Wells sells asset management unit; Morgan Stanley bets on the future

Receiving Wide Coverage …

Slow pivot to Asia

HSBC’s “much-anticipated strategic update continues the bank’s frustratingly slow pivot toward Asia, only with lower shareholder returns, ” the Wall Street Journal comments. “The direction of travel makes sense, but the pace remains frustratingly sedate, particularly as competition in the region is picking up. Discussions continue about long-mooted exits from retail operations in France and the U.S.”

“The speed of change might accelerate under Chief Financial Officer Ewen Stevenson, who was put in charge of the new overhaul. [But] the bank has no good answers to geopolitical questions, giving it all the more reason to address organizational ones. For a company that makes much of its position in exciting high-growth Asian markets, HSBC’s expected returns are surprisingly modest. For its shares to regain their old luster, that needs to change.”

The bank’s “pivot to Asia marks more than just an acceptance of economic realities,” the Financial Times says. “It is just as much a recognition of the new political reality facing every western company that is dependent on doing business with China. HSBC’s calculus is that to survive long-term, it needs to keep China’s authorities on side. The hope must be that the economic realities will prove less stark than the politics suggest.”

HSBC “is playing coy about the future of its U.S. retail banking unit — perhaps a smart negotiating tactic in a hot M&A market,” American Banker reports.

Wall Street Journal

Top challenge

Adewale Adeyemo, “President Biden’s nominee for the No. 2 spot at the Treasury Department, said he sees inequality as a top challenge for the U.S. economy as the country moves past the Covid-induced recession.”

“It’s a critical economic issue that we unlock the unrealized potential of marginalized people in this country in order to grow our economy and make sure that we’re competitive going forward,” he said at his Senate Finance Committee confirmation hearing Tuesday.

Betting on the future

Morgan Stanley is betting that its partnership with a Silicon Valley law firm to manage stock plans for thousands of clients “will lead to new long-term clients for its wealth-management business. Some of those clients, the bank hopes, will turn to it for more lucrative services, such as advice, as their needs grow more complex. The agreement aims to give Morgan Stanley a leg up in cementing connections with startups and their employees before a possible public offering. Some will become millionaires overnight.”

Going up

Visa and Mastercard “are planning to raise swipe fees for some types of credit-card purchases in April, adding to the squeeze felt by restaurants, retailers and other merchants already struggling through the Covid-19 pandemic.”

Cashing in

The takeover battle for control of CoreLogic, “once a sleepy data firm, is a vivid sign of the investor interest in businesses tied to the housing market, which has been roaring throughout much of the pandemic.” CoStar Group, “one of the world’s largest providers of commercial real-estate data and online marketplaces,” last week “boosted its all-stock bid to about $96 a share” after CoreLogic had accepted an $80 a share all-cash bid from two investment firms. CoreLogic is “the country’s largest provider of information on home values, mortgages and other housing statistics for financial firms and real-estate brokers.”

“If CoStar prevails, the Washington, D.C.-based data giant plans to use CoreLogic to challenge Zillow Group for dominance of the multibillion-dollar online home-sales marketplace.”

Financial Times

Cost-cutting move

Wells Fargo “has agreed to sell its asset management arm to U.S. private equity firms GTCR and Reverence Capital for $2.1 billion, in the latest of a string of deals sweeping across the U.S. fund management industry. The disposal comes as Wells Fargo has pledged to cut $8 billion from its annual cost base over the next three years, including more than 250 ‘efficiency initiatives’ by streamlining operations around its most core businesses.”The bank said it will retain a 9.9% stake in Wells Fargo Asset Management and “continue to serve as an important client and distribution partner.” The unit has $603 billion in client funds, 24 offices globally and employs 450 investment professionals. JPMorgan Chase was once seen as a possible buyer.”

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