Receiving Wide Coverage ...
Goldman Names New Managing Directors: At Goldman Sachs, 425 employees got their golden ticket. The company named its newest batch of managing directors — a much sought-after position at the company just one step below the rank of partner. Goldman now names a new class of managing directors every other November following a lengthy and grueling vetting process, followed by a class photo taken the following January. Before 2013, the bank named new managing directors every year.
This year's class of managing directors features 106 women, the largest percentage in a single year for the bank, the New York Times reports. Nearly one-third of the newly minted managing directors are millennials, and just over a fifth are former summer interns. The selections also point to a shift in power within the investment bank, the Financial Times writes. Of the 425 new managing directors, 96 will be in the advisory division, 13 in merchant banking and 103 in securities.
Many talented employees were not promoted and could seek their fortunes elsewhere, according to the reports.
HSBC Names New Board Members: U.K.-based HSBC has nominated two independent directors to its board to replace outgoing board members. The former chief executive of spirits company Diageo, Paul Walsh, will join the bank's board in January, while the chairman and CEO of French insurer AXA, Henri de Castries, will do so in March, according to the New York Times. Leaving the board are Oracle CEO Safra Catz, BBC Trust chairwoman Rona Fairhead and HSBC deputy chairman Simon Robertson. Fairhead and Robertson, two of the longest serving members of HSBC's board, are retiring from the company.
Additionally, the bank announced Heidi Miller, who joined the board in 2014, will replace Fairhead as chairwoman of HSBC North America, the Financial Times notes. The changes come amid shareholder pressure for a change in the company's corporate culture following the revelation of a tax evasion scandal at the company's Swiss private banking unit. HSBC is also considering relocating its headquarters, perhaps outside the U.K.
Parsing Fedspeak: Federal Reserve officials continue to drop hints it will raise interest rates in December. As the New York Times reports, New York Fed president William Dudley said in a speech the fundamentals that gave him cause for hesitation back in August have receded, clearing the path for a policy change. Meanwhile, the paper says, Chicago Fed president Charles Evans didn't focus on the first rate hike, but rather gradual increases that will lead to a 1% rate at the end of 2016. And Richmond Fed president Jeffrey Lacker, who pushed for rate hikes at the last two Fed meetings, continued his push for raising rates more than a percentage point per year.
The opinions reflected in these speeches largely mirror the sentiment among economists. In a poll conducted by the Wall Street Journal, 92% of economists said they believe rates will be raised in December. Of course, the public sentiment doesn't make the Fed's choice all that much easier. The Journal notes the Fed will soon grapple with the question of wages: while unemployment has certainly improved, wages have yet to rise, giving the Fed some time before rates will have to tamp inflation. "The problem for investors is the pool of available workers has shrunk to the point that when wages heat up, they may heat up in a hurry, forcing the Fed's hand," the paper says. Plus, when the Fed does raise rates, it will need to appease the skeptics — including those wary now because of a slide in copper futures that has in the past served as a bellwether for recessions.
Regardless, markets have already begun to prepare. The Washington Post reports Wall Street had its worst session in over a month Thursday due in part to the comments from the Fed policymakers. Investors appear to have taken their places at the starting blocks as they await rate hikes, ready to change their investing strategy.
Wall Street Journal
In another take on Thursday's news that Apple is eying peer-to-peer payments via Apple Pay, the paper looks at how truly transformative that change would be. While Apple Pay has always functioned as a payment delivery service, the addition of P2P payments would also turn it into a payment acceptance service — one that could eventually also apply to merchants. This change would not only mean that Apple Pay was targeting the likes of Venmo, but that it was looking to compete with the likes of payment processors, card networks and ATM operators. And if its costs were to remain low, Apple Pay could even flip the script on how card servicers do their business.
The Federal Reserve appears to be considering measures that would restrict the ability of bank examiners to leave the regulator for posts at financial institutions. The move would expand existing restraints on such career moves and would represent a nod to concerns from lawmakers about the transparency of the central bank. The mulling comes a month after the New York Department of Financial Services fined Goldman Sachs for its improper supervision of an employee who obtained confidential information from a former co-worker at the New York Fed.
A mobile bank chief is taking swings at traditional banks, saying their efforts to keep up with the move to digital banking are like "putting lipstick on a pig." So why does Anthony Thompson, chairman of the soon-to-launch U.K.-based Atom Bank, say that? Because while traditional banks have made sincere efforts to roll out state-of-the-art mobile apps and other digital services, underpinning those are archaic technology systems that have begun to cause more and more problems. Case in point: the glitches experience by HSBC and the Royal Bank of Scotland. Ultimately, he believes his bank and other mobile-first competitors will wipe out the competition much like Uber has hit the taxi industry.
Speaking of Uber, the paper took a look at the so-called "Uberization" of financial services in its latest installments of the "Beyond Banking" series. The paper details how banks have begun to face the threats posed by new lenders, such as Lending Club, Funding Circle and Prosper. In particular, P2P lenders have upended the mortgage game for banks, which long served as a primary driver of income for many retail banks. These new lenders have easily doubled their business in recent years, and say they don't see any limit to how big they can get. Driving their success is the lack of stringent regulatory requirements or costly branches, which allows them to function much more efficiently than traditional banks. Nonetheless, marketplace lenders still remain small in the scheme of things — they represented only 1.1% of all new unsecured consumer credit in the U.S. last year. For more on alternative lenders, be sure to check out American Banker's Marketplace Lending section, where we regularly post takes on this growing industry.
New York Times
A report from the British Bankers' Association warns the U.K. has begun to lose its financial competitiveness due to policy and regulatory decisions. The study, which was created with consulting firm Oliver Wyman, found that British banking assets had fallen 12% since 2011, but grew in the U.S., Hong Kong and Singapore during that same time. Similarly, the banking industry in Britain has shed 8% of its jobs. The banking association's leader said the country faces "a watershed moment" as further regulations are set to go into place in coming months, which many argue would make it more difficult to do business in the U.K. and make it all the more unattractive.
Citigroup has begun to roll out a "smart branch" model in Manhattan, which could serve as a guide for future changes to the bank's retail operations. The branch design imports ideas from 100 existing smart branches in Europe, Asia and Latin America, which incorporate more digital services in lieu of traditional branch features. The design, made in coordination with the firm Eight Inc., foregoes desks, "bandit barriers" and paper forms. Instead, branch staff carries iPads and perform transactions with customers at workbenches on desktops or mobile devices. The branch also has a luxury suite, where customers can get a free cappuccino. The redesign comes as the bank retools its branch strategy, including the recent closing of its 17 remaining branches in Boston.