Bramson gets his moment; Where Deutsche-Commerzbank talks went wrong

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It’s go time
“The fight over the future of Barclays,” which “will help determine whether any of Europe’s banks can retain global ambitions,” begins Thursday at the bank’s annual meeting. CEO Jes Staley, who “runs one of the last full-service banks left in Europe that compete with Wall Street,” believes he has the bank “primed to take on the likes of Goldman Sachs and Morgan Stanley.” But activist investor Edward Bramson “couldn’t agree less” and wants the bank “to scale back its Wall Street ambitions, to become a consumer and commercial lender with smaller investment-banking operations.”

Bramson conceded before the meeting that he doesn’t have the votes to win a seat on Barclays’ board.

But he “insisted that his attempt to win a directorship had already brought about positive changes at the underperforming investment bank, pointing to a change of leadership, a reduction in bonuses and a new focus on costs.”

Post mortem
The Financial Times takes an in-depth look into the doomed Deutsche Bank-Commerzbank merger attempt “to understand how a deal that had seemed inevitable ended in failure” and where both banks go to “find convincing plan B’s.”

European Central Bank regulators are worried that Deutsche Bank may fail its U.S. stress tests, “adding to pressure on Germany’s biggest lender to make changes to its investment bank after failed merger talks with Commerzbank.” The ECB is “concerned that Deutsche Bank’s standing has weakened since it flunked U.S. stress tests in 2015, 2016 and 2018 and a repeat would cause a bigger dent in confidence among customers and business partners.” At the same time, the Federal Reserve, which is currently examining the bank’s American operations, “could also impose conditions curbing its Wall Street investment bank, further undermining its earning power.”

No more paper
Intercontinental Exchange said it will pay $335 million to acquire Simplifile, which facilitates electronic processing of mortgage records and runs one of the largest networks connecting mortgage lenders, settlement agents and county governments. “With Wednesday’s deal, ICE is doubling down on its wager that U.S. mortgages will continue their transition from an awkward paper-based system to electronic processing. Last year, ICE acquired 100% of the parent company of Mortgage Electronic Registrations Systems, a national electronic registry for tracking servicing rights and ownership interests for U.S. mortgage loans.” Wall Street Journal, Financial Times

Wall Street Journal

On hold
The House of Representatives will suspend its deadline for Deutsche Bank and Capital One to turn over President Trump’s financial records until a court hears the president’s legal attempt to block the subpoenas. “The deadline suspension means the banks won’t turn over those documents to the congressional committees for at least a few weeks, pending a decision by the court.”

Opposite directions
The two largest publicly traded U.S. life-insurance companies had sharply divergent earnings in the first quarter. MetLife reported an 8% profit increase “in the last earnings period for former president and chief executive Steven Kandarian,” who had been CEO since 2011. But rival Prudential Financial reported a 32% drop in earnings “as a new CEO delivered his first full quarter of results.”

Fined
The Consumer Financial Protection Bureau fined Conduent Education Services, a servicer of government-issued student loans, $3.9 million for failing to failing to “take the required steps to ease the burden on borrowers facing difficulty repaying their loans.” The agency said the company since 2011 “failed to process loan adjustments in a timely manner, causing some borrowers to pay more than they owed.”

Financial Times

Out the door
Metro Bank said it lost 4% of its deposits in the first quarter after a “small number of large commercial and partnership customers” took their business elsewhere. The British bank, founded by Vernon Hill, the American banker who founded Commerce Bancorp in the U.S., has been under fire since “the discovery of a historic accounting error” in which it “miscategorized a large number of commercial loans, meaning it did not have as much capital against them as it should have.” That forced the bank to cut its growth plans. Metro’s stock has fallen more than 50% since the beginning of the year.

The bank’s shares plunged as much as 16% Thursday morning to a record low after it reported what one analyst called an “awful quarter for the bank.”

Quotable

“He wants us to retreat into a foxhole? He should go back to Connecticut.” — Barclays CEO Jes Staley, commenting on activist investor Edward Bramson’s demand that the bank reduce the size of its investment bank. Bramson lives in Connecticut.

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