Wells Fargo gets some good news; JPMorgan teams with Black-owned asset manager

Receiving Wide Coverage ...

Dividends resumed

Barclays said it would restart dividends this year and buy back up to £700 million of shares after it reported its 2020 profit fell 38%, including a 68% drop in fourth-quarter earnings, the Wall Street Journal reported. Financial Times

Better than expected

Credit Suisse reported a smaller-than-expected loss for the fourth quarter as it took large write-offs for loan defaults and litigation expenses, the Journal reported. Financial Times

Wall Street Journal

Room on BNPL bandwagon

There is still plenty of room for companies looking to enter the burgeoning “buy now, pay later” lending business, the Journal says, “at least for now.”

“While BNPL payment volumes are growing rapidly—by more than 50% among four big providers through the first nine months of 2020, according to Autonomous Research—they collectively represent just a couple percentage points of global e-commerce spending, which is itself growing rapidly. That leaves plenty of volume to fight over between these firms, as well as others such as Afterpay and Klarna and established card companies and banks that evolve their products to mimic BNPL in some respects.”

Financial Times

Minority stake

JPMorgan Chase is investing $200 million in a strategic initiative with the asset manager Ariel Investments “aimed at turning minority-owned businesses into multibillion-dollar companies. The fund will be the first for a private equity arm being launched by the asset manager, called Ariel Alternatives.”

Ariel, “one of the few large black-owned investment companies in the U.S.,” sees the fund as a way to “scale sustainable minority-owned businesses” and position middle-market companies as “leading suppliers to Fortune 500 companies.”

Strong 4Q for mortgages

Total U.S. mortgages outstanding rose by $182 billion in the fourth quarter of 2020, “the biggest increase since 2007,” according to the Federal Reserve Bank of New York. “Americans took out a record $1.2 trillion worth of mortgages in the final three months of 2020, locking in historically low interest rates.”

“The sharp uptick was driven in large part by the fastest quarterly expansion in mortgage originations since the Fed began collecting data in 2000. Borrowers with high credit scores — above 760 — fueled the surge, accounting for more than two-thirds of total originations for the quarter. That is significantly higher than the share of new mortgages that went to the most creditworthy borrowers during the last mortgage boom in 2003, when they represented only about a third of originations.”

Career switch

JPMorgan Chase has appointed Charlie Jacobs “as its new co-head of investment banking in the U.K., making the veteran M&A lawyer the latest to swap the law for finance.” Jacobs, currently the senior partner at Linklaters, a top U.K. top law firm, and “one of the City’s top legal advisers to companies, will take up the role later this year and lead the unit with David Lomer. He will succeed Ed Byers, who will become JPMorgan’s vice-chair of U.K. investment banking.”

“At JPMorgan, Jacobs will advise blue-chip U.K. companies on challenges thrown up by a post-Brexit market and recovery from the fallout of the Covid-19 pandemic.”

Elsewhere

One step closer

Federal Reserve “officials have privately signaled to Wells Fargo that they have accepted its proposal for overhauling risk management and governance,” Reuters said, citing a Bloomberg News report. The bank’s shares rose more than 5% on the news.

“The approval is a key step in getting a regulatory asset cap lifted, which has hindered Wells Fargo’s growth since 2018. Under the public order, the Fed must sign off on any plan to address shortcomings at the bank and verify its implementation. After that, an independent third party must come in and review the plan and its implementation. Only then would the Fed board consider voting to lift the asset cap.”