Banks are experiencing a resurgence, shedding the constraints of the 2008 financial crisis and regaining investor confidence. A combination of factors – rebounding dealmaking, easing regulatory burdens and strong stock performance – is driving a new era of profitability for the sector, with significant implications for executive compensation and the broader financial landscape.
The six largest US lenders saw their chief executives’ combined pay reach ’s end at $250 million, a 22 percent increase over the prior year, according to recent reports. This rise in remuneration coincides with an average 42 percent gain in the banks’ stock prices throughout .
This positive trend is partly attributable to policy shifts under the current administration. US regulators have begun unwinding rules implemented after the financial crisis, easing leverage restrictions and overhauling stress tests used to determine capital requirements. These changes are providing banks with greater flexibility and capacity for risk-taking.
Investment banking activity has played a crucial role in this turnaround. marked Wall Street’s strongest performance in investment banking since the pandemic, fueled by a surge in mergers and acquisitions. This rebound in dealmaking has translated directly into increased fee income for banks.
The shift isn’t solely benefiting banks. While banks were once losing ground to private credit firms, the tables are turning. Private capital groups are now facing challenges, with their shares declining as they struggle to exit deals and investors express concerns about the potential impact of artificial intelligence on lenders to software companies.
However, the renewed optimism for banks hasn’t entirely eclipsed the dominance of private capital. The compensation of bank CEOs, while significantly increased, still pales in comparison to figures like Stephen Schwarzman, chief executive of Blackstone, who earned over $1 billion in , largely through dividend payments from his substantial Blackstone shareholding.
The relationship between banks and the administration remains complex. While deregulation provides a favorable environment, President Trump has also introduced unpredictable elements, including threats to cap credit card interest rates and a lawsuit against JPMorgan Chase related to the closure of his accounts in .
Banks are also engaged in a lobbying battle with cryptocurrency companies for influence in Washington and within the Republican Party. Lenders fear losing retail customers to crypto exchanges offering higher interest rates on stablecoins.
Billionaires and Media Control in Israel
Patrick Drahi, a French-Israeli telecoms mogul, is expanding his media holdings in Israel, a move that is raising concerns about potential political influence. He is set to acquire a nearly 15 percent stake in Channel 13, one of Israel’s main television channels, from Leonard Blavatnik’s Access Industries for $40 million.
The deal has sparked controversy due to Drahi’s existing ownership of a right-wing Israeli outlet and the possibility of government changes that could allow him to increase his stake in Channel 13 beyond the current regulatory limit of 14.99 percent. Critics argue that this could compromise the channel’s independence and potentially favor Prime Minister Benjamin Netanyahu, particularly ahead of expected elections.
The Hunt for Missing Funds at Byju’s
The collapse of Indian edtech company Byju’s has triggered a complex international investigation into the whereabouts of $533 million transferred through a hedge fund, Camshaft Capital. The funds were part of a $1.2 billion loan extended to a Delaware subsidiary of Byju’s, and creditors allege that founder Byju Raveendran illegally siphoned off the proceeds.
Raveendran and William Morton, the founder of Camshaft Capital, both deny any wrongdoing. A Delaware court issued a default judgment against Raveendran, which he plans to appeal. The case highlights the risks associated with high-growth startups and the challenges of cross-border financial investigations.
Job Moves
- Morgan Stanley has appointed William Bertagna as deputy head of investment banking for Emea, Martin Grebner as co-head of the Emea industrials group, and Karsten Hofacker as head of Emea financial sponsors M&A.
- OpenAI has hired Peter Steinberger, the founder of OpenClaw, to expand the autonomous capabilities of its AI systems.
- Hyatt Hotels executive chair Thomas Pritzker is stepping down following revelations about his associations with Jeffrey Epstein and Ghislaine Maxwell.
- DLA Piper has hired Sherlyn Lau as an equity capital markets partner in Hong Kong and Charles Ching as a private equity partner in Washington.
- Baillie Gifford has promoted Joe Stellato, Liam Hoare, and Monica Shortell to leadership positions within its US wealth management and institutional sales teams.
Smart Reads
Former President Trump is reportedly seeking to exert greater control over government-owned golf courses, potentially remodeling them to align with his personal real estate brand.
Niger is attempting to sell a uranium stockpile worth $240 million, but faces challenges in finding a buyer due to French claims and security concerns following a recent attack on the airbase where the uranium is stored.
An exclusive New York club with ties to Jeffrey Epstein is facing scrutiny due to his past membership and advisory role.
News Round-up
- The UK is proposing audit changes to attract Chinese listings.
- The Federal Reserve is set to loosen US bank rules in an attempt to boost mortgage lending.
- The EU privacy watchdog has opened a probe into Elon Musk’s X over sexualized AI images.
- Fund managers have taken the most bearish stance on the dollar in a decade.
- Hapag-Lloyd is acquiring Israel’s Zim in a $4.2 billion shipping deal.
- Rosebank Industries vows to maintain its London listing while exploring $3 billion in US deals.
- SpaceX will compete in a Pentagon contest for autonomous drone technology.
