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US banks ramp up spending on talent and technology

Costs at the top US banks jumped more than $ 6.6bn, or 10 per cent, in the most recent quarter compared with the same period of last year as executives paid up for talent and technology to fortify their businesses against increasing competition from nearly every angle.

The increase in spending at JPMorgan Chase, Goldman Sachs, Morgan Stanley, Bank of America, and Citigroup surprised analysts. Many had predicted that banks’ expenses would fall modestly this year as the extra costs associated with doing business during the pandemic faded away.

However, on a series of conference calls this week to discuss quarterly earnings, executives forecast higher annual expenses due to pay increases for bankers and bigger investments in technology and marketing.

“There’s a nervousness among investors that this is the cost of doing business to keep clients from bleeding to fintechs,” said Autonomous Research bank analyst Brian Foran.

Cost increases at most US banks are outpacing revenue growth while banks grapple with historically low interest rates and a dramatic slowdown in lending.

Expenses at the five banks were 21 per cent higher in the second quarter compared with 2019, before the pandemic hit, according to earnings released this week. But second-quarter revenues just rose 10 per cent compared with 2019.

Although technology spending has been on the rise for years, accelerated digitisation during the pandemic has forced executives to stump up even more.

Column chart of Quarterly expenses in US$ bn showing US banks are spending more to fend off competition

“The urgency and importance when you talk to bank executives seems to go up by the day,” Foran said.

The higher spending represents a shift from how banks reacted to the last financial crisis, when many relied on cost cuts to boost profits. But stimulus programmes helped banks avoid the wave of pandemic-related loan losses that executives had expected, meaning they have extra cash to spend.

“We are identifying, particularly given the pace of the recovery, some real strategic opportunities to invest in the franchise,” Citigroup chief financial officer Mark Mason said this week after the bank reported a 7 per cent increase in costs. “We’re not going to miss this window of opportunity.”

Banks are facing heightened competition in virtually every aspect of their business. Private equity firms now have the capital to execute large deals on their own without relying on banks, and fintech companies are eroding margins in the wealth management business and luring some consumers away from traditional banks with lower fees and perks.

Jamie Dimon, JPMorgan chief executive, warned about the banking industry’s shrinking share of the US financial system in his annual letter to shareholders in April. The bank this week raised its annual expense guidance by 1 per cent to $ 71bn.

Column chart of Quarterly compensation costs US$ bn showing Banks are paying their employees more amid a war for talent

“If we can find more good money to spend we’re going to spend it,” Dimon said on the bank’s earnings call.

Compensation, the biggest expense for the industry by far, rose 7 per cent at the five banks in the second quarter compared with last year as they paid up for talent.

Investment banks like Citigroup and JPMorgan have raised salaries for junior investment bankers who complained of burnout during the pandemic, and Bank of America committed to increasing its minimum wage to $ 25 per hour.

Businesses like investment banking with performance-related compensation have also outperformed expectations this year, which is likely to drive up bonuses.

As part of the tech push, banks are increasingly recruiting engineers and data scientists, which increases their median pay, said Jan Bellens, global banking and capital markets sector leader at EY.

Column chart of Marketing expenses in US$ m showing Banks are spending much more on marketing than during the pandemic

Quarterly marketing expenses also soared 46 per cent year-on-year across the group as lenders pushed promotional credit card offers in attempt to jump-start loan growth and bankers got back to wining and dining potential clients after the lockdowns last year.

“The banks are all in the ring and they’re all ready to fight for revenues. Fighting for revenues means spending more on growth,” said Mike Mayo, bank analyst at Wells Fargo.

Other bank-specific factors are also fuelling spending like integration expenses for Morgan Stanley following two large deals and regulatory costs at Citigroup.

Banks will hope this latest round of tech spending will yield better results than previous efforts. Years of prior tech spending have failed to meaningfully reduce the cost of doing business for banks, with banks’ efficiency ratios — a measure of costs as a proportion of income — remaining stubbornly above 50 per cent for years.

Higher spending in the face of revenue pressures could be a tough sell to bank investors who have closely monitored profitability metrics.

“It’s really hard for investors to understand the long-term value of technology investments being made now,” said Vivian Merker, a consultant at Oliver Wyman. “In part because historically there’s been over promises and under delivers and in part because no one knows the future.”

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Widow of Kobe Bryant helicopter crash victim wows ‘America’s Got Talent’ judges

In an emotion-filled ‘America’s Got Talent’ audition, Matt Mauser fought back tears and choked up as he tried to deliver the final line of the song.

WASHINGTON — Matt Mauser, who lost his wife in the same helicopter crash that killed NBA legend Kobe Bryant, shared his family’s heartbreaking story and delivered an emotional performance on Tuesday’s episode of “America’s Got Talent.” 

Mauser’s wife, Christina, helped Bryant coach his daughter’s basketball team at his Mamba Sports Academy. She was one of the nine victims in the tragic Jan. 2020 helicopter crash that also claimed the lives of Bryant, his 13-year-old daughter Gianna and six others. The group was heading to a youth basketball tournament when their helicopter crashed. 

Before starting his audition, Matt Mauser, 51, recounted how he and his wife retired from teaching so he could focus on music full-time and she went on to coach with Kobe Bryant. They lived a “dreamy kind of life,” had three kids and were married for 15 years before that fateful day in 2020.  

“When she left that day, she kissed me and said ‘I love you,’ and that was the last thing my wife ever said to me,” Mauser described. “Your whole life changes in a second, it was pain.”

As his three kids watched from backstage, Mauser then gave an emotional performance of “Against All Odds (Take a Look at me Now)” by Phil Collins. Mauser fought back tears as he made his way through the song, briefly choking up as he tried to deliver the final line, “Take a Look at me Now.”

It was a memorable performance that brought all four judges to their feet. 

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“AGT” judge Howie Mandel praised Mauser’s ability to move total strangers with such an emotional performance.

When asked by Simon Cowell what he would like to happen if he did well on the show, Mauser responded that he’d like to make sure his kids see that in spite of the grief they’ve been through that grief is not going to define who they are as a family.

“That my children see that you have to find joy in life and you have to continue. If this can in any way help my children to chase their dreams, then I’ll take it,” the singer explained.

Mauser told PEOPLE that if he were to win the show’s $ 1 million prize, 100% of the earnings would go to the foundation set up in memory of Christina, which provides scholarships and financial aid to female athletes. 

The “AGT” judges gave Mauser four “yes” votes, so he’ll be moving on to the next round of the competition. 

“When I was out there tonight, I was singing to her and I wanted to make her proud, I think I did that. I felt her in my heart, which was nice,” Mauser described after getting off the stage.  

Author: Andrew Weil
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Michael Jackson: The Jackson 5 discuss discovering their brother's talent

By the time Michael Jackson was 13-years-old he already had a top-five hit with Got To Be There. At that point, Michael had been touring and performing with his brothers, Jackie, Marlon, Tito and Jermaine for years – but he was not the main attraction of the group. Michael was later placed as the lead singer for the legendary act, The Jackson 5, while touring America, Europe and Japan. What followed was the greatest pop career in history selling more than 230 million records. Michael’s brother Jackie recently revealed Michael worked on his skills all the time.
Speaking to The Guardian, Jackie reminisced: “He loved it. He loved it.

“He would work at it every single day. Dancing, honing his craft. That’s what he did.”

Despite having a sense of pride in how hard his brother worked, Jackie admitted that he didn’t always remain close with Michael throughout his popular years.

He said: “When you have that kind of career, it’s kinda hard to keep pace with all your brothers because you’re busy.”

READ MORE: Michael Jackson: Lisa Marie kept marriage secret from Priscilla

Before Michael became a superstar, however, he was relegated to the backbenches of The Jackson 5.

Jackie revealed: “When we started it was Jermaine, Tito and I singing. Then Marlon and Michael came in.

“Michael used to take a Quaker oatmeal box and they were his bongos. He used to play it so well.”

However, it all changed when they gave him an opportunity to show them what he could do.

Jackie went on: “If you’re going for it, you go for all of it. You go with gusto.”

He added he would rather have had Michael’s life: “Yeah, that’s right. That’s what everyone wants who’s in this business.”

Tito agreed: “You want to be on top.”

Previously, Tito spoke emotionally about the loss of his brother, who died on June 25, 2009 from an administered drug overdose.

Tito said in 2011: “I don’t think there will ever be closure for our family.”

Speaking candidly about Conrad Murray, Michael’s physician who was arrested for involuntary manslaughter over the pop star’s death, Tito said: “I’m not a doctor but whether he knew better or Michael knew better he shouldn’t have been doing that.

“He’s a doctor. He’s in charge. He’s taken an oath and at that time he should have been doing what he needed to do to get my brother straight, not contributing to the situation.

“The world has lost a great man, but for our family it has nothing to do with music.”

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Ex-Facebook recruiter speaks out about 'a problematic system' that fails to deliver diverse talent

A former Facebook recruiter is speaking out against the tech giant’s hiring system and workplace culture, which he says fail to reach the company’s diversity goals and alienates people of color. 

Rhett Lindsey, who left Facebook in November after working there for just 11 months, told The Washington Post in an interview published Tuesday that the metrics the company has adopted in its hiring system fail to actually recruit diverse talent. [1]

Lindsey alleged that some potential candidates can be rejected over vague terms like “cultural fit,” noting that at least a dozen qualified applicants of color who he referred for interviews to Facebook were eventually rejected in part due to this reasoning. 

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“There is no culture fit check mark on an application form, but at Facebook it is like this invisible cloud that hangs over candidates of color,” he explained. 

Lindsey, as well as other current and former Black employees involved in Facebook hiring efforts, also told the Post about problematic workplace culture that they said can be harmful to workers of color. 

For example, Lindsey recounted one August 2020 incident in which he attended a virtual meeting to talk about Facebook’s efforts to hire more Black engineers. 

According to videos of the meeting reviewed by the Post, a white manager played a Drake song in the background whose chorus repeats the phrase “Where the [n-word]s be at?,” five times. 

Lindsey asked in the chat system during the meeting why they were playing the song, adding that he was “really disappointed,” which was followed by nine other employees also vocalizing their frustration. 

The Post reported that a manager eventually apologized, though Lindsey said the incident, “shows you the insensitivity and the lack of awareness.” 

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The allegations from Lindsey, who has since launched his own start-up to promote diversity and inclusion in job recruiting, come as Facebook also faces an Equal Employment Opportunity Commission (EEOC) claim filed by potential job recruits last summer. 

Facebook operations manager Oscar Veneszee Jr., who is Black and still works at the company, along with two applicants who were denied jobs brought the claim in July, and a third rejected applicant joined the case in December, Reuters reported last month. [2]

Veneszee told the Post Tuesday that more than half a dozen qualified candidates from minority groups who he submitted to Facebook were all rejected because they were not deemed a “cultural fit.” 

However, when reached for comment, Facebook told The Hill that the company does not measure candidates for cultural fit, but that potential employees are asked how they would respond to specific situations and if these line up with Facebook’s “five core values.” 

Facebook also told The Hill that it does not complete visual inspections of job candidates, and recruiters are instead asked to use objective criteria in measuring candidates, such as membership in a professional society. 

A Facebook spokesperson said in a statement, “We’re focused on diversity and inclusivity as well as advancing racial justice, both in our own workplace as well as in how we recruit candidates to work here,” and that it has “added diversity and inclusion goals to senior leaders’ performance reviews.” 

“We take seriously allegations of discrimination and have robust policies and processes in place for employees to report concerns, including concerns about micro aggressions and policy violations,” the spokesperson added.

References

  1. ^ The Washington Post (www.washingtonpost.com)
  2. ^ Reuters reported (thehill.com)

[email protected] (Celine Castronuovo)

West coast top surfing talent hang ten in Oceanside at long awaited competition

United States Surfing is also responsible for selecting a team for the upcoming 2021 Olympic Games where surfing will be the newest sport to join the Olympiad.

OCEANSIDE, Calif. — The best young surfers on the west coast were in Oceanside on Saturday competing in one of the biggest surfing competitions in over a year. More than 100 of the best U-18 surfers on the west coast competed for the judges in at the USA Prime Series at the Oceanside Harbor.

USA Surfing had been holding tournaments in Florida due to the pandemic, but after holding one in Huntington Beach last month they were ready to drop in near Oceanside.
CEO of USA Surfing, Greg Cruse said, “It’s one of the safest sports you can do. I mean, there’s probably way less people out on the water than there would be on a normal day. It’s really easy to maintain the social distance and all that.”
Cruse added that these particular competitions are the real tests for finding the next surfing talent in California. “We started this program about 11 years ago as a way for the best athletes on each coast to face each other more often rather than just at our national championships,” said Cruse.
As the national governing body of the sport, United States Surfing, selects the top athletes from around the country to compete internationally, surfers like Tex Mitchell from Oceanside compete in tournaments like these to be selected for the national squads. Mitchell told News 8, “The next step is to keep us qualifying series. Um, and when you go through the qualifying series and you do good and now you go to the World Championship tour and those are the best surfers in the world.”
United States surfing is also responsible for selecting a team for the upcoming 2021 Olympic Games in Tokyo where surfing will be the newest sport to join the Olympiad. While these young shredders might have a long way before donning the red, white and blue jersey, Cruse told News 8 the surfers they are sending to Tokyo. “So we have Caroline Marks who won the World Championship in Taiwan, I mean Carissa Moore who won the World Championships, and Caroline Marks from Sacramento who came in second point, Chloe and Dino and John. John Florence is our team. Kelly Slater is our first alternate for the men. Lakey Peterson’s our first alternate for the women. So a super solid team,” said Cruse.
Watch from May 2020: San Diego surf shops struggling during coronavirus shut down