Receiving Wide Coverage ...
Shakeup at Santander: Santander's recently elected chairman Ana Botín made some big changes to the bank's leadership in a move to make her mark on the family-run Spanish lender, according to the papers. The bank's longtime chief financial officer Jose Antonio Álvarez has been named chief executive. He replaces Javier Marín, who had served in the role for less than two years. Santander also named three new independent board directors and appointed José García Cantera, who worked closely with Botín at former Santander unit Banesto, as CFO. "The moves show Ms. Botín is surrounding herself with her allies, shaking up a board that her father built up over decades," the Wall Street Journal reports, alluding to the death of former chairman Emilio Botín in September. The Financial Times suggests shareholders will be happy about the leadership shuffle: "The changes offer the clearest signal to date that Ms. Botín wants to update Santander's corporate governance and board structure, both of which have raised concerns with some investors in the past." The New York Times offers no opinion.
Citi's Stock Tip Specials: Citigroup has agreed to pay $15 million to settle accusations that bank analysts offered better information to big investors, including one incident in which an analyst told clients at an "ideas dinner" that he expected the value of a certain stock to dip despite the fact that he had bumped his public recommendation on the stock from "sell" to "hold." In another noteworthy episode, a Citi analyst helped prep two client companies for investor roadshows before their initial public offerings. Citi's deal with the Financial Industry Regulatory Authority is the bank's fourth settlement related to faulty research practices since the beginning of 2012, according to the Journal. The FT notes that a string of regulatory actions in this area over the past decade "has contributed to doubts among investors and employers over the value of equity research." Wall Street Journal, Financial Times, New York Times
Wall Street Journal
A financial trade group is fighting back against recently issued rules that aim to force firms that manage collateralized loan obligations to keep skin in the game. The Loan Syndications and Trading Association has filed a lawsuit "alleging the Securities and Exchange Commission and Federal Reserve's rules were arbitrary and exceeded the agencies' authority to impose them." The regulation requires firms to hold some of the risk for the loans backing the securities on their books.
Would splitting the roles of chairman and chief executive at Bank of America actually help the bank avoid costly litigation and scandals? John Carney has his doubts. "There is scant evidence that an independent chairman would have pushed back against the acquisitions of Countrywide and Merrill Lynch that have proved so costly to Bank of America," he writes. A more effective solution would be to give more power to all independent directors so they can keep the chairman and independent lead director in check, he suggests.
Risk culture is a better indicator of bank safety than capital ratios, according to Simon Samuels, a member of the Financial Stability Board's enhanced disclosure task force. He recommends regulators impose tougher capital rules only on those banks with risk management problems, although he acknowledges that culture is difficult to quantify.
New York Times
Sen. Elizabeth Warren's objections to the nomination of Antonio Weiss as Treasury undersecretary are misguided, according to a somewhat condescending column by Andrew Ross Sorkin. Warren objects to Weiss's involvement as an advisor on the Burger King-Tim Hortons deal, which will move the company's headquarters to Canada, and to the fact that he's a Wall Street banker. Sorkin argues that the merger isn't as bad as other tax inversions and says Weiss didn't have that much to do with the deal anyway; he also says that Weiss's financial background makes him well-qualified for the particulars of the job. "Sadly, Ms. Warren's denunciation of Mr. Weiss is a reason many talented people in the private sector are unwilling to take on government roles," Sorkin writes. "They worry that, like Mr. Weiss, they will be attacked by what seems like just another campaign talking point."
New York Fed president William Dudley's remarks comparing the Fed's role to that of a fire warden rather than a cop on the beat are indicative of the regulator's overall identity crisis, according to law professor Peter J. Henning. "The issue is how the Fed will balance the conflicting roles it plays as an overseer of the banks, protecting them to ensure they operate successfully, and as a law enforcement agency charged with pursuing misconduct," he writes.