Credit card issuers bulk up; Diversity still a challenge for banks

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One for all

European Union finance ministers want a centralized, independent agency to supervise anti-money-laundering compliance throughout the bloc, the Wall Street Journal reports. Such supervision is now largely handled on a country-by-country basis. “The push comes amid a wave of allegations of weak internal controls at some of the region’s largest banks. In a report published in July, the European Commission said fragmentation in the way EU members supervise anti-money-laundering compliance has left the financial system vulnerable to criminal activity.”

However, “Eurozone finance ministers failed to agree on plans to accelerate the introduction of a bloc-wide banking union, casting doubt over completion of the project,” the Financial Times notes. “As part of the plan Germany proposed to introduce a deposit insurance scheme, but this was met with opposition from Italy, among other member states. The setback illustrates the risk that euro area reform will get bogged down in domestic political wrangling as coalition governments in member states including Italy and Germany struggle to coalesce around key reforms.”

Wall Street Journal

Keeping it fluid

Treasury Secretary Steven Mnuchin told House lawmakers “he is working closely with the Federal Reserve to make sure there are ample reserves, or deposits banks keep at the Fed, following funding strains in money markets in September. Mr. Mnuchin said the Treasury is also working with bank regulators to review whether regulatory issues contributed to the interest-rate spike. The agency is also looking at the timing of corporate tax payments, which drained cash from the banking system at the same time that large Treasury debt auctions settled.”

“We’ve talked in our weekly meeting [about] making sure the Fed is prepared for year-end activity so there are ample reserves,” Mnuchin said, referring to Fed Chair Jerome Powell.

Worth its weight

Some of the largest U.S. banks have started “to add metal to some of their credit cards with the idea that the hefty feel makes customers feel special and maybe spend more. For many bank customers, the heavier the card, the greater the cachet,” the paper reports.

“At least 20 types of credit cards in the U.S. contain metal, including offerings from JPMorgan Chase, Citigroup, Wells Fargo” and Capital One. “More than 32 million metal credit cards are in circulation world-wide, up from around five million five years ago. While that is a tiny fraction of the four billion credit cards in circulation,” the number of metal cards is expected “to quadruple in the next two years.”

Financial Times

Owe Canada

“Canada’s biggest banks are facing a storm of challenges, with a slowdown in consumer spending and a dearth of public listings pushing some big lenders to make hefty job cuts as their profitability falters,” the paper reports. “Canadian banks are grappling with multiple issues, chief among them a reckoning for consumers, whose spending buoyed the country’s economy for years but who accumulated a mountain of debt in the process. The number of consumer insolvencies has climbed to the highest level since the financial crisis a decade ago. Just over 135,000 Canadians declared bankruptcy or entered an insolvency agreement in the year to the end of October, according to the federal Office of the Superintendent of Bankruptcy, up almost 11% from the month before.”

Going for the green

The European Banking Authority said Friday it would “examine how green projects might be given favorable treatment on banks’ balance sheets in the latest move by Europe to tackle climate change,” the paper reports. “In essence, the EBA will scrutinize whether, and how, banks could hold less capital against loans that helped finance climate-friendly projects.”

Washington Post

Little diversity

Banks show “slow progress” in improving their workplace diversity, according to the data they are required to provide to the federal government each year. But “only two of the 15 biggest banks in the country — TD Bank and BNY Mellon — agreed to publicly disclose their most recent government diversity reports in response to a request from the Washington Post,” the paper reports.

“At TD Bank, there was one black woman among 72 senior executives in 2015. There were no black women in its top ranks last year out of 42 senior executives overall. In 2018, the data showed BNY’s U.S. executive tier, made up of 14 people, was all white, except for one Asian man. The bank has since added two black executives.” The paper offered a summary for the other banks as well.

Quotable

“I can assure you this is something that FSOC [the Financial Stability Oversight Council] is very focused on, and this is something that in my role as Treasury secretary, Chairman Powell and I are working on.” — Treasury Secretary Steven Mnuchin, commenting on steps the government and the Fed plan to take to ensure there are ample bank reserves available as the end of the year approaches