Editor's note: Morning Scan will not publish on Friday, March 25 in observance of Good Friday. We’ll be back on Monday, March 28.

Receiving Wide Coverage ...

Blindsided: Credit Suisse chief executive Tidjane Thiam has said neither he nor his CFO were aware of the size of the bank’s “positions in risky, illiquid segments,” following a bad first quarter for trading that saw revenues fall 40%-45% (analysts’ expectations were revenues would decline 37%). Apparently staff had concealed risky exposures from senior management last October. Thiam said some of the positions were accumulated before he joined the bank in July and they had been problematic in recent years as trading limits were raised. “A limit that keeps moving is not a limit,” he said on a conference call. “That’s really where things went wrong.” It “was a surprise for a number of people and was not a widely known fact,” he said, that there are consequences involved. Thiam said he asked the board to cut his bonus by 40%. Wall Street Journal, New York Times, Financial Times

Extradited: A British trader who allegedly contributed to the so-called stock market “flash crash” in 2010 will be extradited to the U.S. after losing a court battle Wednesday. The U.S. has alleged that Navinder Singh Sarao, 37, used spoofing – an illegal trading strategy in the U.S. and U.K. whereby traders place orders with the intention of canceling them – helped stocks fell sharply in May 2010. He has been accused of making $900,000 in profits that day and $40 million over four years using similar trading tactics. Sarao faces 22 criminal charges from the Justice Department and a civil case from the U.S. Commodity Futures Trading Commission. The U.S. has sought his extradition since last year. Wall Street Journal, New York Times, Financial Times

Wall Street Journal

Next week Ellen Alemany will take the helm at CIT Group, a firm struggling to get back on track after facing a series of obstacles under John Thain. On an analyst call Wednesday, she termed the firm’s share-price performance “unacceptable.” Whether she can bring the bank remains to be seen; its executives aren’t expecting to see a boost in shareholder returns anytime this year. The bank intends to focus on domestic banking and continue a plan to exit its commercial-air business. But Alemany didn’t offer any new strategies. Even after separating out the air-leasing unit, CIT will have more than $50 billion in assets, and still be considered systemically important. CIT has been weighed down by restructuring, regulatory compliance and credit risk management costs; its deal with OneWest was muddled with accounting issues and culture clashes; and investors have been pushing it to downsize further. American Banker reports Alemany's focus is on profitability, not revenue growth. "What we're doing today is really putting in place a strategy for the company, post the OneWest transaction," she said. "I think we have a tremendous opportunity."

Curbing executive pay is one of the last unresolved issues from Dodd-Frank. Regulators are now planning to impose requirements that would hold bank executives’ bonuses longer than the standard of three years, in order to allow banks more time to claw back bonuses if risk-taking executives’ conduct is found to have caused material damage to the company. How long they’re planning to hold the bonuses hasn’t yet been determined, but people familiar with the matter say it probably won’t be as long as the U.K. banks’ 10-year standard. Regulators also have yet to figure out the portion of the bonuses that would be deferred. The original draft of the rules suggested as much as half.

Financial Times

Despite some shock and anxiety to Credit Suisse regarding a tank in first quarter trading revenue, the bank has revealed it attracted $15.5 billion in net new assets in the quarter, almost triple the new assets in the same period a year ago. As part of the latest version of its restructuring plan it is moving away from its reliance on investment banking and refocusing on wealth management, following the path taken by UBS, now considered by analysts and the market as one of the strongest European banks. But analysts say although Credit Suisse is moving quickly and in the right direction, it needs to move more quickly and more decisively.

Android Pay has launched in the U.K. The mobile wallet and payments service is open to Visa and MasterCard holders and can be used with any merchant that accepts contactless payments as well as on the London tube, buses and trains. Initial banking partners include Bank of Scotland, First Direct, Halifax, HSBC, Lloyds, M&S Bank, MBNA and Nationwide. The service seeks to rival Apple Pay, which launched in the U.K. last year. Android Pay launched in the U.S. in September and claims it has 1.5 million new registrations monthly.

Elsewhere ...

The Boston Globe: JPMorgan Chase officials have said the company is spending $500 million this year on cybersecurity. Bank of America reportedly spent $400 million on it last year. But the Boston Fed is concerned about smaller banks that don’t have the multi-million budgets to combat cyberthreats. They’re weaker links in the financial system; easier targets for anyone looking to steal money, identities or otherwise infiltrate the system. But the system is so interconnected an attack on a small bank could become a virus that spreads to one of the Big Four.

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