Morgan Stanley to buy E-Trade; ING CEO named to head UBS

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Morgan Stanley/E-Trade deal

In what the Wall Street Journal is calling “the biggest takeover by a giant U.S. bank since the 2008 crisis,” Morgan Stanley said it is buying E-Trade Financial “in a $13 billion deal that will reshape the storied investment bank and firmly stake its future on managing money for regular people. The all-stock takeover, set to be announced Thursday, will combine a Wall Street firm in the late innings of a decadelong turnaround with a discount broker built on the backs of dot-com day traders.”

Morgan Stanley CEO James Gorman told the paper, “This isn’t about legacy-building; it’s about getting [Morgan Stanley] ready for prime time.”

Morgan Stanley CEO James Gorman
Morgan Stanley CEO James Gorman

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Changing of the guard

UBS has named ING CEO Ralph Hamers to succeed Sergio Ermotti as CEO. “Hamers will take over on November 1 from Mr. Ermotti, who has spent almost nine years turning around the Swiss lender after it was bailed out during the financial crisis,” the Financial Times says. “The 59-year-old won plaudits for reviving earnings, cleaning up the balance sheet and making UBS the world’s largest wealth manager with $2.6 trillion in assets.”

Hamers, who has been ING’s CEO since 2013, “led the bank through the completion of its post-financial crisis restructuring, repaying the money it received from the Dutch government and returning to dividend payments, while investing heavily in digital services and slashing the size of its traditional branch network,"the paper said. "However, his tenure has more recently been marred by compliance failings. The bank received a record €775 million penalty from Dutch prosecutors in 2018, and has been banned from taking on new customers in Italy for more than a year.”

Ermotti had been expected to leave UBS this year or next. Hamers will continue as ING CEO until June 30. Wall Street Journal, Financial Times

Wall Street Journal

Taxi loan deal

Distressed asset firm Marblegate Asset Management has agreed to buy the majority of the National Credit Union Administration’s large portfolio of taxi-medallion loans. The paper had earlier reported that Marblegate would pay around $350 million for roughly 4,500-medallion loans, most of which are on New York City taxi cabs. “Marblegate already owns about 300 New York City medallions and roughly 1,000 medallion loans, most of which it bought from Capital One in 2018.”

The NCUA acquired the loans following the collapse of several credit unions. “The regulator estimates the National Credit Union Share Insurance Fund has lost $766 million as a result of the risky loans. Members of Congress and advocates for medallion owners and taxi drivers had urged the NCUA to delay the sale. They had hoped New York City would set up a $500 million bailout fund, with the help of private investors, for struggling medallion owners. The NCUA said Wednesday’s deal didn’t preclude a later sale to a public-private partnership.”

Financial Times

Into the fire

The U.K.’s Metro Bank made interim CEO Dan Frumkin’s job permanent on Wednesday, “as the retail lender prepared to outline its second attempted turnround plan in a year. Mr. Frumkin faced immediate pressure from investors and analysts to demonstrate a decisive turn away from the high-growth but high-cost strategy of his predecessors. They ran into problems after the discovery last year of a big reporting error that led to the departure of its chairman and chief executive.”

“Metro’s new broom has more mess to sweep up than most, following the departure of chairman Vernon Hill amid a toxic combination of accounting whoopsies and governance worries,” the paper comments.

Washington Post

Not all is lost

The paper profiles the dozen examiners who work for the Mutilated Currency Division of the Treasury Department’s Bureau of Engraving and Printing. “These experts play forensic scientist with damaged bank notes. They inspect an owner’s unusable money to determine a value, which the Treasury Department will redeem in check form. To consider a claim, the office needs the mutilated currency, regardless of its condition or odor. The more they can piece together, the larger the reimbursement check. Last year, the agency issued checks for more than $35 million to businesses and individuals who had submitted their battered money, hoping to recoup some or all of its value.”

Elsewhere

Access

Atlanta Mayor Keisha Lance Bottoms Wednesday announced the launch of Bank On Atlanta, “a collaboration between financial institutions, community-based organizations and local government to ensure that all residents have the opportunity to be financially healthy by connecting them to safe, affordable, and certified banking accounts.” Among the banks participating in the program are Bank of America, JPMorgan Chase and Wells Fargo.

Quotable

“I believe this plan is predicated on three things we can control, which are costs, simplification of the business, and capital efficiency, rather than being dependent on revenue growth assumptions influenced by the macroeconomic environment.” — HSBC interim CEO Noel Quinn, defending the bank’s third overhaul since the financial crisis

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M&A Morgan Stanley E-Trade Financial UBS Succession planning Medallion loans NCUA
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