Morgan Stanley promotes senior execs; strong dollar hits bank stocks
Receiving Wide Coverage ...
Picked: Morgan Stanley promoted trading chief Ted Pick to head its investment banking unit, “a move that puts him in charge of half of the firm’s revenue and cements his frontrunner status” to eventually replace CEO James Gorman. The firm also promoted Franck Petitgas, a longtime investment banker, to run the firm’s international business. Both Pick and Petitgas will report to President Colm Kelleher. In addition, the company named Susie Huang to replace Petitgas as co-head of investment banking. “She will be the first woman to run investment-banking at a top U.S. firm,” the Wall Street Journal says.
Gorman, who turns 60 this week, “is unlikely to leave soon,” the Financial Times notes. “But by elevating two of its most senior executives, Morgan Stanley has made its longer-term succession planning more apparent.”
Gorman “is keen to ensure the transition to the next generation goes more smoothly” than it did back in 2005, when “one of the most dramatic regime changes ever seen on Wall Street took place at the bank.”
Speaking of succession, the New York Post reports Goldman Sachs has planned a board meeting in late September or early October to discuss CEO Lloyd Blankfein’s retirement and President and COO David Solomon’s elevation to CEO. It also names the four top candidates to for president and COO: Stephen M. Scherr, CEO of Goldman Sachs Bank USA; John Waldron, co-head of investment banking; Richard Gnodde, vice chair; and Marty Chavez, CFO.
Greenback blues: The strengthening dollar is one reason behind the drop in international bank stocks this year, and the downtrend may get even worse, the Heard on the Street column warns. “When the greenback gets stronger, non-U.S. banks’ appetite for risk diminishes and their share prices suffer. This phenomenon bites banks almost everywhere outside the U.S. Investors should be paying attention now, not only because the trend can help explain why bank shares have performed badly so far this year, but because it suggests they might continue to do so.”
Might this spark an urge to merge among the big European banks? “The idea of megamergers between banks is back, a decade after the last round of grand-scale dealmaking left shareholders nursing painful losses,” the FT reports. No deal seems imminent, but many bankers are expecting a large-scale deal over the next year or so.
Wall Street Journal
Insider charges: The Securities and Exchange Commission charged the former CEO of Heartland Payment Systems with insider trading. The agency accused Robert Carr of telling his romantic partner, Katherine Hanratty, that Heartland was about to be acquired by payment processor Global Payments in 2015. The two then bought Heartland shares, earning a profit of $250,628 when they sold the shares after the deal closed. The SEC is demanding that the two disgorge their profits and pay a civil monetary penalty.
Conflict of interest?: Some large shareholders in Deutsche Bank are none too happy about the bank’s hiring of private equity giant Cerberus, one of its biggest investors, to act as an adviser on restructuring the bank. “It’s similar to accountants working as consultants — it’s not illegal, but it’s surely not looking good,” one investor told the paper. “One issue of concern to shareholders is the possibility that [Cerberus] might gain access to potentially confidential information as an adviser.”
More IT problems: Beleaguered U.K. bank TSB suffered another technical glitch on Tuesday when its online banking and in-branch IT systems went down for several hours. “The outage highlights the issues still facing TSB as it attempts to recover from one of the worst banking IT disasters in recent memory [in April]. The problems began when an attempt to move customer data to a new IT platform designed by its Spanish owner Sabadell left hundreds of thousands of customers unable to access their accounts.”
“We still do not fully understand what Brexit is, its economic effects and how its effects will play out: these are huge question marks that will stay for a long time. I do think that, because of Brexit, some businesses across the financial and manufacturing sectors will be relocating from the U.K. to other parts of Europe, including Italy.” — JPMorgan Chase CEO Jamie Dimon in an interview with an Italian newspaper.