Receiving Wide Coverage ...
It’s good to be king: Citigroup, which raised Michael Corbat’s 2017 pay by 48% to $23 million, and Goldman Sachs, which increased Lloyd Blankfein’s compensation 9% to $24 million, were the last of the big five Wall Street banks to report their CEO’s pay packages last Friday. All told, the CEOs of the five banks made an average $25.3 million last year, up 17% from 2016.
“The gains mark the fifth consecutive year in which pay rose for Wall Street’s top CEOs,” the Wall Street Journal says. “The increases reflected stronger profits for banks driven by a growing economy, rising employment, loosening regulations under President Donald Trump and an improving interest-rate backdrop for lending.”
But this year’s pay increases may not be as hefty if the expected rebound in trading revenue doesn’t materialize. Coalition, a research group, says, “a looming price war between the world’s biggest investment banks could erase the revenue rebound promised by a recent surge in market volatility,” the Financial Times reports. Last year trading revenue at the world’s 12 biggest investment banks fell to a nine-year low “as a persistent lack of volatility crippled their trading businesses.” Revenue growth this year may be undercut by “intensified and increased competition.”
Going out on a high note: HSBC said its full-year 2017 net income jumped to $9.68 billion from $1.30 billion a year earlier, while revenue rose to $51.45 billion from $47.97 billion. The results are the last under CEO Stuart Gulliver, who is retiring after 38 years with the bank. Wall Street Journal, Financial Times
Wall Street Journal
Failing grade: Despite a decade and nearly $500 million spent, the Office of Financial Research, a creation of the Dodd-Frank Act, has yet to live up to its “gargantuan mission: Serve as the finance world’s version of the National Weather Service,” anticipating financial crises and helping contain the damage. “The agency has struggled to establish a place for itself in Washington,” the paper says. “Major projects have been delayed or scaled back. Morale has suffered amid turf battles with other regulators and opposition from Republicans.”
Education pays: SunTrust Banks is one of the growing number of companies offering financial incentives to their employees as part of financial wellness programs. The bank gives its employees $1,000 for completing a financial education course, and they can use the money to pay down debt or fund an emergency, 401(k) or health savings account. More than 20,000 of the bank’s current and past employees have participated, says the bank, which has spent over $9 million on the incentives and offers the program to more than 80 other companies.
Lofty goal: SoftBank founder and CEO Masayoshi Son, who likes to compare himself to Warren Buffett, “is convinced his creation can be a Berkshire Hathaway for the digital age,” writes Patrick Jenkins, the papers financial editor. “His latest deal, the attempted purchase of a 20-30% stake in reinsurance group Swiss Re, certainly looks right out of the Buffett playbook.”
Timing's everything: Deutsche Bank is looking to cut between 250 and 500 investment banking and trading jobs in its latest restructuring, the paper reports. Those let go before the bank’s bonus announcements on March 16 may not be eligible for the payouts.
Putting AI to work: BlackRock, the world’s biggest asset manager, is setting up an artificial intelligence lab in California to augment its investing management. “Big data offers a world of possibilities for generating alpha but traditional techniques are not good enough to analyze the huge volumes of information involved,” said David Wright, a BlackRock executive.
New York Times
A Modest proposal: The financial industry can “effectively set new rules for the sales of guns in America," Andrew Ross Sorkin says. "Collectively, they have more leverage over the gun industry than any lawmaker. And it wouldn’t be hard for them to take a stand.”
“We know that stress is the No. 1 cause of health-related issues, and the No. 1 cause of stress is money. If we can attack financial stress, we can improve our employees’ physical well-being as well.” — SunTrust CEO William Rogers Jr.