Banks line up for Citi Asia retail units; Goldman discloses Black worker count

Wall Street Journal

Probe of Credit Suisse

Regulators in the U.S. and Switzerland “have asked Credit Suisse for more information about additional stock sales related to the collapse of Archegos Capital Management. The sales could result in additional losses that go beyond the $4.7 billion hit the bank disclosed earlier this month, [although] any additional losses are expected to be small in relation to the earlier amount.”

“The recent regulator questions are part of a broader investigation into the bank’s relationship with Archegos and its wind down. It couldn’t be determined which U.S. regulators were asking questions about the most recent stock sales. The Securities and Exchange Commission launched a probe into Archegos trading in March. The Federal Reserve is examining the Archegos situation and working with overseas regulators.”

Wait and see

“Demand for business loans in the eurozone fell and banks tightened credit standards in the first quarter of this year, a toxic combination that challenges the bloc’s slow economic recovery from the pandemic.” The European Central Bank’s latest lending survey showed “demand from companies for loans and credit lines fell for the third quarter in a row. The ECB said businesses seem to be postponing investments, as the pandemic triggers fresh lockdowns and other restrictions in many parts of Europe.”

“European companies tend to rely more heavily on bank lending than U.S. counterparts. That makes demand and supply of loans a key gauge of the health of the region’s economy. The sluggish lending will be seen as a frustration for the ECB, which has unleashed massive stimulus into the economy through bond buying, cheap lending to banks and negative interest rates, as a way to counteract the effects of the pandemic.”

Red hot

“Hispanic homeownership grew at a record pace last year [as] the number of Hispanic-homeowner households rose by more than 700,000 to nearly 9 million in 2020, according to the National Association of Hispanic Real Estate Professionals, an industry group. Those gains marked the biggest one-year increase in data on Hispanic homeownership going back two decades, NAHREP said.”

Barred

A Goldman Sachs stock analyst “has been barred from the broker-dealer industry by the Financial Industry Regulatory Authority for insider trading.” Brian Maguire, who was fired by Goldman last November, “bought shares in two different companies after finding out through internal emails that another analyst was upgrading his recommendation on those firms to buy from neutral. Mr. Maguire bought his shares ahead of publication of the upgrades, Finra said.”

Financial Times

Climate crisis

"We are facing a climate emergency that demands collective action and central banks must undergo a transformation, perhaps an uncomfortable one, to play their part in dealing with it,” an FT op-ed argues. “By reshaping their interventions in asset markets, they can accelerate reductions in carbon emissions and change the cost of capital to address hidden climate risks in the financial system.”

Elsewhere

Head count

Goldman Sachs said Black employees represent 6.8% of its U.S. workforce “and make up a little more than 3% of its senior executive team,” Reuters reported. “The bank employs a total of 1,425 Black men and women, of which 649 are men and 776 are women,” according to the bank’s 2020 sustainability report. “Goldman, which had previously revealed only percentage figures, released headcount numbers based on ethnicities and race across job categories for the first time.”

“In 2020, Black men and women represented 3.2% of its 1,548 senior executive leadership, managers and senior officials,” up from 2.7% a year earlier. “The report showed that 57 of Goldman’s 3,411 first-level or mid-level officials and managers are Black men while 48 are women. The bank has 40,500 employees across the globe.”

Let the bidding begin

Banks including Mitsubishi UFJ Financial Group and Standard Chartered “are set to bid for parts of Citigroup’s consumer business in Asia,” Reuters reported. “The move comes after Citi said it would exit its consumer franchises in 13 markets, 10 of which are in Asia, as it refocuses on its more lucrative institutional and wealth management businesses in these markets.”

“The businesses Citi is exiting had $82 billion in assets and were allocated $7 billion in tangible common equity last year. Potential bids from the regional banks and StanChart, which makes most of its profit in Asia, underscores their growing appetite for businesses like credit cards and mortgages in a push to lock in long-term income growth.”

Danske sued

The U.S. Federal Retirement Thrift Investment Board (FRTIB) has filed a lawsuit against Danske Bank and its former CEO, Reuters reported. “The suit is linked to Danske’s involvement in a major money laundering scandal. The FRTIB, which manages almost $600 billion in federal retirement funds, lost money after buying shares in Danske Bank.”

Quotable

“When there is less appetite from the supply side with banks not wanting to expose themselves to the domestic economy, and from the demand side where the companies have no visibility on when the economy will open, that’s not a good recipe for an economy reliant on the banking system.” — Shaniel Ramjee, a fund manager at Pictet Asset Management, about the dearth of bank lending in the eurozone.