Outraged Members of the House Financial Services Committee were none too happy to hear that Wells Fargo had rewarded CEO Timothy Sloan with a 5% raise and a bonus for 2018 a day after he received a verbal beating from the panel. “It is outrageous and wholly inappropriate that the bank has rewarded Mr. Sloan with a $2 million bonus for 2018,” committee chair Maxine Waters, D-Calif., who said he should be fired, told CNBC. “Another raise for the Wells Fargo CEO in the midst of more scandals and fumbling Congressional testimony. This is not how fair and competitive markets are supposed to work,” added Rep. Katie Porter, another California Democrat.
Porter, a first-term Congresswoman, “enters the chamber with powerful backers," the Washington Post says. "Porter took a bankruptcy class taught by a law professor named Elizabeth Warren, now a senator from Massachusetts, that she has said changed her life trajectory. In 2012, Sen. Kamala D. Harris (D-Calif.), then California’s attorney general, picked Porter to oversee the distribution of a $25 billion settlement with big banks for fraudulent foreclosures. That track record made her a natural for the Financial Services Committee.”
Defensive tactic Goldman Sachs claims the Malaysian government provided the bank with guarantees that the money raised by the state-sponsored 1MDB fund would be used for regional development, “a key part of the U.S. bank’s defense against potential regulatory sanctions over the fund’s multibillion-dollar corruption scandal.” The bank is “being sued for billions of dollars and criminally prosecuted in Malaysia for its role in helping 1MDB to raise $6.5 billion in debt, much of which, it is alleged, was ultimately stolen and used to pay bribes to state officials.”
Abu Dhabi’s state investment company, Mubadala, has stopped doing business with Goldman pending the outcome of the Malaysian case, “piling pressure on the Wall Street bank.” The International Petroleum Investment Company, a Mubadala unit, is a former partner of 1MDB.
Separately, “a dreaded bloodbath at Goldman Sachs under the bank’s new boss has finally begun,” the New York Post reports. The paper says Goldman laid off 65 employees at its New York headquarters at the end of last month. “The body count, however, is expected to swell in the coming weeks,” with an additional dozen people laid off this week. “The layoffs at Goldman have been closely watched on Wall Street for hints about what direction will be taken by [new CEO David] Solomon.”
Wall Street Journal
Not a proponent The proposed merger of Deutsche Bank and Commerzbank, would create “a bank that’s too big to succeed, too big to fail, and too big to save in a crisis,” the paper says. Moreover, it “would do nothing to fix the underlying problem afflicting Germany’s banking system, which is not too few huge banks but rather too many little ones.”
Banned and fined Hong Kong’s Securities and Futures Commission banned UBS from acting as the senior underwriter on initial public offerings for a year and fined the Swiss bank and units of Morgan Stanley and Bank of America a total of $100 million for “cutting corners on IPOs.” The U.K.’s Standard Chartered was also fined. The securities regulator said the banks failed to perform the required due diligence on several IPOs.
Fast money In what could be a quick financial bonanza for the bank, JPMorgan Chase bought $350 million of bonds directly from Ukraine’s government on Tuesday, “a departure from the standard Wall Street practice of arranging bond sales from governments to outside investors. The deal could deliver millions of dollars in gains for JPMorgan, which bought the bonds at a discount and has already begun unloading them to bond funds at full market price.”
Financial Times
Stepping aside Francisco González, BBVA’s former executive chairman, said he is “temporarily” stepping down from his honorary chairmanship post while the bank investigates allegations of corporate spying during his tenure. In January, Spanish media reported the bank had hired a corporate services company to investigate executives from a Spanish construction firm “in order to head off a takeover bid by the company that would have pushed out Mr. González.”
Elsewhere
On the soap box Bank of America CEO Brian Moynihan discussed a variety of subjects on CNBC’s “The Exchange,” including the state of the U.S. economy, mortgage lending and housing, digital banking, and what the bank is doing to promote gender equality.
BofA CEO Brian Moynihan and fellow executives warned analysts during fourth-quarter earnings Friday that deposit migration may continue this year if interest rates rise further.
Chris Keane/Bloomberg
Quotable
“Mr. Sloan shouldn’t be getting a bonus, he should be shown the door.” — Rep. Maxine Waters, D-Calif., commenting on Wells Fargo CEO’s compensation package for 2018, which included a 5% raise and a $2 million bonus.
The Office of the Attorney General in New York says the bank violated the state's Exempt Income Protection Act, illegally transferring customers' money to debt collectors.
The Providence, Rhode Island, company is having discussions with private wealth management teams elsewhere as it seeks to expand its fledgling private bank. In just three months, private banking deposits doubled to $2.4 billion.
After the Minneapolis-based company reported stubbornly high commercial deposit costs, it reduced its full-year forecast for net interest income by $200 million-$500 million.
The CFPB has dissolved the Office of Supervision, Enforcement and Fair Lending and eliminated the job of associate director in a move that impacts how it designates nonbanks for supervision.
Rising deposit costs have plagued banks in general, and the Tennessee bank had to pay up to bolster liquidity after its failed merger with TD. But First Horizon retained customers in the first quarter while not paying them the special rates they got last year.
U.S. customers who have previously used Sweden-based Klarna's buy now/pay later financing — and paid off their loans in full — will be prequalified for interest-bearing loans through a new version of the Klarna Visa card rolling out later this year.
