Clearing up in Saxony after storm “Kirsten”

The storm “Kirsten” caused some damage in Saxony. The police and fire brigade had to move out mainly because of fallen trees and construction fences.

So fell in Scheibenberg im Erzgebirge a tree on a house roof. In Chemnitz Several trees buckled on a tram route, so that traffic had to be temporarily stopped. The Vogtlandbahn had to temporarily cover the distance between Falkenstein and Zwickau Block due to storm damage and use buses. In Leipzig three cars were damaged by fallen trees.

Wind affects fire fighting

The game gate in Chemnitz-Oberrabenstein will be closed on Thursday due to the storm low. The employees of the zoos want to remove the storm damage.

Branch crashes into the car while driving

With the horror, a 31 year old motorist is in during the storm Plauen got away in Vogtland. According to the police, he was unharmed when he was out on the road on Wednesday and a falling branch fell on the roof of his car. The police estimate the damage to the car at around 4,000 euros.

Parasol flies through the air

Also in East Saxony the fire brigade had to remove a lot of dead wood. About 40 missions were counted. In Pulsnitz snapped a phone line. In Bautzen a passer-by was slightly injured by a fallen flowerpot. In White water a restaurant umbrella flew through the air and damaged a car.

30 missions in northern Saxony

The volunteer fire brigades in the district had to do 30 missions North Saxony move out, said the district office. In the Kleine Gasse in Döbernitz Near Delitzsch For example, a tree fell on a carport. The Klosterstrasse had three trees Angry blocked at Mügeln. Also around Collm near Wermsdorf trees fell on the streets again and again on Wednesday. The volunteer fire brigades from Beilrode and Dobrichau took care that the wind did not have old hot spots of a forest fire in mid-August near the railway line rekindled.

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déconfinement long-term care facility, a new peak in Iran… the balance sheet of the Monday, 1st June

► The déconfinement long-term care Facility planned for Friday, June 5

The directors of institutions hosting elderly people will be able to put in place from Friday 5 June “a resumption of the visits of the relatives,” when “the health situation permits “, including the ability to bring miners, announced on Monday 1 June the ministry of health.

→ RE (READ). Visits in long-term care facilities : “The risk of the virus remains higher than the risk of decompensation “

The resumption of visits from relatives can be “more than two people at once “ on the outside, and to a maximum of two people in a room. As long as they wear a mask, the miners will be able to participate in these visits, that it will not be under the supervision of a member of the staff of the institution.

Before the announcement of the ministry, the AD-PA, association of directors of long-term care facilities had claimed in a press release that residents of long-term care facilities “to be able to benefit (them) also easing, in the framework of the déconfinement of the general population,”.

► United Kingdom : weaker balance sheet and daily re-opening of schools

While the return of a party of schoolchildren on Monday 1er June worried strongly parents, teachers ‘ unions, and local communities, the United Kingdom recorded its lowest balance daily with 111 deaths.

→ RE (READ). United Kingdom : the health system faces a “tsunami” of patients serious

The reopening of schools and the student home from 4 to 6 years, and from 10 to 11 years of age were wanted by the authorities in the framework of the déconfinement progressive. Two million students have found their mates. The national union of education calls for more “tests and robust scientific evidence “ for “reopen the time “and the Association of School and College Leaders is concerned “logistical problems are important “.

The United Kingdom, with more than 39, 000 deaths tested positive, is very grief-stricken by the pandemic, and, according to several comparative studies, the first in terms of excess mortality compared to the population.

► A doctor close to Berlusconi stirs controversy

The famous physician and emergency physician Alberto Zangrillo, known as the doctor of Silvio Berlusconi, and the director of the hospital San Raffaele of Milan, has assured that the new coronavirus had gone to Italy, and that it was time to stop “terrorize “ unnecessarily the Italians. “In reality, the virus no longer exists clinically in Italy “, he said Sunday at the television RAI.

→ RE (READ). In Italy, 19 000 additional deaths related to the coronavirus ?

His comments have immediately sparked controversy. The boss of the national Board of health, Franco Locatelli, said “bewildered “ by the words of Dr. Zangrillo. “Just look at the number of new positive cases confirmed each day to see the persisting circulation in Italy of the new coronavirus “, he said. This number fluctuates between 300 and 500 new infections daily. Sunday, may 31, 355 new cases were registered, most of them in Lombardy.

The new coronavirus has been nearly 33 500 deaths in three months in Italy, a time the epicenter of the disease in Europe after its appearance in China in late 2019. The North, in particular the Lombardy region (of which Milan is the capital), has focused the majority of cases.

► New peak in Iran

Iran announced on Monday that nearly 3,000 new cases in the last 24 hours. This is the highest increase recorded in the last two months in the country. “People seem to think that the coronavirus is finished “ but it is “far from being “ and “we could attend at any time at a (another) pic dangerous “warned the minister of health, Saeed Namaki.

► The Latin America and the Caribbean account for over a million cases

The number of confirmed cases of infection with the coronavirus, has exceeded Sunday, may 31, the million in Latin America and the Caribbean, half of which in Brazil. Since the beginning of the epidemic, a total of 1 016 828 cases of Covid-19 have been formally documented in Latin America and the Caribbean, of which 514 849 in Brazil, by far the countries of the region the most affected by the disease.

Brazil is, with 29 314 dead, the fourth country in the world in terms of mortality due to the new coronavirus behind the United States (103 781 deaths), the Uk (38 376) and Italy (33 340). With 164 476 infected persons, Peru is the second country in Latin America the most affected.

→ RE (READ). Coronavirus : the amazonian peoples ” in danger of extinction “

Pope Francis has lamented, at the end of his prayer Sunday, this balance is particularly terrible for the indigenous peoples of the Amazon, “particularly vulnerable “.

► In France, the phase 2 of the déconfinement is published in the official journal

Organization of transport, shops, schools and even weddings, the wide port of the mask : a decree specifies the measures for the second stage of the déconfinement from Tuesday, 2 June, and plans, if necessary, the possibility of reconfinements located.

If travel will be allowed without limit as from the 2nd of June in the whole of the territory, the decree stipulates that the prefect may, if necessary, to new restrict in order to combat the spread of the virus, the scale of departments or even way more localized. Similarly, the businesses, schools, or institutions of worship could then be closed again.

→ RE (READ). Édouard Philippe, and the déconfinement : “freedom will become once again the rule “

The port of the protective mask is imposed on “any person of eleven years or more “ on trains, planes, ships, in transit and also in train stations and airports.

Weddings may be celebrated : the decree authorizes the public reception for the “celebration of marriage by a civil registrar “.

Finally, the decree caps the price of gels or hydro-alcoholic solutions, as well as masks to “95 cents of euro ( € ) all taxes included per unit, regardless of the mode of distribution “.

► SNCF : a return to 100 % of the offer in mid-June

The secretary of State for transport, Jean-Baptiste Djebbari, said Sunday, may 31, on BFMTV that “100 % of the supply “ the SNCF would be marketed from the “mid-June “.

“We remove the restriction of a seat on two “ occupied, which had been imposed on the SNCF to comply with the rules of detachment, said Jean-Baptiste Djebbari, asking the public operator of “control of its prices “ during the summer months.

► Overseas, and economic impact over 10 years

The economic consequences of the confinement overseas “are likely to be felt over the next ten years “warning , this Monday 1er June the Association of ITC overseas (ACCIOM), which evaluates to “60 000 “ the number of jobs under threat in these territories.

→ RE (READ). Coronavirus : in Mayotte, the peak of the epidemic is still to come

The association said that if businesses ultramarines “not able to find a normal activity that 1er September “the economic impact, which is already very heavy in overseas, “the double up “. The overseas have seen on average “a loss of revenue of the order of 12 million euros per day of confinement “. According to the geographies, these losses range from 5 (French Guiana) to 24 million euros (The Meeting).

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Growing doubts about official death toll in Russia

Russia is entering its deconfinement phase in full doubt about the mortality of the coronavirus. ” We are ready “Vladimir Putin said Monday, May 11, when his spokesperson said he was infected with the virus himself. Wishing to put the Russians back to work after a month and a half of forced unemployment, the head of the Kremlin leaves the regions to decide.

With more than 230,000 cases (more than in the United Kingdom, Spain or Italy), Russia is today the second most affected country in the world in number of infections behind the United States. But, to reassure, Vladimir Putin explained that the intensification of screening (soon 300,000 tests per day) and the mobilization of hospitals (130,000 hospital beds adapted to Covid-19) allow to launch this deconfinement “à la carte “

These are precisely the same arguments that the authorities regularly put forward to explain the very low mortality rate from Covid-19 in Russia: 2,116 deaths on Tuesday May 12, or less than 1%.

Government pressure on hospitals

Very early on, critical voices questioned this figure. Persistent, the doubt has just increased, with the publication of excess mortality figures in Moscow, the main focus. The capital register detailed 11,846 deaths in April. This is almost 20% more than the same month in the past ten years. “This excess mortality in Moscow is explained by the deaths due to the coronavirus, but also by the indirect damages of the pandemic: the health system, concentrated on Covid-19, has neglected other pathologies”, says Nikolai Malishef, an epidemiologist in Moscow, who does not question the low mortality of the coronavirus.

Pending national statistics in June, the health ministry has already said that March’s nationwide mortality was 0.5% higher than last year, but that over the January to March quarter had decreased 3.8%.

Minimize coronavirus-related death figures

This accounting is to be taken with even more caution as the situation varies between hospitals. All under high tension, they are receiving additional funds to treat people with the virus, but authorities are suspected of pressuring them to minimize the death toll. In the press, there has been an increase in the testimony of doctors surprised to not see on the local registers all their patients who died of the virus. In Dagestan, a hotbed of the epidemic, a doctor expressed doubts on Facebook the day when the official report announced 11 deaths in his region when his only intensive care service counted 12 …

In the interests of transparency, some hospitals have started to keep two reports: for deaths from Covid-19 alone and for deaths from other pathologies – the virus being an aggravating circumstance – de facto excluded, in several local registers, from assessment of the pandemic.

In its directives, the ministry of health demands not to mention Covid-19 as a cause of death if there has not been “Clinical manifestations and pathological changes, particularly in the lungs”, because of the virus. The authorities, therefore, hold on to the distinction between coronavirus and pneumonia. So in Moscow, the number of pneumonias in early 2020 increased by more than 1.5 times. And that, in the registers, some dead people of the virus find themselves decked out with the mention “double pneumonia”.

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The end of the special stage is postponed again

Munich / Frankfurt The completion of the special audit at Wirecard shifts again. “Wirecard AG was recently informed by the auditing firm KPMG that KPMG will present the results of the ongoing special investigation on Monday, April 27, 2020,” the group said on Wednesday evening.

“In the remaining days, incoming data should be processed and taken into account,” is the official reason for the postponement. From an investor’s perspective, it was particularly important: “No evidence was found for the publicly alleged manipulation of the balance sheet,” the group continued.

Specifically, in the four business areas covered by the audit order, third-party partner business, pre-financing of receivables and the activities in India and Singapore, “there have been no substantial findings that would have required correction for the annual financial statements in the 2016, 2017 and 2018 investigation period.”

KPMG has been checking the balance sheets of the payment service provider from Aschheim near Munich since October 2019. This was preceded by a year-long debate on Wirecard’s business practices. For the final report now announced for Monday, Wirecard again promises to make it available on the homepage.

Serious allegations

Numerous serious allegations prompted the special audit. Since January 2019, the British business newspaper Financial Times (FT) has published a series of articles on opaque contracts and dubious partners of the group. Above all, the inconsistencies in the important Asian business raised bad suspicions: Has Wirecard manipulated its balance sheet?

After the pressure had risen for months, Wirecard attempted the exemption in October – and commissioned KPMG’s auditors to carry out a special audit of the balance sheets from 2016 to 2018. Today’s postponement represents the second extension of the audit period.

The group had already presented a partial report of the test results at a late hour on March 12. At that time, however, the auditors only achieved partial information about the accounting methods at Wirecard.

They only brought light into three of the four sub-areas examined. The auditors made initial relief statements on two company acquisitions in India in 2015, on financial irregularities at the Asian headquarters in Singapore and on the area of ​​pre-financing of receivables, also known as “Merchant Cash Advance” (MCA). The group defines MCA as loans to small retailers who use the Wirecard platform for their payment transactions.

“From today’s perspective, these parts of the special investigation did not result in any substantive findings in these investigation areas, which would lead to the need for correction for the annual financial statements in the investigation period 2016, 2017 and 2018”, Wirecard had announced in March.

Problematic third parties

At that time, the auditors did not allow themselves to make any statements regarding the particularly important fourth point: the controversial third-party business – i.e. the question of which parts of Wirecard’s sales were generated with the help of external companies.

In October, the FT had posted clear doubts about cash flows via partners in Dubai and Ireland in a ten-page article. The report was enriched by internal and external documents. The focus was on Wirecard’s partner Al Alam from Dubai. This is a so-called “third party acquirer”, which handles the payment transactions in countries where Wirecard does not have its own licenses.

The essence of the allegations: According to FT, Al Alam should have generated around half of its consolidated earnings before interest, taxes and depreciation in 2016. According to the newspaper, the company from Dubai was responsible for sales of EUR 265 million and an “Ebitda effect” of EUR 173 million, according to internal documents.

According to the FT, the business of 34 key Wirecard customers was processed through Al Alam in 2016. They came from the United States, Europe, the Middle East, Russia and Japan.

As a result, the newspaper said it had tried to contact all of these business partners. Accordingly, 15 of them had never heard of the Al Alam name, six did not answer, five could not be identified, and eight of them had already stopped doing business.

Wirecard boss Markus Braun had always denied all these allegations. Now he should feel confirmed by the statement approved by KPMG that no “evidence of balance sheet manipulation” was found in the third-party business either. The mood in the group is good, reports a Wirecard manager. But KPMG wanted to be very precise.

Time-consuming examination

The special test was carried out with great effort. In the meantime, around 40 auditors rummaged through the balance sheets. These had already been approved by the long-standing group auditor EY, whose care, however, was in doubt. The audit is tricky for KPMG: Society knows that its reputation is now at stake.

Today’s “Day X” was planned for Wednesday, the moment of truth. Management hoped to finally draw a line under the accusations of the past with the publication of the test report. The fact that the publication is now postponed a second time shortly before the end after half a year of the exam shows how high the stakes are – and how far the Dax-Newcomer Wirecard is still far from the standard of other large corporations.

Why the relocation? According to insiders, KPMG also checked incoming numbers from third parties earlier this week. Wirecard now officially justifies the extension. According to groups of companies, the data with a probability bordering on certainty did not contain any greater risk for the balance sheet – nevertheless, they are not irrelevant and must be checked by KPMG.

Apparently, it is not only late-arrival data sets that cause problems. According to insiders, Wirecard is also struggling with KPMG to clarify the wording of the test report. There is relief in the most important – on the balance sheet – points, such as the allegation of so-called roundtripping, the invention of sales. Nevertheless, the auditors had made numerous negative findings, for example regarding compliance and internal processes.

Now the question is how serious the corresponding complaints in the test report were. The KPMG auditors formulated significantly more negative than expected, it is said from corporate circles. The corresponding talks continued.

Change in the supervisory board

Wirecard’s new Chairman of the Supervisory Board, Thomas Eichelmann, oversees the review. According to two people familiar with the matter, there is a change on his committee. The previous supervisory board member Susana Quintana-Plaza is promoted to the operational board of the Portuguese oil and gas group Galp Energia and leaves the Wirecard committee at the request of the Galp owner family.

The successor is apparently already certain: A “very well-known personality” should therefore take the place of Quintana-Plaza and strengthen the competence in the control committee. First, the “Wirtschaftswoche” reported on the possible exit. This should not be related to the special test.

With the coming Monday there is now a new end date for the KPMG audit. However, a third extension of the review period is hardly possible: Wirecard plans to publish its 2019 annual balance sheet on April 30. And the group auditor EY apparently does not want to test this without the final KPMG assessment for the special audit.

The payment processor can no longer afford to make mistakes. The KPMG report is sure to attract the keen attention of investors, analysts and regulators. According to insiders, he is also being studied closely by the financial regulator Bafin.

More: Alleged balance sheet fraud, dubious partner: Wirecard has been at the center of criticism for over a year.

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Amateur football: “A club like AS Saint-Priest, you can’t shoot it like that!”

Stade Jacques Joly of AS Saint-Priest, March 7. The pennant team (in N2, fourth echelon of French football) narrowly bowed at home against RC Grasse (2-3), and fell to 14e place (out of 16) in the ranking. At this moment, the players do not know it yet, but they have just disputed their last meeting of the season. Worse: this precise defeat condemns them to relegation to national 3, while there are still nine games to play on the calendar. Consequence of the decision made by the French Football Federation (FFF) last Thursday to stop net the amateur championships due to the epidemic of Covid-19, by freezing the classification on the day of the interruption while maintaining the system of three ascent-descent… only for passages from N2 to N3 and vice versa For all other championships, there will only be one ascent, one descent. “I’m scared, it’s an aberration. We add woe to woe ”, fulminates Patrick Gonzalez, president of this popular club in the Lyon suburbs.

Already hard to swallow, the defeat turns to undrinkable. During the first 21 days, Saint-Priest was almost never relegated and had just faced the formations at the top of the table. “The calendar was much more favorable for us then. The following weekend, we played Marignane, one point ahead of us, and we recovered six injured », rages the leader, for whom a white season – the championships purely and simply canceled, with no rise or fall between divisions – would have been more logical. Definitely poissard, AS Saint-Priest: its team B, in regional 2 (7e division), first at the truce, third at the time of the glaciation, will not be promoted.

Sad irony of fate: the leader san-priod had co-written two successive letters at the beginning of the month with Eric Thomas, president of the French Association of Amateur Football (Affa), for the attention of Noël Le Graët, so that several measures are taken in order to best manage the end of the 2019-2020 fiscal year. Approved in the meantime by some 3,000 amateur clubs, the letters went unanswered. “The instances [districts, ligues, fédération, ndlr] never consulted us, castigates Patrick Gonzalez, for five years at the helm of the club. Now we’re going to open the cages, let go of the lions. ”

Three-quarters less employees next season

Such an unexpected descent would be catastrophic for the club. From 1.050 million euros, the budget would drop to around 500,000 euros. A drop of half to be linked with those of the town hall grants (300,000 euros today) and the withdrawal of many sponsors. Without forgetting the aid from the Federation, divided by 4 in the event of demotion (from 35,000 to 8,000 euros, allocated to team travel every weekend).

At the same time, an amateur club like Saint-Priest pays a subscription of 70 euros for each of its 650 licensees, or around 45,000 euros which are found each year in the coffers of the FFF. To this must be added the costs of arbitration (20,000 euros), training, but also fines (around 10,000 per year) … “A large amateur club pays between 80,000 and 100,000 euros a year [à la FFF]”, summarizes Patrick Gonzalez.

If the demotion is activated, the manager will only be able to keep a quarter of the twenty employees currently employed by the association. “We risk stopping training, but also closing sections, teams.” The female structure, strong with 80 people and growing, will also have to review its ambitions. He will no longer be able to pay all of his educators “Who also have training courses which are excessively expensive”, explains Robert Mouangué, sports director since the position was created in 2017.

Up to now, Saint-Priest is one of the only two structures in the eastern part of Lyon to be labeled Eite (the highest level for youth training). The reputation of “blood and gold” as a nursery in the Lyon suburbs is no longer to be proven (Luis Fernandez, Youri Djorkaeff or more recently Nabil Fékir have shaped their game there as a junior). Over the decade, an average of fifteen players signed up each year in professional clubs (18 in 2019). “Many L3 players sometimes have as many as five of our former players, adds Robert Mouangué. So a club like AS Saint-Priest, you can’t shoot him like that. “

A pledge of support that extends beyond the lawns. Visits to museums, cleaning of neighborhoods, awareness of waste treatment in collaboration with local missions: several socio-educational activities allow young people to also become “Good citizens of tomorrow, underlines Robert Mouangué. Without forgetting the internships and training that we find for older children. All this is threatened. Some kids will have to go back to neighborhood clubs with even lower means

It was heartbreaking for Franck Valente, member of the recruitment unit for under-19s for seniors and assistant coach for under-20s. For three years in the staff, this former san-priod player from the 90s is aware of the difficulties that could be those of the club. His included, from next season. “If I am kept in my post, I will not have the same means. And it’s not as easy to attract players in N3 as in N2 “, assures this territorial agent at Lyon-Métropole, which until then pocketed 350 euros per month for its activity within the club. A little more “who [m’]help for the end of the month, like many “.

Close the budget “at all costs”

Despite everything, clubs like Saint-Priest must find the financial resources necessary to be on track for the two deadlines in June. The first, the payment of contributions to the FFF on June 11. For Saint-Priest, the invoice amounts to 500 euros. A reasonable amount, “Because we paid everything in advance”, crop Patrick Gonzalez. “But a lot of small clubs are not in this case and can no longer make money by then. How are they going to do it? ” More worrying, the closure of the budget before the 30th of the same month, date on which the club must go to Paris to present its annual balance sheet to the National Directorate of Management Control (DNCG), the financial police of football. The balance sheet must be balanced, under penalty of sanctions (demotion, for example).

Problem: “Many partners who were supposed to give us money between March and June are at the bottom of the hole. Their employees are on partial unemployment, how do you want them to help us? ” wonders Patrick Gonzalez, who estimates that to be afloat today, he would have to recover between 150,000 and 200,000 euros. A sum that was to be provided in part by raffles and other end-of-year youth or inter-company tournaments, all canceled since. Impossible to count on the traditional recipes of the refreshment bar, after the redevelopment of the sports complex by the town hall this year (it also includes two new synthetic fields, but also a natural lawn, changing rooms and grandstands redone).

“We will all go to war”

“Today, it is not up to us to restructure ourselves. It’s up to Mr. Le Graët to change. If they don’t reverse their decisions,it will be very, very hot. We will all go to war, “threatens the president, who has just addressed a new open letter published this Friday to the Minister of Sports, again supported by Eric Thomas. Among the urgent demands: the cancellation of all the descents, but also the “Implementation of a relief and emergency fund for amateur football”, at least 300 million. As revealed by the Team, this special fund is between 12 and 15 million today. “All 15,000 amateur clubs donate 150 million euros each year to the FFF. It’s an organized racket “, denounces Eric Thomas, who points out that in four years, nearly 4,000 clubs have disappeared. For him, the distrust of amateurs towards the authorities will reach a point of no return. “Football should advance on its two legs. Today he is hopping on his professional leg. “

Roman Métairie

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US banks’ profits halved due to corona crisis

Bank of America

Bank of America suffered a slump in profits due to high provisions for bad loans.

(Photo: AP)

New York, Charlotte The profit of the US investment bank Goldman Sachs has halved in the Corona crisis due to impending credit defaults and increased costs. Earnings fell 49 percent to $ 1.12 billion in the first quarter, the institute said on Wednesday.

In contrast, earnings decreased only one percent to $ 8.74 billion, due to the increased trade in stocks and bonds during the recent stock market turmoil. Net interest income grew as customers overdrawn their accounts and charged their credit cards more.

Provisions for bad loans quadrupled to $ 937 million at the end of March, from $ 224 million a year earlier. According to Goldman CEO David Solomon, the group is well equipped to help its customers and society to recover from the crisis.

The economic standstill in the Corona crisis also affects them Bank of America hard. Because of high provisions for bad loans, net income decreased 49 percent to $ 3.5 billion in the first quarter, the US money house said on Wednesday.

As before JP Morgan and Wells Fargo Bank of America is preparing for high credit losses due to the virus pandemic. The institute increased bad debt provisions by $ 3.6 billion to $ 4.8 billion.

However, CEO Brian Moynihan emphasized that the company is well prepared for an impending recession: “We ended the quarter with higher liquidity reserves than we started”.

In the three months to the end of March, the bank increased its net income by one percent to just under $ 22.8 billion. While net interest income fell two percent, income from investment banking increased, among other things, thanks to higher fee income in the corporate bond business and higher income from securities trading, which picked up in the wake of the corona virus pandemic.

Also the Citigroup is preparing for high credit losses due to the Corona crisis. As a result, earnings plunged 46 percent in the first quarter to $ 2.5 billion, the major US bank said on Wednesday.

By contrast, earnings rose 12 percent to $ 20.7 billion thanks to flourishing stock and bond trading. “Our first quarter result was significantly impacted by the Covid 19 pandemic,” said chief executive Michael Corbat.

Citigroup topped up bad debt provisions by nearly $ 5 billion.

More: Industry leader JP Morgan and Wells Fargo’s numbers provide a first glimpse of the damage the virus is causing to the economy and Wall Street.

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Goldman Sachs and Bank of America halved profits

Bank of America

Bank of America suffered a slump in profits due to high provisions for bad loans.

(Photo: AP)

new York The profit of the US investment bank Goldman Sachs has halved in the Corona crisis due to impending credit defaults and increased costs. Earnings fell 49 percent to $ 1.12 billion in the first quarter, the institute said on Wednesday.

In contrast, earnings decreased only one percent to $ 8.74 billion. Provisions for bad loans quadrupled to $ 937 million at the end of March, from $ 224 million a year earlier.

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Bad loans let JP Morgan’s profits plummet

Denver, Frankfurt The corona virus has ended the series of successful US banks. After years of record profits, the large institutes are now in crisis mode. The profit from JP Morgan Chase, America’s largest bank, slumped 69 percent in the first quarter to $ 2.9 billion, the lowest since 2013. At Wells Fargo, the institute with the most small and medium-sized corporate customers, saw its profit drop 89 percent to $ 653 million.

Compared to the competition from Europe, the US banks have had one decisive advantage so far: they have left the financial crisis much faster and benefited from tax cuts and a booming labor market, especially under US President Donald Trump. That filled their coffers: JP Morgan made a profit of a good $ 36 billion in 2019 alone – more than ever before a bank.

However, because the social network in the USA is much thinner than in Europe, the corona crisis is now taking hold much faster: applications for unemployment benefits have risen since mid-March like never before. The 22 million jobs that have been created since the financial crisis could have been wiped out in the past four weeks, believes Torsten Slok, chief economist at German bank.

The banks are also feeling this. The corona crisis hits them three times over: the dormant economy, high loan loss provisions and lower key interest rates, which the Federal Reserve cut to almost zero in March.

JP Morgan has now had to significantly increase loan loss provisions. It rose to $ 8.3 billion. A year ago it was 1.5 billion. Return on equity, an important measure of bank profitability, fell from 16 percent to four percent.

graphic

“It is extremely difficult to predict whether loan loss provisions will be sufficient,” says Octavio Marenzi from Opimas, the capital market consultancy. Finally, another wave of layoffs is imminent – with the risk that fewer and fewer Americans or companies in need of help can service their loans. “That could mean a loss for the bank in the second quarter,” believes Marenzi. It would be the first quarterly loss since the 2008 financial crisis.

Fear of a severe recession

JP Morgan CEO Jamie Dimon had already sent a letter to shareholders in early April warning that the bank would not be immune to the serious economic consequences of the corona crisis. On Tuesday, he assumed a “fairly severe recession” and spoke of “unprecedented challenges” in the opening quarter, which is usually the strongest for banks over the course of the year.

Dimon, who is working full-heartedly after an emergency heart operation at the beginning of March, advocated reopening the US economy as soon as possible, “but it has to happen in a way that is safe,” he said in a conference call with journalists clear.

The extent to which the crisis will affect credit quality also depends on how quickly the government’s many bailout programs take effect, stressed JP Morgan’s chief financial officer Jennifer Piepszak. The first consumer checks in the amount of $ 1200 have been sent to consumers, as the tax authority told IRS at the weekend.

JP Morgan has currently paid out $ 9 billion from the $ 350 billion Paycheck Protection Program (PPP) through which banks provide government-backed loans to small and medium-sized businesses. But there are delays everywhere and time is short. Even healthy medium-sized companies in the USA have hardly any reserves to cope with severe sales losses for more than two months.

Many corporate customers stretched their credit lines in the first quarter, totaling $ 50 billion, Dimon said. In March, the bank extended more than $ 25 billion in additional loans to businesses. The demand for new credit cards also increased. “In March alone, we opened half a million new accounts for our credit card customers,” said Dimon. But high risk provisions are necessary for the rapidly growing credit card business. Therefore, the profit in the consumer business fell particularly sharply at 95 percent.

The crisis is putting the banks in a dilemma. They emphasize that they are there for their customers, especially in difficult times. At the same time, they don’t want to take on too high risks. After all, the extent of the slump is still not foreseeable.

Wells Fargo profit collapses

Wells Fargo is also facing this problem and is already feeling the effects of the corona crisis clearly. Profits shrank to $ 653 million from $ 5.9 billion a year earlier. Revenue plummeted 18 percent to $ 17.7 billion. The San Francisco institute also significantly increased loan loss provisions to be prepared for a wave of loan defaults: it is now around four billion dollars, an increase of more than three billion dollars compared to the previous year. Another $ 950 million was spent on write-downs on securities.

“We have taken extensive steps to help customers, employees and communities. For our customers, we have, among other things, suspended foreclosures for residential properties, cut fees and granted deferrals of payments, ”emphasized bank boss Charlie Scharf, who has headed the crisis-ridden institute since the end of October.

More than 1.3 million private and corporate customers benefited from the fee suspensions alone. The latter also claimed over $ 80 billion in loan commitments in March alone. The bank’s foundation is also donating $ 175 million for food, housing and health care to victims of the crisis, Scharf said.

With the current figures, Wells Fargo is particularly susceptible to the severe economic downturn expected by US economists. A look at the estimates shows how badly the bank failed to meet analysts’ expectations in the first quarter. The analysts had expected an average profit of 38 cents per share – in the end, the value was one cent.

The West Coast Bank is hit by the crisis at a particularly delicate time. Wells Fargo is still struggling with the aftermath of a gigantic reputation scandal. For years, employees had created bogus accounts for customers without their knowledge in order to meet internal growth targets and earn premiums. CEO Tim Sloan crashed over the scandal in 2019; the bank hired Scharf as an external cleaner. It was only in February that Wells Fargo reached an agreement with the investigating authorities to pay a $ 3 billion fine to settle most of the scandal.

Wells Fargo, the bank with the largest number of small and medium-sized companies, is overwhelmed by the flood of government loan requests. The Fed mitigated an existing growth stop for the bank, which now enables it to lend significantly more government-backed loans. But Wells Fargo has repeatedly asked its customers to apply for the loans at other companies as well, because the bank’s capacities are simply overloaded.

Only securities trading is booming

Lay this Wednesday Goldman Sachs, Bank of America and Citigroup their quarterly results. Analysts expect a similar picture: slump in profits and high risk provisions. However, like JP Morgan, the institutions will benefit from strong securities trading. The industry leader reported record sales of $ 7.2 billion. Turnover from equity trading increased by 28 percent in the turbulent markets, bond trading even increased by 34 percent.

JP Morgan also posted a record for new issues with high credit ratings. Companies are very keen to provide themselves with sufficient liquidity, said Dimon. Therefore, many would not only have drawn their lines of credit, but would also have obtained fresh money on the capital market.

JP Morgan, like other institutions, is holding on to the dividend for the time being and bought back $ 6 billion in shares by mid-March. The major banks then jointly announced that they would not buy back shares until the end of the second quarter.

Sheila Bair, the former chief of US deposit insurance, had also called for no bonuses and dividends. However, this is not yet an issue in the US, even though a number of institutions in Europe have already suspended the dividend. The Goldman Sachs CEOs, Morgan Stanley, Bank of America and Citigroup recently pledged not to shake the dividend.

In his letter to shareholders, JP Morgan boss Dimon at least admitted that the distribution could be canceled in “an extreme situation”, such as a 35 percent drop in economic performance. However, the bank’s economists are currently anticipating a less dire scenario.

All in all, Dimon, the longest-serving head of a large US bank, was full of drive. His emergency operation did not change his plans to run the bank for several years, he emphasized. He is “dazzling”, likes to work and, with a view to the corona pandemic, he hopes that “we as a society will learn what we can do better”.

More: US economist Rogoff warns of “crisis of a new dimension”.

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The crisis will triple burden US banks

Denver The upcoming balance sheet season for US banks could be a big surprise. Several times in the past few weeks, analysts have revised their forecasts down and then referred to bright spots. “This quarterly outlook is the hardest of our careers because there is simply no precedent,” admitted Chris Kotowski from Oppenheimer.

The corona crisis was not comparable to the market crash of 1987, the terrorist attacks of September 11, 2001, or the global financial crisis. This time, analyst estimates could therefore be particularly inaccurate and cause further corrections to the forecasts.

However, one thing is clear: America’s banks are exposed to a so-called “triple whammy” in the corona crisis, as it is colloquially called on Wall Street. They suffer three times: from the slump in the economy, which has practically come to a standstill in large parts. Among credit defaults and high provisions that they have to cover for future defaults. Under the key interest rate that the US Federal Reserve (Fed) set back in the first quarter in an emergency measure back to the range of 0 to 0.25 percent to support the economy as much as possible.

Investors reacted promptly: the KBW bank index collapsed by 43 percent in the first quarter. The broader S&P 500 index, on the other hand, fell significantly less strongly with a minus of 20 percent. Recently, however, the courses have recovered somewhat.

Analysts have long been preparing for a sustained recession. A rapid recovery that the US government initially hoped for has become increasingly unlikely. Brian Kleinhanzl, analyst at Keefe Bruyette & Woods, expects profits for universal banks to be industry leaders JP Morgan Chase and Bank of America will decrease by 58 percent this year. He expects a minus of 50 percent for 2021.

The effects in the first quarter, on the other hand, will probably not be quite as strong since the US corona crisis only really became apparent in March. In the long term, Kleinhanzl believes that JP Morgan and Goldman Sachs could emerge more from the crisis.

“JP Morgan is well positioned to weather a recession and then emerge stronger than many other banks,” he wrote in a recent analysis. The bank could use its total assets to gain market share. The stock of the largest US financial institution is therefore a good opportunity for investors to add to their portfolio.

Even in the best of cases, if the recovery starts after six months, global universal and investment banks will not make any profits this year, according to a report by Morgan Stanley and the consulting firm Oliver Wyman. However, it is more likely that banks will have to face high losses. Because the institutes, especially in the USA, are better capitalized than before the 2008 financial crisis.

“But profitability before a crisis has never been so low,” the report says. As a result, the consequences of Corona could also reveal weaknesses in the business models of some banks.

The authors of the study assume that the return on equity of some institutions could drop below five percent, well below the ten percent mark or more, which investors see as a healthy measure. Large institutes that can count on economies of scale would therefore get through the crisis better and presumably emerge as winners.

JP Morgan starts the quarterly season on Tuesday, along with Wells Fargo. Goldman Sachs, Bank of America and Citi. Morgan Stanley presents numbers on Thursday. These topics could also become important:

1. Trading business and bond issues are booming

Despite all the bad news, analysts estimate that a number of banks will also be able to set new records – especially in the trading business. “The trading turnover of the investment banks has risen sharply due to the high transaction volume and higher spreads between supply and demand,” says a new report by the rating agency Standard & Poor’s.

The volatile markets caused a flood of orders. According to industry estimates, Goldman Sachs, Morgan Stanley, JP Morgan and Citi have posted record sales for many products, especially stocks and derivatives. That should more than make up for weaknesses in mergers and acquisitions business in investment banking.

Bond issues were also in high demand. JP Morgan CEO Jamie Dimon announced in his letter to shareholders on Monday that the bank had issued more bonds for companies with high credit ratings than ever before in the first quarter. Jason Goldberg, analyst of Barclays, assumes that other institutes will also be strong in this area. To arm themselves against a lack of sales, companies have placed new bonds and drawn their credit lines.

But given record sales, some JP Morgan and Bank of America traders appear to be under pressure from their superiors to get back to the office earlier, U.S. media reports. Work in the retail halls works better than at home, so some department heads apparently sense competitive advantages when as many employees as possible come back to their desks.

Those who do not parry fear income loss or job loss in the coming year if the institute’s job guarantee is lifted. However, this contradicts the announcement of their CEOs, who insured last week that they would let employees work from home whenever possible.

2. How well does lending to SMEs work?

Banks play a central role in the corona crisis in order to pump as many loans into the economy as quickly as possible. Firstly, by increasingly using their own total assets. And secondly as an intermediary for the programs of the Ministry of Finance and the central bank. Time is short, companies have long since started firing their employees on a grand scale.

Applications for unemployment benefits have skyrocketed to over 16 million since mid-March – people haven’t lost their jobs so quickly in any other crisis. Janet Yellen, the former head of the Fed, believes that the unemployment rate could currently be as high as 12 to 13 percent, higher than in the 2008 financial crisis.

Since early April, small and medium-sized businesses have been able to apply for government-guaranteed loans. The $ 350 billion Paycheck Protection Program (PPP) is designed to encourage companies to retain employees and continue to pay rents. Those who abide by the rules will get the loans canceled later. The Federal Reserve continued on Thursday, launching $ 2.3 trillion programs to help small and medium-sized businesses alongside smaller communities.

Because the start of the PPP was bumpy, which is why tensions between Wall Street and Washington are increasing: banks are still overwhelmed by the many inquiries. They point to the poor preparation and poor system of the SBA, which ultimately distributes the funds. The outdated SBA system keeps crashing, bankers complain, which further delays the already lengthy processing process.

According to the SBA, 661,000 loans worth $ 168 billion had been approved by Friday afternoon. But how many of them were actually paid out is not known. Entrepreneurs and associations complain that they either fail to get to their bank and still have not received any money.

SBA employees, on the other hand, accuse banks of not being committed enough to the program. However, due to the high level of demand, PPP could soon be expanded by another $ 250 billion.

The Fed also mitigated a fine on Wells Fargo on Wednesday to speed up small business lending. The central bank had ordered the bank to stop growing in 2018 until the many compliance violations involving fake accounts had been remedied. Since then, total assets have not been allowed to exceed $ 2 trillion – the size the bank had at the end of 2017.

However, the institute counts most small and medium-sized companies among its customers and is therefore in an important position to grant the $ 350 billion loan from Washington. The Fed announced that the restriction on loans granted through the state program has been lifted temporarily.

But also on their own initiative, some banks have extended lending to SMEs. Goldman Sachs boss David Solomon announced that the available funds in the balance sheet total would double to 500 million dollars. However, the banks are in a dilemma. They want to be there for their customers right now, but on the other hand they don’t want to take too high risks, which can later lead to high losses.

3. What about the dividend?

The large banks had already announced in mid-March that they would not buy back shares until the end of the second quarter. Sheila Bair, the former head of US deposit insurance, had also called for no bonuses and dividends.

However, this is not yet an issue in the United States, even though a number of institutions in Europe have already suspended the dividend. The CEOs of Goldman Sachs, Morgan Stanley, Bank of America and Citigroup have recently stated that they intend to keep the dividend.

In his letter to shareholders, JP Morgan CEO Dimon at least admitted that the distribution could be canceled in “an extreme situation” such as a 35 percent slump in economic performance.

More: Which banks cut board remuneration in the corona crisis – and which don’t

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The corona crisis poses new dangers for the banks

Lehman Brothers headquarters in New York

The US bank Lehman Brothers went bankrupt in mid-September 2008 and accelerated the financial crisis, which hit the banking world hard.


(Photo: dpa)

How dangerous is the corona crisis for the banks? Of course, this question cannot really be answered at the moment, but a comparison with the financial crisis of 2008 can provide first indications of what the industry is facing. First of all, the most important difference: Back then, the banks triggered the crisis, and today they are victims. At that time, the shock hit the institutes directly and with full force, today the financial institutions are more at the end of the chain of damage.

However, this does not mean that the corona crisis is less dangerous. Many European and German banks have still not found a robust business model a decade after the Lehman shock. The institutes may be much better capitalized, but there is often still a huge lack of profitability. The corona crisis will relentlessly expose these weaknesses, even if the damage to the balance sheets will probably be more of an erosion than a landslide.

The epicenter of the quake in the financial crisis was investment banking. Highly complex derivatives, which had generated lavish profits over the years, rapidly lost value and turned out to be insidious time bombs that exploded like a chain reaction. One bank after another was in need of existence.

This time the risk is more in the credit books. Companies will get into trouble and will no longer repay their loans, consumers will lose their jobs and will no longer be able to service their loans.

Investment banking, on the other hand, should at least temporarily be one of the winners of the crisis. There is an ice age in the business of takeovers and IPOs. However, trade is flourishing in almost all markets, for which the violent price fluctuations are a clear sign. And trading in securities is the main source of revenue for the investment banking departments of the big banks.

This also means that this time, those banks that were considered to be rock solid in the financial crisis could get to the center of the storm: institutes that earn their money primarily from companies and private customers.

More: China’s central bank frees billions for lending

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