Capital Markets, Financial

BGC Partners eyes new platform to trade US Treasuries

BGC Partners plans to launch a new platform to trade US Treasuries early next year, in a bid to return to a market in the middle of evolution, according to people familiar with the plans.  The company, spun out of Howard Lutnick’s Cantor Fitzgerald in 2004, sold eSpeed, the second-largest interdealer platform for trading Treasuries, […]

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Sales in Rocket Internet’s portfolio companies rise 30%

Revenues at Rocket Internet rose strongly at its portfolio companies in the first nine months of the year as the German tech group said it was making strides on the “path towards profitability”. Sales at its main companies increased 30.6 per cent to €1.58bn while losses narrowed. Rocket said the adjusted margin for earnings before […]

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Renminbi strengthens further despite gains by dollar

The renminbi on track for a fourth day of firming against the dollar on Wednesday after China’s central bank once again pushed the currency’s trading band (marginally) stronger. The onshore exchange rate (CNY) for the reniminbi was 0.28 per cent stronger at Rmb6.8855 in afternoon trade, bringing it 0.53 per cent firmer since it last […]

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Nomura rounds up markets’ biggest misses in 2016

Forecasting markets a year in advance is never easy, but with “year-ahead investment themes” season well underway, Nomura has provided a handy reminder of quite how difficult it is, with an overview of markets’ biggest hits and misses (OK, mostly misses) from the start of 2016. The biggest miss among analysts, according to Nomura’s Sam […]

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Spanish construction rebuilds after market collapse

Property developer Olivier Crambade founded Therus Invest in Madrid in 2004 to build offices and retail space. For five years business went quite well, and Therus developed and sold more than €300m of properties. Then Spain’s economy imploded, taking property with it, and Mr Crambade spent six years tending to Dhamma Energy, a solar energy […]

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Categorized | Banks

Illinois suspends $30bn of Wells business

Posted on October 3, 2016

Illinois has suspended $30bn worth of investment business with Wells Fargo as the fallout from its sham accounts scandal spreads to new parts of the US bank.

Michael Frerichs, the state’s treasurer, said the decision by Illinois to follow California in pulling business from Wells was likely to cost the bank “millions of dollars” in lost fee income. “Wells Fargo is a big financial player in Illinois and I hope to send the message that their unscrupulous practices are not welcomed and will not be tolerated,” he said.

    While the latest financial hit is likely to be easily digestible for a bank that produced almost $22bn in net income last year, the actions highlight the risks to Wells from the unfolding cross-selling debacle.

    Wells, the most valuable bank in the world before the scandal wiped about $30bn off its market capitalisation, is facing investigations and lawsuits after regulators found thousands of its staff created accounts for customers without their permission.

    Illinois has been a Wells client since 1970. The bank handles the state’s business as part of its government and institutional banking division, which is separate from its retail banking arm.

    The state is to stop using Wells as a broker dealer for about $30bn worth of annual short-term investments, such as repurchase agreements and commercial paper, and re-evaluate its position after a year.

    The transactions will instead be handled by the 25 or so financial institutions with which Illinois also does such business.

    Illinois may take further action against Wells. It is conducting an audit of unclaimed accounts and has written to the Illinois state board of investment — a pensions manager — calling on it to review its dealings with the bank.

    “This is the first step we can take, today,” Mr Frerichs said of the broker dealer business. “We want to make sure the financial institutions we work with have proper internal controls … they [Wells] did not have strong internal controls in place.”

    Lawmaker calls for break-up of Wells Fargo

    epa05562141 Chairman and CEO of the Wells Fargo & Company John Stumpf (C) testifies before the House Financial Services Committee hearing on 'Holding Wall Street Accountable: Investigating Wells Fargo's Opening of Unauthorized Customer Accounts.' Capitol Hill in Washington, DC, USA, 29 September 2016. The State Treasurer of California is suspending large parts of the state's business with Wells Fargo due to the scandal involving unauthorized customer accounts. EPA/SHAWN THEW

    Bank chief John Stumpf grilled on Capitol Hill over fake accounts

    In response, Wells said in a statement: “We certainly understand the concerns that have been raised.

    “We are very sorry and take full responsibility for the incidents in our retail bank. We have already taken important steps, and will continue to do so, to address these issues and rebuild the state’s trust.”

    By early afternoon in New York, shares in Wells were down 1.2 per cent, underperforming banking peers. That brings the decline since the scandal erupted last month to 12 per cent.

    Pressure is building on John Stumpf, chief executive, to quit over the scandal. He has already agreed to forfeit more than $40m in pay and told Congressional lawmakers he is “deeply sorry”.

    Last week, California’s treasurer put a one-year ban on doing business with Wells — which is based in the state — and called for Mr Stumpf to resign.