Bank Stock Roundup: Trade War & Recession Concerns Linger, WFC, C, JPM in Focus
Over the last five trading days, renewed fear of U.S.-China trade war posed a prime concern. This significantly hurt investor sentiments, and bank stocks did not remain untouched.
The development even led the yield on the 10-year bond yields to fall below that of the three-month bill, thus inverting part of the yield curve. This triggered recession fear among investors. Also, for banks, decline in yields will hurt net interest margin growth.
With the health of the banking system depending on the nation’s economy, these developments are expected to hamper banks’ financials to an extent. Further, the Federal Reserve’s dovish rate hike stance is adding fuel to fire.
Talking about company-specific headlines, major banks continued their restructuring and streamlining initiatives. These efforts are anticipated to attract more business and support revenue growth. Moreover, banks are undertaking measures to move past legacy business mishandlings.
(Read: Bank Stock Roundup for the Week Ending Apr 5, 2019)
Important Developments of the Week
1. In a bid to rebuild its image, Wells Fargo WFC has created a strategic execution and operations unit. Through this unit, the bank seeks to meet demands of several regulators and compliance officers, who remain unsatisfied with the bank's remediation moves after a horde of scandals. The new unit will focus exclusively on Wells Fargo’s regulatory priorities, i.e., “strengthening and driving the implementation of certain business and risk-management processes.” (Read more: Wells Fargo to Better Meet Regulatory Demands With New Unit)
2. In other news related to Wells Fargo, per its quarterly regulatory filing the company might refund fees wrongly charged to some customers on account of confusion about the types of transactions counted toward the minimum usage of debit cards that would have waived service fees. The company is currently reviewing past disclosures to consumers. (Read more: Wells Fargo Might Refund Fees Wrongly Charged to Some Clients)
3. Per a Reuters article, Citigroup C has closed one of its private stock trading unit following an extensive review conducted on its equities business. Citigroup Global Markets' CitiCross alternative trading system ceased to operate from April-end, per a SEC filing. (Read more: Citi Shuts Dark Pool Platform Post Equities Unit Review)
4. Federated Investors Inc. FII and PNC Financial PNC have entered into a deal, under which the former will acquire certain components of PNC Capital Advisors LLC's (PCA) investment-management business for about $52 million. Under the agreement, liquidity, equity and fixed-income mutual funds of PNC Financial will be reorganized into respective Federated mutual funds. (Read more: Federated to Buy Mutual Funds Worth $14B From PNC Financial)
5. JPMorgan JPM is likely to become the first foreign bank to own majority stake in its Chinese mutual fund operation. This might happen as the bank’s joint venture (JV) partner – Shanghai International Trust (which at present owns 51%) – has put 2% of the business up for sale. (Read more: JPMorgan Might Own Majority Stake in China Fund Venture)
Here is how the seven major stocks performed:
Over the last five trading sessions, Citigroup and Capital One COF were the major losers, with their shares declining4.3% and 3.9%, respectively. Also, shares of PNC Financialfell3.8%.
In the past six months, shares of Bank of America BAC and Citigroup have appreciated 5.3% and 4.2%, respectively. However, shares of Wells Fargo have lost 10.2%.
Over the next five trading days, performance of bank stocks will likely remain the same unless any unexpected event occurs.
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Bank of America Corporation (BAC): Free Stock Analysis Report
JPMorgan Chase & Co. (JPM): Free Stock Analysis Report
The PNC Financial Services Group, Inc (PNC): Free Stock Analysis Report
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Capital One Financial Corporation (COF): Free Stock Analysis Report
Federated Investors, Inc. (FII): Free Stock Analysis Report
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