Sarkozy Confirms Deal With French Banks (Reuters)
Immediately after French President Nicolas Sarkozy announced the breakthrough, German bankers voiced their interest in the "French model." The news came as international bankers met euro zone policymakers in Rome to discuss how the private sector can share the burden of a second rescue programme for Greece.
Soros Says Exit Mechanism From Euro Is ‘Probably Inevitable’ (Bloomberg)
“There’s no arrangement for any countries leaving the euro, which in current circumstances is probably inevitable,” Soros, 80, said at a panel discussion in Vienna yesterday on whether liberal democracy is at risk in Europe. “We are on the verge of an economic collapse which starts, let’s say, in Greece, but it could easily spread. The financial system remains extremely vulnerable.”…Because the “survival of the EU is of vital interest to us all,” there’s a need for a “Plan B,” he said, explaining that this could include EU-wide taxes, a “banking system guaranteed by European institutions, not a bunch of national banking systems,” or a financial transaction tax.
Capital Rules Tighten for Big Banks (WSJ)
The Basel deal will require roughly 30 of the world's top banks to hold between 1% and 2.5% of extra capital as a percentage of their "risk-weighted assets." That comes on top of a base 7% capital requirement for all banks that international policy makers agreed to last year. Newly assertive regulators are pushing banks to get smaller and simpler. The Basel Committee on Banking Supervision said Saturday that the capital requirements will apply progressively, based on each bank's size, complexity, global reach and interconnectedness…The rules also feature the threat of an additional 1% capital requirement on giant banks that grow bigger. The goal, the regulators said in a statement, is "to provide a disincentive for banks facing the highest charge to increase materially their global systemic importance in the future."
European Banks May Need More Capital After Basel (Bloomberg)
Deutsche Bank AG (DBK), Germany’s biggest lender, and UniCredit SpA (UCG) are among European banks that may have to raise additional capital after regulators dismissed lenders’ threats that stiffer rules may stunt economic growth… The banks, together with Banco Santander SA (SAN) and Credit Suisse Group AG, will have a combined 62 billion-euro ($88 billion) capital shortfall, according to Mediobanca.
Dick Bove: Extra Bank Capital Means 'Global Recession' (CNBC)
"The legislators and regulators never understood what caused the financial crisis," he wrote in a note titled Central Bankers Vote for Global Recession. "They have never acknowledged their part in facilitating the events that led to the crisis. Now having failed miserably in meeting their responsibilities on the way in to the crisis they are perpetuating their mistakes by over-reacting by swinging in every direction without regard to the consequences."
European leaders prepare for a Greek default (Telegraph)
Greek politicians will vote on a radical €28.4bn (£25.2bn) austerity package in the coming days that they must pass if the country is to receive the vital fifth tranche of a €110bn bail-out agreed last year…Werner Faymann, the Austrian Chancellor, said on Sunday he "can't rule out" a Greek default and Wolfgang Schaeuble, the German finance minister, revealed that Europe is preparing "for the worst".
New Debt Ceiling Estimate Coming (Politico Morning Money)
Treasury likely to update the “drop-dead” date for raising the debt ceiling either late this week or early next. As of now, no dramatic change expected from the Aug. 2nd date when Treasury currently says it will run out of emergency measures to forestall default.
Threat of $100bn hit if US top rating lost (FT)
“If Standard & Poor’s or any of the other major rating agencies downgrade the US, Treasuries would likely drop in value, possibly by as much as $100bn,” said analysts at S&P Valuation and Risk Strategies, a research team separate from the agency.
John Mack Likely to Leave Morgan Stanley by End of Year (FBN)
The FOX Business Network has learned that Mack is telling friends that he will likely leave the firm at the end of the year. People at Morgan Stanley confirm to FOX Business that while they would like him to remain in some capacity, possibly as chairman emeritus or as a senior adviser, his career as a day-to-day executive is coming to an end.
Outrage at £260,000 Wimbledon junket by RBS chiefs - after job cuts and a £20bn taxpayer bailout (Daily Mail)
The bank which was bailed out with £20 billion of taxpayers’ cash, faces fresh anger after laying on £260,000 of hospitality for its executives and their clients at Wimbledon. RBS staff enjoyed champagne and lobster platters in a luxurious suite attached to Court One. As one group of bankers strolled out late for Rafael Nadal’s match against Gilles Muller on Friday, they spoke admiringly of the gourmet menu they had just sampled.
Goldman's Paperwork Flub (WSJ)
Goldman Sachs Group Inc. had no standard contracts in place to protect itself when it made $1.3 billion in options trades for Libya's sovereign-wealth fund controlled by Col. Moammar Gadhafi, according to people familiar with the situation.
SecondMarket sued over Facebook stock sale (MarketWatch)
According to the lawsuit filed by Felix Investments, its affiliate Facie Libre agreed to buy nearly $2.5 million in Facebook stock being sold by a software engineer at the social-networking service through SecondMarket. However, its lawsuit filed earlier this month in New York says SecondMarket did not obtain Facebook’s required approval for the sale — even as Felix Investments “sent letters to its investors representing that they now owned 75,000 additional shares of Facebook.”
Economic growth must slow, warns BIS (FT)
Global economic growth must slow to curb inflationary pressure around the world, the influential central bankers’ bank has warned, saying that there was little or no slack left for rapid non-inflationary expansion.
China Auditor Warns of Risk on Local Debt (Bloomberg)
China’s first audit of local government debt found liabilities of 10.7 trillion yuan ($1.7 trillion) at the end of last year and warned of repayment risks, including a reliance on land sales. Financing vehicles set up by regional authorities already had more than 8 billion yuan in overdue debt, while more than 5 percent of such companies used new bank borrowing to repay loans, according to the audit, posted on the National Audit Office’s website and submitted to China’s cabinet. “Some local government financing platforms’ management is irregular, and their profitability and ability to pay their debt is quite weak,” Liu Jiayi, the country’s auditor-general said in speech published today.
New guidelines for US dealmaking (FT)
More US companies could find themselves subject to restrictions on their post-deal conduct under new justice department guidelines that lay out its latest moves to safeguard competition. US antitrust bodies have traditionally shied away from so-called behavioural remedies because of the burden of enforcement they create for the agencies.
SEC OKs Circuit Breakers for All Stocks (WSJ)
The Securities and Exchange Commission approved an expansion of safeguards aimed at preventing another "flash crash," allowing exchanges to implement a circuit breaker for every U.S. stock. U.S. stock exchanges intend by Aug. 8 to implement temporary trading halts for securities not already covered by circuit breakers that were put in place a year ago after the May 6 "flash crash."
Lloyds has most 'risky' home loans on its books (Telegraph)
Roughly 60pc of Lloyds' secured lending is judged to have a "high" or "very high" loan-to-value ratio, the Bank [of England] said in its latest Financial Stability Report. Royal Bank of Scotland is second with 40pc, while Santander UK has 35pc, Nationwide 30pc, Barclays 20pc, and HSBC 10pc.
Oil Trades Before IEA Move Draw CFTC Eye (WSJ)
The fact that oil prices sank hours before the International Energy Agency announced a coordinated release of 60 million barrels of oil could indicate that some market participants got wind of the decision early, the person said. Traders also have raised the possibility of a leak.
Fed May Buy $300 Billion in Treasuries After QE2 (Bloomberg)
While the $600 billion purchase program, known as QE2, winds down, the Fed said June 22 that it will continue to buy Treasuries with proceeds from the maturing debt it currently owns. That could mean purchases of as much as $300 billion of government debt over the next 12 months without adding money to the financial system.
Banker Makes Guilty Plea as Sex Charge Is Reduced (NYT)
An Egyptian banker pleaded guilty on Friday to a misdemeanor charge of kissing and touching the breasts of a housekeeper at the Pierre hotel without her consent.
Michael Jackson 'Thriller' jacket fetches $1.8M (USA Today)
Darren Julien, president and CEO of Julien's Auctions in Beverly Hills, says the jacket was purchased Sunday by Milton Verret, a commodities trader from Austin. Verret says the jacket will be sent on tour and used as a fundraising tool for children's charities.