Regulators want Sewing to give up a title; Changes to JPM balance sheet

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Going small

Banco Santander has bought a 50.1% stake in British fintech Ebury for £350 million, “as Spain’s biggest bank seeks to win more business from small companies that trade internationally,” the Financial Times reports. The London-based start-up provides foreign exchange, cash management and trade finance for small and medium-sized businesses. “Citibank, HSBC and Standard Chartered are focused on serving larger companies, but Ebury’s user-friendly system for bringing on board new customers would make it easier for Santander to target small businesses, executive chairman Ana Botín said.

“Santander, one of the world’s largest retail banks, is bulking up its commercial business when low rates and political and economic uncertainty are squeezing it and other European lenders, driving them to look beyond their traditional strengths to bolster their businesses,” the Wall Street Journal notes. “Such banks have alternated between competing with and working alongside fintech companies trying to disrupt established banking operations.”

American Banker's Laura Alix looks at Santander's plans for offering an online money market account.

Staying put

Just when lenders thought the mortgage market was improving ... "Ultralow mortgage rates, record levels of home equity and a strong job market haven’t jump-started the sluggish housing market” because “Americans are staying in their homes much longer than before, creating a logjam of housing inventory off the market.” Homeowners are remaining in their homes an average 13 years, “five years longer than they did in 2010, according to a new analysis by real-estate brokerage Redfin. Adjusted for population, the inventory of homes for sale is now near the lowest level in 37 years of record-keeping, according to housing-data firm CoreLogic,” the journal says.

“Economists say aging baby boomers are the biggest culprits because many are staying healthier later in life and choosing not to downsize.”

On Monday, Apple announced a $2.5 billion plan “to help address the housing crisis in California,” including $1 billion in mortgages for first-time home buyers and $1 billion for an affordable housing investment fund, according to the New York Times.

Wall Street Journal

Inside job

“A single large player” was responsible for about half of the huge spike in bitcoin prices in 2017 and 2018, according to a research paper to be published Monday. The paper doesn’t say who was behind the “manipulation scheme” but “strongly suggests” that executives at Bitfinex, the largest cryptocurrency exchange at the time, “either knew of the scheme or were aiding it.”

Financial Times

Portfolio shift

JPMorgan Chase has reduced the amount of excess cash it keeps on hand by “more than $130 billion” and moved it into long-term bonds while reducing the amount of loans it holds by about 4%, or $40 billion, “marking a major shift in how the largest U.S. bank by assets manages its enormous balance sheet. The moves, which have seen the bank’s bond portfolio increase by 50%, are prompted by capital rules that treat loans as riskier than bonds. As it continues to return billions of dollars to shareholders in dividends and share buybacks each year, JPMorgan has less room than some rivals to hold riskier assets.”

Give it up

The European Central Bank and Germany’s financial regulator BaFin want Deutsche’s CEO Christian Sewing “to give up his dual role as chief executive and investment bank head because of fears his twin responsibilities could undermine the group’s radical restructuring. The regulators also warn there is a potential conflict of interest between the two roles, arguing that the chief executive has to promote prudent risk-taking while the top investment banker by definition was a ‘risk creator.’”

Separately, "Four months after kicking off the most radical restructuring in its history, Deutsche Bank is reshuffling its management board in an attempt to accelerate the process.” The bank named Fabrizio Campelli, a 15-year bank veteran, to its management board, “giving him the role of chief transformation officer” as well as responsibility for human resources.

“With the creation of the new transformation and human resources function, Deutsche Bank aims to drive forward its most comprehensive transformation for 20 years with a sharpened focus,” the bank said. “The management reshuffle comes two days after Deutsche Bank disappointed investors with tepid third-quarter results that sent down its shares 8% in a day and fueled doubts of Deutsche’s ability to deliver.”

More trouble in Denmark

Danske Bank, which “has been hard hit by a €200 billion money-laundering scandal and the subsequent ousting of its chief executive and chairman as well as criminal investigations in the U.S., Denmark, Estonia and France,” has “cut its profit guidance for the second time this year, downgraded its outlook for 2020 and abandoned its goal of being one of the leading Nordic lenders for profitability.” Shares in Denmark’s largest “have fallen almost two-thirds since details of the scandal first became public at the start of 2018.”

Quotable

“If people aren’t moving on, there just are fewer and fewer homes available for new home buyers.” — Daryl Fairweather, chief economist at real estate company Redfin, on why home sales haven’t caught fire despite low mortgage rates and a strong job market

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