Weekly Financial Biz Recap: BB&T Expands, MasterCard Earnings
Citigroup (NYSE:C) chairman Richard Parsons is contemplating resignation, sources say. After just three years on the job, it may be a bullish sign for Citi’s progress and health. Parsons, who helped lead the company through the financial crisis, has said in the past he would stay until the company is on solid ground. A decision is expected by early March.
Deutsche Bank (NYSE:DB) allowed hedge fund Paulson & Co. to select mortgage-backed securities and then bet against the securities without telling other investors. The Securities Exchange Commission is reportedly investigating this Collateralized Debt Obligation transaction. Goldman Sachs (NYSE:GS) also settled a similar suit with the Securities Exchange Commission for $500 million.
Deutsche Boerse (DBOEY.PK) and NYSE Euronext (NYSE:NYX) are hopeful their merger will go through with help from European Union financial regulator Michel Barnier. Not only hopeful that Barnier will go to bat for them, but the exchanges also hope Angela Merkel will lobby for the deal at the European Union meeting today.
TD Bank (NYSE:TD) will take a $255 million charge in the first quarter (after-tax, roughly 10% of expected profits), after it was hit with a $67 million verdict against it earlier this month, related to its role in Scott Rothstein’s $1.2 billion South Florida Ponzi scheme. This is just the first of several lawsuits to go to trial.
CIT Group Inc.’s (NYSE:CIT) fourth quarter easily beats estimates, despite a 59% year-over-year drop in profit. The commercial lender saw reduced benefits from fresh-start accounting. A decline in problem loans and borrowing costs helped to beat analysts’ expectations, as loan volume increased across all business segments. It also redeemed about $860 million of high-cost debt during the quarter.
American International Group, Inc. (NYSE:AIG) and General Motors Company (NYSE:GM) will ultimately be hurt by the Troubled Asset Relief Program. TARP will impact AIG and GM in that the gains of $37 billion last year for the program will swing to losses of $23 billion in fiscal year 2012, which will result in steep declines in their share prices. Still, as of October, the Treasury had recouped $316 billion of the nearly $411 billion it used for bailouts.
Morgan Stanley (NYSE:MS) has an underwriting role in the filing of preliminary paperwork on behalf of Facebook for a $5 billion initial public offering, reports IFR. Also taking a role are Goldman Sachs (NYSE:GS), Bank of America (NYSE:BAC), Barclays Plc. (NYSE:BCS), and JPMorgan Chase & Co. (NYSE:JPM) which are also part of the syndicate, sources close to the deal say.
Credit Suisse (NYSE:CS) former employee David Higgs pleads guilty. He fesses up to conspiracy, as United States prosecutors file criminal charges against former Credit Suisse traders alleging they misstated the value of mortgage bonds, an issue central to the 2008 financial crisis.
CME Group Inc. (NASDAQ:CME) announced it will implement a special yearly dividend. The special dividend will be paid with it quarterly dividend which the group raised.
MasterCard (NYSE:MA) traded up as the company beat fourth quarter earnings per share estimates even though it missed revenue. Mastercard took a one-time charge for a pending legal situation, but earnings gave the report had a positive outlook.
Bank of America Corporation (NYSE:BAC), JPMorgan Chase & Co. (NYSE:JPM), Wells Fargo & Company (NYSE:WFC): Attorney General Eric T. Schneiderman filed a lawsuit against several of the nation’s largest banks charging that the creation and use of a private national mortgage electronic registry system known as MERS has resulted in a wide range of deceptive and fraudulent foreclosure filings in New York state and federal courts, harming homeowners and undermining the integrity of the judicial foreclosure process. The lawsuit asserts that employees and agents of Bank of America (NYSE:BAC), J.P. Morgan Chase (NYSE:JPM), and Wells Fargo (NYSE:WFC), acting as “MERS certifying officers,” have repeatedly submitted court documents containing false and misleading information that made it appear that the foreclosing party had the authority to bring a case when in fact it may not have.” The lawsuit further asserts that the MERS System has effectively eliminated homeowners’ and the public’s ability to track property transfers through the traditional public records system.
BAC shares recently traded at $7.77, up $0.32, or 4.3%.
JPM shares recently traded at $38.16, up $0.61, or 1.62%.
WFC shares recently traded at $30.53, up $0.63, or 2.11%.
Genworth Financial Inc. (NYSE:GNW) reported a fourth quarter profit of $107 million (22 cents per share), compared to a loss of $161 million a year earlier.
GNW shares recently traded at $9.14, up $1.1, or 13.68%.
Mastercard Incorporated (NYSE:MA) CEO Ajay Banga said Facebook was a “huge opportunity” for the industry. These comments came on investor fears that this would create competition for payment companies such as Visa (NYSE:V), MasterCard (NYSE:MA) and American Express (NYSE:AXP) after Facebook earned $557 million from ‘payments and other fee revenue’ in 2011, and it “may seek to extend the use of Payments to other types of apps in the future.”
MA shares recently traded at $390.00, up $8.43, or 2.21%.
BB&T Corp. (NYSE:BBT) announced that it has reached an agreement to acquire the life and property and casualty insurance operating divisions of Roseland, N.J.- based Crump Group Inc. Crump is the largest independent wholesale distributor of life insurance and one of the largest providers of wholesale commercial insurance brokerage and specialty programs in the U.S. Under the terms of the agreement, BB&T will acquire Crump Life Insurance Services and Crump Property & Casualty Insurance Services for $570M in cash. The transaction, which exceeds BB&T’s acquisition criteria, is expected to add approximately $300M in annual revenue to BB&T Insurance. BB&T expects to record approximately $570M of intangibles as a result of this acquisition. The transaction, which is subject to regulatory approval, is expected to close in the first quarter. This transaction does not include Crump’s retirement services business – Ascensus. John Howard, president and chief executive officer of Crump Group, will join BB&T Insurance operations in a senior leadership position reporting to Reece.
BBT shares recently traded at $29.07, up $1.05, or 3.75%.
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