Receiving Wide Coverage ...
Deutsche to Slim Down: Deutsche Bank plans to get smaller and simpler. The German lender unveiled a wide-ranging strategy aimed at improving profitability and capital ratios Monday, including plans to winnow down its investment banking and retail businesses. Deutsche will also aim to shed another $3.8 billion in expenses and focus on bolstering its transaction banking, asset and wealth management operations. It also announced on Friday plans to get rid of its Postbank retail unit. Reuters suggests Deutsche's move is evidence of a sea change in banking board rooms: "The benefits of size and reach, for years considered the holy grail of global banking, are now viewed as being outweighed by the cost and complexity of running businesses across dozens of countries." It appears investors aren't so wild about the trend; shares in the bank fell 3% in early trading. But perhaps shareholders will be more cheerful if the changes help Deutsche avoid expensive legal snafus. As a result of the bank's $2.5 billion settlement over Libor-rigging charges, its first-quarter net profit dropped by half to $608 million. On the bright side, the bank boosted revenue by 24% year-to-year, propelled by a strong investment banking performances. Wall Street Journal, Financial Times, New York Times
This Bank Was Made for Walking: HSBC is making noises about leaving London, and the papers say the decision is all about taxes. Lawmakers and voters in the U.S. as well as the U.K. should take note of the effects of Britain's rapidly increasing bank levy, according to an unsigned op-ed in the Journal: "the more you tax an activity like banking or manufacturing, the less you get of it." The FT is less hostile to the bank tax, but Jonathan Ford also suggests continuously raising the levy will likely backfire. Another tax hike "would drag on the willingness of financial institutions to invest and do business in the U.K., ultimately diminishing the tax take from the sector in future," he writes.
Wall Street Journal
If the lone-gunman theory of the May 2010 flash crash checks out, why did it take authorities five years to finger London trader Navinder Sarao? Basically, investigators messed up, members of the committee that supervised the probe tell the paper. In order to catch data that could be traced back to Sarao, investigators would have needed to broaden their analysis of the day's trading to include bids and orders as well as actual trades.
Look out, Citigroup: Wells Fargo is getting close to surpassing its big-bank competitor in size. If the bank goes through with a possible deal to purchase a $74 billion commercial loan portfolio from General Electric, it will be "within a whisker of reaching parity with Citi."
Is the Export-Import Bank good for U.S. national security? Former cabinet members Madeleine Albright and William Cohen vote yes, while former White House deputy national security advisor Mark Pfeifle says nothing could be further from the truth. "For decades, Ex-Im has sent American taxpayer money to companies and countries that either have no place doing business with America or actively undermine U.S. national security interests," he writes in an op-ed, citing the state-owned Russian bank Vnesheconombank as one example.
Critics of the revolving door between Wall Street and Washington often point out it's greased by millions of dollars in exit payments for bank executives who go into public service. Now union trade group AFL-CIO plans to take aim at the practice at Citigroup's annual shareholder meeting Tuesday. "It is not in shareholders' best interests to pay talented employees to leaveunless there is some explanation [for them joining government] that makes folks uncomfortable," says the director of AFL-CIO's office of investment.
Crain's New York Business: Crain's New York Business takes a look at banks and fintech companies targeting millennials and underserved customers, including BankMobile (owned by Customers Bancorp in Reading, Pa.,) and GlobeOne, a company that charged $9.95 a month for a smartphone app that offers "deposit account with a debit card, a savings account with a line of credit, free money transfers with other customers and a chance to earn income as a result of referrals through its 'Social Boost' program."