Finance

Binance plans to lay off between 1,500 and 3,000 employees through the year in response to an ongoing Justice Department probe, a current employee familiar with the company’s plans told CNBC. A company spokesperson disputed the higher number.
The company has already laid off 1,000, the Wall Street Journal reported earlier on Friday, and this number is part of the total, CNBC’s source said.
Binance has been charged by both the SEC and CFTC with various securities and commodities violations, while founder Changpeng Zhao has downplayed concerns.

Changpeng Zhao, billionaire and chief executive officer of Binance Holdings Ltd., speaks during a session at the Web Summit in Lisbon, Portugal, on Wednesday, Nov. 2, 2022.
Zed Jameson | Bloomberg | Getty Images

Crypto exchange Binance is laying off employees in response to an ongoing Justice Department probe that is likely to end with a consent decree or settlement, according to a current employee who is familiar with the company’s plans.
The cuts will eliminate 1,500 to 3,000 of Binance’s global workforce, this person told CNBC, and will take place through the end of the year. The Wall Street Journal previously reported on Friday that 1,000 employees have already been laid off, and those layoffs are part of the total planned, the source told CNBC. This person asked to remain anonymous because they are not authorized to talk to the press about internal matters.

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The Justice Department probe will likely reshape the company fundamentally, the employee told CNBC. If Binance opts to settle the DOJ allegations, it could result in a multi-billion dollar payment. Reuters has reported that federal prosecutors have been weighing anti-money laundering violations and sanctions evasion charges, allegations that would make it difficult for Binance or founder Changpeng Zhao to continue to get licenses to operate.
A Binance spokesperson disputed that the cuts would impact 3,000 employees, saying that the high-end number was “just not right.”
The spokesperson said, “As we prepare for the next major bull cycle, it has become clear that we need to focus on talent density across the organization to ensure we remain nimble and dynamic. This is not a case of rightsizing, but rather, re-evaluating whether we have the right talent and expertise in critical roles.”
Binance has faced significant regulatory challenges over the last few months, culminating in lawsuits from the Securities and Exchange Commission and the Commodity Futures Trading Commission over alleged mishandling of customer assets and the operation of an illegal, unregistered exchange in the U.S.
Binance founder Changpeng Zhao has repeatedly dismissed concerns about the future of the exchange, even after being personally named in the SEC’s lawsuit. Binance itself has suffered significantly since the lawsuits from U.S. regulators, with exchange outflows running into the hundreds of millions. The company has also seen a number of key executive departures. More

JPMorgan Chase executives warned that tougher regulations in the wake of bank failures this year would raise costs for consumers and businesses.
JPMorgan CEO Jamie Dimon said that other financial players could end up winners.
“This is great news for hedge funds, private equity, private credit, Apollo, Blackstone,” Dimon said, naming two of the largest private equity players. “They’re dancing in the streets.”

Jamie Dimon, CEO of JPMorgan Chase, testifies during the Senate Banking, Housing, and Urban Affairs Committee hearing titled Annual Oversight of the Nations Largest Banks, in Hart Building on Sept. 22, 2022.
Tom Williams | CQ-Roll Call, Inc. | Getty Images

JPMorgan Chase executives warned Friday that tougher regulations in the wake of a trio of bank failures this year would raise costs for consumers and businesses, while forcing lenders to exit some businesses entirely.
When asked by Wells Fargo analyst Mike Mayo about the impact of changes proposed by Federal Reserve Vice Chair for Supervision Michael Barr in a speech earlier this week, JPMorgan CEO Jamie Dimon said that other financial players could end up winners.

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“This is great news for hedge funds, private equity, private credit, Apollo, Blackstone,” Dimon said, naming two of the largest private equity players. “They’re dancing in the streets.”
Blackstone and Apollo didn’t immediately respond to requests for comment on Dimon’s remarks.
Banks face requirements to hold more capital as a cushion against risky activities from both U.S. and international regulators. Authorities are proposing higher capital requirements for banks with at least $100 billion in assets after the sudden collapse of Silicon Valley Bank in March. But that also coincides with a long-awaited set of international rules spurred by the 2008 financial crisis referred to as the Basel III endgame.

Rise of the shadow banks

“How much business leaves JPMorgan or the industry if capital ratios go up as much as potentially proposed?” Mayo asked.
CFO Jeremy Barnum said that banks would raise prices on end users of loans and other products before ultimately deciding to leave some areas entirely.

“To the extent we have pricing power and the higher capital requirements means that we’re not generating the right return for shareholders, we will try to reprice and see how that sticks,” Barnum said.
“If the repricing is not successful, then in some cases, we will have to remix and that means getting out of certain products and services,” he said. “That probably means that those products and services leave the regulated perimeter and go elsewhere.”
After the 2008 financial crisis, heightened rules forced banks to pull back from activities including mortgages and student loans. For corporations and institutional players, acquisitions and other huge loans are now increasingly funded by private equity players like Blackstone and Apollo.
That has contributed to the rise of non-bank players, sometimes referred to as the “shadow banking” industry, which has concerned some financial experts because they generally face lower federal scrutiny than banks. More

Since the company’s collapse during the 2008 recession, Citigroup’s stock has continuously struggled.
In response, Jane Fraser, the CEO of Citigroup, announced a bold shift in the company strategy, doubling down on wealth management.
But despite the shift in strategy, Citigroup’s investment in wealth management hasn’t started to pay off.

Since the company’s collapse during the 2008 recession, Citigroup’s stock has continuously struggled, with shares falling more than 30% over the past five years.
In response, Jane Fraser, the CEO of Citigroup, announced a bold shift in company strategy, and it has exited 14 consumer markets outside of the United States since April 2021.

“What’s been obvious to analysts for a long time is that Citi had become too unwieldy and too big to manage,” said Hugh Son, a banking reporter at CNBC. “Ultimately, a lot of the disparate parts overseas didn’t really have very many synergies between them.”
Citigroup instead announced its plans to divert resources and double down on wealth management. It’s a tactical move that several other major banks like Bank of America and Wells Fargo have adopted in recent years.
“It offers high returns and it creates growth opportunities in areas that are in the early stages of wealth generation like Asia and the Middle East,” according to Mike Mayo, a senior banking analyst at Wells Fargo Securities. “And it comes with less risk of big mishaps so the regulatory treatment is better.”
Despite the shift in strategy, though, Citigroup’s investment in wealth management hasn’t started to pay off. In 2022, the firm expected global wealth management to generate a compound annual revenue growth in the high single digits to low teens.
But, instead, Citigroup’s wealth management revenue fell 5% year over year in the second quarter of 2023.

“It waits to be seen whether Citigroup will be successful,” said Mayo. “I’m skeptical, for as much as I am more positive about Citi’s strategy when it comes to their global payments or banking or markets business. I think it’s to be determined how this wealth management strategy plays out.”
Citigroup declined to provide someone for CNBC to interview for this piece.
Watch the video above to see how Citigroup is planning its comeback. More

Citigroup shares rose in premarket trading after the bank reported second-quarter earnings and revenue that topped expectations.
Despite the beat, Citi’s revenue fell 1% from a year ago as the decline in markets and investment banking businesses weighed on its results.
“Amid a challenging macroeconomic backdrop, we continued to see the benefits of our diversified business model and strong balance sheet,” CEO Jane Fraser said in a statement.

Citigroup shares rose in premarket trading on Friday after the bank reported second-quarter earnings and revenue that topped expectations.
Despite the beat, Citi’s revenue fell 1% from a year ago as the decline in markets and investment banking businesses weighed on its results. Citi said the uncertain macroenvironment and low volatility impacted client activity and market performance.

“Amid a challenging macroeconomic backdrop, we continued to see the benefits of our diversified business model and strong balance sheet,” CEO Jane Fraser said in a statement.
Here’s how the company fared in the quarter compared with what analysts polled by Refinitiv expected from the banking giant.

Earnings per share: $1.33 vs. $1.30
Revenue: $19.44 billion vs. $19.29 billion

Citigroup’s net income fell 36% to $2.9 billion, or $1.33 per share, from $4.5 billion, or $2.19 per share, last year, pressured by higher expenses, high cost of credit and lower revenue.
“Markets revenues were down from a strong second quarter last year, as clients stood on the sidelines starting in April while the U.S. debt limit played out,” Fraser said. “In Banking, the long-awaited rebound in Investment Banking has yet to materialize, making for a disappointing quarter.”
On the bright side, revenue from personal banking and wealth management increased 6% in the quarter to $6.4 billion driven by strong loan growth.

Citi returned a total $2 billion to shareholders through common dividends and share buybacks in the second quarter.
Shares of Citigroup climbed more than 1% in premarket trading. The stock is up 5.4% year to date, outperforming the SPDR S&P Bank ETF (KBE), which is down 14.8%.
Read the earnings release here.
Correction: Citigroup’s net income fell 36% year over year. A previous version misstated the percentage. More

JPMorgan Chase reported better-than-expected second quarter results Friday.
The bank posted strong results even excluding the impact of its First Republic acquisition, which boosted per share earnings by 38 cents.
Revenue rose 34% as JPMorgan took advantage of higher rates and solid loan growth.

JPMorgan Chase reported second-quarter earnings Friday that topped analysts’ expectations as the company benefited from higher interest rates and better-than-expected bond trading.
Here’s what the company reported:

Earnings: $4.37 per share adjusted vs. $4 per share Refinitiv estimate
Revenue: $42.4 billion vs. $38.96 billion estimate

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22 hours ago

Net income surged 67% to $14.5 billion, or $4.75 per share. When excluding the impact of its First Republic acquisition in early May — a $2.7 billion “bargain purchase gain” from the government-brokered takeover, as well as loan reserve builds and securities losses tied to the purchase — earnings were $4.37 per share.
Revenue rose 34% to $42.4 billion as JPMorgan took advantage of higher rates and solid loan growth. Revenue gains were fueled by a 44% jump in net interest income to $21.9 billion, which topped the StreetAccount estimate by roughly $700 million. Average loans climbed 13%, while deposits fell 6%.
“The U.S. economy continues to be resilient,” CEO Jamie Dimon said in the release. “Consumer balance sheets remain healthy, and consumers are spending, albeit a little more slowly. Labor markets have softened somewhat, but job growth remains strong.”

Jamie Dimon, chief executive officer of JPMorgan Chase & Co., speaks during the Bloomberg Global Business Forum in New York, on Wednesday, Sept. 25, 2019.
Tiffany Hagler-Geard | Bloomberg | Getty Images

Dimon added that there were “salient risks in the immediate view” including dwindling consumer balances, the risk that interest rates would be higher for longer than expected, and geopolitical tension including the Ukraine war.
JPMorgan increased its guidance for 2023 net interest income to $87 billion, which is $3 billion higher than its guidance from May and the bank’s third increase to its NII forecast this year.

Shares of the bank climbed more than 2% in premarket trading.

Signs of strength

JPMorgan’s retailing banking division was its main source of strength this quarter. Profit surged 71% in the business to $5.3 billion on a 37% jump in revenue.
The bank’s results also benefited from better-than-expected trading and investment banking activity. In May, the bank said revenue from the Wall Street activities was headed for a 15% decline from a year earlier.
But fixed income trading revenue only dipped 3% to $4.6 billion, topping the StreetAccount estimate by nearly $500 million. Equity trading revenue of $2.5 billion edged out the $2.41 billion estimate. And investment banking revenue of $1.5 billion topped the $1.42 billion estimate.
“The results were outstanding and really showed strength across the board,” said Octavio Marenzi, CEO of consultancy Opimas. “Consumer banking was particularly strong, but even investment banking, which has been a problem child over the past year or so, is starting to show signs of life.”
JPMorgan has been a standout recently on several fronts. Whether it’s about deposits, funding costs or net interest income — all hot-button topics since the regional banking crisis began in March — the bank has outperformed smaller peers.
That’s helped shares of the bank climb 11% so far this year as of Thursday, compared with the 16% decline of the KBW Bank Index. When JPMorgan last reported results in April, its shares had their biggest earnings-day increase in two decades.

First Republic impact

This time around, JPMorgan had the benefit of owning First Republic for most of the quarter.
The acquisition, which added roughly $203 billion in loans and securities and $92 billion in deposits, helped cushion JPMorgan against some of the headwinds faced by the industry. Banks are losing low-cost deposits as customers find higher-yielding places to park their cash, causing the industry’s funding costs to rise.
That’s pressuring the industry’s profit margins. Last month, several regional banks disclosed lower-than-expected interest revenue, and analysts expect more banks to do the same in coming weeks. On top of that, banks are expected to disclose a slowdown in loan growth and rising costs related to commercial real estate debt, all of which squeeze banks’ bottom lines.
Analysts will want to hear what Dimon has to say about the health of the economy and his expectations for banking regulation and consolidation.
Wells Fargo also reported earnings Friday, and Citigroup results are on deck. Bank of America and Morgan Stanley report Tuesday. Goldman Sachs discloses results Wednesday.
This story is developing. Please check back for updates. More

A pedestrian passes an AT&T store in New York, U.S.
Scott Mlyn | CNBC

Check out the companies making headlines in premarket trading.
JPMorgan Chase — The bank stock climbed 2.7% after reporting better-than-expected earnings due to higher interest rates and strong bond trading from the investment bank side. The company reported an adjusted $4.37 per share and $42.4 billion in revenue, while analysts polled by Refinitiv estimated $4 a share and $38.96 billion.

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Wells Fargo — Shares climbed nearly 4% after an earnings beat due to a 29% increase in interest income. Wells reported an adjusted $1.25 per share and $20.53 billion in revenue, while analysts polled by Refinitiv forecasted $1.16 per share and $20.12 billion.
Citi — Citi stock added nearly 2% in premarket trading after beating on earnings. The firm reported an adjusted $1.33 per share and $19.44 billion in revenue. Analysts polled by Refinitiv forecasted $1.30 per share and $19.29 billion.
BlackRock — Shares slipped roughly 1% after quarterly results. The investment firm reported an adjusted $9.28 per share and $4.46 billion in revenue while analysts surveyed by Refinitiv expected $8.45 per share and $4.45 billion.
Coinbase — Stock in the cryptocurrency exchange pulled back 1.2% in premarket trading. Shares of Coinbase are coming off of a strong rally a day earlier thanks to a ruling in a case concerning the cryptocurrency XRP. A judge in New York’s Southern District said that the token may not classify as a security.
Plug Power — The battery stock added nearly 6% after an upgrade to outperform from Northland Capital Markets.

Microsoft — Microsoft gained 1.8% after UBS upgraded the tech stock to buy from neutral. The Wall Street firm said the recent weakness in the stock, which is a major artificial intelligence play, is an opportunity for investors. UBS also hiked the price target to $400, implying more than 16% upside. Microsoft is higher by 42% this year.
AT&T — Shares of the telecommunications giant slipped 1.3% after a downgrade to neutral from JPMorgan over increased competition in both its wireless and cable segments.
UnitedHealth Group — The healthcare stock climbed 3.4% after beating on earnings. The company reported an adjusted $6.14 per share and $92.9 billion in revenue while analysts polled by Refinitiv forecasted $5.99 and $91 billion.
Alcoa — Stock in the aluminum supplier fell 2.3% after a downgrade to neutral from JPMorgan over weaker near-term metal prices.
— CNBC’s Sarah Min contributed reporting More

The bank said he’s leaving to take a position at Purdue University, effective Aug. 15.
It also added that Bullard has “recused himself from his monetary policy role on the Federal Reserve’s Federal Open Market Committee and other related duties and has ceased all public speaking.”

James Bullard, president and chief executive officer of the Federal Reserve Bank of St. Louis, delivers a speech in London, U.K., on Tuesday, Oct. 15, 2019.
Luke MacGregor | Bloomberg | Getty Images

The St. Louis Federal Reserve announced Thursday that Jim Bullard will step down from his post as president, effective Aug. 14.
The bank said he’s leaving to take the position of dean at Purdue University’s Mitchell E. Daniels, Jr. School of Business, effective Aug. 15. It also added that Bullard has “recused himself from his monetary policy role on the Federal Reserve’s Federal Open Market Committee and other related duties and has ceased all public speaking.”

“It has been both a privilege and an honor to be part of the St. Louis Fed for the last 33 years, including serving as its president for the last 15 years,” Bullard said in a statement. “I am also grateful to have worked alongside such dedicated and inspiring colleagues across the Federal Reserve System.”
The St. Louis Fed said it will hire a “national executive search firm” to assist in seeking Bullard’s successor.
The announcement comes roughly two weeks before the Fed’s next policy meeting. According to the CME Group’s FedWatch tool, traders are pricing in a 92.4% chance for a 25 basis point rate hike.
Back in May, Bullard said rates needed to go up by another half-point to curb inflation. Since then, the Fed has raised rates by 25 basis points.
“The risk with inflation is that it does not turn around and go back to a low level,” Bullard said. “As long as the labor market is so good it is a great time to get this problem behind us and not replay the 1970s.”
To be sure, Bullard is not a voting member on the policymaking committee this year. More

Amazon delivery package seen in front of a door.
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Check out the companies making headlines in midday trading.
Alphabet — The Google parent company added 4.4% after launching its large language model, Bard AI, in Brazil and the European Union.

Cirrus Logic — The chipmaker fell more than 3% in midday trading after it announced in an 8K filing plans to slash 5% of its workforce.
Nvidia — Stock in the semiconductor and artificial intelligence powerhouse added 2.2%. Nvidia invested $50 million into Recursion to help drive AI-based drug discovery, the company said Wednesday.
Disney — Shares of the media giant rose less than 1% after the company said it will extend CEO Bob Iger’s deal two years, through 2026. Bank of America reiterated its buy rating on Disney following the news.
Carvana — Shares tumbled 7% after being downgraded to underweight from neutral by JPMorgan, which said the used-car dealer’s valuation has “disconnected materially from fundamentals.” Carvana has soared about 700% this year. The Wall Street firm’s price target of $10 suggests 74% downside from Wednesday’s close.
SoFi — The financial technology stock slipped 1.4% after Morgan Stanley downgraded it to underweight. Morgan Stanley said SoFi should be valued more like a bank and a fintech company.

ViaSat — ViaSat shares tanked 29% for their worst day on record after the company revealed a malfunction with its recently launched communications satellite. The company disclosed late Wednesday that an “unexpected event” occurred during reflector deployment that could affect the performance of its Viasat-3 Americas satellite.
Shopify — The online purchase processor added 5.5% in midday trading, building on its strong gain from the previous session, after chief executive Tobi Lutke announced in a video on Twitter plans for an AI assistant tool into its platform for entrepreneurs.
Amazon — Shares of the e-commerce giant climbed 2% after the company said its Prime Day was the “biggest ever” with online sales climbing to $12.7 billion.
Progressive — Shares of the insurance company fell about 11% after Progressive reported results for June and the full second quarter. While the company swung from a loss to a profit compared with last year, its combined ratio was above 100 for both the quarter and the month, meaning its profits came largely from investment gains and not underwriting activity. Additionally, the company’s $14.72 billion in net premiums written for the quarter was below the $15.04 billion expected, according to StreetAccount.
— CNBC’s Samantha Subin, Yun Li, Jesse Pound, Michelle Fox and Alex Harring contributed reporting. More