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Yahoo
3 hours ago
- Business
- Yahoo
TD names next board chair
This story was originally published on Banking Dive. To receive daily news and insights, subscribe to our free daily Banking Dive newsletter. Dive Brief: TD Bank has tapped John MacIntyre as the chair of its board, effective Sept. 1, the lender said Monday, as it continues making changes to reassure investors. MacIntyre will replace Alan MacGibbon, who became chair of the board in February 2024. MacGibbon will retire, which the bank announced in January. MacIntyre has served as an independent director on the board since 2023 and chairs its human resources committee. Dive Insight: The Toronto-based lender's latest appointment aligns with its strategy to hire executives with strong regulatory experience, as the bank has started overhauling its leadership team amid an anti-money laundering scandal that resulted in more than $3 billion in penalties and a $434 billion asset cap on the bank's U.S. retail operations. MacIntyre has had a 30-year career in capital markets. Prior to joining TD, he retired as a partner emeritus from Birch Hill Capital Partners, which he co-founded in 2005. He has also served on public, private and nonprofit boards, including those of Park Lawn Corp., HomeEquity Bank, Maple Leaf Sports and Entertainment, YMCA Toronto and the University Health Network Foundation. TD aims to benefit from MacIntyre's 'deep understanding of financial services, global capital markets, technology, and risk management,' the bank said in the press release. 'Alongside my fellow directors and in concert with our strong leadership team, I look forward to supporting TD's strategy, further strengthening governance, and delivering long-term value,' MacIntyre said in a statement Monday, thanking MacGibbon for his contribution to the board and the bank. Earlier this month, TD hired Andrew Jensen, a veteran of the Treasury Department, as head of financial crime risk management in Canada, effective July 14. He replaced Stephen Joyce, who had been serving as the interim head of the unit. In January, TD's now-CEO Raymond Chun, who at that time was soon to replace outgoing CEO Bharat Masrani, said the bank 'rebuilt' its AML team in the U.S. with a new head of U.S. financial crimes and risk management. Chun stressed the importance of lessons learned from the debacle, including the significance of experienced staff. 'You need to have talent that is commensurate with the size and complexity of a bank [like] TD,' Chun said in January. 'Talent at the most senior levels in AML is absolutely one of the top priorities that we have as an organization.' Following the AML scandal and the penalty, TD expedited its CEO succession date to February — two months before Masrani's scheduled departure in April. In April, TD named four new members to its board of directors: Elio Luongo, Nathalie Palladitcheff, Frank Pearn and Paul C. Wirth. Pearn has served as a compliance and risk executive at JPMorgan Chase, while Wirth has been a finance and accounting executive at Morgan Stanley. As part of its broader restructuring move, TD announced in May that it would cut roughly 2% of its workforce and wind down a $3 billion portfolio tied to its U.S. point-of-sale financing business. Recommended Reading Making the case for women-owned banks
Yahoo
3 hours ago
- Business
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Flagstar wants to dissolve its holding company
This story was originally published on Banking Dive. To receive daily news and insights, subscribe to our free daily Banking Dive newsletter. Flagstar wants to dissolve its holding company, the bank said Thursday, marking the second major structural change to its regulatory mandate in little more than three years. By merging the holding company into its bank and making Flagstar Bank the surviving entity, the Hicksville, New York-based lender would cut the Federal Reserve out of supervision but keep the Office of the Comptroller of the Currency as its primary regulator. The move is estimated to save $15 million in annual costs, according to a slide presentation from the bank. Additionally, it would 'streamline various functions across the organization, and eliminate redundant corporate activities and duplicative supervision and regulation,' Flagstar CEO Joseph Otting said Friday in a statement accompanying the bank's second-quarter earnings report. On that front, Flagstar counted a $70 million loss for the three months between April and June. That's $30 million less than it lost in the first quarter and $253 million less than it shed in 2024's second quarter. Otting cited growth in commercial and industrial banking, where Flagstar funded $1.2 billion in new loans, a 57% quarterly jump. Flagstar added 47 bankers and credit employees during the quarter, and planned to bring on another 40 to 50 during the second half of the year, Otting said. That's in line with estimates Otting outlined in April. "We also made further headway on reducing the level of our multifamily and commercial real estate exposure, due to record par payoffs of $1.5 billion,' he said. 'This is a primary reason why our total CRE balances are down 5% compared to the first quarter and 16% since the end of 2023.' Otting said the bank reduced its 'criticized' assets by 9%, or $1.3 billion, quarter over quarter and 15% ($2.2 billion) throughout 2025's first half. As for the holding company dissolution, such a move would not require a charter change – though Flagstar, in the recent past, has shown it's not against going that far. The bank in 2022 switched to a national banking charter from a state one to gain regulatory approval for the deal that combined Flagstar and New York Community Bank. The charter change, at the time, was seen as a maneuver to avoid needing sign-off from the Federal Deposit Insurance Corp. The bank, however, justified the change as 'appropriate' because the OCC has regulated Flagstar's national mortgage banking business for years prior. Flagstar said it expects Thursday's move to be finalized by the end of the year, but it needs regulatory and shareholder approval. The bank aims to file a proxy statement with the Securities and Exchange Commission next month and to hold a shareholder meeting in October. Bank holding companies are necessary for banks that are engaged in nonbanking activities. "But if you don't want to engage in non-banking activities, if that's not your business plan, the rationale is a lot less," H. Rodgin Cohen, senior chair at law firm Sullivan & Cromwell, told American Banker. Bao Nguyen, Flagstar's general counsel, said the bank isn't interested in doing nonbanking business. "We're focused on recalibrating our regulatory relationships,' Nguyen told American Banker. 'To be simple in our structure, to have less duplication and less regulation, that's all constructive for us." Otting indicated in April that the bank's executives were targeting profitability by the fourth quarter. Flagstar is aiming to shed $600 million in operating expenses this year. That includes closing 60 retail branches, about 20 private-client retail locations, and a couple of operating centers. Flagstar is not the first major lender to dispatch with its holding company. Salt Lake City-based Zions Bank's holding company merged into its national bank subsidiary in 2017. Bank OZK did the same, also in 2017. And in a 2021 deal, Cadence Bank's holding company merged into Bancorp South but then took the Cadence name. Recommended Reading CFTC's Kristin Johnson to exit, shrinking team further
Yahoo
5 days ago
- Business
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Northern Trust CEO dismisses reports of takeover talks
This story was originally published on Banking Dive. To receive daily news and insights, subscribe to our free daily Banking Dive newsletter. Northern Trust CEO Mike O'Grady on Wednesday dismissed reports that the bank had met with other institutions to discuss a potential sale. 'Contrary to recent speculation, during my tenure as CEO, we have never entertained discussions regarding the sale of the company with any financial institution, nor do we intend to,' O'Grady told analysts on a call following Northern Trust's second-quarter earnings report. 'We believe that strategy of independence is what will produce the best returns for our shareholders ultimately,' he said. The Wall Street Journal reported that Chicago-based Northern Trust had been approached by BNY to discuss a potential merger in June. Goldman Sachs also approached the firm earlier this year, according to Semafor. 'Is there any scenario in which you think M&A would make sense from a shareholder return perspective? Or do you think the uniqueness of the Northern franchise, the scale in the custody business, all of that kind of makes just M&A unattractive strategically?' Bank of America analyst Ebrahim Poonawala asked following O'Grady's commitment to independence. O'Grady said the bank is 'completely focused' on executing its strategy, and that independence will 'produce the best returns for our shareholders ultimately.' The bank has $18.1 trillion in assets under management or custody as of June 30. 'We've heard from a lot of our clients … who have said, 'We chose Northern Trust because it's a different value proposition. It's one where you are focused on trying to provide a higher level of client service, where you do have very targeted expertise in just certain segments of the market where you compete.' We believe that that differentiated value proposition is the one that's going to create the most value,' O'Grady said. 'We're an organic growth company,' he added. 'But if at times, there's something that would be attractive for us on the inorganic front to improve that value proposition, we would consider doing it, obviously, with very high standards.' Sen Elizabeth Warren, D-MA, warned BNY CEO Robin Vince this week that buying Northern Trust would be 'presumptively illegal' based on BNY's size, 'raising serious antitrust concerns and presenting risks to financial stability given the firms' dominance in important markets that serve as the plumbing of the financial system.' 'Should this potential merger move forward, the combined entity's estimated custodial services market share would exceed 30 percent, and would appear to significantly increase consolidation in this market, as measured by the Herfindahl-Hirschman Index ('HHI'), by roughly 400 points,' Warren wrote. Northern Trust's stock price was down 3% in the first hour of trading Wednesday, and Truist analysts attributed the dip to 'the emphatic denial of the company being up for sale, in contrast to news reports of suitors approaching [Northern Trust] management in recent weeks, and the pros and cons of independence drove the bulk of the analyst questioning.' As of 11 a.m. Thursday, the price has risen to $128.39, above where it was before the call. Northern Trust declined to comment beyond the earnings call comments. BNY and Goldman also declined to comment.
Yahoo
5 days ago
- Business
- Yahoo
Bank trade groups push back on crypto firms' bank charter pursuit
This story was originally published on Banking Dive. To receive daily news and insights, subscribe to our free daily Banking Dive newsletter. In a major pushback against the cryptocurrency industry's banking ambitions, the American Bankers Association and four other bank trade groups have urged the Office of the Comptroller of the Currency to postpone decisions on several national trust bank charter applications. The joint letter sent July 17 comes in response to a slew of applications filed since April 2025 by crypto firms, including Fidelity Digital Assets, Ripple, Circle, and National Digital TR CO – all seeking specialized banking charters that would grant them federal recognition and more simplified regulatory oversight. The ABA, America's Credit Unions, Consumer Bankers Association, Independent Community Bankers of America and National Bankers Association argued that the public portions of the applications lack sufficient information for meaningful public scrutiny and that more transparency is needed about the applicants' business plans. 'Given these substantial concerns, and the policy, legal, and commercial implications that chartering the Applicants would have for the banking system, the Associations urge the OCC to postpone consideration of the Applications,' the trade groups wrote. 'The delay should continue until such time as the OCC has released enough information concerning the Applicants' intended business plans, as well as other aspects of the Applications, to inform the public's review and interested stakeholder comment, consistent with the historical transparency of the OCC's charter application review process.' The groups pointed out that a delay would buy more time for the public to 'meaningfully assess the Applications and the novel issues they present' and offer their input on the broader policy shift that granting these national trust bank charters would present, since they will not be involved in fiduciary activities. The trade groups' letter has surprised bank charter experts, who don't necessarily expect more information to be made public. Patrick Hanchey, a partner at law firm Alston & Bird, said a standard regulatory process includes both public and confidential portions of applications. Confidential parts are protected from Freedom of Information Act requests and public disclosure to safeguard proprietary business information. The OCC's established policy does not involve publishing detailed application information for public review, although the agency thoroughly evaluates all application details internally with multiple follow-up questions over weeks or months — a standard process for traditional de novo bank charter applications, he said. 'Even if the OCC delays or refrains from acting in an expedited fashion on these applications, I would not expect there to be detailed information released to the public, for the public to react to,' Hanchey noted. At times, the OCC holds public hearings, typically focusing on community development impact, Community Reinvestment Act considerations and competitive factors, but not on applicants' specific business plans or strategies, he added. 'There's nothing nefarious here; this is very common practice,' said Michele Alt, a partner at consulting firm Klaros Group, echoing Hanchey's views on the two-part application process. A national trust bank charter differs from a traditional bank charter in that it has a more limited scope of authorization for financial activities. Its primary custody or fiduciary activities on behalf of customers are similar to a trust company, Hanchey said. A trust company manages assets and administers trusts on behalf of individuals or organizations; it cannot lend or take insured deposits since it is not an insured depository institution. Capital requirements for trust banks also differ from those of traditional banks – traditional banks' capital requirements are based on asset size as a risk proxy, whereas trust banks hold assets in trust and not on their balance sheets, according to Alt. The regulatory differences raise questions about consumer protection and liability if a trust bank fails, as it is not typically insured by the Federal Deposit Insurance Corporation. However, the OCC has specific procedures for resolving uninsured banks, she pointed out. The resolution framework dates back to 2016 — almost during the same time as early fintech charter considerations, Alt noted. The process involves the OCC appointing an independent receiver, rather than acting as the receiver itself. The claims prioritization system is similar to that of bankruptcy proceedings, where the receiver's costs are typically covered first, followed by creditors and other claimants. The primary risk concerns for trust banks, according to Alt, involve focusing on safeguarding assets rather than loan defaults or deposit runs, safeguarding against potential hacking vulnerabilities and specific risks related to crypto assets, when applicable. The national trust bank charter applications were filed before the Guiding and Establishing National Innovation for US Stablecoins Act, which aims to create a framework for stablecoin regulation, was signed into law Friday. Hanchey noted that the applications were submitted strategically, anticipating but not certain of the GENIUS Act's outcome. The federal charter would provide regulatory legitimacy in the marketplace, the ability to conduct activities in a regulated, safe and sound manner, and the flexibility to operate under federal oversight, he said. The ABA's request for delay highlights the need to understand 'exactly how these charters would be used and what they would accomplish,' Hanchey said, since there's not much use-case evidence in this regard. 'I certainly agree with that as well. I think it remains to be seen exactly how these companies would intend to use their charters,' Hanchey said. Recommended Reading Circle applies for national trust charter Sign in to access your portfolio
Yahoo
5 days ago
- Business
- Yahoo
Discover costs mount for Capital One
This story was originally published on Banking Dive. To receive daily news and insights, subscribe to our free daily Banking Dive newsletter. Dive Brief: Capital One reported a $4.3 billion second-quarter loss Tuesday, as the bank begins digesting its acquisition of Discover. The McLean, Virginia-based lender – whose assets jumped about 34%, to $659 billion, once the acquisition was completed in the second quarter – said Discover integration costs will surpass the $2.8 billion estimate originally shared, although Capital One CEO Richard Fairbank didn't provide more detail during the bank's second-quarter earnings call. Opportunities the Discover purchase presents are exciting, 'but they will require significant investment to bring them home,' Fairbank said. 'We're very compelled by the opportunities on the other side, but it's very clear to us that it's a multiyear journey and it's going to require quite a bit of investment.' Dive Insight: Although the Discover deal was originally estimated at $35.3 billion when it was announced in February 2024, the fair value purchase consideration was actually $51.8 billion when the deal closed May 18, Capital One disclosed Tuesday. The bank's integration budget includes deal costs, moving Discover onto its technology stack, integrating the Riverwoods, Illinois-based company's products and experiences, added investments in risk management and compliance, and integrating Discover's workforce, Fairbank told analysts during Tuesday's earnings call. 'As we have gotten more granularity on each of these efforts, we expect our integration costs will be somewhat higher than our previously announced $2.8 billion,' Fairbank said. For the first six months of the year, Capital One spent about $409 million on Discover integration expenses. Discover-related expenses in the second quarter totaled $9.4 billion, counting money set aside for some Discover loans. 'As we get deeper into it, it is … coming in somewhat higher,' Fairbank said. 'But it's not in any one thing. It's really just across a variety of the many elements of this deal.' On top of merger integration costs, Capital One CFO Andrew Young noted the bank plans to continue investing, too, including by building out additional capabilities for debit on Discover's network, in part to increase customer engagement. Fairbank stressed that investments in technology will remain a priority for Capital One, which aims to be a 'technology company that does banking.' 'Management noted ongoing investment in tech stack for operational efficiency and marketing / customer experience to remain competitive,' Jefferies analyst John Hecht wrote in a Tuesday note. 'It is clear that [Capital One] is planning on a several-year-journey in investing in the network from several perspectives (brand, technology, etc.).' Capital One also reiterated its expectation of $2.5 billion in deal synergies. 'This quarter reminded me of college physics class - I see the numbers and hear the words but only have a vague grasp of what is actually happening,' Truist Securities analyst Brian Foran wrote in a Tuesday note. Also Tuesday, a judge granted Capital One's request to put evidence-sharing on hold in a lawsuit the Trump Organization has filed against the bank. The lawsuit, filed in March, lodged de-banking accusations against Capital One, saying the lender closed hundreds of Trump-related bank accounts in 2021 because it believed 'the political tide at the moment favored doing so.' In May, Capital One asked the judge to dismiss the lawsuit, saying the Trump Organization's 'generalized allegations' of politically motivated de-banking don't hold up and its claims lack factual or legal support. Tuesday's order halts the discovery or evidence-sharing process until after the judge issues a decision on tossing the lawsuit. Recommended Reading Synapse partner banks hit with lawsuit over fund mismanagement Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
