Weekly Financial Biz Recap: Deutsche Bank Inquiry, Wells Fargo Dominates Mortgage Market
CME Group Inc. (NASDAQ:CME) announces that it is applying to the United Kingdom’s Financial Services Authority for the creation of a London-based derivatives exchange, since more that 20 percent of its volume comes from Europe. Upon approval as a Recognized Investment Exchange, the firm will initially start the trading of foreign exchange futures, expected in mid-2013.
The board of JPMorgan Chase & Co. (NYSE:JPM) has named the former Exxon Mobil Corporation (NYSE:XOM) Chief Executive Lee Raymond as the chairman of a panel that’s looking into a possible involvement of JPM’s current Chief Executive Jamie Dimon in the bank’s multi-billion dollar “London-whale” trading fiasco, according to the Wall Street Journal. Former JPMorgan Director John Biggs says of Raymond that, “He won’t whitewash anything”, and a source agrees, remarking that he was “tough as nails” when at Exxon.
The next chief executive of Barclays PLC’s (NYSE:BCS) might be Anthony Jenkins, who is currently the head of retail operations, according to The Telegraph, as he has emerged as the top candidate for the spot. It was previously thought that The Royal Bank of Scotland chief Stephen Hester was likely in line for the position, but the board worries that his selection would not “signal the right politics.”
TICC Capital Corp. (NASDAQ:TICC) has completed its secondary from last week, with the underwriters exercising their option to purchase 450,000 additional shares, which brings the total amount of the offering to 3.45 million. The shares were priced at $9.65, providing gross proceeds at $33.3 million, and have rebounded to $9.95, which is above their pre-offering price.
Authorities in the United States are said to be looking into certain actions of Deutsche Bank AG (NYSE:DB), along with several of its worldwide peers, for allegedly transferring billions of dollars through their branches in the U.S. for Sudan, Iran, and other sanctioned countries. Once authorities have finished their similar inquiry of Standard Chartered.5 (SCBFF.PK), they intend to make a move against Deutsche and three other European banks as well.
Allegations that S&P (NYSE:MHP) and Moody’s Corporation (NYSE:MCO) gave inflated ratings to Morgan Stanley (NYSE:MS) mortgage bonds will go to court in a lawsuit following a judge’s Friday refusal to dismiss the case. If allowed into evidence, an internal S&P IM conversation could be quite problematic: “That deal is ridiculous,” said one analyst, “We should not be rating it.” Another replied that “We rate every deal.”
Citigroup Inc. (NYSE:C) pulls off a ‘first’ in China as it issues credit cards in that country without co-branding from a domestic financial institution, taking advantage of eased regulations. Shanghai analyst Tang Yayun remarks that the company has its “IT system, product innovation and brand awareness” to its benefit “although it lacks distribution channels in China.”
Perhaps momentarily cowed, JPMorgan Chase & Co. (NYSE:JPM) Chief Executive Jamie Dimon is no longer the banking industry champion who can stand up to the regulatory barrage faced by the firms. A fund manager comments that, “The government is piling on the banks. Somebody has to fight the damn thing.”
Shares of Jefferies Group Inc. (NYSE:JEF) spike and fall back a bit subsequent to an upgrade from Dick Bove to Undervalued from Fairly Valued. It’s apparent that the firm is benefiting from Knight Capital Group’s recent fiasco, with shares up by more than 20 percent.
Capstead Mortgage Corporation (NYSE:CMO) is distinguished from others in its mortgage real estate investment trust peer group, in that its holdings are nearly all adjustable rate mortgages rather than fixed-rate. This difference enables the firm to quickly recapture diminished interest rate spreads when rates are increasing. Currently, Capstead stock trades at around 6 percent higher than book value.
The United States Treasury has, on Tuesday, announced the initial public offerings of preferred stock that it holds, left over from TARP, in four publicly-traded banks which include BNC Corporation (NASDAQ:BNCN), First Community Corporation (NASDAQ:FCCO), Guaranty Federal Bancshares, Inc. (NASDAQ:GFED), and Mackinac Financial Corporation (NASDAQ:MFNC). The auction has begun and will conclude on Thursday. Analysts believe that this sale deserves attention because past history suggests that such an investment could be profitable.
The relationship between Regions Financial Corporation (NYSE:RF) and executive recruitment firm Fiderion is the currently subject of an inquiry by a Federal grand jury. Fiderion is said to have funded annual golfing holidays for Regions’ management from 2002 to 2008, and it once handled the firm’s executive recruitment as well, according to the Wall Street Journal. Prosecutors in the case want information about the golf trips and any gifts Fiderion gave, along with loans it might have received from Regions.
Perhaps for tidiness’ sake, a judge has unified the several lawsuits against JPMorgan Chase & Co. (NYSE:JPM) concerning its “London Whale” losses into one class-action suit, with public pension funds from the United States joining one from Sweden, as the lead plaintiffs.
Discover Financial Services (NYSE:DFS) and PayPal have reached an arrangement that allows the eBAY Inc. (NASDAQ:EBAY) division access to Discover’s network of more than 7 million retailers. Through the terms, PayPal will issue payment cards to its 50 million users, enabling them to make payments at any location where Discover is accepted. For this, PayPal will charge merchants a nominal fee, of which Discover will get a portion.
Wells Fargo & Co. (NYSE:WFC) informs its staff that competition in the mortgage market is “essential”, and that its current 33 percent market share didn’t come by “magic” but was the result of doing a job better than did the rivals. The company’s dominant position in the sector might be attracting interest from regulators.
The Royal Bank of Scotland (NYSE:RBS) is being investigated by the Federal Reserve and United States Justice Department for alleged violations of sanctions against Iran, according to the Financial Times. It is said that two years ago, RBS agreed to pay $500 million in penalties for its Dutch division ABN Amro breaching embargoes against Cuba, Libya, and Sudan, along with Iran.
Shares of MPG Office Trust, Inc. (NYSE:MPG) spike following a Wall Street Journal report which implied that the real estate investment trust has recruited an adviser to search out a suitor or a cash investment. Real estate majors such as Piedmont Office Realty Trust (NYSE:PDM), Brookfield Asset Management Inc. (NYSE:BAM), and Thomas Properties Group, Inc. (NASDAQ:TPGI) could be mulling offers, with the possibility of snapping up a sizable portion of downtown Los Angeles no doubt uppermost in mind.
American Capital, Ltd. (NASDAQ:ACAS) has reduced its interest cost by refinancing all of its recourse debt with a 4-year $600 million loan, that is priced at Libor +4.25 percent, and having a Libor floor of 1.25 percent. In addition, the firm also gets a $250 million credit line at Libor +3.75 percent.
SunTrust Banks Inc. (NYSE:STI) reports that the Federal Reserve does not object to the company’s revised capital plan, as it requested neither an increase in the dividend nor share buyback. The firm’s capital return plans will be reevaluated next year.
Shares of General Growth Properties (NYSE:GGP) pop as Bill Ackman’s Pershing Square insists that the firm put itself up for sale. Pershing currently holds a 10 percent investment in the mall-owning company and began buying into it in 2008 when it was bankrupt at $0.25 per share and also led its restructuring process.
HSBC Holdings PLC (NYSE:HBC) at present is in discussions with United States authorities regarding a resolution of charges that it violated U.S. statutes through its business with certain banned countries, according to Bloomberg. The firm has already set aside $700 million in reserves as needed for any penalties arising from the matter.
Residential Capital LLC has requested another 9 months in which to file a plan for bankruptcy, from the present deadline of September 11th. In the meantime, Berkshire Hathaway Inc. (NYSE:BRKB) and Nationstar Mortgage Holdings (NYSE:NSM), and others are jockeying for the mortgage servicing assets of the Ally Financial Inc division (ResCap). However, Nationstar shares are down some 10 percent over the past few sessions, so perhaps its chances of beating Berkshire are not what it might wish them to be.
Morgan Stanley (NYSE:MS) shares seem mostly indifferent to chatter that its mutual funds have disproportionately large stakes in Facebook’s (NASDAQ:FB) stock, following the former’s handling of the latter’s infamous IPO. Actually, much of the holdings were acquired prior to the IPO, which indicates that it could still be holding profits, although the gains have obviously been almost erased.
JPMorgan Chase & Company’s (NYSE:JPM) Libor inquiry takes yet another turn, as Bruno Iksil, the “London Whale” at the center of the criminal investigation surrounding the firm’s (NYSE:NOW) $5.8 billion trading loss, is said by two sources to have retained a lawyer in Paris, according to a Reuters report. United States federal investigators are examining whether Iksil and his superiors deliberately attempted to cover up the losses by mismarking the value of some of the trading positions.
The Mexican subsidiary of Banco Santander S.A. (NYSE:SAN) will be listed both in New York and in Mexico from September 25th, says Reuters. Meanwhile, the parent company hopes to divest 6 percent in Spain and another 18.7 percent overseas, to bring between $3 billion and $4 billion in proceeds.
CME Group’s (NASDAQ:CME) would like to establish an exchange in the United Kingdom for the purpose of interest rate trading along with currency exchange. Such a move would put CME in direct rivalry with Liffe (NYSE:NYX), and its bevy of gilts, short-sterling, and Euribor futures.
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