Capital One hacked; job cuts and a reorg on tap for Citi

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Big hack
Capital One said a hacker accessed the personal information of more than 100 million credit card customers and applicants, “one of the largest-ever data breaches of a large bank.” Paige A. Thompson, a former employee of Amazon Web Services, which hosted the database, was arrested by federal agents in Seattle.

“The bulk of the exposed data involves information submitted by customers and small businesses that applied for Capital One credit cards between 2005 and early 2019, the bank said, including addresses, dates of birth and self-reported income.”

“The suspect, Paige Thompson, 33, left a trail online for investigators to follow as she boasted about the hacking, according to court documents in Seattle, where she was arrested and charged with one count of computer fraud and abuse.”

On her Twitter account, Thompson “spoke darkly about her mental health, writing on July 5 that she intended to check herself into a facility for treatment.”

“I have a whole list of things that will ensure my involuntary confinement from the world,” she wrote. “The kind that they can’t ignore or brush off onto the crisis clinic. I’m never coming back.”

“The hack appears to be one of the largest data breaches ever to hit a financial services firm. In 2017, the credit-reporting company Equifax disclosed that hackers had stolen the personal information of 147 million people. Last week, it reached a $700 million settlement with U.S. regulators over that breach.”

Facing up to the challenge
Responding to “challenging market conditions,” Citigroup is planning to cut “hundreds” of jobs in its global markets division “imminently.” At the same time, the bank is combining its stock trading business with its prime brokerage unit, but the job cuts “were in no way related” to that reorganization, the Financial Times said.

“Citi was a relatively good performer” in the second quarter, the FT noted, “but still suffered a 4% fall in fixed income trading year on year and a 9% drop in equities revenues on the same basis.” Financial Times, Reuters

On Sunday the FT reported that the bank is under pressure from investors and some people within the bank “to be bolder in changing the bank’s strategic direction.”

Wall Street Journal

Boom times
Lenders originated $565 billion of mortgage loans in the second quarter, the most in more than two years, putting them on a pace to originate more than $2 trillion this year, only the third time that has happened since the financial crisis.

“The 30-year mortgage rate unexpectedly dropped to below 4% in May and has remained near its lowest level in three years, opening a window for borrowers who bought at higher rates to lower their payments and for purchasers to jump in. With the Federal Reserve expected to lower short-term rates this week and the yield on the longer-term 10-year Treasury yield lingering just above 2%, the period of low rates stands to continue.”

AI to the rescue

JPMorgan Chase will use artificial intelligence to “make marketing messages more effective” after signing a five-year deal with software company Persado. The bank “will start by applying Persado to direct-response emails and online display ads, and perhaps headlines on direct mail, but doesn’t plan to use it for broader branding work. The deal follows trials that included using Persado on JP Morgan Chase pitches for credit cards and mortgages.”

Financial Times

The wrong kind of interest
BBVA has been named a “legal entity of interest” in a Spanish government investigation into corporate spying at the bank as well as “accusations of bribery, the disclosure of confidential information, and business corruption.” Former chief operating officer Ángel Cano and seven other current and former executives have been named as persons of interest in the case.

“The court is investigating whether BBVA hired a company to spy on a would-be buyer and members of the government of the former Socialist prime minister José Luis Rodríguez Zapatero more than a decade ago.”

Transparency
U.K. banks with more than £50 billion in retail deposits will be required to publish their “living wills” every two years starting in June 2021, “alongside an assessment from the Bank of England as to whether they pass muster.” The rules published by the BoE “are the final part of the plan to avoid taxpayer bailouts in the future.”

Welcome aboard
Revolut, the British online bank, is planning to name Metro Bank executive David MacLean as its new CFO, “the latest in a wave of senior hires with more traditional banking skills.” MacLean is expected to join Revolut later this year.

“Dave brings a wealth of banking and financial services experience to the table and, as we prepare to launch Revolut in new international markets, will play a crucial role in our mission to help improve the financial wellbeing of millions of people worldwide,” CEO Nik Storonsky said.

Washington Post

Abuse and misuse
Eric Blankenstein, the former Consumer Financial Protection Bureau official who left the agency after being accused of writing racially insensitive blog posts more than 10 years ago, “may have abused his authority” and “misused his position for private gain,” according to a CFPB inspector general’s report.

Quotable

“We are competing with other countries that know how to play the game against the U.S. A small rate cut is not enough, but we will win anyway!” — President Trump, commenting on the 25-basis point rate cut the Federal Reserve is expected to deliver following its two-day monetary policy meeting that begins Tuesday.

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Hacking Originations Artificial intelligence Living wills Capital One Citigroup JPMorgan Chase BBVA
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