TUESDAY FEBRUARY 23, 2021 VOL. 186 No. 35 AMERICANBANKER.COM Follow us on Twitter @AmerBanker White House will give 5 small firms two-week exclusive PPP access Ready to hire again? Only businesses with 20 or fewer employees The size of the CFPB's workforce peaked in 2017 following will be eligible to apply for forgivable loans sharp growth during the Obama administration. The agency is from the Small Business Administration’s expected to add personnel under President Biden. Paycheck Protection Program. Page 4

Total employees | See story on page 3 Fintech seeks ILC to 6 be one-stop banking resource for startups 1.7K Brex currently relies on bank partners to 1.6K offer credit cards and cash management 1.5K accounts to small and midsize businesses. 1.4K It is looking to charter its own FDIC-insured 1.3K institution to be a direct provider. Page 5 1.2K Fed sounds alarm on 1.1K 7 commercial real estate, 1K business bankruptcy 900 The Federal Reserve warned of significant 800 risks of business bankruptcies and steep 700 drops in commercial real estate prices in a 2012 2013 2014 2015 2016 2017 2018 2019 2020 report published on Friday. Page 6

Source: CFPB (fiscal year) Citi said to consider divesting 8 some foreign consumer units The company is mulling the sale of certain retail operations the Asia-Pacific region as dailybriefing CFPB goes on hiring part of incoming CEO Jane Fraser’s plan to 3 spree as it looks to streamline operations, according to people ramp up enforcement familiar with the matter. Page 6 M&T ends M&A drought with The agency is recruiting more attorneys and 1 $7.6B deal for People’s United shuffling personnel under new Democratic Santander’s CRA rating The deal for the $63 billion-asset People’s leadership as it prepares to toughen 9 upgraded to ‘outstanding’ United would create a company with more oversight of the financial services industry. The Boston-based bank said the Office of the than $200 billion of assets and a branch (See chart above.) Page 3 Comptroller of the Currency gave it the highest network stretching from Maine to Virginia. grade possible on its most recent Community Buffalo, N.Y.-based M&T has not made Bankers plead for Reinvestment Act examination. Santander had an acquisition since buying Hudson City 4 answers from SBA on received a “needs to improve” grade in 2017 Bancorp in late 2015. Page 2 forgiving big PPP loans and had a “satisfactory” rating in 2018. Page 7 The Small Business Administration wants BancFirst to buy to vet Paycheck Protection Program loans New OCC chief should 2 Oklahoma bank dealing of $2 million or more, but lenders have 10 encourage banks, fintechs with regulatory issues grown tired of waiting for months with no to partner with CDFIs The Office of the Comptroller of the updates. Page 4 Community development financial Currency issued a prompt corrective action institutions would reach even more directive to First National Bank and Trust underserved households and business if in January, requiring it to hire a forensic they had strong relationships with tech firms auditor and provide the OCC with access to and national banks, Maria Schuld of FIS documents and records. Page 2 writes. Page 7 TUESDAY FEBRUARY 23, 2021 AMERICANBANKER.COM PAGE 2

our ability to serve our communities and M&A customers, and provide solutions that make M&A a difference in people’s lives,” Jones added. M&T said it expects the deal will be M&T ends immediately accretive to its tangible book BancFirst to value per share. The acquisition should be M&A drought 10% to 12% accretive to M&T’s 2023 earnings buy Oklahoma per share in 2023, including planned cost cuts. with $7.6B M&T said it plans to cut about $330 bank million in annual noninterest expenses, deal for though the savings include People’s United’s dealing with pre-existing plan to close branches inside Stop & Shop supermarkets in and People’s Connecticut. The company expects to incur regulatory $740 million in merger-related expenses. United Five People’s United directors, including issues CEO Jack Barnes, will join M&T’s board. By Paul Davis Lazard and Sullivan & Cromwell advised By Paul Davis February 22, 2021 M&T. Keefe, Bruyette & Woods, J.P. Morgan February 22, 2021 M&T Bank in Buffalo, N.Y., has agreed to Securities and Simpson, Thacher & Bartlett BancFirst in Oklahoma City has agreed to buy People’s United Financial in Bridgeport, advised People’s United. buy First National Bank and Trust in Vinita, Conn. Okla. The $143 billion-asset M&T said in a The $9.2 billion-asset BancFirst said in press release Monday that it will buy the $63 a press release Friday that it will gain two billion-asset People’s United for $7.6 billion branches, $209 million of loans and $235 in stock. The deal, which is expected to close million of deposits as part of its purchase- in the fourth quarter, priced People’s United and-assumption agreement with the Ratcliff at 164% of its tangible book value. family. Based on the value, the deal is the third- BancFirst did not disclose the price it biggest bank merger announced in the last will pay. The deal is expected to close in the two years. The only deals to surpass the price second quarter. over that time are PNC Financial Services The Ratcliff family has owned First National Group’s agreement to buy BBVA Bancshares since the 1980s. and the merger of BB&T and SunTrust Banks First National has been operating that created Truist Financial. under a prompt corrective action directive The merger — the first for M&T since it from the Office of the Comptroller of the bought Hudson City Bancorp in November Currency since Jan. 15. The enforcement 2015 — would create a bank with more than 1,100 branches and roughly $200 billion of assets. The footprint would stretch from Established 1836 One State Street Plaza, 27th floor, New York, NY 10004 Maine to Virginia. Phone 212-803-8200 AmericanBanker.com People’s United had been a very aggressive acquirer in recent years, buying Editor in Chief Alan Kline 571.403.3846 Copy Editor Neil Cassidy 212.803.8440 Suffolk Bancorp in Riverhead, N.Y., 2017 and Managing Editor Dean Anason 770.621.9935 BSB Bancorp in Belmont, Mass., and United Reporters/Producers Financial in Hartford, Conn., in 2019. The Executive Editor Bonnie McGeer 212.803.8430 Laura Alix 860.836.5431, Kate Berry 562.434.5432 company spent nearly $1.5 billion on those Washington Bureau Chief Joe Adler 571.403.3832 acquisitions. Executive Editor, Technology Miriam Cross 571.403.3834 “In People’s United, we have found Penny Crosman 212.803.8673 Jim Dobbs 605.310.7780 a partner with an equally long history BankThink Editor Rachel Witkowski 571.403.3857 of serving and supporting customers, John Heltman 571.403.3847, Allissa Kline 716.243.2679 Community Banking Editor Paul Davis 336.852.9496 businesses and communities,” René Jones, Hannah Lang 571.403.3855 M&T’s chairman and CEO, said in the Contributing Editor Daniel Wolfe 212.803.8397 John Reosti 571.403.3864, Gary Siegel 212.803.1560 release. Digital Managing Editor “Combining our common legacies and our Christopher Wood 212.803.8437 Kevin Wack 626.486.2341 complementary footprints will strengthen

For up to date and complete coverage go to AmericanBanker.com TUESDAY FEBRUARY 23, 2021 AMERICANBANKER.COM PAGE 3 action required the bank to hire a forensic “We must hold accountable companies nontraditional means, which suggests they auditor and provide the OCC with “prompt that break the law and harm American have big plans for what they want to do,” said and unrestricted access” to documents and consumers and small businesses during this Lucy Morris, a partner at Hudson Cook and records, among other things. time of incredible financial stress,” he said in former CFPB deputy enforcement director. Mark Poole, First National’s chief lending the Feb. 9 blog. “To do this, we need the fullest In his blog post calling on attorneys to officer, will continue to run the bank. talents and passion of the American public. apply for jobs, Uejio highlighted the bureau’s The Bureau has one of the most remarkable mission and the stress of the COVID-19 workforces I have ever seen, and I invite you to pandemic on consumers. BIDEN ADMINISTRATION seize the moment and join us.” The “CFPB was created for moments like The hiring moves come as Uejio also has this,” Uejio wrote. “Born out of the Great moved aggressively to tee up enforcement Recession, the CFPB was forged in crisis to CFPB goes on actions. vigorously protect America’s consumers. “It’s clear that they intend to become really Achieving this goal requires vigorous oversight hiring spree aggressive as quickly as they can,” said Scott of all applicable Federal laws and the fullest Pearson, a partner at Manatt, Phelps & Phillips. utilization of our legal authorities.” To be fair, CFPB enforcement actions picked The ramp-up in hiring follows a three-year as it looks up toward the end of the Trump era. Tom period of mostly attrition under the Trump Ward, Kraninger’s enforcement director, filed administration. When former acting CFPB to ramp up 52 such orders last year, the highest number Director Mick Mulvaney took control of the since 2015. agency in late 2017, he immediately instituted But in a move appearing to clear the way a two-year hiring freeze. Though Kraninger enforcement for Chopra to put his own managers in top vowed to increase hiring in 2019, the bureau’s positions, Ward was moved out of the job headcount dropped 17% under her watch By Kate Berry recently and into a new role to make way for to a low of 1,421 in June 2020, from a peak of February 21, 2021 Petersen, according to internal agency emails. 1,712 in June 2017 under Cordray. The CFPB The Consumer Financial Protection Bureau Petersen has been with the bureau since 2011. had 1,504 employees at the end of December, is assembling a new enforcement team Ward will serve as executive senior counsel in according to the bureau’s financial statements. and hiring more personnel as it prepares the division of Supervision, Enforcement and “It makes a lot of sense that they want new to toughen oversight of banks, mortgage Fair Lending. attorneys and to beef up the overall numbers servicers and other financial firms. The change in enforcement chiefs is just the because they have had attrition of employees President Biden’s pick to lead the agency, beginning of a return to reviving the approach over the last few years that haven’t been Federal Trade Commissioner Rohit Chopra, taken by former CFPB Director Richard replaced,” said Dankworth. has not yet had a nomination hearing before Cordray during the Obama administration, Meanwhile, though Mulvaney’s plan to the Senate Banking Committee. But the experts said. embed political appointees in 2017 to shadow agency under acting Director Dave Uejio has “There may be a lot of reshuffling within the career employees was blasted by critics, Uejio already named a new head of enforcement bureau,” said Courtney Dankworth, a litigation has hired two senior political appointees — and launched an effort to recruit attorneys. partner at Debevoise & Plimpton. “Cordray both consumer advocates and former CFPB The size of the agency’s workforce tapered was obviously quite aggressive and set the officials — essentially to do the same thing. off during the Trump administration as stage as the first director for what the bureau Diane Thompson is founder of the Consumer enforcement activity slowed. But observers could do, so [Chopra] doesn’t have to break Rights Regulatory Engagement and Advocacy see the latest personnel moves as a sign new ground.” Project, and Brian Shearer was legal director at that the bureau aims to bulk up under new The national campaign to recruit attorneys Justice Catalyst Law. They will serve as senior leadership, even before Chopra is confirmed. follows a 17% drop in staffing at the agency advisers and will shadow Trump appointees, “They are ramping up for an increase in during the Trump administration. sources said. the number of enforcement investigations Still, some experts were surprised at the Uejio has already signaled that the bureau and activity,” said Tony Alexis, a partner at scope of the recruitment drive. In addition to will be scrutinizing how consumers have been Goodwin Procter and a former CFPB assistant the LinkedIn page, the agency also is actively treated by auto lenders, banks, debt collectors director and head of enforcement. “Headcount recruiting from the Hispanic Bar Association, and mortgage servicers under the Coronavirus is an incredible part of the resources that need the National Asian Pacific American Bar Aid, Relief, and Economic Security Act. boosting.” Association, law schools, government Many expect an increase in the number of Uejio has already installed Cara Petersen as entities and nonprofits, according to a CFPB enforcement actions and the size of penalties acting head of enforcement, succeeding former spokesperson. The bureau has also engaged and fines. Director Kathy Kraninger’s enforcement chief, with current and former members of its “I expect to see more big names in their and appointed new senior officials to oversee advisory committees about the hiring efforts, sights where they go after players affecting Trump appointees. He also announced plans the spokesperson said. millions of consumers with very large on LinkedIn and an agency blog to recruit “They are trying to staff up aggressively penalties,” said Dankworth. additional attorneys for multiple areas. and trying to get the word out through

For up to date and complete coverage go to AmericanBanker.com TUESDAY FEBRUARY 23, 2021 AMERICANBANKER.COM PAGE 4

loans that exceeded $2 million. The SBA in on forgiveness rates for loans of $2 million SMALL BUSINESS LENDING November unveiled a nine-page questionnaire or more. An agency spokesman declined to for PPP borrowers who took out loans that big. provide an update. But lenders are frustrated by the radio Obtaining forgiveness is important for Bankers plead silence from the SBA and Treasury on the lenders. It would allow them to take the loans status of the loans or what could be holding off their books, and it triggers the payment for answers forgiveness up. of PPP origination fees. Last year, those fees “We’ve been putting pressure both on the totaled about $5.3 billion. previous administration and the current one to The delays have the potential to create from SBA on process these applications more quickly,” said accounting issues for borrowers, bankers said. Paul Merski, group executive vice president Auditors are likely to require small forgiving big for congressional relations and strategy at the businesses to record their PPP funds as a Independent Community Bankers of America. liability on the balance sheet, instead of other At a Midwestern community bank, an income, until the SBA forgives the debt. PPP loans executive who asked not to be named said That could create issues with loan covenants forgiveness for its three biggest PPP loans for other loans. For contractors, it could By John Reosti has been under review for months, including complicate their ability to secure bonding for February 19, 2021 one submitted in August. The SBA sought projects. It could also create valuation issues Large Paycheck Protection Program more information on the types of protective for owners looking to buy or sell their business. loans remain in limbo as the Small Business equipment the borrowers bought, while The SBA approved more than $520 billion in Administration takes its time reviewing asking for more financial statements that what forgiveable PPP loans between April 3 and Aug. borrowers’ applications. it typically required. 8, when its original lending authority ended. Though the SBA has forgiven more than One borrower submitted more than 100 Congress provided $284 billion for a new 30% of the 5.1 million PPP loans it approved pages of supporting documents. round of PPP in the stimulas package enacted last year, many lenders who originated loans of “It’s been crickets since,” the executive on Dec. 27, including funds for second loans $2 million or more are still waiting to hear back said. “I’ve spoken with bankers across several to borrowers who could demonstrate that from the agency months after their borrowers other states and they’re experiencing the same their businesses were experiencing ongoing submitted paperwork. thing.” harm from the coronavirus pandemic. For bankers, the wait is delaying the payout Atlantic Union Bankshares in Richmond, Paul Davis contributed to this report. of origination fees for the loans. And it could Va., has also experienced lengthy delays cause big headaches for borrowers as they look with its biggest loans. The $20 billion-asset to finalize their latest financial statements, company made more than 11,000 PPP loans SMALL BUSINESS LENDING bankers said. last year, totaling $1.7 billion. The “SBA asked for an awful lot of While the SBA has approved 93% of the information” from businesses that borrowed forgiveness applications Atlantic Union has White House large amounts, said Ted Sheppe, executive submitted, it hasn’t signed off on any large- vice president of commercial banking at the dollar loans, said Alison Holt-Fuller, the will give $675 million-asset Axiom Bank in Maitland, company’s head of product and enterprise Fla. first line risk management. “The information is supplied, then it just Some of the delays may be tied to situations small firms kind of goes dark for three or four months,” where a borrower who received a loan of $2 Sheppe added. “That has some customers a million or more last year is seeking a second two-week little spooked. … We just don’t have an answer PPP loan. But that doesn’t explain delays in for them. That’s frustrating.” cases where borrowers have not applied for Lenders have originated more than 29,000 second draws. exclusive PPP loans of $2 million or more under the PPP, “We won’t know the reason for the hold accounting for just 0.4% of total loans. But or delay on those,” Holt-Fuller said. “We are access they make up 16% of the $651 billion in funds hearing that most in the industry are having approved by the SBA. the same experience and understand that the By Bloomberg News Bankers aren’t surprised the SBA is giving trade associations have been reaching out to February 22, 2021 large loans extra scrutiny given the controversy the SBA for more clarity around the delays.” The Biden administration will give exclusive during the PPP’s earliest days when large The SBA’s changeover in leadership, access to the Paycheck Protection Program to businesses and publicly traded companies with many top officials including incoming the nation’s smallest businesses for two weeks were approved for funds. Administrator Isabel Guzman, still awaiting as part of a broader effort to steer federal aid The SBA and Treasury Department, which confirmation, may also be contributing to the to the most vulnerable parts of the economy. are administering the program, issued a delays, Merski said. From Feb. 24 through March 9, only statement on April 28 pledging to review all The SBA has not released any information businesses with fewer than 20 employees will

For up to date and complete coverage go to AmericanBanker.com TUESDAY FEBRUARY 23, 2021 AMERICANBANKER.COM PAGE 5 be able to apply for relief through the program, gesture was largely seen as ineffective because insurance, without a middleman. a senior administration official said. few lenders and businesses were prepared to “Most small, medium-sized businesses, The window is aimed at helping smaller submit applications that quickly. they have to go to multiple places to basically companies, which often struggle more than The changes to expand access to sole- run their finance operations, and they can use larger businesses to secure funding from proprietorships could open up funding to large anywhere from 10 to 15 different software tools lenders, the official said. The program is set to swaths of companies that have previously been to do that,” said Bruce Wallace, who would expire on March 31. shut out from PPP money. Dozens of consumer become CEO of the proposed Brex Bank. He The measure is part of a series of moves the groups, banks, community lenders, and others previously served as chief digital officer of administration is announcing Monday aimed sent a letter earlier this month to lawmakers, Silicon Valley Bank in Santa Clara, Calif. at improving access to the federal program for SBA, and the Treasury Department asking for Wallace said “the primary purpose of hard-hit businesses and other groups. a change to the eligibility rules to include the pursuing the bank license is to be able to offer The White House said it will also recalculate self-employed. financing solutions to” small and midsize a funding formula to make more money It’s unclear how effective the SBA and business clients. available to sole proprietors, independent lenders have been this time at making sure “Without having a banking license, it is far contractors and the self-employed, who’d minority-owned businesses are receiving PPP more challenging to do that,” he said. struggled to access the program, as well funding. The application asks for business Brex, founded in 2017 by Brazilian as remove restrictions that had prevented owners to provide demographic data, but it’s entrepreneurs Henrique Dubugras and Pedro non-U.S. citizens and convicted felons from optional and more than 90% of applications so Franceschi, got its start in Silicon Valley as a accessing the aid. far don’t include it. Last week, the SBA moved corporate credit card lender to fellow startups. The PPP, created as part of the $2.2 trillion the questions about race, ethnicity and gender It has since expanded its business, seeking to coronavirus relief package enacted in March, to the beginning of the application in a bid to be a comprehensive business management has faced criticism — especially for excluding get more responses. platform for new enterprises. minority-owned and the smallest firms. The Having an industrial bank charter would Small Business Administration had approved “improve our profitability in the future by 5.2 million loans worth $525 billion when the ILCs being able to provide credit solutions, in program closed in August. addition to what we provide today,” Wallace In December, Congress approved another said. $284 billion for the program when it reopened Fintech seeks Doyle Arnold, former vice chairman and Jan. 11 and made changes aimed at making it chief financial officer of Zions Bancorp. in more accessible to minorities. ILC to be one- Salt Lake City, would serve as the bank’s First-time applicants to the program can get chairman, according to the FDIC application. their loans forgiven if they have fewer than 500 Jean Perschon, former CFO at UBS Bank USA, employees and use the money for approved stop banking would have the same role at Brex Bank and costs, like payroll and rent. Companies can will serve on its board. apply for a second forgivable loan if they have resource for Ted Lowery, founding CEO of CapitalSource 300 or fewer employees and can show a 25% Bank, and Tracey Brophy Warson, a former drop in revenue. chairman and CEO of North The SBA approved almost 1.7 million loans startups America, will serve on the de novo’s board. worth $125.8 billion through Feb. 15, according Before seeking an ILC, Brex inked deals with to an agency report. The pace picked up after a By Brendan Pedersen partner banks to offer its services. In July, it slow start following the program’s reopening. February 19, 2021 announced it would partner with Kansas City, The average loan size was $75,133, with WASHINGTON — A San Francisco fintech Mo.-based UMB to offer checking accounts first-draw loans being much smaller on that specializes in offering banking services to with FDIC backing. In 2019, the company average, the data showed. First-time business business startups is seeking a bank charter of worked with Radius Bancorp in Boston to applicants received an average loan of $21,675, its own. offer a corporate credit card tied to a bank while second-time recipients got an average of Brex filed an application on Wednesday account paying 1.6% interest and offering a $97,974. with the Federal Deposit Insurance Corp. for rewards program for credit card payments, This round of PPP lending got off to a slow deposit insurance, according to FDIC records. wire transfers and more. start as lenders and applicants had just days to To date, Brex has relied on partnerships It is not the first or most recognizable fintech update their systems and paperwork between with third-party institutions such as UMB serving small-business clients to apply for an when the SBA released the updated forms and Financial, Radius Bancorp and Bank of the industrial bank. Over the objections of banks, began accepting applications. West to offer a suite of services to startup the merchant payments company Square was Businesses applying through community clients, including cash management, federally approved for a charter in March, ending a long lenders, such as a community development insured deposits and credit cards. dry spell for ILC approvals. financial institution, had exclusive access With a Utah bank — also known as an The industrial bank charter has been a sore to apply for PPP money for one week when industrial loan company — Brex would be spot for the mainstream banking industry the system opened in January. However, the able to provide those services, including FDIC since the early 2000s. The specialized charter

For up to date and complete coverage go to AmericanBanker.com TUESDAY FEBRUARY 23, 2021 AMERICANBANKER.COM PAGE 6 gives fintechs — already a competitive threat deal with the economic and financial fallout certain units across retail banking in the for traditional financial institutions — a from COVID-19, including in some cases Asia-Pacific region, including those in foothold in the banking system while not forced shutdowns. South Korea, Thailand, the Philippines and requiring bank holding company registration Australia, according to people familiar with or oversight by the Federal Reserve. ILCs also Powell testimony the matter. No decisions have been made, remain one of the last legal bank charters The Fed report, which provides lawmakers any divestitures could be spaced out over available to nonfinancial firms. with an update on economic and financial time and the New York-based firm could Though the FDIC delayed decisions on developments and monetary policy, was ultimately decide to keep all its existing pending ILC applications for years, the agency published on the central bank’s website international operations, said the people, under FDIC Chair Jelena McWilliams has ahead of Chair Jerome Powell’s testimony who asked not to be identified discussing warmed to the charter, making it one of the before the Senate Banking Committee on internal deliberations. more viable paths for a fintech firm to access Tuesday and the House Financial Services “As our incoming CEO Jane Fraser the banking system. panel a day later. said in January, we are undertaking a Several fintechs that have pursued an In the report, the Fed voiced hopes of an dispassionate and thorough review of our industrial bank charter in recent years had end to the pandemic later this year, though it strategy, including our mix of businesses to file numerous applications before getting cautioned that pitfalls remained. and how they fit together,” Jennifer Lowney, approved. The Japanese e-commerce giant In particular, it said that commercial real a spokeswoman for the bank, said Friday in Rakuten made its third attempt in January. estate prices “appear susceptible to sharp an emailed statement. “As you would expect, “Whether or not this is going to be the final declines” from historically high levels. That many different options are being considered application to get us to approval or we’re going could particularly prove to be the case if the and we will take the right amount of time to have to address things during the field level of distressed sales picks up or if the before making any decisions.” investigation,” Wallace said. “We’ll take that as pandemic leads to longer-term declines in Shares of climbed after it happens.” demand, it said. Bloomberg reported the possible divestitures, Commercial real estate might be hit by rising as much as 3.6% Friday afternoon, their a double-whammy after the pandemic, biggest intraday gain in a month. CRE some economists say. An increase in people Citigroup’s Asia consumer business, working from home could result in less which reaches far beyond the region, spans demand for office space, while stepped- 17 markets —12 in the Asia-Pacific area and Fed sounds up online purchases could force more five in Europe, the Middle East and Africa. shutdowns of brick-and-mortar retailers and The unit is home to 16 million credit-card alarm on additional vacancies at shopping centers. accounts and more than 400,000 wealth- management customers. The firm also is reviewing consumer commercial INTERNATIONAL BANKING operations in Mexico, though a sale there is less likely, according to one of the people. real estate, The company operates there as Citibanamex, Citi said to the second-largest bank in the country, with nearly 1,400 locations, making it Citigroup’s business consider largest branch network. Combined, the Asia and Mexico consumer bankruptcy units had average assets of $161 billion last divesting year. They normally contribute more than By Bloomberg News 40% of Citigroup’s global consumer-bank February 19, 2021 some foreign earnings. The Federal Reserve warned of significant Offloading the international consumer risks of business bankruptcies and steep franchise would simplify Citigroup’s business drops in commercial real estate prices in a consumer at a time when the firm is under strict report published on Friday. orders from regulators to clean up internal “Business leverage now stands near units infrastructure and controls. The Office of the historical highs,” the central bank said in Comptroller of the Currency and the Federal its semiannual Monetary Policy Report to By Bloomberg News Reserve criticized the bank late last year for Congress. “Insolvency risks at small and February 19, 2021 shortcomings in its technology. medium-sized firms, as well as at some large Citigroup is studying options for slimming Facing years of costly regulatory work, firms, remain considerable.” down the firm’s sprawling international Fraser has vowed to take a thorough look In part encouraged by government and Fed consumer operations as part of incoming at each Citigroup unit as part of a broad programs, businesses have taken on more CEO Jane Fraser’s efforts to simplify the bank. strategic review. debt over the past year as they’ve struggled to The company is weighing divesting “We’re taking a clinical look at our strategic

For up to date and complete coverage go to AmericanBanker.com TUESDAY FEBRUARY 23, 2021 AMERICANBANKER.COM PAGE 7 positioning, assessing which businesses can on building out its wealth-management 2013. Santander raised that to a “satisfactory” attain leading market positions in a much arm in the region and recently opened its in 2018 for a period covering 2014 to 2016. more digitalized world,” Fraser told analysts largest wealth-advisory hub in Singapore, “Of the many operational improvements on a conference call last month. “I believe a 30,000-square-foot (2,800-square- that Santander has made in recent years, there is value to unlock by simplifying the meter) space, with room for more than receiving an outstanding assessment of fi r m .” 300 relationship managers and product our Community Reinvestment Act efforts is Playing a role in Citigroup’s deliberations specialists. The firm has said it’s hoping to particularly meaningful,” said Santander U.S. is whether the bank would be able to find a double its market share and increase the CEO Tim Wennes. willing buyer for each unit, according to two number of clients there by a percentage in the The regulator gave the $89.5 billion-asset of the people familiar with the review. The double digits in coming years. Santander high marks for its overall lending bank would probably have to sell to local “We see a great opportunity for us to serve activity, such as offering affordable mortgage banks in each of the countries, they said. the growing affluent segment in Singapore, products, and its investment strategy, which It’s familiar territory for Fraser. Less than a and believe in the need to continue includes the use of low-income housing tax year after Citigroup named her head of Latin enhancing our client value proposition by credits. America in 2015, she led the company’s sale investing in this new wealth hub,” Brendan “The OCC noted that these are complex of retail-banking and credit-card operations Carney, CEO of Singapore Ltd., said transactions that deliver substantial impact in Brazil, Argentina and Colombia. in a statement last year. “As we continue to to low- and moderate-income individuals At the time, the move came as a shock. The grow our business, we will look to open more and communities in the form of affordable Argentina unit had opened in 1914, when of such hubs in the future.” housing,” Santander said of the tax credits. it was the bank’s first non-U.S. branch. But Santander has put several other regulatory Fraser argued that Citigroup wouldn’t be able matters behind it recently. Earlier this to make the investments it needed to achieve CRA month the Federal Reserve terminated a proper scale in the three countries. 2017 enforcement action against the U.S. “It was a tough decision from a history holding company concerning oversight of its point of view, but it was a relatively easy Santander’s auto lending unit, Santander Consumer. In one from a strategic point of view,” Fraser December, it paid a $4.7 million penalty to said in a 2018 interview with CNN. “After the CRA rating the Consumer Financial Protection Bureau crisis, U.S. banks weren’t allowed to acquire to settle charges that it had knowingly other banks, so we watched the local banks supplied the three major credit bureaus with rolling up their retail-banking franchises and upgraded to inaccurate consumer credit data. consolidating. We grew, but nothing like as fast as you could inorganically.” ‘outstanding’ Even after those sales, Fraser and outgoing BANKTHINK CEO Michael Corbat have been adamant By Laura Alix they’d like to keep the firm’s consumer February 19, 2021 operations in Mexico, despite facing repeated Four years after receiving a “needs New OCC calls to offload the unit. In 2016, the two to improve” grade on its Community announced the bank would embark on a four- Reinvestment Act examination, Santander chief should year, $1 billion investment in Citibanamex to Bank in Boston has earned an “outstanding” improve the unit’s technology and upgrade rating from the Office of the Comptroller of its branches. the Currency. encourage Citigroup’s operations in Asia are led by The agency gave Santander particularly Peter Babej, who previously headed up the high marks for its mortgage and small- banks, lender’s business of advising banks and business lending, as well as its community other financial institutions on mergers and development activities, the bank said in a acquisitions. The bank plans to maintain its press release Friday. The assessment, which fintechs to wealth-management franchise in the region, the OCC has not yet made public, covered according to one of the people. the 2017 to 2019 CRA exam period, Santander partner with The company often looks to the Asia said. consumer business for ideas that will shape The improvement in its CRA rating is the future of its U.S. operations, as it did with welcome news for the the U.S. arm of Spain’s CDFIs its most recent partnering with Alphabet Banco Santander, which has worked to resolve Inc.’s Google on a new checking account. Still, a number of regulatory issues in recent years. By Maria Schuld Citigroup has said publicly that customers In 2017, the OCC cited legal issues with February 19, 2021 rarely use some of the bank’s 224 branches its lending practices when it downgraded As President Biden continues to select across the region for transactions. Santander Bank from “satisfactory” to “needs hundreds of key personnel to serve as the The firm instead has been focused to improve” for a period covering 2011 to new administration, one crucial seat remains

For up to date and complete coverage go to AmericanBanker.com TUESDAY FEBRUARY 23, 2021 AMERICANBANKER.COM PAGE 8 open: the next comptroller of the currency. communities. not only affordable, but can be scalable to The person who fills this role will have The path to building a financially inclusive address systemic problems like financial a profound impact on the entire banking world involves a concerted effort to address inclusion. industry over the course of their term. But many historic and systemic issues. There’s no With the right creative financial there are two groups of financial institutions simple manual for that type of broad-scale partnerships and a new leader at the helm that have a particularly large stake in the change, but having the right technology in of the OCC, there is hope that technology game — community development financial hand is a good first step. can ultimately help unite the country, rather institutions (CDFIs) and minority depository Banks and fintechs should revisit their than creating a divide between the haves and institutions (MDIs). product roadmaps and reassess their have-nots. There are currently 143 banks and 511 innovation strategies to ensure they are credit unions across the U.S. with collective building new technologies that can empower Maria Schuld is division executive of the assets of nearly $300 billion that are either all Americans to get access to vital financial Core and Banking groups at FIS. owned or directed primarily by Black, Asian, services. Latinx or Native Americans. In the past year, For example, as fair lending becomes a the challenges of systemic inequality boiled critical focus for the government, fintechs CRISIS MANAGEMENT over into public protest that highlighted the should collaborate to build a new, broadly need to further support such minority-owned accepted system of credit scoring using businesses and banks. These organizations alternative data to unlock lending for millions Citigroup are the backbone to closing the racial wealth Americans who lack usable credit scores. gap because they often provide vital financial Another example are initiatives like the tells Texas services to the unbanked and underbanked. Cities for Financial Empowerment’s “Bank But to keep this mission ongoing, it will On” certified accounts that are public-private require stronger partnerships between partnerships to help drive financial inclusion. employees financial institutions and fintechs. The future Banks and fintechs should continue to leader of the Office of the Comptroller of join these efforts and help identify the new they can use the Currency will also play a critical role in features and capabilities that would provide this area since the OCC was the first bank more Americans with affordable access to regulator to push forward in recognizing financial services. office for fintechs as a part of the banking world — an Collaboratively, and even hand in hand effort that was supported by OCC leaders of with regulatory agencies, banks and fintechs shelter the previous two administrations. must pursue new innovations that can bring As national banks wait for the next leaders underserved Americans into the financial By Bloomberg News of the OCC, there are a number of efforts system. And this goes beyond just supporting February 19, 2021 that we can work on now. First and foremost, CDFIs and MDIs. The greater financial Citigroup told employees in Texas they developing high-tech partnerships with industry should also consider the diverse could take shelter in the firm’s offices as the CDFIs and MDIs. Not to oversimplify things, perspectives and technology from minority state grapples with the effects of a snow and but that is something that the industry should fintech startups. ice storm earlier this week. already be on top of. According to a recent study by CrunchBase, Workers who have been without power A handful of large banks made significant Black and Latinx tech startup founders have for days can reach out to their managers if investments in minority-owned banks last a harder time securing venture capital than they need to use the offices in Irving and San year. Fintechs and other banks can work their nonminority peers, and have less Antonio to charge their phones or get warm. with these institutions on training, exchange access to seed capital to “bootstrap” their The New York-based bank has about 8,500 programs, assistance with infrastructure businesses. Yet, there is a huge need for employees in Texas. upgrades, and even mentorship to executives the services these new Black- and Latinx- “Severe weather is impacting so many and board members. driven companies can provide. Just look at across the U.S. this week,” Sara Wechter, From a regulatory standpoint, initiatives Greenwood Financial’s signup of nearly half head of human resources, said in a post on like the OCC’s Project REACh (Roundtable a million new customers within 100 days of LinkedIn. “I hope everyone is staying safe for Economic Access and Change) aims their launch. and finding ways to keep warm with the at building partnerships to help minority- Apple recently launched a new developer freezing temperatures.” owned banks thrive and support the academy and funding for minority Millions of Texans and others across the communities they serve. entrepreneurs. Similar commitments to South have been without power for days The December coronavius relief bill invest in minority-owned fintech startups amid the region’s coldest weather in decades. also provided specific emergency financial could also make a big impact. Large parts of Texas saw more snow and ice assistance for CDFIs and MDIs, creating Technological advancements have Thursday.q an opportunity for fintechs and banks alike historically created barriers of entry to the to work closely with these institutions to economy and industry at large. But the tides © 2021 Arizent and American Banker. help support underserved and struggling are turning to where digital technology is All rights reserved.

For up to date and complete coverage go to AmericanBanker.com