Financials Weekly Notes: Bank of America, Barclays, Wells Fargo

by Trefis Team
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Bank stocks took a beating this week with share prices for almost all major banks sliding over the week. Early in the week, Spain formally requested help from other European Union members to help prop up its failing banks. A lack of clarity about the actual amount of funds Spain would need to nurse its banks back to health fueled fears of a lock-down in the country’s banking system – the potential repercussions of which on global financial markets triggered a sell-off in bank shares on Monday.

Calming investor nerves allowed the shares to recover partially through Wednesday. But record fines imposed by American and British financial regulators on Barclays (NYSE:BCS) over LIBOR fixing, and the conclusion that more banks will soon see similar hefty penalties resulted in investor’s shunning bank stocks again on Thursday. Friday we saw a massive spike as Germany agreed to move forward on joint European bonds.

Besides Barclays, there were important events to report for Bank of America (NYSE:BAC) and Wells Fargo (NYSE:WFC) this week.

Bank of America

Bank of America, along with its biggest competitors Citigroup (NYSE:C), JPMorgan Chase (NYSE:JPM) and Wells Fargo (NYSE:WFC), may end up paying as much as $125,000 to each customer who was wrongly subjected to a foreclosure during 2009-2010 according to new rules released by the Federal Reserve and the Office of the Comptroller of the Currency (OCC) earlier this week. This will likely result in the banks paying up millions to the thousands of affected customers over coming months.

You can read more about this development in our article Banks to Pay Individuals for Wrong Foreclosure.

See our full analysis for Bank of America

Barclays & RBS

Barclays was fined $451 million by the regulator trio of the American CFTC and Department of Justice and the British FSA as settlement as a part of the ongoing investigation of LIBOR manipulation by some of the world’s biggest banks at the peak of the economic crisis of 2008. The largest U.K.-based bank allegedly colluded with several other banks to keep the LIBOR artificially low.

The announcement resulted in large-scale dumping of Barclays’ stock over trading on Thursday, with the bank’s share losing more than 12% of their value. Reports that RBS is one of the other banks likely to be slapped with a similar fine soon led to an almost 10% decline in price of shares of the 82% government-owned British bank.

Read more about the LIBOR fixing investigation and its impact on various banks here: Barclays Paying $451 Million in LIBOR-Fixing Case, Who’s Next?.

See our full analysis for Barclays

Wells Fargo

Wells Fargo is keen on shifting quite a few of its jobs to India and the Philippines over the rest of the year to achieve its optimistic 15% to 20% cut in quarterly expenses by the end of the year. The bank may shift various technology-based roles as well as its retirement division, besides several other business units to the low-cost Asian countries. In fact, the focus on cost cutting has also led the bank to ponder over the possibility of shifting some jobs from more expensive locations to cheaper ones within the U.S. itself.

To know more about this, read Wells Fargo Plans To Outsource Jobs To Meet Cost Cutting Goals .

See our full analysis for Wells Fargo

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