Today is Tuesday, May 16, 2023, and here’s your weekly selection of essential intelligence on financial markets and the global economy from S&P Global Market Intelligence. Subscribe to be notified of each new Insight Weekly.
In this edition of Insight Weekly, we examine the issues in US banking regulation. Regulators have started to intensify their supervision of banks following recent regional bank failures. Deposits, liquidity and capital levels will be closely scrutinized, and regulators will have less tolerance for companies that are slow to fix their issues. Year to date as of May 8, regulators have issued five new severe enforcement actions, with the latest one targeting capital retention and liquidity and interest rate risk management. On the M&A front, Toronto-Dominion Bank’s long-pending acquisition of First Horizon was terminated, with industry experts saying that a regulatory issue with TD may have sidelined the deal.
The US private auto insurance industry had a year to forget in 2022 as the business line reported its worst underwriting results in over two decades. The net combined ratio for the sector, excluding policyholder dividends, came in at 111.8%, topping the previous high record of 110.4% recorded in 2000, according to an S&P Global Market Intelligence review of available annual regulatory statements.
Venture capital investments worldwide plunged 61.2% year over year in April, as the number of funding rounds also tumbled 47.8%, according to Market Intelligence data. The technology, media and telecommunications industry dominated global venture capital investments by attracting 37.6% of the total funding.
- In Focus: Banking Regulatory Issues
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Signs point to regulatory issues in TD-First Horizon termination
Industry experts believe a regulatory issue with Toronto-Dominion Bank may have sidelined the deal, leading regulators to hint that eventual approval would be unlikely. However, it is unclear what the exact impediment was.
—Read the full article from S&P Global Market Intelligence
5 severe enforcement actions handed out so far in 2023
In the latest severe enforcement action, regulators targeted capital retention and liquidity and interest rate risk management — hot topics right now following the failures of three regional banks since March.
—Read the full article from S&P Global Market Intelligence
Bank regulators lose patience for slow remediation as they step up supervision
Banks that find themselves under the regulatory spotlight will have to hustle to fix identified issues as regulators step up supervision of deposits, liquidity and capital levels following the recent bank failures.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Financials
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Deutsche Bank's €30B Q1 deposit outflows no cause for concern – analysts
Deutsche Bank's total deposits declined to €591.94 billion at the end of March, but CFO James von Moltke said the level is expected to have returned to above €600 billion by April-end.
—Read the full article from S&P Global Market Intelligence
Investor fears contributed to regional bank stock declines, analysts say
Regional bank stocks came under pressure again following the third major bank failure since March.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Fintech
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Most select fintechs, payment processors, specialty lenders log higher earnings
Of the 30 companies that reported their first-quarter earnings, 17 companies posted sequential gains in diluted earnings per share, according to an S&P Global Market Intelligence analysis.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Insurance
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US private auto insurers report historically bad underwriting results in 2022
The net combined ratio for US private auto insurers surged to 111.8% in 2022, the worst underwriting results for the business line since at least 1996.
—Read the full article from S&P Global Market Intelligence
Financials Research: Affiliated, private equity-backed reinsurers fuel life and annuity cession surge
The increased use of reinsurance by US life insurers and annuity providers seeking enhanced capital efficiency continued unabated in 2022, even as volatile financial markets changed the economics associated with the kinds of arrangements that dominated the landscape in prior years.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Credit and Markets
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Banking risk monthly outlook: May 2023
S&P Global Market Intelligence’s banking risk experts provide insight into events impacting the financial sector in emerging markets in May.
—Read the full article from S&P Global Market Intelligence
Navigating geopolitical headwinds
The defining feature of the geopolitical era unfolding around us is an accelerating interdependence between economic and security spheres.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Real Estate
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6 US REITs raised dividend payouts in April
Dividend increases announced in April bring the year-to-date totals to 43 US-based and five Canadian REITs.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Private Equity
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Global venture capital investment activity slumps in April
The number of funding rounds fell 47.8% year over year to 959.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Energy and Utilities
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Race for ever-larger wind turbines might be unsustainable
The constant pursuit for bigger offshore wind turbines is putting pressure on the supply chain to keep pace, executives and analysts told S&P Global Commodity Insights.
—Read the full article from S&P Global Market Intelligence
Most European utility stocks make gains in April
Fortum Oyj was the sole European utility among a select group of 20 European utilities and power producers to show a negative stock return in the month.
—Read the full article from S&P Global Market Intelligence
Outlook 2023: CAISO calling all resources to navigate reliability risks
Nearly 8.3 GW of capacity additions, mostly renewables and batteries, are scheduled to come online in California ISO territory this year, according to S&P Global Market Intelligence data.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Metals and Mining
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Bills to speed up mine permitting in US Congress alarm tribes
Advocates for Indigenous peoples' rights said the bills for faster mine permitting would put at risk the role of tribal communities in the decision-making process for activities that affect their lands.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Technology, Media and Telecommunications
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Infotech capital offerings raise $4.51B in March
Publicly traded IT companies in the US, Canada and Bermuda raised $4.51 billion through capital offerings in March, compared to $21.81 billion in February, according to S&P Global Market Intelligence data.
—Read the full article from S&P Global Market Intelligence
Kagan Research: Chip designer MediaTek looking past metaverse to 'ambient era' of computing
The Taiwan-based semiconductor company dominates in segments such as smartphones and smart TVs, but is looking for new opportunities as those markets mature. The challenge is overcoming its image as the industry's workhorse for midrange devices.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Supply Chain
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Global factory output inches higher as supply improvements offset falling demand
A marginal improvement in global manufacturing output was recorded for a third consecutive month in April, according to the JPMorgan Global Manufacturing Purchasing Managers' Index™ (PMI™) compiled by S&P Global.
—Read the full article from S&P Global Market Intelligence
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- The Week in M&A
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Oil, gas deal tracker: 2 large deals drive YOY increase in M&A value in April
CBRE buys Millman National; Morgan Stanley Private Equity buys RowCal Nation
$4.57B Arconic deal leads metals, mining M&A for week ended May 5
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The Big Number:
Trending
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Compiled by Alex Virtucio