Goldman’s Chavez to retire; credit unions on bank buying spree

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Happy trails

Martin Chavez, co-head of Goldman Sachs’ securities division and former chief financial officer, “once seen as a future chief executive candidate,” said he is retiring from the bank and “moving to California, where he plans to spend more time with his two young children and teach a course at Stanford University.”

“His ascension up Goldman’s ranks—a gay, tattooed, Latino techie who became the face of a new breed of nerds ruling Wall Street—was a sign of changes across the financial industry.”

“Mr. Chavez is the latest trading executive to leave Goldman since Mr. Solomon’s promotion. Others include Pablo Salame and Isabelle Ealet. After his retirement, Mr. Chavez will become a senior director of the firm.”

“Chavez, 55, will be replaced by Marc Nachmann, a London-based, 25-year veteran of the firm who was previously co-head of Goldman’s global investment banking division. The reshuffle comes four months before a long-awaited investor day at which [CEO David] Solomon has promised to reveal further details of a pivot from Goldman’s investment banking and trading roots towards consumer banking and serving smaller companies.”

Wall Street Journal

Turf encroachment

The recent spate of credit unions buying up small banks “in record numbers … is prompting pushback from the banking industry.” Credit unions have bought 21 banks since last year, versus just 12 purchases over the previous five years. “Bankers say the deals are proof credit unions are growing too aggressively given their not-for-profit business model. Credit unions say they are driven by the same market forces that have driven hundreds of bank mergers in recent years.”

Winners and losers

A decade after the financial crisis, American banks rule global investment banking. “Last year, U.S. banks took home $7 of every $10 in merger fees, $6 of every $10 in stock commissions, and $6 of every $10 paid to hold and move corporate cash.” European banks, meanwhile, are “smaller, less profitable and beating a hasty retreat from Wall Street.”

Demand concerns

The KBW Nasdaq Bank Index of large commercial banks dropped 1.8% on Tuesday, “its biggest one-day percentage loss since August 23 … as weak manufacturing data and a drop in bond yields renewed fears over a slowdown in U.S. economic growth … raising concerns about demand for bank loans.” The broader S&P 500 fell only 0.7%.

Growing again

The Federal Reserve Bank of New York said the Fed’s balance sheet, “which has recently stopped shrinking, may once again start growing later this year.” The change “would be technical, and wouldn’t signal a change in the central bank’s view on the economic outlook,” the New York Fed said. The Fed currently holds $3.8 trillion of government and mortgage-backed securities.

Get your nonperforming loans here

First Financial Network, an Oklahoma City-based financial firm run by the husband-and-wife team of John and Bliss Morris, “has carved out a niche selling nonperforming loans—many of them real-estate—in countries like Mexico, Nicaragua, Spain and the U.S.” And “business is booming. The volume of nonperforming loans as a percentage of total loans grew rapidly in several countries between 2010 and 2017, particularly in Europe, Central Asia and Africa,” according to the World Bank.

Elsewhere

Ron Shevlin's got a nice piece on Forbes asking if either Apple or Amazon can become "full stack banks" (full stack = "a complete, end-to-end product or service that bypasses existing companies"). The short answer: they're not there — yet. But neither are legacy banks.

Over on TechCrunch: "European banking app Monese partners with deposits marketplace Raisin."

In Japan, depopulation and super low interest rates are pushing regional banks toward riskier holdings in an effort to stay afloat, Bloomberg says.

Quotable

“I tell people if your top priority is your career on Wall Street, I think that’s interesting and I support you and I don’t want to hang out with you. My top priority is peace of mind. No. 2 is my kids. No. 3 was Goldman Sachs.” — Martin Chavez, co-head of Goldman Sachs’ securities division, announcing his retirement from the firm.

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