Financials On Friday: Calm After The Storm

Financials on Friday: Calm after the storm.

• Price action was dominated by recovery from last week’s sell-off surrounding the French political situation. A range of French financials, and those adjacent, rallied hard and €IG banks overall was c.4bp tighter WoW and insurers just 1bp tighter.
• Regulatory news was quite a feature with Citigroup’s living will reportedly getting a failing grade from the FDIC (though not the Fed). Citi. None of these look to be too spread-relevant.
  • Perhaps the most is the fact that US regulators are also apparently set to push FRTB (fundamental review of the trading book) back into 2026. This would have been a positive coming in 2025, previously. US and Swiss FRTB.
  • Switzerland is censuring HSBC’s Swiss private bank business and BBVA is set to face trial over historical spying allegations (alongside its former chairman). BBVA.
• Deal news continues to flow with NatWest buying most of Sainsbury’s Bank in the UK, continuing the trend in that market of smaller mergers, or bolt-on acquisitions. Santander is closing on a deal with Amazon to offer financing to its customers and SocGen is selling its nascent digital bank. NatWest.
• Away from Europe, Norinchukin, the largest agribank in Japan has managed to get its rate bets all wrong on its giant (USD360bn investment portfolio). It is set to realise losses that could exceed USD10bn but is shifting something over USD60bn towards more credit-oriented products. A technical tailwind. Link here.
• Financial updates: SparNord issued a guidance upgrade due to rates remaining higher than expected and positive Danish asset quality – positive for the Danish banks and Citigroup held an investor day which didn’t move any near-term dials, in our view. SparNord.
• Few banks issue pre-close statements these days and, with 2Q24 close period starting next weekend, there could be paucity of corporate newsflow, at least news of the positive variety. Results season kicks off on 11 July – just thirteen trading sessions away.