“Low-level branch employees fired by Wells Fargo as part of the bank’s effort to get its fake-account problem under control” in 2016 are finding it hard to land jobs in the banking industry even though “regulators, lawmakers and even the bank’s own board have questioned whether the junior staffers were really the ones to blame. That has been little consolation for low-level employees caught up in the scandal. Many have found they are now effectively blacklisted from the banking industry.”
Wells maintains that “a thorough process was followed and the terminations were warranted based on the actions of the individuals.”
A Wells Fargo & Co. sign sits on display outside the company's offices in San Francisco, California, U.S., on Tuesday, April 27, 2010. Wells Fargo & Co., the fourth-largest U.S. bank by assets and deposits, may raise its dividend once capital levels satisfy regulators and if the economic recovery continues, said Chief Executive Officer John Stumpf. Photographer: David Paul Morris/Bloomberg
David Paul Morris/Bloomberg
Bounce back
Bank stocks last week “notched their best week since 2016, rallying alongside a big jump in government-bond yields.” The KBW Nasdaq Bank Index surged 7.76% “as the yield on the benchmark 10-year U.S. Treasury note staged its largest weekly climb since June 2013. The yield rose to 1.901% from 1.552% on optimism about U.S. economic growth and a thaw in the U.S.-China trade standoff. Higher rates tend to boost banks’ net interest margins, a key measure of lending profitability.”
Comings and goings
Comerica said its CFO Muneera Carr is leaving the bank and "treasurer James Herzog has been named interim CFO,” a move that comes as the regional lender braces for lower interest rates that could cut into its bottom line.” Carr’s departure isn’t linked to “any issue, concern or disagreement” with accounting, financial reporting or internal controls, the bank said in a regulatory filing. “Muneera has made many valuable contributions to Comerica, both as chief financial officer and while she served as chief accounting officer,” CEO Curtis C. Farmer said.
Separately, Discover Financial Services has named John T. Greene as executive vice president and CFO. Greene, who was CFO at Bioverativ, which was acquired by Sanofi last year, succeeds R. Mark Graf, under whom “Discover posted strong financial results and a solid balance sheet as it diversified revenue streams in recent years.”
“One area of focus for the new CFO, analysts said, will likely be the payments business, which Chief Executive Roger Hochschild has discussed on earnings calls.”
What's old is new
Banks led by Citigroup, Goldman Sachs, Wells Fargo and JPMorgan Chase “are getting back into the business of building mortgage bonds, laying the groundwork for a market that stands to grow as the Trump administration tries to reduce the government’s role in housing finance. They are adding a jolt of energy to efforts to revive the so-called private-label market for mortgage bonds, which virtually disappeared after it blew up during the financial crisis of 2008. Smaller operators have long tried, but mostly failed, to rebuild what was once among the most significant businesses on Wall Street.”
Crypto conundrum
The cryptocurrency industry “is rushing to comply with new anti-money-laundering standards” adopted recently by the Financial Action Task Force that require exchanges and other firms to “send customer data — including names and account numbers — to institutions receiving transfers of digital funds, similar to a wire transfer at a bank. But crypto firms don’t have the infrastructure in place to send customer data to each other. There is also the challenge of getting firms in a decentralized industry to reach a consensus on how a system for sharing information should be paid for and governed.”
Financial Times
Payments push
Deutsche Bank, “the world’s biggest clearer of euro denominated payments,” is joining the Interbank Information Network (IIN), “the financial services industry’s biggest blockchain project, in a move that will lower costs at the German bank and give global heft to a system created to speed up cross-border payments.” The JPMorgan Chase-led network of 320 banks, most of which use JPM as a correspondent bank, “have agreed to swap information on global payments over blockchain. Their goal is to free payments from the lengthy and costly delays that affect around 1.5% of cross-border payments by making information about the transfers instantly accessible to every bank in the payments chain.”
Winning streak
Jamie Dimon has been the “larger-than-life boss” of a “larger-than-life bank” for the past 14 years. Yet, “in the face of a trade war with China, declining interest rates, mounting fears of recession and widespread concerns about asset bubbles, JPMorgan Chase is still thriving.” The paper says the "challenge will be to maintain JP’s outperformance through the bad weather as well as the good."
Elsewhere
In the cards
Responding to some Wall Street analysts who have “begun to question whether Citigroup’s big bet on credit cards will backfire if the U.S. economy enters a recession,” card executives at the bank assert “that strong underwriting procedures will prevent catastrophic losses, and that they are sticking with the card strategy because it is crucial to hit growth targets.”
Citi is “among the most aggressive promoters of zero-interest balance transfers,” but bank spokeswoman Elizabeth Fogarty said Citi “is lending responsibly, through balance transfer offers as well as other products.”
“We diligently monitor market and environmental conditions on a continuous basis and will make adjustments as needed,” she said.
Quotable
“A network that only has JPMorgan’s clients will have very big natural limitations. Having Deutsche join — and hopefully Deutsche will be the first of several other large banks — is going to help us drive towards ubiquity and ubiquity is a pre-requisite for the success of the network.” — Takis Georgakopoulos, head of payments at JPMorgan Chase, about Deutsche Bank joining the Interbank Information Network, which seeks to speed up cross-border payments
Many legal experts think the Supreme Court will rule in favor of the Consumer Financial Protection Bureau in a case challenging its funding. Such a ruling would unleash a flurry of litigation that has been on hold pending the outcome of the constitutional challenge.
Lawmakers including one of the original sponsors of the Corporate Transparency Act have filed an amicus brief in the appeal against an Alabama court ruling that the law is unconstitutional, which would throw into question Treasury's newly-established beneficial ownership structure.
The Connecticut bank —a regional traditionally regarded as a cautious lender — said nonperforming loans and leases rose 53% year-over-year. The uptick was in mostly the commercial-and-industrial loan space, although there was one nonperforming commercial real estate loan, executives said.
The two regional banks are anticipating that borrower demand will increase in the back half of the year. High interest rates and economic uncertainty have been muting the appetite for borrowing.
In a letter to Treasury Secretary Janet Yellen last week, the Massachusetts senator highlighted the growing use of cryptocurrencies by malicious organizations abroad and underscored the need for anti-money-laundering and counterterrorism provisions in future proposals.
