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The Zacks Analyst Blog Highlights: Wells Fargo, Citigroup and JPMorgan

Zacks Equity Research
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For Immediate Release

Chicago, IL – May 21, 2018 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Wells Fargo WFC, Citigroup C and JPMorgan JPM.

Here are highlights from Friday’s Analyst Blog:

Bank Stock Roundup: Wells Fargo Shakes Investor Confidence Again, & More

Over the last five trading days, banking stocks put up a lackluster show. Though improving U.S. economic data and rising 10-year Treasury bond yields were positives, investors were a bit concerned on the time uncertainty related to the easing of banking regulations and soft loan growth. Nevertheless, strong economy and increasing commodity prices aided a rise in bond yields followed by mortgage rates.

Mortgage rates improved to 4.61%, recording a seven-year high since May 2011, as the 10-year Treasury yield hit 3.122%, the highest level since July 2011, on a sell-off recorded in the bond market. However, homeowners seeking lower rates for refinancing are definitely big-time losers. Increases in mortgage rates will limit refinancing activity.

Further, litigations and probes pertaining to banks’ past shoddy activities dominated headlines. The law enforcement agencies are also on track to work to resolve such issues and avoid lengthy litigations.

Important Developments of the Week

1. Wells Fargo is in trouble again as its employees have been accused this time for modifying or adding false information related to the bank’s corporate customers, without bringing to their notice, in order to meet a regulatory deadline. Despite strict regulatory scrutiny and promises made by the bank to improve internal controls, disclosures of such misconducts have shattered the bank’s image.

Per the report, the scandal took place between late 2017 and the first few months of 2018. Employees at its Wholesale Banking segment have added or changed some personal information such as birth dates, social security numbers and addresses for clients it dealt with during that period.

Wells Fargo has been facing a Jun 30 deadline to comply with a regulatory order related to anti-money laundering controls. In an internal investigation, Wells Fargo became aware of these misdoings. The matter has been brought up with the Office of the Comptroller of the Currency, who is currently investigating the matter.

2. Citigroup has been fined $7.3 million by Hong Kong’s securities regulator. The Securities and Futures Commission said that the bank had failed to discharge its duties of conducting proper due diligence as a sponsor for China-based Real Gold Mining Ltd.’s initial public offering (IPO) in 2009.

The mining company has been banned from trading since 2011, after irregularities were discovered in its accounting system. The SFC noted that the bank “failed to conduct adequate and reasonable due diligence on Real Gold’s customers and properly supervise its staff when carrying out the sponsor work on Real Gold’s listing application.”

3. With an aim to provide access to its sophisticated alternative investment strategies to a broader client base, JPMorgan is reducing the minimum requirement needed to participate in various alternative investment strategies that the company’s asset-management arm offers. The new limit has been set at $100,000, down from the previous requirement of $10 million. This reduction will expand access to certain J.P. Morgan Global Alternative strategies to the masses, which was earlier restricted only to the institutions and the ultra-rich.

For this, J.P. Morgan Asset Management, the asset-management arm of the bank has agreed to use the technology of iCapital Network Inc. — a financial technology platform. Per the agreement, J.P. Morgan Asset Management will partner with iCapital so that high net worth investors and their advisors can access certain J.P. Morgan Global Alternative strategies by using iCapital’s digital platform.

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