Weekly Financial Biz Recap: Citigroup and Big Banks Settle Mortgage Servicing Issues
Bank of America (NYSE:BAC), JPMorgan (NYSE:JPM), Wells Fargo (NYSE:WFC), and Citigroup (NYSE:C) among others, have submitted documents that detail their plans to resolve foreclosure problems. Yesterday the Fed made public the papers submitted by the above four, and more are expected.
Moody’s warns Morgan Stanley (NYSE:MS) that it might cut that firm’s long-term debt rating by up to three notches, unless it posts an additional $6.52 billion in collateral to counterparties and clearinghouses.
At JPMorgan’s (NYSE:JPM) investor conference CFO Doug Braunstein says the bank plans to increase annual net income to $24 billion this year, from $19 billion in 2011 and to grow its return on equity to 16 percent from 15 percent. The firm needs to seek out new growth opportunities that will yield $1 billion, and to manipulate its available options to that goal. Shares are up from this news.
Shares of Bank of America (NYSE:BAC), Wells Fargo (NYSE:WFC), JP Morgan (NYSE:JPM) and Citigroup (NYSE:C) are all up after the banking industry settled on deal over mortgage servicing issues. Rochdale’s Dick Bove, says that “it appears the banking industry may have landed itself a very positive mortgage settlement”, and has gotten “huge benefits” with talks with the Attorney General.
In a down note, Wells Fargo (NYSE:WFC), the biggest U.S. mortgage servicer, reports in its annual 10-K that refinancings will cost it around $720 million in expected income. The re-dos are required by the settlement between mortgage servicers and regulators. The bank is also facing SEC inquiries as to whether its offered documents were honest about facts and figures.
PayPal (NASDAQ:EBAY) might have already introduced an app that allows its members to make payments to each other, but American Express (NYSE:AXP) has launched a Facebook app which does the same thing for free on the social networking site. The two companies will thus compete with each other directly for users of the apps.
Following its fourth quarter net loss of $2.4 billion and $16.9 billion in all of 2011, Fannie Mae will ask the government for another $4.6 billion. Fannie lost $14 billion in 2010, so the new amount is even higher. However, the institution claims that it estimates that it has now “reserved for the substantial majority of the remaining losses” on its pre-2009 loans.
Analysts’ reports are positive following JPMorgan Chase’s (NYSE:JPM) investor day on Tuesday. Keefe Bruyette comments, “No surprises, which is why we like the stock”, on the fact that no real attention grabbing events occurred. Others registered slight surprise that few managers were intimidated by the Volcker Rule, and many are confident that the company will return much more capital to shareholders.
A strategic partnership agreement has been reached by CME Group (NASDAQ:CME) and the Bank of China. The purpose of the deal is improved exploration and development of business opportunities that would be jointly beneficial, which includes cross-border trading in commodities futures and options.
Quickly on the heels of Bank of America’s (NYSE:BAC) exploration of new fee structures on its checking accounts, Massachusetts Sec. of the Commonwealth William Galvin proposes legislation that would prevent banks from holding state deposits if they don’t offer basic checking without fees. Reaction from the new Consumer Financial Protection Bureau is expected as well.
Piper Jaffray (NYSE:PJC) puts the kabosh on rumors that it’s selling itself to a Chinese securities firm, causing its shares to settle back down after rising earlier. However, Piper did not rule out a possible joint venture in the region.
Both ING (NYSE:ING) and the Royal Bank of Scotland (NYSE:RBS) are looking to sell their insurance units by the end of 2013, for different reasons. ING wants to sell its Asian insurance unit in order to come up with the €3 billion ($4 billion) that it owes the Dutch government, and RBS needs to be rid of its unit to comply with EU rules pertaining to its bailout. PE firm J.C. Flowers is said to be considering bids for the units.
Travelers (NYSE:TRV) is retaining lower excess capital than its peer group, according to Morgan Stanley, who downgrades to the company to Equal-Weight in return.
A Thursday night interview with CNBC’s Jim Cramer gave BGC Partners (NASDAQ:BGCP) CEO Howard Lutnick an opportunity to boast about that company’s posh 9.6 percent yield and its promising growth prospects. Potential buyers must have liked it, as shares are trading higher Friday.
AIG (NYSE:AIG) is raising funds to pay back the U.S. government from its 2008 bailout. To this end it sells its $500 million investment in private equity firm Blackstone (NYSE:BX) as a part of a block trade, premarket on Friday.
Facebook’s (FB) $5 billion initial public offering will be underwritten by nine banks, including new arrivals Credit Suisse (NYSE:CS), Deutsche Bank (NYSE:DB), and Citigroup (NYSE:C), according to Bloomberg. As a part of the agreement Facebook also lands an additional credit line of more than $2.5 billion.
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