Banking's unlikely top brand; CEOs still raking in pay

Editor's note: Morning Scan will not publish on Tuesday, July 4 in observance of Independence Day. We’ll be back on Wednesday, July 5.

Receiving Wide Coverage ...
Big hit: British banks may need to pay €15 billion ($17.1 billion) to move some of their operations from London to elsewhere Europe after Brexit, “a tab that could weigh on bank profits for years and ultimately hit European Union consumers,” according to a report by Boston Consulting Group. The study, which was commissioned by the Association for Financial Markets in Europe, said the banks may also need to put up another €40 billion of additional tier one capital requirements. Wall Street Journal, Financial Times

Wall Street Journal
Pricey: Fees to buy and sell bitcoin have been rising sharply, making it “impractical to use as a day-to-day currency,” the paper says. The digital currency “was designed to be cheap, reliable and fast,” it notes, but is now anything but. The cost to buy or sell bitcoin now averages $3.50 per transaction, down from a recent peak of $5.00 but up from pennies two years ago.

“Paying a $5 fee to send $10,000 bitcoin isn’t a big deal,” it says, “but it’s hard to justify buying a cup of coffee with bitcoin if the transaction costs more than the coffee.”

First in China: HSBC has become the first foreign bank to win regulatory approval to operate a majority-owned joint-venture securities company in China. The bank, which applied for approval nearly two years ago, will be the majority owner of the venture with Qianhai Financial Holdings Co. Ltd., a state-owned financial company.

“Foreign banks generally aren’t allowed to have majority control of their joint-venture businesses with local brokerage firms in China,” the Journal notes. “Banks have clamored for years to get control of the businesses, hoping to reap more of the profits and be able to make more decisions on a local level.”

Financial Times
It’s good to be the king: American bank CEOs make three times as much as their banking peers around the world, according to a study by analysts at AllianceBernstein. The report, which looked at CEOs at 25 banks in the U.S., Europe and Asia since 2004, found that American banks “have persistently paid more than rivals in the rest of the world.” But the study also found that global bank CEO pay “hasn’t changed at all” over the past 13 years “despite regulations and other burdens that mean banks now make far lower shareholder returns than they did in the heady period before the financial crisis began in 2007,” the paper comments.

Untarnished: Wells Fargo’s phony accounts scandal didn’t hurt it very much in BrandZ’s ranking of the 100 most valuable brands in the world for 2017. The bank ranked 15^th, just one notch below its 2016 ranking, and well above other American banks on the list, including Citigroup at 59, U.S. Bank at 71, Chase at 73, JPMorgan Chase at 74 (it’s listed separately under both names) and Bank of America at 87.

BrandZ, which has been compiling rankings of the world’s most valuable brands since 2006, calculates brand values using a combination of financial measures, including revenue and profitability, and survey responses from 3.1 million consumers in 51 countries. Wells is valued at $58.4 billion. The highest-rated financial services company on the list is Visa, which ranks seventh at $111 billion.

In court: John Varley, “the patrician former chief executive of Barclays, has the dubious honor of being the first CEO of a global bank to be charged with criminal offences emanating from the financial crisis.” On Monday, he and “three of his former high-flying colleagues at the bank” are scheduled to appear in magistrates court in London to officially face charges brought by the Serious Fraud Office that they unlawfully agreed to accept money from Qatar to avoid the British government bailing out the bank.

Chris Ratcliffe/Bloomberg

New York Times
Regulation gets the credit: An editorial opines banks are healthy because of the restrictions set after the financial crisis and warns deregulation would bring back "the reckless practices that precipitated the crash."

Quotable
“With all due respect, running a bank in the U.S. (even with the occasional trip to Congress to be publicly abused) can’t be that much more complicated than running a thankless restructuring job at RBS or UniCredit.” —AllianceBernstein analysts.