BNY Mellon whistleblower gets $50 million; Citi sees an opening in EMEA

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Wall Street Journal

Big payday

A former trader at Bank of New York Mellon “who alerted authorities to the bank’s pattern of overcharging big clients on currency trades was awarded a $50 million whistleblower payment Thursday. The award, the largest of its type made by the Securities and Exchange Commission, comes more than a decade after the trader, Grant Wilson, began assisting authorities with the currency-trading investigations. The bank paid $714 million in fines and other compensation in 2015 to resolve allegations it defrauded pension funds and other clients related to currency transactions.”


Australian bank Westpac said “millions of breaches of anti-money-laundering finance laws were caused by technology shortcomings and human mistakes, but an internal investigation hadn’t found intentional wrongdoing by any of its staff. Westpac has been accused by Australia’s financial-intelligence agency of the biggest breach of the country’s money-laundering and terrorism financing laws in history, with more than 23 million breaches that include failing to detect transfers that may have been used to facilitate child exploitation in Asia and failing to report in a timely way about $7.5 billion in international transfers.”

“We completely accept that some important aspects of Westpac’s financial crime risk culture were immature and reactive, and we failed to build sufficient capacity and experience in some important areas,” said Westpac CEO Peter King.

New York Times

Bankers on defense

Some community lenders are willing to go the extra mile for their clients. Take Justine Petersen, a community development financial institution in Ferguson, Mo., where on Tuesday night about a dozen of its employees “formed a human chain” around a barbecue restaurant for two hours to discourage vandals and arsonists.

“Groups such as Justine Petersen, which mostly lend to minority-owned businesses across the United States, are not regular banks. They use a combination of government funds and private donations to seed businesses that banks won’t deal with. But the looting and damage that have marred protests in the past week have added a new set of tasks for many of these organizations, akin to those of a security guard or emergency workers. In places like Ferguson, Minneapolis and Wilmington, Del., where violent groups have destroyed property by smashing windows and setting fires, representatives from these lenders have been the first to make contact with devastated business owners and help organize their defense.”

CRE storm clouds

Landlords of commercial real estate spaces are feeling the squeeze from tenants pushing to renegotiate better terms during the pandemic, and that might create huge issues for lenders. "Banks, which have $2.38 trillion of commercial real estate loans on their books, could face a stampede of landlords asking to restructure the loans they took out to buy properties where tenants are falling behind on their rents. After the last financial crisis, losses on commercial real estate lending peaked in 2009, when 3.3 percent of loans were written off, according to the Federal Reserve, but weighed on many banks for years."


Citi moves into the breach

Citigroup “is looking to ramp up its commercial banking operations across Europe, Middle East and Africa, plugging gaps left by rivals facing fallout from a coronavirus-induced recession. The U.S. bank plans to expand its business lending division catering to companies with annual turnover between $25 million and $2.5 billion with a slew of new hires and office launches in several Western European countries by the end of 2020.”

“The time is right to expand despite fears of credit losses caused by the pandemic, as rivals pare lending to smaller, fast-growing companies which find they need a global bank when liquidity is being used up by domestic or blue chip clients,” Ray Gatcliffe, head of Citi Commercial Bank for Europe, Middle East and Africa (EMEA), told Reuters.

Separately, Citi is “forming a new strategic advisory group within its investment bank. The new group of roughly 80 bankers merges the Financial Strategy Group and the Shareholder Advisory and Data Science group and will be led by Muir Paterson, who has been running Citi’s activist defense group. In addition to shareholder defense, the group will leverage its data capabilities to serve a broader set of clients and offer insights into client’s asset bases, corporate finance structure and tax strategies,” executives told Reuters.

“Our shareholder advisory group has been helping clients look beyond the near-term to assess their potential vulnerabilities from a defense perspective, as well as consider opportunities for potential growth and M&A as the market slowly finds some stability,” Paterson said.


Politicians in the U.S. and U.K. criticized HSBC and Standard Chartered Thursday “after the banks backed China’s national security law for Hong Kong. The reaction highlighted the predicament facing the two banks, based in Britain but with deep roots in China where they are trying to expand when the country’s ruling party is clashing with Britain and the United States.”

“I wonder why HSBC and StanChart are choosing to back an authoritarian state’s repression of liberties and undermining of the rule of law,” Tom Tugendhat, British Conservative Party member and chair of the Foreign Affairs Committee, said on Twitter. Sen. Rick Scott, R-Florida, tweeted that HSBC had “chosen profits over human rights.” At the same time, “people who said they are HSBC customers posted on social media that they will close their accounts in response to HSBC’s backing of Beijing.”


We’re like the National Guard for small businesses. I love the idea of us being dispatched.” Galen Gondolfi, a senior loan counselor at Justine Petersen, a community development financial institution, which helped one of its clients, a restaurant in Ferguson, Mo., defend itself against vandals.

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CDFIs AML Whistleblower BNY Mellon Citigroup