Changes at Mastercard; JPM gets on climate change bandwagon

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Shuffling the cards

Mastercard said its chief product officer, Michael Miebach, will become CEO at the beginning of next year, succeeding Ajay Banga, who will become executive chairman. He, in turn, will replace Richard Haythornthwaite, who will step down.

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Fabulous fintech

As expected, Intuit, the parent company of TurboTax and Mint, agreed Monday to pay $7.1 billion for Credit Karma, “a start-up that has become one of the most popular financial applications for young consumers,” according to the New York Times. “The deal is expected to create a Silicon Valley financial technology company that can help people easily get their credit scores, calculate and file their taxes and better access loans. Credit Karma grew to be worth billions of dollars by giving people access to their credit scores and then used the information to serve them advertisements for new credit cards and loans,” the paper adds.

“By joining forces with Credit Karma, we can create a personalized financial assistant that will help consumers find the right financial products, put more money in their pockets and provide insights and advice,” Intuit CEO Sasan Goodarzi said.

“The deal highlights the growing appetite among financial services groups for data and its increasing value in the digital age,” the Financial Times says. “The takeover is the latest significant acquisition in the financial technology sector, as banks, payment processors, brokerages and other providers seek to bolster their tech prowess by taking over fast-growing start-ups and industry disrupters.”

American Banker’s Penny Crosman takes a look at the deal, which the CEOs of the two companies say is good for consumers.

Elsewhere in the fintech world, Revolut “has raised $500 million in a long-awaited funding round that makes the U.K. company one of the most valuable fintech groups in Europe,” the FT reports. That puts a $5.5 billion value on the company, “three times the valuation at its last fundraising round in 2018, and equaling the record for a private European fintech set by Sweden’s Klarna last year.” The company is attempting “to shift from being a prepaid card used mainly for overseas travel, to an international bank that customers use on a daily basis.”

“The rapid growth of the company is an example of how new financial-technology pioneers are challenging established banks,” the Wall Street Journal says.

Twisting in the wind

Unicredit CEO Jean Pierre Mustier may have taken himself out of the running for the top job at HSBC, but the British bank isn’t about to hand the job permanently to interim chief Noel Quinn. “A spokeswoman for HSBC on Monday said the search ‘remains ongoing,’ indicating Mr. Quinn won’t get the job by default,” the Journal reports.

“Analysts on Monday said that stance undermines Mr. Quinn’s credibility as the bank embarks on a strategic overhaul announced by the interim CEO last week. They said it also raises questions about the board’s judgment to string out the process while Mr. Quinn moves to cut thousands of jobs and reallocate capital away from Europe and the U.S. and into Asia.”

“The longer that HSBC prevaricates, the shakier the bank’s succession planning looks,” the FT comments. “HSBC’s protracted hiring strategy smacks of a disunited board battling to cope with the slowdown in Asia while the industry is reshaped by regulatory constraints, low interest rates and diminished returns.”

“That creates job opportunities elsewhere — doors revolve fast in times of change," the paper says. "Banks across Europe are shrinking or ditching their high-rolling investment banks, slashing costs and searching for a new model army able to ride the turn.”

Indeed, HSBC isn’t the only big European big bank looking for a new CEO. ING’s boss was recently hired by UBS, while “Barclays is poised to join the hunt as the British lender seeks candidates to replace Jes Staley. Credit Suisse and Royal Bank of Scotland have recently appointed new people to the top job.”

“The current succession struggles are in many ways a proxy for the wider crisis gripping European banking,” the FT says. “On almost any measure, the continent’s big banks have struggled since the financial crisis. They are less profitable and less valuable than before. The industry’s predicament is in part due to a shift of financiers into less regulated, more lucrative areas, such as private equity and asset management. Many capable and ambitious European bankers also moved to Wall Street competitors, where pay is often substantially higher. Unlike in Europe, banking has generally regained its status as a well-respected profession on the other side of the Atlantic.”

No fly zone

Investment banks including Citigroup, Credit Suisse and Nomura Holdings “have curbed trips to Italy on fears that the coronavirus outbreak across the north of the country could quickly spread across Europe," Reuters reports. “The curbs come as coronavirus infections have soared across northern Italy over the past few days, causing seven deaths and more than 200 cases. It is the first time banks have restricted trips within Europe as most financial institutions have so far only applied travel bans to mainland China, imposing a 14-day quarantine to those who had recently returned.”

Mastercard cut its revenue outlook for the current quarter and the full year, “citing the impact of the coronavirus on cross-border travel and commerce. The company expects full-year revenue growth to be at the ‘low end’ of its previous outlook, which called for revenue growth in the low teens.”

“The fundamentals of our business remain strong. However, cross-border travel, and to a lesser extent cross-border ecommerce growth, is being impacted by the coronavirus,” the company said.

Elsewhere

Changing climate

JPMorgan Chase plans to announce new climate-change initiatives at its investor day on Tuesday, “including restrictions on financing coal mining and Arctic drilling, as well as a $200 billion target to provide financing for sustainable projects,” Reuters reports. “The bank has faced years of criticism from environmentalists for its relationships with fossil-fuel companies, scrutiny it has sought to avoid at events like its annual shareholder meeting, which are open to the public. The bank’s changing approach at its 13th annual investor day, which is invitation-only, comes as other big U.S. banks have announced similar initiatives.”