Stripe value soars to record $95 billion; Deutsche Bank bonuses bashed

Receiving Wide Coverage ...

Earning another Stripe

Stripe “has become the most valuable private company Silicon Valley has produced, after investors struck a deal to raise $600 million of new equity, valuing the online payments processor at $95 billion,” the Financial Times reported.

“Stripe’s valuation has almost tripled in less than a year, surpassing those achieved by Facebook and Uber before they went public. The company's rising valuation reflects a boom in ecommerce and digital payments activity that has boosted the values of listed rivals such as Adyen and Square, as well as Checkout.com, a London-based payments start-up that was valued at $15 billion in January.”

“As a payment processor to startups and fast-growing internet companies, Stripe benefited from the pandemic-induced boom in online shopping,” the Wall Street Journal said.

“The investment nearly triples Stripe’s last valuation of $35 billion,” the New York Times said.

Wall Street Journal

Pots of gold

U.S. banks “in the coming months are expected to free up tens of billions of dollars in reserves they set aside to cover soured loans—losses that still haven’t materialized a year into the pandemic.” That money “could turn into billions of dollars of profits. Banks had $236.6 billion in total reserves in December, nearly double their level from before the coronavirus upended the economy and sent unemployment up sharply.”

Financial Times

Bonus backlash

Deutsche Bank’s decision to raise investment banker bonuses and its CEO’s pay by 46% last year — “16 times Deutsche’s net profit in 2020” —
has provoked a backlash in Germany. The bank, “which has racked up a cumulative loss of €14.6 billion since 2015, is in the middle of a costly turnround plan and has suspended dividend payments to shareholders for the second year in a row.”

“The imbalance between bonuses and dividends is blatant,” said Vanda Rothacker, corporate governance expert at Union Investment, Germany’s third-largest asset manager and a top 15-investor in Deutsche. “Such a remuneration policy creates an extremely poor image of the bank and it should be urgently corrected,” added Jan Duscheck, a representative of the Verdi service sector union and member of the lender’s supervisory board.

Deutsche “has promised to resume dividend payments next year and pledged to hand back €5 billion to investors from 2022. Deutsche’s share price has more than doubled over the past year, but at about €10.63 is still 6% below the level it was trading at in April 2018 when Christian Sewing was appointed chief executive.”

Scapegoat?

Citigroup “is headed to trial over allegations it ‘framed’ a former foreign exchange trader to save itself during a market-manipulation scandal, after failing to have a $112 million lawsuit he filed thrown out of court. The case will be closely watched, with implications for companies that open check books to settle with prosecutors, who often demand names of implicated individuals in exchange.”

Ramchandani, once European head of Citi’s currencies desk, “was acquitted by a Manhattan jury in 2018 of charges brought by the Department of Justice as part of the global forex-rigging probe. He argues in his lawsuit that the bank ‘knowingly’ encouraged the DoJ to pursue an antitrust case against him as a ‘scapegoat’ and ‘without probable cause’ in an effort to shield itself from greater damage caused by the forex-rigging scandal.”

“Mr. Ramchandani’s claims of malicious prosecution are without merit and we will contest them vigorously,” Citi said.

New York Times

Broken promise?

A whistleblower is contending that “seven years after Credit Suisse promised federal prosecutors that it would stop helping rich Americans hide their wealth from tax collectors, it continued to do just that, raising the possibility that the Swiss bank could face a fresh investigation and steep financial penalties. The allegations, laid out in documents sent last week to the Justice Department and the Internal Revenue Service, were made by a former Credit Suisse employee who said that the bank continued to hide assets for its clients long after it promised prosecutors it would close those accounts. The whistle-blower, whose identity is unknown, is also contending that Credit Suisse lied to federal prosecutors, the IRS and members of Congress during their years-long inquiry into how Swiss banks helped Americans defraud the government.”“Credit Suisse was fined a total of $2.6 billion in 2014, but avoided even higher fines because it vowed to the Justice Department and a Senate panel that it had not only stopped the practice, but that it would close ‘any and all accounts of recalcitrant account holders.’ The bank also pledged to help the United States pursue other criminal investigations.”

Quotable

“It doesn’t fit with the times that Deutsche Bank, which has also indirectly benefited from bailouts time and again, is having a coronavirus party.” — German MP Fabio De Masi, criticizing the bank’s decision to raise bonuses for investment bankers and its CEO’s pay by 46% last year.