Japan unexpectedly slipped into a recession at the end of the last year, losing its position as the world’s third-largest economy to Germany.
Government data revealed that Japan’s gross domestic product fell by 0.4 per cent in the final quarter of 2023 — defying market expectations for a 1.4 per cent increase — following a 3.3 per cent fall in the previous three months.
The unexpected contraction may postpone a much-anticipated decision from the Bank of Japan to end its negative interest rate policy and raise the cost of borrowing. Negative interest rates have been a feature of Japan’s economy since 2016, as the central bank attempted to boost spending and lift the economy out of decades of deflation. However, these negative rates have also contributed to the depreciation in value of the yen, making it less attractive to global investors. Most analysts had anticipated the BoJ to abandon its negative rates policy in either March or April.
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On Thursday, Wells Fargo announced the termination of a 2016 consent order served by the Office of the Comptroller of the Currency relating to sales practices misconduct. CEO Charlie Scharf noted it as the sixth consent order closed since 2019.
The consent order was put in place after a series of newspaper and government investigations exposed a toxic sales culture at the bank. Under pressure from their supervisors, Wells Fargo employees sold unnecessary products to customers and opened an estimated 3mn bank accounts and at least 500,000 credit card accounts that customers did not request.
Yesterday’s announcement resulted in a more than 6 per cent increase in Wells Fargo’s shares; however, the bank still has eight open consent orders and is operating under a $1.95tn asset cap imposed by the Federal Reserve in 2018, preventing its growth until regulators determine that it has fully addressed its issues.
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JPMorgan and State Street are pulling their asset management businesses out of Climate Action 100+, a global investor coalition that uses shareholder influence to pressure polluting companies to take action on climate change. BlackRock, the world’s largest asset manager, is reducing its participation by transferring it to its international arm.
This development is a major setback to Climate Action 100+’s efforts to influence companies on global warming issues. The exits mean that none of the world’s five largest asset managers fully support the initiative.
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NatWest has announced its highest annual profit since just before the financial crisis in 2007. Bolstered by elevated interest rates, the UK lender reported a 20 per cent increase in pre-tax profits to £6.2bn for the year ending in December.
It also confirmed press reports that interim head Paul Thwaite would take over as its permanent CEO, in anticipation of a sale of its government-owned shares.
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Barclays is in the early stages of considering an acquisition of Societe Generale’s UK private bank, Kleinwort Hambros, according to Reuters. Lloyds Banking Group, along with wealth managers Rathbones and Raymond James, are also among the parties invited to bid for the business. Rothschild & Co has been advising SocGen on the potential transaction.
Kleinwort Hambros, with more than $15bn in assets as of 2022, could be valued at up to £700mn if a sale takes place. SocGen is also reportedly exploring options for the sale of its private banking business in Switzerland as part of a move to reduce costs and free up capital.
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Kenya’s currency experienced its most significant rally in nearly 16 years yesterday, as its citizens divested from US dollars following the nation’s successful sale of eurobonds, prompting speculation that a shortage of its US currency reserves may be over, as reported by Bloomberg,
The Kenyan shilling is poised for its eighth consecutive day of gains, representing an almost 10 per cent appreciation against the US dollar during this period. The Kenyan shilling’s recent performance has propelled the currency from being the second-worst performer in Africa to emerging as the strongest in 2023 so far.
