Month: June 2023

US banks scramble on research fees as reprieve on European rules runs out

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NEW YORK, June 28 (Reuters) – Wall Street banks and brokerages are in a last-minute scramble to meet a July 3 deadline to charge investors for research reports, bankers and others in the industry said, a requirement that threatens their European business if they fail to comply.

Bank of America Corp (BAC.N) and Jefferies Financial Group were among the earliest U.S. banks to comply with the rules – but many others have not yet met the standards and are rushing to catch up, they said.

Failure to do so could mean losing millions of dollars worth of business as U.S. firms must comply to continue providing research-related services to European clients. Many in the banking industry had hoped a regulatory reprieve in place since October 2017 would be extended beyond July 3, analysts said, explaining the reason behind the eleventh-hour scramble.

The challenge is more likely being felt by smaller and regional firms who lack European operations rather than the largest Wall Street banks, who are expected to meet the deadline, analysts said.

Banks typically provide research to clients as part of a broader offering of services, but that changed when the European Union introduced the Markets in Financial Instruments Directive (MiFID) II laws in 2018 to improve transparency.

Since then, firms operating in the European Union have been required to “unbundle” or itemize charges to investors for research such as stock picks, bespoke studies and meetings with analysts. The fees are separate from those charged for executing trades.

“It took about a year for us to become compliant to MiFID II laws — it was a long, intense process,” said Candace Browning, head of BofA Global Research. “There were definitely negotiations, there were detailed conversations with clients.”

U.S. financial firms were initially given an exemption by the U.S. Securities

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Business Financial News

Bank Customers in Canada Seeking Financial Advice but Some Retail Banks Not Effectively Delivering, J.D. Power Finds

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Nearly Two-Thirds of Retail Bank Customers Are Struggling Financially

TORONTO — The economic pressure caused by inflation, capital markets volatility and rising interest rates has put its mark on bank customers in Canada, with nearly two-thirds (66%) being classified as financially unhealthy,1 according to the J.D. Power 2023 Canada Retail Banking Advice Satisfaction Study,SM released today. The study also finds that, while personalized financial advice can elevate customer satisfaction and engagement with retail banks, only 42% of customers recall receiving advice from their financial institution and only 50% of those customers found the advice to be effective. Furthermore, overall satisfaction with banking advice declines 4 points year over year to 588 (on a 1,000-point scale).

“Canada’s large banks should be more attuned to their customers’ financial state and needs, offering and tailoring advice that is aligned with their financial challenges and tied to their future financial goals,” said Jennifer White, senior director for banking and payments intelligence at J.D. Power. “During times of financial hardship, customers are looking for guidance. Delivering advice can increase customer trust by 9 percentage points, and when the advice is completely personalized, trust rises 15 percentage points. Unlike their U.S. counterparts that demonstrated an improvement on that front,2 Canadian banks have yet to rise to the occasion and are still lagging in delivering the right advice at the right time to make a positive impact on their customers’ satisfaction.”

Following are some key findings of the 2023 study:

  • Financial state tied to satisfaction: The study finds a correlation between customers’ financial state and satisfaction with their bank’s advice. Satisfaction among those who are considered financially healthy is significantly higher (657) than among those who are considered financially stressed (562) or vulnerable (500).
  • Advice personalization: The top
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Business Financial News

US banks push back as regulators prepare international capital hikes

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[1/2]The logo for Morgan Stanley is seen on the trading floor at the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S., August 3, 2021. REUTERS/Andrew Kelly/File Photo

WASHINGTON, June 22 (Reuters) – U.S. banks are pushing to soften a major regulatory proposal to hike bank capital requirements, worried it could prove too onerous, especially for lenders still reeling from the March banking crisis, according to six people briefed on the matter.

Bank regulators led by the U.S. Federal Reserve are finalizing the proposal which would implement international capital standards agreed by the Basel Committee on Banking Supervision in the aftermath of the 2007-2009 financial crisis.

Bankers are particularly concerned by an aspect of the draft proposal that would apply higher capital charges on non-interest revenue, such as the fees lenders charge on credit cards or investment banking services.

That capital charge is part of the package agreed by the Basel Committee in 2017, but the industry says it overstates the risk for banks that have a high proportion of non-interest income and had hoped U.S. regulators would mitigate its impact, the people said.

Bank groups are pushing for regulators to cap the proportion of assets on which such charges would apply, said three people, but it was unclear if the agencies would take that approach.

Non-interest services income has been a key focus of many lenders’ growth strategies in recent years, one industry official noted.

American Express (AXP.N), Morgan Stanley (MS.N) and the U.S. units of UBS, Deutsche Bank and Barclays are among banks with a high proportion of non-interest income, according to a 2022 blog by Washington group the Bank Policy Institute.

Barclays, Deutsche Bank, and Morgan Stanley declined to comment. UBS and American Express did not immediately provide comment.

On Wednesday, Fed Chair Jerome

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American Business News

Top Financial Stocks for June 2023

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Rising interest rates have introduced significant stress into the banking system. So far in 2023, we’ve already seen two regional banks collapse under macroeconomic strain, and with inflation still above the Federal Reserve’s 2% target, financial-sector stocks aren’t keeping up with broader stock market benchmarks.

The financial industry, as represented by the Financial Select Sector SPDR ETF (XLF), has underperformed the overall market, gaining 5% over the past year as the Russell 1000 Index has delivered a 14% return.

That being said, there are a few standouts in this beleaguered sector. Here are the top three financial stocks each in the categories of the best value, the fastest growth, and the strongest performance.

Market performance figures and the data in the tables below are as of June 9.

Best Value Financial Stocks

These are the financial stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.

Best Value Financial Stocks
  Price ($) Market Capitalization (Market Cap) ($B) 12-Month Trailing P/E Ratio
Banco Macro SA (BMA) 21.86   1.4                 0.14
Jackson Financial Inc (JXN) 30.01 2.5 1.3
Ambac Financial Group Inc (AMBC) 14.04 0.64 1.3

Source: YCharts

  • Banco Macro SA: This is a global bank based out of Argentina, with a focus on low- to middle-income customers, and small to mid-sized companies. On May 17, Banco Macro announced lackluster first-quarter results, with net income falling 52% from the prior quarter and 20% year-over-year. However, operating income increased 28% year-over-year due to cost-cutting.
  •  Jackson Financial Inc.: Jackson Financial provides a diverse range of annuity products to U.S. clients. Falling equity prices and lower spread income due to variable-rate annuities, weighed heavily on Jackson’s core
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Business Financial News

Is American Culture Becoming More Pro-Business?

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In Capitalism: Hollywood’s Miscast Villain, a piece I wrote in 2010 for the Wall Street Journal, I described the slew of movies and television shows featuring mass-murdering corporate villains including “The Fugitive,” “Syriana,” “Mission Impossible II,” “Erin Brockovich,” “The China Syndrome” and “Avatar,” and Hollywood’s not so subtle attacks on capitalism with characters like Jabba the Hut in the Star Wars universe and the Ferengi in Star Trek. I explained some reasons for Hollywood’s antipathy to capitalism:

Directors and screenwriters see the capitalist as a constraint, a force that prevents them from fulfilling their vision. In turn, the capitalist sees the artist as self-indulgent. Capitalists work hard to produce what consumers want. Artists who work too hard to produce what consumers want are often accused of selling out. Thus even the languages of capitalism and art conflict: a firm that has “sold out” has succeeded, but an artist that has “sold out” has failed.

…Hollywood share[s] Marx’s concept of alienation, the idea that under capitalism workers are separated from the product of their work and made to feel like cogs in a machine rather than independent creators. The lowly screenwriter is a perfect illustration of what Marx had in mind—a screenwriter can pour heart and soul into a screenplay only to see it rewritten, optioned, revised, reworked, rewritten again and hacked, hacked and hacked by a succession of directors, producers and worst of all studio executives. A screenwriter can have a nominally successful career in Hollywood without ever seeing one of his works brought to the screen. Thus, the antipathy of filmmakers to capitalism is less ideological than it is experiential. Screenwriters and directors find themselves in a daily battle between art and commerce, and they come to see their battle against “the suits” as emblematic of a larger war

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American Business News

AstraZeneca drafts plan to spin off China business amid tensions

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AstraZeneca has drawn up plans to break out its China business and list it separately in Hong Kong as a way to shelter the company against mounting geopolitical tensions.

The Anglo-Swedish drugmaker began discussing the idea with bankers several months ago and is among a growing number of multinational companies now considering that option, according to three people familiar with the talks.

A separation might not ultimately take place, the same people cautioned. One of the people said listing the entity in Shanghai was also possible.

The discussion shows the significant restructuring multinational corporations could be forced to undertake as they adapt to growing friction between China and the US and its allies.

Earlier this month Sequoia, the Silicon Valley venture capital group, said it would spin off its China business and run it as a “completely independent” entity from its US operations. Neil Shen, the billionaire founder of Sequoia China, said there was “much less in common now” between the Sequoia entities.

Under the plans AstraZeneca, which is the UK’s biggest listed company by market value at £183bn, would carve off its operations in China into a separate legal entity but would retain control of the business.

The idea has been “on the table for a few years”, one adviser to AstraZeneca said, adding that it had been sidelined until recently amid a global downturn in biotech stocks.

“Every multinational with a strong China business” seems to have considered a similar move, one senior Asia-based banker said. “Even if it’s just the option to give you flexibility in the future, it’s worth thinking about.”

A person briefed on AstraZeneca’s plans said listing a

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Business Financial News

Point Roberts, the cut-off U.S. town on B.C.’s border, wants Canadian workers

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Businesses in the isolated U.S. border town of Point Roberts just south of Vancouver are calling on President Joe Biden to help them hire Canadians to fill a labour shortage.

Brian Calder, the president of the Point Roberts Chamber of Commerce, wrote an open letter urging the president and lawmakers to make an exception to U.S. work permit policies for Point Roberts. 

Point Roberts is part of Washington state but juts out from the Canadian mainland south of Vancouver and is only accessible by land via the Canadian border. 

Calder says while they’ve looked for American citizens from other parts of Washington state to come work, high rental costs and four daily border crossings are barriers. 

They say they hope their government will address their concerns and allow them to temporarily employ Canadians with work visas. 

“Point Roberts is unique … in North America. Well, where is the unique solution? Nothing,” said Calder. 

A map of the Lower Mainland and Washington state is shown with the border lined in black and Point Roberts highlighted in yellow.
The international border cuts the peninsula containing Point Roberts in half, turning what would otherwise be a suburb of metropolitan Vancouver into a secluded getaway in Washington state separated from the U.S. mainland. (Allison Cake/CBC)

‘Orphan of the United States’

Dave Duncan, 62, lives in Blaine, Wash., but has worked in Point Roberts for 10 years. 

As the manager of Point Roberts International Marketplace, the only grocery store in town, Duncan goes through four border crossings a day to get to work

“It feels good working here. I feel like I’m making a difference in people’s lives helping them,” said Duncan, adding he was able to cross the border for work during the pandemic but was required to provide letters, additional forms, and complete ArriveCan every time. 

Duncan says before the pandemic, there were at least six other Americans who committed to the same commute. But now,

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American Business News

Novuna Business Finance achieves rapid growth fuelled by new business surge and sustainable investment boost

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maleham geoff 400

Strong new business volumes and a one-off gain from the revaluation of the Group’s investment in green energy provider GRIDSERVE resulted in record pre-tax profits for Novuna Business Finance.

The company, which specialises in providing asset finance solutions for SMEs and larger corporations across the UK, achieved pre-tax profits of £66.2m in FY22/23, up 165% from the previous year.

Leveraging its well-established routes to market, including broker, direct and manufacturer and dealer relationships, Novuna Business Finance achieved a 22% increase in new business, totalling £999.3m and benefitted from a one-off gain of £44.1m following the revaluation of a strategic investment in GRIDSERVE’S electric vehicle charging infrastructure to deliver a record performance.

Novuna Business Finance, which provides hire purchase, finance lease solutions, stocking finance and block discounting solutions for businesses, achieved an 8% increase in net earning assets, totalling £1.7billion this year which propelled its standing to become the third largest asset finance provider in the UK.

Despite the challenges posed by rising funding costs and an unfavourable economic climate, the company remained committed to its growth objectives by investing in diversified funding provisions, which accounted for 20% of new business volume.

Novuna Business Finance’s expanding Project Finance proposition, forged partnerships with SMEs, Community Energy Groups, and Fund Managers to drive revenue growth for the Group leveraging wider market opportunities in the sustainability sector.

The business continued to enhance its support for customers, making significant investments in cutting edge technology, accelerating digital onboarding and enabling instant funding decisions. The introduction of a revolutionary workflow automation tool for manufacturers and dealers resulted in over £4m in additional revenue.

Geoff Maleham, Managing Director at Novuna Business Finance, said: “Against a backdrop of rising cost of funds and a challenging economic climate, our business has achieved remarkable success, driven by unprecedented levels of new

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Business Financial News

Why Demographics Matter to Small Business Marketing

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  • Demographic data is used by businesses to help them understand the characteristics of the people who buy their products and services.
  • With demographics, you can see who your brand appeals to the most by age, location, gender, job title, income and hundreds of other variables.
  • With the right demographic data, you can spend more marketing to your most enthusiastic clients and stop spending to reach those who aren’t interested.
  • This article is for small business owners who understand the importance of marketing but want to significantly increase the sales and leads they get from their campaigns.

In the past two decades, marketers’ ability to target the right person or business decision-maker has gotten much better for two main reasons: the rise of the internet and social media, and people’s willingness to constantly share and update vast amounts of information about themselves on these platforms.

The type of demographic data available to companies now is incredibly accurate and precisely segmented. That makes finding the people most likely to want your products and services a lot easier and less expensive.

What are demographics?

Demographics is the study of the characteristics of people or organizations within a defined geographical location. The more information collected, the more people and organizations can be segmented into smaller common groups with shared attributes.

Companies use demographic data to:

  • Understand which products and services different groups of customers want and can afford.
  • More precisely target marketing campaigns, thereby reducing the cost per lead or sale.
  • Track how society is changing and how they should adapt (often used in PEST analysis).

What is demographic data?

Here are some examples of demographic data and variables (sometimes called fields):

  • Age group
  • Gender
  • Race
  • Ethnicity
  • Location
  • Marital status
  • Education level
  • Occupation
  • Employment status
  • Income level

Traditionally, demographic data comes from a relatively

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Business Company News

How India is slowly moving into the American orbit

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Before he became Indian prime minister in 2014, Narendra Modi could not get a visa to visit the US over claims about communal violence in his home state of Gujarat.

US lawmakers this week gave Modi multiple standing ovations when he joined the small pantheon of leaders, alongside Nelson Mandela and Winston Churchill, who have addressed Congress more than once. 

The reception, one of the high points in a three-day state visit by Modi, reflected the seismic shift in US-India relations that has occurred over the past 25 years — and which has accelerated under President Joe Biden. 

“In the past few years, there have been many advances in AI — artificial intelligence,” Modi joked to members of Congress. “At the same time, there have been even more momentous developments in another AI — America and India.”

For a country that co-founded the Non-Aligned Movement at the height of the cold war in 1961, and whose diplomats today take every opportunity to voice New Delhi’s policy of neutrality, both the optics and substance of Modi’s visit were extraordinary.

The two sides signed defence and technology agreements, including deals to sell US drones to New Delhi and to co-produce fighter jet engines in India. They also did deals to help jump-start India’s nascent semiconductor industry, train Indian astronauts at Nasa, and open US consulates in Bengaluru, India’s IT capital, and Ahmedabad. 

But one of the most telling lines in Modi’s speech was an oblique reference to what experts say is the main reason India is diluting its traditional non-aligned status and moving slowly but surely into the US orbit: China.

“The dark clouds of coercion and confrontation are casting a shadow in the Indo-Pacific,” Modi declared. “The stability of the region has become one of the central concerns of our partnership.”

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American Business News