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business Saturday 16 January 2021
Optimistic banks start moving ‘bad’ loans back to ‘good’

By KEN SWEET helped keep some busi-
AP Business Writer nesses afloat. “The fear of
CHARLOTTE, N.C. (AP) — a wave of COVID-related
The pandemic and reces- bankruptcies has not oc-
sion aren’t over by a long curred,” said Octavio
shot, but banks are feeling Marenzi, CEO of Opimas, a
optimistic enough to start capital markets manage-
taking potentially “bad” ment consultancy firm.
loans off their books and In releasing funds from loan-
move them back into the loss reserves, the banks cit-
“good” pile. ed the improvement in the
The financial performance economy. Though still not
of the big U.S. banks has im- fully recovered from the
proved from earlier in 2020, shutdowns of March and
when the virus pandemic April, the economic pic-
walloped the global econ- ture is better than it was six
omy. JPMorgan and Wells or nine months ago. And
Fargo saw fourth quarter with mass vaccination ef-
profits rise; Citigroup’s prof- forts now underway, banks
it fell in the last quarter of are feeling a bit better on
2020, but increased from where things stand.
the third quarter. But there’s still a signifi-
The three banks have a cant degree of uncertain-
more positive, though cau- A Wells Fargo office is shown, Wednesday, Jan. 13, 2021 in New York. ty when it comes to the
tious outlook for the econo- Associated Press banks. JPMorgan still has
my, which was reflected in pandemic and subsequent the pandemic. Banks are shut their economies down more than $30 billion tied
an accounting maneuver recession. Citigroup had a required to set aside loans to combat the early stages up in its loan-loss reserves,
each employed that con- similar story, releasing $1.5 that may become unpay- of the pandemic. and banks like Citi and
tributed significantly to their billion of its loan-loss re- able on their balance sheet But trillions of dollars’ worth Wells have similar figures on
better results. serves that it had set aside to show whether they have of government stimulus their balance sheets.
JPMorgan reported a re- earlier last year. Wells Fargo enough money to meet and the reopening of busi- “Thank God for the vac-
cord profit of $12.14 billion, released a modest amount depositors’ and regulators’ nesses in many parts of the cine,” said Jamie Dimon,
up from a profit of $8.52 bil- of money from its reserves needs. country has resulted in less CEO of JPMorgan Chase,
lion a year earlier. Roughly a — less than $200 million. This largely had to do be- financial carnage than in a call with reporters
quarter of that profit — $2.9 Still, those amounts are just cause millions of customers what bank executives and on Friday. But the same
billion — came from JPM- a fraction of the tens of and businesses who were investors initially expected. breath, Dimon said that “all
organ “releasing” some of billions of dollars into their financially fine in February Notably the Paycheck Pro- bets are off” on how the
the funds it had set aside so-called loan-loss reserves 2020 were suddenly in deep tection Program, which U.S. economy may go if the
last year to cover potential to cover potentially bad trouble in March 2020, as lo- helped businesses cover vaccine isn’t as effective
loan losses caused by the loans in the first months of cal and state governments basic expenses like payroll, as expected.q

Xi asks Starbucks’ Schultz to help repair U.S.-China ties

By JOE McDONALD reported. No text of the let- bucks’ employees in China,
AP Business Writer ter was released. which is Starbucks’ biggest
BEIJING (AP) — President In a statement issued Fri- market outside the United
Xi Jinping is asking former day, Schultz didn’t directly States. It has 4,700 stores
CEO Howard Schultz of address Xi’s request to help and 58,000 employees in
Starbucks to help repair repair relations, instead say- almost 190 Chinese cities.
U.S.-Chinese relations that ing it was “a great honor” “I truly believe Starbucks
have plunged to their low- to receive the letter from best days are ahead in
est level in decades amid a China’s president. China and that the values
tariff war and tension over Schultz said Xi was replying of creativity, compassion,
technology and security. to a letter Schultz recently community and hard work
A letter from Xi to Schultz re- sent him along with a Chi- will guide the company to-
ported Friday by the official nese-language edition of ward an even greater busi-
Xinhua News Agency was a his book, “From the Ground ness and community con-
rare direct communication Up: A Journey to Reimagine tribution, while continuing
from China’s paramount the Promise of America.” to build common ground In this Jan. 31, 2019, file photo, former Starbucks CEO Howard
leader to a foreign business Xinhua reported that Schul- for cooperation between Schultz speaks at an event to promote his book, “From the
figure. Schultz opened Star- tz congratulated Xi on “the our two countries,” Schultz Ground Up,” in Seattle.
bucks’ first China outlet in completion of a well-off said in his statement. Associated Press
1999 and is a frequent visi- society” under his leader- Starbucks said it had no whether the letter reflected tion with Beijing over North
tor. Xi wrote to Schultz “to ship. Schultz didn’t release comment. Schultz stepped an initiative to ask Ameri- Korea and other political
encourage him and Star- a copy of his letter to Xi, down as Starbucks’ CEO in can corporate leaders to issues. But few changes on
bucks to continue to play but he said he shared his 2017 and retired as chair- help change policy after trade are expected due to
an active role in promot- respect for the Chinese man of the company in President-elect Joe Biden widespread frustration in
ing Chinese-U.S. economic people and culture. 2018. He briefly considered takes office next week. Washington over China’s
and trade cooperation In his statement, Schultz running for president as an Economists and political human rights record and
and the development of said he has formed many independent in 2019. analysts say Biden is likely accusations of technology
bilateral relations,” Xinhua close relationships with Star- Xinhua gave no indication to try to revive coopera- theft.q