BofA adds to holiday cheer; AI could be a savings tool

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Restructuring

JPMorgan is a revamping its wealth management business units “in an effort to better compete with big-bank rivals such as Morgan Stanley. The bank is creating a unit that will combine its U.S. wealth-management operations for affluent clients and the Chase branch network’s financial-advisory business. The restructured business will also include JPMorgan’s new You lnvest online brokerage,” the Wall Street Journal reports.

“The change positions the bank to have one set of operations for clients with up to $25 million in assets. The new unit will be headed by Kristin Lemkau, currently the bank’s marketing chief. The bank plans to name a new head for its marketing efforts in the coming weeks.”

Separately, Lori Beer JPM’s chief information officer, “said artificial intelligence could help the bank develop new products and services for helping people build retirement savings, among other things. AI-based virtual assistants, for example, could be used to help consumers save money for retirement.”

“I do think we are uniquely positioned to really have an impact on how AI will address social-economic issues that provide wider access to financial services in our communities,” she told the AI Summit.

Meanwhile, the bank’s co-president Gordon Smith told employees he was “sickened” by a report in Wednesday’s New York Times in which two black men — a JPM financial advisor and a prospective client — had taped conversations that showed possible racism at the bank. “All of us feel absolutely sickened — not about the article, but about what happened at one of our branches in Arizona,” Smith said. He added, Chase takes “such great pride in diversity and inclusion at the company” and so “this strikes right at the heart of who we are, and what we believe in, and what this company is all about.”

Another spy accusation

Credit Suisse, which allegedly spied on its former wealth management chief as he was preparing to defect to rival UBS in September, is being accused by another former executive of spying on her more than two years earlier. “Colleen Graham, who worked for a joint venture half owned by the bank, said she believes a woman followed her over three days [in July 2017], allegedly in retaliation over her stance on an accounting issue at the joint venture, according to filings released Tuesday by a U.S. labor court. Ms. Graham was previously Credit Suisse’s compliance head for the Americas and spent 20 years with the bank before being selected to co-head the joint venture, called Signac. She wasn’t an employee of the bank at the time of the alleged surveillance.”

After the most recent episode of alleged spying became public, “Graham emailed Credit Suisse Chief Executive Tidjane Thiam, Chairman Urs Rohner and board member John Tiner with details of her alleged surveillance. She asked them to investigate and to share her information with regulators and a law firm investigating the spying” on Iqbal Khan, the executive who is now at UBS.

Financial Times

A tale of two nations

Bank of America CEO Brian Moynihan “has joined a chorus of U.S. bankers predicting a strong end to the year for trading and investment banking. Mr. Moynihan told investors on Wednesday that the two divisions would record higher fourth-quarter revenues than a year earlier, a day after upbeat remarks from senior executives at Citigroup, JPMorgan Chase and Goldman Sachs.”

“News on Monday that Morgan Stanley would cut 1,500 jobs to deal with the ‘uncertain’ outlook had raised questions about whether investment banks were enjoying the rebound analysts expected. But senior executives speaking at the Goldman Sachs financials conference in New York this week painted a brighter picture.”

It’s a different story in Europe, where Credit Suisse “has softened its full-year financial targets and targeted hundreds of millions of fresh cost-saving measures, making it the latest European bank to back away from its goals. Switzerland’s second-largest lender now seeks a return on tangible equity of at least 8% for 2019, compared with its previous ambition for 10 to 11%, executives told investors on Wednesday,” the paper says.

The new forecast “follows a plunge in Credit Suisse’s investment banking revenue, with the M&A unit expected to make a big loss this year. The bank, like many across the region, is also suffering from an extension of negative interest rates and slowing economic growth in Europe.”

Forex suit

One of the law firms that won a $2 billion settlement against banks in the U.S. for allegedly manipulating foreign exchange prices has filed a similar action in the U.K. against Barclays, Citibank, Royal Bank of Scotland, JPMorgan Chase, UBS and MUFG Bank. It is the second such suit to be filed this year.

“The two cases come after the EU’s competition watchdog levied a €1 billion fine on five [of the] banks that are pursued in the latest case. There are a few differences between the two claims, including the number of banks the action is being brought against and the scope of the transactions being included,” the paper says. The newest case was filed by the Hausfeld law firm, which said it is “seeking to represent the interests of thousands of participants in the foreign exchange market.”

Mum’s the word

“Some leading Wall Street and European banks are avoiding mentions of Hong Kong’s anti-government protests in the research they supply to clients, out of fears they will upset Beijing and risk an increasingly important source of revenue,” the paper says. “Banks in the city have said in private that discussing the market impact of months of simmering political unrest is too sensitive, underscoring the challenges faced by bankers in the restive finance hub.”

Quotable

“The myopic, feckless and piecemeal attempt to address socially desirable initiatives, such as green finance and [small business] lending, via bank capital regulation risks thwarting the [Basel committee’s] progress in improving minimum global standards. This approach is ineffective and, in the longer term, dangerous.” — William Coen, the former secretary general of the Basel Committee on banking supervision, arguing against a proposal that would allow banks to reduce the amount of capital they hold for making certain types of loans

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