Citigroup CEO and COO Resign, U.S. Bancorp’s Positive Report: Weekly Financial Biz Recap

| + More Articles
  • Like on Facebook
  • Share on Google+
  • Share on LinkedIn

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

Are these stocks a buy or sell? Let us help you decide. Check out our Wall St. Cheat Sheet Stock Picker Newsletter now >>

UBS (NYSE:UBS) will sharply cut its yearly information tech costs from 3.6 billion francs, or $3.8 billion, to 2.4 billion francs by 2015 in a plan that could impact thousands of jobs worldwide, according to TagesAnzeiger on Saturday. The firm currently employs 8,200 tech workers, of which 3,200 are in Switzerland.

ING Groep (NYSE:ING) is in talks with the government of The Netherlands and the European Commission about repaying the final €4.5 billion of state aid it received following the 2008 financial crisis. The firm obtained €10 billion in total, and is currently divesting assets around the globe to raise the cash needed to reimburse the bailout, and also to comply with EU conditions for accepting it.

JPMorgan Chase & Co. (NYSE:JPM), which is currently the largest U.S. bank, intends to sell three-year debt in a benchmark bond offering as soon as Monday. The company may sell three-year, fixed-rate notes to yield around 80 basis points more than similar-maturity Treasuries and floating-rate securities to yield about 69 basis points in excess of the three-month Libor, says a person familiar with the offering, but who wishes not to be identified, as terms aren’t set. A benchmark offering is usually at a minimum of $500 million.

The selloff in mortgage real estate investment trusts continues Friday’s trend, with almost the entire sector losing ground again Monday. The top decliner today was CYS Investments (NYSE:CYS), after being downgraded to Hold at Wunderlich. The cause of the sector slide is being adduced to declining interest margins, along with mortgage refinance activity (prepays) increasing.

Don’t Miss: Q3 Earnings: Citigroup Profits Fall, Schwab Enjoys Gains.

Citigroup (NYSE:C) beats its third quarter earnings by 7 cents, and the shares popped. Chief Financial Officer John Gerspach commented on the conference call, that “We are all seeing some elements of what I would call stabilization… But there are still some rather significant challenges to be faced.”

The Charles Schwab Corporation (NYSE:SCHW) will buy the money manager ThomasPartners for $85 million in upfront cash, and additional consideration that depends on growth in AUM, which is currently at $2.3 billion. The buyer expects the purchase to be accretive to earnings per share after the first year.

Bankrate (NYSE:RATE) shares tumbled after hours Monday, following word that the firm’s preliminary third quarter results of revenue expected between $115.5 million and $117.5 million, compared to consensus of $132.7 million, and earnings of 11 to 13 cents versus a consensus of 20. Other reports showed quite strong refi activity today, so analysts might wonder what is up with Bankrate.

The Japanese banks Sumitomo Mitsui (NYSE:SMFG) and Mitsubishi UFJ (NYSE:MTU), along with Resona, are making the electronics major Panasonic Corporation (NYSE:PC) $7.6 billion in loan commitments, permitting it to avoid having to raise the cash in the markets. The lenders are also said to be helping Softbank Corp. finance its $20.1 billion purchase of Sprint Nextel Corporation (NYSE:S).

Are these stocks a buy or sell? Let us help you decide. Check out our Wall St. Cheat Sheet Stock Picker Newsletter now >>

The Royal Bank of Scotland (NYSE:RBS) mulls bringing a suit against Banco Santander (NYSE:SAN) over the Friday collapse of the latter’s agreement to acquire 316 United Kingdom branches of RBS for £1.65 billion. The board of RBS has “strongly refuted” the notion that Santander pulled back due to information tech problems, say sources, but instead thinks that the lender is storing capital because of troubles in Spain.

Goldman Sachs (NYSE:GS) names private equity executive Adebayo Ojunlesi as an independent director on its board. The appointment enlarges the board to 11 members, of which 9 are independent. The firm intends to appoint another independent director soon, as it hopes to assuage worries that the board had become too “insider-heavy.”

Vikram Pandit has resigned down as chief executive of Citigroup (NYSE:C), and Chief Operations Officer John Havens is also stepping down, although he maintains that he had thought of retiring for some time. The board has named Michael Corbat, previously the firm’s chief executive for Europe, the Middle East and Africa, as the new chief executive for Citigroup as a whole. It’s now thought that Pandit had fought with the board over “strategy and performance,” according to The Wall Street Journal, and David Faber believes that Pandit’s “firing” occurred in the past 12 to 24 hours. A bit later on Tuesday, Pandit told the Journal that “it was my decision” as he and the board rush to get their own versions out.

Don’t Miss: Citigroup’s New CEO: Who is Michael Corbat?

Financial stocks led Wednesday’s sectors and also widened their lead as the year’s top performers, up 25 percent year-to-date and 33 percent over the past 12 months. Wednesday’s top gainers included The Bank of New York Mellon Corporation (NYSE:BK), and M&T Bank Corporation (NYSE:MTB) after both reported impressive quarters. Not too shabby on the day were shares of Citigroup (NYSE:C), Goldman Sachs (NYSE:GS), and JPMorgan Chase & Co. (NYSE:JPM).

On Thursday, The Royal Bank of Scotland (NYSE:RBS) will leave the United Kingdom government’s Asset Protection Scheme, which constitutes an insurance program that covers the bank’s “toxic assets”. Many of them have been divested or written off, but have cost £2.5 billion in premiums since RBS joined in 2009. The bank’s exit will save APS some £800 million yearly and is regarded as a first phase towards its re-privatization.

Annaly Capital Management’s (NYSE:NLY) repurchase announcement from Tuesday night has prompted Compass Point to upgrade its shares from Neutral to Buy, commenting that it was “a smart reallocation of capital… (and) a floor for the share price.” The analyst points to likely high prepayment rates and says that the Federal Reserve’s continued offer for mortgage-backed securities should keep book values not only for Annaly, but also the rest of the sector strong.

CME Group (NASDAQ:CME) will acquire the Kansas City Board of Trade in a cash deal worth $126 million. In terms of the wheat market, the hard red winter variety trades in Kansas City while the sector benchmark soft red winter wheat dominates in Chicago.

Shares of Knight Capital Group (NYSE:KCG) ended the day modestly up after reporting a third quarter loss. The “Aug. 1, 2012 technology issue” cost $461 million compared to the previously reported $440 million. The firm has virtually ceded control over its operations to an investor group, but Chief Executive Tom Joyce attempted to reassure investors that clients have not run away.

Verizon Communications (NYSE:VZ) transfers $7.5 billion of the $3 billion in obligations held in management pension plan to Prudential Financial (NYSE:PRU) which will impact some 41,000 retirees. The pension plan will purchase a group annuity contract from the latter, which will then make the future annuity payments to the retirees.

U.S. Bancorp’s (NYSE:USB) earnings report on Wednesday indicated impressive growth in loans, along with strong non-interest deposit growth, all of which should remove some pressure from the narrowing net interest margin. Shares were upgraded from Neutral to Positive at Susquehanna.

UBS (NYSE:UBS) is said to be boosting the job eliminations at its European investment bank to 400. Prior to this, it was thought that the cuts would number between 80 and 90.

Morgan Stanley (NYSE:MS) Chief Financial Officer Ruth Porat says that, “Clients re-engaged and continued to re-engage throughout the quarter,” as trading revenues zoomed after the drawn-out ratings cut process was settled. The reduction in VaR was accomplished by checking back 1 year rather than 4.

President Tony James of The Blackstone Group (NYSE:BX) says that the lawsuit brought against KKR & Co. (NYSE:KKR) is “full of malarkey.” The suit alleges that the company and others committed collusion. James commented on a friendly email between him and George Roberts that it is “a requirement” for the firms to collaborate on big deals.

Barclays (NYSE:BCS) reports that it has seen higher-than-expected claims in regards to payment protection insurance policies that it sold and thus reserves an additional £700 million. Thus far, the bank has shelled out £1.2 billion in claims while the United Kingdom’s banking industry overall has set aside an amount in excess of £10 billion.

Don’t Miss: And the Best Capitalized Bank Is…?

Citigroup adds The Blackstone Group (NYSE:BX) to its Top Picks Live list along with raising its price from $18 to target to $20 following Thursday’s positive earnings. A Buy was issued by Glenn Schorr at Nomura who said that, “Plenty of moving parts as always, but earnings, AUM and flows are growing.”

A consortium composed of Nationstar Mortgage Holdings (NYSE:NSM), Ocwen Financial Corporation (NYSE:OCN), and Walter Investment Management Corp. (AMEX:WAC) will likely bid for ResCap’s mortgage servicing assets in a bankruptcy auction next week, say sources. Already, the former already has entered a starting offer of $2.45 billion with final bids due by the end of business next Friday.

Don’t Miss: Will EU Meet This Banking Deadline?

Morgan Stanley (NYSE:MS) seems to have fought off attempts to recruit a number of its high-producing brokers by other companies. The number of wealth managers shrank by 105 to 16,800, but annualized revenue/adviser rose, implying that those who did leave had smaller books.

Catalysts are critical to discovering winning stocks. Check out our newest CHEAT SHEET stock picks now.

The insurer Prudential Financial (NYSE:PRU) might end up seeing itself labeled as systemically important, having advanced to stage 3 of evaluation by a group that is led by Tim Geithner. If the firm is classified as such, any returns of capital to shareholders would be have to be approved by the Federal Reserve.

MetLife (NYSE:MET) introduces MetLife Investment Management, which is its asset management unit targeted at grabbing a share of the growing market for private-placement debt. Division chief Scott Inglis remarked that compared to public bonds, private fixed-income assets mount up ‘quite nicely from a risk-reward perspective’.

Don’t Miss: Bank of America’s Stock After Earnings: Buy, Wait, Or Stay Away?

More Articles About:

To contact the reporter on this story: staff.writers@wallstcheatsheet.com To contact the editor responsible for this story: editors@wallstcheatsheet.com

Yahoo Finance, Harvard Business Review, Market Watch, The Wall St. Journal, Financial Times, CNN Money, Fox Business