Citi taps new global consumer chief, says chief risk officer to depart
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In and out
Citigroup named Anand Selva, one of incoming CEO Jane Fraser’s top lieutenants, to succeed her as head of its global consumer bank.
“The consumer bank has long been viewed as an area where Citigroup could increase profits,” the Wall Street Journal said. “Mr. Selva has run U.S. consumer operations, which includes both the retail bank and credit cards, since 2018. Mr. Selva, who was previously in Asia for Citigroup, is a leader behind the bank’s focus on digital consumer offerings, largely shunning the heavier focus on branches that defined some rivals. He has been at Citigroup since 1991.”
At the same time, Citigroup said Brad Hu, its chief risk officer, “will depart as the bank works to overhaul its risk-management systems. News of Mr. Hu’s departure arrives a month after federal financial regulators fined Citigroup $400 million and ordered the bank to fix its risk-management systems, citing ‘significant ongoing deficiencies,’” the Journal said.
“The decision to leave was Mr. Hu’s, according to Citigroup. The Federal Reserve and the Office of the Comptroller of the Currency in October said Citigroup failed in various areas of internal controls and risk management, including data management, regulatory reporting and capital planning.”
“The bank has committed to spending an incremental $1 billion on risk and control infrastructure this year,” the Financial Times said. “The two announcements are the first senior personnel announcements since Ms. Fraser was announced as the next CEO of the company in September.”
Hu’s departure “makes way for the company to hire someone else to oversee its massive overhaul of risk management and internal controls,” American Banker’s Allissa Kline reports.
Wall Street Journal
Look beyond the election
Regardless of who wins on Tuesday, “holders of shares in big banks who are hoping for stepped-up capital returns could continue to see one key person in place: The Federal Reserve’s vice chairman for supervision, Randal Quarles. Mr. Quarles’s term doesn’t end until October 2021. Bank regulation often changes at a slow pace, but thanks to Covid-19 there will be some potential important moves in the near term, such as whether to extend dividend and buyback restrictions imposed by the Fed.”
“Housing market investors, meanwhile, may be watching the Supreme Court. In December, the high court is set to hear arguments on a case that in part considers the president’s power to remove the director of the Federal Housing Finance Agency,” which regulates Fannie Mae and Freddie Mac. “As it stands, FHFA director Mark Calabria’s term ends in 2024. But many court-watchers are eyeing a Supreme Court decision in June that the director of the Consumer Financial Protection Bureau could be removed by the president for any reason, and wondering if this sets a precedent for FHFA.”
A Joe Biden victory Tuesday “could open the door to the first major revision in 15 years to the nation’s consumer bankruptcy laws. Mr. Biden has proposed changes that would make it easier for struggling borrowers to file for bankruptcy and reduce the cost of doing so, embracing Sen. Elizabeth Warren’s platform for rolling back amendments to the bankruptcy code he voted for when he was a senator in 2005.”
“The Warren platform adopted by Mr. Biden would eliminate barriers that for decades have prevented people from having student loans forgiven in bankruptcy. Other changes would make it easier for homeowners to modify underwater mortgages in bankruptcy and bolster protections for renters to prevent evictions.”
American Banker's Kate Berry takes a look at who might be tapped to craft bank regulatory policy in a Biden administration.
In good shape
The recent optimism sounded by the U.K.’s big banks “sounds off key” in the face of a possible second lockdown as COVID-19 cases rise. “It may not be entirely discordant, though,” an FT op-ed says.
“The spring lockdowns did not wreak as much economic damage as prophesied. Nor have bad debts mounted, as had been feared. Provisions against loan losses were a fraction of second-quarter levels. Bank bosses argue that their balance sheets have plenty of cushioning. Capital ratios are far above regulatory requirements put in place after the bailouts during the 2009 financial crisis. The gist: We can lend to the consumers and businesses who need cash and absorb the loans that go wrong. That message hasn’t changed in the past day or so, in spite of the new restrictions.”
What took so long?
Varo Money’s acceptance of federally insured customer deposits last month three years after it first applied to do so “was a watershed moment for the industry — coming only weeks after Varo had become the first consumer fintech company to be granted a national banking charter. But the milestone also raised questions in the industry about why it had taken so long for the U.S. to bring fintechs into its regulatory regime, when other countries, from the U.K. to China, have been faster and more flexible.”
“Italian payments provider Nexi has offered to buy Danish rival Nets in a €7.2 billion all-share deal that marks the latest example of European groups racing to consolidate the fragmented digital sector. The deal would come just weeks after Nexi agreed to combine with Italian rival Sia in a €15 billion deal. If successful, the acquisition of both Nets and Sia would turn Nexi into one of Europe’s largest payments operators with a market capitalization of more than €22 billion.”