Barclays Faces Regulators’ Inquires, Wells Fargo Cleans Up: Weekly Financial Biz Recap

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Here’s your Cheat Sheet to this week’s financial industry business headlines:

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The stock markets in New York may be closed Monday, but the recently gone-public Javelin Mortgage Investment (NYSE:JMI) is started at Buy at both Citigroup and Deutsche Bank in a bright spot for the embattled mortgage real estate investment trust sector. ARMOUR Residential (AMEX:ARR) externally manages Javelin.

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Regulators in both the United Kingdom and in the United States are hoping to obtain resolutions with one or even two additional banks by the end of 2102 over claims that they manipulated Libor along with other interbank interest rates, says The Financial Times. The Royal Bank of Scotland (NYSE:RBS) should be one of the banks to settle with the agencies, and it anticipates having to pay as much as £300 million.

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Barclays (NYSE:BCS) now has the distinction of being the first bank ordered to trial in the United Kingdom over the manipulation of Libor rates. The firm is being sued for as much as £37 million by the residential care home operator Guardian Care Homes, over claims of the mis-selling of swaps. This case could lead to new revelations and should constitute a test case for thousands of small firms that also believe they were mis-sold such instruments.

Because of the aftermath of Sandy, the insurance sector is certain to be closely monitored as stock trading resumes Wednesday. William Blair has noted that 2011′s fourth quarter losses from Irene for Allstate Corporation (NYSE:ALL), Chubb Corporation (NYSE:CB), and Tower Group (NASDAQ:TWGP) comprised more than one half of the anticipated earnings per share estimates. On the upside, MKM Partners believes that although the group will sustain losses, it should not be a major capital event for the average firm, even in the event of $10 billion of insured losses.

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Now, UBS (NYSE:UBS) says that along with other banks, it is under inquiry in Singapore for the possible manipulation of Libor rates, which marks the first time it has admitted that it’s involved the Singapore investigation. This new inquiry adds to those already in progress in the United States, the United Kingdom, and in Switzerland.

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By the latest report, the NYSE Euronext (NYSE:NYX) intends to open Wednesday, a critical day due to its role in supplying key opening and closing auctions for the last day of the month. Currently the aim is for a normal 9:30 to 4:00 trading session. This exchange, along with Nasdaq OMX (NASDAQ:NDAQ), BATS Global Markets (BATS) and Direct Edge, is testing a backup solution that would direct trading through the Arca platform if the floor is unable to open.

The aftermath of the ResCap auction finds shares of both the winners Walter Investment Management Corp. (AMEX:WAC) and Ocwen Financial Corporation (NYSE:OCN) and the losers Nationstar Mortgage (NYSE:NSM), Newcastle Investment Corp. (NYSE:NCT) considerably higher. It does not seem to matter whether Ocwen paid too much or Nationstar got pushed out of an excellent opportunity. Since capital requirements are squeezing banks near the bottom out of the servicing business, being a specialty servicer is not so bad.

JPMorgan Chase & Co. (NYSE:JPM) brought a suit in London last week against Javier Martin-Artajo, who was the former boss of Bruno Iksil. Thus far details are unavailable, but the move seems to be in keeping with the bank’s pledge to claw back pay from those involved in The Big Loss.

Barclays (NYSE:BCS) concedes that it is the focus of two additional inquires in the United States as the Securities and Exchange Commission and the Justice Department are looking at whether the company has violated the Foreign Corrupt Practices Act. For its part, the bank implies, without being specific, that the investigation is linked with payments to investors in Qatar who helped it avoid a taxpayer bailout.

Invesco Mortgage Capital (NYSE:IVR) chooses James Balloun as its Chairman of the Board, effective immediately. Balloun has been on the board since the firm’s 2009 IPO, serving on the Audit and Compensation committees among other positions. The previous Chairman, Neil Williams, passed away in the summer.

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Shares of American Capital Agency (NASDAQ:AGNC) move up subsequent to Monday’s earnings release and repurchase announcement. Perhaps of most interest was a fall in the CPR, which does not square with either the mortgage refinance boom or other mortgage real estate interest trust reports.

National Bank of Greece (NYSE:NBG) shares plummet as investors ignore the government’s forecast of economic growth redounding in 2014. Once more, a deadline for additional bailout funds is looming and again, there are the usual threats from the European Union majors causing speculation that this time they mean “no.”

Berkshire Hathaway (NYSE:BRKB) is joining with Brookfield Asset Management (NYSE:BAM) to create Berkshire Hathaway HomeServices. Brookfield’s network operates under the better-known name Prudential and Real Living Brands. The joint venture Chief Executive Ron Peltier says that, “We have significant inventory shortage across the country. We see a housing market that will continue to improve.”

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New guidelines agreed to by Fannie Mae and its insurers change the situation for mortgage servicers such as Genworth Financial (NYSE:GNW) and Radian Group (NYSE:RDN) concerning short sales among them. The modifications allow the firms to approve such sales without getting approval from the insurers.

On Wednesday, the Federal Energy Regulatory Commission gave Barclays (NYSE:BCS) 30 days to explain why it should not be fined $470 million, on claims that it manipulated Californian power markets by deliberately creating losses on physical electricity prices so as to profit from related swaps positions. It seems that this strategy was once fairly common, and now Barclays pledges to fight the Commission.

American Capital Agency Corp. (NASDAQ:AGNC) Chief Executive Gary Kain says that, “We feel more comfortable than we have in ages,” on his company’s earnings call as he does not anticipate anything but marginal changes to the current low-return regime currently in place. The firm believes that it can continue to bring double-digit returns, but the mix will change — lower spreads will be outweighed by higher book value.

Shares of MGIC Investment Corporation (NYSE:MTG) jump on word of a resolution of the pool-insurance dispute between one of the firm’s subsidiaries and Freddie Mac (FMCC.OB) that might have prevented MGIC from backing certain loans. The company will make payments to Freddie Mac over four years under the terms, but that requires approval from boards of both parties.

Wells Fargo & Co. (NYSE:WFC) is cleaning up on the refinancing boom and its head of the home lending division Mike Heid says that his business has not yet scratched the surface. In excess of 40 percent of customers in the bank’s $1.9 trillion servicing portfolio have interest rates of more than 4 percent equity in their homes and strong credit. Meanwhile, current discussion in mortgage real estate investment trust conference calls blame the lack of origination capacity as a key factor retarding back refinancing.

Along with its earnings release late on Thursday, RenaissanceRE Holdings (NYSE:RNR) has become the first reinsurers to warn regarding the hurricane, saying that, “The Company’s current preliminary assessment is that the impact of Hurricane Sandy on its financial results will likely be significant.”

Standard Chartered (SCBFF.PK) approached a resolution with authorities in the United States to pay a penalty of approximately $300 million to resolve probes into its dealings with Iran, according to Reuters. Additionally, the company is currently negotiating the deal with the District Attorney of Manhattan, The Federal Reserve Bank of New York, the United States Treasury, and the Justice Department. Any new fine would add to the $340 million that StanChart has agreed to pay in an settlement with the New York Department of Financial Services.

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Berkshire Hathaway (NYSE:BRKB) will acquire the direct marketing toy and party supply firm Oriental Trading. Financials of the transaction were not released, but according to the Wall Street Journal, the price should be around $500 million. The divestiture will make a tidy windfall for Oriental’s largest shareholder KKR, which assisted in bringing it out of bankruptcy 18 months ago.

Shares of Prospect Capital Corporation (NASDAQ:PSEC) slide on word of a secondary offering of 35 million shares (price undisclosed) while it endeavors to repay debt or invest in short-term debt instruments. Prospect recently had around 174.5 million shares outstanding.

JPMorgan Chase & Co. (NYSE:JPM), Citigroup (NYSE:C), Deutsche Bank (NYSE:DB), and HSBC Holdings (NYSE:HBC) will now be required to retain an additional 2.5 percent of Tier 1 Capital, besides the 7 percent minimum mandated under Basel III rules, said the Financial Stability Board on Thursday. Further, Barclays (NYSE:BCS) and BNP Paribas will have to keep an extra 2 percent, and 8 others will need 1.5 percent. In all, 28 banks are considered “global systemically important” and thus are subject to the extra capital requirement.

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