UBS Tries to Block Suit, U.S Drops Probe on Wells Fargo: Weekly Financial Biz Recap

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

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In a Monday Shanghai release, the media and branding firm Acorn International (NYSE:ATV) said that it has reached an Insurance Business Cooperation Agreement with United MetLife Insurance Co., which is a joint venture firm established by certain wholly-owned subsidiaries of MetLife (NYSE:MET) and Shanghai Alliance Investment Ltd. MetLife is a top worldwide provider of insurance, annuities and employee benefit programs.

Banco Bilbao Vizcaya Argentaria (NYSE:BBVA) intends to divest its first covered bond in 20 months, employing its mortgage division to raise less expensive funds than the government of Spain pays for debt of a similar maturity. To that effect, the bank is offering investors 260 basis points above the reference midswap rate for the five-year bond, while the benchmark government bonds maturing in July 2017 are currently trading at about 365 basis points, a full percentage point higher, says Tradeweb.

Bruce Berkowitz says that American International Group (NYSE:AIG) needs to cut its expenses, which should happen over time, though there has been a large amount of time and energy used in dealing with the Federal Reserve and the United States Treasury along with establishing new information systems. Stock manager Berkowitz added that, “They’re also moving away from low-frequency, high-severity insurance which, in my opinion, is picking up pennies in front of a steamroller. But, I think Peter Hancock, who runs their property-and-casualty business, understands that the one-in-100-year storm happens every five years.”

Zürich-based UBS (NYSE:UBS) attempts to block a United States lawsuit concerning billions of dollars worth of mortgage bonds in a case that could impact government endeavors to recover losses that Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB) suffered during the housing crash. In the United States Court of Appeals in Manhattan Monday, UBS contended that a decision which allows the Federal Housing Finance Agency to pursue its suit in regards to losses on $6.4 billion in mortgage bonds sold to Fannie and Freddie should be overturned. The agency that oversees the two was established in 2008 and the central question is whether that agency also extended the time which the government had to file claims against UBS and a group of other lenders.

Data from Goldman Sachs (NYSE:GS) finds that only 13 percent of what it calls the smartest money on the Street is outperforming the S&P 500 and that 20 percent of all hedge funds are actually in the red during the current year. Even more to the downside, the research indicates that hedge fund managers have pushed into the same trades with turnover standing at a record low. More specifically, investors in hedge fund are currently paying 2 percent fees up front and then 20 percent of profits to the managers.

In a Monday release, Vice chairman and Chief Executive of Fifth Third Bancorp (NASDAQ:FITB) Kevin T. Kabat said that Executive Vice President and Chief Credit Officer Bruce Lee will step down at the end of 2012 for personal reasons. Lee had joined the company in 2001 at he time of the  acquisition of Capital Bank, N.A., headquartered in Toledo, in which he served as executive vice president and senior loan officer.

The United Kingdom was surprised at Monday’s appointment of Mark Carney, the current governor of the Bank of Canada, as the new governor of the Bank of England. Along with his mentioned position, Carney is also chair of the global Financial Stability Board (FSB). However, observers are wondering just what the choice might entail for the U.K. banking industry. From Switzerland, UBS (NYSE:UBS) believes that the appointment allows the regulatory environment in the UK to be reshaped into one that carries a more conciliatory tone, as Carney wants banks to be more robustly capitalized, but it might be expected that such results might be more broadly balanced under his tenure. Further, UBS now thinks that the risks linked with investment in United Kingdom banks are reduced, and thus has upgraded The Royal Bank of Scotland (NYSE:RBS) to Buy. Meanwhile, shares of Lloyds Banking Group (NYSE:LYG) and Barclays (NYSE:BSC) also traded higher in London on Tuesday.

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Through a Wednesday release, Wells Fargo & Company (NYSE:WFC) has announced that its board of directors has chosen the retired partner of PricewaterhouseCoopers Howard V. Rick Richardson to add to the board’s Audit and Examination Committee effective January 1st. With Richardson’s election, the Wells Fargo Board increased to 16 directors.

Raymond James & Associates has named the Morgan Stanley Wealth Management (NYSE:MS) veteran John N. Dorsey as a senior vice president of investments and branch manager. Dorsey will be located in a new office in Huntington, West Virginia.

Triangle Capital Corporation (NASDAQ:TCAP) announced through a release that its board of directors has declared a cash dividend of 53 cents per share, marking its 24th consecutive quarterly dividend since its IPO in February of 2007, with the current dividend representing a 12.8 percent rise year-over-year from 2011. The dividend will be paid to shareholders of record as of December 12th to be distributed on December 26th.

Four nationalized banks of Spain, including Bankia (BNKXF.OB), will have to reduce their balance sheets by more than 50 percent in five years, slash jobs and impose losses on bondholders so as to receive a euro zone rescue package of €40 billion, or $52 billion, in hopes of ending the country’s banking crisis.  The plans were okayed by the European Commission on Wednesday, commencing one of the most far-reaching overhauls of any European banking system since the beginning of the banking crisis in mid-2007.

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Virtu Financial is currently the top bidder for Knight Capital Group (NYSE:KCG) in a potential transaction that might value the  brokerage firm in excess of $1 billion, according to inside sources. The latter’s board is expected to receive bids as early as this week from Virtu and also Getco, two of the rival high-speed trading companies.

Shares of MBIA (NYSE:MBI) do not seem to be much affected by its victory Monday over Bank of America Corporation (NYSE:BAC). The latter had made a tender offer for some of MBIA’s bonds, hoping to block the company from changing the terms of certain bond issues so as to protect its municipal bond insurance division in the event of a default by its securitization unit. However, MBIA successfully resisted Bank of America’s tender offer, igniting a one-day rally in its shares and giving back a modest portion of  Monday’s gains on Tuesday.

The Commodity Futures Trading Commission voted unanimously in a private process on Wednesday on a rule that requires Wall Street’s top swap dealers, including JPMorgan Chase & Co. (NYSE:JPM) and Goldman Sachs Group (NYSE:GS), to guarantee trades at clearinghouses beginning in March. The Dodd-Frank rule was scheduled for a public vote and it determines which credit and interest rate swaps have to be be guaranteed at clearinghouses owned by CME Group (NASDAQ:CME), Intercontinental Exchange (NYSE:ICE), and LCH Clearnet Group.

Citigroup’s (NYSE:C) trading and investment-banking division intends to cut 150 additional jobs while reducing bonuses by as much as 10 percent, according to two knowledgeable sources. The dismissals are set for the current quarter and should impact units that include equities trading and underwriting. However, the sources added that top performers are likely to be spared bonus reductions.

In a Wednesday securities filing, Wells Fargo & Co. (NYSE:WFC) said that United States regulators have dismissed their investigation into the firm’s mortgage securities offerings. The Securities and Exchange Commission advised the bank on November 20th that it closed its inquiry and does not intend to recommend an enforcement action. The Commission has been generating such cases which involve mortgage securities linked with  the financial crisis, including entering into $417 million in resolutions thus far in November with Credit Suisse Group (NYSE:CS) and JPMorgan Chase & Co.

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Mitsubishi UFJ Financial Group (NYSE:MTU) is reportedly in discussions to purchase a 49 percent interest in Bank of America Merrill Lynch (NYSE:BAC) out of a private banking joint venture, according to knowledgeable sources Thursday, who added that an official notice on such a deal, which could add up to approximately ¥40 billion, or $488 million, might be released in December. Such an acquisition could be highly beneficial to the buyer, the largest bank in Japan by assets, and also might boost coordination with its partner Morgan Stanley (NYSE:MS) in future asset management and private banking projects.

The Barcelona-based CaixaBank (CAIXY.PK) receives €600 million, or $778.7 million, from Berkshire Hathaway (NYSE:BRKA)(NYSE:BRKB) for the future cash stream from a portfolio of life insurance policies, according to the former on Friday. This move marks an unusual involvement into a fiscally troubled euro-zone country for Warren Buffett’s investment firm. Like many of its rivals, Caixa has large insurance operations.

The Royal Bank of Scotland Group (NYSE:RBS) announced on Friday that it will not divest its Indian retail and commercial unit to HSBC Holdings (NYSE:HBC) and instead intends to wind the business down. The arrangement that was first reported in 2010 collapsed because all the commercial terms of the deal couldn’t be satisfied, according to a statement by HSBC. In its own release, RBS said that its division in India is profitable and comprised total assets of £190 million as at September 30th.

China Construction Bank (CICHF.PK)(CICHY.PK) said Friday that it has finished repurchasing Bank of America Corporation’s (NYSE:BAC) shares through their joint venture, CCB Financial Leasing Corp., which means that the Chinese lender now fully owns the leasing company. The China Banking Regulatory Commission approved the transaction on Thursday. Currently, the joint venture has an initial capitalization of 4.5 billion yuan, or $720 million, and BofA holds 24.9 percent of that amount.

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The chief executive of Royal Bank of Canada (NYSE:RY) says that a proposed new rule by the Federal Reserve Governor Daniel Tarullo, subjecting foreign banks operating in the United States to the same strict oversight rules as their American competitors, would not have much impact on the Canadian firm, Canada’s largest bank. Canadian lenders RBC, Toronto-Dominion Bank (NYSE:TD) and Bank of Montreal have large operations in the US. The new rule would mandate that the largest domestic divisions of foreign banks set up holding companies that would cover all subsidiaries and holding companies would have to comply with the same capital rules that cover American banks.

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