Apple, Goldman plan credit card; Wells will be late
Receiving Wide Coverage ...
Golden Apple: Apple and Goldman Sachs are joining forces on a credit card that may launch early next year. The card would carry the Apple Pay brand and replace the company’s current rewards card issued by Barclays. The “move would deepen the technology giant’s push into its customers’ wallets and mark the Wall Street firm’s first foray into plastic,” the Wall Street Journal comments.
“The push into credit cards is fraught for Goldman, whose track record in consumer finance is scarcely two years old,” the paper notes. “Credit cards are a cutthroat business dominated by larger rivals like JPMorgan Chase and Citigroup. Yields are falling. And Goldman lacks much of the infrastructure to be able to issue credit cards and process payments to merchants.” Wall Street Journal, New York Times, American Banker
More Wells woes: Wells Fargo said the Federal Reserve’s penalty barring the bank from increasing its assets beyond $1.95 trillion will keep the bank constrained from growing at least into early next year, longer than its earlier estimate that it would finish complying with the Fed’s requirements by October. CEO Timothy Sloan said during the bank’s investor day presentation that it needed more time to address the Fed’s risk-management questions.
Wells also told investors it expects to make less in the future from overdraft and other deposit account services charges, one of its biggest sources of revenue. CFO John Shrewsberry said the lower revenues reflect “customer friendly” changes the bank is making. For example, he said its “overdraft rewind” notifications that help customers avoid overdraft charges have “had a negative impact on our fee income.”
The Journal’s Heard on the Street column is in no hurry to recommend Wells’ stock, a notable underperformer compared to its peers. The bank’s shares are up just 9% since the September 2016 disclosure of its phony accounts scandal, compared to the 53% increase in the KBW Nasdaq Bank Index. “Given how shoes continue to drop at Wells Fargo, including complaints filed with regulators just this week by a Tennessee public pension fund about its fee practices, it is no sure bet that the bank will be back in the good graces of regulators any time soon,” it says.
Play fair: The Justice Department wants to put an end to “piling on” penalties by multiple enforcement agencies in white-collar crime cases. “In reaching corporate resolutions, the department should consider the totality of fines, penalties, and/or forfeiture imposed by all department components as well as other law enforcement agencies and regulators in an effort to achieve an equitable result,” according to a JOD memo. “We have heard concerns about ‘piling on’ from our own department personnel,” Deputy Attorney General Rod Rosenstein said. Wall Street Journal, Financial Times
Punished: U.K. regulators fined Barclays CEO Jes Staley £642,430 ($868,501) for making “serious errors of judgment” by trying to unmask a whistleblower in 2016. In addition, the bank said it docked Staley’s 2016 bonus by £500,000 over the issue, meaning that the episode will cost him a total of £1.14 million, or 27% of his total compensation that year. The bank itself avoided any sanctions by the Financial Conduct Authority and the Bank of England’s Prudential Regulation Authority. Wall Street Journal, Financial Times
Majority rules: JPMorgan Chase is seeking approval to launch a joint-venture brokerage in China in which it, not its Chinese partner, would be the majority owner. JPM is looking to take advantage of a new policy by Chinese authorities to “loosen rules on foreign firms controlling such ventures.” Wall Street Journal, Financial Times
New York Times
Slow growth: Commercial and industrial loans at banks rose by a weak 2.5% in March compared to a year ago, well below the monthly average of 7% over the past three years. “Lending has certainly not fallen off a cliff like it did during the Great Recession, but it is growing quite a bit slower than it has in recent years,” the paper notes. “If it doesn’t pick up, that could dampen growth, some expect.”
“It is important for us to be aggressive in pursuing wrongdoing. But we should discourage disproportionate enforcement of laws by multiple authorities.” — Deputy Attorney General Rod Rosenstein.