Barclays Slashes 2,000 Jobs, UBS Faces Million Dollar Fine: Weekly Financial Biz Recap

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

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Among Canada’s lenders in 2012, Royal Bank of Canada (NYSE:RY) and National Bank of Canada (NTIOF.PK) led the 7.5 percent jump in bonus awards, resisting a world trend of pay cuts in New York and in London. Royal Bank, which is the country’s largest by assets, and National Bank, the sixth-largest lender, increased variable compensation by 11 percent in the year ended October 31st, representing the heftiest rises among the main banks. Toronto-Dominion Bank (NYSE:TD), the second-biggest of the lenders, raised incentive compensation by 7.8 percent to C$1.56 billion while Bank of Nova Scotia (NYSE:BNS), the third-largest lender, elevated performance-based compensation by 9.4 percent to C$1.48 billion, marking the third-highest percentage increase of the firms. Of the group, Canadian Imperial Bank of Commerce (NYSE:CM) was the only one to shrink its bonus pool, cutting 2 percent from its 2011 allocation.

As if the Libor matter were not enough, banks now have to worry about the Euribor, or the euro interbank offered rate, which is increasingly being challenged. Knowledgeable sources believe that the European Union will soon accuse multiple banks of attempted collusion in the setting of Euribor.  Barclays (NYSE:BCS) has already admitted its attempts to rig the rate and other banks will probably be pressured by regulators in the United States, the United Kingdom, and elsewhere into confessions, say industry and regulatory officials. UBS (NYSE:UBS) could be next, say inside sources, as that bank nears settlement of regulator claims that it tried to rig rates including Euribor.

While many banks in Europe are having to divest loan portfolios so as to raise capital and to meet stress testing, Bank of America Merrill Lynch (NYSE:BAC) emerges as one of the largest buyers, having purchased a minimum of $9.44 billion worth of loans since late 2011, including a $1.2 billion portfolio of Latin American loans from The Royal Bank of Scotland (NYSE:RBS). The firm holds some of the assets through which to deepen client relationships and profitably divested the remaining loans to end investors. However, BofA has seen formidable competition from other buyers including Citigroup (NYSE:C), Barclays and hedge funds.

The hundreds of senior managers at Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB) who earned in excess of $200,000 in 2011 saw their take-home pay levels investigated by the inspector general for the Federal Housing Finance Agency, which report is slated for release Monday. Last year was when the United States Congress threatened to significantly slash the pay of rank-and-file employees by placing the firms on federal wage scales.

On Monday the United States Treasury Department said that it has initiated an underwritten public offering for its remaining 234,169,156 common shares of American International Group (NYSE:AIG). Upon completion of the offering, the Treasury would continue to hold warrants to purchase the firm’s common stock that were also issued as part of its participation in Treasury programs. Goldman Sachs (NYSE:GS), JPMorgan Securities (NYSE:JPM), Bank of America Merrill Lynch, Citigroup, and Deutsche Bank Securities have been retained as joint bookrunners for the offering.

Inside sources believe that Morgan Stanley (NYSE:MS) might in the near term request that United States regulators allow it to repurchase shares for the first time in more than four years, adding that as soon as next month, the firm might ask the Federal Reserve about the matter as part of the annual “stress-test” process. The tests were begun in 2009 as a way to assure investors that the largest banks could withstand a financial crisis and have also been employed to determine banks’ ability to pay dividends or repurchase shares.

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The largest manager of real estate private-equity funds, The Blackstone Group (NYSE:BX), looks to raise more than $2 billion for its first property pool concentrated on Asia, according to an inside source, who added that the exact amount has not yet been set. President and Chief Operating Officer Tony James said that, “We’re now starting an Asian real estate fund. These are unique products and they’re unique products in an asset class that investors increasingly want. It’s hard assets.”

Genworth Financial (NYSE:GNW) reported in a Tuesday release that its board has named Thomas J. McInerney as the firm’s President, Chief Executive Officer and Board Member, effective January 1st. McInerney previously held senior leadership positions at both ING Groep (NYSE:ING) and Aetna Financial Services (NYSE:AET), having served most recently as an advisor to The Boston Consulting Group. James S. Riepe will continue as Genworth’s non-executive Chairman of the Board.

The fifth largest bank in the United States by deposits, Capital One Financial Corporation (NYSE:COF), has been advised by the Federal Reserve to not pursue more large near-term deals subsequent to its $9 billion purchase of ING Groep NV’s domestic online banking business, say inside sources. The Fed is currently telling the big banks to drop all but the smallest purchases while  a debate regarding the risk large lenders pose to the financial system rages on.

In a Wednesday release, Berkshire Hathaway (NYSE:BRKA)(NYSE:BRKB) says that it has bought 9,200 of its Class A shares at $131,000 per share from the estate of a long-time shareholder. The board authorized this purchase while elevating the price limit for repurchases to 120 percent of book value. Accordingly, Berkshire may buy additional shares in the market or via direct offerings at no more than that amount.

NorthStar Realty Finance Corp. (NYSE:NRF) said Wednesday that it has priced an underwritten public offering of 25 million shares of common stock at a public offering price of $6.40 per share. Underwriters were allowed a 30-day option to buy as many as 3.75 million additional shares of common stock and the offering should close on December 17th. NorthStar will use the net proceeds to make investments relating to its business, to buy back or pay its liabilities and for general corporate purposes.

Deutsche Bank’s (NYSE:DB) Frankfurt headquarters were searched by prosecutors investigating an alleged tax evasion plan that involved the trading of carbon permits, according to the firm on Wednesday. The bank suspended a number of employees in October following criticism by a judge in 2011 during a trial into tax evasion on carbon permits, according to financial source.

Barclays (NYSE:BCS) will slash up to 2,000 jobs in its investment bank as it conducts a broad restructuring, according to inside sources, as the firm becomes the most recent player in a worldwide series of banks that are reducing costs. The job cuts should be announced early in 2013, but would affect a relatively small slice of Barclays’ total investment-banking workforce of about 23,000 full-time employees.

Thomson Reuters Corporation (NYSE:TRI) supplies data that is responsible for the administration of the Libor and now wants to run a stricter new system following assurance by regulators in the United Kingdom that it is not being examined over attempts to rig world interest rates. The Financial Services Authority has said that the future administration of Libor should still to be operated by a private organization. Managing Director Martin Wheatley wants to set up links between the submissions from banks and transactions on markets to reinforce Libor’s credibility.

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UBS (NYSE:UBS) may be fined more than $1 billion by regulators in the United States and the United Kingdom for attempts at rigging world interest rates, a figure that represents more than double the amount levied against Barclays, according to an inside source. Penalties from the Commodity Futures Trading Commission, the Financial Services Authority and the Justice Department could be announced by next week, said the source, who added that the final figures are still being negotiated and are subject to modification. Meanwhile, The Royal Bank of Scotland Group (NYSE:RBS) is in discussions with U.S. and U.K. authorities to resolve issues regarding Libor and that fine is likely to be more than for Barclays and under the amount levied against UBS as well.

On Thursday, Harbinger Gr0up (NYSE:HRG) announced that its registered secondary public offering of 20 million shares of common stock by Harbinger Capital Partners Master Fund I, Harbinger Capital Partners Special Situations Fund, and Global Opportunities Breakaway has been priced at $7.50 per share.  Also, the underwriters have an option for 30 days to purchase up to an additional 3 million shares.  The firm will neither sell shares nor receive any proceeds from the offering.

The lengthy legal battle between Bank of America Corporation (NYSE:BAC) and the insurer MBIA (NYSE:MBI) might be near resolution early next year, subsequent to recent maneuvers involving the latter’s bonds, according to analysts at CreditSights. In November, MBIA reached the necessary approval of bondholders to modify the terms of a portion of its debt in the face of Bank of America’s attempt to block the change, resulting in bank’s negotiating leverage being reduced, but increasing the likelihood of a settlement.

On Thursday, Deutsche Bank (NYSE:DB) announced that it has finalized the formal establishment of its non-core operations unit, which was initially reported as a part of the Bank’s Strategy 2015+ in September. The bank has now completed the NCOU’s financial reporting, governance structure, and relationship with the core business units.

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CNO Financial Group (NYSE:CNO) said Thursday that its board has okayed an additional $300 million to buy back its outstanding common stock, warrants and convertible debentures. Thus far, the firm has repurchased 7,554,416 shares of its common stock in the fourth quarter at an average price of $9.32. With the new authorization, total buyback capacity is now roughly $360 million.

JPMorgan Chase & Co. (NYSE:JPM) Co-Chief Operating Officer and Chief Executive Officer of Chase Mortgage Banking Frank Bisignano released a statement that said, “We share Governor Cuomo’s urgency in helping our neighbors recover from Superstorm Sandy. We have been working closely with our customers so they can get back on their feet. We have a number of programs to help with hardships.”

UBS (NYSE:UBS) is now in final negotiations with American, British and Swiss authorities to resolve claims that its employees reported false rates in a deal in which the bank’s Japanese division is expected to plead guilty to a criminal charge, say knowledgeable sources, who added that UBS could face  about $1 billion in penalties and regulatory sanctions. United States prosecutors are said to be close to obtaining a guilty plea from a UBS subsidiary of the first big bank to agree to criminal charges in more than ten years. In June, Barclays (NYSE:BCS) agreed to shell out $450 million to settle accusations that it influenced crucial benchmarks.

American International Group (NYSE:AIG) announced Friday the finalization of an offering of around 234.2 million shares of AIG common stock by the Treasury Department which received proceeds of about $7.6 billion from the sale. The sale of the last of the Treasury’s remaining shares of AIG represents the full settlement of the government’s financial support of the firm.

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The NASDAQ OMX Group (NASDAQ:NDAQ) announced late Thursday that its board has named its Interim Chairman as Börje E. Ekholm. Ekholm has been the interim chairman since May 25th of this year, subsequent to the retirement from the board of Chairman H. Furlong Baldwin.

Chief Executive Brian Moynihan of Bank of America Corporation (NYSE:BAC) said on Friday that the taxpayer-supported Fannie Mae and Freddie Mac should remain as policymakers come up with the right balance of government support for home purchases. Moynihan also commented that it is regulatory uncertainty that is keeping the return of private capital to the mortgage market, however, cautioning that Fannie and Freddie should not be eliminated without first building a housing finance system for future use.

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