Goldman Sachs Decreases Partners, Freddie Mac Posts Profits: Weekly Financial Biz Recap

Here’s your Cheat Sheet to this week’s financial industry business headlines:

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Visa (NYSE:V) reaches a licensing agreement with three banks in Myanmar which permits its credit cards to be issued and accepted in that country. MasterCard signed a similar arrangement in September and this latest deal with Visa marks another phase in the development of Myanmar’s financial infrastructure.

Goldman Sachs (NYSE:GS) shrinks the number of its partners by 31 to 407 since February and it continues to reduce costs. However, the firm has set aside $10.97 billion for compensation year-to-date, which is up by 10 percent from a year ago.

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JPMorgan Chase & Co. (NYSE:JPM) broadened its servicing operations with the acquisition of MetLife’s $70 billion MSR portfolio, while shares of Ocwen Financial Corporation (NYSE:OCN) and Nationstar Mortgage Holdings (NYSE:NSM) move down as others were thought to have easy pickings as top banks unloaded servicing assets to comply with new capital requirements.

MetLife (NYSE:MET) should now be free from oversight by the Federal reserve after divesting its mortgage-servicing portfolio which will also cause the firm to surrender its bank charter. The sale also permits the return of more than $1 billion in capital via a share repurchase and dividend hike. Only approval of the OCC of the sale of Met’s deposit business to GE Capital (NYSE:GE) remains, and that could occur by the end of the year.

Freddie Mac (FMCC.OB) posts its fourth straight quarter of profits along with a third quarter net income of $2.9 billion. Fully 60 percent of its book is now post-2008, which means that the credit quality is very high. The serious delinquency rate on post-2008 loans stands at 0.37 percent and at 9.38 percent on loans dated between 2005 and 2008.

Shares of Annaly Capital Management (NYSE:NLY) moved down Tuesday following Monday night’s earnings report and the subsequent conference call. Chief Executive Wellington Denehan-Norris commented that, “Our balance sheet is not a trading vehicle. The active involvement of policymakers in the mortgage market… has introduced unique challenges for all investors.” Credit Suisse reduced its price target on Annaly from $17 to $16.


Wells Fargo & Co. (NYSE:WFC) intends to broaden its international presence and obtain regulatory approval to expand its lending and to supply other commercial banking services in Canada.

Citigroup (NYSE:C) reports that its practices concerning Libor are now subject to investigation in Singapore. The development doe not come as a shock since in September, the Monetary Authority of Singapore had ordered banks involved in setting the rate to both review their practices and report any irregularities, although at that time individual firms were not named.

Underwriters of Triangle Capital Corporation‘s (NASDAQ:TCAP) $70 million note from mid-October offering have exercised their option to buy an additional $10.5 million of paper, which takes the total size of the issue to $80.5 million. The notes commenced trading on the New York Stock Exchange under the ticker TCCA.

Morgan Stanley (NYSE:MS) has seen more of its rainmakers in its wealth management division as a 3-person team moves to UBS. The group managed $423 million. Morgan is currently experiencing difficulties with advisors who are frustrated with tech issues and culture clashes following the merger with Smith Barney.

ING Groep (NYSE:ING) withdraws from another profitable unit, this time its United Kingdom machinery leasing operation, as it continues to raise cash. This new move will leave a void in the British economy since ING was the major in that particular market.

The mortgage real estate investment trust sector is on edge following last night’s election results which assure that the Federal Reserve will continue to press on the leveraged operators’ net interest margins. Annaly Capital Management (NYSE:NLY) may the purest of the pure-play agency REITs, but it is still feeling the effects from its weak earnings as posted on Monday and is now helping to lead sector firms such as American Capital Agency Corp. (NASDAQ:AGNC), Hatteras Financial Corp. (NYSE:HTS), and Two Harbors Investment Corp. (AMEX:TWO) to the downside.

Nasdaq OMX Group (NASDAQ:NDAQ) plans to offer retail investors a discount on orders starting early next year, as part of an effort to slowly increase the pressure on wholesalers and regain market share from off-exchange venues. The Nasdaq program would be comparable to the program introduced by NYSE Euronext (NYSE:NYX) in August, which places discounts on stock orders by fractions of a cent.

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JPMorgan Chase & Co. (NYSE:JPM) is said to be near a resolution with the Securities and Exchange Commission through which to end a inquiry into mortgage bonds issued by the firm’s Bear Stearns business. No settlement in this matter is expected to exceed the $550 million that Goldman Sachs (NYSE:GS) paid in 2010 over CDOs. However, after a settlement on the bonds JPMorgan will have to face another investigation by the Commission into mortgage bonds, along with lawsuits from New York States and the Federal Housing Finance Agency.

Shares of Allstate Corporation (NYSE:ALL) have shown weakness following Sandy, which has created a buying opportunity, according to Argus. The stock’s price has fallen almost 10 percent since the storm, and the analyst believes that insurers might only have to shell out between 40 and 50 percent of the losses involved. Further, the share’s multiples are below current levels, and the firm projects that its earnings per share should increase at an 8 percent long-term rate.

Carlyle Group (NYSE:CG) is raising $1.1 billion for a United States middle-market buyout fund which will aim at investments of between $25 million and $150 million. Already, the firm has invested in excess of $200 million of the cash, including the acquisition of Sunoco’s 330,000 barrels per day Philadelphia refinery.

MBIA (NYSE:MBI) third quarter earnings are being blamed upon deterioration in its commercial real estate exposures, and also “losses on insured RMBS transactions from ineligible mortgages”. The latter has to do with Bank of America Corporation (NYSE:BAC) not buying back bad paper, in particular. However, the firm remains “confident” it will settle the BofA litigation, and collect the put-back recoverables.

Fannie Mae (FNMA.OB) now anticipates posting an annual profit for the first time since 2006, while its third quarter net income of $1.8 billion compares to a $5.1 billion year-over-year loss in 2011, as an improving housing market permitted a $9 billion reduction in loan loss reserves to $67 billion. Similar to Freddie Mac (FMCC.OB), an increasing amount of the loan book, currently at 63 percent, is comprised of mortgages that were originated post-bubble, which means they have stellar credit ratings.

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Manulife Financial Corporation’s (NYSE:MFC) third quarter earnings show a loss that follows an approximate charge of $1 billion as the firm reconfigures its macro assumptions. As for operations, Manulife is impacted by low interest rates and moves its target of $4 billion in annual core earnings forward from 2015 to 2016.

JPMorgan Chase & Co. (NYSE:JPM) says on its 10-Q that the Federal Reserve does not oppose its $3 billion share buyback plan set for the first quarter of next year. In addition, the company says that it has made an agreement in principle with the Securities and Exchange Commission in regards to the inquiry into mortgage-based securities issued by Bear Stearns.

WisdomTree Investments (NASDAQ:WETF) sees Research Affiliates withdrawing its patent infringement lawsuit against it, reporting that “All claims will be dismissed with prejudice.” For its part, the former plaintiff’s Chief execuitve Bob Arnott said that his firm “acknowledge that WisdomTree’s fundamentally-weighted indexes and strategies were developed (independently).”

Observers are noting the difference in management attitudes between the mortgage players Ellington Financial (NYSE:EFC) and Annaly Capital Management (NYSE:NLY). Both firms are highly aware of problems that arise from the Federal Reserve’s involvement with the mortgage-backed securities market, but Ellington, through its earnings call, exudes optimism in regards to the trading opportunities which will surely come, while Annaly says that the “balance sheet is not a trading vehicle.”

HM Revenue & Customs of the United Kingdom has set up an inquiry into HSBC Holdings (NYSE:HBC). The Daily Telegraph reports that the bureau is looking at the company’s offshore accounts in island of Jersey, held by thousands of British and by other citizens.

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It is thought that United Kingdom authorities will soon begin arrests of former traders at Barclays (NYSE:BCS), The Royal Bank of Scotland (NYSE:RBS), and UBS (NYSE:UBS) linked to the Libor issue, according to an inside source. However, arrests do not necessarily indicate that charges will be filed, but rather enable prosecutors to more closely question those persons involved.

On Thursday, District Judge Denise Cote turned down most of a Merrill Lynch request to dismiss a lawsuit from the Federal Housing Finance Agency which claims that Bank of America Corporation’s (NYSE:BAC) Merrill Lynch unit made negligent misrepresentations and committed fraud linked to the mortgage bonds it sold between 2005 and 2007.

JPMorgan Chase & Co. (NYSE:JPM) resumes its stock repurchase plan and expects to buy up to $3 billion of its stock back during the first quarter of next year. The company placed these buybacks on hold in the wake of the $6.5 billion “London Whale” faux pas.

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MetLife (NYSE:MET) is poised to acquire Constitution Center for $750 million in a transaction that would represent the highest price ever paid for a District of Columbia office building. However, this price is somewhat below the $900 million that some brokers had expected. MetLife unloaded Stuyvesant Town – Peter Cooper Village at the market peak back in 2006.

ING U.S. (NYSE:ING) has filed for an initial public offering. The company had $166 billion in assets under management in its investment management division as of the end of last year and its life and employee benefit insurance operations contributed approximately an additional $270 million. The firm’s profit was $277.8 million before taxes in 2011.