Banking

Bank CEOs hear it from both sides of the aisle; crypto firms stalk Wall Street

Receiving Wide Coverage …

Bankers berated

“The chief executives of the six largest U.S. banks drew fire from both Republicans and Democrats at a Senate hearing that highlighted challenges facing corporate leaders seeking to navigate partisan strife over hot-button issues including voting rules, climate change and racial justice,” The Wall Street Journal reported. “In sometimes tense exchanges Wednesday before the Senate Banking Committee, the CEOs were criticized by Democrats for perceived faults, including excessive executive compensation and overdraft fees.”

“The bankers are due to testify virtually again on Thursday before the House Financial Services Committee. The hearings mark the first time in about two years that the chief executives of major banks have appeared together before U.S. lawmakers.”

“The six CEOs touted their efforts to address the economic impact of COVID-19 through the Paycheck Protection Program and loan payment flexibility,” American Banker reported. “They also attempted to publicize their work to try to narrow the racial wealth gap through investments in minority communities.”

“But the CEOs’ comments on efforts to help the economy weather the pandemic fell on deaf ears with some Democrats, who said small-business lending and relief efforts for struggling consumers were insufficient. And they were criticized by Republicans over the efforts of some banks to scale back lending to fossil fuel companies, and for public statements on political debates that lawmakers said were outside the scope of banking.”

Some of the banking chiefs “expressed caution about dealing in cryptocurrencies in testimony released ahead of the sometimes contentious hearing,” the Financial Times said. “The remarks by Bank of America’s Brian Moynihan, Citigroup’s Jane Fraser and Wells Fargo’s Charles Scharf came as U.S. financial regulators scramble to respond to the explosive growth — and dizzying volatility — of a crypto market that currently lacks an overarching national supervisor.”

Morgan Stanley CEO James Gorman said his bank’s “efforts to improve the diversity of its workforce and senior management have not proceeded as quickly as he would have liked, he said in his prepared testimony,” according to Reuters.

“I acknowledge that progress in this area has been slow for us and we can and should do better,” Gorman said. “The events of 2020 focused all of us in a way we had not been before and this was the ultimate call to action to make meaningful change.”

HSBC’s exit

HSBC said it “will sell 90 of its 148 branches in the U.S., and plans to wind down another 35 to 40,” The Wall Street Journal reported. The bank “agreed to sell parts of its business to two U.S. regional banks, Citizens Financial and Cathay Bank. HSBC said it will retain around two dozen locations, which will become international wealth centers providing banking and wealth-management services to high-net-worth clients.”

The bank “will go from about 1.4 million customers to roughly 300,000 in the U.S. It will no longer service customers with basic bank accounts, or those with balances below $75,000, and businesses with turnover of $5 million or less.”

The bank is “effectively bringing to a close its struggling North America business after a 40-year attempt to run a full-service bank in the country,” the Financial Times said. The bank said it sold “80 of its 148 branches on the east coast to Citizens Bank, which has also acquired $9.2 billion of deposits and $2.2 billion of outstanding loans. Ten branches on the west coast have been purchased by Cathay Bank, which has taken over $1 billion of deposits and $800 million of loans.”

Financial Times

Happy hunting

“Huge gains in digital asset values are helping crypto firms to poach previously out-of-reach executives from some of the biggest companies in mainstream finance. Coinbase this week announced it had hired a top Goldman Sachs lobbyist, while John Dalby, chief financial officer of the world’s largest hedge fund, Bridgewater, is also joining crypto financial services group NYDIG.”

“The pace of finance talent moving into crypto jobs has picked up sharply, according to recruiters and industry insiders, alongside the surge in activity in digital assets. The migration echoes a string of job moves by traders and bankers during the crypto boom that came to an end after 2017.”

Wall Street Journal

Archegos probe

Federal prosecutors in New York “have requested information about Archegos Capital Management from banks across Wall Street, including Credit Suisse, UBS, Goldman Sachs and Morgan Stanley. The firm’s collapse in March triggered more than $10 billion in losses across Wall Street, in one of the biggest meltdowns since the financial crisis.”

Quotable

“Banks were a part of the solution to beat back the economic impacts of a global pandemic, and now we must continue to work together to ensure a fair and equitable recovery.” — Wells Fargo CEO Charlie Scharf in his testimony before the Senate Finance Committee.



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