2024-11-07 19:10

Deregulation, lower taxes, softer antitrust stance expected Some bankers told to get the ball rolling on deals Trade tariffs, national debt and potential for chaotic policy are concerns NEW YORK, Nov 7 (Reuters) - Wall Street executives cheered the prospect of business-friendly regulations and a burst of deals as they analyzed the implications of Donald Trump's reelection, although some felt uneasy about his unpredictability. Trump's return to power is likely to significantly ease some regulatory pressures under the Biden administration, executives across banks and private equity said. Smaller government, broad deregulation and tax breaks for corporations and the wealthy are widely expected. In particular, a softer antitrust stance and less regulation in areas such as banking and cryptocurrencies could boost corporate profits and spur deal flow, they said. "He is pro-business and anti-regulation," said Euan Rellie, co-founder and managing partner of investment bank BDA Partners. "His instincts are to cut taxes. All of that will help the M&A market." "So long as he governs with moderation and not with chaos, the markets will welcome him," said Rellie. However, some executives said that was not a given. Some bankers worried about how to navigate unpredictable shifts in government policy, the impact of trade tariffs, a potentially perilous fiscal path that adds trillions of dollars to the national debt and the potential tightening of visa programs. For now, though, the reaction was euphoric. As U.S. stocks rallied sharply, one equity capital markets banker who declined to be named said his colleagues got fresh mandates Wednesday morning and an opportunity to pitch for an initial public offering. The message was, "Let's get the ball rolling," the banker said. An investment banker at a global firm in New York also said his firm had an internal call to discuss deals, including possibly revisiting some transactions that may have not passed regulatory scrutiny under Lina Khan's Federal Trade Commission in the Biden administration. MORE BUSINESS A more lenient approach to antitrust issues could boost dealmaking in many sectors. Two sources with knowledge of the media industry said the sector was in for two years of consolidation. Greg Hertrich, head of U.S. depository strategies at Nomura, projected more banking mergers. "The current number of 4,700 banks in the U.S. may be reduced to around 2,500 faster," he said. Large financial deals will have more chance of being greenlighted. Shares of payments firms Capital One (COF.N) , opens new tab and Discover Financial Services (DFS.N) , opens new tab, awaiting approval of a $35.3 billion deal, surged after Trump was elected. "It is expected that the Trump administration will be more open to sensible M&As than many believe has been the case under the Biden administration," said Gene Ludwig, a former top bank regulator who advises financial institutions as CEO of Ludwig Advisors. For banks, one of the biggest questions is how stringent new Basel capital standards will be. Raymond James analyst Ed Mills said the turnover of regulators as the new administration comes in will "stall the bank regulatory super cycle that has existed over the last couple of years." "We are unlikely to see any major bank regulation come out and all of this paints a very favorable picture for the banks," said Mills. Expectations of an easier regulatory path for banks under Trump have buoyed their shares. The KBW Banks Index (.BKX) , opens new tab, which tracks large-cap banks, closed almost 11% higher on Wednesday but fell back 2% on Thursday. MANY WORRIES Not everyone was celebrating, however. A lawyer who works with renewable energy companies said he had been on the phone with despondent clients all day. They were all trying to reach local Republican politicians in districts where they have planned projects, seeking assurances that tax credits and incentives under Biden's push for green energy would continue. At one Wall Street firm, a meeting included discussions about the risk of deficits rising under a Trump administration, one source said. One estimate is for his policies to add $7.5 trillion to deficits over 10 years. The participants hoped Trump's aides would encourage him not to go to extremes with tariffs and tax cuts, said the source. Other concerns were more personal, such as safeguarding non-U.S. staff. In Trump's first term, he took steps to tighten access to some visa programs, including suspending many work visas during the COVID pandemic. A private equity investor in New York said international employees on H-1B visas were wondering on Wednesday whether they would have trouble renewing their visas and how their employer could support them. Sign up here. https://www.reuters.com/markets/us/wall-street-greets-trumps-return-with-greed-trepidation-2024-11-07/

2024-11-07 18:59

Nov 7 (Reuters) - Global physically-backed gold exchange-traded funds (ETFs) saw inflows for the sixth straight month in October, with year-to-date flows turning positive for the first time this year, the World Gold Council (WGC) said on Thursday. Demand was supported by North American and Asian flows, the WGC added. As geopolitical tensions rise and market uncertainties persist, investors have flocked to gold ETFs, which act as vaults of wealth, holding gold on behalf of investors and driving substantial demand for the precious metal. Gold-backed ETFs attracted $4.3 billion of inflows in October to lift collective holdings to 3,244 tons, the WGC said. After three years of outflows, driven by high interest rates, the past six months have seen a marked reversal. Continued inflows and record gold prices lifted global assets under management to a month-end record of $286 billion in October, the WGC said in a note. The WGC, an industry body grouping global gold miners, said North American gold demand was boosted by uncertainty around the U.S. presidential election. The military escalation in the Middle East, along with reports of North Korean soldiers joining Russia in the Ukraine conflict, may also have driven increased demand for gold ETFs. The WGC added that worldwide gold trading volumes edged higher, supported by over-the-counter (OTC) and ETF activities. Bullion is poised to be one of 2024's top-performing assets, with prices up 33% so far this year. The metal hit a record high of $2,790.15 per ounce on Oct. 31, fueled by the start of U.S. interest rate cuts and geopolitical tensions. Sign up here. https://www.reuters.com/markets/commodities/gold-etf-demand-turns-positive-year-to-date-says-wgc-2024-11-07/

2024-11-07 18:28

BRUGG, Switzerland, Nov 7 (Reuters) - The Swiss National Bank is wary about cryptocurrencies like Bitcoin and Ether, Chairman Martin Schlegel said on Thursday, adding physical cash would retain an important role in the Swiss payments system in future. "Bitcoin and other virtual currencies have grown enormously in recent years," Schlegel told an event organised by the Aargauische Kantonalbank in Brugg, Switzerland. "But despite this growth, these currencies remain a niche phenomenon," Schlegel said. Although he declined to give a view on the future of cryptocurrencies, Schlegel raised concerns such as the strong fluctuation in values that meant they were not practical for payments. Cryptocurrencies also required a huge amount of energy, Schlegel said, and were also linked to illegal activities and were difficult to police. Still, the SNB was not standing still on technological change, Schlegel said, and is for example running a pilot project using central bank digital currency to ease payments between financial institutions. In August the central bank also introduced instant payments, which means money can be transferred from one account to another in seconds rather than days. Schlegel said cash would continue to play an important role, with the SNB announcing last week that it would launch a new range of banknotes. "Despite the digitalization of the electronic payment system, we believe that cash will play an important role in the future," Schlegel said. "Cash offers many advantages. It does not require any technology. It is anonymous, for example, you can simply pay with a banknote." Sign up here. https://www.reuters.com/markets/currencies/swiss-national-bank-chairman-wary-cryptocurrencies-2024-11-07/

2024-11-07 18:02

Nov 7 (Reuters) - U.S. President-elect Donald Trump is likely to allow Jerome Powell to serve the remainder of his term as the Federal Reserve chair, CNN reported on Thursday, citing a senior adviser to Trump. While Trump could change his mind, he and his economic team's present view is that Powell should remain atop the central bank until Powell's term expires in May 2026, CNN reported, citing the unidentified senior adviser. Sign up here. https://www.reuters.com/world/us/trump-likely-allow-fed-chair-powell-serve-remainder-his-term-cnn-reports-2024-11-07/

2024-11-07 17:41

Basel III endgame proposal may be scrapped Banks may use capital for lending, buybacks Regional lenders to benefit from easier merger scrutiny Nov 7 (Reuters) - (This Nov. 7 story has been refiled to remove analyst reference to companies in paragraph 20) The banking industry is expected to win big as former President Donald Trump returns to the White House, ushering in Republican regulators who are expected to ease capital rules and merger approvals, industry experts and analysts said. The President-elect's picks are likely to further dilute the contentious Basel III endgame proposal aimed at requiring big lenders to hold more capital to safeguard against soured loans. While banks have already won major concessions on that proposal which they say will crimp lending and hurt the economy, the latest draft would still increase capital requirements by around 9% for the largest lenders, according to a top Fed official. "The Basel endgame rule could be completely dead," said Gene Ludwig, a former top bank regulator who advises financial institutions as CEO of Ludwig Advisors. The regulatory shift could bring some relief to investors after a year in which some bank stocks were weighed down by concerns over deteriorating loans. First unveiled months after the collapse of three regional lenders last year, the Basel proposal faced intense pushback and an unprecedented lobbying campaign from big banks, which argued the rules would erode their competitive edge. The Federal Reserve agreed to water down the proposal in September, when Vice Chair for Supervision Michael Barr said the regulator would overhaul and re-issue the rules later. Other planned rules requiring banks to hold more debt, as well as changes to liquidity regulations, may also be in doubt. "The outlook for the banking sector is more encouraging under Trump," said Dan Coatsworth, investment analyst at AJ Bell. "Banks would have fewer constraints and be able to use more cash for lending or share buybacks." The U.S. central bank declined comment. The KBW Banks Index (.BKX) , opens new tab, which tracks large-cap banks, fell 2% after closing almost 11% higher on Wednesday, while an index tracking regional lenders dipped 1.8% a day after a 13.5% surge. REGULATOR TURNOVER As Trump installs new regulators at key agencies, his picks could have an immediate and seismic effect on a banking industry more used to a slower pace of change, according to a financial technology executive who declined to be identified discussing the personnel changes. "This is like an earthquake for bank M&A and bank regulatory policy," said Ed Mills, an analyst at Raymond James, who expected bank deals to be announced within weeks. The aggressive financial regulators of the Biden era, including Gary Gensler at the U.S. Securities and Exchange Commission, Lina Khan of the Federal Trade Commission and Rohit Chopra at the Consumer Financial Protection Bureau, are also likely to be replaced by more business-friendly agency heads. But Meg Tahyar, head of the financial institutions group at law firm Davis Polk, tempered expectations for a radical change. "There will be changes of personnel at the top level and there will be more M&A, but the intensity of supervision and the focus on junk fees is unlikely to change much," she said. On Wednesday, midsize bank stocks were buoyed by expectations that their capital requirements would be eased, said Lazard chief market strategist Ronald Temple. The potential for less-stringent antitrust policy also bolstered shares of Discover Financial (DFS.N) , opens new tab and Capital One Financial (COF.N) , opens new tab. Both are awaiting the green light for their $35.3 billion deal. "The M&A landscape for banks may benefit with shorter approval timeframes," Morningstar DBRS wrote in a note. Many top industry executives have called for some consolidation among banks in the U.S., which is home to more than 4,600 lenders. Dealmaking would allow smaller banks to compete more effectively against their larger peers. "We can at least put M&A back into the discussion; whereas it has been largely nonexistent over the past few years on a punitive regulatory backdrop," Scott Siefers, a banking analyst at Piper Sandler, wrote in a report. Fifth Third Bancorp (FITB.O) , opens new tab, Huntington Bancshares (HBAN.O) , opens new tab and PNC Financial (PNC.N) , opens new tab may be more interested in pursuing M&As, Siefers said. Huntington declined comment. Fifth Third Bancorp and PNC Financial did not immediately respond to requests for comment. Despite the ebullient mood, potential policy uncertainty, trade wars, protectionism and inflationary pressures under Trump could also pose some challenges to dealmaking, some bankers said. Sign up here. https://www.reuters.com/business/finance/us-banks-gain-looser-capital-merger-policies-under-trump-2024-11-07/

2024-11-07 17:36

LONDON, Nov 7 (Reuters) - The Bank of England will monitor the trade policies of U.S. President-elect Donald Trump for their impact on the UK economy once they are announced, BoE Governor Andrew Bailey said, adding he did not want to speculate on what the policies might be. "We'll watch it very closely... I'm not going to make any presumptions about what will happen, because I don't think that's either a) consistent with our policy remit, or b) wise, frankly. I think let's see what happens," Bailey said at a press conference. "We will, no doubt, over time be able to get a better sense of a) what the policies are, and then b) how they might affect the UK economy, and of course we'll do that. But... I don't think it's useful or wise to enter into speculation (as to) what they might be, because we just don't know." Sign up here. https://www.reuters.com/business/boes-bailey-says-will-monitor-trump-trade-impacts-uk-economy-2024-11-07/