UBS Nears Settlement, HSBC Could be Liable for $1.8 Billion: Weekly Financial Biz Recap
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UBS (NYSE:UBS) nears resolutions with American and British authorities over the manipulation of interest rates as it is anticipated that the Swiss bank will pay more than $450 million to settle claims that some of its employees reported false rates so as to increase profit, according to knowledgeable but anonymous officials. The authorities say that traders at UBS colluded with peer banks to influence rates in an endeavor to augment their profits and some were suspended in 2012 in regards to the matter. In reaction to the Libor situation, a reform movement gained traction after worldwide authorities reached a settlement with Barclays (NYSE:BCS), having accused that firm of similar misdeeds with rates. Other banks that are involved, such as The Royal Bank of Scotland (NYSE:RBS), are in advanced settlement discussions and in November, Deutsche Bank (NYSE:DB) said that it is setting reserves aside to cover potential fines.
Daniel Bailey, the head of tech at Citigroup (NYSE:C), is exiting as a part of the bank’s cost reductions, reacting to the stalled economic climate on the continent and also tougher regulation, said inside sources to Reuters on Monday. The resignation is immediately effective and Bailey will be replaced by the firm’s European head of mergers and acquisitions, Wilhelm Schulz.
In a Monday press release, American International Group (NYSE:AIG) said that its life and retirement division, AIG Life and Retirement, purchased Woodbury Financial Services from the Hartford Financial Services Group (NYSE:HIG). The parties had completed a definitive agreement for the acquisition on July 31st. Woodbury Financial Services is now a part of AIG Life and Retirements Advisor Group, which is one of the country’s largest networks of independent broker-dealers, and brings about 1,400 advisors and $25 billion in assets under management to the Advisor Groups network, including FSC Securities Corporation, Royal Alliance Associates and SagePoint Financial.
The surprise purchase last week of Archstone by SamZell’s Equity Residential (NYSE:EQR) and AvalonBay Communities (NYSE:AVB) is bringing back investor interest to apartment stocks after four months of decline. The parties paid $16 billion to buy Archstone from Lehman Brothers, ending a plan by the latter for an IPO of its biggest asset along with stopping a 13 percent slide in apartment stocks since their peak in July. The slump was begun by worries that rising homeownership and new construction would dampen landlords’ ability to hike rents as a giant share sale was dumped on the market.
Bank of America Corporation (NYSE:BAC) decides that this is not the time for new fees which could have impacted a minimum of 10 million customers by the end of 2012. The move to not hike checking account fees at least until late in 2013 comes during a sweeping review of the company’s retail-banking business, say inside sources. Meanwhile, other top banks like J.P. Morgan Chase & Co. (NYSE:JPM) and Wells Fargo & Co. (NYSE:WFC) are launching plans that should either raise fee revenues or force customers to do more business with them.
Glenn Hadden, the chief of interest rate trading at Morgan Stanley (NYSE:MS), is being investigated in regards to trades he made back in 2008 while employed with the competitor Goldman Sachs Group (NYSE:GS), according to a regulatory filing. Hadden has been credited with bringing part of Morgan Stanley’s bond-trading operation back after the financial crisis.
Berkshire Hathaway (NYSE:BRKA)(NYSE:BRKB) claims as much as $1 billion from the reinsurer Swiss Re (SSREF.OB) in a dispute in regards to a life insurance agreement between them in 2010, as was first reported on Monday by Insurance Insider. Swiss Re said in its third quarter earnings report that Berkshire Hathaway is “alleging damages of between $0.5 and $1 billion”, adding that the claim was without merit. Neither party was available for comments.
Chief Executive John Stumpf of Wells Fargo & Co. (NYSE:WFC) has told investors that the firm most recently acquired the energy lending division from BNP Paribas, but “it’s probably fair to say there’s been a little less activity.” While there has been pressure on banks in Europe from regulators who want them to boost their capital, funding has been forthcoming and several potential deals have already been completed and thus are no longer available to Wells.
Unicredito Italia (UNCFF.PK) UniCredit looks to sell a €750 million, or $977.5 million, five-year senior unsecured bond on Tuesday, one day following the bank’s adding €250 million to its recent 10-year subordinated bond which constitutes a riskier type of debt further down the line in the event of default. Even with the euro-zone debt crisis, investors who want yield are eagerly raising their exposures to that area and UniCredit is ready to take advantage. Thus far in 2012, the cost of insuring UniCredit’s senior debt against default has nearly been cut in half to 2.85 percent, says Markit, showing the extent to which the perception of risk has been assuaged towards the bank.
Fifth Street Finance Corp. (NYSE:FCS) reported in a Tuesday press release that it priced a public offering of 14 million shares of its common stock at a public offering price of $10.68 per share for total gross proceeds of $149.52 million with all shares being offered by the company. Morgan Stanley (NYSE:MS), Barclays (NYSE:BCS), Goldman Sachs Group (NYSE:GS), UBS Investment Bank and Wells Fargo Securities are lead book-running managers for the offering, with Raymond James and RBC Capital Markets as joint book-running managers for the offering. Janney Montgomery Scott LLC, SMBC Nikko, Gilford Securities Incorporated, and Maxim Group LLC are acting as co-managers.
BlackRock (NYSE:BLK) Chief Executive Larry Fink is staying put, he announced at the Goldman Sachs Financial Services Conference in New York on Tuesday, reacting to chatter that has him in the running to be the next Secretary of the Treasury.
James Giddens, the trustee who is monitoring the liquidation of the failed futures brokerage of MF Global (MFGLQ.PK), thinks that the more than 28,000 customer claims which have been filed will be fully resolved within the next few months, according to a report filed on Tuesday. However, Giddens said through the report that further distributions to those customers will depend greatly on the outcome of pending claims against the failed brokerage by its parent company, MF Global Holdings, and its United Kingdom affiliate.
WhiteHorse Finance (WHF) had to wait for its initial public offering until Wednesday afternoon, due to a “human error” at the Nasdaq Stock Market, said the exchange. The Nasdaq OMX Group (NASDAQ:NDAQ) inadvertently halted the IPO instead of simply pushing back the timing Wednesday morning, according to knowledgeable sources.
Standard Charterd.5 (SCBFF.PK), which is the United Kingdom’s number-two bank by market value, anticipates paying around $330 million to resolve regulators’ claims that transactions with Iranian clients violated United States sanctions. Finance Director Richard Meddings told journalists on Thursday that discussion with American authorities could be finished by the end of December, although the company is still negotiating with the Treasury Department, the Justice Department, the Federal Reserve and the Manhattan District Attorney’s office.
Europe’s largest bank, HSBC Holdings (NYSE:HBC), could be liable for a fine of $1.8 billion as part of its resolution with United States law-enforcement agencies in regards to money-laundering matters, say knowledgeable sources, which added that settlement will probably entail the firm entering into a deferred prosecution arrangement with federal prosecutors. The case is becoming a bellwether for just how far prosecutors want to go to attempt a curb on illicit flows of money moving through U.S. banks.
Toronto-Dominion Bank (NYSE:TD) is acquiring Epoch Holding Corporation (NASDAQ:EPHC) and its subsidiary Epoch Investment Partners for around $668 million in an all-cash purchase. Epoch Holding Corporation shareholders will receive $28 in cash per share, marking a bonus of about 28 per cent to Epoch’s close on December 5th. Mike Pedersen, Group Head of Wealth Management, Insurance and Corporate Shared Services for the buyer, said that, “We’ve been looking for an opportunity to acquire a U.S. asset manager to build our North American Wealth business, which is a key growth area for TD. It will broaden our offer for institutional and retail clients in Canada and will immediately and significantly strengthen our U.S. Wealth business.”
France’s largest insurer, Axa (AXAHF.PK)(AXAHY.PK), searches for buyers for life insurance assets in the United States which could be worth a minimum of $500 million, according to knowledgeable sources, who added that the firm is being advised by Morgan Stanley (NYSE:MS) on the potential sales, among which include remnants of the Mony Group business that Axa purchased in 2004. Axa’s other American operations include the investment manager AllianceBerstein Holding (NYSE:AB) and Axa Equitable Life Insurance Co.
Forget the fiscal cliff (or at least part of it), Chief Executive Steve Johnston of Cincinnati Financial Corporation (NASDAQ:CINF) seems to say, as he reported that his company will not allow the expected year-end increase in the dividend tax rate to affect the way executives see their dividend payments to shareholders. His company has raised its dividend for 52 straight years. At the NASDAQ OMX Investor Program, Johnston told investors that the possibility of dividend tax rates to far excess the current 15 percent rate is not a factor in its payment policy, adding that “We have paid dividends through a variety of different cycles of tax regimes and we feel that it has worked well in all tax regimes. We’ll keep a close eye on it, but we feel confident in our dividend strategy through all types of cycles.”
US Bancorp’s (NYSE:USB) senior debt rating has been downgraded at Moody’s Investors Service from Aa3 to A1 and the standalone bank financial strength rating/baseline credit assessment of U.S. Bank National Association, its lead operating bank, was lowered to from B+/aa2 to B/aa3. Additionally, US Bancorp’s long-term deposit rating was lowered to Aa3 from Aa2. These downgrades concludes the review for possible downgrade that began on September 20. The Prime-1 rating of US Bancorp was not on review and is unchanged with a stable outlook on the firm.
Chief Executive Jamie Dimon of JPMorgan Chase & Co. (NYSE:JPM) believes that the dreaded fiscal cliff matter will be settled at the last moment, says Matt Burnell of Wells Fargo & Co. (NYSE:WFC), subsequent to a meeting he had with Dimon. The latter, consequently, is not getting upset over the feeding frenzy about the fiscal cliff or new capital requirements for J.P. Morgan. Of this, Burnell wrote that, “This is because both caucuses will probably not be able to reach agreement without extreme pressure, although Dimon expressed the view that there are enough sensible people in DC who recognize the foolishness of going over the fiscal cliff (and risking the consequences) unnecessarily.”
The brokerage Morgan Stanley (NYSE:MS) has the largest corps of financial advisers and has now modified its wealth- management compensation plan so as to encourage brokers to grow revenue and to permit them to purchase discounted stock. The program, to begin in 2013, pays a bonus of 2 to 5 percentage points of revenue for advisers who recruit new assets and are in the top 40 percent in revenue growth, according a summary obtained Thursday by Bloomberg News.
The Charles Schwab Corporation (NYSE:SCHW) wants exchange traded fund firms to sign up for a new trading platform that would enable Schwab clients trade ETFs for free, according to Jessica Toonkel at Reuters, who added that “ETF providers, however, have been reluctant to sign on to Schwab’s plan because they would have to pay the firm a marketing fee they say is too high, according to people with knowledge of the discussions.” Presently, Schwab manages its own lineup of ETFs, which hold $8.3 billion in assets; the total domestic ETF market is about $1.3 trillion, says XTF.
Prospect Capital Corporation (NASDAQ:PSEC). in a Friday press release, declared revised monthly cash distributions to shareholders, representing an 8.2 percent rise from the prior announcement in early November, and marking a dividend yield of 12.8 percent based on the closing price as of December 6th, in the following amounts and with the following record and payment dates: 11 cents per share for December with record date of December 31st and payment date of January 23rd; and 11.0025 cents per share for January, with record date of January 31st and payment date of February 20th.
The National Bank of Greece (NYSE:NBG) said on Friday that it would be involved in a large bond repurchase plan that intends to lower the country’s debt load, while securing the disbursement of its international bailout loans. The government will spend approximately €10 billion, or $13 billion, in the buyback, which will offer between 30 and 40 percent of the face value. Since the bonds were trading at even lower prices than those on the secondary bond market, the government hopes that investors will respond to the offer.
Vantiv (VNTV) has recently priced a secondary offering of 12,454,545 shares of Class A Common Stock being sold on behalf of Fifth Third Bancorp (NASDAQ:FITB) which divestiture would mark around 15 percent of the latter’s ownership position in Vantiv, excluding a certain warrant. Fifth Third Bancorp’s purpose for the sale is to initiate monetization the remaining portion of its position in Vantiv in a considered, orderly fashion over time.