Latest banking news, Dec. 16, 2022

Goldman Sachs considers eliminating as many as 4,000 Jobs

Scott Eells/Bloomberg

Goldman Sachs may eliminate as many as 4,000 employees, according to a person familiar with the matter. Top managers have been asked to identify potential cost-reduction targets, and no final job-cut number has been determined, the person said, asking not to be identified discussing internal deliberations. Headcount at the Wall Street giant has surged in recent years as CEO David Solomon completed acquisitions to build a more diversified company. A costly expansion into consumer banking left the unit with its deepest losses yet amid a slowdown in the business environment for dealmaking and slumping asset prices.
The bank's workforce surpassed 49,000 in this year's third quarter, up 34% since the end of 2018. Solomon has said he's dialing back the firm's ambitions for consumer banking and signaled he's reviewing other business lines to manage headcount and limit costs. The latest cuts go beyond the firm's annual exercise of weeding out underperforming staff, which was the focus just months ago. Semafor, which reported the potential job cuts earlier Friday, said they may amount to up to 8% of the bank's workforce. A spokesperson for the New York-based company declined to comment. — Sridhar Natarajan and Steve Dickson, Bloomberg News

Fund managers appointed to co-lead FDIC's Mission Driven Bank Fund

FDIC flag flies outside the agency's headquarters in Washington D.C.

Andrew Harrer/Bloomberg

The investment fund created last year by the Federal Deposit Insurance Corp. to support minority depository institutions and community development financial institutions officially launched this week with the naming of two fund managers. Anchor investors Microsoft and Truist Financial appointed Elizabeth Park Capital Management, an alternative asset manager in Cleveland, and Calvart Impact, an investment firm in Bethesda, Maryland, to co-manage the fund, which will provide capital, market development and other technical support services to mission-driven banks. The fund, which was announced in September 2021, will focus on about 300 mission-driven U.S. banks that make loans in historically unbanked and rural communities and communities of color. The fund has secured $120 million of commitments to date, with a target goal of $500 million to $1 billion. In addition to Microsoft and Truist, Warner Bros. Discovery has made a commitment to the fund, which expects to start making investments after the first fundraising close, which is anticipated to take place during the second quarter of 2023. — Allissa Kline

FTX told Australia of work on ‘robust’ security before collapse

FTX Collapse Probed by Federal Prosecutors in Manhattan

Jakub Porzycki/NurPhoto/Photographer: Jakub Porzycki/Nur

FTX described its "robust" security practices and advocated against stricter safeguards on client assets in a letter to the Australian government a little more than five months before the cryptocurrency exchange collapsed. Crypto firms shouldn't be forced to keep clients assets locally or using a third-party firm, FTX wrote in a submission to the nation's Treasury department dated May 29 that was recently made public. "Larger more sophisticated groups such as FTX have invested significant sums in developing robust security practices which achieve the necessary levels of security while keeping custody of assets 'in-house,' " according to the document. FTX's implosion last month came after the exchange had wooed regulators worldwide for years. Founder Sam Bankman-Fried, who was arrested in the Bahamas on Monday, had testified before the US Congress and had been active in the debate over whether the crypto space should be more tightly regulated. The assertions in the Australian letter are at odds with the assessment of new FTX CEO John J. Ray III, who said recently that the exchange had "absolute concentration of control in the hands of a very small group of grossly inexperienced and unsophisticated individuals." "By providing regulatory certainty, consumers can be confident that they are dealing with legitimate businesses and that their consumer rights can be enforced," FTX said in the Australian letter. "Likewise, a clear regulatory regime will provide greater business certainty." The Australian Financial Review reported earlier on the letter. — Joanna Ossinger and Ben Westcott, Bloomberg News, with assistance from Victoria Batchelor.

First Hawaiian hires industry veteran James Moses as next CFO

First Hawaiian Inc. in Honolulu named James Moses vice chairman and chief financial officer of the company and its First Hawaiian Bank subsidiary. Moses will officially join First Hawaiian on Jan. 3 from First Bank in St. Louis, where he was CFO. He previously was the finance chief of Berkshire Hills Bancorp in Boston. "Jamie brings more than 20 years of diverse banking experience to the team. His track record of driving financial growth in complex organizations makes him a great fit for First Hawaiian," Bob Harrison, First Hawaiian's chairman, president and CEO, said in a press release Thursday. Moses succeeds Ravi Mallela, who resigned earlier this year for personal reasons. — Jim Dobbs

U.K.'s largest money laundering prosecution heads for a retrial

A group of people linked to an English gold dealer will face a retrial in the U.K.'s largest money laundering prosecution after a jury failed to reach verdicts for them after a nearly eight-month trial. Four defendants were found not guilty, while the remaining four will be tried again, a prosecutor said Wednesday. The group were accused of concealing and converting hundreds of millions of pounds of street cash that was banked by NatWest Group. The gold dealer, Fowler Oldfield, deposited some £266 million ($329 million) through NatWest between 2014 and 2016, prosecutors said. They said gold bars and grain were purchased using the laundered funds for ultimate export to Dubai. All defendants denied the charges saying that authorities couldn't prove that the cash was criminal. Paul Miller, Heidi Buckler, Alexander Tulloch and Francesca Sota were found not guilty. The socialite James Stunt was found not guilty of one count of forgery. — Jonathan Browning, Bloomberg News

AMC will offer co-brand credit card to appeal to meme stock crowd

AMC Entertainment Holdings said it will introduce a co-brand credit card next year that it designed for the meme-stock crowd. The movie theater operator — one of the poster children for the meme-stock mania of 2021 — partnered with Visa and the financial technology upstart Deserve on the offering, according to a statement. For now, the company is allowing customers to join a wait list ahead of an official launch of the card next year. Retail investors armed with commission-free brokerage accounts and who lurk in forums like Reddit's WallStreetBets banded together last year to push up the prices of widely shorted stocks such as GameStop and AMC. That's given brands caught up in the so-called meme stock craze almost cultish appeal among day traders. AMC Chief Executive Adam Aron, who embraced his company's meme-stock status, has unveiled a bevy of perks for these retail investors, including free popcorn. With the card, AMC is betting that appeal will carry over into financial services. — Jenny Surane, Bloomberg News

Treasury deputy favored to become next top Biden economic aide

Wally Adeyemo on Sept. 6, 2022. Photographer: Victor J. Blue/Bloomberg

Deputy Treasury Secretary Wally Adeyemo is emerging as the front-runner to succeed Brian Deese as top White House economic advisor, according to people familiar with the matter, as the Biden administration prepares to shuffle its team early next year. Adeyemo would take over as director of the National Economic Council, where he previously served as a deputy director in the Obama administration. The moves are still under discussion and have not been presented to President Biden, according to the people, who described the personnel deliberations on condition of anonymity. Deese gave top Biden aides a two-year commitment to run the NEC, according to a person familiar with the matter, and is expected to depart as soon as the spring. Bloomberg News reported last month that Deese is expected to leave the administration next year, giving Biden the chance to remake his economic team ahead of an expected 2024 reelection bid. Adeyemo's status as front-runner for the job was cemented once it was clear Democrats retained control of the Senate in the midterm elections. With a slightly larger 51-49 majority starting in January, Biden's party will be better positioned to confirm a new deputy secretary at the Treasury should Adeyemo leave the department. Treasury spokeswoman Lily Adams declined to comment on personnel matters. The White House also declined to comment. — Bloomberg News

FIS accelerates handoff to new CEO Stephanie Ferris

Stephanie Ferris.

FIS sped up its transition to a new leader, announcing that Stephanie Ferris, its president, added the title of CEO. Ferris succeeds longtime CEO Gary Norcross, who left the board of the core banking service giant on Dec. 16. FIS in October had announced Ferris would take the reins as CEO at the beginning of 2023, while Norcross would remain as executive chairman of the board. Jeffrey A. Goldstein, previously lead independent board member, has been named chairman of the company's now-independent board. FIS also announced a comprehensive review of its strategy, businesses, operations and structure aimed at repositioning the Jacksonville, Florida, company to drive stronger results and shareholder value. —Kate Fitzgerald

PayPal adds crypto purchasing options

David Paul Morris/Bloomberg

PayPal has partnered with the web technology company Consensys to allow U.S. MetaMask's crypto wallet users use PayPal to buy Ethereum from MetaMask's app. MetaMask specializes in NFTs, gaming, distributed finance applications and the metaverse, which financial institutions are starting to adopt to reach new consumers. PayPal supports a variety of buy, sell and hold services for cryptocurrency, and is in the midst of expanding its crypto footprint beyond the U.S. and U.K to new markets. PayPal is also developing other use cases for digital assets, including a potential stablecoin. — John Adams