A roundup of all the best financial news and analysis from Day 2 of the World Economic Forum Annual Meeting in Davos, Switzerland.
Global bank capitalization much improved since crisis: Despite talk that little has changed, banks’ capital positions are much better than they were before the financial crisis, Bank for International Settlements General Manager Jaime Caruana said on CNBC. The quality of capital also has improved, a factor that is sometimes overlooked, Caruana said.
Mixed messages from ICBC: Jiang Jianqing, chairman of the Industrial and Commercial Bank of China, talked with CNBC Thursday in Davos and ruled out the possibility that the bank would repay investors for losses related to a fund product that soured. But that doesn’t jibe with what local media reports back in China. Shanghai Securities News quotes an unnamed ICBC official as saying, “ICBC won’t ignore the issue of its reputation. … The ICBC has not shirked its responsibility and pushed these investors to go chase China Credit Trust Co Ltd for payment. On this point, ICBC will bear responsibility.”
Retail investors “scared” out of the market: NYSE Euronext CEO Duncan Niederauer tells CNBC why he thinks many retail investors have missed out on the resurgent market. “I think we scared them all out of the market. I understand why they left. The industry didn’t acquit itself very well.”
Asset valuation ignores social risk: Gillian Tett at the Financial Times uses the example of Detroit to explain how asset valuation doesn’t seem to take into account the risks associated with social and political upheaval. “As social tensions rise, investors must brace for more unpredictable government intervention. A year ago, after all, Detroit’s general obligation bonds were rated among the least dicey of junk bonds. Because of their seniority, it was widely assumed that they would be among the last to be repudiated. But this assumption may now be overturned. That would be popular with voters but the prospect horrifies investors.”
“Leniency Applicants”: Joaquin Almunia, vice-president of the European Commission and Competition Commissioner, tells CNBC banks have accepted the evidence of benchmark manipulation. Almunia gets particularly technical when he labels banks/whistle-blowers who come forward seeking to get ahead of stiff penalties as “leniency applicants” and “immunity applicants.”
Cultural change afoot at Barclays?: Barclays CEO Antony Jenkins touts organizational changes set to be announced Feb. 11. Regulators and banks can make all the “technocratic changes” they want, Jenkins tells Bloomberg TV, but the key to fixing the industry is cultural. “We have to change the culture in banking institutions.”
Debt Limit Redux: U.S. Treasury Secretary Jack Lew chats with CNBC and calls on Congress to “do its job” and raise the debt limit. Lew also participated in a panel discussion on the U.S. Economic Outlook, where he forecast 3% growth. Watch the full panel discussion.
StanChart shuffling, but solid: Standard Chartered CEO Peter Sands explains to Reuters the reshuffling of some executives and harpoons rumors of the bank being a takeover target.