Feb 22, 2021

Axios Closer

🔔 Welcome to the first edition of Axios Closer, a newsletter that gets you up to speed on the most important business stories of the day.

  • Feedback, tips, questions, ideas for what we should be writing about? Hit reply or find me on Twitter.
  • This newsletter is 680 words, or a 2½-minute read.

📈 The dashboard: Tech was the story. The Nasdaq Composite fell 2%, though it's still near its highest level ever.

Situational awareness: Unthinkable pandemic milestone ... Over 500,000 Americans have died from the coronavirus in U.S. (Axios)

1 big thing: A "super" regional bank bulks up
Data: FactSet; Chart: Andrew Witherspoon/Axios

M&T Bank today became the latest to glob on to the "bigger is better" mentality swarming regional banks.

Why it matters: It adds to the parade of regional lenders — which have taken an active role in distributing PPP loans — swallowing each other in an effort to survive a more treacherous backdrop.

Details: M&T is buying People's United Financial for $7.6 billion in an all-stock deal.

  • The combined bank would have roughly $200 billion in assets, per the release. That catapults M&T to the fifth largest regional bank by this measure, according to FactSet. (Previously, it was the 10th).
  • Yes, but: Even with the tie-up, M&T won't crack the top 10 biggest banks overall by assets.

What's going on: Net interest margin — a key way banks make money — collectively hit an all-time low for U.S. banks last year. The culprits: low interest rates and sluggish lending.

  • There's also growing competition from bigger players (think JPMorgan or Bank of America) that are popping up in additional states and offering more digital banking options.

The big picture: The deal follows PNC Financial's purchase of BBVA's U.S. branches last year, which — if approved — would create the largest regional lender in the U.S.

  • Another: Huntington Bancshares said it would buy regional peer TCF Financial late last year, giving them combined assets of roughly $170 billion.

What they're saying: Part of the thinking is you can consolidate, then grow that way, says Stephen Biggar, a banking analyst at Argus Research.

What to watch: The regional tie-ups are among the first bank deals that will face regulatory scrutiny in the Biden era.

2. Charted: Brazil's oil drama
Data: EIA; Chart: Axios Visuals

Axios' Felix Salmon writes: Brazil's oil reserves are tiny in comparison to Venezuela, which sits on the largest reserves in the world.

  • But it's producing far more oil, about 3 million barrels per day.

Driving the news: Brazil's state oil company Petrobras lost 19% of its value today after President Jair Bolsonaro announced he was firing the company's CEO and replacing him with a former general.

  • Why it matters: Bolsonaro pledged to "put a finger on electricity" — to keep prices at artificially low levels, worrying investors who had previously been counting on him to have more of a laissez-faire approach to industry.

Go deeper.

3. Scoop: Nasdaq facing pressure to expand board mandate

Photo: Michael Nagle/Bloomberg via Getty Images

The Nasdaq’s historic diversity ultimatum is being called too narrow by activists who say it was a “colossal mistake” to exclude disability from the list, Axios has learned.

What we're hearing: Two disability rights groups sent a letter to Nasdaq CEO Adena Friedman last week calling for a change to the mandate to include corporate directors who self-identify as disabled.

Details: The exchange's proposal says Nasdaq-listed companies will eventually be required to have at least one director who identifies as a woman, plus another who identifies as a woman, minority or member of the LGBTQ community — or someone with a self-disclosed disability, if the groups get their way.

  • The rule, still awaiting SEC approval, says companies that aren't compliant will have to explain why.

Of note: A Nasdaq spokesperson tells Axios it received the letter.

  • The Nasdaq proposal says stakeholders supported this "narrower definition of diversity," and the ruling would not prevent companies from disclosing other attributes including veteran status or disabilities.

Go deeper.

4. What’s happening

Treasury Secretary Janet Yellen said "people should be aware" of bitcoin's extreme volatility, saying it's "an extremely inefficient way to conduct transactions" and calling the amount of energy needed to mine bitcoin "staggering." (New York Times)

  • The cryptocurrency fell more than 10% (though it remains above $50K, close it its highest level ever).

Google will start accepting political ads on its platform this week, after banning them in the wake of the Capital insurrection, Sara Fischer scoops. (Axios)

Shares of Royal Caribbean rose to the highest level in nearly a year, following the company's upbeat guidance about future cruise line bookings. (Bloomberg)

5. What they’re saying

How much did LVMH spend for the 50% stake in Jay-Z's "Ace of Spades" champagne line it announced today? We don't know.

But the New York Times points out that his lyrics sort of give us some idea for a ballpark: In 2018, the brand was worth $500 million.

“I’m 50% of D’Ussé and it’s debt-free, 100% of Ace of Spades, worth half a B."
— Jay-Z, "What's Free" verse in 2018

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