Big things have small beginnings.
https://x.com/kshaughnessy2/status/1981673722982674914
https://x.com/MrJJB/status/1981703730778239330
Key insight: Two more regional banks disclosed credit losses related to the bankruptcy of First Brands, the U.S. auto parts maker that filed for bankruptcy amid allegations that it engaged in fraud.
What’s at stake: The list of large and regional banks with exposures to First Brands continues to grow. Affected banks, however, say the losses appear to be contained.
Forward look: Net charge-offs in the fourth quarter should return to more normal levels, one bank said.
First Citizens BancShares reported a steep increase in net charge-offs during the third quarter, with the bulk of the hike stemming from the bank’s exposure to the troubled First Brands Group.
https://www.americanbanker.com/news/first-citizens-takes-83-million-hit-tied-to-first-brands
Wall Street faces losses as HSBC tightens fraud controls
While HSBC stands clear, JPMorgan Chase is cleaning up damage from a different corner of the market. Chief Executive Officer Jamie Dimon told investors this week that the bank took a $170 million charge linked to Tricolor Holdings, a subprime auto lender.
According to Jamie, failures like those of Tricolor and First Brands could mean there are deeper issues. “When you see one cockroach, there are probably more,” he said. “Everyone should be forewarned on this one.” Jamie admitted the hit from Tricolor was “not our finest moment” and added that his team has been combing through their loan books for other potential risks.
The fallout spread quickly. Jefferies Financial Group received redemption requests from clients who had invested in a fund that financed First Brands. Point Bonita Capital, one of the firms caught in the mess, had nearly a quarter of one of its portfolios tied to the failed company.
And Cantor Fitzgerald is now trying to revise the terms of its acquisition of UBS Group’s O’Connor hedge fund, after discovering how deep the First Brands exposure ran. Losses from the bankruptcy have forced many financial firms to reassess their lending structures, especially those tied to private credit and leveraged deals.
https://www.cryptopolitan.com/hsbc-avoids-fallout-first-brands-collapse/