Financials Weekly Notes: BofA, Wells Fargo & BNY Mellon
Bank stocks swung significantly over the week with investors yet again reacting sharply to any and all news about the troubled European region. Shares of banking institutions started the week on shaky ground as doubts about Greece getting its debt restructuring plan cleared by a majority of creditors threw off investor sentiments. Come Tuesday, data that Europe’s growth and consumer spending numbers fell for the last quarter of 2011 renewed fears of a recession in the region.
Not to be left out of the action, China also revised its growth numbers for 2012 downward – adding fuel to an already blazing fire of doubt. These factors resulted in the largest decline by shares at Wall Street this year. Investors got a grip on themselves later this week, with Greece finally clearing the last hurdle before it is awarded by another bailout package. There were significant events to report for Bank of America (NYSE:BAC), Wells Fargo (NYSE:WFC) and BNY Mellon (NYSE:BK) over the week.
Bank of America
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Trouble for Bank of America from its mortgage business is starting to look unending with the dispute between the Bank of America and Fannie Mae over outstanding repurchase requests being the latest addition to the list. Fannie Mae wants Bank of America to honor repurchase requests worth $5.5 billion at the end of 2011 – a figure that represents 60% of all of Fannie’s repurchase requests. Bank of America would also see more pressure to repurchase mortgage portfolios that are denied claims by insurers starting June, as Fannie Mae intends to tighten appeal deadlines from 90 days to 30 days then.
You can read more about this in our article BofA Feels the Heat From Fannie Mae Repurchase Demands.
See our full analysis for Bank of America
Wells Fargo
Wells Fargo has decided to go global from its almost exclusive focus on U.S. operations currently. The big bank will leverage its stable domestic business and extend corporate banking services to 20 other countries – developed and developing. The new geographical diversification strategy will take the bank to the U.K., Germany, the Netherlands, France, China, Hong Kong, Australia, Japan, India, South Korea and Singapore in coming years.
More information about this can be found in our article, Wells Fargo Going Global, Finally.
See our full analysis for Wells Fargo
Bank of New York Mellon
Major custody banks including BNY Mellon (NYSE:BK), State Street (NYSE:STT) and Northern Trust Corp (NASDAQ:NTRS) may see their Q1 2012 earnings estimates hit by a lack-luster performance by their foreign exchange operations – if a report from Goldman Sachs (NYSE:GS) is to be believed. Goldman predicts a 19% reduction in foreign exchange revenues for custody banks due to the low volatility and sharp decline in forex volumes.
Read more about what Goldman said about the custody banks in the article, BNY Mellon, Custody Banks May Miss Q1 Revenue Targets.
See our full analysis for BNY Mellon
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