Losing face Square CFO Sarah Friar, the company’s “face” on Wall Street, is leaving to become CEO at the social network Nextdoor. Friar “played an instrumental role in Square’s expansion into financial services, from lending to small businesses to letting consumers buy and sell bitcoin through Cash App, Square’s money-transfer service.” Square’s stock dropped more than 10% in after-hours trading following the announcement after falling a similar amount during the regular trading session.
Sarah Friar, chief financial officer of Square Inc., walks the grounds after the morning session at the Allen & Co. Media and Technology Conference in Sun Valley, Idaho, U.S., on Friday, July 13, 2018. The 35th annual Allen & Co. conference gathers many of America's wealthiest and most powerful people in media, technology, and sports. Photographer: David Paul Morris/Bloomberg
David Paul Morris/Bloomberg
Alternative universe BlackRock is investing up to $400 million in Gallatin Point Capital, a new private-equity firm that plans to invest in “lenders, insurers, financial institutions and financial assets such as loan pools.” The investment is “part of a push by the world’s largest asset manager to become a bigger player in alternative investing. The commitment gives BlackRock a new foothold in privately held companies, one of the few corners of Wall Street not currently dominated by the giant investment firm.”
A better CDO Commercial mortgage issuers are increasingly hitting the market with a new type of mortgage-backed security: the commercial real estate collateralized loan obligation, or CRE CLO. “The financial product is part of a broad surge in CLO issuance as institutional investors clamor for more of the floating rate securities, which outperform most bonds when interest rates rise. Issuance of CRE CLOs is expected to hit about $13 billion this year, more than twice the amount sold in 2017,” the paper says. CRE-CLO deals differ from commercial real estate collateralized debt obligations sold before the financial crisis, experts say, since the CDOs held risky mortgage securities and were bought using borrowed money. CRE-CLO issuers “use the cash to make short-term bridge loans to borrowers looking to buy or renovate properties ranging from multifamily housing to offices, hotels and nursing homes.”
Not buying it Civil Media Co., which has been pitching a new cryptocurrency to help fund journalism outlets, is finding “the effort isn’t going smoothly. Consumer demand for the so-called token that the company is selling has been weak ahead of an Oct. 15 deadline, and major news organizations have rebuffed partnerships with the company. Meanwhile, a Civil co-founder said its business plans are fundamentally flawed.”
Financial Times
I was only joking Three U.K.-based bank traders who are on trial in New York for allegedly fixing foreign exchange markets were only kidding when they talked about doing that in a private chatroom, according to their attorneys in opening arguments. “Letting off steam in a chatroom ... does not violate the Sherman Anti-Trust Act,” the lawyer for one of the accused said.
A second claim A former UBS employee in London who has “sharply criticized” the bank for the way it handled her complaint about a workplace sexual assault last year had actually reported two attacks. “The woman did not want the second incident to be investigated at the time as she feared it would jeopardize her career,” the paper reports. “She has since left the bank, as has the man at the center of the first allegation,” although the man involved in the second allegation still works at the bank. UBS said it is still reviewing the claims.
Elsewhere
Citi sanctions? The Comptroller of the Currency is considering sanctions against Citigroup after the bank said it inadvertently denied minority customers mortgage discounts it offered to other borrowers. Citi self-reported the problem in its “relationship pricing” program last year. “The OCC is examining whether Citigroup breached fair lending standards, which prohibit discrimination on the basis of customers’ race, gender, age or religion,” Reuters says.
Quotable
“The Fed is making a mistake. I think the Fed has gone crazy. Actually, it’s a correction that we’ve been waiting for, for a long time. But I really disagree with what the Fed is doing, OK?” — President Trump commenting on Wednesday’s stock market rout and the role Federal Reserve interest rate hikes may have played in it.
At a time of mild or nonexistent loan growth, middle-market borrowers in the Lone Star State are providing a boost to Fifth Third Bancorp and Huntington Bancshares.
New details have emerged about the negotiations that culminated in Capital One's blockbuster $35 billion agreement to acquire Discover. At one point last December, the two parties broke off discussions, according to a securities filing.
According to the Federal Reserve Board's latest financial stability report, persistent inflation and policy uncertainty are the primary worries for banks. Survey respondents expressed heightened anxiety over murky policy outlooks due to geopolitical turmoil and rapidly approaching domestic elections.
The Alabama regional lender says it expects expenses to taper off this year and anticipates challenged loans will gradually rise to historically average levels.
Truist Financial's top executive leadership team announces departures; First Horizon's chief credit officer is retiring; Ferry teams with Highnote to roll out a new Visa-branded payroll card; and more in the weekly banking news roundup.
The Dallas-based regional bank tapped a client for its co-pilot capabilities, where employees can message a bot instead of a human to get tech assistance.
