The Zacks Analyst Blog Highlights: Citigroup, Goldman Sachs Group, JPMorgan Chase, Bank of America and HSBC Holdings

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Sep 09, 2014, 09:30 ET

CHICAGO, Sept. 9, 2014 /PRNewswire/ -- 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 the Citigroup Inc. (NYSE:C-Free Report), Goldman Sachs Group, Inc. (NYSE:GS-Free Report), JPMorgan Chase & Co. (NYSE:JPM-Free Report), Bank of America Corp. (NYSE:BAC-Free Report) and HSBC Holdings Plc (NYSE:HSBC-Free Report).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Monday's Analyst Blog:

Bank Stock Roundup

While banks encountered fresh regulatory issues, active restructuring activities and resolution of some legacy issues were more prominent in the last five trading days. Citigroup Inc. (NYSE:C-Free Report) was in the limelight for its restructuring activities to improve operational efficiency. Further, optimism surrounded the industry as regulators issued a clean chit to banks related to conspiracy in hoarding aluminum stock to push up prices.

On the other hand, the announcement of stringent regulations related to liquidity kept investors concerned as this might mar lending activities of banks to some extent.

Further, recent lawsuit related to manipulation of ISDAfix rates against banks has increased legal hassles. Nevertheless, the law-enforcement agencies are trying to resolve such issues in order to avoid lengthy litigations.

(Read last to last week's developments: Bank Stock Round up for Aug 25, 2014)

Recap of the Week's Most Important Developments:

1. Amid heightened regulatory and political scrutiny on banks' ownership of the physical commodity business, the latest dismissal of an antitrust lawsuit brings relief for Goldman Sachs Group, Inc. (NYSE:GS-Free Report) and JPMorgan Chase & Co. (NYSE:JPM-Free Report), among other banks. On Friday, U.S. District Judge Katherine B. Forrest disposed the suit, which alleged that the defendants conspired in hoarding aluminum stock to push up prices. (Read more: Wall Street Banks Get Rid of Aluminum Price Fixing Suits)

2. Adding to the already stringent capital regulations, U.S. banks now face another rule, which may hamper their lending activities to some extent. The Federal Reserve, along with the Federal Deposit Insurance Corp. (FDIC) and the Office of the Comptroller of the Currency (OCC), has approved the new liquidity rule. Per the Liquidity Rule, big banks (with at least $250 billion in total assets or $10 billion of foreign exposure) must hold high quality liquid assets (HQLA) that can be easily converted in cash that is equal to or greater than the amount required to run their operations for 30 days in the event of a financial crisis. Starting the phase-in from Jan 1, 2015 the banks must be fully compliant by 2017, and calculate their liquidity on a daily basis.

Further, the rule requires even the comparatively smaller banks (with total assets of at least $50 billion) to hold HQLA that can be used for 21 days. These banks will start phase-in from Jan 1, 2016 and will get two years to fully comply with the rule, calculating liquidity on a monthly basis. (Read more: Banks Face New Liquidity Rule: Lending to Feel Pain?)

3. Legal hassles continue for major global banks. A lawsuit related to alleged manipulation of ISDAfix rates, a benchmark used for setting rates for interest rate derivatives, commercial real estate mortgages and structured debt securities, has been filed in the U.S. District Court, Southern District of New York.

The lawsuit filed by the Alaska Electrical Pension Fund sued 13 global banks including JPMorgan, Bank of America Corp. (NYSE:BAC-Free Report), Citigroup and HSBC Holdings Plc (NYSE:HSBC-Free Report). The lawsuit claimed that banks colluded to rig ISDAfix rates by rapidly executing trades just before the rate was supposed to be determined and delaying the processing of trades until it was fixed. This allowed the banks to manipulate payments to investors on derivative trades. This adversely impacted approximately $170 trillion worth of financial instruments tied to ISDAfix rates.

The lawsuit seeks unspecified damages for breaking the U.S. antitrust and commodities laws. (Read more: 13 Global Banks Sued by Alaska Fund for ISDAfix Rigging)

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

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