Wells revamps retail unit again; Goldman hears it from protestors

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Unpopular bet: Goldman Sachs is taking flak from opponents of Venezuelan President Nicolás Maduro's regime after it bought nearly $3 billion of the country's bonds on the secondary market at a deep discount. The bank's asset-management division paid about $865 million, or 31 cents on the dollar, for the bonds that were issued by the country's state-owned oil company, implying a yield of more than 40%. Critics planning demonstrations outside the bank's New York headquarters say the purchase is "a cynical move to make money out of other people's misery," the Financial Times reported. Wall Street Journal, Financial Times

While several other large, well-known financial firms also own the country's bonds, none of them carries "Goldman's reputation for being politically influential and financially opportunistic — a combination that has made it an easy global punching bag," the New York Times commented. New York Times, here and here.

Changing hands: The London Stock Exchange agreed to buy Citigroup's global bond analytics business for $685 million. The exchange said it would acquire Citi's fixed-income indexes, including its flagship World Government Bond Index, and its "yield book" platforms, which provide data on bond indexes. "The acquisition is a bet that the appetite for passive investment products, which track indices, will continue to grow," the Financial Times commented. Wall Street Journal, Financial Times

Wall Street Journal
More shake-ups: Wells Fargo has again reorganized regions in its retail banking unit in the western half of the U.S. and rearranged executive positions. The moves, which include consolidating eight areas into five, were made to "streamline" the bank and make it more "consistent" across regions, a memo from retail banking chief Mary Mack said. The moves are part of the bank's "continuing efforts to untangle the firm from the sales-practices scandal that erupted in September." Wall Street Journal, American Banker

Cleared: Separately, Wells reinstated three senior executives in its Chicago private banking unit who were suspended for allegedly steering business toward certain people in the unit. An internal investigation found no disciplinary action against the three men was warranted.

Rebuttal: Rep. French Hill, R-Arkansas, takes issue with a recent op-ed piece by former Federal Reserve vice chair Alan Blinder, in which Blinder said the Financial Choice Act would "allow Wall Street to return to the Wild West atmosphere that existed before the financial crisis." Rather, says Hill, a member of the House Financial Services Committee, the bill "reduces moral hazard by requiring high levels of tier-one leverage capital, while giving community banks the regulatory flexibility they need to return to their historical role; requires bankruptcy for complex financial institutions and increases penalties for bad actors at banks."

Hit again: In the latest in a long line of fines in the U.S., the Federal Reserve fined Deutsche Bank $41 million for "unsafe and unsound" anti-money-laundering practices. In January, the bank was fined $425 million by the New York State Department of Financial Services for money-laundering violations involving its Moscow branch.

Financial Times
Surging: Credit card borrowing continues to surge in the U.K. The Bank of England said credit card outstandings hit £68.1 billion in April, up nearly 10% from a year earlier, which is the biggest one-year jump in more than 11 years. Total consumer credit grew at an even faster pace, rising 10.3%. "The figures will increase concerns at the BoE that the rapid increase in credit card borrowing is unsustainable and driven by deteriorating underwriting standards among lenders, which could lead to a credit crunch if left unchecked," the FT observed.

"It's a big shot in the arm. We're going to have a lot of condominiums we wouldn't have had before." — Buzz Geller, a Denver area developer said of one of several new laws meant to stoke the housing supply.

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Consumer banking AML Regulatory reform Private banks Wells Fargo Goldman Sachs