Smoke, mirrors and net interest margins

2 April 2024BanksAccounting, Barclays, derivatives, hedging, HSBCNick Dunbar

UK banks use accounting tricks and derivatives to boost their net interest margins, and HSBC is under pressure to follow suit.

HSBC’s overvalued Chinese bank

12 March 2024BanksAccounting, China, HSBCNick Dunbar

Experts say HSBC’s BoCom stake is overvalued by $12 bn. Risky Finance trawled through ten years of data to understand the giant’s accounting controversy.

JP Morgan swallows First Republic Bank

5 May 2023BanksAccounting, bank resolution, Federal Deposit Insurance Corporation, Federal Reserve, interest rates, JP MorganNick Dunbar

Six months ago we warned about held-to-maturity bond losses at US banks, but now the giants that hedged the risk are hoovering up depositors while unhedged regional banks are in crisis

Banks can’t hide from the pain of underwater bond investments

29 November 2022Banks, Risk CommentaryAccounting, government bonds, interest rate risk, investments, mortgage-backed securitiesNick Dunbar

The biggest US banks amassed $2.2 trillion of government and mortgage bond investments, but now the portfolios are underwater and banks must hold them to avoid recording losses. This will have a lasting effect on deposits and the impact of Fed policy.

The adventures of CECL in banking land

27 May 2020BanksAccounting, CECL, corporate loans, IFRS 9, loan loss provisions, retail loansNick Dunbar

Should accounting be independent of bank supervision? The arrival of IFRS 9 provisioning at the height of the Covid-19 crisis has exposed a three way tussle between auditors, regulators and bank management.

Barclays LOBO waiver forestalls council legal threat

16 March 2017Municipal FinanceAccounting, Barclays, interest rate risk, LOBOsNick Dunbar

Why did the bank unilaterally waive LOBO provisions in loans last year, losing as much as £1 billion in the process?

Bank leverage and the lessons of the crisis

19 March 2013Articles, BanksAccounting, Cyprus, deposits, leverage ratiosNick Dunbar

"The final banking crisis, which terminated in the banking holiday early in March 1933" - So begins a dark passage in Milton Friedman and Anna Schwartz's Monetary History of the United States, which last Friday arose from ancient slumbers in the eastern Mediterranean. The turmoil sparked by the proposed tax on Cyprus bank depositors makes…

Back to the future

22 December 2010ArticlesAccounting, eurozone, pensionsNick Dunbar

23rd November 2010 Policymakers trying to find a fair resolution to the current European debt crisis might benefit from the insights of a taxpayer beamed back in time from 2050. That may be impossible, but economists are attempting the next best thing by discounting pension promises and tax revenues and comparing them with today's more…