Weekly Financial Biz Recap: Berkshire Hathaway and Euro Banks Lead the Way
Former American International Group (NYSE:AIG) CEO Maurice “Hank” Greenberg believes says the U.S. Treasury will hold onto its 77 percent AIG stake “for a very long time” before it can recover its investment. In order for the Treasury to break even on the investment, it would need to sell the remaining shares at an average price of $28.72; they previously sold 200 million AIG shares $29 per share in May, decreasing its holdings from 92 percent.
Genworth Financial, Inc. (NYSE:GNW) saw its stock jump after Citigroup increased its rating to Neutral. The company cited Genworth’s 2012 plan to sell its 40 percent stake in their Australian mortgage-insurance business through an IPO.
E*Trade Financial Corporation’s (NASDAQ:ETFC) efforts to find a buyer didn’t work out because of the firm’s inheritable legacy loan portfolio, which may be valued at approximately $1.3 billion less than than what’s on the books, according to Raymond James. The question remains on whether Citadel Investment Group will sell its 9.6 percent holdings or again push the firm to sell.
According to a Bloomberg analysis, the largest U.S. money market funds cut their Deutsche Bank AG (NYSE:DB) investments by $8.1 billion in October. This represents the largest drop among the 35 major Western lenders; however, it is only three percent of Deutsche Bank’s overall funding.
French banks have fared much worse. They have lost 78 percent ($61.3 billion) of their money market funding during the last year.
Goldman Sachs Group Inc. (NYSE:GS) and Morgan Stanley (NYSE:MS) may reduce their mark-to-market accounting practices and increase their historical cost accounting. The two firms are unhappy that market swings, especially down ones, are taking such a big hit on their earnings.
One example: Goldman took close to a $1 billion mark in the third quarter on its fixed-income holdings.
Investing Insights: Bernanke: Treasuries Still Safe Haven Despite Downgrade.
Regions Financial Corp. (NYSE:RF) has been negotiating again with Stifel Financial Corp. (NYSE:SF) to potentially sell its Morgan Keegan unit. The company recently received lower bids from private-equity firms, according to a Bloomberg article. High bids had allegedly come in around $750 million while Stifel had previously indicated it was willing to pay more than $1 billion for Morgan Keegan.
Talks had ceased after Regions expressed concerns about Stifel completing the deal.
Invesco Ltd.’s (NYSE:IVZ) stock jumped after reporting assets under management rose 6.2 percent month over month to $635.7 billion thanks to positive market returns, net inflows and foreign exchange. The company expects improving flow trends despite current economic conditions.
The Securities and Exchange Commission charged UBS Securities LLC (NYSE:UBS) for ”inaccurate recording practices” on short sale transactions. UBS settled with the regulatory agency for an $8 million penalty. They will also will retain an independent consultant.
Lloyds Banking Group PLC (NYSE:LYG) reported its third quarter pretax profit declined 21 percent to £644M ($1.03 billion) as compared to the previous quarter. This came in below the £754M forecasts. Revenue was £5.07 billion, also not meeting its £5.21 billion estimates.
The company also noted it may not meet its 2014 goals because of the current weak economy and it has started spin-off talks with the U.K. Listing Authority as well the listing for the potential divestiture of 632 retail bank branches.
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Societe Generale Spo (SCGLY.PK) saw its third quarter net profit decline 31 percent to €622M ($855 million), well below the €858 million forecasts. Revenues rose 4 percent to €6.5B. The company also took a €333 million pretax write down in the quarter on its Greek sovereign debt holdings.
Morgan Stanley’s (NYSE:MS) Morgan Stanley Infrastructure Partners (MSIP) sold its 50 percent stake in the Chilean SAESA Group (SAESA) to Alberta Investment Management for an undisclosed amount. The sale was done by the investment bank as a capital-raising move.
In effort to curtail damage on the global economy from its possible failures, Citigroup Inc. (NYSE:C), JPMorgan Chase & Co. (NYSE:JPM), BNP Paribas SA (NYSE:BNP), Royal Bank of Scotland Group Plc (NYSE:RBS), and HSBC Holdings Plc (NYSE:HBC) may see capital surcharges of 2.5 percentage points, up from the 1.5 minimum level, according to 29-bank list published by the Financial Stability Board on Nov. 4.
Bank of America Corp. (NYSE:BAC) may further reduce its China Construction Bank Corp. holdings, according to a newspaper report. In August, the bank sold half of its 10 percent stake. This past weekend, BofA contacted China Construction and said they may sell part of its remaining stake in an effort to increase its capital. Neither party has commented.
Berkshire Hathaway Inc. (NYSE:BRKA) had an active third quarter investing the most money during any quarter in 15 years, according to a SEC filing. The firm’s stock holdings haven’t been filed but insiders say the $23.9 billion invested falls outside the usual consumer product and banks companies.
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Jefferies (NYSE:JEF) caught a bid after the company cut its long and short holdings of Euro sovereign debt 49.5% to $1.1 billion. Jefferies claims net long exposure to the asset class is now merely $59 million.
In the third quarter, Citigroup Inc. (NYSE:C) invested about $800 million of shareholders’ money in its own private-equity and hedge funds called “Citi-advised” funds. The bank subsequently sold $1.1 billion of separate hedge-fund and private-equity assets, according to a SEC filing. Regulators are trying to curtail this type of practice under the Volker Rule.
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