Bloomberg - Evening Briefing - ‘The warning stage’

Some two dozen banks in the US had portfolios of commercial real estate loans in late 2023 that federal regulators felt would merit greater scrutiny. It’s a sign that more lenders may face pressure from authorities to bolster reserves amid a brewing commercial real estate crisis—a parting gift from the coronavirus pandemic and its aftermath. A trio of regulators publicly warned the industry last year to carefully assess any large exposures to debt on office buildings, retail storefronts and other commercial properties. At the time, authorities said they would pay closer attention to banks that rapidly piled up such loans worth more than three times their total capital. 

While New York Community Bancorp, which set off a cascade of stock drops in recent weeks, was the biggest US bank that came close to fitting that criteria, many smaller lenders went further. That’s because they amassed outsize concentrations even faster, according to a Bloomberg analysis. The three watchdogs—the Federal Reserve, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency—indicated that among those banks they would zero in on portfolios that had grown dramatically: at least 50% in the past three years. “We’re at the warning stage,” said Keith Noreika, who was acting comptroller of the currency in 2017. “There’s a light going off on the dashboard and now people are opening up the hood to see: Is it really wrong or do we just need to keep our eye on it?” —David E. Rovella

The sense of impending doom in commercial property is almost inescapable in the US and Europe, but evidence of actual disaster is scant, Paul J. Davies writes in Bloomberg Opinion. The losses to come over the next few years will likely be as varied and specific as the experiences of different banks so far seem to be. There will be some stories of real pain, he writes, but other owners nearby will be filling units and raising rents.

Japan’s economy unexpectedly slipped into recession after shrinking for a second quarter due to anemic domestic demand. The news prompted some central bank watchers to push back bets on when the nation’s negative interest rate policy will end. Gross domestic product contracted at an annualized pace of 0.4% in the final three months of last year, following a revised 3.3% retreat in the previous quarter, the Cabinet Office reported Thursday. The report showed both households and businesses cut spending for a third straight quarter as Japan’s economy slipped to fourth-largest in the world. Germany now has the world’s third-largest economy.

The UK also slipped into recession last year, showing Tory Prime Minister Rishi Sunak has so far failed to meet his pledge to grow the economy. Gross domestic product fell 0.3% in the fourth quarter, more than the 0.1% drop economists forecast, Office for National Statistics figures released Thursday show. That followed an unrevised 0.1% decline in the previous three months, meeting economists’ technical definition of a recession, or two consecutive quarters of contraction. 

Temenos AG plunged by nearly a third, slashing its market value by $2.1 billion after Hindenburg Research—famous for going after the empire of Indian billionaire Gautum Andani—took a short position and suggested serious flaws in the books of the Swiss provider of software for banks. The activist short-seller referred to “major accounting irregularities” and said Temenos “manipulated earnings,” practices it claims were an “open secret” within the company. The company rejected the allegations.

At least 1 million US homes are at risk because of something most Americans don’t know much about: dangerous power quality.  When homes experience stable power quality, it means the flow of electricity powering lights and appliances is being delivered at an even and predictable pace, ensuring electricity consumption is perfectly matched with supply every minute of the day. It’s the sudden surges or sags of voltage that can lead to disaster. Interviews with more than two dozen experts, along with exclusive data, public reports and regulatory filings, paint the picture of a country dealing with power quality that’s rapidly worsening, with potentially deadly consequences.

Kenya’s shilling rallied the most in almost 16 years as residents offloaded dollars after the nation’s successful Eurobond sale fueled speculation that a shortage of the US currency is over. The shilling headed for its eighth day of gains—putting it on track for an almost 10% appreciation against the greenback in the period. That’s seen the currency go from second-worst performer in Africa to the strongest in the year so far.

in Nigeria, at least three global conglomerates have announced they are exiting the nation, Africa’s most populous and its second biggest economy. GSK, Bayer and Sanofi are joining Procter & Gamble in departing. Last year, Unilever cut some of the products it was manufacturing there while Nestle has posted losses from its operations. At the heart of the exodus is a scarcity of the dollars international businesses need to repatriate earnings.

• The first of four criminal trials for Donald Trump begins March 25.
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• Pentagon cancels multibillion-dollar Northrop secret satellite program.
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When Mohammed Zina landed himself a job at Goldman Sachs, he chose to keep working weekend shifts at a local supermarket. It was an unusual side hustle for someone at the investment banking giant. But for Zina it was a chance to stay grounded, allowing him to work alongside “ordinary people,” as one witness would say. Prosecutors saw him differently, though. They alleged he was an ambitious risk taker who used privileged information to trade illegally. On Thursday, a London jury found the 35-year-old former analyst guilty of insider trading and fraud. He faces a prison sentence of as long as 10 years.

Mohammed Zina Photographer: Chris Ratcliffe/Bloomberg

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