Banks are Going to Need Some R and R After This Week

February isn't traditionally a time of great activity for banks, but the past few days have been an exception, with notable advances and reversals at Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo.

Feb 7, 2014 at 2:00PM

For a week that few thought would be very busy for the banking sector, there sure was a lot of action in and around the nation's major financials. Lawsuits, deals brewing and deals stewing, big-name resignations, big job hirings... it's almost as if investors needed score cards to keep track of it all.

On top of that, a few big macro numbers were released in the five-day span. Chief among these was the nation's unemployment, with the Bureau of Labor Statistics saying this morning that the January figure came in at 6.6%. That wasn't a huge improvement over December's 6.7%, but at least the rate's continuing to move in the right direction.

As ever with the banking sector in recent times, legal issues produced more than a few headlines over the past few days. The biggie was the postponement of Bank of America's (NYSE:BAC) proposed $8.5 billion settlement over securities sold by Countrywide Financial, the train wreck of a home lender it bought in 2008. A judge had approved the bulk of the settlement, but said black robe was replaced and the new gavel-banger has postponed a final decision on the settlement. At this point, look for the matter to be resolved in the vicinity of the year 2150, around the time the bank opens its first branch on Mars.

In happier news, the company announced that it had extended nearly $11 billion in new loans to small businesses last year, representing a nice increase of 26% over 2012's tally. Not coincidentally, it also said it'll boost its small business team by more than 200 bankers, or by around 20%. The process of start-up enterprises growing larger is a boon for any economy, so it's good to witness that space expanding, and to see Bank of America playing an active role in it.

Perhaps one of those 200-plus officers could come from the ranks of a rival bank. Citigroup (NYSE:C) saw the departure of one of its key execs this past week, when its global head of foreign exchange and local markets Anil Prasad served notice that he'll leave the company. The departure is definitely a blow for the firm, as the steady Prasad has been in its employ for nearly thirty years, and in his current post since 2007.

Meanwhile, the door seems to be revolving at Citi; earlier in the week, the bank named company veteran James Bardrick its new country officer for the U.K. The firm has been making more than a few personnel moves in London of late; perhaps it's more bullish on the European economy than most of its peers.

On the subject of departures, JPMorgan Chase (NYSE:JPM) is apparently getting ready to wave goodbye to its physical commodities business. It first announced it was "pursuing strategic alternatives" (read: "hopefully finding a buyer willing to pay us decent money") last July, so it's been working this divestment for a while. Citing the usual "person familiar with the matter," The Wall Street Journal wrote that Switzerland's Mercuria Energy Group is entering exclusive talks with the bank to buy the unit.

Wells Fargo (NYSE:WFC) should be so lucky. Its planned $2.7 billion sale of a set of mortgage-servicing rights to Ocwen Financial (NYSE:OCN) was blocked by the New York Department of Financial Services, according to Ocwen. Apparently, the Empire State's mini-SEC is worried that the purchase, which covers rights for around 184,000 loans totaling roughly $39 billion in principal, might be too big for the buyer to swallow. Although this isn't a huge setback for Wells (the loans amount to only about 2% of its residential servicing portfolio), $2.7 billion is a handy chunk of change that could certainly be put to good use by the clever bank.

The big financials are lucky the weekend is looming in front of us. They could use a breather after all the lurch-forwards and fall-backs of the past few days. They'll need to rest and gather their energy in case next week is anywhere near as eventful as this one proved to be.

Let's play "Name That Bank"!
Out of the five financial institutions named in this article, The Motley Fool has tagged one as a notable stand-out. In a sea of mismanaged and dangerous peers, it rises above as "The Only Big Bank Built to Last." Hint: Warren Buffett loves this lender. Find out which bank it is by taking a look at The Motley Fool's new report. It's free, so click here to access it now.

Eric Volkman has no position in any stocks mentioned. The Motley Fool recommends Bank of America and Wells Fargo, and owns shares of Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers