Wells paying up to recruit brokers; Will JPM’s stock buybacks slow?

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Change in plans

Marcus, Goldman Sachs’ retail banking arm, has “shelved plans” to enable its customers in the U.K. to buy stocks for their retirement “in favor of targeting more cash savings products,” the Financial Times says. Marcus “had been working with Nutmeg, a U.K. online wealth manager, with a view to launching a product” this spring. “However, it is likely that Goldman will develop its wealth management services with other providers,” the paper reports.

“In the U.S., the offering is likely to be developed by United Capital, the wealth management firm which Goldman bought last year and which is working on a robo advisory service for people with as little as $5,000 to invest.”

Separately, the Wall Street Journal talks to Maeve DuVally, a managing director in Goldman’s corporate communications department and “one of only a handful of employees of the financial firm to openly identify as transgender.” She “typically manages the firm’s story from behind the scenes. But she moved into the spotlight last year when she shared her transition story with the world. Since then, she has spoken openly about how her relationships and views on diversity have changed and how Wall Street can make firms feel more inclusive.”

Frozen

Credit Suisse “has frozen its investment bank bonus pool … at about SFr3.2 billion ($3.3 billion) as the board tries to balance a strong increase in group net income with a falling share price in recent years,” the FT reports. “Despite the bonus freeze, staff at Credit Suisse’s investment bank are likely to suffer less than many of their European peers. Barclays has cut its bonus pool by a mid-teens percentage, and Deutsche Bank slashed incentive pay by as much as 30%.”

Meanwhile, Credit Suisse, which has admitted to spying on some of its former executives, is now being accused of snooping on Greenpeace, according to a Swiss newspaper. Then-COO Pierre-Oliver Bouee, who was fired in December for ordering the surveillance of former executive board members Iqbal Khan and Peter Goerke, “ordered his head of security to infiltrate the environmental group after Greenpeace disrupted the bank’s annual shareholder meeting in 2017,” according to the paper. “Credit Suisse, which has been criticized by Greenpeace for investing in fossil fuels, gained access to emails, tipping the bank off to demonstrations planned against it, the report said,” according to Reuters.

Wall Street Journal

An interesting dilemma

JPMorgan Chase is facing an enviable problem: “a lot of cash and an expensive stock," the paper says. Over the past three years, [the bank] has spent most of its profit on share repurchases. That has been a boon for shareholders, since buybacks typically increase a company’s stock price. The issue now is that JPMorgan shares, trading as they are at records, are getting more expensive. Analysts and investors are starting to ask if that means repurchases will slow. Slower buybacks could add to the pressure on returns and, therefore, the stock.”

Michael Nagle/Bloomberg

Costly fix

Wells Fargo, which “is finding it is hard to win back the trust it lost” following its 2016 phony accounts scandal, is facing an exodus of many of its 13,000 financial advisers. “To stem the tide, the bank is luring new advisers with six-figure bonuses while asking for money back from those who don’t meet performance goals. The bank’s wealth-management profits have barely budged from 2016,” while some of its Wall Street competitors have “posted double-digit gains in their wealth businesses.”

But “Wells Fargo executives believe the wealth operation — one of the bank’s three main business lines — is close to turning around after the scandal. Wealth-management head Jonathan Weiss has put new managers in place, and the bank said 2019 was its best recruiting year since before the sales scandal erupted," the paper says. "Yet expenses have jumped 23% from a year ago, in part because of higher compensation and benefits.”

Financial Times

Start preparing

The European Banking Authority’s stress tests this year will “test the region’s banks against the most severe post-Brexit economic conditions ever envisaged, including a contraction of more than 4% in the bloc’s economy by 2022," the paper reports. "The tests, which cover 51 banks that do business across the European Union, including U.K. banks, would assume “a recession coupled with low or negative interest rates for a prolonged period.”

“It will be the first time that the regulator’s biennial test includes this ‘lower for longer’ narrative as part of the most extreme scenario that it expects banks to be able to withstand. Its inclusion reflects the fact that central banks have struggled to raise interest rates since the global financial crisis.”

Stupid, stupid, stupid

Mastercard CEO Ajay Banga is worried about “governments edging towards nationalization of consumer payments systems, and fears that consumers, wary of their privacy, could shift back towards cash.”

“The economic cost of building siloed systems in a world where citizens travel globally is really stupid, and where crime travels globally is even more stupid, and where technology is completely global is even three times more stupid,” he told the paper.

New York Times

No good deed goes unpunished

Emily James, a senior officer at a U.S. Bank call center in Portland, Ore., was fired, along with her supervisor, after she went — in person — to give $20 out of her own pocket to a stranded customer who was waiting for the bank to cash one of his checks. The bank told the paper “she broke the rules, putting herself and the bank at unnecessary risk.”

After the article was published online on Saturday, the reporter said he received “a contrite phone call” from the bank’s CEO, Andrew Cecere, whom he had unsuccessfully tried to reach earlier. “This is not who we are,” Cecere said, adding, "companies sometimes make mistakes, and that he accepted ownership of what went wrong. He also telephoned Emily James and expressed concern for her and for her supervisor, Abigail Gilbert. ‘I will fix this,’” he told the reporter.

Washington Post

It won't be easy

Judy Shelton, President Trump’s latest Federal Reserve nominee, “is expected to face a contentious confirmation battle in the coming weeks,” the paper says. One of the senators likely to oppose her nomination is Sen. Elizabeth Warren, D-Mass., who last week “sent a six-page letter to Shelton on Thursday questioning Shelton’s ‘economic expertise and judgment’ and alleging that the nominee will be unable to remain politically independent of Trump.”

“Shelton's nomination is the latest attempt by the Trump administration to fill the Fed's empty seats after other possible choices floated by the president — including onetime presidential nominee Herman Cain and Trump economic adviser Stephen Moore — failed to drum up enough support in the Senate,” American Banker says.

Quotable

“We are proud that so many outstanding financial advisers are choosing to join us. We remain optimistic about the business and the future.” — A Wells Fargo spokeswoman about its wealth management business, which has had to pay bonuses to attract new brokers to replace those who have left since the bank’s 2016 phony accounts scandal