Behind Citi’s Fraser pick; payments companies’ strong quarter

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Citigroup promoted Jane Fraser, the head of its Latin American unit, to president of the bank as well as head of its global consumer bank, putting her in the lead to eventually succeed CEO Michael Corbat. Stephen Bird, who she succeeds as head of consumer banking and who had also been a potential CEO candidate, said he is leaving the bank “to pursue an opportunity outside our firm.”

“The changes come as the lender has faced pressure from an activist investor, ValueAct, which has built up a $2 billion stake and is lobbying for greater strategic focus at the sprawling global banking group,” the Financial Times notes. “[Citi’s] management team has staked its credibility on hitting its 2020 return on tangible equity target of 13.5%, and better results in the retail division are key to hitting that goal.”

By elevating Fraser, “Citigroup became the first giant United States bank to definitively tee up a takeover of its leadership by a woman,” the New York Times says. “While Mr. Corbat, 59, is widely expected to remain in place for some time, Citi’s announcement offered the latest hope that women are close to cracking the glass ceilings at the country’s largest banks.”

"Fraser’s profile rose this year as her name popped up among potential candidates to run Wells Fargo & Co. or HSBC Holdings Plc," American Banker reports. "The industry is under mounting pressure to improve diversity of its leadership and elevate women. In April, white men running seven of the largest U.S. lenders were grilled at a congressional hearing about why their companies have never put a woman in charge. Several, including Corbat, said they can imagine one succeeding them."

Validation

Barclays said pre-tax profits at its corporate and investment bank jumped 77% to £882 million in the third quarter “after the U.K.-based lender posted strong gains in trading revenues and banking fees, the Financial Times reports. “The solid performance appeared to validate the strategy adopted by Jes Staley, chief executive since late 2015, who has maintained the group’s presence in global investment banking even as other European banks have staged a retreat.”

Overall, the bank reported a £292 million net loss for the quarter, down from last year’s £1.05 billion net profit, mainly due to a £1.4 billion ($1.8 billion) charge for reimbursing customers who were wrongly sold payment protection insurance on its products.

Separately, Barclays “has reversed its decision to pull out of a partnership that allowed U.K. customers to withdraw cash at branches of the Post Office, after the plan prompted fierce criticism” from members of Parliament. “We have been persuaded to rethink our proposals by the argument that our full participation in the Post Office Banking Framework is crucial at this point to the viability of the Post Office network,” Staley said.

“The Post Office has become an increasingly important way of guaranteeing access to banking services, particularly for those living in rural areas, as banks have closed thousands of their own branches. It currently allows customers of 28 banks, including all of the country’s major lenders, to use various banking services in Post Office branches,” the FT notes. Earlier this month Barclays “refused to sign up fully to a new agreement with the network, meaning its customers would from January be unable to withdraw cash in Post Offices.”

Wall Street Journal

Good quarter for payments

Visa said its fiscal fourth quarter profit rose 6% to $3.03 billion as net revenue climbed 13% to $6.14 billion, beating analysts’ estimates. “Payments volume, adjusted for foreign-currency fluctuations, was up 9% for the quarter. Meanwhile, volume from cross-border transactions, which typically carry larger fees, rose 7%.”

Separately, PayPal’s third quarter profit rose 6% to $462 million while revenue increased 19%, prompting a 9% jump in the company’s stock price, its biggest one-day gain in more than a year. The company “reported a jump in its user base and progress in making money from its Venmo digital money-transfer service, which processed $27.5 billion in payments in the third quarter and was on track to generate annual revenue of about $400 million. Finance chief John Rainey said Venmo has changed from being a drag on profit margins to a contributor. A Venmo credit card due to hit the market next year should help accelerate that trend.”

Not booted

The chair of the Federal Reserve Bank of Chicago’s board of directors will be allowed to stay in that role while her former employer is the being investigated by the Justice Department. Anne Pramaggiore “abruptly retired October 15 from her job as chief executive of the utilities unit of Exelon, the largest operator of nuclear plants in the U.S., less than a week after Exelon said it had received a second grand-jury subpoena from federal prosecutors looking into its lobbying activities in Illinois.” Pramaggiore has served on the Chicago Fed’s board since 2014 and has been its chair since 2017. Her term ends this year.

Quotable

“We’re operating post peak globalization. The financial services sector has been perhaps the biggest beneficiary of globalization. Now it’s an era of unbridled global expansion narrowing. What happens to these institutions? Perhaps more regional in nature.” — Christiana Riley, head of Deutsche Bank’s U.S. operations, in her first public remarks since taking over the unit, which is sharply reducing its business

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