Another advisor turns on Deutsche; Financial tools for sandwich generation

Wall Street Journal

Insuring its future
Blackstone Group “is planning to build its insurance business into a powerhouse as it casts about for new sources of cash in a bid to build a trillion-dollar stockpile of assets. The effort figures prominently into Chief Executive Stephen Schwarzman’s goal, set last year, of expanding the investing giant’s assets to $1 trillion by 2026, up from just over $500 billion now.” The firm, which “already manages around $50 billion of fixed-annuity and other insurance assets, has told investors it aims to more than double that over time,” becoming the private-equity company’s largest unit.

Digital parenting
Financial technology companies are slowly rolling out online tools designed to help adult children manage their aging parents’ finances. “The new tools often leverage forms of artificial intelligence to help users perform a range of tasks, from paying bills to monitoring financial accounts for suspicious activities. The rise of these services comes as financial companies look to technology to cater to the changing needs of an aging population. A bonus for such companies is the opportunity to develop relationships with adult children who are likely to be beneficiaries of a large wealth transfer in coming years from their parents.”

Thinking big
Lenders are turning up their noses at small mortgage loans in favor of much bigger ones, making it hard for some low- and middle-income consumers. Only about $5.1 billion of mortgages between $10,000 and $70,000 were made last year, down 38% from 2009. By comparison, originations between $70,000 and $150,000 fell 26% while loans above $150,000 jumped 65%.

Financial Times

Opposing views
A European proxy adviser is urging Deutsche Bank shareholders to vote against the bank’s chairman and three senior executives at its upcoming annual meeting. The move by ECGS “heaps more pressure on Germany’s biggest bank ahead of what looks set to be an uncomfortable annual meeting on May 23.” Two other proxy advisers, Glass Lewis and ISS, have already advised investors to vote against the bank’s supervisory and management boards, but ECGS said it is recommending “much, much more.” In addition to chairman Paul Achleitner, the firm is urging investors to vote against the bank’s regulatory affairs, credit risk and investment banking chiefs.

Andrey Rudakov/Bloomberg

Separately, ISS is also advising JPMorgan Chase shareholders to vote against the bank’s executive compensation policies its annual meeting next week, citing discretionary compensation as a concern. “Investors increasingly prefer an incentive program structure that constrains discretion in favor of emphasis on objective and transparent determinations that are more compatible with pay-for-performance,” ISS said.

Managing risk
Wells Fargo has named chief credit officer Derek Flowers to head of strategic execution and operations, where he will oversee “the operational and compliance improvements demanded by regulators in the wake of its fake accounts scandal.” The group headed by Flowers, a two-decade veteran of the bank, will “be focused on executing against our regulatory priorities and, in that connection, strengthening and driving the implementation of certain business and risk-management processes,” according to a memo from C. Allen Parker, the bank’s acting CEO. “The new role is being created amid calls by some company insiders for the appointment of a chief operating officer to avoid the mistakes made during the fake-accounts scandal.”

Quotable

“We consider a change in the chair position as helpful to enable the company to develop a new and coherent business strategy for the company and consequently recommend supporting the removal proposal.” — Proxy advisor ECGS, which is advising Deutsche Bank shareholders to throw out chairman Paul Achleitner and three senior executives.