Why Citi didn’t bite on Apple card; Barclays eyes MBS again

Wall Street Journal

Hasty departures
Two senior executives of the Federal Reserve Bank of New York are leaving, effective at the end of this week. Simon Potter, head of the bank’s Markets Group, and Richard Dzina, its Financial Services Group chief, are both leaving. The two positions “are among the most important within the Federal Reserve.” The Fed did not explain "why Messrs. Potter and Dzina are leaving the bank, the timing of which surprised some central bank watchers."

Business with Iran
The Treasury Department said a unit of State Street Corp. violated sanctions against doing business with Iran when it processed 45 pension payments totaling more than $11,000 for an American retiree living in Tehran between 2012 and 2015. State Street wasn’t fined because the bank made the disclosure and made improvements to its compliance program.

Financial Times

Gotta have a replacement
“In a rare public attack by a big U.S. bank on a rival,” JPMorgan Chase CEO Jamie Dimon said Wells Fargo was “irresponsible” for announcing the departure of its CEO in March without naming his replacement at the same time. “I think Tim Sloan was doing a good job,” Dimon said at Deutsche Bank’s annual financial conference in New York. “I think it’s not responsible for a company to have a CEO leave with no plan in place ... I’d be surprised if regulators wanted that to happen because it’s irresponsible ... It’s not the way to run the railroad.”

On your guard
Visa’s plan to offer a cryptocurrency-funded debit card in the U.K. with Coinbase “could open a back door for dirty money” unless “regulators stand firm on anti-money laundering requirements,” the paper says. “Forcing crypto institutions to operate in a similar way to the core banking system is a must if the sector is to be allowed access to the core system via the Visa network. It’s the only way to maintain a level playing field and insure that 30 years of action against financial crime is not squandered.”

Seeing an opening
Plaid, a Silicon Valley-backed fintech firm that “provides the technology for other financial technology companies to link to customers’ bank accounts,” is expanding into the U.K. to take advantage of the country’s “open banking” program. Plaid’s technology is already “integrated with ... banks and links to popular apps such as Venmo and Coinbase” in the U.S. and now supports “integration with eight of the U.K.’s biggest banks and challenger banks.”

Elsewhere

Second choice?
Citigroup “was in advanced negotiations” with Apple to co-brand its credit card “but pulled out amid doubts that it could earn an acceptable profit on the partnership,” which eventually went to Goldman Sachs. JPMorgan Chase, Barclays and Synchron, also bid on the business, according to Reuters.

“Within the industry, the deal is widely perceived as one that’s risky for a bank to take on,” Reuters said. “Apple Card’s consumer-friendly features — no fees of any kind, software that actively encourages users to avoid debt or pay it down quickly, and potentially lower interest rates — make it harder for banks to make money on the product. As the first credit card by Goldman Sachs, it will be a test of whether the bank can profitably scale up a consumer business in the late innings of the U.S. economic expansion.”

Barclays tries again
A year after it paid $2 billion to settle U.S. charges that it sold toxic mortgage-backed securities in the run up to the 2008 financial crisis, Barclays “is betting a return to that market can bring in bumper revenues to fortify its investment bank.” The British bank has “assembled a team of over 140 securitization bankers and traders with plans to hire more as investors clamor for the higher returns such deals offer compared with traditional stocks and bonds. The success of that bid would [also] be a huge fillip for Barclays Chief Executive Jes Staley, who is in a race against time to increase investment banking profits and vindicate his faith in a business that an activist investor argues should be cut back.”

Scott Eells/Bloomberg

Quotable

“Dude, if that portfolio ever makes money, I’m buying you a beer.” — An employee at a rival credit card bank to a colleague at Goldman Sachs after Goldman won the Apple Card deal