crashed around 60%... But it's not the only regional bank with bad price development since the beginning of the year. Have a look: - Valley National Bank -25% - Metropolitan Bank 15% - HarborOne -14% - Comerica Bank -13% - Zions Bank -12% Where does this come from? It might be a result of the FED ending the Bank Term Funding Program (BTFP) which was intended to be a lifeline for these regional banks, but ended up being only profitable for the large banks and thus only exacerbated the situation of small banks, because the BTFP was their main source to get new loans. Is this the death sentence for regional banks? Well it depends on what the FED is doing in respect to: - interest rate cuts - quantitative easing Many market observers expect bailouts along the way, because the banks' balance sheets couldn't be cleaned up as initially intended by the BTFP. This means explosion of a commercial real estate bubble is more likely than ever, since regional banks hold around 70% of these loans. Their best way out? Turning to the big banks, which thanks to the BTFP, have enough cash on hand and can sit these low-interest rate assets out. As a result, we'll likely experience a further concentration of the banking sector in the hand of a select few, who - of course - didn't have any intentions of this happening at first place...

As I mentioned yesterday, there's a good read on banking by The Brookings Institution on the future of our industry. One item mentioned I believe is critical in the study is what type of regulatory environment the under $100 billion banks will face. So far it seems like the burden will be substantial and costly as these institutions work to play important localized and niched roles in our economy. Brookings is correct to encourage regulators to become more accommodating to mergers between regional banks and allowing mid-size banks to buy smaller banks without unfair scrutiny. Let this part of the industry evolve so we avoid the nightmare of 20 institutions with $1 trillion in assets that have been quasi-nationalized. No thank you. #banking #smarterbank #reguatoryburden https://lnkd.in/g8fPyeyf

Canada's banking regulator, OSFI, has delayed a key rule change on "capital floor levels" for banks by one year. This delay allows Canadian banks more time to adjust and align with international standards, particularly as similar rules face opposition in the U.S. How will this postponement impact lending practices? #Banking #Regulation 📊

Banks and their regulators have always needed to collaborate. It's essential to have a constructive relationship and dialogue between banks and their regulators. But that is not generally what is missing from the relationship. It's clear from the three major banking crises in the U.S. in the past 50 years, that we have not achieved a balanced, effective system for U.S. bank regulation from 1975 forward. While irresponsible fiscal and monetary policies were at the heart of those crises, they were made far worse by the failure of bank regulators to use their authority effectively to rein in excessive speculation by financial institutions. We have responded to each crisis by piling on more burdensome regulations without addressing the actual causes of the crises or the ineffective regulatory system that allowed them to happen. We keep forgetting that proper bank supervision should always be counter-cyclical. The time to tighten supervision, slow growth, and require more capital and reserves is when bank lending is booming. The time to ease off on regulatory burdens is when banks don't want to lend. William M. Isaac, Chairman, Secura/Isaac Group Former Chairman, FDIC

🚀 Banking Revolution: Canada's Big Five Pioneer Synthetic Risk-Transfer Strategies 🌐💼 Introduction: In a strategic move reshaping the financial landscape, Canada's largest lenders are leading the charge in adopting synthetic risk-transfer tools. This surge not only aligns with regulatory demands but could also set a precedent for broader industry shifts, potentially reaching Wall Street. Key Insights: Regulatory Response: A direct response to stringent regulatory requirements, synthetic securitization exposure has doubled to C$86.6 billion in just two years. Collective Effort: All five major Canadian banks are actively participating, marking a collective shift from a single-player scenario in the past. Strategic Advantages: Beyond compliance, banks are leveraging synthetic risk transfers to optimize capital without issuing new equity, managing risk-weighted assets, and lowering provisioning. Bank-Specific Dynamics: Bank of Montreal's increased exposure, driven by the Bank of the West acquisition, showcases how individual bank dynamics play into this strategic shift. Broader Adoption: Bank of Nova Scotia's foray into synthetic note offerings and talent acquisition from Bank of Montreal signal broader adoption across the Canadian banking landscape. Global Implications: This Canadian trend is not isolated. As regulatory landscapes evolve globally, particularly with upcoming Basel requirements in the U.S., the use of synthetic risk transfers is becoming a strategic imperative. Conclusion: Stay tuned for further insights into this dynamic financial transformation. The surge in synthetic securitization by Canada's Big Five is more than a trend; it's a strategic response to a changing regulatory environment that could influence practices on a global scale. #Finance #Banking #RiskManagement #SyntheticSecuritization #WallStreetTrends

March marked the 1 year anniversary of the latest global #bankingcrisis that started with the fatal #bankrun on Silicon Valley Bank (SVB) and culminated in the collapse of Credit Siusse. 👨🏫 Today, most investors seem no longer concerned over more bank failures or a looming global banking crisis. ✔ This is arguably defensible when it comes to international banking giants - for the moment at least. High #interestrates and #inflation (forcing many households to turn to credit) have clearly benefited big lenders. ❓ But, what about regional banks? #banks #economy #monetarypolicy #regionalbanks

📈 The Dominican Republic’s banking sector is thriving, with a 2.5% return on tangible assets as of June 2024, the highest in central America. Moody’s credits robust consumer activity and disciplined capitalisation for this standout performance. 🌱 Growth areas like renewable energy and logistics are expanding, highlighting the sector’s adaptability. Banesco’s recent $10mn cross-border repo underscores this market sophistication, while climate-focused initiatives mark a push toward sustainability. ⚠️ However, challenges remain. Rising money laundering risks and climate-related vulnerabilities could strain asset quality over time. Backed by strong regulation and diversified lending, Dominican banks are poised to manage these risks while pursuing further growth. With comment from Susana Almeida Martínez, Daniel Baeza, Alexandria Valerio and Christopher Hernandez-Roy Read more here: https://lnkd.in/eH2_Xatk

Often used, often misunderstood. Hybrids are a common feature of many client portfolios, particularly retail investors without access to OTC markets, but ask an investor to explain what a hybrid is and most probably couldn't answer. Investors sometimes perceive hybrids/AT1 the same as Tier 2 subordinated debt without appreciating the material risk and return composition differences. APRA wants to change that. Read more in William Fisher's article below.