Custody banks

Why PayPal just deposited $50 million in tiny Optus Bank; ex-Bank of America employees allege 'extreme pressure' to sell credit cards; the Citi snafu may bring fresh scrutiny to custodial banks; and more from this week's most-read stories.

Citigroup’s $900 million payment blunder in a normally low-profile part of the financial market dominated by a handful of banks has experts wondering if regulators will uncover a deeper problem.

Responding to an unnamed bank that had sought the opinion, the regulatory agency issued an interpretive letter clarifying that an institution's custody services can be used for cryptographic keys and other digital currency-related assets.

While rival banks reported increases in loans and deposits, thanks largely to their participation in the Paycheck Protection Program, State Street and Bank of New York Mellon saw their balance sheets shrink in the second quarter.

Gibbons had been in the position on an interim basis since September, when his predecessor, Charlie Scharf, left to become CEO of Wells Fargo.

Fourth-quarter fees earned from managing the assets of family offices rose 12% and were a powerful counterbalance to tighter margins.

Despite the weaker-than-expected results, interim CEO Thomas Gibbons pledged to continue spending heavily on tech upgrades aimed at cutting costs, improving efficiency and developing innovative products.

Fed proposal is at odds with the one offered by the FDIC and OCC; judge wants to dispel the “myth” that student loans can’t be expunged in bankruptcy.

The bank sees digital assets as part of the future and "we want to be there when this happens," says Ralph Achkar, head of digital product development and innovation.

Todd Gibbons, who succeeded Charlie Scharf in September, said tech investments give the custody bank a competitive edge and make it more efficient.