Pressure grows on Barclays CEO; JPM tightens rules on working with fintechs

Editor's note: Morning Scan will not publish on Monday, Feb. 17, in observance of Presidents Day. We’ll be back on Tuesday, Feb. 18.

Receiving Wide Coverage ...

In jeopardy

The U.K. investigation into Barclays CEO Jes Staley’s dealings with disgraced financier Jeffrey Epstein was launched after financial regulators there “received a cache of emails supplied by JPMorgan Chase,” which “provided them to U.S. regulators, who passed it to their counterparts in the U.K.,” the Financial Times reports.

“The emails between the two men — dating back to Mr. Staley’s time as an executive at JPMorgan when Epstein was a client of the bank — suggested their relationship was friendlier than claimed by Mr. Staley, who had categorized the association as professional.”

Bloomberg News

“It is pretty much unprecedented” for the U.K.’s two top financial regulators “to launch an enforcement investigation into the chief executive of a big U.K. bank,” the paper says. “That they have now twice initiated a probe into [Barclays CEO] James E. Staley is jaw-dropping. They must broadcast loud and clear that the U.K. is not a cushy billet and that chief executives of banks, however international, are never too grand to be called to account.”

“Four years ago, Mr. Staley twice tried to identify an anonymous whistleblower against advice. The following year he was censured by Barclays’ board. It took another year still for the U.K. regulators to conclude the investigation and fine him £640,000. It is harder to see how Mr. Staley can save his job this time. What was acceptable three years ago is much less so now. The watchdogs can’t be seen to bottle out this time.”

But the Wall Street Journal warns investors about “overreacting” to the Barclays news. “It is a narrow investigation that seems unlikely to amount to much, either for the bank or the banker. Barclays’ board had commissioned its own inquiries and concluded Mr. Staley had been transparent.”

“If Mr. Staley is edged out, he will leave a leaner, more focused and profitable company than he joined nearly five years ago. Barclays is now a diversified bank with modest growth ambitions for its full-service U.K. business, U.S. credit card unit and investment bank focused on London and New York. There is every reason to believe the latest investigation won’t send Mr. Staley overboard. But even if it did, Barclays can probably manage without him.”

Grilled

Republican senators “dealt a significant setback to one of President Trump’s nominees to the Federal Reserve Board when they raised concerns” over Judy Shelton’s “writings and public statements at a confirmation hearing Thursday,” the Journal says. “Lawmakers of both parties on the Senate Banking Committee said they were uncomfortable with at least some of her policy preferences.”

But “senators from both parties indicated no concerns with Mr. Trump’s second nominee for the central bank’s seven-member board, Christopher Waller, who is research director at the Federal Reserve Bank of St. Louis.” Wall Street Journal, Financial Times, New York Times, Washington Post here and here, American Banker

Out with the old

Royal Bank of Scotland is changing its name to NatWest “as part of a strategic overhaul that will involve slashing the size of its investment bank, halving the carbon emissions linked to its loan book, and cutting its long-term profitability targets.” CEO Alison Rose said the bank is entering “a new era” and that “as part of the shift, the bank will stop using the 293-year-old RBS name at the group level in favor of the less scandal-tainted NatWest brand, though it will continue to be used in its Scottish branch network.”

The bank is trying “to move on from the legacy of the global financial crisis that saw the U.K. banking giant receive a £45.5 billion ($59.3 billion) bailout from British taxpayers to prevent it collapsing,” the journal says.

Wall Street Journal

Good deal

Visa’s stock may be a relative bargain compared to archrival Mastercard, the paper says. Mastercard “is trading 36.4 times forward earnings versus 31.7 times for Visa. Visa’s stock price hasn’t exactly suffered, but it has lagged. Mastercard’s rose 58% last year while Visa’s was up by just 42%.” That despite “more cards, more revenue and more profit.”

Better scores

The Department of Housing and Urban Development says “more public-housing residents would see their credit scores improve if their rent payments were reported to credit agencies,” according to a study it conducted.

Financial Times

Continued cost-cutting

Commerzbank’s new chief financial officer said she will “look everywhere” to cut more costs “just days after it emerged that a European Central Bank official had urged Germany’s second-biggest bank to speed up its restructuring.” Bettina Orlopp, the bank’s incoming CFO, said “the bank had started looking for additional savings on top of those announced last year,” when it “laid out ambitions to axe 10% of annual costs by 2023 in a plan that will cost 2,300 jobs and close a fifth of its branches.”

Elsewhere

Our way or the highway

JPMorgan Chase “has told financial technology companies they will be barred from accessing its customer information by July 30 unless they sign data access agreements with the bank and back a plan to stop using customer passwords to gather the data,” Reuters reports. The bank said the fintechs must agree to “transition to a new method of collecting customer data. Otherwise, JPMorgan will block all automated access to the data.”

“The deadline is the latest move in the bank’s effort to transition fintechs and data aggregators to what it has said is a more secure way of accessing customer data.”

Quotable

“I believe everyone has the right to criticize the Federal Reserve, including the president, every member of Congress and every citizen.” — Judy Shelton, President Trump’s nominee to join the Fed, at her confirmation hearing before the Senate Banking Committee