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Here’s your Cheat Sheet to the last week in financial news:
Certain international banks – Lloyds Banking Group plc (NYSE:LYG), HSBC Holdings PLC (NYSE:HBC), and Barclays PLC (NYSE:BCS) are very much aware of New York State’s inquiry into transactions that the federal authorities consider legal, but New York’s banking regulator does not, according to the New York Times. The state’s allegations against StanChart overs its dealings with Iran is the crux of the matter, and also of the banks’ worries that they might get tied in.
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JPMorgan Chase & Co. (NYSE:JPM) considers its plan to join its corporate and investment banks with its treasury and securities services division, as a source of raising its pretax profit by $1 billion within five years. At the same time, the firm is letting its return-on-equity target of 17 percent go because of tightening regulations.
Bank of America Corporation (NYSE:BAC) will divest Merrill Lynch’s overseas private bank to Switzerland’s Julius Baer for 1.47 billion Swiss francs, or $1.5 billion. The transaction marks the most recent in a series of asset sales by BofA, which requires a strong cash position to satisfy Basel III requirements and also to pay for all its legal liabilities.
Credit card companies Citigroup Inc. (NYSE:C), Discover Financial Services (NYSE:DFS), and American Express Company (NYSE:AXP) are on the verge of being investigated by regulators, at the time they themselves pursue lawsuits to collect debts. The New York Times reports that robo-signing by the companies, along with erroneous and forged documents, incomplete records, and generic testimony from witnesses are all pertinent to the looming investigations.
Certain Barclays PLC (NYSE:BCS) shareholders are supporting The Royal Bank of Scotland Group’s (NYSE:RBS) Chief Executive Stephen Hester for that position at Barclays, says The Telegraph. Hester is credited with excelling at reducing non-core assets, bad debts, and perhaps more importantly, maintaining a good relationship with regulators, since RBS is more than 80 percent government-owned.
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The Charles Schwab Corporation (NYSE:SCHW) reports that July trading volume is down 5 percent from June and down 2 percent year-over-year. The drop is seen as unusual, as July typically experiences an increase in activity since earnings are reported in that month. At any rate, client assets jumped $7.4 billion in July, which was considerably up from June, but still off 25 percent from a year ago.
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Wells Fargo & Co. (NYSE:WFC) is already the mortgage king of the hill, but now the company is also aiming at automobile lending and also at Ally Financial (formerly GMAC), focusing on increasing the portion of the country where it can gain an advantage in providing financing for GM sales. The company’s auto loans jumped by 18 percent year-over-year in the second quarter to $6.6 billion, making it second in the United States in the sector. Separately, Wells Fargo will pay more than $6.5 million to resolve the Securities and Exchange Commission’s charges that it sold investments tied to mortgage-backed securities, without first grasping their complexity or divulging the risks to investors.
Capital One Financial Corporation (NYSE:COF) has increased the amount of a preferred stock sale from the original amount of $250 million to $875 million. The coupon is at 6 percent, with the issue callable in five years’ time.
Former Bank of America Corporation (NYSE:BAC) municipal bond marketer Doug Campbell testified on Monday in the trial of three UBS AG (NYSE:UBS) executives that he conspired to rig bids in the municipal reinvestment market with them. The defendants allegedly gave Campbell advance information regarding transactions, and in return, he submitted bids that were intentionally losing for certain deals and then falsely billed BofA clients for UBS work.
Bond insurers such as Assured Guaranty Ltd. (NYSE:AGO) and other creditors remain in appeal regarding Jefferson County, Alabama’s bankruptcy trial, but Bank of America Corporation has unloaded most of its $225.7 million in the county’s defaulted bonds that it holds and has dropped out of the court case.
Barclays PLC (NYSE:BCS) is the subject of renewed breakup rumors, with its shares trading at a 59 percent discount to boot, compared to the 93 percent of its global peers. The company’s new Chairman David Walker has indicated that he thinks that Barclays should remain a “universal bank,” but Gareth Hunt believes that new management along with the Libor scandal could lead to a breakup with a doubling of the shares’ price.
Five top U.S. lenders, including JPMorgan Chase & Co. (NYSE:JPM), Citigroup Inc. (NYSE:C), Wells Fargo & Co. (NYSE:WFC), Bank of America Corporation (NYSE:BAC), and Ally Financial, are setting almost $3 billion into reserve to buy back mortgages that have gone awry, as Fannie Mae and Freddie Mac have stepped up their efforts to persuade banks to take such steps, according to Bloomberg calculations. Meanwhile, regional lenders such as SunTrust Banks Inc. (NYSE:STI) have set aside an extra $1.3 billion for the same purpose.
Lloyds Banking Group plc (NYSE:LYG) will divest a portfolio of private equity related investments to London-based Coller Capital for £1.03 billion, even though upon completion of the transaction, the former still manage the fund for an annual fee of less than £10 million.
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In the wake of the Volcker rule, observers wonder how money will be earned in the investment banks. Ex-Goldman Sachs Group Inc. (NYSE:GS) partner Buck Ratchford, who recently led global bank loan trading and distressed investment, is said to be in advanced discussions to receive between $200 million and 250 million in seed capital for his new hedge fund.
TICC Capital Corporation’s (NASDAQ:TICC) 3 million share secondary is priced at $9.65 per share, below Tuesday’s close at $9.91, for total estimated gross proceeds of $29 million. The underwriters will have a 30-day option in which to acquiree an additional 450,000 shares.
The Carlyle Group (NYSE:CG) sees its first high-profile departure since its May initial public offering, as managing director Brett Wyard exits the company. His stepping down comes as the company faces difficulties raising money for its most recent distressed-debt fund, which was his own area.
JPMorgan Chase & Co. (NYSE:JPM) and Barclays PLC (NYSE:BCS) are among the latest of at least 7 major banks that have been subpoenaed in connection with New York State’s and Connecticut’s inquiry into the alleged manipulations of Libor, according to Bloomberg. Other top banks in the United States, the United Kingdom and continental Europe getting subpoenas for the same case in recent weeks include The Royal Bank of Scotland (NYSE:RBS), Deutsche Bank (NYSE:DB), and HSBC Holdings (NYSE:HBC).
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An early September initial public offering might be in store for the Banco Santander S.A. (NYSE:SAN) Mexican division, as the company is said to intend to raise as much as $4 billion from the move. A prospectus will soon be sent out that describes the parts of the bank’s operations in Mexico and in New York, but Santander does not yet itself indicate how much proceeds it believes it can turn up.
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The large number of mortgage real estate investment trusts issuing secondary offerings continues to grow as New York Mortgage Trust, Inc. (NASDAQ:NYMT) prices a 10 million share of secondaries at $6.73, compared to Wednesday’s close $6.94.
It now seems that Jon Corzine will dodge criminal charges over MF Global Holdings Ltd. (MFGLQ.PK) and already, his future plans are being discussed with starting a hedge fund being a good possibility. Since he has had no firm to head over the past months, he has been trading his own huge amount of wealth.
Assured Guaranty Ltd. (NYSE:AGO) is cleared by a judge to move forward with its lawsuit against UBS AG (NYSE:UBS), which alleges that it misrepresented the quality of loans underlying $1.49 billion of mortgage-backed securities that it issued. The former has demanded that UBS repurchase the loans, and has brought similar lawsuits against JPMorgan Chase and Credit Suisse, which are currently pending.
Top financial companies are purchasing new Internet domain suffixes as a part of their endeavors to block ‘pfishing’ attempts from obtaining confidential information with bogus, authentic-appearing websites. Examples of the new suffixes include dot-bofa (NYSE:BAC), dot-citi (NYSE:C), and dot-barclays (NYSE:BCS), while JPMorgan Chase & Co. (NYSE:JPM) and American Express Company (NYSE:AXP) are buying addresses as well. It has been estimated that cybercrime cost the financial sector some $2.5 billion in 2011.
Modifications to the United States Treasury’s backstop of Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB) are to be announced on Friday. Through terms of the new arrangement, the two companies will be required to turn over all quarterly profits to the government in the form of dividend payment, but nothing will be due during loss periods. In the prior setup, they made a quarterly 10 percent dividend payment and often had to borrow from Treasury to pay for it.
Goldman Sachs Group Inc. (NYSE:GS) has pulled the plug on its Hudson Street Services division, which was mostly charged with selling research from independent analysts to institutional clients, because fund managers showed scant interest. Independent research was thought to be the next big trend, subsequent to the dot-com era bringing to light some of the more unpleasant secrets of investment banks’ sell-side.
Ares Capital Corporation (NASDAQ:ARCC) both prices and grows the size of its secondary offering. The sale will take place for 22.5 million shares, compared to the 19 million announced Thursday night, along with an option granted to underwriters to acquire another 3.375 million, up from the prior 2.85 million. The price was not divulged.
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