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2. New study says women may not be better execs than men after all

Bank of America CEO Brian Moynihan is said to use the following anecdote to instill in executives the importance of customer service: "A son was taking his 97-year-old mother around to different banking centers and couldn't get anyone to take care of them. But they finally landed at one of our banking centers and somebody--who we joke probably broke a bunch of rules--came out to the car to do the transaction with a 97-year-old customer who needed help. I think that's the different mindset. People are excited about having that opportunity."

The executive who noted this anecdote in an interview with the Charlotte Business Journal says the bank is indeed serious about reversing its image as the antithesis of good customer service. This goal dovetails with the bank's new ad campaign, which has gained visibility for its tone of humility and its new "connectedness" theme.

No doubt there are synergies to customer service and branding efforts. If the bank can turn around its image, it can pay amazing dividends internally. "Most of the people at the bank want to do positive things for people. The negative images don't always reflect the rank-and-file here. Most of our employees want to serve customers and are proud of what they do. One banker told me they feel like they can now go to a dinner party or a cocktail party and hold their head up. That's a different feel," the executive was quoted as saying.

All in all, it will be a long road toward reversing the bank's image. But you've got to start somewhere.

For more:
- here's the interview

Read more about: Bank of America, Customer Service
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By Jim Kim

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3. Goldman Sachs invests in Motif Investing

I've thoroughly enjoyed the New York Times' recent series on Women in Wall Street, which offered a host of thoughtful articles on a pressing issue. The conventional wisdom, as made clear from by these articles, is that the industry, from big banks to hedge funds and beyond, would be better off if women were running the show. Boards would work better. Portfolio performance would be enhanced. Risk would be moderated. Trading would become more rational, with less churning. Retail investors wouldn't get burned as often by their brokers.

To be sure, there are some contrarian voices out there. In fact, the Bundesbank has published a study, as noted in the Financial Times, concluding that gender is a poor predictor when it comes to risk readiness.

"The study looked at households in Austria, Italy, the Netherlands and Spain. While it is a leap to draw conclusions from this about the likely behavior of top finance industry professionals, the Bundesbank paper challenges the popular idea that the global financial system would be intrinsically safer if run by women--currently under-represented--rather than testosterone-charged men, and that Lehman Brothers would not have collapsed if it had been Lehman Sisters," the study said. This study follows another report released last year that concluded more provocatively that board changes resulting in a higher proportion of female banking executives "lead to a more risky conduct of business."

These studies do not represent the definitive word on the issue. There is a lot to debate academically underway. But the authors of the Bundesbank paper note "a growing number of studies put the previous findings into perspective or refute them altogether."

My sense is that it really doesn't matter. You can't expect the mere presence of women in the executive suite or on the board to automatically change the fortunes of a company; that's simply an unrealistic standard. The bottom line is that women represent a source of talent at all levels of a company. The inability of the industry to tap that talent seems illogical, especially at a time when good directors, for example, are so lacking.

For more:
- here's the article (sub. req.)

Read more about: women, gender bias
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By Jim Kim

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4. Universal banks to spin off investment banking operations?

The idea of online brokerages that allow users to build and manage their own stock portfolios is hardly new. In fact, some might see the idea as passé. But then along comes a financing event that seems to validate the concept and the upstart company trying to sell it.

Motif Investing, of San Mateo, Calif., has announced that it has raised $25 million in its Series C round of financing from new investor Goldman Sachs alongside existing investors Foundation Capital, Ignition Partners and Norwest Venture Partners. The company has raised $51 million in total.

Motif calls itself a pioneer in "ideas-based" stock investing.

The idea is to offer individuals a way to invest easily around specific themes. As explained by VentureBeat, "Each motif contains up to 30 stocks. Investors scroll through a Pinterest-esque design with categories like 'biotech breakthroughs,' 'pet passion' and even 'rest in peace,' because 'with baby boomers approaching their 70s, the death care industry could see a boost in demand.' Results are filterable by idea type, industry, percentage of daily change, returns, dividend yield, valuation, and volatility."

The statement adds, "Investors also have the option to build their own motifs with up to 30 stocks, or customize existing motifs by adding and removing stocks and changing weightings. Motif takes a flat commission of $9.95 to buy, sell, and rebalance."

Frankly, this does sound a bit fad-ish. The idea has cropped up and faded before. But the fundraising in this case has been impressive. The question is not so much whether Motif will emerge as a popular retail investor service but whether the investors can make some money off of it. Hopefully, it will be both.

For more:
- here's the article

Read more about: Goldman Sachs, Motif Investing
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By Jim Kim

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5. Citigroup beat estimates, investment banking strong

Plenty of people have made the case for breaking up the big banks, but all that angst has amounted to little. Management has held on to the idea that universal banks offer tremendous benefits and that break-up proponents are misguided. It will be a cold day in August before shareholder agitation actually succeeds in prompting a big break up.

That raises an interesting question: Is there anything that could succeed in prompting banks to break themselves up?

A recent report from JPMorgan about top banks (excepting JPMorgan itself) has concluded that the miasma of regulation around the world might someday force universal banks to spin off their investment banking operations, which in many ways would be the ultimate break-up.

In fact, the report says there is reason to worry about this now. Top tier investment banks are said to be "uninvestable" at this point. The biggest issue, according to the report, is the multiple regulatory attempts going on in various countries. At some point, we could see rules that force global banks to hold more capital locally to fund local operations and to make it easier to wind down such operations. That would be the worst-case scenario, according to the report; the point at which universal banks would have to consider spin-offs of investment banking units.

"The viability of running a global Tier 1 IB business as part of a universal banking business is starting to be put in question," the analysts wrote.

For more:
- here's the article

Read more about: Bank break ups
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By Jim Kim

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