Financial Sector Review: Citigroup and 4 Major Mortgage Lenders Close to Settlement

Hartford Financial (NYSE:HIG) said that it would have difficulty maintaining competitive ratings if it separated its life insurance and P&C companies while allocating $6.8B in holding company debt. The company made the statements in a presentation slide this morning. In the event of a separation, the P&C companies would have to assume at least two-thirds of the debt, and could potentially have to take dilute deleveraging action in order to retain their “A” ratings, explained Hartfod. Furthermore, regulators could condition their approval of a spin-off on the companies making capital contributions, or executing keepwell agreements among themselves. In addition, a significant portion of the life insurance companies’ deferred tax assets could have to be written off, The Hartford added.

The shares closed at $20.58, up $1.46, or 7.64%, on the day. Its market capitalization is $9.17 billion.

Apollo Investment Corp. (NASDAQ:AINV): In order to capitalize on various proprietary market opportunities and to maintain an appropriate capital structure, the Board has authorized management to explore whether the Company should raise up to $200 million of additional equity capital, which may be conducted, among other means, through either a marketed deal or a rights offering. Apollo Global Management has informed the Company that it intends to support AINV’s equity capital raise, which in the case of a rights offering could include the exercise of oversubscription rights as a backstop for up to $50 million. In further support of an equity offering, Apollo Investment Management has informed the Company that it intends to waive its management and incentive fees associated with any shares issued through this offering. Additionally, Apollo Global Management may also purchase shares of AINV in the open market.

The shares closed at $7.11, down $0.83, or 10.45%, on the day. Its market capitalization is $1.40 billion.

Bank of America Corp (NYSE:BAC), JPMorgan Chase (NYSE:JPM), and Wells Fargo (NYSE:WFC) were sued by New York Attorney General Schneiderman over the use of a mortgage database that the state said led to improper foreclosures, Bloomberg Businessweek reports.

BAC shares closed at $8.13, up $0.28, or 3.57%, on the day. Its market capitalization is $85.66 billion.

Citigroup Inc. (NYSE:C): Five of the country’s biggest mortgage lenders–Bank of America (NYSE:BAC), JPMorgan Chase (NYSE:JPM), Wells Fargo (NYSE:WFC), Citigroup (NYSE:C) and Ally Financial–are moving closer to a $25B settlement over foreclosure abuses, and it’s now being understood that any deal will have little or no impact on their future bottom lines, reports Reuters.

C shares closed at $34.23, up $1.16, or 3.51%, on the day. Its market capitalization is $100.09 billion.

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