Word: banking
(lookup in dictionary)
(lookup stats)
Dates: all
Sort By: most recent first
(reverse)
Consider that the average yield on a one-year CD is 2.39%, the same as it was in mid-August, according to a weekly survey by Bankrate.com, even though the prime rate - the rate at which banks lend to their most creditworthy customers - has fallen from 5% to 4%. That means a bank that used to borrow at about 2.5% and lend at 5% now borrows at 2.5% and lends at 4% - an entire percentage point has been stripped from the bank's ability to make money. More than half of all banks saw their net interest margin - a measure...
Taking the lead in pricing up the market are the institutions most battered by the credit crisis and flagging economy. Among the companies offering the highest yields on CDs are GMAC, the financing arm of the carmaker GM; Corus, a Chicago bank that has lost substantial money on construction loans; Wachovia, the Charlotte, N.C., bank whose sale to Wells Fargo was brokered by regulators in October; and the bank affiliate of the insurance company AIG, which the Federal Government started bailing out in September...
...even banks on more solid financial footing and those that sell themselves on qualities other than high rates are finding they have to keep up. "People who bank with us aren't going to bank with us because we're the highest rate on the street, but if we're too much under the market, at some point they'll leave," says Steve Andrews, president and CEO of the Bank of Alameda. The San Francisco Bay Area bank has been forced to keep rates artificially high, Andrews says, as one flailing competitor after another - IndyMac, Washington Mutual, Downey Savings & Loan...
...more competition is on the horizon. In the past two months, Goldman Sachs, Morgan Stanley, Raymond James, GMAC, American Express and business financier CIT have all applied to convert into bank holding companies, partly in order to be able to get access to cheap funding through deposits. GE Capital, the finance arm of GE, is planning on doubling its deposit base, which it garners through broker-sold CDs, to $81 billion next year. Goldman Sachs is on track to open an online bank. Morgan Stanley, which already has $36 billion in deposits, is selling billions of dollars' worth...
...Banks looking to invest the money they raise through deposit-gathering are finding that the numbers barely work at all. Easton Bank's Menzies, for example, recently lost a bid to get $5 million in cash from a local government in exchange for the bank's issuing the government a one-year CD. The winning bidder agreed to pay the government 3.72%. Menzies had offered 2.69%, which he considered a high rate, one that probably would have netted him just a 0.04- or 0.05-percentage-point profit after he rolled the money into an investment like a Fannie Mae mortgage...