Latest banking news, Jan. 20, 2023

Citizens lands exclusive Mastercard issuing deal

Kelvin Ma/Bloomberg

Mastercard and Citizens Financial Group announced a partnership making Mastercard the exclusive payments network across Citizens' credit, debit and commercial card portfolios, including all U.S. services, the companies announced on Thursday. It's the first time the $227 billion-asset Citizens — which currently offers a mix of Visa and Mastercard products — has agreed to issue one card brand exclusively, according to a spokesperson. The Providence, Rhode Island-based bank said it plans to release details about converting cards in its portfolio to Mastercard later this year. — Kate Fitzgerald

Green Dot expands e-bill pay for cash-reliant consumers

Andrew Harrer/Bloomberg

Green Dot will collaborate with the electronic billing company Paymentus in an effort to support faster payments for consumers who pay bills with cash out of preference or necessity. Green Dot's prepaid card customers can pay bills with cash at a network of 90,000 convenience stores, which are often used to extend digital payments for cash consumers. After making a payment using Paymentus, Green Dot's consumers receive real-time digital confirmation that the payment was processed and applied to their Green Dot account. Green Dot cited Federal Reserve data that indicates roughly 19% of U.S. householders are underbanked, and that cash payments account for about 20% of all transactions. "Helping businesses offer customers simple, convenient options to manage money and pay bills is central to our mission to give all people the power to bank seamlessly, affordably and with confidence," said Jamison Jaworski, general manager and senior vice president of retail and Green Dot Network at Green Dot, said in a news release. — John Adams

Leader Bank launches digital insurance agency

Leader Bank in Arlington, Massachusetts, has started a subsidiary that focuses on insurance. Leader Insurance provides property, auto and umbrella insurance policies through insurance carrier partners. "We are excited to offer our clients a streamlined, digital process for obtaining an insurance quote when they receive a loan through Leader Bank," Sean Valiton, Leader Bank's senior vice president of sales and new business, at the $3.9 billion-asset bank, said in a press release. The product is available to customers in Massachusetts and New Hampshire to start, and will expand to more of New England in 2023. — Miriam Cross

Discover adds contactless pay to more transit networks

Payment innovation has played a major role as transit systems try to recover from a pandemic ridership slump, creating an opportunity for financial institutions. Discover Global Network, Discover Financial Services' payments brand, has deployed contactless payments technology at several metro networks, including EMT Madrid, Metro de Seville and GetNet in Spain. Other deployments this week include Mennica in Poland and the New Taipei Metro. Riders use Discover, Diners Club and network alliance cards to make payments, which allows the metro systems to address a goal of reducing reliance on internal fare collection and ticketing. Discover has also enabled contactless transit payments in several U.S. cities, including New York, Chicago, Albany, N.Y., Dallas and Portland, Oregon. Its pipeline includes pending launches in Turkey and Qatar. — John Adams

Goldman Sachs compensation ratio hits decade high as expenses climb

Goldman Pushes to Keep Executive Names Hidden in Gender Suit

Daniel Acker/Bloomberg

Back in early 2020, Goldman Sachs said it would stop using its fourth-quarter results to iron out its compensation ratio. Three years later, it appears the firm's attempt to provide investors with a more predictable idea of staff costs has gone awry. On Tuesday, Goldman reported results showing its highest fourth-quarter compensation ratio in more than a decade, at 35.5%, as employee costs hit $3.76 billion. That's the most the New York-based company has ever set aside for staff pay in the final quarter of its fiscal year. The latest figure compares with 25.7% in 2021 and 21.1% the year before. The compensation ratio was last higher in the fourth quarter of 2011, when it reached 36.5%, according to data compiled by Bloomberg. Staff compensation costs, meanwhile, beat the previous fourth-quarter record of $3.27 billion, set in 2007. In January 2020, Stephen Scherr, then Goldman's chief financial officer, said the bank would report its compensation "more on a straight line without relying or waiting on the fourth quarter, so as to be a bigger adjustment." The revamped approach appears to have done little to please investors: Goldman shares slumped Tuesday morning after the bank reported an increase in expenses.
— Harry Wilson and Sridhar Natarajan, Bloomberg News, with assistance from Keith Gerstein

JPMorgan, IFC lead $27 million investment for Colombian fintech

Thumbnail for Video: What's Behind JPMorgan Chase's Branch Revamp

JPMorgan Chase and International Finance Corp. are leading a $27 million round of investment in KLYM, a data-driven fintech that focuses on providing working capital to small and midsize companies in Latin America. KLYM will use the capital to expand, with Brazil as the main priority in 2023, Diego Caicedo, co-founder and chief executive of the Bogota-based KLYM, said in an interview. The firm, formerly known as OmniLatam, plans to also expand in Colombia and Chile, and is working with regulators to start a business in Mexico. "This investment will take our partnership with JPMorgan to the next level," Caicedo said. "Now that they are going to be equity holders in the company, it's going to cement our relationship for the long-term." JPMorgan is seeking partnerships to offer digital banking services to retail customers as well as small and midsize companies outside the U.S. In addition to a minority stake at KLYM, the New York-based bank has previously invested in two Brazilian firms. In June 2021 it agreed to buy 40% of the Sao Paulo-based digital bank C6 after acquiring equity in another Brazilian fintech, FitBank Pagamentos Eletronicos, a year earlier. — Cristiane Lucchesi, Bloomberg News

National Australia Bank mints stablecoin in blockchain push

Brent Lewin/Bloomberg

National Australia Bank has created its own stablecoin pegged to the Australian dollar, a move it says will help large institutional customers with transactions that use blockchain technology. The Melbourne-based lender will start testing the token — named AUDN — before expanding its use cases and getting feedback on the needs of corporate clients, National Australia said in a LinkedIn post. It follows the unveiling of a stablecoin last year by Australia & New Zealand Banking Group. Stablecoins are intended to hold a set value, for example $1, and come in a variety of forms. Some are underpinned by a matching reserve of assets like cash and bonds."Elements of the future of finance will be blockchain enabled because it has the potential to help deliver instantaneous, transparent, and inclusive financial outcomes for customers as our economy becomes increasingly digitised," National Australia's Chief Innovation Officer Howard Silby said in the post. "Our focus is very much on looking at use cases where there is high friction and clear customer benefit particularly for larger businesses," he added. — Harry Brumpton, Bloomberg News

Bank worker who led secret life after $500,000 heist caught 25 years later

Yan Cong/Bloomberg

A Chinese woman who lived under a fake identity for 25 years after stealing more than half a million dollars from a bank and having plastic surgery to change her appearance has been caught. Authorities in Yueqing, a city some 370 km (230 miles) south of Shanghai, revealed the details of the real-life film noir in a social media post this week, much to the amusement of internet users in the Asian nation. Authorities said Chen Yile disappeared in 1997 while working as a 26-year-old bank teller at China Construction Bank Corp. She apparently stole some 3.98 million yuan ($587,000 now) by inflating bank accounts over a weekend, then withdrawing cash from ATMs. She paid "tens of thousands" of yuan for plastic surgery in nearby Wenzhou, then bought a new ID card bearing the name Jiang Mouhong in Shanghai. Chen broke off contact with her former husband and settled in Guangdong, where she remarried, had a daughter and started a cleaning supplies business. Authorities said they tracked her down in December and charged her with crimes including corruption, forgery of documents and bigamy. Police didn't say how they found Chen, but did say her father reported the crime back in 1997. — Low De Wei, Bloomberg News, with assistance from Selina Xu.