Top banking news this month: July 2022

July 29, 2022 2:23 PM

In this month's roundup of American Banker's favorite stories: Merger-and-acquisition announcements in the community banking space begin slowing, Roe v. Wade's reversal has a politicizing effect on payments, a Native American neobank sets out to offer bespoke services to tribes and more.

Click here to read last month's roundup of banking industry news.

The bank vault is photographed with it's door open in a secu

Bloomberg

Pressure from commercial depositors is arriving faster than expected

Article by Polo Rocha

With interest rates rising quickly, banks are starting to face pressure from business clients to pay more on their deposits.

The landscape for commercial deposits has been changing rapidly since the Federal Reserve hiked rates at its most aggressive pace since 1994, according to bank consultants. The shift raises the risk that banks’ funding costs could rise in the coming months, eroding their profits.

For much of the pandemic, companies have parked their spare cash at the bank, since low interest rates meant that other safe options typically didn’t offer much yield. Recently, that flood of deposits has made banks comfortable with some of the cash heading out the door.

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Victoria's Secret was among the clients affected by Bread's tech outage.

Eve Edelheit/Bloomberg

Why glitches like Bread’s payment outage are riskier now

Article by Kate Fitzgerald

When Bread — formerly Alliance Data Systems — recently adopted the name of the buy now/pay later fintech it acquired, one goal was to demonstrate its new capabilities after decades of marketing co-branded and private-label credit cards to fading stores at malls.

Those efforts suffered a setback early in July when the online credit card bill payment site for Bread’s Comenity Bank subsidiary went offline after a technical update, leaving some customers unable to pay their bills online for a few days.

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MAXFX - stock.adobe.com

Why banks are hitting the brakes on M&A

Article by Jim Dobbs

Bank merger-and-acquisition announcements dropped during the second quarter and put 2022 deal activity on pace for one of the slowest years in recent history.

Banks inked 35 bank deals during the second quarter. That was down from 49 the prior quarter and well below the 66 transactions announced a year earlier, according to a Raymond James analysis.

At issue: ramped-up regulatory scrutiny following new guidance from President Biden in 2021 for regulators to ask more questions and set up more hurdles to clear before signing off on proposed deals.

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The divide over abortion rights and laws creates myriad compliance challenges for payment companies.

Ting Shen/Bloomberg

How the Roe v. Wade reversal politicizes payments

Article by John Adams

When the Supreme Court opened the door to criminalizing abortion, it also placed financial institutions and payment processors in the position of setting new compliance rules based on state lines — and potentially breaking the law in any attempt to help their own employees.

Many employers, including the largest banks, have promised to at least cover travel expenses for employees who need to go to another state to receive abortion services. But banks and payment companies must also determine how they handle payments their customers make when those customers cross state lines seeking an abortion. Some states may consider it illegal to facilitate travel for abortion care.

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When it opens this year, Walden Mutual Bank will be the first de novo mutual bank to launch in nearly 50 years.

After 50 years, a new mutual bank will launch

Article by John Reosti

Organizers of what would be the nation’s first de novo mutual bank in half a century say they’re nearly ready to open their doors.

Walden Mutual in Concord, New Hampshire, has received conditional approval from the Federal Deposit Insurance Corp. and a conditional charter from New Hampshire’s Banking Department. The final big hurdle is raising a minimum $20 million of capital, CEO Charley Cummings said in an interview.

“Our hope is to open in late summer,” Cummings said. “We are working to do final implementation on all our technology systems, bring the rest of the capital into escrow and get final approval from the FDIC.”

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Native American neobank customizing financial services for tribes

Article by Miriam Cross

When Amber Buker tried to purchase her first home, she went in circles between her lender and her Native American tribe.

Buker’s mom recalled that as an enrolled member of the Choctaw Nation of Oklahoma, she was eligible for a down payment assistance program. But representatives of the tribe were not able to help her figure out eligibility, and her lender was not willing to communicate with the tribe. Buker had to wait two more years before she could buy her first home in 2018, and it was without the benefit of this program.

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Adobe Stock

A credit union hired banking pros to take on Philly's biggest lenders

Article by Ken McCarthy

The Philadelphia commercial lending market is dominated by large banks, but one credit union wants to grab its own piece of the pie.

The $4.8 billion-asset Citadel Credit Union in Exton, Pennsylvania, plans to launch its new business banking division in August. Earlier this year, the company lifted a team of business bankers from Santander Bank to build the new division and establish partnerships with clients around the eastern Pennsylvania region.

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Mounting pay pressure at banks as Truist, JPMorgan hike minimum wages

Article by Polo Rocha, Paige Hagy and Victoria Zhuang

A hot job market is prompting some large banks to raise their minimum wages, continuing a trend that will likely force many smaller competitors to pay up for employees.

The latest bank to increase the low end of its pay scale is Truist Financial, which said July 6 that it will raise its minimum hourly wage for U.S. employees to $22 starting in October, up from a prior range of $15 to $18. Truist’s announcement followed Bank of America’s just-enacted $22 minimum hourly wage, which the bank plans to raise to $25 by 2025.

JPMorgan Chase, the country’s largest bank by assets, also started notifying its employees last month that its minimum wage would rise to between $20 and $25 an hour, depending on the worker's location. That range is up from $18 to $22 per hour and is part of the bank’s steady increases in pay, a spokesperson said.

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Trial for ex-JPMorgan bankers could signal new tactic against white-collar crime

Article by Brendan Pedersen

A rare courtroom trial starting in early July for a team of former JPMorgan Chase bankers is being closely watched for potential ripple effects impacting the broader financial sector and its exposure to criminal liability.

The trial, set to begin jury selection on July 7 in the U.S. District Court for the Northern District of Illinois, revolves around a precious metals trading scandal that stretched more than eight years, from 2008 to 2016. According to prosecutors, the JPMorgan traders “spoofed” precious metal commodity markets by placing and quickly canceling orders, effectively driving up prices.

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Federal Reserve building in Washington, D.C.

The Marriner S. Eccles Federal Reserve building stands in Washington, D.C. While many policymakers have expressed skepticism on whether the Fed should pursue a central bank digital currency, some administration officials and members of Congress are building an affirmative case for a digital dollar.

Andrew Harrer/Bloomberg

The case for a digital dollar is ‘picking up momentum’

Article by Kyle Campbell

Once dismissed out of hand, the prospect of a Federal Reserve-issued digital currency is beginning to gain traction with Washington policymakers.

Officials from Congress, the Federal Reserve and the Office of Financial Research have made a case in recent weeks for the development of a U.S. central bank digital currency, or CBDC, through public remarks and discussion papers.

Fed Vice Chair Lael Brainard called CBDCs a “natural evolution” in the payments arena in a speech earlier this month. She added that digital fiat could stabilize crypto markets by providing a neutral settlement layer.

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