Weekly Financial Biz Cheat Sheet: Stocks Up 6.5% After JP Morgan and Euro Banks
Dexia Chairman Jean-Luc Dehaene has resigned from the board of the now-nationalized Belgian bank division, but will remain on as Chair of the parent company.
Denizbank, a Dexia-owned bank in Turkey, is surging on speculation it will be sold as part of a restructuring plan for Dexia. Meanwhile, Dexia shares are also trading lower today as they resume trading in Belgium after being suspended last Thursday.
China’s SWF is stepping into the markets today to support the struggling share prices of 4 major banks: Commercial Bank, Agricultural Bank, Bank of China, and China Construction Bank. All 4 banks rose moderately against a steep decline in the broader market.
Oppenheimer (NYSE:OPY) has announced plans to repurchase up to 675K shares of its stock in a buyback that is expected to continue indefinitely. The size of the repurchasement represents roughly 5% of all outstanding shares.
Greece’s central bank has activated a rescue fund to nationalize Proton Bank, now being proved for money-laundering. Proton is the first bank to be rescued under the Financial Stability Fund.
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BNP Paribas and Societe Generale, France’s two largest lenders, are denying a report that they might look to raise a combined 11 billion euros as part of a wider EU bank recapitalization plan. Both banks say they will be able to reach Basel II targets without raising more capital.
“Rising healthcare costs and the impact of federal healthcare reform” have moved Wells Fargo (NYSE:WFC) to move employees into HSA-style accounts, which will have lower premiums but be funded with employees’ pre-tax dollars, thus encouraging them to spend less.
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David Hilder from SIG says Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS) may drop their statuses as bank holding companies in the wake of the Volcker rule, as market-makers not owned by banks will not have to comply with the rule.
Today the Wall Street Journal reported an outage at currency trading systems owned by Thomson Reuters (NYSE:TRI), disrupting FX markets during European trading. The technical problems created “bottlenecks”, according to traders, and affected price quotes.
A unit of AIG (NYSE:AIG) is offering companies insurance to offset the cost of PR disasters with policies that pay for bringing in outside experts when a crisis hits, even before the event becomes public. The policy would cover, “The sorts of things that a stakeholder would look at as a breach of trust,” according to one AIG executive.
Credit Suisse (NYSE:CS) is reportedly eliminating its entire CMBS unit, “An omen for the carnage to hit Wall Street,” according to Wall Street Journal reporter Dennis Berman.
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Raj Rajarnam, the co-founder of Galleon Group whom prosecutors have dubbed “the modern face of illegal insider trading,” has been sentenced to 11 years in prison, one of the longest terms ever handed down for an insider case.
In a repeat vote, the Slovak parliament ratified the expanded EFSF, as expected. The expanded rescue fund will now be allowed to bail out banks, among other things, a task once left up to individual governments.
Reporting lower profits in the last quarter, JPMorgan (NYSE:JPM) announced that it will cut 1,000 jobs at its investment bank. The news brought bank stocks lower today. Bank of America (NYSE:BAC) and Citigroup (NYSE:C) will report earnings next week.
Deutsche Bank (NYSE:DB) CEO Ackerman says his bank will do everything in its power to avoid being forced to recapitalize, saying it is sovereign debt, not capital levels, that threatens the health of European banks. “The key to the problem, therefore, lies with governments to restore trust in the solidity of state finances.”
Standard & Poor’s has lowered its rating for BNP Paribas (PINK:BNPQY) from AA to AA- while affirming its ratings of Societe Generale (PINK:SCGLY) and Credit Agricole (PINK:CRARY). “In our view, French banks have already started to adapt their funding profiles, especially with the issuance of long term debt,” said S&P in the statement announcing the decisions.
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About 25% of JP Morgan’s (NYSE:JPM) third-quarter profit resulted from debt valuation adjustments. Morgan Stanley (NYSE:MS) owes DVAs for $1 billion, while Goldman Sachs (NYSE:GS) earned $300 million.
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Looking to save some money, Royal Bank of Scotland (NYSE:RBS) has canceled Christmas for its investment bankers. AN e-mail from the bank’s CFO to employees advises them that holiday parties and staff entertainment won’t be subsidized this year as the bank looks to “further tighten and minimize the rate of spend on non-staff costs.”