-
Receiving Wide Coverage ...Downsizing After Volcker: In what the Journal pegs as an "unforeseen consequence" of the recently released Volcker Rule, more than a dozen small and regional banks will likely need to sell collateralized debt obligations. Case in point: Zions Bancorp, which said it would take a $387 million charge to get rid of a large CDO portfolio, as a result of the Volcker Rule's treatment of CDOs comprised of trust preferred securities. "The unexpected announcement by Zions is an indication that the impact of the Volcker Rule will not just be felt at traditional Wall Street firms but at other kinds of banks as well," echoes Dealbook. JPMorgan Chase, meanwhile, is selling an Asia-based principal investment business, valued at more than $1 billion. Potential buyers include Blackstone, Carlyle and KKR. According to the FT, "while the operation does not directly fall foul of the new Volcker rule restricting proprietary investments, bankers at JPMorgan say it is only a matter of time before regulators may decide it is a risk-taking business." The FT also reports that Citigroup and Santander have sold $1 billion of trade finance assets in a securitization, though that sale is attributed primarily to new Basel capital rules, which "hurt the profitability of assets that banks would have typically held."
December 17 -
The Volcker Rule may finally be out, but the process of understanding the intricacies of the complex regulation that bans the largest banks from making risky trades has only just begun.
December 11 -
Zions Bancorp (ZION) said the Volcker Rule will force it to take a $387 million charge on its portfolio of collateralized debt obligations.
December 16 -
Citigroup Inc. (C), the third-biggest U.S. bank by assets, sold its Metalmark Capital private-equity unit to comply with the Volcker Rule.
December 17
BankUnited in Miami Lakes, Fla., has sold two batches of securities in order to comply with the Volcker Rule.
The $14.3 billion-asset company sold its entire portfolio of collateralized loan obligations, with a cost-basis of $431 million, at a loss of $1.4 million on Tuesday. It also sold $119 million of private-label re-securitized real estate mortgage investment conduits, or Re-REMICS, for a $3.8 million gain.
The sales were prompted by the release last week of the final version of the Volcker Rule, BankUnited said. The rule bans large commercial banks from certain types of risky trading.
BankUnited "continues to evaluate its remaining investment holdings in light of the Volcker Rule," it said in a news release.
Banks have been boosting their holdings of CLOs this year as a means to pick up yield while minimizing interest-rate risk. Banks held $69.8 billion in CLOs as of the end of the third quarter, up 54% from a year earlier, according to a report released Thursday by SNL Financial..
But the Volcker Rule could slow or reverse this trend by forcing banks - including dozens of small and regional banks to
Zions Bancorp (ZION) in Salt Lake City said it would
