Sales goals still an issue for Wells; UBS’ baby problem
Receiving Wide Coverage ...
Germany’s two biggest banks, Deutsche Bank and Commerzbank, have agreed to hold talks about a possible merger. “The informal talks reflect a deepening willingness by Deutsche Bank’s management board to engage in a possible tie-up. Heightened pressure on the banks from German government officials to address their lagging performance, and consider in more detail how a merger might take shape, also factored into recent discussions.”
Deutsche CEO Christian Sewing “has dropped his opposition” to a merger “after persistently low interest rates and investor pressure over its grim performance forced him to consider other options.” Cerberus, one of the biggest investors in both banks, “is actively pushing for a tie-up which the German finance ministry would welcome as a way to create a national champion in banking. Deutsche Bank’s chairman Paul Achleitner is also an advocate for a merger that would create the eurozone’s second-largest bank with close to €1.9 trillion in assets.”
Top women bankers at UBS say their bonuses were cut after they took maternity leave, “raising questions over its commitment to gender equality. Some have resigned in frustration — forgoing promotions in at least two cases — while others having begrudgingly continued working for less pay than before they became mothers, according to several current and former UBS employees.”
“Basically once pregnant, one will never catch-up again with male colleagues in the career one has built up prior to going on maternity,” one woman
Meanwhile, Citigroup has teamed up with the Association of National Advertisers to expand the music industry’s “#SeeHer” effort, “which aims to improve the representation of women in marketing and media, with a new project boosting women in the music business.” The bank “hopes using female artists, especially up-and-coming performers, more often in its own commercials and events will help increase demand and support for female artists. The company also started a mentorship program, including $5,000 awards made to aspiring singer-songwriters.”
“For Citi, the effort could polish its brand at a time when doing good is considered basic marketing. It might also help with the effectiveness of its ads.”
Wall Street Journal
Cutting out the middle man
Private companies, including banks, are buying “a small but growing share” of mortgage loans directly from originators and bypassing Fannie Mae and Freddie Mac, “a sign of the changing dynamics in the $11 trillion mortgage industry.” The companies, which include JPMorgan Chase and Flagstar Bancorp, are pooling the loans into bonds and selling them to investors without government backing. “In the last year or so, investors have proven increasingly willing to forgo the government backstop and buy private mortgage bonds, indicating they have grown more comfortable taking risk for more potential return. The fact that more investors want to buy these securities means banks and other firms can package these deals more profitably, which in some cases lets them offer better bids than the agencies.”
Meanwhile, American Banker reports Mark Calabria, the nominee for chief of the Federal Housing Finance Agency, may let "the government-sponsored enterprises retain more capital once he takes the helm of the agency."
Preparing for the worst
The Bank of England has told some U.K. banks to triple their liquidity “to cope with the market meltdown forecast if the U.K. crashes out of the EU without a deal later this month. Some lenders must now hold enough liquid assets to withstand a severe stress — when banks stop lending to each other — of 100 days rather than the normal 30. Banks are also being forced to model their balance sheets on the assumption that they will not be able to swap sterling for dollars” in a no-deal Brexit.
Revolut, the “under-fire” U.K. digital bank, announced several high-profile hires “to boost regulatory compliance and governance efforts. News of the announcements came after a difficult start to the year for the London-based fintech, which has faced questions over its ability to effectively manage its rapid growth.” Last week the paper reported London police were investigating the company over a suspicious money transfer,
New York Times
Still under pressure
Despite “years [of] publicly apologizing for deceiving customers with fake bank accounts, unwarranted fees and unwanted products” and claims by top executives that they “have eliminated the aggressive sales targets that spurred bad behavior,” workers at Wells Fargo “say they remain under heavy pressure to squeeze extra money out of customers.” While “there is no evidence that employees are secretly opening accounts in customers’ names or tricking them into buying unnecessary auto insurance, as some did in the past, some have witnessed colleagues bending or breaking internal rules to meet ambitious performance goals.”
Big banks, including JPMorgan Chase, Wells Fargo and US Bank, are succumbing to political pressure to divest from financing private detention facilities over the Trump administration’s immigration policies.
Where are the banks?
Lack of access to a convenient bank branch is one of the reasons why nearly 25% of U.S. households are unbanked or underbanked, and the problem “continues to worsen as more and more branches close,” particularly in low-income areas. Over the past four years, nearly 2,000 more branches closed than were opened in lower-income areas, according S&P Global.
“For us front-line workers, there’s an overwhelming sense of frustration. There is a general fear of retaliation for speaking out.” — Mark Willie, a Wells Fargo employee in Des Moines who is part of a group trying to unionize bank employees.