Weekly Financial Biz Recap: MF Global Implodes, NYSE Earnings, Bank of America Retreats
NYSE Euronext (NYSE:NYX) reported its third quarter earnings per share beat analysts expectations by $0.01. Its $704 million net revenue increased 18 percent, year over year. This represents its highest net revenue generation since 2008′s third quarter. Dig Deeper: NYSE Euronext Earnings Cheat Sheet: Consecutive Profit Quarter Streak Stays Intact.
MF Global’s (NYSE:MF) collapse may come with the “Goldman Sachs (NYSE:GS) myth” that the firm produces the best risk takers. With Goldman alum Jon Corzine at MF’s helm, he was hardwired to take risks and may have driven the firm into the ground from his Goldman experiences. Corzine had been quoted as saying about risk: “You can’t achieve the kinds of returns we want just by buying on the bid and selling on the offer.”
Wells Fargo & Co. (NYSE:WFC) wants to increase its dividend and continue buying back its shares as part of a capital plan to be submitted to the Federal Reserve next year, according to bank’s Chief Financial Officer Tim Sloan. A recommendation has been determined but the bank reported record quarterly earnings in 2011 and it feels it has a “good story” to tell.
The big banks (NYSEARCA:KBE) had the best intentions to curtail consumer backlash when it cancelled the proposed debit card fees; however, some of them may still see an exodus of customers. According to a new Harris Interactive poll, Bank of America Corporation (NYSE:BAC) could lose 9 percent of its accounts, with Wells Fargo & Co. (WFC ) and JPMorgan Chase & Co. (NYSE:JPM) also in danger of losing many customers.
On Tuesday, a federal judge dismissed two lawsuits by Irving Picard, the trustee for Bernard Madoff’s victims. Most of the $19.9 billion suit against JPMorgan Chase & Co. (NYSE:JPM), Madoff’s top bank for 20 years, and a $2 billion suit against UBS AG (NYSE:UBS) were thrown out by the court.
This isn’t the first setback for Madoff’s victims: a claim for $8.6 billion against HSBC Holdings PLC (NYSE:HBC) had been dismissed in July.
Watch Now: Ruth Madoff Reveals All.
Contrary to rumors, an MF Global Holdings Ltd (MF) attorney told a bankruptcy judge that the alleged $700 million in missing client cash has been accounted for by the firm. The majority of the firm’s U.S. assets are in its brokerage unit, which is not part of the firm’s bankruptcy case and its foreign funds are with regulated entities.
The gross dollar volume of transactions grew 18.1 percent year over year, up 16.4 percent from the second quarter. The company also reported a 13.6 percent increase in U.S. dollar volume and 20.4 percent growth in international volume. Processed transactions jumped 20.5 percent from the second quarter’s 17.4 percent rise and MasterCard’s free cash flow sat at $991 million in the third quarter, up 72 percent year over year.
Lloyd’s Banking Group plc’s (NYSE:LYG) stock dove on the news that CEO Antonio Horta-Osorio will take a medical leave of absence; he is expected to return by year’s end. CFO Tim Tookey will act as his temporary replacement.
Bank of America’s (NYSE:BAC) employees are hoping the job market isn’t as bad as they say. Many are looking for external opportunities before the bank’s cost-cutting program, Project New BAC, is implemented. The bank will reportedly cut close to 40,000 jobs over the next few years. Rival banks and executive recruiters have received a flurry of resumes lately from the bank’s employees.
Credit Unions are the bright spot from this debacle: they have added 650,000 customers since the end of September.
Leucadia National Corporation (NYSE:LUK) bought an additional 1 million shares of Jefferies Group Inc. (NYSE:JEF) at $11.84. The transaction gave Leucadia about a 2 percent increased stake in the company.
Investing Insights: The Growing Need for Precious Metals as Insurance.
This morning’s surprise news of the Greek Referendum is crushing banks stocks today. Battered companies include Bank of America (NYSE:BAC), Morgan Stanley (NYSE:MS), JPMorgan Chase & Co. (NYSE:JPM), Citigroup Inc. (NYSE:C) and Goldman Sachs Group (NYSE:GS).
Credit Suisse Group AG (NYSE:CS) reported its third quarter 12 percent net profit rise came from an accounting gain in firm credit spreads. The $683 million Swiss francs ($776 million) profit came in under analysts’ forecast of $1.1 billion Swiss francs. Revenue increased 8.5 percent to $6.82 billion Swiss francs. The company also said it plans an additional 1,500 job cuts along with the 2,000 announced in July.
H&R Block, Inc. (NYSE:HRB) saw its TaxAct acquisition plans die after a federal judge ruled that the $287 million potential merger would violate U.S. antitrust law. The Department of Justice has previously filed a suit to stop the transaction, alleging that it “substantially reduces competition” and results in “higher prices and a reduction in innovation and quality.”
The ruling comes at a good time for the DOJ as it prepares to block a parallel deal: AT&T’s (NYSE:T) merger with T-Mobile (DTEGY.PK).
Investment bank Jefferies Group, Inc. (NYSE:JEF) tried to distance itself from the MF Global (NYSE:MF) fallout and its exposure to European government debt by issuing a statement. It included language that the firm “has no meaningful exposure to the sovereign debt of the PIIGS,” nor does it have “any repo-to-maturity activity or related off balance-sheet derivative activity.”
Bank of America (NYSE:BAC) retreated on its $5 debit-fee charge after a strong backlash by customers. The company is a little behind the curve in its change of heart after its rivals tested fees and decided to not implement them. SunTrust Banks Inc. (NYSE:STI) and Regions Financial Corp. (NYSE:RF) announced their decision on Monday while Wells Fargo & Co. (NYSE:WFC) and J.P. Morgan Chase & Co. (NYSE:JPM) dropped fee plans last week.
Investing Insights: Here Are The Biggest Winners & Losers From MF Global’s Bankruptcy.
The Treasury Department will postpone its second round of share sales on its American International Group Inc. (NYSE:AIG) investment due to “unfavorable market conditions.” With a 77 percent stake in the insurer after the U.S. government bailout, the Department sold some shares in May to investors but it will until wait after AIG announces its earnings report on Thursday to determine the next round.
Investing Insights: How Will the Yen Intervention Affect Precious Metals?
Barclays PLC (NYSE:BCS) reported a 5 percent increase in its third quarter pretax profit of £$ 1.34 billion, exceeding a $1.24 billion forecast. Revenue declined 19 percent at Barclays Capital to £$ 2.25 billion. With its core Tier 1 capital at 11 percent, the firm said it can make enough money to meet company needs and will therefore not “raise new equity capital.”
Wells Fargo & Co. (NYSE:WFC) has listened to consumers and said it will cancel its planned $3 debit-card fee. The bank isn’t alone with this news. SunTrust Banks, Inc. (NYSE:STI) announced today the elimination of its monthly Check Card fee, beginning on Wednesday, Nov. 2. Rumors are now swirling that the fee initiative’s instigator, Bank of America (NYSE:BAC), is reconsidering its own $5 debit-card fee.
MF Global Holdings (NYSE:MF) filed Chapter 11 today and in its filing, disclosed $100 million to $500 million of assets with JP Morgan & Chase (NYSE:JPM). This places the bank as its firm’s largest creditor with $1.2 billion owed. Earlier today, reports had included a possible purchase by Interactive Brokers (IBKR); however, talks went south after the firm reviewed the numbers.
Don’t Miss: Are Ratings Agencies Taking Bribes?
MF Global’s (NYSE:MF) CEO and Chairman Jon Corzine has resigned and will exit without taking severance pay. It had been reported earlier in the week that upon his departure, Corzine could have received a $12.1 million goodbye payment.
KKR & Co L.P. (NYSE:KKR) reported third quarter earnings per share of $0.91. This beat analysts estimates of $0.05. Revenue jumped 71.9 percent to $224.7 million year over year, also surpassing expectations by $15 million. Assets under management was $58.7 million at the end of the third quarter as compared to $55.5 billion from the previous year.
McGraw-Hill (NYSE:MHP) and CME Group (NASDAQ:CME) announced a joint venture in the expanding index business. The agreement has McGraw-Hill combining its S&P Indices business with the CME Group/Dow Jones joint venture to form a new S&P/Dow Jones Indices. This will bring annual revenues of more than $400 million.
McGraw-Hill will own the majority of the new venture at 73 percent; CME Group will have 24.4 percent through affiliates and Dow Jones grabs a 2.6 percent share.
While Bank of America Corporation (NYSE:BAC) plans to issue common stock to raise funds and improve its balance, there’s also the possibility this may dilute shareholders’ stakes. However, a bigger issue may be its potential loss of credibility, according to analysts.
According to Mike Mayo from CLSA, the move “would have no material impact on long-term EPS,” (who gave the stock a selling rating) but it “reflects poorly on management who were previously adamant that BAC did not need to raise any additional common capital.
HSBC Holding Systems, Inc. (NYSE:HBC) may be getting a small taste of how RIMM felt weeks ago with a two-hour systems crash, affecting millions of U.K. customers. The bank’s ATMs, branches, debit cards and Internet banking services stopped working on Friday afternoon from a computer glitch. The company acknowledged the problem right away by tweeting, “experiencing some problems–sorry for the inconvenience.”
Fortunately the problem had been resolved by the end of the working day.
HOT FEATURE: Groupon Analyst Cheat Sheet>>