JPMorgan shakes up consumer unit; BofA to raise minimum pay to $25 an hour

Receiving Wide Coverage ...

Two-woman race?

“JPMorgan Chase is putting two of the contenders to succeed Chief Executive Jamie Dimon in charge of its sprawling consumer-banking operation,” The Wall Street Journal reported. “Consumer-lending chief Marianne Lake and Chief Financial Officer Jennifer Piepszak are taking the reins of its consumer and community bank from Gordon Smith, who will retire at the end of the year. Jeremy Barnum, the bank’s head of global research, will become finance chief.”

“The move comes two years after JPMorgan put Ms. Lake and Ms. Piepszak in their current roles and established them as front-runners to one day run America’s biggest bank. The decision to place the women, both 51 years old, in charge of a unit that serves half of all U.S. households and accounts for roughly 40% of the bank’s profit further cements that status.”

“The two women will oversee a business that generated $51.3 billion in revenue last year, about 42% of JPMorgan’s total turnover, and has more than 120,000 employees,” the Financial Times said.

“Tuesday’s announcement brings renewed attention to what has been a hotly debated question within financial circles for years: who would replace Mr. Dimon, the charismatic CEO who led JPMorgan through the financial crisis and is the longest-tenured bank leader on Wall Street,” The New York Times said. Naming “two female executives as joint heads of its largest division potentially paves the way for the nation’s largest bank to be led by a woman.”

“The management shuffle is happening as the bank is bringing employees back to the office as COVID-19 cases continue to fall and more Americans are fully vaccinated,” American Banker noted.

Wall Street Journal

Pay raise

Bank of America “plans to raise its hourly minimum wage to $25 by 2025, putting it on track to surpass its big-bank peers during a time of worker shortages across the country.” The bank “also said it is requiring all of its U.S. vendors to pay employees who are dedicated to the bank at least $15 an hour.”

“In March 2020, Bank of America raised its minimum hourly wage to $20, a year ahead of plan, after boosting it to $17 an hour in 2019. The bank said it has more than doubled its minimum hourly pay since 2010.”

AML chief

Deutsche Bank has appointed Joe Salama, its U.S. general counsel, to head its global anti-financial-crime unit. Salama “will split his time between the bank’s headquarters in Frankfurt and the U.S., part of the bank’s efforts to keep a close relationship with U.S. authorities following a series of investigations and fines.”

“Deutsche Bank, which has run into problems with U.S. and European authorities over lapses in money-laundering controls, has been eager to show much of its legal troubles are behind it. But issues remain. Last month, BaFin, Germany’s financial regulator, ordered the bank to take further steps to safeguard against money laundering, signaling it is still unhappy with the bank’s progress.”

Financial Times

Ready to rumble

Andrea Orcel “has halved his claim for compensation from Santander over its U-turn on appointing him chief executive, as his case against the Spanish bank heads to a Madrid courtroom this week.” The banker, who now heads Italy’s UniCredit, “reduced his claim to between €57.6 million and €67.1 million, having previously sought €112 million after Santander withdrew its offer to give him the top job just over two years ago.”

“The legal tussle between Europe’s best-known investment banker and Santander, his former client when he worked at UBS and Merrill Lynch, is one of the highest-profile disputes in European banking in recent years. Orcel alleges that the bank’s reversal of the decision it made in September 2018 constitutes a breach of contract. Santander claims that Orcel’s offer letter did not amount to a contract under Spanish law.”

New York Times

Not so fast

“The Biden administration’s effort to provide $4 billion in debt relief to minority farmers is encountering stiff resistance from banks, which are complaining that the government initiative to pay off the loans of borrowers will cut into their profits and hurt investors. Now, three of the biggest banking groups — the American Bankers Association, the Independent Community Bankers of America and National Rural Lenders Association — are waging their own fight and complaining about the cost of being repaid early.”

“By allowing borrowers to repay their debts early, the lenders are being denied income they have long expected, they argue. The banks want the federal government to pay money beyond the outstanding loan amount so that banks and investors will not miss out on interest income that they were expecting or money that they would have made reselling the loans to other investors.”

Quotable

“It looks like a two-woman race for the CEO job of JPMorgan.” — Wells Fargo banking analyst Mike Mayo, commenting on the bank’s naming Marianne Lake and Jennifer Piepszak to head its big consumer banking unit.