MONDAY MARCH 1, 2021 VOL. 186 No. 39 AMERICANBANKER.COM Follow us on Twitter @AmerBanker Standard Chartered tests AI 5 to size up young borrowers The London bank is trying out new models Shared credit exposure that help it assess the creditworthiness of Syndicated loans in danger of default or showing potential recent college graduates, and layering on weaknesses are at a 10-year high. The biggest increases are in software that analyzes the fairness of its credit decisions. Page 4 sectors hit hard by the pandemic like energy and hospitality. Classified Special mention Industry was strong 6 enough without dividend, See story on page 2 buyback curbs: Quarles The Federal Reserve imposed the restrictions $400B after conducting supplemental stress tests tied to the pandemic. But Vice Chair of Supervision Randal Quarles says it is now $300B clear banks would have had sufficient capital regardless. Page 5 $200B FHFA announces further 7 extension of COVID-related $100B mortgage relief The agency will allow an additional three $0 months of forbearance for loans backed 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 by Fannie Mae and Freddie Mac, giving homeowners up to 18 months to suspend Source: FDIC, Fed, OCC payments due to the pandemic. Page 6 JPMorgan exits Mexico private 8 banking, refers clients to BBVA dailybriefing JPMorgan Chase’s JPMorgan Chase is shutting its private 3 Duckett to depart banking business in Mexico, according to for top job at TIAA people with knowledge of the matter, as Red flags abound The CEO of Chase Consumer Banking and wealthy clients in some of Latin America’s 1 in syndicated lending a member of JPMorgan’s leadership team, largest economies move their money to Shared national credit balances rose 5% Thasunda Brown Duckett has been tapped international financial capitals.Page 7 last year, and the percentage of at-risk loans to replace Roger Ferguson as CEO of the nearly doubled. Regulators point out that retirement services provider. Page 3 Bank of America cuts staff in banks have stashed away extra capital, but a 9 investment banking and trading lot will depend on the speed of the economic  makeover Bank of America cut some of its staff in the recovery and the performance of nonbank 4 should drive higher global banking and markets division this loans. (See chart above.) Page 2 returns, CFO says week. The latest cuts mark an end to BofA’s Efforts to simplify business operations under pledge not to eliminate any jobs in 2020 as JPMorgan has ‘sense incoming CEO Jane Fraser will cost a lot the global pandemic flared. Page 7 2 of urgency’ in search of money but will ultimately create a safer, for acquisitions more profitable company, Chief Financial TD to close 82 U.S. bank JPMorgan Chase is stepping up its search for Officer Mark Mason said.Page 4 10 branches as COVID acquisition targets as competition intensifies drives digital growth from financial technology firms and other Toronto-Dominion Bank said it will close new rivals. Page 3 82 bank branches in the U.S. as part of a “store optimization” in its American unit, where net income dropped in the fiscal first quarter. Page 7 MONDAY MARCH 1, 2021 AMERICANBANKER.COM PAGE 2

nearly $630 billion in loans flagged as to 11.7% of other kinds of loans to these COMMERCIAL LENDING “classified” or “special mention.” businesses. Loans labeled classified are substandard, This rise in risk throughout the syndicated doubtful or losing money, while those in the credit market is partly behind bank Red flags special mention category are considered decisions to stockpile massive reserves to to have potential weaknesses “that could guard against loan losses last year, resulting abound in result in further deterioration of the in a full percentage point increase in the repayment prospects or in the institution’s amount of reserves in the system and more credit position in the future,” according to detailed oversight of their books, according syndicated regulators’ definitions. to the report. The trouble appears concentrated in five “Many agent banks have strengthened lending industries most hurt by the virus: oil and their risk management systems since the gas, real estate, retail, entertainment and prior downturn and are better equipped to By Jon Prior recreation, and transportation services. measure and monitor risks associated with February 25, 2021 The oil and gas business had the most leveraged loans in the current environment,” Trouble has emerged in a corner of the outstanding syndicated loans last year, the regulators said in the report. financial market where groups of lenders totaling about $383 billion. About 23.3% Despite the issues examiners uncovered cobbled together large loans for of those were deemed classified or special last year, analysts and traders who monitor that were hampered by the pandemic, mention, up from 10.7% in 2019, according these loans are optimistic that massive according to a report from federal regulators to the report. losses can be avoided. Thursday. While the market for loans to airlines and The data was gathered at a time when About 12.4% of loans in the syndicated other transportation services was smaller at companies were drawing down their credit credit market last year were deemed about $59 billion last year, more than 56% lines from banks en masse so they could “classified” or “special mention” — nearly of them were either classified or special keep cash on hand while the economy double the 6.9% seen one year earlier, the mention, up from 15.1% the year before. closed up, resulting in the kind of leverage report from the Federal Reserve, the Federal Problems are also concentrated in buildup that could land loans into a riskier Deposit Insurance Corp. and the Office of leveraged loans, which are considered category, Penniman said. the Comptroller of the Currency showed. riskier and come with more relaxed terms “You’re looking at these companies at Such a jump has not been seen since that allow companies to pile on more the depth of the pandemic,” Penniman said. the financial crisis, when the percentage of debt, and have been highlighted as posing “They’re all increasing their leverage to troubled loans eventually crested at 22%, higher risk in the past few years. Leveraged improve their liquidity.” data from the agencies show. loans make up about half of the syndicated Any effect the vaccine rollout has had on A big question facing regulators and national credit market, and banks hold this slice of the market would not show up the market is how quickly will the vaccine about $1.5 trillion of them. until regulators examine these books again rollout translate to an economic turnaround, Nearly 30% of leveraged loans to the key this year, an OCC spokesman said in an said Kingman Penniman, president of the industries regulators have highlighted at risk email. investment firm KDP Asset Management, from the pandemic were tagged as classified “Regulators constantly work with which specializes in bank loans. or special mention in 2020, compared supervised institutions to ensure they have “When banks see the regulators come and put their loans on special mention, they get queasy,” Penniman said. “There Established 1836 One State Street Plaza, 27th floor, , NY 10004 are some banks that say anything that could Phone 212-803-8200 AmericanBanker.com be penalized, we don’t want them on our books.” Editor in Chief Alan Kline 571.403.3846 Copy Editor Neil Cassidy 212.803.8440 In such situations, banks can work with Managing Editor Dean Anason 770.621.9935 a borrower to bring the loan into good Reporters/Producers standing or sell the debt from their books. Executive Editor Bonnie McGeer 212.803.8430 Laura Alix 860.836.5431, Kate Berry 562.434.5432 The data comes from examinations Washington Bureau Chief Joe Adler 571.403.3832 regulators conducted in the first and third Executive Editor, Technology Miriam Cross 571.403.3834 quarters of 2020 as COVID-19 spread and Penny Crosman 212.803.8673 Jim Dobbs 605.310.7780 shuttered businesses. BankThink Editor Rachel Witkowski 571.403.3857 The $5.1 trillion of loans in the syndication John Heltman 571.403.3847, Allissa Kline 716.243.2679 Community Banking Editor Paul Davis 336.852.9496 market was a 5% increase from the year Hannah Lang 571.403.3855 before. Banks hold about 44% of those loans, Contributing Editor Daniel Wolfe 212.803.8397 John Reosti 571.403.3864, Gary Siegel 212.803.1560 and the rest are held by nonbanks and Digital Managing Editor foreign bank organizations. Christopher Wood 212.803.8437 Kevin Wack 626.486.2341 But banks have just one in four of the

For up to date and complete coverage go to AmericanBanker.com MONDAY MARCH 1, 2021 AMERICANBANKER.COM PAGE 3 robust risk management processes in place the takeover of E-Trade Financial Corp. 1. Ferguson will also remain on TIAA’s board and properly mitigate risks in their profile,” and the asset manager Eaton Vance. of directors. the spokesman said. “It is worth pointing In December, Dimon told M&A bankers Duckett, 47, will oversee a financial out that while we did observe increasing risk to call him with creative ideas for mergers services organization that manages $1.3 overall, the majority of classified credits are and acquisitions. He mentioned asset trillion of assets and offers a range of held by nonbank institutions.” management in particular as an area where services including investing, banking and Penniman said most loans in the takeovers would make sense for the New retirement services. TIAA substantially syndicated market are currently trading York-based company. increased its banking capabilities when it “at par,” meaning without steep discounts In the wide-ranging presentation, Piepszak acquired Jacksonville, Fla.-based EverBank traders can sometimes get if they bet on debt also said the bank has generated more in 2016 and today the banking arm has $41 that’s considered risky. And going forward, trading revenue this year than in the same billion of assets and 14 offices, primarily in there could be an opportunity for these period of 2020. But the CFO said she didn’t Florida. companies to refinance what debt they’ve want to make predictions for the first quarter At Chase, Duckett leads a business unit taken on. because “we’re heading into a much more with more than $600 billion of deposits, more “It will be dramatically different than challenging” comparison to year-earlier than 40,000 employees and 4,900 branches. when they looked at them a year ago,” figures for March. She is also spearheading the company’s Penniman said. The bank generated what at the time was latest branch expansion initiative, a five- a record $7.23 billion trading stocks and year-long strategy to add 400 new branches bonds in last year’s first three months, as in 20 new markets across the country. M&A the business benefited from markets being In a press release, TIAA board chairman whipsawed by the pandemic. Ronald Thompson praised Duckett as “an On the economy, the CFO said inflation is exceptionally dynamic and inspirational JPMorgan “getting a lot of attention — that’s a risk we’re leader” who is also “deeply mission- starting to really think about.” oriented.” has ‘sense She said “portions of the economy are “She brings invaluable experience leading very strong,” pointing to higher savings rates and growing large, complex businesses, among consumers. setting and executing strategy, improving of urgency’ client experience and attracting and development talent,” he said. in search for C-SUITE Duckett, who grew up in Texas, joined JPMorgan in 2004 and served as chief executive of its auto finance unit before acquisitions JPMorgan being named CEO of the consumer banking unit in 2016. She is the executive By Bloomberg News Chase’s sponsor of the company’s Advancing Black February 25, 2021 Pathways program, a member of the steering JPMorgan Chase is stepping up its search committee for its Women on the Move for acquisition targets as competition Duckett to initiative and the executive sponsor of the intensifies from financial technology firms Fellowship Initiative, a program that offers and other new rivals. depart for top academic and social support to young men The effort is being driven by “perhaps a of color. greater sense of urgency,” Chief Financial Her experience makes her “the right Officer Jennifer Piepszak said Thursday at job at TIAA person” to lead TIAA “at a time when its a virtual investor conference. “There are work has never been more important and businesses like asset management where By Allissa Kline when the challenges of fostering financial scale matters even more than it did a year February 25, 2021 stability and inclusion have never been ago. And then other businesses where the Thasunda Brown Duckett, the highest- greater,” Ferguson said in the release. need to move quickly and to innovate quickly ranking Black executive at JPMorgan Chase, Duckett’s promotion last fall to JPMorgan’s to keep up with competition is certainly is set to exit the company after 17 years to operating committee made her the first Black accelerating.” take over as president and CEO of TIAA in woman to serve on the leadership team Chief Executive told investors New York. and she has been a mainstay on American a year ago that the firm was aggressively The CEO of Chase Consumer Banking Banker’s Most Powerful Women in Banking looking at acquisitions across its business since 2016 and one of the most powerful list in recent years, including in 2020. lines, and that it could buy anything except female bankers in the industry, Duckett Duckett’s career started at Fannie Mae, another U.S. bank. Since then, competitor will succeed Roger Ferguson Jr., who had where she led affordable housing initiatives Morgan Stanley has announced two major planned to retire from TIAA on March 31 but for people of color. deals — will now stay on until Duckett starts on May

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bank faces. GROWTH STRATEGIES “To be fair, while we have made ARTIFICIAL INTELLIGENCE demonstrable progress” in increasing share valuation over the last 10 years, Citi Citigroup acknowledges “there is a gap to close with Standard our peers,” she told investors. makeover Meanwhile, the company is grappling Chartered with a pair of consent orders from federal regulators who have identified deficiencies should with Citi’s risk management and internal- tests AI to controls systems. The enforcement — which drive higher included a $400 million civil money penalty size up young — came a few weeks after the company accidentally paid $900 million to creditors of returns, CFO the cosmetics company Revlon. borrowers Last week, Citi lost its legal bid to recover says $500 million of the $900 million. On By Miriam Cross Thursday, Mason said the company plans to February 25, 2021 By Allissa Kline appeal the decision. Standard Chartered has been developing February 25, 2021 “I do believe we have good grounds for new underwriting models using machine Citigroup’s efforts to simplify business appeal and we’ll pursue that,” he said. learning that could help it determine operations under incoming CEO Jane Fraser Expenses for the year are now projected creditworthiness of borrowers with minimal will cost a lot of money but will ultimately to rise 2.5% to 3%, Mason said. Much of the credit histories. create a safer, more profitable company, increase is tied to the improvements being The ultimate goal: to increase approval Chief Financial Officer Mark Mason said made in risk management. The company rates and eliminate bias by gender, race, age Thursday. spent $1 billion last year in that area. and other characteristics. Fraser has not yet taken the reins from How exactly Citi — which operates in 95 The international bank has been outgoing CEO Michael Corbat — the countries — might remake itself is still being incorporating artificial intelligence and transition is expected to take place within figured out. Fraser and her team continue machine learning into its business since the next few weeks — but she and other top to undertake a “dispassionate review” of the 2016, to better engage with customers and executives are already mapping out changes entire operation to determine where it has recommend suitable credit cards and loans. to the $2.3 trillion-asset company that could competitive advantages and could grow, In 2019, it identified another need: making include fewer business lines, expansions and where it might want to step back, Mason more inclusive and unbiased credit decisions, of those that remain in the fold and better said. especially for its burgeoning population alignment of departments across the board. Bloomberg reported last week that Fraser of young customers leaving university and Combined, the moves should pave “a is considering offloading certain retail entering the workforce, and ensuring its realistic path” to average returns that are banking units in the Asia-Pacific region. Last machine-learning models were transparent at or near the levels of other large banks, month Citi announced the consolidation and explainable. Mason said. of two wealth management units into a Standard Chartered, which is based in “We’re seeing payback of investments single global division, bringing wealth London, worked with its SC Ventures unit, we’ve been making over several years … management services for the ultrawealthy which identifies emerging technology and and we will continue to make those types of under the same umbrella as services for startups, to identify companies that could investments,” Mason said during the virtual substantially less affluent consumers. help. In August it announced its partnership Credit Suisse Financial Services Forum. Mason declined to say whether the unit with Truera, a model intelligence platform in “That’s an important factor, because those could become a third core business for Citi, Redwood City, Calif., that analyzes machine investments will be what helps us achieve joining the institutional clients group and learning and improves models. higher returns [and] we do believe that with global consumer banking division. Previously, Standard Chartered based all the right strategy, we can get to comparable its lending decisions on credit bureau data peer-level returns.” and traditional modeling techniques such Citi’s returns have lagged those of its as logistic regression, a type of statistical competitors. For the fourth quarter, it analysis that helps predict the likelihood of reported a return on equity of 5.9%, trailing something happening. JPMorgan Chase’s 12% and Wells Fargo’s The bank has been testing its new models 6.4%. Bank of America reported an ROE of in one country over the past 12 months. 8.4% for the quarter. Sam Kumar, group head of analytics and During her first earnings call in January, data management at Standard Chartered, Fraser was upfront about the challenges the declined to share specific numbers, but notes

For up to date and complete coverage go to AmericanBanker.com MONDAY MARCH 1, 2021 AMERICANBANKER.COM PAGE 5 that default levels have been similar to what or derived bias even though we excluded the is 90% male or 80% white people, then the they were in the past and the bank has begun data items typically considered for bias.” system is being evaluated against how well it approving some clients who would have Besides Standard Chartered, the company does with historical data.” historically been rejected. works with banks, insurance companies and “Broadly, we’ve seen that risk degradation fintechs in Asia-Pacific countries, the United is not substantially different to what our Kingdom and the U.S. Its AI Explainability STRESS TESTS traditional approach has been,” Kumar said. technology, or its ability to make clear how “It shows the opportunity for a wider set of model inputs affect model outputs, is based inclusions moving forward.” on research from Carnegie Mellon University. Industry was The challenges Standard Chartered faces For Standard Chartered, its work with in its efforts to make more inclusive credit Truera is one piece in a multipart strategy strong enough decisions are shared by financial institutions to lend to customers with minimal credit in the U.S. histories. (In parallel, the bank is also According to the Federal Reserve’s turning to nontraditional data when scoring without Report on the Economic Well-Being of U.S. customers.) In several countries where it Households in 2019, 41% of adults applied for does business, including India, Indonesia, dividend, some type of credit. Of those, 24% were denied Malaysia and Vietnam, there are large swaths at least once in the year before the survey of customers in their early 20s who are and 31% were either denied or offered less leaving university, entering the workforce buyback credit than they requested. Lower-income and applying for their first credit cards or individuals were substantially more likely personal loans. curbs: Quarles to experience adverse outcomes with their “It’s important for us to ensure we have the applications than those with higher incomes, best way for financial inclusion while making By Hannah Lang as were Black and Hispanic individuals at all the right decisions in terms of how we take February 25, 2021 income levels. on risk for the bank,” Kumar said. “How do WASHINGTON — In response to the In terms of young customers specifically, we become better at predicting risk and COVID-19 crisis, the Federal Reserve took a Bankrate poll from November showed improving financial inclusion for clients that novel steps to measure and strengthen that 32% of millennials (ages 24 to 39) would not be approved the old way?” bank capital. But now, the central bank’s were rejected for credit in the U.S. this Standard Chartered considered three top supervisory officials says some year, compared with 22% of Generation X vendors and conducted proofs of concept extradordinary measures were unnecessary, consumers (ages 40 to 55) and 11% of baby over six to eight months. Kumar says the and the Fed could have just stuck with its boomers (ages 56 to 74). bank chose Truera because its values normal stress test regime. Credit bureau data is much thinner for regarding ensuring fair decisions aligned Due to the pandemic, the Fed these customers compared to older, more and the company understood regulations complemented its June 2020 stress tests established customers, and basing decisions governing transparency in AI. The bank was with “sensitivity analyses” assessing how the on the same formulas would result in more also impressed by the academic research largest banks’ balance sheets would respond rejections. underlying Truera’s technology. to various economic recovery scenarios. Kumar says that the bank does not take “We can compare how a model treats Based on those analyses, the results of which gender, marital status, religion or race into different people, calculate whether it’s were published June 25, the Fed blocked account when evaluating customers for treating people differently and explain why share repurchases and capped the dividend credit, but other pieces of data, such as buying it might be doing that,” said Will Uppington, payments banks could make to shareholders. patterns, can still correlate with a specific life a co-founder of Truera and its CEO. “The But Fed Vice Chair of Supervision Randal stage or gender. He says Standard Chartered model may accept women at a lower rate Quarles said, based on how banks have has always tried to identify bias and correlate than men. If it does, you need to understand navigated the crisis, it is evident now that these instances back to variables like gender why. Then you can say, is that justified or not their capital levels would have remained and race. justified?” adequate without those shareholder Truera, which came out of stealth last Correcting bias in credit decisions is not restrictions. That calls into question the need August, says its software removes the a one-time process, said said Rayid Ghani, for irregular stress test exercises, he said. “black box” surrounding machine learning, professor of machine learning at Carnegie “With the benefit of hindsight, I think it’s allowing data scientists, risk teams and more Mellon University’s Heinz College. now clear that we could have not imposed to understand how models work and how “If you’ve never given credit to certain those distribution limitations [and] the inputs will affect outputs. types of people before and build a machine banking system would have been fine,” Truera, “allows us to dive deeper,” Kumar learning system, it won’t tell you these Quarles said Thursday at a virtual event said. “It gives us transparency into the fact people will pay you back,” he said. “Or if hosted by the Federal Reserve Bank of that we can explain which data items have the machine-learning system you build Atlanta. a material contribution to a decision and is designed to get predictions for as many The comments echo earlier remarks he ensure we’re not reintroducing an indirect people as possible and your customer base made in June touting the potential of the

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Fed’s standard stress test regime to measure for even unprecedented situations,” Quarles bank capital strength during both normal added. CORONAVIRUS conditions and crises. The Fed has yet to make a decision as to Quarles said without knowing how the what limits, if any, it might impose on bank economic crisis of the past year was going to dividend payments and share repurchases FHFA play out, the Fed was right to take the extra in the second quarter, after easing some of steps it did. But he suggested that current the restrictions that were in place for most of announces analyses of the economic environment show 2020 for the first quarter of this year. that those steps were not required. Quarles did concede that the pandemic “Given the uncertainty that existed at has made it more challenging to account for further the time, I don’t think it would have been risks on banks’ balance sheets. For example, prudent for us” not to impose restrictions, current models to evaluate credit quality extension of “but it underscores that doing something do not take into consideration the effects of like this should be extraordinarily rare.” government stimulus programs, which may It is unclear if other Fed board members hide the true condition of certain loans. COVID-related such as Chair Jerome Powell or Gov. Lael “The programs put in place to help those Brainard share Quarles’ view. A Trump borrowers are critical for our recovery mortgage appointee, Quarles is slated to hold his vice but will further complicate risk modeling chair title until his term ends in October. (He as borrower stress may be obscured by can remain a Fed governor until 2032.) temporary stimulus,” he said. relief Some have speculated that Brainard, It is difficult to discern whether borrowers appointed to the Fed board in the Obama are able to continue making payments By Kate Berry administration, could succeed Quarles as because of stimulus efforts, or because they February 25, 2021 the central bank’s top supervisory official. have continued to earn income during the The Federal Housing Finance Agency is The two Fed governors have clashed on pandemic, he said. providing an additional three months of numerous issues related to supervising large “Borrowers benefitting from temporary forbearance to borrowers with loans backed banks, with Brainard dissenting from several forbearance may or may not be able to by Fannie Mae and Freddie Mac, totaling recent board decisions. resume payments once the forbearance 18 months of relief due to the coronavirus The core of the Fed’s stress test regime ends,” he said. pandemic. is a measure known as the stress capital Separately, Quarles also said the Fed plans The FHFA said Thursday that it was aligning buffer, which was established in March 2020 to look into how to “reduce the volatility” in its policies with the Biden administration to in an effort to streamline the regime and stress test results without compromising address economic burdens for homeowners consolidate several requirements. their rigidity or significance. due to COVID-19. The change comes nearly Under the new system, each bank subject “Not every aspect of a supervisor’s work three weeks after the agency extended the to the Comprehensive Capital Analysis and can be quantified,” he said. “But I believe total forbearance period to 15 months. Review has to meet a unique benchmark that there is room for supervisors to be more When Congress passed the Coronavirus based on its performance of how much transparent about their analytical processes Aid, Relief and Economic Security Act last capital to hold in the following year to in general, and more forthcoming about year, it allowed borrowers with federally combat stress. the data used as the basis for supervisory backed mortgages to request up to 12 months But the Fed created the accompanying judgments.” of forbearance — divided into two 180-day “sensitivity analyses” out of concern that During Quarles’ tenure, the Fed has increments — if they experienced financial the economic scenarios developed before provided more information to the public hardship. COVID-19 started spreading were outdated on its stress testing models in an effort to be In forbearance, a borrower is allowed once the pandemic was in full force. more open about how it tests bank capital to suspend payments by extending the Quarles suggested it is now evident that against various economic scenarios. loan’s terms. There is no set cutoff date the regular stress tests would have been But there is still room for improvement in for the 18-month forbearance period sufficient to ensure banks had enough the Fed’s stress-testing framework, Quarles because borrowers have entered and exited capital. He said deviating from the normal argued. forbearance at different times. regime should be reserved for more dire “Over the longer term, we must The FHFA also said Thursday that it was circumstances. continue to sharpen our thinking around extending a moratorium on foreclosures and The Fed “should be loath to repeat the interrelationships between bank risk real estate-owned evictions until June 30 for something like that” in the future, he said and broader changes, such as advancing loans backed by Fannie and Freddie. Because of the sensitivity analyses and shareholder technologies and growth in nonbank housing prices have jumped dramatically, restrictions. finance,” he said. “Those forces are borrowers are more likely to be able to sell “It really does require an asteroid flaming undoubtedly altering bank risk, and it their homes than go into foreclosure than in the sky, and our regular framework has will take creative and timely research to in financial crisis in 2008, when many were demonstrated itself to be extremely adequate understand the implications.” underwater on their mortgages.

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The foreclosure moratorium had been people with knowledge of the matter, as set to expire on March 31, but the FHFA is wealthy clients in some of Latin America’s EXPENSE MANAGEMENT offering another three-month extension only largest economies move their money to for single-family mortgages backed by the international financial capitals. government-sponsored enterprises. The REO The biggest U.S. bank signed an agreement Bank of eviction moratorium applies to properties to refer local business to BBVA Mexico, the acquired by the GSEs through foreclosures or local unit of Banco Bilbao Vizcaya Argentaria America deed-in-lieu transactions. SA, said one of the people. Still, the New York- Earlier this month, the Biden based firm will continue to serve clients from administration announced similar extensions Mexico through its platform outside of the cuts staff in of relief for loans backed by the Federal country, one of the people said. Housing Administration, Department The decision to discontinue local wealth investment of Veterans Affairs and Department of management services in Latin America’s Agriculture. second-biggest economy follows a similar “Today’s extensions of the COVID-19 move in Brazil last summer in which banking and forbearance period to 18 months and JPMorgan wound down its local private- foreclosure and eviction moratoriums banking business and referred Brazilian trading through the end of June will help align wealth clients to Banco Bradesco SA. mortgage policies across the federal Wealthy families across Latin America By Bloomberg News government,” FHFA Director Mark Calabria have been seeking out money managers in February 25, 2021 said in a press release. “Borrowers and the world capitals in recent years, bankers said. Bank of America cut some of its staff in the housing finance market alike can benefit In Mexico, the populist policies of President global banking and markets division this week. during the pandemic from the consistent Andres Manuel Lopez Obrador, including The reductions affected employees in sales treatment of mortgages regardless of who a tax crackdown, have pushed some and trading, research, investment banking owns or backs them.” families to transfer more wealth abroad. and capital markets, according to two people Roughly 2.6 million homeowners were in Offshore accounts represent the majority familiar with the situation who asked not to be forbearance plans as of Feb. 14, representing of JPMorgan’s private-banking business in identified discussing personnel matters. The 5.29% of loans serviced, the Mortgage Mexico, one of the people said. moves are part of ’s typical round of Bankers Association said Monday. JPMorgan will continue to maintain other staffing changes around this time of year, after The share of Fannie- and Freddie-backed businesses in Mexico, including investment bonuses are distributed, the people said. loans in forbearance fell slightly to 2.97% last banking, trading and treasury services. A The latest cuts mark an end to the bank’s week, from 3.01% on Feb. 8, the MBA said. By company spokesman declined to comment. pledge not to eliminate any jobs in 2020 as the comparison, 5.22% of all loans serviced are JPMorgan is the biggest wholesale bank global pandemic flared. currently in forbearance plans, the MBA said. in Mexico among the global giants without A Bank of America spokesman declined to retail operations, according to data from comment. banking regulator CNBV. The firm’s other WEALTH MANAGEMENT business lines have been growing, one of the people said, and last year the bank increased BRANCH NETWORK JPMorgan its capital by $8 billion pesos ($393 million) to 19.5 billion pesos, data show. TD to close exits Mexico 82 U.S. bank private branches as banking, COVID drives refers clients digital growth to BBVA By Bloomberg News By Bloomberg News February 25, 2021 February 25, 2021 Toronto-Dominion Bank said it will close JPMorgan Chase is shutting its private 82 bank branches in the U.S. as part of a “store banking business in Mexico, according to optimization” in its American unit, where net

For up to date and complete coverage go to AmericanBanker.com MONDAY MARCH 1, 2021 AMERICANBANKER.COM PAGE 8 income dropped in the fiscal first quarter. of its fourth-quarter revenue. billion for the full year of 2020, up 127% and Greg Braca, chief executive of Toronto- Square’s two main business lines are 137% year-over-year, respectively. Dominion’s TD Bank U.S. unit, announced its Cash App platform for P2P payments Square’s Seller Ecosystem generated $987 the number of closures during the company’s and Seller Ecosystem for merchant card million in revenue in the quarter, up 5% from earnings conference call Thursday. Toronto- acceptance. However, bitcoin trading a year earlier. For the full year Seller generated Dominion said in a filing earlier in the day overshadowed both of those audiences, $3.53 billion in revenue, up 2% from 2019. that earnings at the U.S. retail bank fell 16% having surpassed 56% of its fourth-quarter Square Capital, which is part of the Seller to $615 million, including a 6% increase in revenue. Ecosystem, generated 57,000 loans in the expenses that was primarily the result of Bitcoin trading happens through Square’s fourth quarter, totaling $254 million, down branch closures. Cash App, which began life as a P2P money 62% from a year earlier. “It was a larger impact on the number of transfer app, has grown into a more complex Square processed $32 billion in gross stores that we will be closing relative to the financial services app that includes stock payment volume for the fourth quarter, normal pruning that we would do annually investing, bitcoin trading and a debit card for up 12% from a year earlier. For the full year for the last several years,” Braca said on in-person payments. The Cash App generated gross payment volume processed was $112.3 the call. The closures, with most planned $2.17 billion in revenue and $377 million in billion, up 6%. for April, were based on an evaluation of gross profit for the fourth quarter of 2020, The Cash App also experienced strong locations redundant to nearby branches. up 502% and 162%, respectively, compared growth in the number of monthly active users Also, many people have begun doing more to the same quarter of 2019. Bitcoin revenue in 2020, reaching 36 million, up 50% from transactions online or over TD’s app in the accounted for $1.76 billion of the Cash App’s 2019’s 24 million user base. Square reported past year, he said. Still, “COVID taught the fourth-quarter revenue and $4.57 billion of that it has had over 80 million consumers company that many customers do want to do its full-year revenue. transact on its Cash App since its inception business in a physical location.” Square is planning to use this cash flow to in 2013. Further it reported that P2P The Toronto-based bank had 1,223 U.S. reinvest in the Cash App’s capabilities as a transactions were its primary method of new branches as of Jan. 31, according to a company financial services platform. account acquisition, which on average costs filing, meaning the closures represent 6.7% of “For Cash App, we’re going to focus on Square about $5 per new user. For the year, locations in the country. increasing the transaction limits across the P2P transactions were up by nearly 50%, with “You’ll see markets in future years where ecosystem, expand our deposit capabilities customers sending each other more funds we continue to invest in new stores,” Braca and increase the quality of our customer and doing it more frequently. said. “But what you’re also seeing is the service, all in order to strengthen our Net income was $294 million for the fourth need for investment in digital and digital foundation and reach new customers,” Jack quarter, down about 25% from a year earlier. capabilities, and we’re doing just that.” Dorsey, Square’s CEO, said in an earnings Square noted that net income in the three call. “We’re also going to double down on our months was boosted by a one-time gain commitment to bitcoin and continue to look of $274 million related to a gain on equity EARNINGS for new ways to connect our product lines investments, of which $255 million was as a within the Cash App.” result of the mark-to-market valuation of its Square is putting that money back into DoorDash investment. More than half the bitcoin ecosystem, having continued to purchase its own stash of the cryptocurrency. This article originally appeared in of Square’s “Today, we announced a $170 million PaymentsSource. q purchase of bitcoin on top of the $50 million we bought in the fourth quarter,” Dorsey © 2021 Arizent and American Banker. revenue now said. “Why are we doing this? We believe All rights reserved. the internet needs a native currency, and comes from we believe bitcoin is it. We believe it has the highest probability of empowering more people in the economy in a fair way.” bitcoin trading More than three million users bought or sold bitcoin on the app in 2020 and in By Michael Moeser January 2021 alone, and of these, more than February 24, 2021 one million customers purchased bitcoin for • For more content like this, from the the first time. industry leader in global payments coverage, For the full year of 2020, Cash App please visit PaymentsSource.com. generated $5.97 billion in revenue and Square, which built its reputation on $1.23 billion in gross profit, up 440% and bringing card acceptance to the small- 168% year-over-year, respectively. Excluding business masses, has now officially linked its bitcoin, Cash App revenue was still strong for fortunes to bitcoin trading as it delivered 56% the fourth quarter at $416 million and $1.4

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