Wells fires district managers; Canadian banks back away from U.S. buys

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Growing risks
The CEOs of JPMorgan Chase, Wells Fargo and Bank of America appeared to be out of touch at Tuesday’s Goldman Sachs financial conference, sounding optimistic notes as their companies’ stocks were getting hammered. But “on closer inspection, all three bank executives gave hints of trouble just beneath the surface,” the Wall Street Journal says. “Sometimes the risks are greatest just when things seem to be at their best. Investors are right to brace for what may come next.”

Those risks are giving Canadian banks pause about “their merger-fueled U.S. expansion.” They believe “U.S. targets are pricey, making them leery of doing deals in their fastest-growing market. If there are no acquisitions by Canadian banks in the rest of this month, 2018 will mark the first year since 2014 that Canada’s banks have not bought any U.S. retail lenders.”

Citigroup said it will miss the efficiency target “it reaffirmed just two months ago, putting the bank in the line of fire of analysts and investors wearied by previous disappointments.” Speaking at the Goldman conference, John Gerspach, the bank’s chief financial officer who is retiring in March, “blamed the deterioration on lower fourth-quarter revenues in fixed-income trading and investment banking, both of which have been hit hard by market gyrations over the past two months.”

Gerspach also said Citi, which operates a large retail bank in Mexico, is not worried about “a recent legislative proposal from the leftist political party in Mexico to eliminate ATM and other banking fees.” The proposal "stands little chance of becoming law."

Wall Street Journal

Not done yet
Wells Fargo has fired nearly 40 district managers for oversight failures related to its 2016 phony accounts scandal. The firings “mark the first wave” of manager terminations following the bank’s settlement with regulators over the scandal. District managers “largely were spared as the company fired some 5,300 employees” in the aftermath of revelations that millions of accounts were opened without customers’ permission in order to meet sales goals. “The bank has sought to reassure regulators it is fixing problems that have emerged throughout the bank following the sales-practices scandal.”

AI ABCs
Cathy Bessant, Bank of America’s chief operations and technology officer, proposes several best practices for using artificial intelligence solutions in the corporation. “The C-suite obligation really is to focus on what we’re trying to learn, then understanding enough about the tools, and testing … business people do have to understand the art of what’s possible with AI,” she says.

Financial Times

Just in case ...
The Bank of England will allow U.K. banks to lower their capital buffers in order to be able to lend £250 billion to the wider economy in the event of a disorderly Brexit.

Quotable

“We would continue to look for opportunities where we might see quality banks. But those opportunities are few and far between and the valuations continue to be expensive. We will remain patient.” — Riaz Ahmed, Toronto-Dominion’s chief financial officer, about the prospects for buying American banks.

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