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(Reuters) -Meta Platforms was set to seal an almost $30 billion finance package for its data center site in rural Louisiana, which would be the largest private capital deal on record, Bloomberg News reported on Thursday. Large-scale cloud service providers, called hyperscalers, have been racing to build AI infrastructure, with most of the investment going towards powering data centers. Meta and alternative asset manager Blue Owl Capital will split ownership of the Hyperion data center site in Richland Parish, Louisiana, with the social media giant retaining just 20%, Bloomberg said, citing people with knowledge of the matter. Morgan Stanley arranged more than $27 billion debt and about $2.5 billion equity into a special purpose vehicle to finance the build-out, according to the report. Meta is not borrowing the capital itself, but the financing entity is, under the SPV structure, Bloomberg News reported. Meta will be the developer, operator and tenant of the project, to be completed in 2029. The social media giant has tapped U.S. bond company PIMCO and Blue Owl Capital to spearhead $29 billion in financing for the data center expansion, Reuters reported in August. The parties took the final step to price the bonds — in the 144A format — with PIMCO as the anchor lender on October 16, according to Bloomberg News. A few other investors are receiving some allocations of the debt, which matures in 2049, the report said. Meta, Blue Owl and Morgan Stanley did not immediately respond to Reuters requests for comment. Meta said on Wednesday it would invest $1.5 billion in a data center in El Paso, Texas, breaking ground at its 29th such facility globally as it expands infrastructure to support AI workloads. (Reporting by Juby Babu in Mexico City)

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By Manya Saini, Arasu Kannagi Basil and Ateev Bhandari (Reuters) -U.S. bank stocks, including Zions Bancorporation, Jefferies, and Western Alliance, fell sharply on Thursday as investors grew uneasy about risk in the sector, which has been shaken by exposure to two auto bankruptcies. Zions sank 12% after disclosing it would take a $50 million loss in the third quarter on two commercial and industrial loans from its California division. Western Alliance's stock slumped almost 11% after the bank separately disclosed it had initiated a lawsuit alleging fraud by Cantor Group V, LLC.  Investment bank Jefferies, which held an investor day on Thursday, plunged 9%. The firm has disclosed exposure to bankrupt auto parts maker First Brands, and its stock has fallen by more than one-fifth since First Brands' bankruptcy announcement. "It shows you can't take credit quality for granted, and poor performing credit quality at one bank can drag down the group quite fast," said Stephen Biggar, a banking analyst at Argus Research. JEFFERIES LEFT 'QUESTIONS UNANSWERED' Jefferies' investor day was closed to the press. Morgan Stanley analyst Ryan Kenny said in a note that Jefferies' investor day was positive on the core business, "but left some questions unanswered on what exactly went wrong with First Brands and whether or not JEF could have mitigated risk in advance."  Jefferies did not respond to a Reuters request for comment. Zions did not respond to a request for comment.  "It appears that investors are electing to sell first and ask questions later regarding Jefferies, a selloff that soon threatens to be overdone," said Sean Dunlop, bank analyst at Morningstar Research, in a note The situations shook the broader market, with the regional banking index dropping 5.8% and the S&P 500 losing nearly 1%. Wall Street analysts drew parallels from Zions' disclosure with the collapse of auto parts maker First Brands, which exposed gaps in lenders' oversight and raised questions about credit market transparency. Brokerages pointed to JPMorgan Chase CEO Jamie Dimon's comments this week about anxiety in the credit market following the bankruptcies of First Brands and subprime lender Tricolor.  As major global lenders file unsecured claims, the issue has become a key test of transparency and management in the rapidly expanding private credit market. JPMorgan wrote off $170 million in the third quarter related to the Tricolor bankruptcy and said it was reviewing its controls. "When you see one cockroach, there are probably more, and so everyone should be forewarned," Dimon said. The banks' selloff comes more than two years after Silicon Valley Bank's 2023 failure, when high interest rates drove paper losses on its bonds, sparking a fatal deposit run that felled Signature Bank days later. FIRST BRANDS, TRICOLOR PUT SPOTLIGHT ON RISK CONTROLS  The bankruptcies of First Brands and Tricolor have put a spotlight on the risk controls of banks and the opaque credit market, where complex loans and new facilities have made it harder to gauge participants' exposure. Zions said it expects to recognize the charges in the third quarter and has filed a lawsuit in California to recover the loans. Western's disclosure said it had alleged the defendants breached a business loan and security agreement by forging title policies related to the lien – a legal claim – on properties underlying several loans. The August court filing showed Cantor was a company that did business in California's Los Angeles County. Western will provide context about its diversified business model and "strong credit structures" when it announces quarterly results on October 21, the bank said in an email. Attorneys for Cantor denied the allegations made by Western Alliance. "These claims are unfounded and misrepresent the facts. We are confident that once all the evidence is presented, our clients will be fully vindicated," Brandon Tran, senior counsel at Dhillon Law Group, said in an email. Western has sought to reassure investors, saying its total criticized assets — credit identified as weak — were lower than on June 30. Some analysts still see the collapses as idiosyncratic and tied to individual borrowers, rather than systemic. But the cases are fueling unease. "In times of loose credit, you are going to have more instances of fraud," said Mike Mayo, banking analyst at Wells Fargo. "Right now, credit in general is fine, but there's a heightened need to watch the recent issues." (Reporting by Manya Saini, Arasu Kannagi Basil and Ateev Bhandari in Bengaluru and Saeed Azhar and Anirban Sen in New York; Editing by Lananh Nguyen, Megan Davies, Rod Nickel)

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(Corrects paragraph 5 to specify that Citi declined to comment while CFPB did not respond) WASHINGTON (Reuters) -The top U.S. consumer finance watchdog agency on Thursday terminated a 2023 enforcement case against Citigroup's lending arm Citibank that had penalized the banking giant for alleged discrimination against Armenian Americans in California. Citibank in 2023 agreed to pay nearly $26 million in fines and consumer redress to resolve allegations that it had intentionally discriminated against credit card applicants based on their last names and then illegally fabricated records to cover this up. At the time, Citigroup apologized, saying a "small number" of employees had circumvented protocols when trying to thwart an Armenian fraud ring and that those involved had been disciplined. In an order posted Thursday to the CFPB's website, acting Director Russell Vought said the CFPB had terminated the consent order, noting that the bank had paid the settlement costs and taken steps to prevent future violations. Representatives for Citigroup declined to comment. The CFPB did not respond to an email seeking comment. Vought, who is also President Donald Trump's budget director and has overseen efforts to slash the federal workforce, said Wednesday he expected to shut the CFPB down within months. The original 2023 consent order was due to remain in force for another three years and contained provisions requiring the bank to supply the CFPB with compliance records on request and make employees and others available to investigators if necessary. Since Trump took control of the CFPB in February, the agency has sought to undo several already-resolved enforcement actions, including cases against Toyota Motor Credit, Bank of America, Apple and US Bank. It has also dropped pending cases en masse. (Reporting by Douglas Gillison in Washington; Editing by Aurora Ellis)

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By David Lawder WASHINGTON (Reuters) -The U.S. budget deficit shrank by $41 billion to $1.775 trillion in the 2025 fiscal year as an increase in revenue from President Donald Trump's tariffs and cuts to education spending helped offset higher outlays on healthcare and retirement programs and interest on the debt, the Treasury Department said on Thursday. The results for the year ended September 30, which include nearly nine months of Trump's second term in the White House, compared to a $1.817 trillion deficit in fiscal 2024. It was the first time the annual deficit had fallen since 2022, when the unwinding of COVID-19 relief programs brought spending down. The smaller deficit was aided by a record $195 billion in net customs receipts for the fiscal year, an increase of $118 billion from the prior year as new Trump tariffs rolled in. Customs receipts in September reached a new record high of $29.7 billion, but the pace of increase slowed from August, when $29.5 billion was collected. Customs receipts were $7.3 billion in September 2024. But this powerful new revenue source was partly offset by a $79 billion reduction in gross corporate tax collections for fiscal 2025, to $486 billion. About $45 billion of that reduction occurred in September, reflecting implementation of full capital equipment expensing and research deductions made retroactive to January 1 in the spending and tax-cut bill passed by the Republican-controlled Congress in July. Total receipts for fiscal 2025 were a record $5.235 trillion, up $317 billion, or 6%, from fiscal 2024, largely driven by increases in withheld and non-withheld individual tax collections. Fiscal 2025 outlays also were a record at $7.01 trillion, up $275 billion, or 4%, from the prior year. A U.S. Treasury official said the department calculated an estimated deficit-to-GDP ratio of 5.9% for fiscal 2025, compared to an actual fiscal 2024 ratio of 6.3%. The official declined to say what GDP estimate was used to calculate the ratio. Data on third-quarter GDP, which would be close out the 2025 fiscal year, has been delayed by the partial U.S. government shutdown.  U.S. Treasury Secretary Scott Bessent said on Wednesday that he wants to bring the ratio down to the 3% range by boosting economic growth and cutting or constraining spending. Budget analysts said the number released on Thursday showed little progress toward that goal. "Most of the fiscal policy changes are simply replacing tax revenue and spending with other sources without lowering the deficit," said Kent Smetters, director of the University of Pennsylvania's Penn Wharton Budget Model analysis group. "So, we are still very much on an unsustainable path." TREASURY REPORTS SURPLUS FOR SEPTEMBER For the 2025 fiscal year's final month of September, the Treasury reported a record surplus of $198 billion, up $118 billion, or 147%, from the same month in the prior year. September is often a month of surplus due to quarterly tax filing deadlines for companies and individuals. Receipts last month were up $17 billion, or 3%, to $544 billion, while outlays were down $101 billion, or 23%, to $346 billion. The latest monthly surplus was boosted by a $131 billion cut to the Department of Education budget that was mandated in the recent spending and tax bill. For September, the education outlays were $123 billion lower than in September 2024. For the full 2025 fiscal year, the Department of Education suffered the biggest cut in outlays, down $233 billion, or 87% from the prior year to just $35 billion. That cut and the higher customs receipts masked continued increases in outlays for the Social Security retirement plan, the Medicare and Medicaid healthcare programs and interest on the U.S. federal debt. The interest expenditure reached a record $1.216 trillion for the full fiscal year, up $83 billion, or 7%, from fiscal 2024, making it the second-largest expenditure item after Social Security. Expenses for that program reached $1.647 trillion, up $127 billion, or 8%, from the prior fiscal year. "There's good news that the tariffs are generating higher revenue, but all major categories of spending are higher with mandatory spending and interest significantly so. The fundamentals remain deeply troubling," said Maya MacGuineas, president of the Committee for a Responsible Federal Budget. (Reporting by David Lawder; Editing by Paul Simao)

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