Aurelia Butler

WASHINGTON (Reuters) -Big U.S. banks sailed through the Federal Reserve’s annual health check on Wednesday, in a vote of confidence for a sector still recovering from turmoil earlier this year and facing an uncertain economic outlook.The Fed’s “stress test” exercise showed lenders, including JPMorgan Chase (NYSE:JPM), Bank of America (NYSE:BAC), Citigroup (NYSE:C), Wells Fargo (NYSE:WFC), Morgan Stanley (NYSE:MS) and Goldman Sachs (NYSE:GS), have enough capital to weather a severe economic slump, paving the way for them to issue share buybacks and dividends.The 23 banks tested, which have more than $100 billion in assets each, would suffer a combined $541 billion in losses under the Fed’s severe downturn scenario – one of its toughest yet – but would still have over twice the amount of capital required.While the results look strong, and were celebrated by the industry, critics warned they paint an overly optimistic picture just months after the government was forced to intervene to protect depositors.Among the top performers were Charles Schwab (NYSE:SCHW) Corp. and Deutsche Bank (ETR:DBKGn)’s U.S. operations, while regional lenders Citizens Financial (NYSE:CFG) Corp. and U.S. Bancorp were the laggards of the pack. Fed Vice Chair for Supervision Michael Barr said the results showed the banking system was “strong and resilient” but, in a nod to the failures of Silicon Valley Bank and two other lenders this year, emphasized it was just one measure of the sector’s health.”We should remain humble about how risks can arise and continue our work to ensure that banks are resilient to a range of economic scenarios, market shocks, and other stresses,” Barr said in a statement. The average capital ratio – a measure of the cushion banks have to absorb potential losses – for the country’s eight “globally systemically important banks” stood at 10.9%, up slightly from last year, according to a Reuters analysis. State Street (NYSE:STT) posted the highest capital ratio of the globally systemically important banks at 13.8%.Banks’ commercial real estate portfolios performed better than expected, showing $65 billion in losses or 8.8% of average loan losses, slightly down on last year’s 9.8%, the Fed said.Goldman Sachs had the highest proportion of losses on commercial real estate loans under the test at 16%. Shares of major banks rose in extended trade following the Fed’s upbeat report card, with Bank of America and Wells Fargo gaining around 2% each, while JPMorgan and Charles Schwab both added more than 1%. Lenders will now be allowed to return excess capital to shareholders, although analysts expect payouts to be slightly lower this year due to economic uncertainty and impending new capital rules. They will be able to announce their share buyback and dividend plans after close of trading on Friday, Fed officials said.Industry officials were quick to cheer the results, which they said showed there was no need for Barr to impose tougher rules, which he has pledged to do. “Recognizing this year’s scenario was the most difficult on record, these outcomes are the best antidote to any lingering anxiety surrounding recent bank failures,” said Lindsey Johnson, president and CEO of the Consumer Bankers Association.SPOTLIGHT ON REGIONAL LENDERSUnder the annual test established following the 2007-2009 financial crisis, the Fed assesses how banks’ balance sheets would fare against a hypothetical severe economic downturn. This year’s test follows turmoil in the banking sector as some lenders found themselves on the wrong end of Fed interest rate hikes, suffering large unrealized losses on their U.S. Treasury bond holdings which spooked their uninsured depositors.That crisis put the spotlight on the performance of mid-sized and regional lenders, who managed to stay above required capital levels but posted some of the lowest capital cushions.Shares of regional U.S. banks also were mostly higher. M&T Bank (NYSE:MTB) was up 2.6% after the bell and PNC Financial (NYSE:PNC) was up 1.4%, while shares of Citizens Financial were down about 2%.The results may reassure some investors but critics have warned the tests do not probe all potential bank weaknesses. “This is dangerous, misleading, incomplete, and results in false comfort,” said Dennis Kelleher, president and CEO of the advocacy group Better Markets.The Fed examined bank balance sheets as they stood at the end of 2022, meaning Wednesday’s results do not reflect the fallout from the crisis. Fed officials acknowledged that banks performed relatively well in large part because the scenario actually envisioned interest rates dropping rapidly, allowing large banks to shrink unrealized losses currently sitting on their balance sheet and offsetting traditional loan losses.”Some may ask how all the banks can get a regulatory thumbs-up when the industry just went through a period of turmoil. But the tests aren’t an endorsement or pass-fail grade meant for public consumption like a beauty contest,” said Ian Katz, managing director of Capital Alpha Partners, in a note. The scenario also envisages the U.S. economy contracting nearly 8.75%, driven in part by a 40% slump in commercial real estate asset values, and the jobless rate jumping to 10%.The test assesses whether banks would stay above the required minimum 4.5% capital ratio. The average capital ratio for the 23 banks was 10.1%, the Fed said. That compares with 9.7% last year, when the central bank tested 34 lenders against a slightly easier scenario. More

WASHINGTON (Reuters) – The U.S. Department of Health and Human Services (HHS) was among those affected by a wide-ranging hack centered on a piece of software called MOVEit Transfer, Bloomberg News reported on Wednesday. The report comes as the hackers behind the massive breach claimed credit for stealing data from two major law firms, Kirkland & Ellis LLP and K&L Gates LLP.The ransomware gang known as cl0p posted the names of Kirkland & Ellis LLP and K&L Gates LLP to its leak site, typically a sign that negotiations between the victims and the hackers had broken down. The hackers’ claims could not immediately be verified. Kirkland and K&L did not immediately return messages left after hours. A spokesperson for HHS could not immediately be reached. HHS’ name did not appear among cl0p’s list of purported victims. The group has previously insisted it doesn’t deliberately steal data from government organizations, but that doesn’t mean that data hasn’t been compromised.Bloomberg cited a person familiar with the incident at HHS as saying that tens of thousands of records could have been exposed. Cl0p didn’t immediately return an email seeking comment.Believed by researchers to be a Russian-speaking group of hackers, cl0p was recently able to gain access to a wide swathe of organizations’ data by compromising MOVEit Transfer, a file commercial management tool made by Progress Software (NASDAQ:PRGS).Speaking to Reuters ahead of the latest claims, Jon Clay, the vice president for threat intelligence at cybersecurity firm TrendMicro, described cl0p as a resourceful group with little incentive to stop its shakedown spree. “They aren’t going away,” he said. “Unless the heat gets on them very bad.” More

The annual Sovereign Grant report, which details the royals’ taxpayer-funded spending and income, detailed that the monarch said thermostats should be turned down to 19 degrees Celsius (66.2°F) to cut greenhouse gas emissions, in keeping with his long-term environmental campaigning. “You will not need me to remind you that this reporting period relates to a year in which inflationary pressures saw the price of many goods and services increase significantly for all organisations, in particular with regards to the cost of fuel and energy,” said Michael Stevens, the royal treasurer.The last year has been one of the busiest for the royal family in generations, with celebrations for Queen Elizabeth’s 70th year on the throne last June, followed by her death in September and the coronation of King Charles in May.The report said 1.6 million pounds ($2 million) had been spent by the royals on the queen’s funeral and related events. The British government said in May it had cost an estimated 162 million pounds overall, which includes the cost of policing and security. “The funeral service itself was believed to have been viewed by the largest worldwide audience for any live event in television history,” said Stevens, whose official title is Keeper of the Privy Purse. Royal spending rose by 5% to 107.5 million pounds, with staff costs rising significantly, while the Sovereign Grant – based on surplus revenue from the Crown Estate, a property portfolio belonging to the monarchy, remained at 86.3 million pounds and additional income fell slightly to 9.8 million.The report said the proportion of ethnic minority employees had stayed at 9.7%, missing its target of reaching 10% by the end of 2022. It has set a new target of 14% by 2025. Around 18% of the population of England and Wales belong to an ethnic group, according to government data.”We are determined to accelerate progress in this area,” Stevens said.He said gas and heating emissions had fallen 19%, partly driven by the king having the thermostats turned down, and a 43% decrease in travel emissions.Critics of the royals said the monarchy cost far more than the report suggested, and said Charles’ son and heir Prince William, who received 6 million pounds from his inherited Duchy of Cornwall estate, should have published full details of his annual accounts.”The royals have long hidden their true cost, which we have worked out to be at least 345 million pounds. That’s enough to pay for 13,000 new nurses or teachers,” said Graham Smith, chief executive of campaign group Republic.Stevens also disclosed that Charles’ younger son Prince Harry and his wife Meghan had vacated their Frogmore Cottage home on the Windsor Castle estate and had paid back all taxpayer-funded spending on the property, “leaving the Crown with a greatly enhanced asset”.He declined to comment on Prince Andrew’s use of Royal Lodge, the property within the Windsor estate which newspapers have said the king would like his younger brother to vacate.($1 = 0.7910 pounds) More

In an interview with Portugal’s broadcaster RTP he said that the ECB “must be cautious so that the impact of rising interest rates on the economy do not exceed the minimum necessary to control prices.””We are reaching the time when monetary policy can pause, we are very close,” he said. “Not overreacting is a huge concern for every central bank.”ECB President Christine Lagarde on Wednesday cemented expectations for a ninth consecutive rise in euro zone rates in July. The ECB has raised rates at each meeting over the past year, taking its deposit rate to 3.5%, and promised more tightening as it attempts to curb inflation still running at three times its 2% target. More

WASHINGTON (Reuters) – Big U.S. banks’ commercial real estate portfolios put in a surprisingly good performance during the Federal Reserve’s annual health checks, with losses declining slightly on last year, the central bank said on Wednesday.With risks growing in the commercial real estate (CRE) sector globally, analysts and investors were looking to the Fed’s “stress tests” for more insight on how exposed the country’s lenders are to falling real estate prices.Commercial real estate (CRE), especially offices, has been hit by interest rates hikes and workers choosing to stay at home. CRE values in all sectors are expected to soften as economic activity decelerates, hurting banks, which hold about half of the $6 trillion in outstanding CRE debt and the largest share maturing in 2023-2026, Moody’s (NYSE:MCO) Investors Service said this month.The Fed’s annual bank “stress tests” established following the 2007-2009 financial crisis probe how lenders would fare against an extreme scenario: a 40% decline in commercial real estate values. The 23 banks examined subject hold approximately 20% of office and downtown retail CRE loans, and showed they could weather a major CRE downturn. The average projected CRE loan loss rate across the group was 8.8% of average loan balances, compared with 9.8% last year, the Fed said. Goldman Sachs Group (NYSE:GS) showed the highest CRE loan loss rate of 16% of average loan balances, followed by Morgan Stanley (NYSE:MS) at 13.7% and Citizens at 12.4%. Charles Schwab , which focuses on retail customers, had a CRE loss rate of zero. While the results paint a better-than-expected picture of the industry’s CRE exposure, Fed officials acknowledged smaller regional and community banks which are not tested hold the majority of bank CRE loans. Here are the projected loan losses by type of loan for 2023:Q1–2025:Q1 under the Fed’s severely adverse scenario as a percent of average loan balances:Bank of America Corporation (NYSE:BAC) – 9.4%The Bank of New York Mellon (NYSE:BK) Corporation – 9.3% Barclays (LON:BARC) US LLC – 3.4%BMO Financial Corp. – 8.3% Capital One Financial Corporation (NYSE:COF) – 9.9%The Charles Schwab Corporation (NYSE:SCHW) – 0.0% Citigroup Inc (NYSE:C). – 9.3%Citizens Financial (NYSE:CFG) Group, Inc. – 12.4%Credit Suisse Holdings (USA), Inc. – 8.4%DB USA Corporation – 11.2%The Goldman Sachs Group, Inc. – 16.0%JPMorgan Chase & Co. (NYSE:JPM) – 3.9%M&T Bank Corporation (NYSE:MTB) – 8.8%Morgan Stanley – 13.7% Northern Trust Corporation (NASDAQ:NTRS) – 11.5%The PNC Financial Services Group (NYSE:PNC), Inc. – 10.0%RBC US Group Holdings LLC 2 – 10.3% State Street Corporation (NYSE:STT) – 4.1%TD Group US Holdings LLC – 7.5%Truist Financial (NYSE:TFC) Corporation – 9.6% UBS Americas Holding LLC – 4.1%U.S. Bancorp – 9.5% Wells Fargo & Company (NYSE:WFC) – 9.7% More