Solomon forms his team; AIG not dazzling investors
Receiving Wide Coverage ...
Setting the stage
Two weeks before he takes over the CEO position at Goldman Sachs, David Solomon made some major moves on Thursday to put together his inner circle. John Waldron, co-head of the investment banking unit, was named president and chief operating officer, while Stephen Scherr, who oversees its consumer banking effort, was named chief financial officer. The shake-up “represents a triumph of Goldman’s investment bankers over its traders,” who have “struggled to make money since the financial crisis,” the Wall Street Journal says.
Scherr replaces Martin Chavez, who had been in that job only 18 months; Chavez is returning to the trading division, where he will be one of three co-heads. Under his tenure as CFO, “Goldman stumbled in the Federal Reserve’s annual stress tests and disappointed investors by reducing its stock buyback.” Wall Street Journal, Financial Times, New York Times
The move, “particularly the change in the chief financial officer role, is an encouraging sign that Solomon is willing to correct past mistakes,” the Journal notes in a separate article. “Mr. Chavez’s performance has been less than stellar over his brief tenure. He did a poor job explaining what was happening at the bank at a time when it mattered.”
President Trump wasted little time firing back at Jamie Dimon on Thursday after the JPMorgan Chase CEO said he was “smarter” than the president and could beat him in an election. “The problem with banker Jamie Dimon running for President is that he doesn’t have the aptitude or 'smarts' & is a poor public speaker & nervous mess — otherwise he is wonderful,” the president said via Twitter. “I’ve made a lot of bankers, and others, look much smarter than they are with my great economic policy!" Wall Street Journal, Financial Times, American Banker
“Dimon has won the loyalty of the business world, but also built a reputation for a sometimes brash demeanor,” the Washington Post notes in a profile of the banker.
Getting serious about AML
Europe appears ready to take sterner measures to fight money laundering. The European Commission proposed giving the European Banking Authority greater supervisory and enforcement power. At the same time, the European Parliament approved measures that “would create EU-wide definitions of money laundering-related crimes, establish minimum penalties across the bloc and bar those convicted of money laundering from public service. They also would lower thresholds on cash flows and allow for temporary seizure if authorities suspect criminal activity.”
The CEO of Danske Bank — which has been involved in a large money laundering scandal — is being accused of rejecting warnings to scale back business at its Estonian branch “despite concerns raised at the time by other managers and JPMorgan.” According to the Financial Times, CEO Thomas Borgen was told five years ago that business at the branch “needed to be reviewed and potentially reduced” but took no action.
Deutsche Bank stopped doing business with Danske’s Estonian branch three years ago “because of concerns over non-resident customers — who came predominantly from Russia and other former Soviet states — in the branch.” Deutsche said it would only be “comfortable dealing with one in 10” of the branch’s customers.
Separately, Deutsche has named Stephan Wilken, a senior risk officer, as its chief of anti-money-laundering and financial crimes unit. He succeeds Philippe Vollot, who was hired by Danske to become its chief compliance officer.
More woes for RBS
Royal Bank of Scotland CEO Ross McEwan was accused of misleading a parliamentary committee “by deliberately withholding details of a criminal investigation into alleged bribery.” The accusation “is the latest blow to RBS as it tries to repair its battered image,” the paper says.
New York Times
Wait til next year
American International Group shows signs of “finally emerging from a lost decade after receiving a controversial $182 billion government bailout in 2008. But investors remain wary.” The insurance giant “still isn’t back to profitable growth,” but “maybe that’s something AIG can achieve in 2019, its centennial year,” the paper suggests.
“Oh yeah. Give me a chance.” — Sen. Elizabeth Warren, D-Mass, about wanting to break up the big banks.