| Company type | Wholly owned subsidiary of IBM |
|---|---|
| Industry | Financial services |
| Founded | 2001 |
| Headquarters | , |
Number of locations | 15 |
Area served | Worldwide |
Key people | Eugene Ludwig Chairman and Founder [1] [2] Julie L. Williams Chief Operating Officer [3] |
| Services | Management consulting, Asset management, Financial regulation |
Number of employees | circa 400 [4] |
| Website | www.promontory.com |
Promontory Financial Group, a wholly owned subsidiary of IBM (through their Consulting arm), is a global consulting firm that advises clients on a variety of financial services matters, including regulatory issues, compliance, risk management, liquidity, restructuring, acquisitions, due diligence, internal investigations and cyber security.
The company was founded in 2001 by Eugene Ludwig, who served as Comptroller of the Currency under President Bill Clinton, and Alfred H. Moses, a partner in the law firm Covington & Burling LLP. Promontory is based in Washington, D.C. and has 18 additional offices and affiliates worldwide, in Atlanta, Beijing, Brussels, Denver, Dubai, Dublin, Hong Kong, Istanbul, London, Madrid, Milan, New York City, Paris, San Francisco, Singapore, Sydney, Tokyo, and Toronto.
IBM announced its planned acquisition of Promontory in September 2016 [5] and completed the transaction in November 2016. [6] Ludwig retired as CEO on February 28, 2021, passing the reins to an operating committee co-chaired by Julie L. Williams, Promontory's global head of strategy, and Leslie Peeler, chief operating officer. [7]
Promontory Financial is affiliated with several similarly named companies: [8]
Approximately 170 of the consultants working for Promontory were former employees of authorities in financial supervision. The news media has sometimes referred to Promontory as a "shadow regulator" for Wall Street. [1] The American Banker newspaper described Promontory under Ludwig's leadership as "a go-to for banks seeking insight on regulatory matters from a stable of former officials from the Office of the Comptroller of the Currency, Federal Deposit Insurance Corp., Federal Reserve, Securities and Exchange Commission and other agencies." [3]
Former government officials currently associated with Promontory include:
Former government officials previously associated with Promontory include:
After uncovering foreign exchange losses in its U.S. banking subsidiary, Allfirst Financial Inc., Allied Irish Bank in 2002 engaged Promontory to conduct an internal investigation. Promontory issued the "Ludwig Report", on March 14, 2002. The report detailed how the trader John Rusnak hid losses of $691 million over five years. [19] The report concluded that Rusnak, who was fired for his role in the trading losses, received no active help from within or outside the bank. Promontory found that the internal control mechanisms and audits had been insufficient. [20]
Promontory advised further the government of the United States and from other countries like Cameroon and Iceland. [21]
Promontory was hired to carry out by order of the Holy See a comprehensive investigation of all customer contacts of the Institute for the Works of Religion (Italian : Istituto per le Opere di Religione – IOR), often also called the Vatican bank, on money laundering guided by former Promontory Europe executives Elizabeth McCaul and Raffaele Cosimo. [22] [23]
In the aftermath of the subprime mortgage crisis, Promontory was one of several consulting firms selected by federal banking regulators to conduct reviews of loan foreclosures initiated by 16 mortgage servicing companies. Promontory reviewed the foreclosure activities of Bank of America, PNC Financial Services and Wells Fargo, encompassing more than 250,000 loan contracts. Promontory was paid $927 million, which led to strong criticism and doubt about the independence of the examination. [24] A hearing was arranged by the U.S. Senate Banking Committee to assess whether regulators had handed off too much oversight authority to private consulting firms such as Promontory. [25]
Promontory was also engaged by Commonwealth Bank to oversee their Open Advice Review [26] [27] in 2014 and by Westpac to undertake an independent review into their breach of anti money laundering laws [28] in 2019.
In August 2015, Promontory entered into an agreement with the New York Department of Financial Services to resolve the state's allegations that it had watered down compliance reports for a UK banking client, Standard Chartered Bank. Promontory agreed to pay a $15 million penalty and voluntarily abstained for six months from accepting new consulting engagements in New York. [29]
The Bank of Credit and Commerce International (BCCI) was an international bank founded in 1972 by Agha Hasan Abedi, a Pakistani financier. The bank was registered in Luxembourg with head offices in Karachi and London. A decade after opening, BCCI had over 4000 branches in 78 countries and assets in excess of US$20 billion, making it the seventh largest private bank in the world.
In the United States, banking had begun by the 1780s, along with the country's founding. It has developed into a highly influential and complex system of banking and financial services. Anchored by New York City and Wall Street, it is centered on various financial services, such as private banking, asset management, and deposit security.
The London Inter-Bank Offered Rate was an interest rate average calculated from estimates submitted by the leading banks in London. Each bank estimated what it would be charged were it to borrow from other banks. It was the primary benchmark, along with the Euribor, for short-term interest rates around the world. Libor was phased out at the end of 2021, with market participants encouraged to transition to risk-free interest rates such as SOFR and SARON.
The Central Bank of Ireland is the Irish member of the Eurosystem and had been the monetary authority for Ireland from 1943 to 1998, issuing the Irish pound. It is also the country's main financial regulatory authority, and since 2014 has been Ireland's national competent authority within European Banking Supervision.
The Office of the Comptroller of the Currency (OCC) is an independent bureau within the United States Department of the Treasury that was established by the National Currency Act of 1863 and serves to charter, regulate, and supervise all national banks and federal thrift institutions and the federally licensed branches and agencies of foreign banks in the United States. The acting Comptroller of the Currency is Michael J. Hsu, who took office on May 10, 2021.
The Basel Committee on Banking Supervision (BCBS) is a committee of banking supervisory authorities that was established by the central bank governors of the Group of Ten (G10) countries in 1974. The committee expanded its membership in 2009 and then again in 2014. As of 2019, the BCBS has 45 members from 28 jurisdictions, consisting of central banks and authorities with responsibility of banking regulation.
The Office of Thrift Supervision (OTS) was a United States federal agency under the Department of the Treasury that chartered, supervised, and regulated all federally chartered and state-chartered savings banks and savings and loans associations. It was created in 1989 as a renamed version of the Federal Home Loan Bank Board, another federal agency. Like other U.S. federal bank regulators, it was paid by the banks it regulated. The OTS was initially seen as an aggressive regulator, but was later lax. Declining revenues and staff led the OTS to market itself to companies as a lax regulator in order to get revenue.
Basel I is the first Basel Accord. It arose from deliberations by central bankers from major countries during the late 1970s and 1980s. In 1988, the Basel Committee on Banking Supervision (BCBS) in Basel, Switzerland, published a set of minimum capital requirements for banks. It is also known as the 1988 Basel Accord, and was enforced by law in the Group of Ten (G-10) countries in 1992.
Tommaso Padoa-Schioppa, OMRI was an Italian banker and economist who served as Italy's Minister of Economy and Finance from 2006 to 2008. He previously served as a member of the Executive Board of the European Central Bank from 1998 to 2005. Padoa-Schioppa is considered as a founding father of the European single currency. He was a former member of the Steering Committee of the Bilderberg Group.
The Federal Financial Institutions Examination Council (FFIEC) is a formal U.S. government interagency body composed of five banking regulators that is "empowered to prescribe uniform principles, standards, and report forms to promote uniformity in the supervision of financial institutions". It also oversees real estate appraisal in the United States. Its regulations are contained in title 12 of the Code of Federal Regulations.
Elizabeth McCaul has been a member of the European Central Bank's supervisory board since 2019. She previously served as superintendent of banks for New York state, and as the head of the New York State Banking Department. Before that, McCaul held senior executive positions at Promontory Financial Group, an IBM company.
Eugene A. "Gene" Ludwig is an American business leader and expert on banking regulation, risk management, and fiscal policy. From 1993 to 1998 he served as Comptroller of the Currency.
David George Nason is an American lawyer, government official and corporate executive from Washington, DC. He served as the president and CEO of GE Energy Financial Services, a unit of General Electric (GE) from 2013 to 2018. Previously at GE, he was the Chief Regulatory Officer and Compliance Leader at GE Capital. Nason is one of 190 GE officers globally. From 2005–2009 he served as Assistant Secretary for Financial Institutions under Treasury Secretary Henry M. Paulson, during which time he was a key architect of the federal government's response to the financial crisis of 2008.
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Keith A. Noreika is an American lawyer who specializes in the regulation of financial institutions. He served as Acting Comptroller of the Currency from May 5, 2017, to November 27, 2017, following the 30th Comptroller of the Currency, Thomas J. Curry, and preceding the 31st Comptroller of the Currency, Joseph Otting. Noreika rejoined the law firm of Simpson Thacher on January 8, 2018. He joined Patomak Global Partners as Executive Vice President and Chairman of its Banking Supervision and Regulation Group on July 5, 2022.
Brian P. Brooks is an American lawyer, banker, entrepreneur, technologist, and former government official. He served as Acting Comptroller of the Currency from May 29, 2020, succeeding the 31st Comptroller of the Currency Joseph Otting, until January 14, 2021. Brooks was nominated twice by President Donald Trump for a five-year term as Comptroller of the Currency, once during the 116th Congress, and once in the 117th Congress.
Ronald J. Cathcart is a Canadian-born American banking executive and financial regulator. He is currently Managing Director, Head of Risk Practice at Promontory Financial Group.
With close to 400 employees and some 1,400 consulting engagements under its belt, Promontory Financial Group has built a shadow network between banks and regulators. The firm is a sort of ex-regulator omnibus, capable of forecasting, mimicking and occasionally even substituting for the financial industry's supervisors.
With 383 employees from Toronto to Tokyo, Promontory has worked on almost 1,600 projects.
New documents suggest that the Promontory Financial Group, which examined loans for Wells Fargo, Bank of America and PNC, was the highest paid of the consultants. The firm, run by a former comptroller of the currency, Eugene Ludwig, received $927 million for reviewing more than 250,000 loan files, according to documents provided to the Senate Banking Committee and reviewed by The Times.
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