Morgan Stanley (NYSE:MS) shares seem to be unaffected on Friday afternoon, as it avoided the dreaded 3-notch downgrade from Moody’s Thursday night. The company reveied a 2-notch downgrade, which means that it will face approximately $3 billion less in collateral calls from trading partners, than will the others who were not so fortunate. MS did much shifting of its $1 trillion (notional) in derivatives into its U.S. bank unit during the first quarter, and the bank is rated one notch higher than is the holding company, so the derivatives in the bank will require lower collateral posting; Morgan has approximately $50 trillion in notional derivative exposure.
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Citigroup (NYSE:C) is acquiring a portion of French lender Societe Generale’s (SCGLY.PK) shipping loan book for a price that has not been divulged. The latter is divesting its property, shipping, and aircraft financing businesses, so as to raise capital.
Goldman Sachs (NYSE:GS) is unable to have a lawsuit brought by a shareholder dismissed, in which it is alleged that the firm has conflicts of interest related to collateralized debt obligation transactions. In 2010 GS was charged with fraud by the SEC, which led to its shares falling some 13 percent; the matter was subsequently settled for $550 million.
Is it just relief that it’s over? Shares of the ‘Too Big To Fail’ companies that were downgraded by Moody’s Thursday night are doing just fine on Friday, thank you. In mid-afternoon trading, shares were up for Citibank, Bank of America (NYSE:BAC), JPMorgan (NYSE:JPM), Goldman Sachs, Morgan Stanley, which got only a 2-notch downgrade; and in Europe, The Royal Bank of Scotland (NYSE:RBS), Lloyds (NYSE:LYG), Credit Suisse (NYSE:CS), UBS (NYSE:UBS), Deutsche Bank (NYSE:DB), Barclays (NYSE:BCS), and Banco Santander SA (NYSE:SAN).
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