The BAN Report: The 11MM Dairy Relationship / Big 4 Bank Earnings / OCC Hammers Former Wells Execs / FICO Changes Model / Retail BKs Lead to Closings-1/24/20
The $11MM Dairy Relationship
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Big 4 Bank Earnings
The nation’s four largest banks, which hold almost half of all deposits, have all reported earnings for the 4th quarter of 2020.
JP Morgan Chase
JP Morgan Chase absolutely crushed the fourth quarter, beating analyst estimates on both earnings and revenue thanx to trading revenue.
The bank said Tuesday that fourth-quarter profit rose 21% to $8.52 billion, or $2.57 a share, compared with the $2.35 estimate of analysts surveyed by Refinitiv. Managed revenue climbed 9% to $29.2 billion, compared with the $27.94 billion estimate. Shares of the bank gained 2.1% in midday trading.
CEO Jamie Dimon said the investment bank produced record revenue for a fourth quarter, aided by the rebound in trading revenue from a challenging period a year ago. The strong results in trading helped offset the impact of compressed margins across retail and commercial banking businesses as interest rates dropped.
In the firm’s huge retail banking division, fourth-quarter profit rose 5% to $4.2 billion. While the division’s overall revenue climbed 3% to $14 billion, helped by strong credit card and auto loan results, in the core banking business revenue dropped 2% to $6.4 billion as margins shrank on lower interest rates.
JP Morgan Chase’s fourth quarter was Exhibit A in the defense of the diversified, large global bank. While core banking business revenue dropped 2%, overall revenue increased by 9%.
Bank of America
Bank of America had a solid quarter, beating analyst estimates on revenue and net income. But, the good news was tempered by lower guidance for 2020.
For the quarter, the bank posted revenue of $22.5 billion, net income of $7 billion and diluted earnings per share of 74 cents, beating analyst estimates, which predicted $22.35 billion in revenue and 68 cents in earnings per share.
The positive news for the quarter and year was tempered by downbeat forecasts for 2020. On the bank’s conference call, it said that net interest income would likely continue to fall in the first half of the year after declining 3% in 2019. In 2019, the bank still benefitted from higher interest rates at the beginning of the year, as interest rate changes don’t show their full affect for months, when loan payments become due. However, we are entering 2020 with interest rates that have been cut three times in the past year, so the full effects of that will be felt in the coming year.
B of A also saw a strong increase in trading revenue. All banks are going to face headwinds with lower interest rates this year, making top-line growth extremely challenging. The key variables will be expense management & fee income to offset shrinking net interest margins.
Citigroup had a great quarter, beating analysts estimates on earnings and revenue. Like JP Morgan Chase, trading revenues were a big driver of a strong quarter.
Citigroup’s bond-trading revenues represent a 49% surge from the year-earlier period. The bank said the strong results reflect a recovery from the fourth quarter of 2018 along with “strong performance, particularly in rates and spread products.
The bank’s consumer business also boosted its results, as its global consumer banking division raked in $8.5 billion in sales. That’s a 5% increase from the year-earlier period.
Trading and consumer lending have been the bright spot for Citigroup, which has saw its stock appreciate by 53% in 2019 – the largest of its rivals.
Wells had a disappointing quarter, missing estimates for revenue and earnings. Litigation costs related to legacy problems and a tough rate environment were the culprit.
Quarterly profit was $2.87 billion, compared with $6.06 billion in the year-ago period, a decline of 53%. Per-share adjusted earnings were 93 cents, well short of the $1.12 per share forecast by Refinitiv.
The company’s stock fell 4.5% Tuesday afternoon, on track for its worst day on Wall Street in more than 13 months.
The bank also took a financial loss in part related to the retail sales scandal that has plagued Wells Fargo since 2016. The company booked a $1.5 billion charge for legal costs related to litigation stemming from its fake-account problems and others.
The litigation costs pushed noninterest expenses up 17% in the fourth quarter from a year earlier despite efforts to keep costs under control. Wells Fargo also paid out more in salaries.
CEO Charles Scharf took over in October, so perhaps this was a kitchen sink quarter, in which the bank positions itself for more favorable comparisons down the road. It is now over 3 years since the account fraud scandal broke and litigation costs are still elevated.
Overall, the banking industry is facing a challenging environment for core banking in 2020, in which lower interest rates squeeze margins. Its notable that the more complex banks (JP Morgan Chase & Citigroup) are doing better in this environment than say Wells Fargo.
OCC Hammers Former Wells Execs
The Office of the Comptroller of the Currency (“OCC”) issued charges and settlements towards multiple former senior executives of Wells Fargo Bank, totaling substantial monetary damages in excess of $100MM and effectively banning from banking several former executives, including former CEO John Stumpf.
“The actions announced by the OCC today reinforce the agency’s expectations that management and employees of national banks and federal savings associations provide fair access to financial services, treat customers fairly, and comply with applicable laws and regulations,” stated Comptroller of the Currency Joseph Otting.
The notice of charges alleges these executives failed to adequately perform their duties and responsibilities, which contributed to the bank’s systemic problems with sales practices misconduct from 2002 until October 2016. The misconduct of these individuals allowed the practices to continue for years, affecting millions of bank customers and thousands of lower level bank employees. Additionally, the notice states that Ms. Russ Anderson also made false and misleading statements to the OCC and actively obstructed the OCC’s examinations of the bank’s sales practices.
Based on the facts and circumstances of each individual’s actions, the relief sought may include a lifetime prohibition from participating in the banking industry, a personal cease and desist order, and/or CMP. A personal cease and desist order would require the individual to take certain affirmative actions or refrain from certain conduct in any future involvement in the banking industry. Pursuant to federal law, the respondents may request a hearing challenging the allegations and relief sought by the OCC.
The OCC also announced today the issuance by consent of a prohibition order and a $17,500,000 CMP against former bank Chairman and CEO John Stumpf; a personal cease and desist order and a $2,250,000 CMP against the bank’s former Chief Administrative Officer and Director of Corporate Human Resources Hope Hardison; and a personal cease and desist order and assessment of a $1,250,000 CMP against its former Chief Risk Officer Michael Loughlin for their roles in the bank’s sales practices misconduct.
While we have often argued that the punishment Wells faced well exceeded their actual damages, it was grossly mishandled by its former management team and Board of Directors, creating a case study in poor crisis management for MBA programs throughout the world. The OCC’s orders are worth reading, as they give a through de-briefing on the extent of the scandal.
FICO Changes Model
Fair Isaac is changing its model for calculating FICO scores, potentially creating a larger separation from consumers with good credit from the rest.
Fair Isaac Corp., creator of FICO scores, will soon start scoring consumers with rising debt levels and those who fall behind on loan payments more harshly. It will also flag certain consumers who sign up for personal loans, a category of unsecured debt that has surged in recent years.
The changes will create a bigger gap between consumers deemed to be good and bad credit risks, the company says. Consumers with already-high FICO scores of about 680 or higher who continue to manage loans well will likely get a higher score than under previous FICO versions. Those with already-low scores below 600 who continue to miss payments or accumulate other black marks will experience bigger score declines than under previous models.
One of the new versions, called FICO 10 T, will place greater weight on recently missed payments. Consumers who fall behind or stop paying their debts are likely to see their credit scores fall more with this model. Those whose last delinquency is at least a year old could see an improvement in their scores.
Unlike previous FICO scores, 10 T will assess how consumers’ debt levels have changed during the past two or so years. FICO scores so far have reflected consumers’ balances during roughly the most recent month tracked. This change will place more weight on rising debt levels. Consumers who previously paid their credit-card bills in full but shift to carrying growing balances for several months will likely end up with a lower score. On the other hand, consumers who tend to increase card debt during a specific month each year and then pay it off quickly will likely experience a smaller drop in their score than they currently do.
The changes will likely hurt scores even more for consumers who have a high “utilization” ratio—for example, when credit-card debt is nearly equal to a consumer’s set spending limit—for a sustained period of time.
FICO for the first time will place more weight on personal loans in a way that penalizes some borrowers. For example, consumers who transfer credit-card debt to a personal loan but continue to rack up credit-card balances will likely experience a bigger drop in their credit scores.
The last major revision was in 2014, which led to higher FICO scores. Additionally, some of the recent changes (i.e. removing judgments) have made credit scores higher than they should be, so this seems to be a good correction. Nevertheless, the vast majority of lenders will continue to use older versions of FICO.
Retail BKs Lead to Closings
While secured creditors tend to recover a very high percentage of their debt in bankruptcy, nearly half of all large retailers that file bankruptcy close all of their stores, according to a report from Fitch.
Among large retail and supermarket chains that filed for bankruptcy protection over the past 15 years, 45% closed all of their stores, the ratings firm said in a new report. Fitch found that the bankruptcies of 25 out of 55 retail and supermarket companies ended in liquidations.
Retailers tend to go out of business for good “if they’ve lost their place in the marketplace,” said Sharon Bonelli, a Fitch senior director and head of the bankruptcy group. Bankruptcies spanning all U.S. corporate sectors ended in liquidation an average of 13% of the time.
Lenders with collateral rights over retailer assets generally recovered in full on at least one first-lien bank loan or secured bond issue claim in the capital structures with more than one first-lien claim, Fitch said. First-lien lenders’ average recovery rate was 91%, including for asset-backed loans, cash-flow revolvers, term loans and secured bonds, the ratings firm found.
Asset-backed loans were often repaid shortly after the bankruptcy filings through a roll up into debtor-in-possession financing, a special loan provided for companies under bankruptcy protection, or with inventory sales proceeds.
Second-lien creditors had a median recovery of 41%, while those with unsecured note claims realized mostly poor recoveries of less than 10% of par value.
The high recovery rate for secured creditors suggest that the liquidation approach is working. However, the fact that nearly half of all retailers close every single one of their stores in a bankruptcy is sobering, and the retailers that don’t completely liquidate most likely shed stores as well. For example, Sears and Kmart had 2,000 stores 5 years ago versus a project 182 this year.
The BAN Report: Mixed Economic Signals / Auto Loan Delinquencies Rise / NYC Hotel Boom / Leon Black Profile-1/17/20
Mixed Economic Signals
While the global economy appears to be avoiding a recession for 2020, there is a number of mixed signals about the economy’s direction. One the negative side, China’s growth is slowing to levels not seen in decades, likely to the impact of the US trade war.
On Friday, Chinese officials said the country emerged from 2019 with an official economic growth of 6.1%—well within the government’s target range of 6% to 6.5% but the lowest level in nearly three decades.
The outlook remains cloudy, and some private-sector economists warn that growth in the world’s second-largest economy could slip even further this year, to below 6%.
Trade, investment, consumer spending and business confidence are all on retreat, while the economy continues to suffer indigestion from debt that had helped fund its remarkable bulk-up and is proving difficult to slash. The country also faces longer-term stresses like an aging population, which was highlighted by Friday data showing births had fallen to their lowest level since 1961.
Additionally, US industrial production fell by 0.3% in December. One can argue now that US manufacturing sector is essentially in a mild recession. Recent conversations with two Chief Credit Officers of large Midwest banks confirm they are seeing problems in their manufacturing portfolios. However, there is still no sign that the US consumer is running out of gas. Sure, there are some increases in delinquencies (see below), but they are still low. Moreover, housing starts, buoyed by low interest rates, had their best month in 13 years.
Groundbreakings on new U.S. homes surged in December to a 13-year high, giving the housing market momentum heading into the new year amid low mortgage rates, solid job growth and optimistic buyers and builders.
Residential starts rose 16.9% to a 1.61 million annualized rate after an upwardly revised 1.375 million pace in the prior month, according to government figures released Friday. The gain was the biggest in three years and well above all estimates in a Bloomberg survey. Permits, a proxy for future construction, fell 3.9% to 1.42 million.
Additionally, bank earnings so far have been very good, and we will report next week in more detail. So long as the US / China dispute de-escalates, 2020 should be a modestly good year for the global economy.
Auto Loan Delinquencies Rise
According to research from the American Bankers Association, 8 of the 11 categories of consumer loans saw higher delinquencies in the 3rd quarter of last year. Auto loans, especially indirect auto loans, saw the biggest increase.
The composite ratio, which tracks delinquencies in eight closed-end installment loan categories, rose 15 basis points to 2.03 percent of all accounts. It remains below the pre-recession average of 2.09 percent (from the first quarter of 2002 to the third quarter of 2007). The ABA report defines a delinquency as a late payment that is 30 days or more overdue.
Delinquencies in bank cards fell two basis points to 2.96 percent of all accounts, dipping further below the pre-recession average of 4.33 percent.
Delinquencies rose in two home-related categories and fell in one. Home equity line of credit delinquencies rose one basis point to 1.07 percent of all accounts, among its lowest post-recession levels but above the pre-recession average of 0.53 percent. Home equity loan delinquencies rose 16 basis points to 2.86 percent of all accounts, above the pre-recession average of 2.12 percent. Property improvement loan delinquencies fell 12 basis points to 1.17 percent of all accounts, remaining well below the pre-recession average of 1.65 percent.
Delinquencies in direct auto loans (those arranged directly through a bank) rose three basis points to 1.15 percent of all accounts, remaining well below the pre-recession average of 2.09 percent. Delinquencies in indirect auto loans (those arranged through a third party such as an auto dealer) rose 20 basis points to 2.43 percent of all accounts, above the pre-recession average of 2.03 percent.
Indirect auto lending can be very competitive, which often pushes underwriting standards downward. Bank of the West announced they were exiting the business in the fourth quarter last year, so perhaps some of the competition may ease somewhat. We continue to see strong demand for both purchasers and sellers of indirect consumer pools.
NYC Hotel Boom
News flash – it is no longer expensive to travel and stay in Manhattan. In my last 6 trips to NYC, I have stayed in limited service Marriott’s (Courtyards, Fairfields, Springhill Suites) for less than $150 / night. This is a direct consequence of an unprecedented hotel boom in NYC, which shows no signs of abating.
“We are still going through a supply indigestion, as New York has suffered from oversupply and Airbnb as well as a big increase in the supply of rooms per night,” says Gilda Perez-Alvarado of JLL’s hospitality group. “However, New York continues to break visitation records, so the rooms are being absorbed.”
But since many of the new hotel rooms, especially in the outer boroughs and those found midblock in Manhattan, are in the mid-market and economy levels, their lower rates bring the nightly averages down, she explains.
According to NYC & Company, the city’s official tourism office, 2019 saw a record 66.9 million visitors from both home and abroad.
By the end of 2021, the city will have more than 144,000 rooms available to visitors — and 3,900 of these will have come from the 20 new hotels that opened in 2019.
More are on the horizon: Hotels in the construction pipeline include 56 in Manhattan, 21 in Brooklyn, 37 in Queens, eight in the Bronx and one in Staten Island.
This report from NYC and Company shows the growth in hotel rooms and the current development plans. Almost a 50% increase in hotel rooms since 2010. If everything under development gets built, NYC will have another 40K rooms – essentially doubling the number since 2010. There is no evidence yet that there is insufficient demand, but it is certainly keeping prices from lower. Additionally, there are few larger hotels built that can support conventions – much of the new inventory is limited service and boutique product.
Leon Black Profile
Bloomberg had a great profile on Leon Black, who has capitalized more than most on the economic rebound since the recession.
he most recent recession, triggered by the 2008 financial crisis, created an unprecedented opportunity for private equity firms, and few have taken better advantage than Apollo, Wall Street’s apex predator. During the past 10 years, its assets grew sixfold, to more than $320 billion. Black has amassed a personal fortune of $9.5 billion. Now 68, he became chairman of New York’s Museum of Modern Art in 2018, a coronation of sorts among the wealthiest of the wealthy. His office, which is guarded by a display of antique French long guns and has spectacular views of Central Park, is just above that of Henry Kravis, the most infamous corporate raider of the 1980s.
Who bears the risk in situations where Black is involved is an interesting question. A private equity takeover can involve deep payroll cuts, massive asset sell-offs, and taking on dangerous levels of debt. The process can mortally wound a company and trigger zero-sum fights over the corpse. Even if you don’t know Apollo, you know its targets: Caesars casinos, Claire’s jewelry stores, Linens ’n Things, all purchased just before the financial crisis and driven to bankruptcy under Black’s watch. That’s not always the outcome, but when it is, creditors are on the hook. Apollo, known for guarding its hoard, usually manages to walk away richer.
Public pensions such as CalPERS are some of Apollo’s best customers. States have underfunded and borrowed from their pensions for years. To make up for it, fund managers have looked for juicier returns from alternative assets such as private equity. Black’s aggressive approach—involving layoffs and slashing benefits—is also among the most profitable. Apollo’s flagship private equity fund, which it opened to investors in 2001, has delivered annual returns of 44%. Pensions have become Apollo’s largest investor base.
44% since 2001 – that’s a track record few can match in all of investing.
The BAN Report: Tepid Outlook for Banks in 2020 / CRA Reform Speed Bumps / Oil Prices Less Elastic / McDonald’s Shuts Down Party Culture / The Great Escape-1/10/20
Tepid Outlook for Banks in 2020
Bank executives and bank analysts are projecting a tougher climate for banks in 2020 with sluggish loan growth, shrinking margins, and some deteriorating credit quality.
So it makes sense that bankers will field more questions about areas they can manage, such as capital management and cost control, this earnings season. Updates on credit quality and the impact of a new accounting standard for future loan losses should also be expected.
Banks will also be challenged to provide as much visibility as possible for the first quarter and beyond. Those that can keep a tight grip on expenses and avoid any credit hiccups are likely to stand out, industry observers said.
“We believe the ability to control the controllable will be of even greater importance” to investors, said Christopher McGratty, an analyst at Keefe, Bruyette & Woods. That means “a firm commitment to profitable and efficient capital management and maximizing operational efficiency,” he said.
Lending volumes and net interest margins could remain under pressure in 2020, KBW’s research team said in a recent note to clients. They expect earnings per share, on average, to decline from last year’s levels.
A Stephens survey of 100 bankers conducted between mid-November and mid-December found that nearly three-fourths of respondents expected consolidation to accelerate in 2020, an increase from 54% a year earlier. And 80% expect margins to narrow, while more than half are bracing for a year-over-year decline in net interest income.
While credit quality remains strong, a fifth of the surveyed bankers said they are seeing early signs of deterioration.
Banks have enjoyed a strong run, but we concur that the short-term and immediate-term operating environment is tough. Loan growth is slowing while margins are compressing. Some banks are highly defensive, bracing for a potential slowdown in the company. We do expect to see a pre-election wave of bank M&A this year, as banks decide to pursue acquisitions before the regulatory pendulum swings again.
CRA Reform Speed Bumps
After declining to endorse the reform plans of the OCC & FDIC, the Federal Reserve this week rolled out its own CRA reform plan.
Now, the central bank has released its own blueprint that could stymie the other regulators’ approach or lead to competing rules for the industry. The OCC oversees roughly 70% of activity under the low-income lending rules, and the agency’s proposal would apply to some 1,200 banks—including some of the biggest, such as JPMorgan Chase & Co. and Wells Fargo & Co. The Fed oversees about 15% of CRA activity.
“It is a little bit of a war between the regulators,” said Warren Traiger, senior counsel at the law firm Buckley LLP, who advises banks on compliance with the rules. At a time when many banking services are provided online, policy makers have been trying to forge a consensus for updating rules from a law enacted more than 40 years ago when banking largely took place at branches.
The regulatory split could lead to an unusual situation in which some U.S. banks must follow one set of rules to comply with the law while others have to abide by another. The FDIC also wants to allow most of the community banks it regulates to follow the old set of rules, raising the prospect of three different regulatory regimes for a single law.
Fed Gov. Lael Brainard, the central bank’s point person on the overhaul, publicly criticized the other regulators’ approach, suggesting their proposal was being rushed to completion and could unintentionally reduce lower-income lending. It “runs the risk of encouraging some institutions to meet expectations primarily through a few large community-development loans or investments rather than meeting local needs,” Ms. Brainard said, speaking before the Urban Institute in Washington, D.C., on Wednesday.
The biggest changes under the OCC and FDIC plan would more precisely define the types of lending and other activities that qualify under the act and redefine the geographic areas, known as assessment areas. If successful, it would allow regulators to see more easily whether lending matches up with deposits, supporters say.
The Fed’s blueprint would encourage large lenders to make lots of loans in low-income areas, rather than just a small number of big loans and investments. Community groups have voiced concern that the OCC and FDIC approach would have the latter outcome.
Banking Agencies usually air their differences between closed doors so this public disagreement on CRA reform is highly unusual. We are supportive of modernizing CRA, and perhaps the silver lining is that at least there is a consensus on the need for CRA reform.
Oil Prices Less Elastic to Mideast Turmoil
Despite elevated tensions between the US and Iran, oil prices have not been as volatile as many would expect.
The most surprising thing about the oil market’s initial response to the American killing of an Iranian general, Qassim Suleimani, was that it appeared to be so muted. Although prices jumped soon after the killing, the upward momentum quickly eased.
But oil can be a highly volatile commodity, and crude oil prices rose by roughly 4 percent on initial reports Tuesday night that Iran had launched missiles on two United States bases in Iraq. Since the attack was not directed at oil facilities, it was impossible to assess whether the spike was a hasty reflex or the beginning of a lasting climb.
Oil flows have not been disrupted — so far — and there is no sign that Iran will seek to hobble trade in the fuel by, for example, closing the Strait of Hormuz, the narrow channel that many oil tankers have to pass through when they leave the Persian Gulf.
The markets are “pricing in just a low probability of something happening,” said Bjornar Tonhaugen, head of oil market research at Rystad Energy, a research firm.
The standoff between the United States and Iran follows several years of downward pressure on prices because of a gusher of supplies, largely from the shale boom in the United States.
American oil production has more than doubled over the last decade to more than 13 million barrels a day, and the United States is now the world’s biggest producer. It imports about four million fewer barrels of oil a day than in 2008 because of its production surge and greater use of more fuel efficient vehicles.
Oil prices appear less and less correlated to world events. In the 1990 Gulf War, for example, oil prices spiked from $15 to $40 per barrel. We may never see world events have the same impact on oil prices again.
McDonald’s Shuts Down Party Culture
After replacing its former CEO for a relationship with an employee, McDonald’s new CEO is cracking down on the company’s party culture.
Top Golden Arches executives used to throw back drinks with rank-and-file staff at bars and corporate conventions under ex-CEO Steve Easterbrook — who was ousted in November for having a relationship with an employee, according to the Wall Street Journal.
Internal romances are also “fairly common” at the fast-food giant despite a company policy banning managers from going out with their subordinates, the Journal reported Sunday. Weddings between couples who meet at the company have even reportedly been dubbed “McMarriages.”
But newly minted chief executive Chris Kempczinski wants to throw out the fraternizing and hard partying with yesterday’s fryer grease, according to the Journal.
“Some people perceived there was this macho, guys club,” one unnamed source told the paper. “That has now progressed to a more open leadership under Chris.”
Companies are increasingly cracking down on corporate cultures that can lead to problems and HR issues. What’s interesting is McDonald’s is making major changes to a company that was performing well.
The Great Escape
Late last month, Carlos Ghosn, the former head of Renault and Nissan, daringly escaped house arrest in Japan and fled ultimately to Beirut in a 23-hour journey. Employing some of the best security experts in the world, Mr. Ghosn found enough holes in various security apparatuses to evade authorities. The Wall Street Journal had a riveting account of the journey.
After months of planning and millions of dollars in costs, Carlos Ghosn climbed into a large, black case with holes drilled in the bottom. He had just traveled by train 300 miles from his court-approved Tokyo home to Osaka, Japan.
It was Sunday evening, Dec. 29, the moment of truth in a plan so audacious that some of its own organizers worried at times it wouldn’t work. A team of private security experts hired to spirit Mr. Ghosn out of Japan hadn’t done a dry run of their scheme to sneak the box containing the former auto executive past airport security, according to a person familiar with the matter. That is standard operating procedure for such a high-stakes smuggling operation. They had cased the airport just twice before, including that morning.
Mr. Ghosn’s case made it past the checkpoint unexamined: It was too large to fit in the lounge’s X-ray machine, and no one checked it by hand either, the person said. The box was then loaded into the cabin of a 13-passenger Bombardier Inc. Global Express jet through the rear cargo door. A decoy box, this one actually filled with audio equipment, was also wedged inside the cabin. The plane took off a short time later, flight records show.
Mr. Ghosn, the former chief of France’s Renault SA and Japan’s Nissan Motor Co., faced a trial that was supposed to kick off later this year. Prosecutors have charged him with financial crimes, including allegedly hiding tens of millions of dollars in deferred compensation and misappropriating funds belonging to Nissan.
Mr. Ghosn denies the charges, and posted bail of almost $14 million to remain free of jail, living in a video-monitored home with tight restrictions over whom he could see. He assembled an international team of lawyers to defend him in court.
In the end, though, he put his faith in a different team—a group of about a dozen operatives, including at least one with experience extracting hostages from war-zone confinement.
Check out the video timeline of his escape in the article. Meanwhile, while Lebanon does not have an extradition treaty with Japan, they did impose a travel ban on Mr. Ghosn, preventing him from leaving Lebanon.