Bank stocks plunge but CEOs bullish; BofA makes exec changes

Receiving Wide Coverage ...

Bad day on Wall Street, mostly
Big-bank stocks were down an average 5% on Tuesday, about double the drop in the overall market. Goldman Sachs, for example, which fell nearly 4%, closed at its "lowest level in more than two years, nearly erasing a jump that followed the 2016 U.S. presidential election."

"Concerns are building around the strength of the economy, which has shown signs of shifting into a lower gear," the Wall Street Journal said. "The rise in short-term rates relative to long-term rates also threatens to crimp the margins banks earn from borrowing at a low short-term rate and lending at a higher long-term one." Wall Street Journal, New York Times

Yet bank CEOs were singing a cheerier tune at an industry conference in New York, "expressing undiminished confidence in the country's economy." "We don't really see a lot to be concerned about," said Wells Fargo CEO Tim Sloan.

JPMorgan Chase CEO Jamie Dimon said the bank is using its excess capital to reinvest in its business instead of buying back stock. "The highest and best use of our capital is reinvesting it and we are starting to do that now," Dimon said, noting that the bank is spending on technology, branches and small business lending.

On Wednesday, Deutsche Bank's stock hit a record low, falling below €8 for only the second time in its history.

Wall Street Journal

Executive changes
Bank of America announced a number of executive appointments on Tuesday. Thong Nguyen, co-head of the bank's consumer unit, was to be named a vice chairman overseeing corporate strategy and payments, leaving Dean Athanasia as sole head of consumer banking. Andrea Smith, chief administrative officer, will oversee the bank's marketing efforts. The bank is also expected to name two executives in its big wealth management division.

bank-of-america-bloomberg-news

Lower fees
The European Commission said Visa and Mastercard have agreed to lower by 40% the fees they charge merchants inside the European Union for accepting debit or credit cards issued outside the region. The move "comes after merchants alleged that networks and banks colluded to inflate those fees."

Financial Times

Hedging their bets
Swift, the international payments system owned by 2,500 banks, is testing a new system to speed up cross-border transfers, "firing a shot across the bow of a blockchain-based project that claims to do the same thing and payments fintechs that offer cheaper, faster services." Interestingly, some of the banks involved in the blockchain-based system are taking part in Swift's pilot, "a testament to how banks are hedging their bets on the future of payments."

Defending their turf
The head of the European Central Bank's banking watchdog is calling on banks to "beef up the range of services they offer to the continent's businesses and do more to challenge the dominance of their counterparts in the U.S. and Asia."

Washington Post

Inside job
The Post takes a look at Mick Mulvaney's time as acting chief of the CFPB (er, sorry, BCFP): "One year after Mulvaney's arrival, he and his political aides have constrained the agency from within, achieving what conservatives on Capitol Hill had for years been unable to do."

Quotable

"I actually now really think that there is going to be massive disruption to the retail banking space in the next five years. I just see all the prerequisites are there: the customers are willing now to switch, it's easy to switch, the services are better, with the new people coming into the stage." — Sebastian Siemiatkowski, CEO of Swedish bank Klarna.

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Bank stocks Career moves Faster payments Mick Mulvaney CFPB Bank of America
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