Weekly Financial Biz Recap: Finance and Oil Refineries, Goldman Sachs CEO Lloyd Blankfein’s Startling Remarks


Shares of SunTrust (NYSE:STI) gain, following the bank’s first quarter earnings. Net interest margin rose 3 basis points over the fourth quarter to 3.49 percent, and average loans increased 3 percent quarter-to-quarter. Other loan postings included an annualized new charge-off ratio down 19 basis points to 1.38 percent; and nonperforming loans decreased 9 percent; loss allowance slightly down to $2.38 billion (1.92 percent of total loans). The company has a Tier 1 common ratio of 9.3 percent.

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The phenomenon of financial companies entering the oil refinery business (i.e., JPMorgan (JPM) trading crude for the Delta (NYSE:DAL)- Conoco (NYSE:COP) arrangement) may well continue, as reports surface of a similar deal between Sunoco (NYSE:SUN) and Carlyle. Once again, JPM would handle the trade of refined products, this time for Carlyle, lowering profit requirements and potentially increasing returns from the sale and hedging of the products

JPMorgan (NYSE:JPM) has improved its loan loss numbers by turning to short sales, since the foreclosure industry has run aground. The firm used the former on 61 percent of its delinquent mortgage liquidations last year, which cut its losses from 71 percent to an average 56 percent.

MetLife (NYSE:MET) is involved in a multi-state “Death Master” inquiry, but will pay $40 million for resolution. In this claims payment practice, insurers have been accused of ceasing annuity payments to deceased customers without ensuring that the life insurance policy holders had passed as well. In all, customers could receive more than $500 million resulting from the investigation.

Invesco (NYSE:IVN), according to sources, is seeking to divest its Atlantic Trust Private Wealth Management unit worth $18 billion in assets, says a Reuters report.


The Royal Bank of Scotland (NYSE:RBS) is seeking approval for a 10 for 1 reverse stock split, after seeing its shares traded in London at less than £1 for more than three years. Even though its valuation would of course be unaffected, RBS apparently would like to not be known for having such low priced shares.

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Some key statistics from Nomura’s (NYSE:NMR) fiscal fourth quarter results, scheduled for a Friday release, have leaked out according to Bloomberg. It appears that net profit in that quarter rose by 51 percent to ¥18 billion ($221 million), against a consensus of ¥14.4 billion. The windfall is said to have arisen from gains from trading that more than offset its drop in investment banking.

Goldman Sachs (NYSE:GS) CEO Lloyd Blankfein made some startling remarks Wednesday on CNBC and Bloomberg: “We have 30 thousand workers who feel the opposite of Greg Smith. We haven’t gotten everything right with respect to how we’ve dealt with the public … I have no plans to leave.” Further, he remarked that “The biggest threat to Goldman Sachs was the poor performance and bad risk management practices of our competitors.”. And, on economists and policy makers who are not sufficiently optimistic, he said that “There is a lot of pent-up demand. The big risk is that things go right” [with the global economy].

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U.S. Bancorp (NYSE:USB), Wells Fargo (NYSE:WFC) and Blackstone (NYSE:BX) are said to have purchased a portfolio of performing loans on U.S. properties held by German lender Eurohypo, for $740 million, according to sources, who add that each buyer will assume distinct ownership of individual loans.

Shares of Aetna (NYSE:AET) fall sharply in early trading, following a first quarter earnings report that showed too little surplus money in reserve for coverage of patient claims that are expected to come from earlier periods. An analyst for Leerink Swann remarked that “The elephant in the room is the lack of prior-period development. We’ve seen consistently for the entire industry that the medical-cost trend has come in below expectations, and it’s unclear why Aetna would be different.”.

Deutsche Bank’s (NYSE:DB) first quarter earnings posted a miss for net profit, with €1.38 billion falling considerably short of the consensus of €1.64 billion. No guidance was provided, but the bank’s report said that its conditions remain ‘challenging’, and that any economic recovery would mainly help U.S. banks. In addition, DB said that all its revenues from its investment banking unit were “flow driven” in that quarter. Espirito Santo calls that remarks ‘proof’ of the suspicion that reduced capital to trading operations has taken effect, and is also the probable cause for an 11 percent year-to-year decline in investment banking revenues, noting that “We believe this capital constraint will be a negative theme … going forward.”. Meanwhile, Deutsche, in a consortium with Barclays (NYSE:BCS), has purchased all of the MAX CDO holdings from a Maiden Lane III portfolio, from the Federal Reserve Bank of New York, in a competitive bid process that included 8 of the SIFIs.

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