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Goldman Sachs Continues to Cut as Wall-Street Braces for 2023 Recession
David Solomon, Goldman's CEO, says the company took on too much risk and will be cutting costs as it braces for a rough 2023
Robert Baron & Anna Lad
January 13, 2023
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Banking News
Fifth Third Bank Consolidates in Midwest
Cincinnati-based Fifth Third bank will close 23 branches this year in seven states. The mostly-Midwestern closures come as the bank plans to open over 30 branches in the Southeast, which is growing at about a 5% quicker rate than Midwestern branches.
CEO Tim Spence said:
We’re gaining share in both households and deposits, and the new branches are achieving breakeven in the two- to three-year range.
Goldman Sachs Continues Cuts
Despite not yet having released its Q4 earnings, the Switzerland-based bank continues to be in the red. Since 2020, Goldman Sachs’ Platform Solutions department has lost $3B between Marcus, GreenSky, and AppleCard. While revenues jumped over $600M in the last two years, operating expenses and credit loss provisions doubled.
Credit Union News
Michigan CU Purchases Community Bank
The trend of credit unions buying community banks continues into 2023. Old Mission Bank will be bought out by 4Front Credit Union for an undisclosed amount. Both institutions are Michigan-based. After the acquisition, 4Front Credit Union will have ~$1.2B in assets. The trend is expected to continue. In reference to the acquisition trend, Honigman attorney Michael Bell said:
2023 is starting quickly. If the economic factors can calm sooner rather than later, I absolutely expect a record year.
Government-Backed Financial Literacy Newsletter Released
The National Credit Union Administration launched an email newsletter focusing on investments, financial literacy, and personal finance. The content includes tips to avoid fraud, keeping healthy savings accounts, and identifying fraud.
Financial Services & Blockchain
Frank, JPMorgan's FASFA Platform, Is No More
JPMorgan Chase closed down the $175M financial planning platform Frank, which it bought from founder Charlie Javice in September 2021, over false claims about the size of its customer base. Users numbered less than 300k, not the 4.25M claimed by Javice. JPMorgan’s suit against Javice stated:
To cash in, Javice decided to lie, including lying about Frank’s success, Frank’s size, and the depth of Frank’s market penetration in order to induce JPMC to purchase Frank.
Funding for Fintech Down 79% Since 2021
Venture funding raised for fintechs in Q4 of 2022 was paltry compared to Q4 of 2021, which raised $18.2B. The size of deals continued to drop, even though the United States carried the most deals, worth $3.9B. Startups continue to receive funding, but late-stage funding rounds have been met with intense skepticism from investors.