Financial Sector Review: Goldman Op-Ed, 5 Big Banks Pay New York $25M
Zions Bancorporation (NASDAQ:ZION): The Federal Reserve formally notified Zions Bancorp that it does not object to Zions’ Capital Plan, submitted pursuant to the Federal Reserve’s 2012 Capital Plan and Review, or CapPR. Key elements of Zions’ Board-approved Capital Plan include: Redemption in its entirety of $1.4B of Zions’ TARP, or Troubled Asset Relief Program, preferred equity in 2012. This redemption is expected to occur in two installments of $700M each; Zions expects to redeem the first $700M after receipt of U.S. Treasury approval; Zions expects to apply to the U.S. Treasury for such approval within the next week. The second $700M installment is also contingent on: maintenance of adequate parent company liquidity; the return of $500M of capital from Zions’ subsidiary banks to the parent in 2H of 2012, which requires primary bank regulator approval; and no material deterioration in the company’s overall condition. Total cumulative issuance of approximately $600M of senior debt. Timely redemption of $255M of TLGP, or Temporary Liquidity Guarantee Program, debt upon its maturity in June 2012. No change to the current common stock dividend of 1c/share per quarter through 2012. No common or preferred equity issuance is required. No redemption of Zions’ Series E preferred shares in 2012. Among other metrics examined, the Fed explicitly stated that the subject bank’s Tier 1 common equity to risk weighted assets would need to remain above 5% throughout the scenario period. Using those assumptions, Zions projected that its Tier 1 common ratio would fall to no lower than 7.9%.
The shares closed at $21.58, up $2.05, or 10.5%, on the day. Its market capitalization is $3.97 billion.
Metlife Inc (NYSE:MET): MetLife (NYSE:MET) CEO Steve Kandarian says company executives don’t understand how regulators came up with their numbers after they failed the Fed’s stress test, reports the Wall Street Journal. We don’t know all the details of how they got [to the failing grade], Kandarian says. They’ve given generic comments, but we’ve been unable to connect our numbers with theirs.
The shares closed at $37.16, down $2.3, or 5.83%, on the day. Its market capitalization is $39.40 billion.
Bank of America Corp (NYSE:BAC), Citigroup Inc. (NYSE:C), JPMorgan Chase & Co. (NYSE:JPM), Wells Fargo & Company (NYSE:WFC): Five U.S. banks agreed to pay $25M to New York State over their use of the Mortgage Electronic Registration System, an electronic mortgage database that the state said resulted in deceptive and illegal practices that led to more than 13,000 foreclosures, reports Reuters. The banks are JPMorgan Chase (NYSE:JPM), Bank of America (NYSE:BAC), Wells Fargo (NYSE:WFC), Citigroup (NYSE:C) and Ally Financial.
BAC shares closed at $8.84, up $0.35, or 4.12%, on the day. Its market capitalization is $94.87 billion. C shares closed at $35.21, down $1.24, or 3.4%, on the day. Its market capitalization is $103.12 billion. JPM shares closed at $43.58, up $0.19, or 0.44%, on the day. Its market capitalization is $166.36 billion. WFC shares closed at $33.37, up $0.04, or 0.12%, on the day. Its market capitalization is $175.97 billion.
Goldman Sachs Group, Inc. (NYSE:GS): In an op-ed published in the New York Times, a Goldman Sachs (NYSE:GS) executive, Greg Smith, explained he was resigning as executive director and head of U.S. equity derivatives in EMEA after being at the firm for 12 years because, “the interests of the client continue to be sidelined in the way the firm operates and thinks about making money.” In listing his complaints, Smith wrote that staff were expected to, and promoted for, executing on “axes” or “persuading your clients to invest in the stocks or other products that we are trying to get rid of because they are not seen as having a lot of potential profit.” He also said executives were encouraged to Hunt Elephants, or get clients “to trade whatever will bring the biggest profit to Goldman.” Smith stated, “It makes me ill how callously people talk about ripping their clients off” and urged the company’s board to “Make the client the focal point of your business [and] get the culture right again.”
The shares closed at $120.37, down $4.17, or 3.35%, on the day. Its market capitalization is $59.57 billion.
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