Weekly Global News Wrap: US regulator rules banks cannot refuse lending to certain sectors; JPMorgan beats Q4 2020 profit expectations

And Goldman Sachs mulls deals to boost consumer banking unit Marcus.

From Reuters

A leading US bank regulator has finalised a rule that prohibits large banks from refusing to lend to certain business sectors, after Republicans voiced frustration at what they saw as lenders’ reluctance to finance gun makers and energy firms.

The rule, proposed in November by the Comptroller of the Currency, applies to banks with more than $100b in assets and stipulates that they must show legitimate business reasons for not providing services to certain borrowers. It has been criticised for being “unworkable” and “politically motivated”.

The rule has been met with broad condemnation, with consumer groups, Democrats, and the banking industry in rare alignment in opposition. Banks say the rule takes away their ability to make business decisions for themselves, and places it in the hands of the government.

From CNBC

JPMorgan Chase beat analysts’ Q4 2020 profit estimates on record trading results and a boost from releasing money previously set aside for loan losses.

The bank posted earnings of $3.79 a share, exceeding the $2.62 per share estimate of analysts surveyed by Refinitiv. It would have beaten estimates even without the 72 cent per share boost from credit-reserve releases. The firm generated $30.16b in revenue, exceeding the $28.7b.

JPMorgan CEO Jamie Dimon cited the news of effective COVID-19 vaccines and another round of government stimulus as reasons for taking down his bank’s reserves. The firm said it released $2.9b from its pile of cash set aside for expected loan defaults in the quarter, resulting in a $1.9b boost after about $1b in charge-offs.

From Reuters

Goldman Sachs is considering acquisitions to bulk up its consumer banking unit Marcus after it slowed loan and deposit growth at its fledgling business last year, three bank sources said.

Goldman management has put an “extremely high” bar for any deal to be large and transformational, the sources cautioned. One of the sources said the bank had M&A bankers crunching numbers on “different ideas”.

The pandemic has strengthened management’s belief that online activity will be central to future growth within the industry and branches will continue to have a diminished role, the source added.