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Bank Stock Roundup: Covid-19 Virus, Restructuring Efforts, JPM, WFC in Focus

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Over the last five trading days, investors’ focus remained mainly on the updates related to Covid-19 virus and its implications on the global economy. Though the U.S. banks are largely immune to the adverse impact of the virus, investment banking business could somewhat get hurt owing to negligible deal-making activities in China.

Nonetheless, a slew of favorable economic data releases during the past five trading sessions suggest that the U.S. economic growth is intact. Thus, banks are likely to continue benefiting.

Now coming to company specific developments, banks continued with business restructuring initiatives. These are likely to improve operating efficiency and support growth. Further, banks plans for technological advancements are expected to improve revenue mix.



(Read: Bank Stock Roundup for the Week Ending Jan 24, 2020)

Important Developments of the Week

1. In a new move, Wells Fargo (WFC - Free Report) has came up with the planned appointment of a number of business leaders with revised business organizational structure. The latest structure will provide leaders with apparent authority, accountability and responsibility with five line of business CEOs. (Read more: Wells Fargo Streamlines Units, Restructures Accountability)

2. In a separate news related to Wells Fargo, the bank intends to eliminate nearly 700 jobs in Manila, Philippines with an aim to concentrate technology employees in lesser number of locations. Also, some of these jobs are expected to be shifted to India, where the company already has roughly 12,000 tech employees.

The company spokesman, Peter Gilchrist said in a statement, “This strategy will ultimately provide meaningful benefits to our employees and customers, but we recognize this change will have a significant impact on some employees and their families.”

Additionally, Wells Fargo is mulling to relocate about 650 tech workers in the United States to a bigger market. These efforts are expected to improve operating efficiency and prospects going forward.

3. JPMorgan (JPM - Free Report) is in talks to merge its in-house blockchain unit Quorum with Brooklyn-based startup ConsenSys. The news was first reported by Reuters citing persons familiar with the matter.

The financial terms of the deal, expected to be announced within six months, are still work in progress. Also, it’s not clear whether nearly 25 employees, who currently work on the Quorum team across the world, will be joining ConsenSys following the merger.

JPMorgan uses Quorum to run the Interbank Information Network (IIN), a payments network that comprises more than 300 banks. The bank also has plans to use Quorum to issue digital currency – JPMorgan Coin – that was designed to make immediate payments using blockchain.

Notably, merger with ConsenSys would have no effect on the IIN and other projects that JPMorgan runs on Quorum. Moreover, following the merger, the plans are to retain the Quorum brand and maintain it as an open source.

4. Bank of America’s (BAC - Free Report) CEO Brian T. Moynihan’s total compensation for 2019 remained flat year over year after the bank reported a 2.5% fall in net income. In a regulatory filing, the company stated that the board of directors has approved his 2019 compensation. (Read more: BofA CEO Moynihan's 2019 Compensation Remains Stable)

Price Performance

Here is how the seven major stocks performed:
 

Company

Last Week

6 months

JPM

0.5%

27.9%

BAC

0.6%

27.5%

WFC

0.6%

6.8%

C

0.4%

23.5%

COF

1.0%

18.8%

USB

1.0%

6.0%

PNC

1.3%

20.7%


Over the last five trading sessions, PNC Financial (PNC - Free Report) gained 1.3%, while both Capital One (COF - Free Report) and U.S. Bancorp (USB - Free Report) have rallied 1%.

In the past six months, shares of JPMorgan and Bank of America have jumped 27.9% and 27.5%, respectively. Also, shares of Citigroup (C - Free Report) have appreciated 23.5%.

What’s Next?

Over the next four trading days, performance of bank stocks is likely to remain the same unless any precedented event occurs.

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