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Prudential's Wells tie-up may mean it got fake accounts too


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Prudential's Wells tie-up may mean it got fake accounts too

With Gary Cohn probably leaving Goldman Sachs Group Inc., speculation abounds regarding who might take his place as Lloyd Blankfein's likeliest successor. Sources for The Wall Street Journal have said investment banking co-chief David Solomon and CFO Harvey Schwartz are the leading candidates for co-president. But if Solomon and Schwartz get promoted, that may mean room for others to take their current roles. The WSJ's sources are naming Marc Nachmann and Gregg Lemkau as Solomon's possible successors and Stephen Scherr and Pablo Salame as Schwartz's. Scherr is chief strategy officer and Goldman Sachs Bank USA CEO at present; Salame is global co-head of securities. Lemkau is global M&A co-head; Nachmann runs the global financing group and is head of Latin America.

New Jersey-based Prudential Financial Inc. is being sued by three former managers, and the latter are claiming some of the insurance firm's customers didn't know they were signed up for policies. Prudential sells some products through Wells Fargo & Co. -- and an internal review allegedly revealed that certain clients had gotten policies through the bank's fake-account creation practice.

In more Wells news, Wall Street's self-regulator is asking the bank's former employees to let it know if they were wrongfully terminated in connection with the scandal. In November, senators asked that the Financial Industry Regulatory Authority hurry its investigation into the possibility that Wells fired employees who refused to meet sales targets through illegal means. The bank is already facing lawsuits by former workers.

Coming up this week is another Wells update on retail banking customer activity. In September, 10% fewer customers met with branch bankers compared with the year-ago count. There was also a 25% decline in consumer checking account openings and a 20% dip in credit card applications. In October, new accounts were down 44% year over year. The conference call for the November data is on Dec. 16, Friday.

A research report by Oppenheimer's Chris Kotowski explains why there isn't likely to be a "a major easing of regulatory burden on the banks" and why the next two years could be "a Goldilocks period in which credit costs remain low, expenses remain low and revenues break out to the upside." That is, unless the EU collapses.

And, in the credit union scene, South Carolina-based Beech Island Credit Union merged into Georgia's Peach State Federal Credit Union on Nov. 1.

In other parts of the world

Asia-Pacific: China to roll out interbank yuan trading; ASEAN to cut nontariff barriers

Europe: UniCredit, Amundi strike Pioneer deal; UK banks could face fresh PPI bill

Middle East & Africa: Non-OPEC countries join in oil cuts; Gambian president rejects loss

The day ahead

Early morning futures indicators pointed to a higher opening for the U.S. market.

In Asia, the Hang Seng fell 1.44% to 22,433.02, while the Nikkei 225 increased 0.84% to 19,155.03.

In Europe, around midday, the FTSE 100 was down 0.32% to 6,931.70, but the Euronext 100 was up by 0.05% to 913.56.

On the macro front

The U.S. Treasury's budget data for November is due out today.

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