Goldman eyes JetBlue card portfolio; Powell calls for faster money transfers

Receiving Wide Coverage ...

Insurance megadeal

Chubb, “one of the nation’s biggest, oldest and best-known property-casualty insurers, has made a preliminary proposal to acquire Hartford Financial Services, another storied name in the industry,” the Wall Street Journal reported.

Chubb is the “largest U.S. non-life insurer by market capitalization,” the Financial Times said. The “unsolicited $23.2 billion takeover offer could be the first megadeal in an industry battered by losses stemming from the coronavirus pandemic.”

“Hartford said its board of directors was considering a non-binding proposal from Chubb. However, according to people briefed on the matter, the company’s executives were unimpressed because the premium was too low.”

Think you have it tough?

A group of first-year analysts at Goldman Sachs “warned senior management that they are overworked and will quit within six months unless conditions improve, according to an internal survey circulated online,” Reuters reported. “The junior bankers said that they worked an average of 95 hours a week, slept five hours a night, frequently faced ‘unrealistic deadlines,’ and that their relationships with friends and family were feeling the strain as a result.”

“While Wall Street is notorious for its tough culture, the survey provides a rare insight into just how grueling working conditions can be.” Goldman said it “has since taken steps to address employee burnout.”

“We recognize that our people are very busy, because business is strong and volumes are at historic levels,” a Goldman spokeswoman said. “A year into COVID, people are understandably quite stretched, and that’s why we are listening to their concerns and taking multiple steps to address them.”

“Three quarters” of the respondents said they felt like “victims of workplace abuse,” the FT said.

Wall Street Journal

Aiming for the sky

Goldman Sachs “is talking to JetBlue Airways about taking over its credit-card program, the latest effort from the Wall Street firm to push deeper into consumer finance. Goldman is competing against Barclays, which is the current issuer of the JetBlue credit cards and is in discussions to hold on to the deal, which doesn’t end for another roughly three years.”

“As of December, outstanding balances on Goldman’s credit cards totaled $4.3 billion, more than double their level the year before. That is still small compared with the big card issuers. A JetBlue deal could be risky for Goldman because of the unusually long gap between when the deal would be signed and when it would take effect, especially given the uncertainty around what will happen to travel demand in the intervening years.”

Exposed

“The coronavirus pandemic has underscored the need to improve systems for transferring money across international borders, Federal Reserve Chair Jerome Powell said Thursday.” While the “existing system for cross-border payments is safe and reliable, it suffers from outdated technology in some areas and inefficiencies that can make it difficult to comply with requirements to fight money laundering and terrorist financing,” he said.

“The Covid-19 pandemic has shined a light on the less efficient areas of our current payment system and accelerated the desire for improvement and digitalization,” Powell said.

“The Fed is working to develop a faster system, dubbed FedNow, to allow banks to exchange money instantly, around the clock. Its current system operates only during business hours and often takes days to clear checks. Mr. Powell said FedNow should be up and running ‘sometime in late 2023 or 2024.’”

Everybody wins

Two leading mortgage companies are engaged in a bitter battle, which is benefiting Michigan State University’s basketball program to the tune of tens of millions of dollars.

“On one side of the off-court feud is Detroit-based Rocket Cos., the parent company of Quicken Loans. Founded in the 1980s by MSU alum Dan Gilbert, Rocket is now the biggest mortgage lender in the U.S. On the other side is Pontiac, Mich.-based United Wholesale Mortgage, which has been hot on Rocket’s tail. CEO Mat Ishbia, a former walk-on to the MSU basketball team, has grown the company by issuing loans through an army of brokers. It was the No. 4 mortgage lender in the U.S. last year.”

“Last month, Mr. Ishbia made a $32 million donation to the athletics department. Last week, Rocket announced it had expanded its existing sponsorship of the Spartans. Mr. Ishbia told the Detroit News that he hoped Mr. Gilbert would “one-up my $32 million donation” and donate $33 million.”

Elsewhere ...

Meeting demand

Morgan Stanley has become “the first big U.S. bank to offer its wealth management clients access to bitcoin funds,” CNBC reported. “The investment bank told its financial advisors in an internal memo that it is launching access to three funds that enable ownership of bitcoin.”

“The move, a significant step for the acceptance of bitcoin as an asset class, was made by Morgan Stanley after clients demanded exposure to the cryptocurrency. Bitcoin’s rally in the past year has put Wall Street firms under pressure to consider getting involved in the nascent asset class.”

Quotable

“There was a point where I was not eating, showering or doing anything else other than working from morning until after midnight.” — A Goldman Sachs junior analyst describing working conditions at the firm.