Bankers, Bulls, Activists: The People of Finance to Watch in 2016
These industry figures are likely to play critical roles over the coming year
Business isn’t easy, whether it is contending with upstart competitors, uncooperative markets or corporate foes. Here is a look at some of the bankers, investors and regulators at critical junctures as the new year unfolds:
* The Banker
James “Jes” Staley, who became CEO of Barclays PLC in December, has one of the toughest jobs in banking: to cut the U.K. bank down to a manageable and profitable size. Among the challenges for the former J.P. Morgan executive is getting the 325-year-old institution ready for new rules in the U.S. and the U.K. that could require it to raise more equity. The American must persuade investors that Barclays has finally figured out what to do with its investment bank and that its mishmash of U.K., U.S. and African operations makes strategic sense.
Mr. Staley is in good company. John Cryan took the top job at Deutsche Bank AG over the summer and launched an overhaul of the German bank while working to repair its troubled relationship with regulators in the U.S. and Europe. Tidjane Thiam, meanwhile, is reshaping Credit Suisse Group AG’s investment bank and cutting costs after becoming CEO in July.
* The Oil Bull
Andrew Hall, founder of Astenbeck Capital Management LLC, has been one of the most dominant traders in the oil market since the 1980s. His bullish orientation, coinciding with a steep run-up in crude prices, yielded billions of dollars in trading profits for his employers and clients. He is perhaps best known for being contractually owed a $100 million bonus at Citigroup Inc. at a time when the bank was being bailed out by the U.S. government after the financial crisis.
That bullish bias served well over prior decades, but all good trades come to an end eventually. Mr. Hall’s Astenbeck has suffered mightily amid the 33% collapse in crude prices in 2015. Though Mr. Hall still runs the largest hedge fund in commodity markets, Astenbeck was down 26% in 2015 through November, and assets under management have dwindled to $2.4 billion from nearly $5 billion three years ago. Oil-market watchers are waiting to see if the 65-year-old makes a comeback or throws in the towel.
* The Activist
Jeffrey Smith, CEO of Starboard Value LP, is perhaps the most active activist investor. Mr. Smith’s Starboard Value heads into the new year with several outstanding questions about big investments that are likely to generate headlines.
Among Starboard’s largest positions is Yahoo Inc., which is scrapping a plan to spin off its stake in Alibaba Group Holding Ltd. and instead looking at options for its core Internet business. That plan worries Starboard and other investors who believe the company would be better off selling the business. A fight for board seats remains a possibility.
Meanwhile, Starboard has a stake in Macy’s Inc., which has rebuffed Starboard’s suggestion to spin off its property into a real-estate investment trust. Starboard, which notched a major victory in 2014 when it unseated the entire board of Olive Garden owner Darden Restaurants Inc., also has open campaigns at companies including security provider Brinks Co. and TV-station owner Media General Inc.
*The Regulator
Richard Cordray, director of the Consumer Financial Protection Bureau, will have no shortage of enemies in 2016.
With the implementation of far-reaching mortgage rules in the fall, the CFPB completed its primary tasks imposed by the Dodd-Frank Act to upgrade basic rules for consumer protection. Now, the young agency is venturing more deeply into corners of the financial industry previously overlooked by federal regulators, from auto loans to credit-reporting companies. Each enforcement action and new rule proposal seems to set off more friction with the business community.
Mr. Cordray is set to begin 2016 by rolling out new rules on debt collection, small-dollar loans and overdraft fees. The CFPB also has started debating how to curb mandatory arbitration.
All of this makes Mr. Cordray one of the most divisive figures in Washington. Consumer advocates and liberal politicians praise him and his bureau for protecting ordinary Americans. His detractors, however, see Mr. Cordray as a symbol of government overreach.
* The Entrepreneur
The four largest U.S. banks have a market value of over $1 trillion, a bounty that appears “vulnerable” to Michael Cagney, founder and CEO of Social Finance Inc.
Mr. Cagney is the loudest bank-basher among the crop of entrepreneurs aiming to disrupt Wall Street. While rivals such as LendingClub Corp. seek ways to team up with banks, Mr. Cagney isn’t shy about calling that strategy unambitious.
Social Finance, also known as SoFi, relies, in part, on credit lines from banks and sells them the loans it originates. But by starting with student loans, SoFi hopes to steal away the next generation of high-earning customers from the likes of Wells Fargo & Co., Mr. Cagney’s former employer, before selling them mortgages and, starting in 2016, wealth-management products.
Some rivals argue that SoFi is exploiting loopholes that allow it to operate like a bank without being regulated like one. But with $1 billion raised from SoftBank Group Corp. and over $6 billion in total loans so far, Mr. Cagney and his team are unlikely to back down.
Jon Winkelried, co-CEO of TPG, joined a firm and an industry in transition when he took the job in 2015. Private-equity firms such as TPG are moving away from the big buyouts that made them famous, transforming into diversified asset managers.
TPG hopes the former Goldman Sachs Group Inc. president can help make the transition a success. “Jon’s a business builder and leader,” his co-CEO, TPG co-founder James Coulter, said when the firm announced Mr. Winkelried’s hiring.
In recent years, TPG has dived into debt and real-estate investing, alongside a push into investing in fast-expanding companies like car-sharing service Uber Technologies Inc. and home-rental site Airbnb Inc. The expansion could help TPG better appeal to stock investors if it opts to go public. The firm’s leaders said Mr. Winkelried’s hiring wasn’t tied to plans for an initial public offering, but they have long considered following rivals such as Blackstone Group LP and KKR & Co. to the public markets.