Skeeter -- Safe till the next election? With $33 trillion in derivatives from US banks -- twice the capitalization of the stock market -- its a house of cards. I wouldn't count gravity out quite yet as a force to be reckoned with.
Thursday March 25, 12:17 pm Eastern Time
U.S. Q4 bank trading revenues rebound -- OCC
WASHINGTON, March 25 (Reuters) - Trading revenues at U.S. commercial banks rebounded sharply to $2.03 billion in the fourth quarter of 1998 from $614 million in the previous quarter as financial markets stabilized, a government regulator said on Thursday.
The Office of the Comptroller of the Currency also said the notional volume of all derivative products at U.S. banks grew for the 13th consecutive quarter to a record $32.9 trillion.
''The fourth quarter marked a return to stability,'' said Deputy Comptroller Michael Brosnan. ''By contrast, the previous three months were characterized by extreme volatility in both domestic and foreign markets, including the default in Russia.''
For the whole of 1998, bank trading revenues fell to $7.9 billion from $8.0 billion in 1997.
The OCC said most of the increase in revenues in the fourth quarter came from banks' interest rate positions, which
earned $669 million in the fourth quarter after a loss of $284 million in the previous three months.
Commercial banks earned $64 million from commodity and other positions, up from a loss of $222 million in the third
quarter. Equity positions earned $92 million after losing $65 million in the prior quarter, the OCC said.
Foreign exchange revenues continued to be strong, rising to $1.2 billion from $1.19 billion in the prior quarter.
Brosnan cautioned that the rebound in revenues should not mask the lessons learned in the turbulent third quarter.
''Bank risk managers would be wise to adjust stress testing, risk limits and other risk-control tools to recognize the
reality that such extreme conditions will periodically arise,'' he said.
Banks' charge-offs due to credit losses from derivatives declined sharply in the fourth quarter as markets calmed, to
$107 million from $445 million in the third quarter, the OCC said. |
