Breaking News This Morning ...
Deutsche sells insurer: Deutsche Bank, which is under heavy pressure to raise capital, said Wednesday it sold its Abbey Life insurance unit to Phoenix Group Holdings for $1.22 billion. The bank's stock, which hit a 33-year low earlier this week, as it faces a potential $14 billion penalty in the U.S. for allegedly selling toxic mortgage-backed securities, in addition to other problems, including a failed stress test and weak quarterly earnings. The sale, however, will result in a nearly $900 million loss for the German bank. The BBC reported Wednesday morning that Germany is devising a bailout plan, should one be needed, although the bank denied the report. Wall Street Journal, Financial Times, New York Times
Receiving Wide Coverage ...
The long arm of the claw: Wells Fargo's board plans to claw back $60 million in compensation — $41 million from CEO John Stumpf and $19 million from former community banking chief Carrie Tolstedt — for their role in the bank's phony accounts scandal. According to the Wall Street Journal, the money Stumpf is forfeiting represents about a quarter of the total compensation he has accrued over his nearly 35 years at the bank and marks "one of the biggest rebukes to the head of a major U.S. financial institution." Stumpf is scheduled to testify before the House Financial Services Committee on Thursday. Wall Street Journal, Financial Times, New York Times, Washington Post, American Banker
Wells also said it plans to eliminate sales goals for its retail banking business employees starting next week, three months earlier than originally planned. The decision to accelerate the plan, originally scheduled to take effect on January 1.
Gretchen Morgenson writes that Wells Fargo's board failed at all three of it "most crucial" duties. "One is to assess the risks inherent in the company's business and handle them before they develop into a crisis. Another is to dispense compensation that does not encourage bad behavior. And finally, a board must monitor a company's culture, from top to bottom." Sheila C. Bair, the former chairwoman of the FDIC, told Morgenson: "Unfortunately, it appears that the bank's response was to view the problem as employee misconduct and to fire people as opposed to looking at the supervisory chain and culture. Culture and tone at the top are exactly what the board should be looking at."
The unauthorized accounts scandal isn't Wells' only problem, although it's certainly the biggest. Without admitting or denying wrongdoing, the bank agreed to pay $400,000 to settle allegations by the Commodity Futures Trading Commission that it failed to submit accurate reports for its swaps unit.
RBS settles: Royal Bank of Scotland agreed to pay $1.1 billion to the National Credit Union Administration to settle charges it sold toxic mortgage-backed securities. RBS said the cost of the settlement was "substantially covered by existing provisions." The U.K.-based bank still faces unresolved lawsuits from the Department of Justice and the Federal Housing Finance Agency. Coming shortly after DOJ filed a $14 billion claim against Deutsche Bank, the RBS settlement "underlines how the focus of US authorities has switched to European lenders," the Financial Times said. Wall Street Journal, Financial Times
Wall Street Journal
Unsecured focus: Goldman Sachs' new online lending platform is planning to focus on unsecured loans, according to Stephen Scherr, an executive overseeing the effort, which may go live as early as next month. Smaller online lending startups have to worry about securing funding for loans or selling them. "Goldman doesn't have similar concerns," the Wall Street Journal reports. "That gives it the flexibility to underwrite more creatively, letting borrowers pick from a range of sizes, terms and payment schedules for their loans."