Underwhelming Credit Suisse’s announcement early Wednesday that it plans to buy back at least $2 billion in stock over the next two years and raise its dividend 5% a year met with a shrug from investors, with the bank’s stock up just a little more than 1%. “Investors don’t yet value Credit Suisse’s promises,” the Wall Street Journal says. “Credit Suisse remains too exposed to trading activity in financial markets and to riskier elements of investment banking, specifically making loans to companies backed by private equity and its securitization business.”
Charm offensive Federal Reserve vice chairman for supervision Randal Quarles and Federal Deposit Insurance Corp. chairman Jelena McWilliams “are seeking a detente with the firms they oversee after years of acrimony. The two Trump-appointed officials have spent several months touring the country, visiting bank examiners in regional offices and asking them to adopt a less-aggressive tone when flagging risky practices and pressing firms to change their behavior.” But “critics say friendlier examiners could blunt the effect of post-crisis rules, giving banks more freedom to engage in riskier practices.”
Randal Quarles, vice chairman of supervision at the U.S. Federal Reserve, listens during a House Financial Services Committee hearing in Washington, D.C., U.S., on Wednesday, Nov. 14, 2018. Quarles played down the risk of automation eliminating jobs and noted the "strong demand for labor in our current economy" as well as the hope that technology will enhance worker productivity. Photographer: Zach Gibson/Bloomberg
Zach Gibson/Bloomberg
Arise’s fall AriseBank, which promised to start a cryptocurrency bank and claimed to have raised $600 million in funding, agreed to pay $2.3 million to settle Securities and Exchange Commission charges of scamming investors. “The company vowed to set up over 1,000 ATMs that would let users tap into their cryptocurrency accounts, a claim that attracted scrutiny from legitimate crypto entrepreneurs who doubted its claims and informed regulators.”
Financial Times
Testing ground Revolut, the British fintech startup, has secured a European banking license from Lithuania, where it plans to start offering checking accounts and loans across the European Union before expanding into the U.K., France and Poland later next year.
Not proved A British jury failed to reach a verdict in an insider trading case against a former UBS compliance officer and her friend, who were accused of using insider information to make £1.4 million from stock trades. “The inconclusive decision is a blow to the Financial Conduct Authority,” the FT said. “Since 2016, the UK’s financial markets seem to have become murkier. Suspicious trades have ticked up to their highest level in eight years, with share prices of UK listed companies moving abnormally ahead of more than one in five takeover announcements.” The FCA said it would seek a retrial.
New York Times
Robin Hood? The Times has a long profile of Nicolas DeMeyer, the former personal assistant to Goldman Sachs CEO David Solomon, who killed himself earlier this year after being arrested for stealing $1.2 million of wine from Solomon’s Long Island home. “Had he robbed a random 0.1 percenter, it would have been easy simply to take the word of people who knew Mr. DeMeyer and described him as a modern-day Tom Ripley, just another grifter undeserving of empathy,” the Times writes. “But Goldman Sachs is a flash point in the rise of economic inequality — and Mr. DeMeyer lifted more than 500 bottles of Mr. Solomon’s wine without anyone noticing. So perhaps there was a certain inevitability to the recasting of Mr. DeMeyer as Butch Cassidy in Hermès sneakers.”
Elsewhere
Helping hand The German government is “looking at concrete ways [it] can assist in a potential combination of the country’s two largest lenders,” Deutsche Bank and Commerzbank, Bloomberg reports. The government has held “high-level discussions which have included Finance Minister Olaf Scholz and Deutsche Bank Chief Executive Officer Christian Sewing. The talks include potentially changing existing laws to make the steps necessary for a merger less costly.”
Deutsche Bank’s shares, which have been trading at record lows recently following several major scandals, rose as much as 9% on the report.
Quotable
“The banks should feel that their supervisor is going to be firm but fair.” — Federal Reserve vice chairman for supervision Randal Quarles.
The Jackson, Mississippi, company will use proceeds from the sale of its Fisher Brown Bottrell Insurance unit to restructure its investment portfolio, moving $1.6 billion of low-yield securities off the balance sheet.
The store-branded card issuer is raising annual percentage rates and adding fees for paper statements to compensate for lost revenue. The Consumer Financial Protection Bureau's new regulation is scheduled to take effect on May 14.
At the banks' annual meetings, shareholders at both companies struck down proposals that would have split the board chair and CEO roles. Two other proposals also failed to win shareholder support, one concerning energy financing and another on pay gap analysis.
Congressional Review Act resolutions are ramping up ahead of the 2024 election cycle. Experts say that, although none are likely to become law, the resolutions are still powerful messaging and political tools.
The ABA is testing an information-exchange network to allow banks to share their fraud data with each other. Companies including Baselayer are also building solutions.
Republicans on the House and Senate Small Business committees are accusing the SBA of being irresponsible in granting Funding Circle permission to participate in its flagship loan-guarantee program.
