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News of the Competition (01/11/2013)
MADISON, Wis. (1/11/13)

  • In the coming two years, decreases in accretable yield--mainly an accounting benefit that accrues from acquisitions of troubled banks--will cause net interest margins to drastically fall this year for 18 small- and mid-cap banks identified byKeefe, Bruyette & Woods, Inc., an investment banking firm headquartered in New York City (American Banker Jan. 9). Those banks' median margin is expected to drop 29 basis points in 2013, and 23 basis points in 2014. The issue is not exclusive to banks on that list--the problem will be confronted by any banks that acquired troubled financial institutions in the past few years, analysts  told the Banker. Although the yield has been a significant force propelling earnings for banks acquiring troubled institutions from the Federal Deposit Insurance  Corp. the past few years, as the loans are worked out or paid off, the benefit gradually shrinks, net interest margins get leaner, and profits decline as a consequence, the Banker said …
  • American International Group (AIG) said Wednesday it will not join a lawsuit against the U.S. government regarding its government-sponsored $182 billion financial crisis bailout (The New York Times DealBook Jan. 9). AIG's board of directors made the decision after a public hubbub occurred when it was reported Monday that the insurance company was considering whether to joins a $25 billion lawsuit--filed by former AIG CEO Maurice R. Greenberg on behalf of fellow shareholders. Greenberg had urged AIG to join the suit--a move that could push the government to enter settlement talks, the Times said (Jan. 7). Although the suit does not say that government help was unnecessary, it posits that the rescue was onerous because it took a 92% ownership stake in AIG, involved high interest rates and sent billions of dollars to AIG's Wall Street clients, the Times added ...


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