Goldman opens up; how strong are banks?

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It takes two
Citigroup named John Dugan, one of its board members and Comptroller of the Currency under President George W. Bush, as its next chairman, succeeding Michael O’Neill, who is retiring in January. The move means Citi will continue to separate its chairman role from its CEO position, which is held by Michael Corbat.

“The appointment of a government insider and non-banker as Citi’s chairman marks a historical turnabout for the financial conglomerate built by a banker’s banker, Sandy Weill, in the 1990s,” the Financial Times says. Wall Street Journal, Financial Times, American Banker here and here

Greater transparency
The alleged involvement of two former Goldman Sachs employees in the 1MDB financial fraud “has forced the firm to shine a spotlight on its business culture and internal controls.” In a 400-word disclosure in its third quarter earnings report, the bank acknowledged “for the first time” that it could face “significant penalties resulting from the allegations.” The report also “highlights potential weaknesses in Goldman’s compliance program.”

Separately, Goldman’s new chief financial officer, Stephen Scherr, said the bank is conducting a “comprehensive front to back review” of all its businesses and will release a report on it next spring.

Wall Street Journal

Mind your own business
Payday lenders’ lawsuit against federal financial regulators shows that the Obama administration “so loathed payday lending that they tried to ruin a legal industry by cutting it off from the banking system. This tactic could be used to destroy any business — from gun stores to abortion providers,” the paper says in an editorial. “Regulators have no business blocking lawful companies from the U.S. banking system.”

King of the hill
Ping An Insurance Co. raised its stake in HSBC to more than 7%, or nearly $12 billion, from 5%. That makes it the bank’s largest shareholder, ahead of BlackRock.

Financial Times

Cause for concern?
Several recent developments — including stock price declines, decreased regulation and rising interest rates — “are undermining the sanguine stance” among American banks that their “systemic riskiness” isn’t anything to be concerned about, Patrick Jenkins, the paper’s financial editor, writes. “It all adds up to a more worrying outlook for banks than the policymakers who plotted the post-crisis clampdown intended. Sad to say, but come the downturn — and some senior figures on Wall Street are now predicting it next year — there could well be plenty to see here.”

Spreading the Karma
Credit Karma, one of the largest American financial technology firms, is buying Noddle, a U.K.-based credit reporting business, its first overseas acquisition. Nichole Mustard, Credit Karma’s co-founder and chief revenue officer, said entering the deal was “a natural first step” toward its “much larger expansion goals.”

New York Times

Going along for now
Swift, the European-based messaging service that facilitates international money transfers among more than 11,000 financial institutions, “has succumbed to pressure from the Trump administration and severed ties with Iranian banks. But the move could deepen the United States’ rifts with the European Union and strengthen the bloc’s resolve to set up a payments system that can operate apart from Washington’s influence.”


Selling the secret sauce
JPMorgan Chase is letting clients tap into its “all-seeing” software program that allows traders to value financial assets. The Investment Analytics Platform allows bank customers to run analytics on their own investments. The bank said it has sold subscriptions to more than 200 big investors, with another 42 expected to sign up by yearend.

Planting for the future
Cogni, a New York-based digital banking start-up, has raised $1.7 million in its initial venture capital funding round. The firm, in which Barclays owns a 2% stake, plans to hold deposits for customers as it books hotels, flights and movie tickets. But CEO Archie Ravishankar said the firm "plans to operate on a borrowed charter" and won't seek a bank charter. It sees itself as more of a tech company than a bank. "Cogni will derive a significant amount of revenue from partnerships with companies that are offering products and services to its customers," according to Reuters.


We are not innovating a lot within the financial services space but we are innovating a lot in the lifestyle space.” — Cogni CEO Archie Ravishankar

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