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Voicing Some Objection: About two-thirds of Citigroup shareholders endorsed the bank’s executive pay package in a vote at its annual meeting Tuesday (compared to the 93% average of shareholder support for executive pay packages in the S&P 500 last year). Just 63.6% approved Citi’s plan, which proxy advisors strongly discouraged after chief executive Mike Corbat received a 27% raise (to $16.5 million) despite shareholder returns that have lagged that of competitors. Objections to the pay plan more than doubled from last year, when more than 15% voted against the bank. In a different vote, 3.5% voted for a proposal asking Citi to consider breaking itself up, compared to 4% last year. Wall Street Journal, New York Times, Financial Times
Wall Street Journal
Wells Fargo chief executive John Stumpf says he doesn’t see negative interest rates coming to the U.S., but if rates stay low for longer than expected it could cause Wells’ profit margins to “stay under pressure.” Wells Fargo's net interest margin fell to 2.9% in the first quarter from 2.95% in the same period the previous year. The 2008 financial crisis, Dodd-Frank rules and Basel accords have also done their part to keep profitability low, he added. “We now keep a lot more liquidity on the balance sheet,” he said. “We try to encourage our investors not to focus so much on the [net interest] margin because we’re still growing the net interest income.”
Comerica shareholders passed all of the bank’s governance proposals at its annual meeting Tuesday, despite voicing strong dissatisfaction with its recent overall performance. Some investors said it’s been too long since the bank has posted acceptable returns and that it would be better as part of a larger bank than trying to cut costs. However, each of the three measures on its directors and compensation policies received more than 80% of shareholders’ votes.
Wells Fargo plans to roll out eye print verification for corporate customers by July, using identification software from EyeVerify, a biometric security technology startup the bank has been mentoring since 2014. The Eyeprint ID software reads a picture of the users’ eyes, which they take with their smartphones, and translates veins and other physical detailing in the image into digital code that gets matched against a stored template. However, until biometrics are more widely integrated and easily used across mobile devices and desktop and laptop computers, the bank will continue offering consumers and corporate customers the option to enter a typed password.
Lending Club is working on its first securitization deal to ramp up growth. The online lender has struggled to win over investors since its initial public offering in 2014 and its share value has fallen at least 60% in the last year, despite a 1% rally in trading Tuesday. Most large companies in the marketplace lending space use unsecured loans to back bond sales as a growth-driving tactic, but lending Club hasn't, instead sticking to its initial peer-to-peer model whereby individual investors lend money to individual borrowers. Securitizations backed by online loan pools fell 21% in the first quarter (to $1.5 billion) from the previous quarter ($1.9 billion).
As U.S. home prices have risen about 5% year-over-year to February, banks are not only making more mortgage loans, they’re keeping more and bigger mortgages on their books (“jumbo mortgages” often exceed size limits of government-backed guarantors Fannie Mae and Freddie Mac). The share of outstanding mortgage debt held by U.S. banks was 31.7% in October – an almost 31% increase from the same time the year before. For the Big Four banks, that figure was 28% for the same period.
Former Wall Street dealmaker Steven Rattner may not be able to return to the securities industry just yet, as the Securities and Exchange Commission plans to reverse an earlier decision that would have let him. Rattner, who ran the Obama administration’s auto bailout program in 2009, was barred from the securities industry over his alleged role in a pay-to-play arrangement that involved New York state’s flagship pension fund. He is currently chairman of Willett Advisors, the investment arm for Michael Bloomberg's personal and philanthropic assets.
Bank of New York Mellon is conducting due diligence and is in talks to buy start-up trading venue DBV-X as it plans a move further into the repurchase market in Europe. Part of the appeal for institutions in the repo market is they can temporarily borrow cash from investors and pledge bonds as collateral in exchange. BNY Mellon is one of the largest custodian banks that provides intermediaries temporary credit and collateral to help roll over loans. But DBV-X is planning to launch a centralized venue for market participants to exchange collateral – "a radical departure for [a] market that has historically been conducted directly between banks."
New York Times
Jennifer Shasky Calvery is rumored to be heading for a top post at HSBC Holdings. The director of the Treasury Department’s Financial Crimes Enforcement Network for the last four years announced Tuesday her resignation from the agency, effective May 27. Unnamed sources confirmed to the Times Calvery will assume a senior global financial-crime fighting role at HSBC, but did not confirm when she would begin. The rumored move would come during a struggle by the bank to demonstrate it has sufficiently overhauled its anti-money laundering controls, a requirement outlined in a five-year pact with the Justice Department, inked in 2012. Calvery, who previously worked in the DOJ’s money-laundering enforcement unit, left that post months before the prosecution agreement with HSBC.