Fintechs look to Mexico for growth; Amex’s next hurdle

Receiving Wide Coverage ...

Still their guy
Regardless of what regulators and members of the House Financial Services Committee think of him, Wells Fargo still apparently loves its CEO Timothy Sloan, granting him $18.4 million in compensation for 2018 — 5% more than the year before — including a $2 million incentive award. Wells said the incentive award was due to the bank’s financial performance “as well as Mr. Sloan’s continued leadership on the company’s top priority of rebuilding trust.”

“The pay disclosure comes a day after the bank received a rare rebuke from a top regulator, minutes after Mr. Sloan finished testifying in Congress, and as regulators consider whether to force out top executives or directors,” the Wall Street Journal reports.

Sloan is probably used by now to hearing the bank accused of cheating its customers, but he probably wasn’t expecting to be blamed for “financing the caging of children,” as alleged by Rep. Alexandria Ocasio-Cortez, D-N.Y., at Tuesday’s hearing before the House Financial Services Committee. The freshman Congresswoman was apparently referring to the bank’s financing of some detention facilities for illegal immigrants. “I’m not familiar with the specific assertion that you are making, but we weren’t involved with that,” Sloan replied.

Fighting back
UBS was sued in London “for uncapped damages by a former graduate trainee who alleges she was raped by a colleague nearly 20 years her senior before the bank mishandled the matter and failed to protect her.” According to the Financial Times’ account of her suit, the woman “had to sit near her alleged rapist for nearly three weeks after first making her allegations to the bank’s human resources team in 2017.”

“The prospect of a publicly fought tribunal claim adds to regulatory scrutiny by the UK’s Financial Conduct Authority into how seriously the bank took the claimant’s allegations and whether it was fully frank with the regulator,” the paper says, “as well as a parallel police investigation into the former trainee’s accusations.”

A former “woman of the year” at Societe Generale is suing the French bank for 5.2 million euros ($6 million) “after colleagues accused her of being a disrespectful control-freak and her bosses decided she was unfit for management,” Bloomberg reports. Zeina Bignier, the bank’s former head of public sector origination, claims she was hassled by her managers and compliance officers before being fired in 2016.

Bignier is the third woman executive to sue a French bank over employment issues in the past few weeks. Two former employees of BNP Paribas have sued that bank in London claiming “they were effectively forced out by colleagues because of their gender amid allegations that one of the women was called ‘princess’ and the other found a witch’s hat on her desk.”

Wall Street Journal

Filling the gaps
Fintech investors — including Goldman Sachs, “which is providing a credit line of up to $100 million to Credijusto, a four-year-old financial technology firm in Mexico City backed by former Morgan Stanley Chief Executive John Mack and Capital One Financial Corp. co-founder Nigel Morris” — “are flocking to Mexico to try to fill a gap in the country’s credit market: loans to young businesses looking to expand. Goldman’s involvement is a reminder of how small fintech companies are challenging and reshaping the banking industry, especially in developing markets like Latin America.”

Trouble ahead?
American Express may have “successfully weathered the great credit cards reward war,” but “rapid lending growth sets it up for future risks.” At its annual investor day on Wednesday, Amex “somewhat vaguely indicated that [credit loss] provisions will rise by less than 30% this year, compared with a 21% rise in 2018. In other words, if provisions run ahead of estimates, perhaps due to an economic downturn, the hit to earnings will be substantial. That is a risk Amex shareholders may not be prepared for.”

Scott Eells/Bloomberg

New horizons
JPMorgan Chase said it expects to open 90 branches and hire as many as 700 employees by the end of this year as part of its plan to open 400 new locations and hire up to 3,000 workers over the next five years. The bank is targeting cities such as Charlotte, St. Louis, Nashville, Pittsburgh and Minneapolis. It also plans to open branches near major universities.

Financial Times

Change of heart
The Basel Committee on Banking Supervision warned banks Wednesday that “cryptoassets such as bitcoin pose potential risks to financial stability, taking a harder line than earlier guidance from a similar body. The statement is an apparent reversal from a letter in March 2018 from the Financial Stability Board, in which the rulemaker’s initial assessment found that ‘cryptoassets do not pose risks to global financial stability at this time.’” The Basel Committee called on banks “to increase transparency, including by making public disclosures of exposure to cryptoassets, both to consumers and to advisory boards.”

Their call
The eight men who will decide whether or not Deutsche Bank and Commerzbank merge and the future of German banking are profiled. They “have very different agendas,” the paper says.

Washington Post

Quicker decisions
Fannie Mae and Freddie Mac have started using optical character recognition (OCR) to underwrite mortgages. This “remarkable new technology automates underwriting for applicants who are self-employed or have significant side income. Applications that previously would have taken days to analyze and verify may now take just minutes.”

Quotable

“Why was the bank involved in the caging of children and financing the caging of children to begin with?” — Rep. Alexandria Ocasio-Cortez, D-N.Y., referring to detention facilities at the U.S.-Mexico border which she said Wells helped finance, in a question to Wells Fargo CEO Timothy Sloan on Tuesday during his appearance before the House Financial Services Committee.