Morning scan: Wells Fargo's new pay plan; banks borrow
Wall Street Journal
New deal: Wells Fargo is expected to roll out a new retail banking compensation plan that, according to a bank spokeswoman, "eliminates sales goals, measures performance based on customer experience and adds more oversight and risk" management. The program, which is expected to be unveiled this week, is "an attempt to fix what many believe was one cause of its sales-tactics scandal," the paper said. The plan will focus on customer service, usage and growth in primary balances.
Meanwhile, The U.S. Labor Department said an outside attorney representing Wells Fargo tried to impede an investigation into the bank's treatment of its employees by citing her possible appointment to a post in the Trump administration. "Citing such a role in the context of an investigation represents a potential violation of the requirements of recusal from matters related to the activities of agencies for transition team members," a Labor Department administrator wrote to Tammy McCutchen, a lawyer at Littler Mendelson, an employment and labor relations firm. "Your conduct could be perceived as an intention to intimidate a government official in the conduct of their official duties." McCutchen denied any improper statements or conduct.
Transformation: The Journal looks at how Merrill Lynch and other Wall Street firms have transformed their brokers from aggressive, cold-calling stock pushers to "overall financial advisers, providing long-term financial planning and pitching checking accounts, credit cards and other banking products, rather than single stocks."
All in: Morgan Stanley and UBS Group are planning to increase their stakes in their investment-banking operations in mainland China to the maximum extent allowed, "a sign of commitment toward developing more business in the country." Both banks are planning to increase their stakes in their joint ventures to the maximum 49%, up from a current 33.3% at Morgan Stanley and 24.99% at UBS.
Last call: Commercial banks were the biggest issuers of debt in the first week of 2017 as companies look to lock in low borrowing costs before interest rates rise further. The FT said banks sold $42 billion of the nearly $73 billion that was issued by corporations last week, including $5.25 billion from Citigroup, $5 billion from Barclays and $4 billion from Credit Suisse. Two of the 20 busiest corporate bond trading days on record took place in the first three trading days of the year, the paper said.
Crazy money: U.K. credit card borrowers are being tempted with "record-breaking" deals from lenders. The paper reports banks are offering interest-free balance transfers that go out nearly four years. At the same time, some lenders, including Barclaycard and MBNA, are not only waiving balance transfer fees but offering £20 cashback incentives for people who transfer their debt.
You're out: Bhairav Trivedi, CEO of Network International, one of the largest payment groups in Africa and the Middle East, is being ousted in favor of Simon Haslam, who runs payments processor Elavon. Haslan "is regarded as a heavyweight in the industry and someone who can help the company expand further," the FT said, noting that competition among private equity groups in the global payments sector has been "intensifying."
Meeting Basel: Oliver Wyman raised its estimates of how much capital some of the world's biggest banks will have to set aside in order to meet new Basel Committee rules on their trading businesses. The consulting company said each bank will have to set aside an average $200 million, which doesn't sound like a lot, but is far higher than what it estimated a year ago.
New York Times
Whose side is he on?: The Times' editorial board is encouraged that Jay Clayton, President-elect Trump's nominee to head the Securities and Exchange Commission, "has undoubtedly mastered the nation's securities laws and related regulations, and applied them in real-world circumstances" at his current job at Sullivan & Cromwell, "the go-to law firm for Goldman Sachs and other Wall Street banks." "The unanswered question is whether Mr. Clayton would use his knowledge and experience to protect investors from abuse and undue risk in the public markets, or to shield Wall Street from scrutiny."
"It's like having a good [European] football player on the field but suddenly [Cristiano] Ronaldo becomes available." — An unnamed source, referring to Simon Haslam's appointment to run Network International