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GS | Chevron exits Caltex Australia stake for 3 7 billion | By Morag MacKinnon PERTH Reuters U S energy giant Chevron NYSE CVX sold its entire stake in refiner Caltex Australia Ltd for A 4 7 billion 3 7 billion in Asia s biggest block deal this year as falling oil prices and high costs hurt margins Offshore institutional investor demand for the 50 percent stake in Australia s biggest refiner was strong with bidding driving the final price to A 35 a share a spokeswoman for Goldman Sachs NYSE GS the sole underwriter for the deal confirmed on Saturday The bank offered the 135 million shares at a floor price of A 34 20 each late on Friday a discount of 9 7 percent to the closing price Caltex shares have risen 10 7 percent this year outpacing a 9 4 percent rise in the benchmark Australian share index The 3 7 billion deal is Asia s largest block transaction this year eclipsing the government of India s 3 6 billion sale of its stake in Coal India Ltd in January Australia has seen a rush of block trades in the past month as investors look to capitalise on strong valuations following a share market that is rising on hopes of more interest rate cuts A halving in global oil prices since mid 2014 has added to the pressures on Australian refiners which are grappling with ageing equipment cheaper imports and high costs Many firms including Caltex Australia have closed refineries while others have restructured operations
Chevron is the latest global major to exit Australia s refining industry Last year Royal Dutch Shell LONDON RDSa Plc sold its Australian petrol station and refinery operations for A 2 9 billion and BP LONDON BP Plc which shut down its Bulwer Island oil refinery in Queensland is also selling its Australian bitumen business 1 1 2905 Australian dollars | 3/27/2015 |
GS | Former JP Morgan banker to head Barclays UK ECM team source | LONDON Reuters Barclays L BARC has hired Barry Meyers a former executive director at JP Morgan N JPM to head its UK equity capital markets ECM team a source familiar with the matter said on Monday
Meyers will start at the bank in July and report to Tom Johnson co head of ECM for Europe the Middle East and Africa the source said
The hiring comes after Chris Madderson was named EMEA head of equities syndicate at the bank last year
Last month Barclays hired Philip Shelley Goldman Sachs NYSE GS s co head of UK corporate broking
Barclays had roles on the initial public offerings IPOs of John Laing L JLG and Wizz Air L WIZZ as well as last week s 1 5 billion pound 2 22 billion block trade in the London Stock Exchange L LSE
1 0 6761 British Pounds | 3/30/2015 |
GS | Teva to buy U S drug developer Auspex Pharma for 3 5 billion | By Tova Cohen TEL AVIV Reuters Israel s Teva Pharmaceutical Industries ARCA TEVA said it would buy U S neurology drug company Auspex NASDAQ ASPX Pharmaceuticals Inc for an equity value of 3 5 billion to boost its portfolio of treatments for the central nervous system Teva the world s largest maker of generic drugs will offer 101 per share in cash representing a premium of 42 4 percent to Auspex s Friday closing price the companies said on Monday In February Teva Israel s biggest company by market value and revenue said it was ready to return to making acquisitions after a year focused on cutting costs under its new chief executive Erez Vigodman This is the first major deal for Vigodman a turnaround specialist brought in last year to reduce costs and improve profit that had been squeezed by rising competition Teva s biggest selling drug multiple sclerosis injectable treatment Copaxone faces competition from oral treatments and cheaper generics in coming years Shares in Auspex were up 41 7 percent to 100 51 in morning trade while Teva shares were up 3 percent at 63 86 Bernstein analyst Aaron Gal said the acquisition was a good strategic fit for Teva as the company looks to boost growth and also leaves financial room for a bigger deal in future To the extent Teva would like to make a transformative deal in the generic space this deal is small enough not to impact that potential Gal said Auspex s main product SD 809 is being developed for the treatment of chorea abnormal involuntary movement associated with Huntington s disease tardive dyskinesia and Tourette syndrome SD 809 for Huntington s is expected to win regulatory approval and be launched commercially in 2016 Teva said An estimated 30 000 people in the United States suffer from Huntington s 350 000 from tardive dyskinesia and 150 000 from Tourette for which the drug is in early stage trials Auspex has another drug being developed for Parkinson s disease SALES Teva said it expected the Auspex deal which will be financed with cash on hand to add to revenue from 2016 and to adjusted earnings per share EPS beginning in 2017 It will be meaningfully accretive thereafter the company added It estimated sales of 2 billion from Auspex products in 2020 It expects minimal dilution to adjusted EPS in the second half of 2015 and 2016 Cowen analyst Ken Cacciatore said the acquisition would fit well with Teva s own neurology commercial and development infrastructure The bottom line is that options remain and Teva is now finally on the offence he said adding he hoped even more aggressive deals would be considered Michael Hayden Teva s chief scientific officer said Auspex s technology could represent a significant breakthrough for patients who often have no sustainable symptom relief from their disease The transaction has been approved by the boards of Teva and Auspex and key shareholders of California based Auspex have entered into agreements indicating support for the deal Teva expects it will close in mid 2015
Goldman Sachs NYSE GS is acting as exclusive financial adviser to Teva and J P Morgan Securities is the exclusive financial adviser to Auspex | 3/30/2015 |
GS | Crude down despite late rally as deadline for Iran nuclear deal nears | Investing com Crude oil prices slid on Monday as a deadline for a deal regarding Iran s nuclear program neared exacerbating concerns that a relaxation of sanctions on Iranian oil exports could add significantly to the glut in global oil supply
A late rally in the final minutes of trading on Monday pared previous losses after a State Department spokesperson said there s a 50 50 chance an agreement with Iran will be reached by Tuesday While crude futures gained more than a dollar a barrel just before the close the last minute rebound failed to offset an earlier sell off
In Lausanne Switzerland a bevy of foreign ministers from major world powers met with Iran reportedly pressing Iranian leaders to budge on the final critical details of a long awaited agreement The sides have set a deadline for Tuesday at midnight to reach an agreement on a preliminary outline for a deal aimed at limiting Iran s capabilities enough to keep a nuclear bomb out of reach
Hampered by heavy economic sanctions over the last three years Iran has reportedly exported just over a million barrels of crude oil a day since 2012 An easing of sanctions could depress crude prices due to heightening supply
On the New York Mercantile Exchange WTI crude for May delivery fell 0 20 or 0 41 to 48 67 a barrel Last Friday WTI crude experienced one of its worst trading days of the year plummeting more than 5 to under 49 a barrel WTI crude on Monday rose to a daily high of 49 14 in morning trading before falling below 47 70 in afternoon hours
Iran holds the world s fourth highest level of crude oil reserves according to the Energy Information Administration EIA a supply level of 157 billion barrels that amounts to approximately 10 of total global crude storage The rigid sanctions in turn have boosted Iranian oil supply Iran reportedly has hoarded 30 million barrels of oil on its fleet of offshore supertankers Reuters reported last week
Opec meanwhile said in a mid March report that heavy crude oil prices in Iran increased to 53 26 for the month of February a spike of more than 10 a barrel from the prior month Iranian Oil Minister Bijan Namdar Zanganeh has set a production target of 5 7 million barrels per day of crude oil by 2018 the Tehran Times reported according to official Iranian government statements
The Iranian prices for crude are slightly below current futures for the international benchmark On the Intercontinental Exchange ICE brent for May delivery fell 0 37 or 0 21 to 56 20 a barrel
Global oil supply is approaching record levels in large part due to the Shale boom throughout the United States In the U S oil is being pumped at its fastest rate in more than 30 years As a result U S storage capacity has hovered around 60 in recent weeks more than doubling from its level of 12 months ago If the U S reaches storage capacity at some point this summer there are mounting fears that crude oil could plunge below 30 a barrel Oil futures are currently down more than 50 from the triple digit levels reached last July
Strong housing numbers and encouraging personal income data led to modest gains in the dollar on Monday The U S Department of Commerce reported that personal income last month rose 0 4 above expectations for a 0 3 increase In addition a report from the National Association of Realtors found that contracts to purchase previously owned homes soared 3 1 in February significantly exceeding expectations of a 0 4 rise
The U S Dollar Index which measures the strength of the greenback versus a basket of six other major currencies increased 0 68 to 98 28
Crude oil futures fell sharply on Friday as supply concerns in Yemen eased While the closure of the strategically located Bab el Mandeb strait could limit oil exports in the Red Sea from reaching the Gulf of Aden analysts from Goldman Sachs NYSE GS said tankers could reach the area by taking an alternative route around Africa | 3/30/2015 |
GS | Holcim wins better terms to get Lafarge tie up back on track | By Gilles Guillaume and Oliver Hirt PARIS ZURICH Reuters Switzerland s Holcim VX HOLN and France s Lafarge PA LAFP have agreed new terms for their plan to create the world s top cement business giving unhappy shareholders in the Swiss company a better deal but leaving a key leadership question unanswered While the merger is back on track after a rocky few weeks the deal could still founder over who will run the combined entity with annual sales of more than 30 billion euros 32 billion After days of intense negotiations the two companies agreed Lafarge shareholders would now receive nine Holcim shares for every 10 Lafarge shares they hold rather than the one for one ratio agreed when the deal was unveiled in April last year The companies also agreed that Lafarge boss Bruno Lafont would no longer become chief executive instead taking on the role of non executive co chairman alongside Holcim s chairman though they have yet to decide who will take the CEO role The lack of a decision on a replacement CEO leaves questions over what tensions remain between the two sides Lafont s removal from the role along with the realigned share exchange also make the deal look less like the merger of equals it was presented as almost a year ago This is not enough to secure the deal and it s not the end of the story Bernstein analysts said in a research note Since the merger was announced last April Holcim investors had watched the companies relative business performances diverge A stronger Swiss franc also became a factor along with questions over Lafont s style and record The new share swap ratio means Holcim shareholders would own 55 6 percent of the new group up from 53 percent previously and the deal is now expected to close in July rather than June Holcim shares closed 0 5 percent higher at 76 15 Swiss francs on Friday and Lafarge stock ended 2 12 percent higher at 63 62 euros BRASH Lafont s proposed role had become a major sticking point for Holcim which threatened to abandon the deal on Sunday if the terms were not revisited The Swiss side questioned his ability to deliver the 1 4 billion euros in promised cost savings and disliked his brash management style sources have said My attitude since Sunday has been to show that men should not prevent this merger from going through and on the contrary should do everything to make it possible Lafont told reporters on a conference call Under the revised deal Lafont will be co chairman along with Holcim Chairman Wolfgang Reitzle Lafont is due to propose a new chief executive in the coming weeks A source close to the situation said the plan was for a new candidate to be named before Holcim s annual shareholder meeting on May 7 In another change to the plan the CEO will not be a member of the board Lafont told Le Figaro newspaper in an interview late on Friday A Lafarge spokeswoman confirmed the change RUSSIAN SHAREHOLDER KEY NEUTRAL CEO The companies also said that certain key shareholders on both sides had confirmed their support for the revised merger terms Thomas Schmidheiny a former Holcim chairman who has a 20 1 percent stake and is heir to the company s founder welcomed the new agreement This breakthrough was only made possible because all people involved attached more importance to the interests of the new corporation than to their own ambitions he said in a statement The position of Russian businessman Filaret Galchev who owns 10 8 percent of Holcim via Eurocement Holding AG could be key He declined to comment on Friday Nassef Sawiris who owns 16 percent of Lafarge told Reuters on Thursday that he backed the deal and was not worried about Holcim shareholders not voting for it Minority shareholders in Lafarge which analysts say have the most to lose if the deal fails were relieved to see it back on track One top 20 investor suggested a neutral CEO might work We ve been invested in this industry for a decade so if we get called and asked for our ideas we will give them There is the French Swiss thing perhaps one or two egos he said If you saw an American in there that might be interesting maybe they could cut through the cultural differences The new company will also pay a scrip dividend of 1 new LafargeHolcim share for each 20 existing shares after completion Analysts said the aim of this could be as a lock in bonus for existing shareholders Bank advisers to Lafarge are Rothschild and Zaoui Co Holcim is advised by Goldman Sachs NYSE GS and Perella Weinberg
1 0 9369 euros | 3/20/2015 |
GS | CNOOC s Nexen closing down crude oil trading division sources | By Nia Williams and Catherine Ngai CALGARY NEW YORK Reuters Nexen Energy a wholly owned subsidiary of China s CNOOC Ltd HK 0883 is closing its crude oil trading division following a round of job cuts announced last week four market sources said on Monday The Calgary based company which was acquired by state controlled CNOOC in 2013 for 15 1 billion cut 400 jobs last week in North America and the United Kingdom in response to plunging global oil prices Three sources said Nexen was closing down its trading operations worldwide although the majority of activity takes place in Calgary The company will continue to market its own crude Nexen did not immediately respond to requests for comment In Canada Nexen s crude oil desk is the biggest trading casualty so far of the global oil price rout in which U S crude prices have more than halved since last June to around 47 00 a barrel One market source said Nexen was among the top five physical crude trading shops in Calgary and the move would impact liquidity in the Canadian market There will be some unhappy brokers in town the source said But this is more consistent with the business model that CNOOC has In 2010 Nexen sold its North American natural gas trading book to Goldman Sachs N GS for an undisclosed sum after Nexen earlier said it wanted its business to reflect production weighting toward crude oil
The deal gave Goldman a business that Nexen said was one of the top 10 in gas trading on the continent | 3/23/2015 |
GS | Obamacare foe Ted Cruz to sign up for coverage under the plan | WASHINGTON Reuters Republican Senator Ted Cruz who has vowed to repeal every word of Obamacare if elected president next year will soon be signing up for coverage under the plan Cruz according to media reports had been covered under the health plan of his wife Heidi who is taking a leave of absence from Goldman Sachs NYSE GS to help his campaign We will presumably go on the exchange and sign up for health care and we re in the process of transitioning over to do that the Texas lawmaker told the Des Moines Iowa Register on Tuesday Under President Barack Obama s signature Affordable Care Act members of Congress seeking insurance must sign up through an exchange Well it is written in the law that members will be on the exchanges without subsidies just like millions of Americans Cruz told the Register adding I think the same rules should apply to all of us Members of Congress should not be exempt In September 2013 efforts by Cruz and House of Representatives conservatives to gut Obamacare by holding up a government spending bill led to a 16 day government shutdown
Cruz a conservative firebrand who is a favorite of the Tea Party movement on Monday became the first major figure in either party to enter the 2016 presidential race | 3/24/2015 |
GS | Goldman trims U S first quarter GDP view to 1 8 percent from 2 0 percent | NEW YORK Reuters Goldman Sachs NYSE GS economist Kris Dawson said on Wednesday he scaled back his view of U S growth in the first quarter following an unexpectedly weak report on domestic durable goods orders in February
Dawson wrote in a research note that he reduced the tracking estimate on the U S gross domestic product in the first quarter to 1 8 percent from 2 0 percent | 3/25/2015 |
GS | Fast growing smart funds in regulators sights | By Nishant Kumar and Simon Jessop LONDON Reuters Funds that mimic strategies used by active managers for a fraction of the cost could be forced to carry a health warning by regulators who are concerned they may pose greater risks than are being disclosed The so called smart beta funds use formulas to decide when to buy and sell stocks and bonds on a semi regular basis as opposed to blindly tracking an underlying index or being more actively run on a daily basis Fund tracker Morningstar which calls the funds strategic beta estimates the industry has quadrupled assets to near 400 billion since 2010 Add private mandates and the total is nearly 1 trillion money manager Lyxor estimates The reason is clear Smart funds can charge between a quarter and half the fees of actively managed funds However their popularity has now caught the eye of regulators in Europe and in the United States who are looking at the potential risks they pose which could lead to new rules and greater disclosures The U S market watchdog said it would review the market this year to see how market volatility affects the funds performance and regulators in the European Union flagged additional concerns with how the funds are constructed The funds shuffle holdings to capture the replicable parts of a strategy which don t involve a manager s particular skill or emotional bias a kind of half way house between a passive and actively managed fund That could mean for example buying high dividend yielding stocks selling overvalued and buying undervalued stocks or re creating the trades of certain hedge funds But such strategies could leave a fund unbalanced We have concerns around the level of transparency and risk disclosures said Patrick Armstrong senior expert of financial innovation at the European Securities and Markets Authority Alternative index strategies may introduce potential factor biases or concentration risk in a portfolio that an investor may not be fully aware of he added Regulators are also concerned because large institutions such as pension funds are increasingly looking to such funds as a cheaper and relatively safe way to access the equity market and improve returns after the financial crisis led to a drop in bond yields One sought after strategy is minimum variance which involves buying stocks with low volatility said Laurence Wormald head of buy side risk research at Sungard although as the assets become more popular they can become volatile Crowding and herding is the big problem with smart beta said Wormald The illusion of being able to permanently depress the risk on equities through smart beta or minimum variance strategies has been very very appealing and a lot of money has piled in but that delusion cannot be kept up because it s based on a strategy that doesn t work when the crowd arrives he said Regulators worry the methodology used to create some funds the testing used to show how they would fare at periods of market stress and the way risks are disclosed to investors is uneven HEDGE FUNDS NEXT Regulators are currently just looking at the plain vanilla end of smart beta which account for the bulk of industry assets but demand is growing to create funds using more exotic formulas to copy strategies similar to hedge funds It s very early days in applying that technology to create alternative strategies It is growing fast but it s growing fast from a very small base said Chris Brightman chief investment officer at smart beta fund provider Research Affiliates Once you move away from a long only unlevered portfolio to using derivatives and leverage in a strategy you are absolutely introducing additional risks that need to be managed he said Goldman Sachs N GS for example in December sought the regulatory nod to launch 11 alternative beta funds five of which sought to replicate hedge fund returns while IndexIQ whose funds aim to clone hedge fund gains recorded a 46 percent jump in assets to 1 6 billion last year Academic research papers have identified more than 350 factors that can be used to create smart beta funds making such investments difficult to monitor for regulators and investors alike It s a legitimate area for research and to invest but some of these things are becoming more and more opaque said Andrew Herberts head of private investment management UK for Thomas Miller
Story refiles to amend headline | 3/26/2015 |
GS | Lumber Liquidators defense not convincing enough analysts | By Ankit Ajmera Reuters Lumber Liquidators Holdings Inc s N LL shares fell as much as 10 percent on Friday reversing some gains from a day earlier after brokerages cut their price targets saying the hardwood flooring retailer s defense of its products left some questions unanswered The retailer came under fire after CBS s 60 Minutes show alleged that laminates sourced by the company from China had higher than permitted levels of formaldehyde a carcinogen Goldman Sachs NYSE GS said the company did not explain why its flooring could not pass the safety test while floors sold by others did downgrading the stock to neutral from buy The brokerage also removed the stock from its Americas buy list adding that it anticipated a hit to sales from recent reputational challenges but the hit to margin was more severe Lumber Liquidators gave a blow by blow account of its testing process on Thursday and said it planned to boost marketing spend and adjust retail prices to show that Lumber Liquidators has the best value proposition in the industry The company said it expected current quarter gross margins to fall to 37 37 5 percent from 41 1 percent a year earlier Lumber Liquidators Founder and Chairman Tom Sullivan in an interview with CNBC on Friday also defended its products saying our laminates are safe we don t skimp on our products 60 Minutes episode did great job of scaring people he said Goldman cut its price target on the stock to 35 from 40 Wedbush Securities to 40 from 55 and Jefferies Co to 33 from 52 Despite Lumber Liquidators defense its first quarter forecast shows that customer confidence is shaken Jefferies analyst Daniel Binder said The company s shares were down 8 percent at 33 17 in afternoon trading on the New York Stock Exchange The stock is currently trading at 12 2 times its forward earnings well below the peer median of 21 6
Up to Thursday s close shares of the Toano Virginia based company had nearly halved in value since Feb 25 when the company first mentioned the then to be aired CBS show | 3/13/2015 |
GS | Weak euro powers European stocks to new highs | By Jamie McGeever LONDON Reuters The euro struck a fresh 12 year low on Monday and euro zone stocks reached new peaks on bets that the currency s relentless fall will boost corporate earning prospects just as the rising dollar hits those of U S firms German stocks powered above 12 000 points for the first time while the main pan euro zone benchmark indices hit new seven year highs The euro rebounded as European trading got underway however while U S oil prices recovered after slipping to a fresh six year low although they were still down on the day This week s focal point for global financial markets is the U S Federal Reserve s policy decision on Wednesday with the euro dollar exchange rate likely to remain the dominant driver for major equity currency and bond markets until then With dollar momentum this strong and investors unlikely to ride any euro rally ahead of the Fed meeting risks for the euro are still to the downside for the next couple of days and any bounces are likely to be limited Unicredit MILAN CRDI FX analysts said on Monday In early European trading the euro was up 1 3 of a percent against the dollar at 1 0530 having slid to 1 0457 early in the Asian session its lowest since January 2003 The euro has lost roughly a quarter of its value versus the dollar since mid 2014 and suffered its biggest weekly fall since September 2011 last week shedding 3 2 percent as the European Central Bank launched its trillion euro money printing scheme Goldman Sachs NYSE GS now sees the euro at 0 80 by the end of 2017 European stocks took heart Germany s DAX GDAXI was up 0 85 percent at 12 001 points France s CAC 40 FCHI half a percent higher at 5 039 points and Britain s FTSE 100 index up 0 25 percent at 6 758 points FTSE The FTSEurofirst 300 FTEU3 index of top European shares rose 0 3 percent to 1 584 points and the euro zone top 50 stocks index was up 0 5 percent at a seven year high of 3 673 points ECB IN AGAIN MSCI s broadest index of Asia Pacific shares outside Japan MIAPJ0000PUS closed a few ticks higher while Chinese shares outperformed to hit five year highs The CSI300 index CSI300 and the Shanghai Composite Index SSEC both rose more than 2 percent after Premier Li Keqiang said Beijing had scope to adjust policies to help boost the world s second largest economy Japan s Nikkei hit a 15 year high of 19 349 points N225 Recent weak U S inflation and retail sales data have not derailed expectations that the Fed will tighten monetary policy and the prospects that higher rates and a stronger dollar will hit U S corporate profits have dragged on shares Wall Street futures were seen opening 0 2 percent higher on Monday lagging Europe s main bourses Many observers expect the Fed to remove its pledge to remain patient on delivering its first interest rate hike since 2006 with economists polled by Reuters almost evenly split on whether a first hike will come in June or later in the year German 10 year Bund yields inched up 1 basis point to 0 265 percent having hit a record low 0 188 percent last week Longer dated German yields fell however and benchmark Spanish Italian and Portuguese yields were also headed back towards their recent record lows The ECB is expected to buy more sovereign bonds as part of its stimulus program this week limiting any upward pressure on bond yields The current dynamic is incredible logical and extendable until something changes but there is little sign of that right now Citi rates strategist Mark Schofield said Oil prices continued to tumble with U S crude dropping more than 2 percent at one point to a six year low on fears of oversupply The International Energy Agency said on Friday that a global glut of oil is growing and U S production shows no sign of slowing U S crude was last down about 0 8 percent at 44 48 a barrel while Brent was 0 6 percent lower at 54 32
After snapping its longest daily losing streak since 1973 on Friday with a first rise in 10 sessions gold consolidated its gains Bullion was flat on the day at 1 158 an ounce | 3/16/2015 |
GS | EUR USD rallies slightly on Monday ahead of critical Fed meeting | Investing com The euro edged slightly higher on Monday slamming the brakes on its rapid depreciation against the U S dollar ahead of a highly anticipated Federal Reserve meeting later this week
EUR USD gained 0 70 or 0 0073 to 1 0569 in U S afternoon trading The pair fell below 1 05 at last week s close as the start of the European Central Bank s 60 billion a month quantitative easing program coincided with expectations of an interest rate hike from the Fed Since the start of the year the pair is down roughly 10
Last week analysts from Deutsche Bank XETRA DBKGn and Goldman Sachs NYSE GS both revised their timetables on when the euro could reach parity against the dollar moving up the dates from previous forecasts Deutsche Bank even predicted that the euro could fall to 0 85 against the dollar by 2017 On Monday Alan Ruskin head of foreign exchange strategy for Deutsche Bank went one step further
Speaking with CNBC s Power Lunch Ruskin said he thinks it is possible the euro could reach a historic low against the dollar of 0 82 The euro hasn t reached a level that low since 2002
If you think of what s driving the euro a lot of this has been hedging from foreigners who ve held euro bonds and euro equities Ruskin told CNBC I think that it will slow somewhere near parity
The Fed could remove its reference to remaining patient from its minutes when the Federal Open Market Committee stages a two day meeting this week beginning on Wednesday The reference typically indicates that it will start raising interest rates at either of its next two meetings It has been six years since the U S central bank has increased rates which have remained near zero since the Financial Crisis
Elsewhere Greece and its euro zone creditors appeared to be far apart in negotiations concerning the reform measures Athens must employ to extend a critical bailout package Greece prime minister Alexis Tsipras appears unwilling to agree to some of the austerity measures required by the euro zone in order to strike a deal
Whatever obstacles we may encounter in our negotiating effort we will not return to the policies of austerity Tsipras told Greece newspaper Ethnos | 3/16/2015 |
GS | ECB s money printing may stymie cash generators | By Mike Dolan LONDON Reuters The European Central Bank may well be printing money via its landmark government bond buying program but it could also be destroying some of the financial system s own printing presses in the process Little over a week after the ECB launched its 1 trillion euro quantitative easing campaign financial markets are fretting that there is a shortage of bonds for the central bank to buy This has created a hiatus in the plumbing of the global financial system that s seen bond yields and long term interest rates vanish across the spectrum and move deeply negative in some cases especially benchmark German bunds ECB officials insist this scarcity rather than shortage is a deliberate part of QE and forces down yields on the lowest risk bonds in order to push banks and investors into riskier lending more useful to the economy But the stimulus to cash flows around financial markets rather through the high streets has been far more seismic ECB QE will not have a significant effect at least in our view on the real economy but it is having a massive effect on financial markets said Phil Poole head of Research at Deutsche Asset Wealth Management There is clearly a distortion in the market which is leading investors generally to take more risk or buy less liquid assets in order to generate a return Some experts beg to differ with the ECB and say a growing shortage of top rated bonds particularly AAA rated German bunds is playing havoc with the way the financial system generates money within itself by the pledging and re pledging of top quality bonds as collateral in return for cash Any shrinkage of this securities lending market a giant moneyspinner with 5 5 trillion euros outstanding in Europe alone has been a concern ever since the global credit crisis and subsequent regulation cut the range of bonds and counterparties involved and limited the amount of times bonds are typically repledged for cash For example a drop in the re use rate of collateral in this way from about 3 times to 2 4 times over the four years after the crisis involved an evaporation of 5 trillion in the cash generated by banks according to IMF estimates The concern is that QE by draining markets of the top rated collateral itself has a similar effect and offsets the intended injection of new cash into the banking system As a result the ECB s 1 trillion euro cash creation could be dampened by the net removal of bunds and other government bonds that can raise more than twice their face value in cash via repo markets DEEPLY NEGATIVE The particular squeeze on the benchmark German bund market from the ECB buying plan which according to its so called capital key formula targets more bunds than the likes of Italian or Spanish government bonds has driven yields on about of a third of euro government bonds into negative territory JPMorgan NYSE JPM analysts estimate that as ECB kicked off QE last week almost 4 percent of 4 6 trillion euros of government bonds between the targeted 2 and 30 year maturities and as much as 20 percent of the 800 billion euros of German bunds in this area had negative yields greater than 20 basis points Given that the ECB is not even able to buy bonds with negative yields any larger than 20bp then the skew in supply and demand is pretty obvious and yields on longer term bunds have sunk further too on the assumption that the shorter term paper is already too negative to be eligible for ECB bond buying The stock of bonds eligible for ECB purchases is diminishing as a result of the price action a self reinforcing but unstable dynamic Goldman Sachs NYSE GS economists told clients Driving this is the fact that unlike the Fed s QE program the ECB will be buying more euro governments bonds than the amount of new bonds being raised by euro capitals over the period of the purchases Barclays LONDON BARC estimates the overall effect will be to remove a net 560 billion euros of government bonds from investors or shrink the market by that amount Claiming German bund market liquidity dried up considerably last week the JPMorgan analysts wrote The ECB not only creates scarcity of one form of collateral versus another but it also creates shortage of collateral by replacing high efficiency government bond collateral with lower efficiency cash collateral The ECB has said it will lend back key securities to the market if stress occurs in particular areas of the bond market but analysts reckon this would likely involve the exchange of one scarce bond for another and not change the collateral pool materially Few expect the ECB to cut its campaign short either at least not in the absence of it getting inflation back to the 2 percent target early Perhaps the effect of pushing banks and asset managers out of such deeply n By Mike Dolan LONDON Reuters The European Central Bank may well be printing money via its landmark government bond buying program but it could also be destroying some of the financial system s own printing presses in the process Little over a week after the ECB launched its 1 trillion euro quantitative easing campaign financial markets are fretting that there is a shortage of bonds for the central bank to buy This has created a hiatus in the plumbing of the global financial system that s seen bond yields and long term interest rates vanish across the spectrum and move deeply negative in some cases especially benchmark German bunds ECB officials insist this scarcity rather than shortage is a deliberate part of QE and forces down yields on the lowest risk bonds in order to push banks and investors into riskier lending more useful to the economy But the stimulus to cash flows around financial markets rather through the high streets has been far more seismic ECB QE will not have a significant effect at least in our view on the real economy but it is having a massive effect on financial markets said Phil Poole head of Research at Deutsche Asset Wealth Management There is clearly a distortion in the market which is leading investors generally to take more risk or buy less liquid assets in order to generate a return Some experts beg to differ with the ECB and say a growing shortage of top rated bonds particularly AAA rated German bunds is playing havoc with the way the financial system generates money within itself by the pledging and re pledging of top quality bonds as collateral in return for cash Any shrinkage of this securities lending market a giant moneyspinner with 5 5 trillion euros outstanding in Europe alone has been a concern ever since the global credit crisis and subsequent regulation cut the range of bonds and counterparties involved and limited the amount of times bonds are typically repledged for cash For example a drop in the re use rate of collateral in this way from about 3 times to 2 4 times over the four years after the crisis involved an evaporation of 5 trillion in the cash generated by banks according to IMF estimates The concern is that QE by draining markets of the top rated collateral itself has a similar effect and offsets the intended injection of new cash into the banking system As a result the ECB s 1 trillion euro cash creation could be dampened by the net removal of bunds and other government bonds that can raise more than twice their face value in cash via repo markets DEEPLY NEGATIVE The particular squeeze on the benchmark German bund market from the ECB buying plan which according to its so called capital key formula targets more bunds than the likes of Italian or Spanish government bonds has driven yields on about of a third of euro government bonds into negative territory JPMorgan analysts estimate that as ECB kicked off QE last week almost 4 percent of 4 6 trillion euros of government bonds between the targeted 2 and 30 year maturities and as much as 20 percent of the 800 billion euros of German bunds in this area had negative yields greater than 20 basis points Given that the ECB is not even able to buy bonds with negative yields any larger than 20bp then the skew in supply and demand is pretty obvious and yields on longer term bunds have sunk further too on the assumption that the shorter term paper is already too negative to be eligible for ECB bond buying The stock of bonds eligible for ECB purchases is diminishing as a result of the price action a self reinforcing but unstable dynamic Goldman Sachs economists told clients Driving this is the fact that unlike the Fed s QE program the ECB will be buying more euro governments bonds than the amount of new bonds being raised by euro capitals over the period of the purchases Barclays estimates the overall effect will be to remove a net 560 billion euros of government bonds from investors or shrink the market by that amount Claiming German bund market liquidity dried up considerably last week the JPMorgan analysts wrote The ECB not only creates scarcity of one form of collateral versus another but it also creates shortage of collateral by replacing high efficiency government bond collateral with lower efficiency cash collateral The ECB has said it will lend back key securities to the market if stress occurs in particular areas of the bond market but analysts reckon this would likely involve the exchange of one scarce bond for another and not change the collateral pool materially Few expect the ECB to cut its campaign short either at least not in the absence of it getting inflation back to the 2 percent target early Perhaps the effect of pushing banks and asset managers out of such deeply negative yields into long dated and riskier debt equities and even foreign bond markets hence weakening the euro may simply be seen as the main prize The near 25 percent drop in euro dollar since the middle of 2014 shows that s well on the way
The principle impact on the real economy is through the exchange rate and that s what we are seeing said Poole at Deutsche AWM | 3/18/2015 |
GS | Forty years after escaping war boat people find fortune back in Vietnam | By Lien Hoang HO CHI MINH CITY Reuters As one of the Vietnam War s final battles raged four decades ago Quynh Pham lay with her mother in a field covered in a stranger s blood They survived only by pretending to be dead They were among an exodus of over a million South Vietnamese who fled oppression and uncertainty before and after U S forces retreated and victorious North Vietnamese tanks rolled into Saigon in April 1975 reuniting the two sides under communism Pham 41 resettled in California and is now owner of an art gallery in Ho Chi Minh City one of a stream of Vietnamese Americans who found their fortunes in a fast changing Vietnam where capitalism is thriving under communist rule Pham runs leading art house Galerie Quynh In the 17 years she s lived in Vietnam her mother has refused to visit When I moved back to Vietnam she disowned me said Pham She said You re not my daughter They ve since buried the hatchet but Pham s mother has bitter memories and can t understand why she returned The war drove boatloads of Vietnamese to the United States which had more than 1 5 million citizens of Vietnamese origin in a 2010 census Others resettled in Australia Canada Britain and France via refugee camps in Asia surviving perilous voyages on crowded rickety boats on which thousands starved or drowned CAPITALIST LURE Now many former refugees and their offspring are reaping the gains of Vietnam s booming emerging market and middle class growth tapping a young consumer population that s embracing Western culture The most notable is Henry Nguyen a venture capitalist and former Goldman Sachs NYSE GS associate from Virginia who co owns a Los Angeles soccer team and helped bring McDonald s Pizza Hut and Forbes Magazine to Vietnam Vietnam was in a certain place in its development and I was in a certain place in my life Nguyen told Reuters referring to his return in 1995 That was a good fit He s also famous for a marriage that brought together families on opposite sides of the war His wife Phuong is daughter of Vietnam Prime Minister Nguyen Tan Dung It forced people who share common values and culture to pick sides Nguyen 41 said of the war It s kind of like a tragicomedy Not all Viet Kieu or Vietnamese overseas can move on Some are scarred by war and persecution But for many time has drained away that bitterness U S Vietnamese relations are warming rapidly too with Viet Kieu among U S diplomats involved in Washington s moves to make its former foe its newest Asian ally Vietnam will send its party chief to the United States this year for the first time Though their role is often overlooked the Viet Kieu have been a boon for Vietnam s economy Remittances are expected to reach 13 14 billion this year central bank data shows compared with 12 billion in 2014 worth 8 percent of a GDP that s grown more than 5 percent a year since 1999 More than half are from the United States HIGH VALUE Viet Kieu also bring know how and capital vital to Vietnam s trade and high tech ambitions contributions Nguyen said apparatchiks like his father in law recognize He s always been one of the more progressive politicians here Nguyen said of Dung I think all senior political leaders here realize the value of our Vietnamese community elsewhere It s a symbiotic relationship that presents Viet Kieu with opportunities they might not have in the United States like new careers or investments in growth areas from coffee shops and restaurant chains to property fashion record labels and the manufacturing sector Jenni Trang Le has made her mark in the Vietnamese film industry producing 13 movies including box office hits De Mai Tinh 2 and Teo Em It s not like every movie I make here is Oscar worthy but just the fact it s in Vietnam and it s in Vietnamese already makes it worth it for me Le said It s the kind of niche Andy Ho managing director of asset firm Vinacapital recommends Viet Kieu find to make their return easier It s common for Vietnamese Americans to feel anxiety about identity in the United States and in Vietnam
You re not a foreigner are you said Ho who was raised in Denver Yet you re not Vietnamese either You re somewhere in between | 3/9/2015 |
GS | NYMEX crude oil up in Asia as API data awaited China price data mixed | Investing com Crude oil prices rose in Asia on Tuesday as data on prices trends in China was mixed and investors looked ahead to U S stockpiles data Producer prices year on year for February fell 4 8 more than the 4 3 decline expected But consumer prices year on year for the same month rose 1 4 faster than the 0 9 gain expected On the New York Mercantile Exchange WTI crude oil for April delivery rose 0 62 to 50 31 a barrel Prices rebounded in U S afternoon trading after falling below 49 30 a barrel earlier Investors are looking ahead to U S industry figures from the American Petroleum Institute for crude and refined product stockpiles last week to be announced later Tuesday On Wednesday the U S Department of Energy will release its own more closely watched figures on the same Overnight oil prices were mixed on Monday as traders reacted to reports of increasing U S supply levels and comments from Opec s general secretary on rising global consumption Last week supply inventories at the Cushing Oil Hub in Oklahoma rose by 1 7 million barrels according to a report released Monday by data service Genscape Inc The report comes days after the Energy Information Administration EIA said in its weekly report that inventories at Cushing reached a level of 49 2 million barrels a 53 increase from the weekly level at this time last year Reports have indicated that supply levels at Cushing the nation s largest hub for WTI crude oil storage are less than 3 million barrels below a record high If inventories grow at its current rate it has been estimated by analysts that Cushing could reach full capacity by the middle of next month Once Cushing reaches full capacity the price of WTI crude could plunge even further In addition in a note to commodities investors on Sunday Goldman Sachs NYSE NYSE GS used a U shaped model to predict price drops with light sweet Texas intermediate on a short term basis Oil analysts at Goldman Sachs believe WTI set a short term price target of 40 a barrel for WTI crude futures down by roughly 10 from its current level For long term price targets into 2016 Goldman Sachs predicted that oil futures could rise to 65 a barrel On the Intercontinental Exchange ICE brent oil fell 2 03 or 1 21 to 58 52 a barrel for April delivery on Monday Brent prices fell following comments from Opec general secretary Abdalla El Badri that demand could increase for the second half of the year as supply is trimmed Opec forecasts that daily consumption of oil will increase to 1 2 million barrels a day in 2015 up from a slower than expected amount of 1 0 million barrels last year Oil prices are down more than 50 from last June | 3/9/2015 |
GS | Exclusive GM capital plan may delay credit rating upgrade | By Ben Klayman DETROIT Reuters General Motors Co s N GM decision this week to give back up to 10 billion to shareholders over the next two years will likely delay one of its important goals achieving a top tier credit rating that would benefit its growing auto finance unit The No 1 U S automaker has been building its GM Financial unit through acquisitions and more aggressive marketing to dealers Automakers use in house lenders to offer discounted financing on new cars and trucks for consumers and dealers Reaching a single A credit rating would give GM greater flexibility to fund GM Financial at lower cost GM is still three steps from an A rating but officials with Standard Poor s Ratings Services and Moody s Investor Service said this week that the next upgrade could be delayed by GM s decision Monday to launch a 5 billion share buyback and boost its dividend The way we are assessing the company s trajectory in terms of any upside ratings is that as of now it appears unlikely in the next two years S P credit analyst Nishit Madlani told Reuters GM on Monday said it agreed to operate with 20 billion in cash reserves returning any excess to stockholders As of the end of 2014 it had stockpiled 25 billion in hopes of rebuilding its debt rating S P reaffirmed its investment grade rating of BBB and a stable outlook but Madlani said in case of a modest downturn that level of cushion is not something we are comfortable with Before Monday S P might have considered an upgrade in 2016 he said Moody s has also delayed its timeline for a GM upgrade senior vice president Bruce Clark said The likelihood of being able to look at the rating for something positive happening is probably not going to happen until 16 he said Moody s has an investment grade rating on GM s corporate credit facility but its senior unsecured debt is a notch below investment grade GM Chief Executive Mary Barra Monday said maintaining an investment grade balance sheet was key President Dan Ammann said a solid investment grade credit rating is a critical pillar of our strategy in relation to GM Financial Chief Financial Officer Chuck Stevens said GM did not expect any negative impact on current ratings The credit agencies said GM s rating is likely to tread water especially until it becomes clear how much the company will pay in costs related to litigation over delayed recalls of millions of vehicles with defective ignition switches Operating costs also could rise after GM negotiates a new labor deal this fall with U S hourly workers Fitch Ratings the third major rating agency has GM s credit rated a step below investment grade with a positive outlook Analysts expect an upgrade within months but they expect Fitch to join the others in waiting after that before moving the company s rating up again Fitch senior director Stephen Brown said his agency could take a negative view if GM s cash position dipped below 20 billion for a prolonged period Meanwhile rival Ford Motor Co N F says it wants to achieve a single A credit rating by 2020 Goldman Sachs NYSE GS credit analyst Brian Jacoby said he is sure GM has a similar goal but has not spelled it out
It would have been nice to hear them say a little bit more about ultimately how they want to have higher debt ratings he said | 3/11/2015 |
GS | Handmade goods website operator Etsy files for IPO | Reuters Etsy Inc which operates a website that sells handmade goods and craft supplies filed with U S regulators on Wednesday for an initial public offering of common stock Goldman Sachs Co NYSE GS Allen Co LLC and Morgan Stanley NYSE MS are underwriting the IPO Brooklyn New York based Etsy told the U S Securities and Exchange Commission in a preliminary prospectus The company said it intended to list on the Nasdaq Global Select Market under the symbol ETSY Etsy which was founded in 2005 employs 685 people and has 29 million items listed on its website The company recorded total revenue of 195 6 million and gross merchandise sales of 1 93 billion in 2014 The company charges a 20 cent listing fee for each item on its site and a 3 5 percent fee for each completed sale It also earns from seller services such as its advertising platform payment processing and shipping labels Etsy said it intended to raise up to 100 million from the IPO but the filing did not reveal how many shares the company planned to sell or their expected price The amount of money a company says it plans to raise in its first IPO filings is used to calculate registration fees The final size of the IPO could be different | 3/4/2015 |
GS | Forex Yen weaker in Asia as Kiuchi questions policy AUD down on Lowe | Investing com The yen weakened along with the Aussie in Asia on Thursday on comments from policy makers at both central banks and data in Australia that gave a mixed outlook ahead of a key European Central Bank meeting later in the day The Australian dollar traded stronger on Thursday early in Asia ahead of trade and retail traded at 0 7811 down 0 08 while USD JPY changed hands at 119 81 up 0 10 The US dollar index was quoted at 96 02 up 0 04 EUR USD changed hands at 1 1074 down 0 04 in Asia Australia s trade balance for January reached a deficit of A 980 million wider than the A 950 million deficit seen while retail sales for the same month rose 0 4 matching expectations Separately Reserve Bank Deputy Governor Philip Lowe said Thursday that more support on the monetary policy side may be required hinting strongly the central bank may cut further from a record low 2 25 cash rate it held steady this month More support may be required Lowe said at the Goldman Sachs NYSE GS annual international macro economic conference at Sydney The RBA lowered the cash rate 25 basis points in February because it believed it appropriate to provide additional support to demand Lowe said This was not because things had turned for the worse but rather because of the lack of compelling signs that economic growth was picking up as was earlier expected Lowe said Still the exchange rate remains relatively high given the overall state of the economy because of the scale of international monetary stimulus he said The end result here is that global developments have left us with a higher exchange rate and lower interest rates than would otherwise have been the case We may not like this configuration but developments abroad give us little choice he added Separately Bank of Japan board member Takahide Kiuchi who opposed the Oct 31 further easing called for looking at shifting policy away from supporting assets like government bonds and the stock market He called for a review on the feasibility of massive buying of government bonds Overnight the U S dollar rose to its highest level against the euro on Wednesday in more than 11 years ahead of the European Central Bank s announcement on Thursday detailing the start of its 60 billion a month quantitative easing program The continuing decline comes on the eve of Thursday s ECB meeting where policymakers are expected to release critical details on a monetary easing program that was passed last month Among the topics expected to be discussed at the meeting in Cyprus include projections for inflation and growth the length and scope of the program as well as projections for when interest rates could rise again in Europe Also on Wednesday Greece announced the auction of 1 138 billion in six month Treasury bills allowing it to refinance a maturing issue The Treasury bills were sold at a yield of 2 97 up from 2 75 at a prior sale last month U S stocks meanwhile fell amid a flurry of mixed economic data In its monthly National Employment Report released on Wednesday payroll services firm ADP said that the private sector added 212 000 non farm jobs in February just below forecasts of a 220 000 gain For the month of January private payrolls were revised upward to 250 000 from a previously reported total of 213 000 Elsewhere the U S Services sector recorded its highest activity level since October as the Markit Purchasing Managers Index PMI rose to 57 1 from a January reading of 51 7 The final number also exceeded a monthly forecast of 54 8 The Institute for Supply Management ISM also said on Wednesday that its services index climbed to 56 9 for February up from a reading of 56 7 a month earlier | 3/4/2015 |
GS | JPMorgan Clamps Down On Social Media | By
In the aftermath of the massive cyberattack that struck JPMorgan Chase Co NYSE JPM last year the bank is now struggling with a different sort of breach Employees are oversharing on LinkedIn As first reported by eFinancialCareers JPMorgan Chief Information Officer Dana Deasy recently issued a directive limiting how employees use their LinkedIn profiles Sources at the bank have confirmed the policy with International Business Times This latest development plays into the escalating recruitment wars between major Wall Street firms and highlights the increasing role social media plays in the corporate food chain as well as questions of employee freedom in the digital age The policy will have implications particularly in the information security field among the fastest growing on Wall Street as well as the most volatile Unrelenting cybersecurity attacks like that one that compromised the privacy of more than eighty million JPMorgan clients have forced banks to bolster their IT units in a hurry There s a lot more jobs and that s going to create attrition says William Wilcox vice president of the specialty recruiting firm Barclay Simpson More jobs being created is going to create higher salaries and people jumping ship Wilcox says That makes LinkedIn a potent weapon if a double edged one for HR managers For the recruitment industry in general I d say it s the primary tool says Wilcox This is true within firms as well as between them A recruiter at Goldman Sachs NYSE GS can use LinkedIn to scope out talent at JPMorgan and vice versa JPMorgan s new policy could be aimed at several objectives According to sources Deasy isn t looking to block any and all use of LinkedIn a network that thousands of its employees use He is asking only that employees limit their profiles to general vague descriptions of their job titles The memo also instructed employees not to give or receive endorsements which colleagues use to recognize each other for particular skills The policy undoubtedly has consequences in the high stakes world of recruitment But it could also be intended to keep proprietary information safe in a dog eat dog market space where even the slightest information as to a firm s business strategy can give competitors an edge JPMorgan declined to comment on matters of recruitment and cybersecurity Regardless of intent the rules may make it harder for headhunters to pinpoint prospective talent I have a job where I m looking at several keywords on LinkedIn says Peter Laughter chief executive officer at the recruiting firm Wall Street Services Trimming the details from LinkedIn profiles he says decreases the likelihood of me finding them This all raises the question of how much a company can legally curtail its employees social media use A number of Wall Street banks notoriously block social media sites like Facebook and Twitter in the office but this policy doesn t extend beyond the workday Though the National Labor Relations Board protects employees who use social media to lodge complaints against employers on a collective level the law is fuzzier for individual actions like updating a LinkedIn profile But whether the policy is legal is a different question from whether it s wise As far as recruiters ability to find people these restrictions will not limit me says Laughter who calls the new policy a fool s errand Considering the potential headaches around compliance it s unclear how far JPMorgan will go to enforce its new policy Any employer has to recognize that their employees work for their own best interests always says Laughter The way to keep employees is not to limit their ability to find a new job but to make the situation they re in their ideal job | 3/6/2015 |
GS | Wall Street firms more convinced of June rate hike Reuters poll | By Yasmeen Abutaleb NEW YORK Reuters Many of Wall Street s biggest banks are more convinced the Federal Reserve will raise interest rates in June after a strong February jobs report on Friday pointed to sustained economic growth and as the jobless rate hit a more than 6 1 2 year low Nine of 16 primary dealers or the banks that deal directly with the Fed said they expect a June lift off date compared to 10 of 19 who predicted the rate hike in a Feb 6 poll All but one expect more than one rate hike in 2015 Though just over half the economists polled predicted a mid year rate hike six dealers polled said their conviction that the Fed would raise rates in three months time had increased in the last month The median expectation for where the federal funds rate will end the year was 0 875 percent for 2015 and 2 375 percent for 2016 compared to 0 75 percent and 2 125 percent respectively in the February Reuters poll The Fed has held rates near zero since the 2008 financial crisis having ended its bond buying program in October Fed Chair Janet Yellen has reiterated that policymakers will remain patient in deciding when to raise rates which she defined in December and January as a couple of meetings But Friday s jobs report which showed that U S employers added 295 000 jobs in February far exceeding expectations means the Fed could move more aggressively to tighten policy economists said The strength of the jobs data today argues in favor of the Fed allowing itself the flexibility to soon drop the word patient from its statement said Dana Saporta economist at Credit Suisse who expects a June rate hike Policy right now is geared toward emergency conditions and we ve been recovering since 2009 On average economists said there was a 47 5 percent probability the Fed will raise rates in the first half of 2015 Of the nine who predicted a mid year rate hike seven answered a Reuters question on the probability of such an occurrence with the median probability at 55 percent Traders on Friday were pricing in a more aggressive pace of policy tightening though the consensus based on market rates still puts September as the most likely point for the first increase Fed funds futures contracts on Friday suggested traders were pricing in just a 22 percent probability of a June rate hike The first contract with a greater than 50 percent probability of a hike is September 2015 at 66 percent according to CME Fed Watch Goldman Sachs NYSE GS economist Jan Hatzius told CNBC he expects the Fed to raise rates by September the firm did not respond to the Reuters poll Five other firms also did not take part | 3/6/2015 |
GS | Newcomers jump into activist investing eying returns and capital | By Svea Herbst Bayliss BOSTON Reuters The largest new field of activist investors in years is shaking up corporate America seeking to tap into billions of dollars in available capital and inspired by the outsized returns of brand name agitators like William Ackman and Carl Icahn The surge could force more companies into costly battles with shareholders over leadership spin offs and buybacks though some of the new entrants risk being brushed off if corporate boards find they lack good ideas or firepower Everyone wants to be an activist these days Everyone wants that capital said Damien Park head of consulting group Hedge Fund Solutions In the last five months some 45 hedge funds launched their first ever activist campaigns according to data from research firm Activist Insight up from 26 new entrants the same period the previous year and 15 the year before The October through March period is traditionally the most active season coming in the runup to companies annual meetings usually held in the spring and early summer when boards are elected Among the newcomers are firms like H Partners Chieftain Capital Isaac Capital Vertex Capital Jet Capital and Heng Ren Investments some of which are taking on big names in the corporate sphere H Partners and Chieftain for example are pressuring bedding maker Tempur Sealy to change its leadership while Jet Capital is complaining about poor capital allocation at SunCoke Energy They join more established hedge funds that are also promoting activist campaigns including Kyle Bass Hayman Capital and David Tepper s Appaloosa Management which are pushing for former Goldman Sachs NYSE GS banker Harry Wilson who had been a part of the Obama administration s auto task force to join General Motors board Activism has picked up dramatically since the 2008 financial crisis but it has been popular before including in the 1970s to late 1980s when financiers including Carl Icahn and Nelson Peltz were called corporate raiders for their strong arm tactics used to replace top management and improve value for shareholders The surge comes as activist funds outpace traditional long short equity rivals returns and draw inflows Activist funds gained an average 6 3 percent in 2014 with Ackman returning 40 percent crushing the average fund s 3 5 percent increase Hedge Fund Research data show To be sure an investor who simply tracked the Standard Poor s 500 index in 2014 would have gained 12 percent Last year 71 dedicated activist funds that oversee 119 2 billion in assets took in a record 14 2 billion in new money nearly three times the 5 3 billion they pulled in 2013 HFR said Meanwhile about 135 billion in money is sitting on the sidelines earmarked for activist strategies according to advisory firm Kingsdale Shareholder Services Still with less expertise fewer connections and less cash some of the newcomers risk falling flat This is like playing sports where you can t simply copy your rival s playbook and hope to replicate success if your team can t execute well said Kingsdale CEO Wesley Hall The world s 14 top activists have on average 16 billion to deploy in full throttle fights while the newcomers often have less than 100 million in assets Activist Insight said
There will inevitably be opportunists who are trying to ride a momentum moment said Richard McGuire who runs 3 billion Marcato Capital Management But maybe some of them have a good nose for good ideas and I wouldn t be as quick to dismiss them | 3/7/2015 |
GS | Oil prices mixed following Opec Goldman Sachs forecasts | Investing com Oil prices were mixed on Monday as traders reacted to reports of increasing U S supply levels and comments from Opec s general secretary on rising global consumption
On the New York Mercantile Exchange WTI crude oil for April delivery rose 0 85 or 0 42 to 50 03 a barrel Prices rebounded in U S afternoon trading after falling below 49 30 a barrel hours earlier
Last week supply inventories at the Cushing Oil Hub in Oklahoma rose by 1 7 million barrels according to a report released Monday by data service Genscape Inc The report comes days after the Energy Information Administration EIA said in its weekly report that inventories at Cushing reached a level of 49 2 million barrels a 53 increase from the weekly level at this time last year
Reports have indicated that supply levels at Cushing the nation s largest hub for WTI crude oil storage are less than 3 million barrels below a record high If inventories grow at its current rate it has been estimated by analysts that Cushing could reach full capacity by the middle of next month Once Cushing reaches full capacity the price of WTI crude could plunge even further
In addition in a note to commodities investors on Sunday Goldman Sachs NYSE GS used a U shaped model to predict price drops with light sweet Texas intermediate on a short term basis Oil analysts at Goldman Sachs believe WTI set a short term price target of 40 a barrel for WTI crude futures down by roughly 10 from its current level For long term price targets into 2016 Goldman Sachs predicted that oil futures could rise to 65 a barrel
On the Intercontinental Exchange ICE brent oil fell 2 03 or 1 21 to 58 52 a barrel for April delivery The decline underscored the current volatility in international oil futures prices With Monday s drop in prices it marked the 28th time in the last 42 trading days that oil futures have moved in an up or down direction at least 2
The U S Dollar Index slipped from record highs last week to 97 58 a slight drop that was absorbed by the changes in Brent futures
Brent prices fell following comments from Opec general secretary Abdalla El Badri that demand could increase for the second half of the year as supply is trimmed Opec forecasts that daily consumption of oil will increase to 1 2 million barrels a day in 2015 up from a slower than expected amount of 1 0 million barrels last year
Oil prices are down more than 50 from last June | 3/9/2015 |
GS | Exclusive UAW president calls GM share buyback proposal premature | By Bernie Woodall DETROIT Reuters United Auto Workers President Dennis Williams whose union indirectly controls the largest single block of General Motors Co N GM shares told Reuters an investor group s proposal that GM buy back 8 billion of its stock is premature and the amount too high for the company s long term health An investment firm controlled by Harry Wilson a former member of the U S government task force that restructured GM through bankruptcy in 2009 together with four other hedge funds is urging it to return part of its roughly 25 billion cash trove to shareholders Williams who said he met Tuesday with Harry Wilson to discuss the proposal left open the possibility that he could endorse a smaller share repurchase I personally don t have a problem with Harry but that doesn t mean I necessarily agreed with his total analysis of the company Williams told Reuters on Friday He described his meeting with Wilson as informative and frank The UAW through a retiree medical trust controls about 8 7 of the automaker s shares according to government filings The voluntary employees benefit association or VEBA trust designed to fund UAW retirees medical care has influence with other funds that it hires to manage its investments Williams has a seat on the VEBA s board Wilson head of Maeva Group LLC leads a group of hedge funds including Taconic Capital Advisors Hayman Capital Management HG Vora Capital Management and Appaloosa Management pressing GM Chief Executive Mary Barra to return 8 billion of that cash in a share buyback over the 12 months following the automaker s annual meeting in June The activists also wants GM to give Wilson a seat on the board In a letter to GM Wilson wrote that the company is substantially overcapitalized while its shares are substantially undervalued The group Wilson leads has disclosed owning about 31 2 million shares or about 1 9 of GM s stock Wilson declined to comment GM earlier in February said it planned to boost its quarterly stock dividend by 20 percent and Chief Financial Officer Chuck Stevens indicated the company could distribute more cash to shareholders later in the year GM has turned to investment banks Morgan Stanley MS N and Goldman Sachs NYSE GS Group Inc GS N for advice on how to respond to the investor group s proposal Williams said he is concerned that GM will need to make substantial investments in new models and technology to stay competitive and to meet stricter fuel economy and emissions requirements GM has outlined plans to boost capital spending in 2015 by 20 percent to 9 billion Some of that investment will flow to U S factories that employ some of GM s 49 900 UAW members The company also faces a risk of hefty legal settlements related to its mishandling of safety recalls GM executives have also said they need to stay on course to regain investment grade credit ratings from all the major rating agencies
Corrects number of hedge funds in paragraph 2 and shares they own in paragraph 8 adds reference to HG Vora Capital Management in paragraph 6 Additional reporting By Joe White Editing by Christian Plumb | 2/20/2015 |
GS | Oil down on high supply worry but quick buying on dips | By Barani Krishnan NEW YORK Reuters Oil prices were down on Monday on worries of oversupply and a strong dollar but bets the market had hit bottom after a seven month selloff limited the downside traders said The weekly decline in the number of U S rigs drilling for oil slowed last week as crude prices rebounded from January lows raising worries about oil inventories that were already at record highs The largest U S refinery strike in 35 years involving workers at 12 refineries that account for one fifth of the national production capacity has also been a negative for crude U S East Coast refineries have also been hit by cold weather sending up heating oil futures on fears of tight supplies But a smaller than expected build in the Cushing Oklahoma delivery point for U S crude reported on Monday by oil services firm Genscape helped prices pare some initial losses Genscape reported a build of 2 2 million barrels for Feb 13 20 versus trade expectations for 4 million barrels or more according to a market source who saw the data The market has also been seeing quick buying on dips evidence that bulls were in more control than a few months ago traders said After percentage losses of between 9 and 18 percent each month from October to December prices consolidated in January and in February rebounded as much as 11 percent month to date There is the notion that a bottom has been set at 55 for Brent and 45 for WTI and there are enough buyers out there each time the market tests those levels said John Kilduff partner at New York energy hedge fund Again Capital Benchmark Brent crude was down 1 at 59 22 at 12 12 p m EST 1712 GMT 12 12 p m EST Benchmark U S WTI crude April futures were trading down 90 cents at 49 44 a barrel U S crude s WTI or West Texas Intermediate futures were down 1 15 at 49 12 Wall Street banks Goldman Sachs NYSE GS and Morgan Stanley NYSE MS both cautioned about rising supplies and their impact on prices Despite optimism about the large drop in the U S rig count in recent weeks the pace of decline has been decelerating Morgan Stanley said A further slowing would only reinforce concerns that a large production decline could take longer
U S oil production growth is expected to reach 440 000 barrels per day by the fourth quarter of 2015 compared with a year before based on the current rig count Goldman said in a note | 2/23/2015 |
GS | Fed Cheers Wall Street Shrinkage | By
Federal Reserve Chair Janet Yellen suggested Wednesday that Wall Street s biggest banks are shrinking thanks to the Fed s new capital requirements rules intended to mitigate the risks individual firms pose to the financial system In testimony to the House Financial Services Committee she indicated this was precisely what the Federal Reserve had in mind
We re beginning to see discussions that these capital charges are sufficiently large that it s causing those firms to think seriously about whether or not they should spin off some of their enterprises to reduce their systemic footprint Yellen said according to a Bloomberg report Frankly that s exactly what we want to see happen
The new capital measures proposed in December govern how much cash the eight biggest banks need to maintain in relation to their liabilities a rule intended to minimize systemic risk The Fed would hold American financial giants to even higher capital standards than those required by international agreements
Analysts speculating on which banks might be due for cutbacks have singled out two firms Citigroup NYSE C and JPMorgan Chase NYSE JPM In January Goldman Sachs NYSE GS released a report suggesting JPMorgan might have to break into smaller pieces if the Fed rules go into effect JPMorgan which has over 2 5 trillion in assets has already altered some of its operations
Earlier this week it was reported that JPMorgan would begin levying fees on its largest depositors an effort to diminish its risk profile in light of new Fed rules
Yellen has previously indicated that she didn t favor breaking up the big banks directly but she has acknowledged that the new capital proposals might lead some firms to downsize In a statement issued last December Yellen said the requirements would encourage such firms to reduce their systemic footprint | 2/25/2015 |
GS | Goldman is jack of all trades not master of one CEO | By Lauren Tara LaCapra NEW YORK Reuters Goldman Sachs Group Inc is trying to convince investors that its business model does not need to change On Tuesday morning Goldman Chief Executive Officer Lloyd Blankfein gave a presentation at a financial services conference that painted the bank as one that earns steadier profits than its peers and delivers them through sundry business lines Those ideas run contrary to a common narrative on Wall Street about Goldman It is good at earning money by trading and investing its own capital but little else Most people will tell you Goldman makes almost all its money on trading I hear it all the time said Rick Scott who trades in Goldman shares as chief investment officer at L S Advisors an investment firm with 500 million in assets under management I like that they re focused on doing one thing very well but the more diversified your business the less there s a chance one area will take a big bite out of your earnings when it s disrupted Goldman executives say the view that the bank is a one trick pony is misguided and Blankfein s presentation on Tuesday was sprinkled with factoids that run contrary to market perceptions It emphasized that more than one half of its revenues comes from businesses other than trading and that trading itself is more diverse than it may seem One slide at the presentation divided Goldman s trading unit into eight components each of which contributed 8 percent to 19 percent of revenue on average since 2010 Another showed that Goldman has squeezed more revenue out of businesses it kept than revenue it lost exiting others due to new regulations Blankfein stressed that Goldman s investment management business has plenty of room to grow since it is just a fraction of the size of leading rivals We re breadthy in capital markets On the other hand we re very focused Blankfein said We re breadthy in the context of the set of businesses we choose to be in He added that Goldman is unabashedly an investment bank and that he sees no need to change its business model Yet Goldman s biggest revenue contributor bond trading is in the midst of a decline that is crimping profits across Wall Street raising questions about how Blankfein will make up for that waning line item Last year Goldman reported 8 5 billion in revenue from bond trading down 2 percent from 2013 and down 61 percent from its peak of 21 9 billion in 2009 As that business has shrunk and capital requirements have gone up Goldman s return on equity has dropped to 11 2 percent less than one third of its peak performance before the crisis That metric is important to shareholders because it shows how much profit a bank can earn from their capital Blankfein and his deputies have refused to offer a return on equity target arguing that regulations are still too unclear Analysts who spoke to Reuters on Monday said some of their investor clients want Goldman management to outline a specific plan for how the bank will make up for falling bond revenue and drive returns higher Goldman is saying we have the right business model but we re not really sure what the business model s going to look like when all is said and done said CLSA analyst Mike Mayo You re going to lose investors with that pitch
Goldman stock was up 0 2 percent to 182 58 | 2/10/2015 |
GS | SEC probes disclosures tied to Icahn takeover of CVR U S filing | By Nate Raymond and Jonathan Stempel NEW YORK Reuters The Securities and Exchange Commission is investigating whether CVR Energy Inc N CVI might have made misleading disclosures to investors during its unsuccessful defense against billionaire Carl Icahn s 2012 hostile takeover court documents show According to a filing with the U S District Court in Manhattan late Tuesday the SEC is examining whether CVR properly characterized the fees it agreed to pay financial advisers Goldman Sachs N GS and Deutsche Bank DE DBKGn to help defend against Icahn s tender offer The SEC probe was made public in a letter from Herbert Beigel a lawyer for CVR and Icahn It was filed as part of lawsuit in which CVR now controlled by Icahn accused law firm Wachtell Lipton Rosen Katz which had defended CVR of malpractice for failing to disclose that Goldman and Deutsche Bank stood to earn far higher fees if a takeover defense failed than if it succeeded Beigel said the SEC probe began last year and that the agency recently advised CVR it intends to expand its inquiry According to court papers the investigation would include depositions of current and former CVR employees and directors and that CVR may face significant risk of an SEC enforcement action SEC spokesman John Nester Goldman spokesman Michael DuVally and Deutsche Bank spokeswoman Kerrie McHugh all declined to comment CVR Icahn and Wachtell did not immediately respond to requests for comment A majority of CVR shareholders ultimately accepted Icahn s 30 per share tender offer But since then Icahn has battled in court with CVR s former advisers claiming they stuck the company with financial burdens that he now bears Icahn owns about 82 percent of CVR The disclosures in question date from March and April 2012 and state that CVR agreed to pay customary compensation for Goldman s and Deutsche Bank s services CVR claimed Wachtell assisted with the disclosures despite knowing at the time they might not have been true It also said company directors did not know specifics about the fees At least two related lawsuits are pending in New York state courts Goldman and Deutsche Bank sued CVR after Icahn refused to pay their fees A judge awarded the banks more than 36 million and CVR is appealing Separately Wachtell has sued CVR and Icahn for breach of contract and abuse of process prompting CVR to file a malpractice counterclaim
The case is CVR Energy Inc v Wachtell Lipton Rosen Katz et al U S District Court Southern District of New York No 14 06566 | 2/11/2015 |
GS | Oil down after record U S crude stocks Brent below 55 | By Barani Krishnan NEW YORK Reuters Oil prices fell as much as 3 percent on Wednesday after U S stockpiles hit record highs and analysts and traders said the market could shed more of the rebound seen over the past two weeks due to expectations of lower output U S crude stocks rose almost 5 million barrels last week to reach nearly 418 million barrels the highest since record keeping began in 1982 government data showed Analysts polled by Reuters had forecast a build of nearly 4 million barrels EIA S The record inventory was a sign that the market was still struggling to find a home for some 2 million barrels per day of oil The glut has prevented prices from forming a bottom to a selloff that began last summer analysts said It proves that the price retracement we had on the capital expenditure cuts and falling rig counts may have been premature said Gene McGillian senior analyst at Tradition Energy in Stamford Connecticut Energy firms slashed billions of dollars from their oil exploration budgets and the number of U S oil drilling rigs fell to three year lows after crude prices fell to half their June peaks On Wednesday benchmark Brent oil fell below the 55 a barrel support settling down 1 77 or 3 percent at 54 83 U S crude closed down 1 18 or about 2 percent at 49 07 After a 60 percent rout over the past seven months on worries of a global supply glut oil prices have risen in five of the last nine sessions due mostly to what traders say is short covering The gain of roughly 10 percent has led some to think the market is on to track to a larger rebound Kuwaiti Oil Minister Ali al Omair believes crude will hit 60 a barrel by year end The International Energy Agency however sees a price well below the 100 level of the last three years If a rally takes hold it will be sold into said Tariq Zahir managing partner at Tyche Capital Advisors in Laurel Hollow New York As proof of the market s near term weakness the contango or discount between U S crude for prompt delivery and a year ahead widened on Wednesday to 11 a barrel its biggest in a week
Investment bank Goldman Sachs one of the oil market s most influential voices reiterated its view that lower prices were needed over the coming quarters to force a slowdown in the U S crude output that led to the global glut | 2/11/2015 |
GS | Exclusive GM turns to banks to help deal with activist investor group | By Ben Klayman DETROIT NEW YORK Reuters General Motors Co N GM has turned to two investment banks to help it come up with a response to a shareholder group demanding 8 billion in stock buybacks and a seat on the board of the No 1 U S automaker the company told Reuters The automaker is working with Morgan Stanley N MS and Goldman Sachs Group Inc N GS for advice on how it should deal with former U S auto task force member Harry Wilson and four hedge funds that are pushing for the company to dip into its 25 billion in cash GM said on Thursday Under the proposal by the activist group Wilson would be elected to the board at GM s annual meeting in June We are working with a set of advisors including Goldman Sachs and Morgan Stanley GM said in a statement in response to Reuters Morgan Stanley and Goldman Sachs declined to comment Wilson 43 has joined with David Tepper s Appaloosa Management and three other hedge funds Taconic Capital Advisors Hayman Capital Management and HG Vora Capital Management which together own about 31 2 million shares or 1 9 percent of GM stock Shareholders have been pressing GM to return more capital to them and the automaker responded last week by announcing plans to boost its dividend by 20 percent GM Chief Financial Officer Chuck Stevens also indicated more could be coming telling Reuters on Feb 4 that the company would look at returning more capital to investors as early as the second half of this year once it resolves legal issues tied to the recall of a defective ignition switch Both Morgan Stanley and Goldman Sachs have historically worked closely with the Detroit automaker Morgan Stanley helped GM during bankruptcy restructuring in 2009 and its initial public offering the following year and GM President Dan Ammann is a former Morgan Stanley banker Goldman Sachs advised GM on its partnership with French automaker PSA Peugeot Citroen PA PEUP
GM shares were up 0 7 percent at 37 93 on Thursday afternoon | 2/12/2015 |
GS | Citigroup Goldman UBS in 235 million mortgage settlement | By Jonathan Stempel NEW YORK Reuters Citigroup Inc N C Goldman Sachs Group Inc N GS and UBS AG S UBSN agreed to pay 235 million in cash to settle U S litigation accusing them of concealing the risks of mortgage securities sold by the former Residential Capital LLC before the global financial crisis The preliminary settlement with investors who bought the securities was made public on Friday in filings with the U S District Court in Manhattan and requires court approval It is separate from a 100 million accord that investors reached in 2013 with ResCap entities and individuals That accord has won court approval In court papers lawyers for the investors said the 335 million recovery equals 3 05 percent of the face value of the securities at issue representing one of the highest recoveries among all mortgage backed securities class actions Led by the New Jersey Carpenters Health Fund the investors accused the banks of misleading them in registration statements and prospectuses about the quality of mortgage loans backing the securities they helped underwrite in 2006 and 2007 The banks denied wrongdoing but agreed to settle to eliminate the burden and cost of litigation court papers show It was not immediately clear how much each bank will pay Citigroup spokeswoman Danielle Romero Apsilos declined to comment Goldman spokesman Michael DuVally declined to elaborate on the settlement UBS did not immediately respond to requests for comment Residential Capital was once part of GMAC and later Ally Financial Inc N ALLY Ally put ResCap into bankruptcy in May 2012 to address soaring mortgage liabilities Cohen Milstein Sellers Toll which represents the lead plaintiff plans to seek legal fees of as much as 69 5 million or 20 75 percent of the total recovery plus up to 5 5 million for expenses court papers show
The case is New Jersey Carpenters Health Fund et al v Residential Capital LLC et al U S District Court Southern District of New York No 08 08781 | 2/13/2015 |
GS | Wall Street Could Lose Out In New CFTC Swaps Rules | By
U S financial regulators will soon announce rules that could transform the 700 trillion swaps market The change would likely force major Wall Street banks currently dominant in the swaps trade to cede business to independent dealers hedge funds and high frequency traders As the Wall Street Journal reports the policy would guarantee anonymity for participants in swaps trades making swaps more similar to financial products that trade on exchanges such as futures and equities That could mean loss of revenue for the Wall Street banks now at the center of the swaps market The Commodity Futures Trading Commission plans to announce the rules in as little as a month A majority of swaps trades currently run through just five banks which match sellers and buyers and take a cut of each deal The so called over the counter arrangement has been criticized because it allows firms like Goldman Sachs and Barclays to amass valuable information on its clients while quietly negotiating its own advantageous prices Swaps are bilateral trades that allow parties to hedge risks or speculate on a whole universe of market events from interest rate fluctuations to the cost of shipping crude through the Baltic Sea The most common type is an interest rate swap which allows firms with fixed rate bonds to swap for floating rates or vice versa Another variation the credit default swap gained notoriety in the fallout of the financial crisis when it was revealed that banks had underwritten enormous bets on whether bundles mortgages would default The sheer volume of outstanding credit default swaps couldn t be sustained when the housing market nosedived Counterintuitively the CFTC hopes that ensuring anonymity between swaps buyers will increase overall transparency in the market Dodd Frank mandated the establishment of special clearinghouses to backstop potentially risky swaps Alongside these clearinghouses the CFTC encouraged the use of newly established venues that allow participants to bypass the banker dealers and trade directly with each other So far however the swaps business has kept mainly to the dim backrooms of a handful of major banks Ensured anonymity would hasten the flight of swaps buyers to the new more open marketplaces which match buy and sell orders without the need for middlemen The proposed policy isn t without its critics though The only Republican CFTC commissioner J Christopher Giancarlo recently released a white paper detailing drawbacks to the commission s approach to swaps arguing that the new rules would increase systemic risk and add unprecedented regulatory complexity without meaningful benefit Giancarlo points out moving swaps onto these new open venues would be a boon to high frequency algorithmic traders which until now have found little purchase in the swaps market In a speech last month Giancarlo said It is unclear how those who support the CFTC s impetus for open swap marketplaces yet decry high frequency trading in today s equities and futures markets will reconcile these views | 2/17/2015 |
GS | Democratic lawmakers seek swaps data from JPMorgan other banks | WASHINGTON Reuters Two U S Democratic lawmakers on Thursday asked giant banks including JPMorgan Chase Co N JPM to explain how they will manage swaps trading activities after lawmakers weakened rules for those operations at the end of 2014 The U S Congress in December scaled back a portion of the 2010 Dodd Frank Wall Street oversight law that would have forced banks to spin off much of their swaps trading into new units separate from their traditional deposit taking businesses The request to the chief executives of JPMorgan Bank of America Corp N BAC Citigroup Inc N C and Goldman Sachs Group Inc N GS was issued by Senator Elizabeth Warren who last year led Democratic opposition to removing the swaps rule and Representative Elijah Cummings also a Democrat The measure to weaken the swaps rules passed as part of a federal government spending package despite strenuous opposition from Warren and others Warren from Massachusetts and Cummings of Maryland on Thursday asked the four banks for the total values of both their derivatives businesses and any swaps they would have been required to push out before the rules changed The omnibus bill passed after intense lobbying from the financial industry the lawmakers wrote referring to the spending bill The letters which were posted online asked for a briefing from the bank CEOs by Feb 19 They also requested copies of any requests to regulators for more time to push out swaps activity and asked how the banks would now decide which trades to make The lawmakers said the four banks they wrote to had more than 90 percent of bank held derivatives contracts Cummings the top Democrat on the House of Representatives government oversight panel and Warren the top Democrat on a subcommittee of the Senate Banking Committee have worked together before on financial services issues Warren a longtime backer of tougher regulation of Wall Street has argued that the swaps rule rollback would make banks less safe and make way for more changes to the Dodd Frank law JP Morgan Chase Co sign outside headquarters in New York alt Reuters JP Morgan Chase Co sign outside headquarters in New York rel external image
Big banks said pushing out swaps trading to subsidiaries would be expensive because they would need additional capital for those units and they argued it would not make them any safer Some regulators and former lawmakers involved in writing Dodd Frank agreed | 1/29/2015 |
GS | U S banks say global too big to fail plan is too strict | By Douwe Miedema WASHINGTON Reuters A plan by regulators for the world s biggest banks to hold more capital to withstand financial shocks is overly demanding major U S bank groups said on Monday urging further study into how to avoid future taxpayer bailouts The proposal by the Financial Stability Board a global group of regulators would force big banks to have between 16 and 20 percent of their liabilities in equity and long term bonds that can be written down in times of financial stress The banks supported the idea of boosting their capital buffers so called Total Loss Absorbing Capacity or TLAC to more than what is required by the internationally agreed Basel III rules they said in a letter to the FSB But our empirical analysis shows that a TLAC requirement calibrated even on the low end of the FSB s proposed range is more than is needed said Paul Saltzman who heads the Clearing House Association one of the groups The letter was also signed by the Securities Industry and Financial Markets Association the American Bankers Association and the Financial Services Roundtable The banks did not give a number for what they thought the TLAC level should be The FSB launched the plan last year marking a watershed in a quest to end taxpayer bailouts of banks after governments spent billions of dollars on propping up Wall Street and European banks during the credit crisis The TLAC proposal will apply to the 30 largest banks across the world such as JP Morgan Chase N JPM Goldman Sachs N GS HSBC L HSBA Credit Suisse VX CSGN Santander MC SAN and Mitsubishi UFJ FG T 8306 Such banks have often been seen as too big to fail because their demise would wreak havoc in the financial system and markets expected governments to always come to their rescue with taxpayer money if they landed in trouble
The Federal Reserve is working on the U S implementation of the TLAC proposal It has often come out with rules that are tougher than the global standards in the past few years | 2/2/2015 |
GS | Goldman advising Ireland for free to boost reputation finance minister | DUBLIN Reuters Ireland s finance minister said on Wednesday Goldman Sachs N GS is advising the Irish state free of charge on the sale of one of its banks in order to boost its reputation and was one of five investment banks to offer to work pro bono
Dublin appointed Goldman Sachs to advise on the sale of Allied Irish Banks I ALBK last month looking to recover all 21 billion euros 24 billion spent on rescuing what is Ireland s second largest bank by assets
Finance Minister Michael Noonan said that of the 11 investment banks on a pre approved panel that tendered for the work five offered to do it for nothing A transaction is not expected until the second half of 2015 at the earliest
It s common practice seemingly particularly in the city of London that finance houses like Goldman Sachs feel that their reputation is enhanced for other work if they re the advisers to sovereign governments for key pieces of work Noonan told parliament
An IPO for AIB if we re selling 25 percent of it would be one of the biggest IPOs ever in the London stock market So obviously there d be great attention paid to who the advisers are There s no commitment at the point of sale that Goldman Sachs would get any additional work
The reputation of banks and investment banks suffered badly in Ireland as a result of its financial crisis in 2008 that forced the government to find 64 billion euros equivalent to 40 percent of annual economic output to save its banks | 2/4/2015 |
GS | Isolated Greece wants no more bailout money with strings | By Lefteris Papadimas and Jan Strupczewski ATHENS BRUSSELS Reuters Greece s new leftist led government isolated in the euro zone and under pressure from the European Central Bank said on Friday it wanted no more bailout money with strings attached from the European Union and International Monetary Fund Instead a government official said it wanted authority from the euro zone to issue more short term debt and to receive profits that the European Central Bank and other central banks have gained from holding Greek bonds The official said Greece was in effect asking for a bridge agreement to keep state finances running until Athens can present a new debt and reform program not a new bailout with terms inspection visits etc It is necessary that Greece is given the possibility to issue T bills beyond the current 15 billion euro threshold in order to cover any extra needs said the official asking not be named Finance Minister Yanis Varoufakis returned empty handed from a tour of European capitals in which even left leaning governments in France and Italy insisted Greece must stick to commitments made to the European Union and International Monetary Fund and rejected any debt write off The Athens official made clear that the new government which came to power on a wave of anti austerity anger in elections last month now wanted to forego remaining bailout money that had austerity strings attached Greece is not asking for the remaining tranches of the current bailout program except the 1 9 billion euros that the ECB and the EU member states central banks must return Euro zone finance ministers will discuss how to proceed with financial support for Athens at a special session next Wednesday ahead of the first summit of EU leaders with the new Greek prime minister Alexis Tsipras the following day NO PROGRESS SO FAR Participants said no progress was made at a preparatory meeting of senior finance officials in Brussels on Thursday because Greece and its euro zone partners were so far apart It was Greece against all others basically one versus 18 one official said Athens partners broadly lined up in support of a hardline German document rejecting any roll back of reforms or commitments made by previous Greek governments Tsipras and his ministers promised in their first days in office to raise the minimum wage re hire some sacked government employees and stop some privatizations This clashed with conditions set by the International Monetary Fund and euro zone countries which have lent Athens a total of 240 billion euros 270 billion The ECB raised the stakes this week by deciding to bar Greek banks from using Greek government bonds as collateral to borrow from the central bank as long as there is no prospect of an agreed bailout program That makes lenders dependent on more costly emergency liquidity from the Greek central bank which the ECB can stop at any time Greek bank shares fell further on Friday at the end of a week of wild swings as brokers cut their forecasts on worries over dwindling deposits and brinkmanship between Athens and its creditors Ratings agency Standard Poor s added to Greece s discomfort by cutting its long term sovereign debt to B minus from B citing liquidity constraints weighing on Greece s banks Portugal which emerged from its own EU IMF bailout last year joined the chorus of countries insisting that Greece must stick to the austerity medicine as Lisbon had done pay its debts and respect past agreements with EU partners NOT THE EASIEST ROUTE Economy Minister Antonio Pires de Lima told the Reuters Euro Zone Summit that Lisbon had chosen a route which was not the easiest one to recover credibility and return to growth and that is also our attitude to the situation in other countries Varoufakis was expecting tough treatment from his partners at next Wednesday s meeting including a demand that he extend the existing bailout program which expires at the end of February It s expected obviously there is pressure as part of a dynamic situation we are in a negotiation But we believe that we will reach a mutually beneficial solution soon said a separate official from the prime minister s office Before then Tsipras will deliver a policy speech to parliament on Sunday and seek a vote of confidence on Tuesday which he is likely to win easily Euro zone officials say Greece is free to design its own reforms in line with Syriza s campaign promises as long as the result is in line with commitments to stronger public finances debt repayment and reforms Time to reach a deal is short Some analysts say Greece could run out of cash as early as March without further euro zone help Greece s financing needs over the next five years may amount to 30 35 billion euros Italy s Unicredit bank said in a research note However if we set the primary surplus at 1 1 5 percent of GDP and assume that privatizations will stop as requested by the Greek government overall financing needs would rise to 60 billion euros Unicredit said
Both Goldman Sachs and Deutsche Bank said their base case was that Greece would remain in the euro zone but a rise in deposit outflows had raised the risk of a crisis | 2/6/2015 |
GS | JPMorgan under scrutiny over hiring of Chinese minister s son WSJ | Reuters JPMorgan Chase Co is under federal scrutiny over hiring the son of China s current commerce minister the Wall Street Journal reported citing internal emails The investment bank hired Gao Jue son of Gao Hucheng despite several issues including his poor performance in job interviews the Journal reported JPMorgan s decision to hire Gao was widely understood within the company to have been supported by William Daley a senior executive at the time and a former U S commerce secretary and White House chief of staff the Journal reported Daley worked at JPMorgan from 2004 to 2010 and reported to Chief Executive Jamie Dimon Gao Jue started work in the summer of 2007 He currently works at Goldman Sachs Group Inc the report said Gao Hucheng who was promoted to minister in March 2013 offered to go extra miles for the investment bank if it spared his son during a major layoff the report said The hiring is under scrutiny from U S authorities who are investigating the Asian hiring practices of JPMorgan and other banks the report said Federal prosecutors view Gao Jue s hiring as a potential violation of the Foreign Corrupt Practices Act the report said citing people with knowledge of the investigation The bank Daley Gao Hucheng and his son are not accused of any wrongdoing the report said Gao Jue s name hasn t previously been reported in connection with the hiring probe which JPMorgan disclosed in a 2013 regulatory filing A JPMorgan spokesman declined to comment on the report A Goldman Sachs spokesman also declined comment The Chinese commerce ministry is not a client of JPMorgan nor a banking regulator but can rule on mergers among multinational companies that do business in China the report said
The U S Justice Department and the Securities and Exchange Commission are expected to reach a settlement with JPMorgan related to the U S antibribery law The settlement may involve a fine and warrant an overhaul of the bank s hiring practices the report said | 2/6/2015 |
GS | John Whitehead former leader of Goldman Sachs dies at 92 | By Doina Chiacu WASHINGTON Reuters John Whitehead a former senior partner and co chairman of Goldman Sachs who helped make it a top tier Wall Street firm and led its international expansion has died the investment bank said on Saturday He was 92 Whitehead joined Goldman Sachs in 1947 and worked his way to the highest rung of its corporate ladder before leaving after 38 years to become a deputy secretary of state under U S President Ronald Reagan He was a chairman of the Federal Reserve Bank of New York and a member of the board of the New York Stock Exchange Active in political and philanthropic circles he also served as chairman of the Lower Manhattan Development Corp after the World Trade Center was destroyed during the Sept 11 2001 attacks We grieve the loss of John Whitehead and honor his achievements and contributions in service to his country and Goldman Sachs Goldman chief executive Lloyd Blankfein said in a statement He was a man of enormous grace and integrity and his legacy will endure in the institutions he led and in the lives of those he cared for and mentored Whitehead joined Goldman with a starting salary of 3 600 a year when it had fewer than 300 employees and its service offerings were almost exclusively in commercial paper The firm today has 34 000 workers and 869 billion in assets Over time he identified new business lines including such things as mergers and acquisitions and initial public offerings according to a biographical account provided to Harvard Business School I remember assigning one young fellow who later became an important partner to keep records about companies that might want to merge with a larger company or might be interested in acquisitions he said And then we tried to match them up We were doing this before anybody thought that there might be business for investment bankers in the merger field Goldman pioneered two other innovation in investment banking the idea of soliciting business and the handling of public offerings Whitehead said in the Harvard biography He was born in Evanston Illinois on April 2 1922 and grew up in Montclair New Jersey during the Great Depression when he remembered scrimping and saving and eating a lot of macaroni and cheese fish cakes but not much meat he said in the Harvard account
He attended Haverford College outside Philadelphia and served in the U S Navy during World War Two before going to business school | 2/7/2015 |
GS | Alibaba s Ant Financial to buy 25 percent of India s One97 | This story corrects paragraph 2 to make clear that the 500 million deal value includes an option to increase the stake next year MUMBAI SHANGHAI Reuters Ant Financial Services Group an affiliate of China s Alibaba Group Holding Ltd has agreed to buy 25 percent of Indian payment services provider One97 Communications tapping into the country s smartphone and online industry boom The companies did not provide the value of the deal but a person with knowledge of the matter called the investment a precursor to One97 listing on the stock exchange and said the transaction was worth more than 500 million and included an option to increase the stake next year The deal values One97 at more than 2 billion making it one of the most valuable start ups in the country One97 runs Paytm an online platform through which users can shop or pay utility bills whereas Ant runs Paytm s Chinese peer Alipay Alibaba spokeswoman Teresa Li and One97 founder Vijay Shekhar Sharma declined to disclose the value Sharma told Reuters that Ant would buy new shares in his company Paytm has benefited from the spread of affordable handsets and internet connectivity which has turned India into the fastest growing smartphone market in the Asia Pacific region according to researcher IDC This partnership between Ant Financial Services Group and Paytm will foster the growth of India s digital payment ecosystem the companies said in a joint statement on Thursday Ant investing in an Indian company for the first time will provide Paytm with strategic and technical support for its business the companies said Last month people close to the deal told Reuters a 30 percent to 40 percent stake would be worth 550 million One97 plans to use the proceeds to grow its mobile payment business and increase the scale of its services they said With over one billion people India s payments market has vast untapped potential Ant Vice President Cyril Han said in the statement Paytm has about 23 million users the companies said The 2 billion valuation of operator One97 compares with the 11 billion of Flipkart Online Services Pvt Ltd India s biggest e commerce company Citigroup and Goldman Sachs advised One97 on the deal | 2/8/2015 |
GS | Ethiopia bets on grand projects in drive for industrial power | By Edmund Blair and Aaron Maasho ADDIS ABABA Reuters Chinese workers mingle with Ethiopians putting the finishing touches to a metro line that cuts through Addis Ababa one of a series of grand state infrastructure projects that Ethiopia hopes will help it mimic Asia s industrial rise Brought to its knees by Red Terror communist purges in the 1970s and famine in the 1980s Ethiopia has been transformed in the last quarter century becoming one of Africa s fastest growing economies At the heart of the state s Growth and Transformation Plan are railway road and dam projects to give the landlocked nation cheap power and reliable transport as well as the metro line the first urban light railway network in Sub Saharan Africa This is the future said Abate Yaye 27 from the poor south as he helped complete the 475 million system being built by China Railway Engineering Corp much of it on concrete stilts to keep it above the crowded streets of an expanding capital We will become an example for the whole of Africa Hefty state led investment has kept the economy of Africa s second most populous nation growing at more than 8 percent a year for over a decade but economists say Ethiopia s rulers need to relax their grip and give room for more private enterprise to maintain momentum Foreigners cannot invest in banking and telecoms and foreign retailers are barred while Ethiopian banks are directed to buy low yielding government development bonds This is a country where relative to rest of Africa there is pretty good state capacity and a commitment to a development mission said S Kal Wajid the outgoing Ethiopia mission chief for the International Monetary Fund But he said private business needed room to grow and generate income so the economy could reap greater benefit from the new projects Where you are making a lot of infrastructure investment there is a risk that the pay off may not be as big as you thought he added DEBT LIMITS Others in Africa have looked with envy at Asia s inexorable rise but few governments if any have proven as single minded as Ethiopia has in mobilizing its resources in a bid to turn an agrarian nation of 96 million people into a manufacturing hub Yet it comes at a cost The IMF said last year Ethiopia was on the cusp of shifting from low to moderate risk of debt distress Total debt at about 50 percent of gross domestic product was still manageable but tougher if it rises much more In the next five year plan there should be a clear indication of a change of emphasis and a significant emphasis on the private sector said Wajid referring to the next Growth and Transformation Plan starting in July The government insists it will not rack up unsustainable debts because funds are used to finance infrastructure and other projects such as sugar factories and industrial zones Investors also say Ethiopia benefits from better security than others in a region blighted by Islamist militant attacks And few executives cite corruption as a big hindrance in business although it can be elsewhere in Africa But Ethiopia is no model for political and media freedom there is just one opposition party member in the 547 seat parliament and international rights groups say the authorities muzzle critics The government insists politics is open to all and that it allows free speech The current five year growth program ends in June and the government has given little away about the next plan But it remains clear about its economic goals Without investing in infrastructure it is now abundantly clear that Africa cannot sustain growth Finance Minister Sufian Ahmed told Reuters in December Sufian s deputy Abraham Tekeste said this month the new plan would likely continue most of the priorities of the last one The government can point to a list of investors suggesting its formula works Clothes retailer Hennes and Mauritz ST HMb is starting to source supplies from Ethiopia consumer goods maker Unilever L ULVR is building a factory Diageo L DGE and Heineken AS HEIN have bought breweries U S private equity giant KKR invested in a flower farm last year while an Ethiopian winery is among the investments of 8 Miles an African focused fund chaired by singer Bob Geldof who launched Live Aid to help Ethiopian famine victims LIMITED ROOM The government s ban on foreign retailers is aimed at encouraging local manufacturing to cut back on imports not wanting a consumer culture that could drain foreign exchange Central bank foreign reserves barely cover two months of imports an inadequate level according to the IMF Other east African states have at least four months The government says it wants to keep banks in the hands of Ethiopians and telecoms controlled by the state as the sectors provide funding for national projects such as infrastructure Earnings from the state telecoms monopoly are helping fund a railway linking Addis Ababa to a port in Djibouti for instance But that leaves few domestic funds available in the market for businesses that could create jobs in future If they are looking at achieving their goal of being a middle income country and getting employment you must enable access to financial options said James Kanagwa of pan African lender Ecobank LG ETI one of half a dozen foreign banks with representative offices in Addis Ababa but barred from commercial work Ethiopia with average annual per capita income of 470 aims to reach middle income status by 2025 which the World Bank says starts at 1 046 For now even Ethiopian banks have limited room for maneuver They must invest the equivalent of 27 percent of their loan portfolio in the development bonds hindering their ability to lend to the private sector The lending capacity of banks is growing very slowly said Mulugeta Asmare president of Bank of Abyssinia one of 16 private banks in a sector dominated by state owned Commercial Bank of Ethiopia Banks must rely on equity and deposits for funding in a nation where only one in 10 people have a bank account because there is no developed capital market After launching a debut 1 billion Eurobond in December Prime Minister Hailemariam Desalegn said tapping international markets did not herald liberalizing the financial sector If you have an efficient effective state development model great Colin Coleman managing director for Goldman Sachs based in South Africa told a conference in Addis Ababa last month
But you must allow businesses to develop in order to get the dynamism in the economy | 2/8/2015 |
GS | Morgan Stanley adjusted profit falls short of expectations | Reuters Morgan Stanley s adjusted quarterly earnings fell short of market expectations as unexpected market swings in December hit its division that trades bonds currencies and commodities and the bank deferred fewer bonus payments The bank s shares fell almost 3 percent to 33 89 in premarket trading on Tuesday Choppy markets caused by factors ranging from plunging oil prices to political upheaval in Greece sent investors scurrying last month slashing the trading revenue of U S banks including Morgan Stanley arch rival Goldman Sachs Group Inc Excluding a range of special items Morgan Stanley s revenue from trading fixed income securities currencies and commodities FICC fell 13 7 percent to 599 million On another adjusted measure the bank s FICC revenue fell 81 percent Revenue from the bank s increasingly important wealth management business rose 2 4 percent to 3 80 billion as equity markets boomed Overall earnings attributable to common shareholders rose to 920 million or 47 cents per share in the fourth quarter from 36 million or 2 cents per share a year earlier Legal expenses fell to 284 million from 1 4 billion
Compensation expense rose to 5 1 billion from 4 0 billion | 1/20/2015 |
GS | Uber to raise 1 6 billion in convertible debt source | By Sarah McBride Reuters Online ride sharing company Uber Technologies Inc has raised 1 6 billion in convertible debt from wealth management clients of Goldman Sachs Group Inc N GS a person familiar with the matter told Reuters The U S car service which allows people to summon rides at the touch of a button plans to use the money to build its presence in international markets improve safety and invest in research and development according to Bloomberg which first reported the news The company is also in talks to raise 600 million under its series E funding round the source told Reuters Uber said in December that it raised 1 2 billion in its latest round of funding and had additional capacity for strategic investments valuing the U S taxi service firm at 40 billion A spokesperson for Goldman Sachs confirmed the news
An Uber spokesman did not respond to an email asking for comment Additional reporting By Lehar Maan in Bengaluru Editing by Simon Jennings | 1/21/2015 |
GS | BNY Mellon may face bribery charges over sovereign wealth funds filing | By Nate Raymond and Aruna Viswanatha Reuters Bank of New York Mellon Corp N BK has disclosed in a filing that U S regulators are considering charging it with violating U S foreign bribery laws after an investigation into internships it gave to relatives of sovereign wealth fund officials In a regulatory filing on Friday BNY Mellon said that U S Securities and Exchange Commission staff had notified it that they would recommend the SEC charge the bank over alleged violations of the Foreign Corrupt Practices Act A case from the SEC would be the first to come from a long running investigation into banks dealings with sovereign wealth funds BNY Mellon said the so called Wells notice came after SEC staff provided a similar notice in the third quarter of 2014 to some current and former employees about possible charges A Wells notice indicates the SEC believes civil charges may be warranted and gives a recipient a chance to mount a defense BNY Mellon said the employees Wells notice indicated the SEC was considering charges in connection with the internships The bank received a similar notice in the fourth quarter it said The bank said it is cooperating with the investigation and did not believe the outcome of the investigation will materially affect its business or finances It is unclear which sovereign wealth funds are at issue or which employees could face charges A spokesman for BNY Mellon declined to comment Tuesday beyond the disclosure filing and representatives of the SEC did not respond to requests for comment The SEC had in 2011 sent letters to several financial institutions asking for information about their business with state owned investment funds as part of a foreign bribery probe U S authorities have also undertaken investigations in recent years into banks overseas hiring practices and whether they violate the FCPA Other banks that have disclosed FCPA investigations related to their hiring practices include Goldman Sachs Group Inc N GS JPMorgan Chase Co N JPM and Deutsche Bank AG DE DBKGn
Goldman Sachs and Deutsche Bank declined to comment Tuesday while a JPMorgan spokeswoman did not respond to a request for comment | 1/27/2015 |
GS | Spain s Santander to boost capital cut dividend | By Jes s Aguado MADRID Reuters Santander MC SAN the euro zone s biggest bank will cut its dividends this year and boost its capital with a 7 5 billion euro 8 8 billion share placement it said on Thursday Though the Spanish lender under new chief Ana Botin passed a health check of European banks capital strength last year the review showed its position to be weaker than many of its peers Analysts have questioned whether the bank which makes most of its revenue outside Spain should bolster capital even though it survived the global financial crisis and Spanish economic downturn without posting quarterly or annual losses I think it s the right thing to do They needed to strengthen their capital base said Francois Savary chief investment officer at Swiss bank and fund management group Reyl which owns some Santander shares Santander one of the few major banks to keep dividends unchanged after the 2008 global financial crisis said on Thursday that it will cut its payout from 2015 earnings to 0 20 euros per share against 0 60 euros previously The capital increase comes after a six month shake up under Botin who ousted CEO Javier Marin in November and replaced him with finance boss Jose Antonio Alvarez Botin took charge after her father Emilio Botin who ran the bank for 28 years died in September Goldman Sachs N GS and UBS have been lined up to run the capital increase a source familiar with the matter said The banks declined to make immediate comment Banco Santander branch in downtown Rio de Janeiro rel external image
1 0 8495 euros | 1/8/2015 |
GS | Oil prices down again as UAE defends production hold | By Claire Milhench LONDON Reuters Crude oil prices hit their lowest in almost six years on Tuesday in a market readying for further falls as a big OPEC producer stood by the group s decision not to cut output to tackle a supply glut Oil prices have fallen 60 percent from their June 2014 peaks driven down by rising production particularly U S shale oil and weaker than expected demand in Europe and Asia Rather than cutting output to try to balance the market producers from the Organization of the Petroleum Exporting Countries OPEC are offering discounts to customers in an attempt to defend market share At 7 43 a m EST February Brent crude was down 1 48 at 45 95 a barrel after dipping to 45 19 its lowest since March 2009 U S crude for February was down 1 23 at 44 84 a barrel off an intraday low of 44 20 The market is in a bit of a panic now and the momentum is really quite negative We haven t seen any actions or comments that could reduce this aggressive selling said Ole Hansen senior commodity strategist at Saxo Bank On the contrary the United Arab Emirates oil minister Suhail bin Mohammed al Mazroui said on Tuesday that OPEC s November decision not to cut output had been the right one The strategy will not change he said By not reducing output we are telling the market and other producers that they need to be rational NO CHINA BOOST Oil prices have fallen so far that the front month February contract is now trading about 7 below the July contract encouraging traders to hire tankers to store oil at sea Once floating storage starts there is very little support on the downside for Brent spreads analysts at Energy Aspects said in a note Storage plays work when traders can buy cheap oil to sell at a higher price at a future date Deflationary pressures are beginning to build in both Asian and European economies as demand remains weak UK inflation dipped to a 14 year low in December The downward pressure so great that even record Chinese crude imports for December above seven million barrels per day for the first time as the world s second largest oil consumer took advantage of low prices to build up reserves could not lift the market for long Banks have slashed their oil price outlook with analysts at Goldman Sachs N GS cutting their average forecast for Brent in 2015 to 50 40 a barrel from 83 75
Deutsche Bank cut its Brent forecast to 59 40 a barrel from 72 50 saying physical oil market fundamentals in the first half of this year were the weakest since 1998 We see few signs that production curtailment is about to happen any time soon they said in a note | 1/13/2015 |
GS | Goldman files for a new batch of exchange traded funds | By Ashley Lau Reuters Goldman Sachs Group Inc has filed for a slew of new exchange traded funds most of them alternative another step by the Wall Street bank in its pursuit of the fast growing nearly 2 trillion U S ETF market In a filing with the U S Securities and Exchange Commission dated Friday Goldman outlined plans for 11 ETFs including six funds it dubbed ActiveBeta and five hedge fund themed funds all of which are passively managed Among the new funds are those tied to international emerging markets Europe and Japan equity as well as U S large cap and small cap stocks The hedge fund themed ETFs include those focusing on event driven and equity long short strategies among others The thinking is that the funds underlying indexes will seek to replicate the returns of hedge funds using those strategies Goldman did not give details in its filing on the ActiveBeta ETFs Goldman Sachs Asset Management LP is named as the index provider The ETFs are to be listed on the NYSE Arca exchange according to the filing but no tickers or prices were given The Arca exchange one of the New York Stock Exchange s trading platforms is where the bulk of all ETFs are traded Goldman in September had filed for permission to launch actively managed exchange traded funds as well as to self index which allows it to launch funds based on its own proprietary indexes The company in July shifted a key executive to help widen its ETF product strategy but otherwise has been largely quiet on its plans to expand in the ETF sector
Goldman did not immediately return a request for comment Editing by Jonathan Oatis | 12/15/2014 |
GS | Goldman s Waldron promoted to co head of investment banking | By Lauren Tara LaCapra NEW YORK Reuters Goldman Sachs Group Inc N GS has promoted John Waldron to co head of its investment banking business replacing John S Weinberg a vice chairman whose family has been in the senior echelons of the investment bank since the 1920s Weinberg 57 is moving to a company wide client development role Goldman said on Thursday He will remain a vice chairman and stay on several powerful committees including the management committee and business standards committee Waldron 45 will lead the investment banking business alongside existing co heads Richard Gnodde and David Solomon He will also join the management committee a group of a few dozen senior executives across Goldman Sachs Waldron s prior role was global head of investment banking services within the division He joined Goldman in 2000 was named partner two years later and spent his early days there as a media and entertainment banker Waldron helped develop many of Goldman s most important client relationships and its global client coverage strategy in investment banking Goldman Chief Executive Lloyd Blankfein and Chief Operating Officer Gary Cohn said in a memo Weinberg had led Goldman s investment banking division for more than a decade and has spent 30 years at the bank His grandfather Sidney Weinberg and father John L Weinberg each headed Goldman when it was a private partnership
In his new role Weinberg will focus on development of client relationships across Goldman s major business units which include investment banking sales and trading investment management and merchant banking He will continue to advise his core clients but give up day to day management of the investment banking division Blankfein and Cohn said in a separate memo Reporting by Lauren Tara LaCapra Editing by Lisa Von Ahn and Steve Orlofsky | 12/18/2014 |
GS | Capital hike asset sales to fill gap at Monte Paschi chairman | VIENNA Reuters Italian lender Monte dei Paschi di Siena expects to complete its planned capital increase by July and can use divestments to help plug a hole in its balance sheet Chairman Alessandro Profumo told an Austrian newspaper Monte Paschi needs to shore up its capital base following this year s euro zone health check of European banks It plans a cash call of up to 2 5 billion euros 3 06 billion next year Asked by Der Standard in an interview in its weekend edition what the plan was to fill the gap he said this had not been officially announced but added It consists of the capital increase but also the sale of assets A consortium comprised of UBS Citibank Mediobanca Goldman Sachs and other foreign institutions is getting the standard 3 percent fee for handling the capital increase he said adding it should be completed by July 2015 at the latest Profumo said the bank was not seeking to extend to 2017 the repayment of the last 1 billion euros of state aid it has yet to pay back He said this would happen after the capital increase Asked about talk a Chinese investor was ready to buy into Monte dei Paschi he said If there is something to report we will do that We are not currently conducting any negotiations He said bad loans would weigh on the bank again next year The volume of non performing loans is still quite high the provisions for these as well Since we are the bank of small and mid sized companies in Italy which are suffering most from the crisis non performing loans will hit us also in 2015 he said
1 0 8179 euros Reporting by Michael Shields editing by Jason Neely | 12/21/2014 |
GS | China stock connect scheme scorecard throws up surprises | By Saikat Chatterjee HONG KONG Reuters A month after China opened up its equity markets in a landmark trading link with Hong Kong demand has been subdued and the bulk of activity has come from short term speculative investors The authorities had hoped mutual and pension funds and private banks would form the bedrock of the Shanghai Hong Kong stock connect But early trade volumes in the program launched in mid November were completely dominated by hedge funds and banks proprietary trading desks according to five traders at some of the biggest brokerages participating in the scheme Regulatory hurdles have kept out a large swathe of the investment community and the steady business the financial industry and regulators had hoped they would bring despite a sizzling stock market rally on the mainland Market players say it could take months for long term investors to eventually trickle into the program as they devise ways to cope with its peculiarities We are not participating in the scheme yet because of the operational issues that have yet to be resolved and we prefer to access the mainland markets via exchange traded funds Robert Cormie Asia CEO of BMO Private Bank told Reuters Edmund Yun executive director of investment at the same wealth management firm agreed citing a number of prohibitive issues These include beneficial ownership tax and trading settlement Hedge funds use banks prime brokerages which help them more deftly manage those regulatory constraints Stock portfolios of hedge funds are often held by the prime brokers themselves to facilitate quick trading decisions so they are unaffected by ownership constraints For example under the scheme funds wanting to sell holdings of Shanghai listed shares have to deliver the shares to brokers a day before they are to be sold a peculiarity that exists in no other major stock market While regulators have looked for ways to encourage long term funds including fast tracking applications for products benchmarked under the stock connect scheme industry officials say that persuading pension funds to participate could take months Under the scheme the daily limit on investment bound for Shanghai is 13 billion yuan 2 1 billion and for Hong Kong bound investment it is 10 5 billion yuan Typically only a small portion of this has been used and on Monday of last week just 10 percent of the combined 23 5 billion yuan quota was used the lowest level since the launch of the stock connect scheme SLIM PICKINGS Brokers that offer a combination of services such as major banks HSBC Holdings L HSBA Standard Chartered Plc L STAN BNP Paribas PA BNPP and Citibank were expected to win the most market share under the scheme But the regulatory uncertainty has limited their capacity to dominate flows Banks with private wealth clients such as UBS and those with extensive hedge fund networks such as Goldman Sachs N GS Credit Suisse VX CSGN and CLSA have grabbed early market share traders said That has been helped by a nearly 25 percent rise in the Shanghai Composite Index SSEC since the scheme was launched as hedge funds have found it cheaper to buy mainland shares under the scheme than rent quotas from investment banks a mechanism under which investors buy derivative products from banks who have access to onshore stocks More worryingly for the Hong Kong Stock Exchange the slower than expected take up of quotas under the scheme means revenues are unlikely to get a big boost two traders said While the Shanghai bound flows were heavier early on Hong Kong bound flows have disappointed from the start a sales equity trader with a European bank said as participation has been limited by stringent eligibility requirements A CLSA survey of Chinese investors found 90 percent willing to invest in the Hong Kong market That dropped to 20 percent however when a minimum investment amount of 500 000 yuan 80 405 which the scheme currently requires is applied The Hong Kong stock market HSI has also fallen more than 5 percent since the launch reducing demand for the territory s shares Despite the slow take up investors are hopeful an MSCI review in the first half next year may earmark a bigger share of mainland equities to its emerging market indexes now that one of the biggest stumbling blocks to a larger presence on the MSCI index has been eased investor access to Chinese stocks Until then participation from long term investors is expected to grow but slowly We expect more participation from the long only funds in the coming months said Nick Ronalds head of equities at Asia Securities Industry Financial Markets Association
1 6 2185 Chinese yuan Reporting by Saikat Chatterjee Editing by Nachum Kaplan Simon Cameron Moore and Jacqueline Wong | 12/21/2014 |
GS | Breaking up JPMorgan could lift its stock price Goldman analyst says | Reuters New capital rules that penalize big banks could add pressure to JPMorgan Chase Co N JPM to break itself up to boost its stock price a prominent stock analyst from Goldman Sachs Group Inc N GS wrote on Monday While the note did not explicitly argue that JPMorgan should be broken up it offered extensive analysis of the benefits of a break up It is unusual for an analyst at a big bank to delve into that topic about another big bank Shares of JPMorgan the biggest U S bank by assets trade at a discount of about 20 percent to other financial institutions that specialize in its different business lines such as consumer banking investment banking and asset management Goldman analyst Richard Ramsden said in a report Investors put less value on JPMorgan s earnings and shareholder equity than they do on more specialized companies that are not as big and do not have such heavy legal and regulatory burdens Ramsden wrote A JPMorgan spokesman declined to comment JPMorgan s chief executive Jamie Dimon has said in the past that the bank s diverse businesses make it stronger reduce its cost of funds and generate additional revenue by selling multiple products to the same customers such as credit cards to checking account customers Ramsden said that even after subtracting such benefits a breakup would still be good for shareholders in most scenarios He cautioned however that breaking up the company would carry risks of botched separations and could leave four very large financial institutions that would continue to be subject to additional regulation On Dec 9 the U S Federal Reserve proposed new rules requiring eight of the largest U S banks to hold an extra capital cushion The rules hit JPMorgan the hardest raising its minimum threshold higher than its competitors While holding more capital should make the bank safer it also stands to reduce the company s return on equity a key consideration for investors JP Morgan Chase Co sign outside headquarters in New York alt Reuters JP Morgan Chase Co sign outside headquarters in New York rel external image
In early afternoon trading in New York shares of JPMorgan were down 2 8 percent closely tracking declines in the stocks of other big banks Reporting by David Henry in New York Editing by Leslie Adler | 1/5/2015 |
GS | Italian bank Intesa eyes UK s Coutts International FT | Reuters Italy s retail bank Intesa SanPaolo MI ISP is looking at a possible bid for Coutts International the wealth management arm of Royal Bank of Scotland L RBS the Financial Times reported
Intesa is trying to persuade RBS to sell the whole of Coutts along with the prized UK business whose customers include Queen Elizabeth the newspaper said citing a source
Coutts which is expected to be worth about 1 billion was put up for sale by RBS in early August
The Italian bank found Coutts assets the most interesting among the available options the FT said citing people close to the bank
The UK based bank recently hired Goldman Sachs Group Inc N GS to seek buyers for Coutts
Julius Baer VX BAER the Swiss private bank expressed interest in Coutts in September
Intesa which is planning to expand in UK is looking at asset managers insurers and private banks as options the bank s chief executive Carlo Messina told the newspaper in an interview
Intesa Sanpaolo automated teller machines ATMs in Milan alt Reuters A man stands outside a building as people use Intesa Sanpaolo automated teller machines ATMs in Milan rel external image
Intesa Coutts and RBS could not be immediately reached for comment
Reporting by Rishika Sadam in Bangalore editing by Andrew Roche | 11/23/2014 |
GS | Goldman leads group investing in South Korean online food service | HONG KONG Reuters Goldman Sachs Group Inc s private equity arm led a group of investors putting 40 billion won 36 1 million in South Korea s largest online and mobile food ordering service as more consumers take to ordering meals from their phones
The investment in Woowa Brothers Corp which owns the Baedal Minjok service will help the company expand internationally and develop new technology Goldman said in a statement Woowa last month started a joint venture with chat app company Line Corp to launch a food delivery service in Japan
Line is owned by Naver Corp South Korea s top Internet portal operator Naver last month said it was holding off on an IPO for Line to build up the chat app company s revenue and profit
Goldman didn t disclose the size of the stake in Woowa bought with the investment
Baedal Minjok which means Delivery Nation in English processes more than 4 million orders a month 99 percent of which are done through mobile devices
Reporting by Elzio Barreto Editing by Stephen Coates | 11/26/2014 |
GS | Better terms win Morgan Stanley 4 8 billion Ping An share placement deal sources | HONG KONG Reuters A lucrative last minute pitch by Morgan Stanley N MS won it the role of sole placing agent for last week s 4 8 billion stake sale in Ping An Insurance Group Co of China Ltd HK 2318 people with knowledge of the matter said Ping An was initially working with Credit Suisse VX CSGN and Goldman Sachs N GS for the share placement but decided to drop the two banks after they did not garner the volume of orders the insurer wanted at the terms it proposed the people said Credit Suisse Morgan Stanley and Goldman declined to comment on the placement Ping An executives were not immediately available to comment The sources declined to be identified as the details of the deal were not public The sources said Credit Suisse and Goldman Sachs tried twice to come up with terms that Ping An would accept During the first attempt the banks were able to secure commitments worth 2 7 billion by offering stakes at an 8 percent discount to the stocks last trading price on Nov 6 Ping An had asked for a trading halt on Nov 7 after the stock market regulator approved the placement Details of the second attempt which took place a few days ago were not immediately available the sources added Morgan Stanley secured the deal by bringing together a smaller group of investors who were willing to buy a bigger stake at a smaller discount the sources said The new shares were eventually sold at a 4 7 percent discount to the stocks Nov 28 close they added Ping An had asked Credit Suisse and Goldman Sachs to match the terms offered by Morgan Stanley but the two investment banks could not IFR a Thomson Reuters publication reported
The founders of Alibaba Group Holding Ltd N BABA and Tencent Holdings Ltd HK 0700 were among a consortium of about 10 investors who eventually bought into the Ping An share placement on December 1 Reporting by Fiona Lau and Elzio Barreto Writing by Denny Thomas Editing by | 12/3/2014 |
GS | Deutsche tests investor patience with no surrender strategy | By Thomas Atkins and Kathrin Jones FRANKFURT Reuters Deutsche Bank s DE DBKGn determination to be the last European in the upper echelons of global investment banking is an expensive waiting game for investors Germany s flagship lender is holding its ground against U S leaders such as JP Morgan N JPM and Goldman Sachs N GS in revenues but its returns are trailing because it was not as quick to restructure and recapitalise in the wake of the financial crisis European rivals such as UBS VX UBSN and Barclays L BARC have seen their revenues fall as they have shrunk their bond trading desks but their returns are in better shape Deutsche bets that its strategy which is to vacuum up activities abandoned by retreating European competitors will pay off when bond trading rebounds With interest rates set to remain at record lows for some time in Europe and a risk that litigation costs and regulatory scrutiny could eat up capital it could be a long wait Investors are frustrated They have seen returns diluted by a 12 billion rights issue this year as Deutsche restocked its balance sheet ahead of European stress tests Deutsche s return on equity of less than 3 percent in the first nine months of this year was far below the 12 percent it aims to reach in 2016 and a far cry from the 20 percent returns enjoyed before the crisis All banks are aiming for double digit returns given that the industry s cost of equity is around 10 12 percent Deutsche Bank has said it is sticking with the 2016 goal Privately some investors say that looks unachievable but since its shares are already among the cheapest in Europe they say it makes more sense to wait and see than to turn their backs now You just have to hang in there said one top 10 investor CAPITAL QUESTION Even with this year s rights issue there are question marks over whether Deutsche will have enough capital to grow the investment banking business given potential litigation costs and new rules which make it far more expensive to trade The bank s leverage ratio or stock of capital to total assets is 3 3 percent close to the 3 percent minimum required globally although it aims to increase that to 3 5 percent by the end of 2015 A review by global regulators of trading books could yet require more capital while ongoing investigations including into alleged interest rate and forex pricing irregularities could result in billions of euros in new penalties despite Deutsche Bank already spending over six billion euros on fines and settlements since 2012 A spokesman for Deutsche which passed this year s European stress tests even before its rights issue was taken into account said the bank had enough capital to fund its investment banking plans citing its core capital ratio of 11 5 percent which compares to 10 2 percent for Britain s Barclays But European players who have abandoned their attempts to be full service investment banks such as Barclays and Switzerland s UBS are reaping earlier rewards Switzerland s largest bank which has largely exited bond trading reported a return on equity of around 7 percent in the first nine months of the year UBS and other banks that have tempered their global investment banking ambitions now rely less on trading and more on other businesses such as private banking and retail business for their earnings At Deutsche Bank investment banking accounted for around half of its adjusted pretax profits in the first nine months of the year which the bank said gave it a balanced portfolio Andrea Williams a fund manager with Royal London Asset Management said she preferred UBS and Credit Suisse The reason I am differentiating them over Deutsche is because of the wealth management and private banking side which Deutsche does not really have said Williams Deutsche still has a lot of litigation issues and it still needs capital REDEPLOYING RESOURCES Washington s swift recapitalisation of its banks in the heat of the crisis gave U S banks a head start in getting their balance sheets ready for a world of tighter regulation JP Morgan is one of the few banks that now earns more now than it did before the crisis and it comfortably leads the revenue rankings coming top of the Thomson Reuters league table for global investment banking fees every year since 2008 JP Morgan s return on equity was 10 percent in the first nine months of 2014 Deutsche has retained its No 6 Thomson Reuters ranking this year and is tagged at No 3 for fixed income currencies and commodities which generates around half its investment banking revenue according to data compiled by consultancy Coalition But Coalition predicts that the investment banking market in terms of revenue will fall to 257 billion in 2014 down 4 percent from 2013 and down 27 percent from their peak in 2009 To try and generate better returns from a smaller pie Deutsche has been adding staff and expanding into riskier areas Our redeployment has paid off and if you look at Europe in particular the trend towards greater investor interest in risk assets such as equities financing and high yield credits will continue in the low interest rate environment all areas where we are a top provider Deutsche Bank s investment bank chief Colin Fan told Reuters But expanding into new areas is expensive costs in the investment bank rose 10 percent in the third quarter versus a year ago and the introduction of a bonus cap for bankers in the European Union starting next year is expected to raise European banks fixed costs Deutsche is cutting back activities that cost too much in capital including pulling out of part of the credit derivatives market this year It has also appointed Stefan Krause its outgoing chief financial officer to a new board role focused on strategy to help plot its future course With few signs of a major upswing in trading and lingering uncertainty over litigation and regulation more cuts are in store not just at Deutsche Bank but in the European investment banking industry as a whole
There still needs to be more efficiency more reshaping more careful capital allocation More banks need to be more selective about where they can compete and play to their strengths said Ted Moynihan global head of corporate banking at consultancy Oliver Wyman There is room for a European at the top table Additional reporting by Steve Slater and Carolyn Cohn in London writing by Carmel Crimmins editing by Philippa Fletcher | 12/9/2014 |
GS | House passes six year extension of terrorism insurance program | By Emily Stephenson WASHINGTON Reuters The U S House of Representatives voted on Wednesday to extend a federal terrorism insurance program that was created after the Sept 11 2001 attacks overcoming criticism from Democrats of a provision that would retool part of 2010 Wall Street reforms The program is intended to support insurers by creating a federal backstop that kicks in if they lose a certain amount of money after an attack It has never been triggered Businesses sports stadium owners and others that insure against attacks have said their costs could rise if the program is not renewed before it expires at the end of the year Lawmakers in both parties want to renew the program but are in dispute over whether to include provisions related to the 2010 Dodd Frank financial reforms Democrats objected to the House plan but let it move forward passing 417 7 It was not clear whether the Democrat controlled Senate would take up the same version I urge the Senate to move on this bill and vote for these needed reforms House Majority Leader Kevin McCarthy a Republican said in a statement The House bill reauthorizes the program for six years and doubles the losses needed to trigger federal support to 200 million changes agreed to by Senate negotiators It also includes the Dodd Frank provision At issue is a portion of the 2010 law that requires swaps participants such as Goldman Sachs Group Inc to post margin against certain kinds of riskier swap deals An early version of the law explicitly exempted energy agriculture and other end user businesses that use swaps to hedge risks But the final text removed that protective language raising concerns that it could lead to higher costs The provision tacked into the insurance extension bill explicitly frees these end users from the rules This isn t for Wall Street It s for Main Street said House Financial Services Chairman Jeb Hensarling a Republican Democrats on the other hand have argued the Dodd Frank provision does not belong in the terrorism extension bill The Senate passed a seven year extension of the terrorism insurance program in July We should have a clean bill with nothing else in it said Representative Maxine Waters who is the top Democrat on the Financial Services Committee The White House said on Wednesday it opposed including Dodd Frank modifications in an unrelated bill but stopped short of threatening to veto the insurance extension Reporting by Emily Stephenson Editing by Sandra Maler and Lisa Shumaker | 12/10/2014 |
GS | Courting liberals Clinton takes tougher line on big business | By Gabriel Debenedetti NASHUA New Hampshire Reuters Long viewed as an ally by Wall Street likely 2016 presidential contender Hillary Clinton has increasingly been taking banks and big business to task while on the campaign trail for Democrats across the country Many Democratic strategists see the sharper rhetoric as an effort to win over liberal critics such as supporters of Massachusetts Senator Elizabeth Warren It comes days before Tuesday s midterm elections and as Clinton ramps up her political activity ahead of a probable White House bid Al has pushed for more and better oversight of the big banks and risky financial activity Clinton said in support of Senator Al Franken in Minnesota in late October There s a lot of unfinished business to make sure we don t end up once again with big banks taking big risks and leaving taxpayers holding the bag she said in the starkest example yet of her populist turn This is a change of tone for the former New York senator who faced criticism for her Wall Street ties as recently as September after appearing with Goldman Sachs N GS chief executive Lloyd Blankfein Allies and analysts see it as an effort to find the balance between populism and her familiar centrism that Clinton may need in order to broaden her appeal in a potential 2016 Democratic primary contest What she s trying to do really is find her message This is something that she struggled with in 2008 while losing the Democratic nomination battle to Barack Obama and she really didn t have to do it as secretary of state said Brookings Institution campaign expert John Hudak She s trying to thread the needle to say to progressives I m your candidate but also say to Iowa Democrats I m your candidate too Clinton who was secretary of state from 2009 2013 has not declared her candidacy although supporters have built a national campaign structure to await a presumed run She says she will decide whether or not to run early next year and for now she is campaigning for others largely in states where Obama is unpopular Sunday s New Hampshire swing comes after Saturday stops in Louisiana and Kentucky But supporters of Warren who says she does not plan to run for the White House are still wary of Clinton who ran as a centrist in 2008 Clinton leads Warren 60 to 17 percent in an October Reuters Ipsos poll of Democrats in Iowa which holds the first contest of the presidential nominating race Warren a former Harvard Law School professor who spearheaded the creation of the Consumer Financial Protection Bureau after the 2008 financial crisis has gained solid backing from liberals in the party for her steady criticism of Wall Street and big banks Clinton campaigned with Warren in October for Massachusetts gubernatorial candidate Martha Coakley praising the bank regulation advocate for giv ing it to those who deserve to get it That despite the fact that she is personally close with some high profile bankers who know her from her time representing them in the Senate and from her experience as first lady during Bill Clinton s years as president At an energetic Sunday rally with Senator Jeanne Shaheen and Governor Maggie Hassan in chilly Nashua New Hampshire Clinton criticized the state s Republican candidates as taking orders from big money donors who don t know the first thing about New Hampshire or its families In Minnesota Clinton expanded on her economic priorities saying that before the financial crisis a lot of us were calling for regulating derivatives and other complex financial products closing the carried interest loophole getting control of skyrocketing CEO pay It was a line that raised eyebrows given the deregulatory policies of Bill Clinton s administration But progressive activists who have criticized Hillary Clinton s practice of giving highly paid speeches to groups including financial firms welcome such statements It s baby steps in the right direction after 200 000 speeches at Goldman Sachs said Adam Green of the Progressive Change Campaign Committee There are pitfalls to the appeals to liberals Critics pounced after Clinton told voters in Boston last month not to let anybody tell you that it s corporations and businesses that create jobs
Clinton later explained that she meant to criticize the idea that the economy grows because of corporate tax breaks but Republicans across the country including a pair of potential Republican 2016 opponents Senator Rand Paul of Kentucky and former Florida Governor Jeb Bush have since used the line against her Reporting by Gabriel Debenedetti Editing by John Whitesides Frances Kerry and Eric Walsh | 11/2/2014 |
GS | New bank rules proposed to end too big to fail | By Joshua Franklin and Huw Jones BASEL Switzerland LONDON Reuters Banks may have to scrap dividends and rein in bonuses if they breach new rules designed to ensure that creditors rather than taxpayers pick up the bill when big lenders collapse Mark Carney chairman of the Financial Stability Board and Bank of England governor said the rules proposed on Monday marked a watershed in putting an end to taxpayer bailouts of banks considered too big to fail Once implemented these agreements will play important roles in enabling globally systemic banks to be resolved wound down without recourse to public subsidy and without disruption to the wider financial system Carney said in a statement After the financial crisis in 2007 2009 governments had to spend billions of dollars of taxpayer money to rescue banks that ran into trouble and could have threatened the global financial system if allowed to go under Since then regulators from the Group of 20 economies have been trying to find ways to prevent this happening again The plans envisage that global banks like Goldman Sachs N GS and HSBC L HSBA should have a buffer of bonds or equity equivalent to at least 16 to 20 percent of their risk weighted assets such as loans from January 2019 These bonds would be converted to equity to help shore up a stricken bank The banks total buffer would include the minimum mandatory core capital requirements banks must already hold to bolster their defences against future crises The new rule will apply to 30 banks the regulators have deemed to be globally systemically important though initially three from China on that list of 30 would be exempt G2O leaders are expected to back the proposal later this week in Australia It is being put out to public consultation until Feb 2 2015 David Ereira a partner at law firm Linklaters said that on its own the new rule as proposed would not end too big to fail banks and that politically tricky details still had to be settled BASEL TOWER Carney was confident the new rule would be applied as central banks and governments had a hand in drafting them This isn t something that we cooked up in Basel tower and are just presenting to everybody he told a news conference referring to the FSB s headquarters in Switzerland Most of the banks would need to sell more bonds to comply with the new rules the FSB said Some bonds known as senior debt that banks have already sold to investors would need restructuring Senior debt was largely protected during the financial crisis which meant investors did not lose their money But Carney said it in future these bonds might have to bear losses if allowed under national rules and if investors were warned in advance The new buffer formally known as total loss absorbing capacity or TLAC must be at least twice a bank s leverage ratio a separate measure of capital to total assets regardless of the level of risk Globally the leverage ratio has been set provisionally at 3 percent but it could be higher when finalised in 2015 Some of the buffer must be held at major overseas subsidiaries to reassure regulators outside a bank s home country Banks may have to hold more than the minimum because of add ons due to specific business models Carney said Elke Koenig president of German regulator Bafin said supervisors should orient themselves more toward the upper end of the 16 20 percent range though banks may be given more time to comply Fitch ratings agency said banks might end up with a buffer equivalent to as much as a quarter of their risk weighted assets once other capital requirements were included Analysts have estimated this could run to billions of dollars Analysts at Citi N C estimated the new rule could cost European banks up to 3 percent of profits in 2016 Citi said European banks would be required to issue the biggest chunk of new bonds including BNP Paribas PA BNPP Deutsche Bank DE DBKGn BBVA MC BBVA and UniCredit MI CRDI with Swiss and British banks the least affected in Europe Additional reporting by Alexander Huebner in Bonn Editing by Keiron Henderson and Jane Merriman By Joshua Franklin and Huw Jones BASEL Switzerland LONDON Reuters Banks may have to scrap dividends and rein in bonuses if they breach new rules designed to ensure that creditors rather than taxpayers pick up the bill when big lenders collapse Mark Carney chairman of the Financial Stability Board and Bank of England governor said the rules proposed on Monday marked a watershed in putting an end to taxpayer bailouts of banks considered too big to fail Once implemented these agreements will play important roles in enabling globally systemic banks to be resolved wound down without recourse to public subsidy and without disruption to the wider financial system Carney said in a statement After the financial crisis in 2007 2009 governments had to spend billions of dollars of taxpayer money to rescue banks that ran into trouble and could have threatened the global financial system if allowed to go under Since then regulators from the Group of 20 economies have been trying to find ways to prevent this happening again The plans envisage that global banks like Goldman Sachs N GS and HSBC L HSBA should have a buffer of bonds or equity equivalent to at least 16 to 20 percent of their risk weighted assets such as loans from January 2019 These bonds would be converted to equity to help shore up a stricken bank The banks total buffer would include the minimum mandatory core capital requirements banks must already hold to bolster their defences against future crises The new rule will apply to 30 banks the regulators have deemed to be globally systemically important though initially three from China on that list of 30 would be exempt G2O leaders are expected to back the proposal later this week in Australia It is being put out to public consultation until Feb 2 2015 David Ereira a partner at law firm Linklaters said that on its own the new rule as proposed would not end too big to fail banks and that politically tricky details still had to be settled BASEL TOWER Carney was confident the new rule would be applied as central banks and governments had a hand in drafting them This isn t something that we cooked up in Basel tower and are just presenting to everybody he told a news conference referring to the FSB s headquarters in Switzerland Most of the banks would need to sell more bonds to comply with the new rules the FSB said Some bonds known as senior debt that banks have already sold to investors would need restructuring Senior debt was largely protected during the financial crisis which meant investors did not lose their money But Carney said it in future these bonds might have to bear losses if allowed under national rules and if investors were warned in advance The new buffer formally known as total loss absorbing capacity or TLAC must be at least twice a bank s leverage ratio a separate measure of capital to total assets regardless of the level of risk Globally the leverage ratio has been set provisionally at 3 percent but it could be higher when finalised in 2015 Some of the buffer must be held at major overseas subsidiaries to reassure regulators outside a bank s home country Banks may have to hold more than the minimum because of add ons due to specific business models Carney said Elke Koenig president of German regulator Bafin said supervisors should orient themselves more toward the upper end of the 16 20 percent range though banks may be given more time to comply Fitch ratings agency said banks might end up with a buffer equivalent to as much as a quarter of their risk weighted assets once other capital requirements were included Analysts have estimated this could run to billions of dollars Analysts at Citi N C estimated the new rule could cost European banks up to 3 percent of profits in 2016
Citi said European banks would be required to issue the biggest chunk of new bonds including BNP Paribas PA BNPP Deutsche Bank DE DBKGn BBVA MC BBVA and UniCredit MI CRDI with Swiss and British banks the least affected in Europe Additional reporting by Alexander Huebner in Bonn Editing by Keiron Henderson and Jane Merriman | 11/10/2014 |
GS | U S stocks dip on soft European data Dow down 0 02 | Investing com U S stocks ended Wednesday mixed to lower after lackluster European data gave investors reason to sell equities for profits
At the close of U S trading the Dow 30 fell 0 02 the S P 500 index fell 0 07 while the NASDAQ Composite index rose 0 31
The CBOE Volatility Index index which measures the outlook for market volatility was up 0 85 at 13 03
Earlier Wednesday Eurostat the European Union s statistical office reported that industrial production in the euro area increased by 0 6 in September missing forecasts for a monthly gain of 1 0 Industrial production in August fell by 1 4
Year on year industrial production inched up 0 6 in September from a year earlier beating expectations for a 0 2 decline and after dropping at a rate of 0 5 in the preceding month
The lackluster report stoked concerns over the outlook for economic growth in the single currency bloc after weak Italian data on Monday fueled fears that its economy is falling back into a recession which allowed U S stocks to take a breather from recent gains
Elsewhere utility stocks fell after the U S and China reached a deal to reduce greenhouse emissions
Under the deal the U S will trim its 2005 level of carbon emissions by 26 28 before 2025 while China will see its carbon emissions peak by 2030 while working to see 20 of its energy stem from zero carbon emission sources that same year
Leading Dow Jones Industrial Average performers included Visa Inc NYSE V up 1 08 Nike Inc NYSE NKE up 0 98 and AT T Inc NYSE T up 0 85
The Dow Jones Industrial Average s worst performers included JPMorgan Chase Co NYSE JPM down 1 32 Exxon Mobil Corporation NYSE XOM down 1 07 and Goldman Sachs Group Inc NYSE GS down 0 89
European indices meanwhile ended the day lower
After the close of European trade the DJ Euro Stoxx 50 fell 1 95 France s CAC 40 fell 1 51 while Germany s DAX fell 1 86 Meanwhile in the U K the FTSE 100 fell 0 25
On Thursday the U S is to publish the weekly report on initial jobless claims | 11/12/2014 |
GS | Goldman Sachs inducts 78 bankers into elite partnership | By Lauren Tara LaCapra NEW YORK Reuters Goldman Sachs Group Inc elevated 78 employees on Wednesday by making them partners according to an internal memo viewed by Reuters capping an anxious few weeks for employees hoping to enter the elite group of Wall Street bankers
The partnership is a lingering vestige of Goldman s time as a private firm when partners pooled their own money to support trading and investment banking and split resulting profits or losses
Although Goldman went public in 1999 the partnership remains an important part of its culture A team of senior partners spends months interviewing colleagues of the candidates They are asked about commercial excellence shorthand for work ethic client relationships and ability to deliver revenue to the firm over the long term
Goldman s partnership which inducts new members every two years has been evolving since the financial crisis as long tenured partners left to make way for more junior employees
The new group has eight more people than the prior class which was announced in 2012 and inducted in 2013 The latest induction will bring the total number to 467 or 1 6 percent of Goldman s workforce It includes 23 employees from investment banking 25 from securities 11 from investment management four from merchant banking three from research and 12 from what is known as the Federation which includes back and middle office roles
Vice Chairman Michael Sherwood Chief Operating Officer Gary Cohn and Edith Cooper head of human capital management led the selection process Known as cross ruffing in reference to a bridge move that exposes weaknesses in other players hands the process is legendary at Goldman and time consuming for those involved each candidate s vetting requires a couple thousand discussions
Becoming a Goldman partner is not only a status symbol It comes with more responsibility and higher pay Partners have a higher base salary than other employees get to share in a special pool of bonus money each year and get perks like the ability to invest in lucrative Goldman managed funds
On Wednesday morning the newly minted partners received a personal phone call from either Goldman Chief Executive Lloyd Blankfein or Chief Operating Officer Gary Cohn
One long time partner remembered receiving the call years ago in which Blankfein said I m sure you re wondering what s on the other side of the curtain Well it looks exactly like the side of the curtain you re on right now but the expectations are much higher
Reporting by Lauren Tara LaCapra Editing by David Gregorio | 11/12/2014 |
GS | Goldman rebuts U S Senate probe into commodity manipulation | WASHINGTON Reuters Goldman Sachs Group Inc on Thursday rebutted allegations made by a powerful U S Senate committee report that condemned Wall Street banks for exploiting physical commodity markets to manipulate prices and gain unfair trading advantages The public airing of concerns about banks ownership of physical commodities and assets from pipelines to warehouses will renew scrutiny on Wall Street But experts said it may have little impact on an industry that is already retrenching and after the Federal Reserve has already signaled its intent to move forward in some way with changes in regulation Still Goldman and its metals storage unit Metro will come under particular pressure when executives appear at the two day hearing by the Senate s Permanent Subcommittee On Investigations because it has maintained commodity trading is core to its business JPMorgan Chase Co and Morgan Stanley which will also address the panel have both made major moves to get out of the physical commodity space If you like what Wall Street did for the housing market you ll love what Wall Street is doing for commodities said committee Chair Carl Levin a Michigan Democrat in his opening remarks Goldman s ability to influence any portion of the price for a key component of the industrial economy is simply unacceptable Ahead of the upcoming hearing the committee released a detailed 403 page bi partisan report that criticized how banks purchased and exploited huge commodity stockpiles It shed light on two areas the Fed s concerns about weakness in banks ability to withstand a major catastrophe and intricate details of Metro s multi million dollar payments to maintain the long wait times and bolster income According to a previously unpublished 2012 analysis by the Federal Reserve Commodities Team the report said four major financial holding companies including the three highlighted in the Senate report had allocated an inadequate amount of capital and insurance to cover extreme loss scenarios Republican Senator John McCain of Arizona a committee member said Wall Street banks have taken excessive risk raised suspicions of market manipulation and gained unfair trading advantages through their expansion into physical commodities trading The session will also include testimony on Friday by top oversight officials with the Federal Energy Regulatory Commission and the Fed s banking supervision arm There will be a lot of sound and fury but it won t amount to much in the long term said Craig Pirrong a finance professor at the University of Houston PLAYING BY THE RULES Aluminum warehousing is likely to be in the spotlight from the report based on 90 000 pages of bank and regulatory documents as well as 78 interviews and briefings In prepared testimony chief executive officer of Goldman s metals warehouse which was accused by a Senate probe of manipulating aluminum prices defended his company s actions saying it plays by the rules and contributes jobs to the Detroit area Chris Wibbelman president and CEO of Metro International Trade Services LLC said only a small percentage of aluminum stockpiles are subject to the kind of metal backlogs that have come under scrutiny About 80 percent of metal stored in Metro warehouses in and out of the London Metal Exchange s vast network is not subject to any queue and may be purchased by a customer through negotiations with the metal owner Wibbelman said in prepared remarks There simply is no lack of availability for aluminum MillerCoors LLC the U S operations of Molson Coors Brewing Co and SABMiller has accused warehouses and their owners of inflating the prices of aluminum and costing consumers billions of extra dollars annually Jacques Gabillon Goldman s head of global commodities principal investments group and Gregory Agran Goldman s co head of commodities will also testify on Thursday The investment in Metro was never part of Goldman Sachs core franchise and has not been integrated into our commodities market making activities Gabillon said in prepared remarks adding that queues do not drive the overall price of aluminum that consumers pay Goldman is in the process of selling Metro though details of bidders and timing remain unclear LAST YEAR S FIGHT This week s hearing stems from a two year investigation by the subcommittee into banks and their influence on commodities and comes as Levin prepares to retire at the end of this year He has served on the panel for about 15 years The question will draw fresh attention to a controversy over the possible risks posed by the involvement of the largest U S investment banks but is unlikely to have much lasting affect as JPMorgan and Morgan Stanley have already pulled out or are shrinking their commodities businesses Earlier in the year the Fed took a preliminary step toward potential new regulations to check banks decade long expansion into the raw materials supply chain Democrats Sherrod Brown and Elizabeth Warren have grilled regulators and banking experts twice on the issue since July 2013
In some ways this is fighting last year s war said Pirrong Reporting by Michael Flaherty Editing by Bernard Orr | 11/20/2014 |
GS | Morgan Stanley armed with cash from fixed income dump goes shopping | By Lauren Tara LaCapra NEW YORK Reuters Morgan Stanley N MS which has spent three years throwing out bad apples from its fixed income trading portfolio now wants to put the freed up money into businesses that bear healthier fruit
It is reinvesting capital previously held against unprofitable trades into areas like municipal bonds credit and securitization where it sees opportunities for boosting profit senior executives at the bank said on Friday
This step represents a turning point in the bank s efforts to shrink to the point where it can make money again in bond trading New regulations put in place after the financial crisis have made the business more expensive for big banks forcing them for example to use shareholder money to finance their trades instead of cheaper debt As trading becomes more expensive many banks have to be choosier about which trades to do
We ve been very focused on what is the return on equity in the business Chief Financial Officer Ruth Porat said in an interview on Friday referring to a measure of profitability
The bank s risk weighted fixed income trading assets have shrunk to 190 billion close to its target of 180 billion by the end of next year giving Morgan Stanley more room to reinvest in the business again the executives said
At this stage Morgan Stanley s bond trading business sits in a gray zone not as big as JPMorgan Chase Co s N JPM nor as profitable as Goldman Sachs Group Inc s N GS
The bank s executives have sometimes been inconsistent in their statements about where the business is headed
In 2010 and 2011 management said the bank was committed to growing revenue in a range of fixed income trading businesses and pledged to increase market share by 2 percentage points One focus was growing trading in interest rate driven products like Treasuries a business that generally requires a big balance sheet to be successful
The bank quietly scrapped that plan as regulations evolved and after the person it had hired from Goldman Sachs to expand that business was unsuccessful and left
Morgan Stanley executives later told analysts that the fixed income trading unit just needed to reach an average quarterly revenue of 1 75 billion to be profitable But more recently executives have said that goal is no longer relevant because they are just focused on improving returns
In the third quarter Morgan Stanley produced 1 billion in adjusted fixed income trading revenue beating analysts average forecast of 885 million
Analysts and investors said the results show that size does not matter for fixed income trading overall but does in areas that a bank excels in
You don t have to be the biggest in FICC you have to be the biggest in what you do in FICC said KBW analyst Brian Kleinhanzl referring to an acronym commonly used for the Fixed Income Currency and Commodities business That goes all the way back to corporate strategy 101 Let s figure out what we do well and do that and stop trying to be all things to everybody
Reporting by Lauren Tara LaCapra Editing by Dan Wilchins and Richard Chang | 10/17/2014 |
GS | Oil Prices Slide Amid Global Economic Slowdown Fears | By Crude oil futures moved marginally higher Friday but finished lower for the week with key exporting nations refusing to cut output amid a supply glut and forecasts for weak crude demand the world over The Intercontinental Exchange Brent December contract gained 57 cents or 0 7 percent to close at 86 10 per barrel Friday The benchmark price lost 4 9 percent for the week as a whole
The ICE WTI November contract edged higher to close at 82 85 per barrel Friday However the light sweet crude lost 3 6 percent for the week
Members of the Organization of the Petroleum Exporting Countries or OPEC the group of 12 mostly Middle Eastern producers that pump about one third of the world s oil are scheduled to meet in November in Vienna and traders will track their decisions on production targets
Producers such as Saudi Arabia Kuwait and the United Arab Emirates plan to oppose any cut in the OPEC oil production ceiling at the meeting the Wall Street Journal reported
Goldman Sachs Group Inc NYSE GS said in a note to clients that crude oil s selloff has been fueled by investor positioning based on expectations rather than a real world disparity between supply and demand and that if prices dropped low enough they could trigger renewed demand and consumption Bloomberg News reported The investment bank said prices have likely overshot to the downside
Oil prices dropped by more than 1 per barrel Thursday when Brent crude hit a fresh four year low at less than 83 amid growing concerns over the health of the global economy
The International Energy Agency or IEA this week cut its oil demand growth forecast for 2015 as global economies remain weak prompting predictions that OPEC members might prefer selling at lower prices over losing their markets | 10/18/2014 |
GS | Special Report Why Madrid s poor fear Goldman Sachs and Blackstone | By Sonya Dowsett Madrid Reuters Last year Madrid s city and regional governments sold almost 5 000 rent controlled flats to private equity investors including Goldman Sachs and Blackstone At the time the tenants were told their rental conditions would remain the same
But as old contracts expire dozens of people have received demands for higher rent been told their rents will increase dramatically been threatened with eviction or moved out to escape the insecurity Thousands of Spain s poor now depend for their homes on the generosity of private equity
Jamila Bouzelmat is one of them
The mother of six lives in a four bedroom flat on the outskirts of the Spanish capital that was bought jointly by Goldman and a Spanish firm The 44 year old said that until March her family paid 58 euros 73 a month in rent out of her husband s 500 euro unemployment benefit In April her bank statement shows her new landlords suddenly took 436 euros from her bank account
She discovered the payment when she tried to pay an electricity bill
We went to take money out and there wasn t a cent left in the bank she said her 18 month old daughter playing at her feet She got charity hand outs to feed her children aged between 18 months and 19 years and now lives in fear of the rent bill Goldman declined to comment
In the buildings sold to the funds Reuters has spoken to more than 40 households who face similar difficulties They include some of Madrid s most vulnerable people an unemployed single mother of five with a severely disabled daughter for example and an HIV patient with one lung Both faced evictions that were temporarily halted at the last minute
There is no suggestion the buyers have acted illegally Having bought around 15 percent of Madrid s publicly held social housing the new owners are simply exercising their right to charge commercial rents once reduced rents that tenants have paid expire
However Socialist councillors in Madrid have launched lawsuits directed at the state bodies that sold the rent controlled homes and tenants meet weekly to organize street protests Evictions ordered and postponed by the new owners are an increasingly common sight in Spain s media
The ructions in Madrid come as Spain tries to recover from its historic property market collapse and deep economic crisis Between 2007 and 2013 Spanish property prices fell by nearly 40 percent More than 3 million houses and apartments sit empty according to official figures Spain has one of the smallest stocks of social housing in Europe but as Madrid s authorities cut their budgets they have sold what they can at fire sale prices
For the private equity firms that bought the flats the deal was good business For tenants less so The poorest had long benefited from rent reductions some of them officially documented contracts others informal arrangements with well meaning public officials
Of the homes Goldman bought around 400 benefited from official rent reductions according to one government source Such cuts were agreed individually for up to two years and some tenants used to pay less than 20 percent of the going rate The informal deals are hard to count
The apartments were sold by two government agencies One of them the Madrid city housing body told Reuters the sales were crucial to paying its debt but did not answer questions on the number of tenants affected or their situation
The other the regional housing body known as IVIMA sold its flats to Goldman Sachs International and Azora a Spanish private equity firm which invests in rental accommodation Azora set up a management firm Encasa Cibeles to manage the flats and both Goldman and Azora referred inquiries to Encasa Cibeles
In the case of Bouzelmat whose rental agreement ended in March an Encasa Cibeles spokesman declined to comment on processes and methods of payment But he said Bouzelmat had been paying by direct debit The company said it respects all ongoing contracts including rent reductions and once these expire reviews each tenant case by case Evictions occur in an extremely small number of cases the spokesman said Our priority is to help those in need and we are doing this with a team of social workers looking to help the most vulnerable
Pablo Sola a spokesman for IVIMA said the deal had been exemplary and IVIMA meets Encasa Cibeles every week to ensure no family that wants to pay is evicted The Madrid government has not washed its hands of the management of these flats We are following up the process to avoid the eviction of any family in financial difficulty
The public sector real estate workout is creating winners and losers Spain needs new investment to put a floor under its property market a necessary condition for a broader recovery and at the same time its social safety net needs funds Economist Miguel Hernandez said foreign investors play an important role by providing cash to public institutions
These funds may appear to be acting like vultures but they are also helping the system because the administrations had very few options to get the cash they needed said Hernandez professor at IE Business School
A GOOD PRICE
The red brick development where Bouzelmat lives is in Vallecas a working class area in the south of Madrid Thousands of new flats many of them state owned social housing were built there during Spain s property boom in the early 2000s
When boom turned to bust in 2008 Spain s budget for housing collapsed It was 1 4 billion euros in 2008 and is now 800 million That left local governments scrambling to cut costs and eyeing privatizations To lure foreign investors Madrid overhauled rental laws making it easier for landlords to evict non paying tenants It worked Investment in Spanish real estate increased 12 fold last year to 5 2 billion euros
A confidential May 2013 report commissioned by Madrid city council and prepared by PriceWaterhouseCoopers found that the city s housing unit known as EMVS was unsustainable EMVS set up over 30 years ago to house the poor and disadvantaged had higher debt repayments than its cash income PWC s report advised Madrid to sell some flats immediately
In July 2013 the city sold 1 860 properties to a fund jointly owned by Blackstone and Spanish fund Magic Real Estate The average price per apartment was around 67 200 euros
EMVS said the sales were crucial to paying down its debt Opposition United Left councillor Angel Perez said it was an outrage You are playing with people s lives he told an angry town hall session at the time Blackstone declined to comment Magic Real Estate did not respond
Within weeks of the Madrid City Council s sale IVIMA the regional housing body sold another 2 935 apartments including Bouzelmat s to Goldman Sachs and Azora for roughly 68 500 euros per unit
Taking an average size of around 70 square meters for the flats sold Goldman and Blackstone and their Spanish partners paid around 970 euros per sq m for the properties Flats in Vallecas sell for around 2 000 euros per sq m real estate agent websites show about 200 000 euros for a 100 sq km home The price per unit was very cheap said Fernando Encinar of Madrid based real estate agent Idealista In any market if you buy in volume you get a good price
TAKE NO ACTION
Last October Pablo Cavero Madrid councilor for transport infrastructure and housing told a council session that the only change for the IVIMA tenants would be the name at the top of the rent bill the minutes show He declined to be interviewed
That month tenants in Bouzelmat s block some of whom had official rent reductions received a letter from Encasa Cibeles saying The rental contract will not suffer any change You will maintain the same rental conditions that you have currently including the monthly rent and the length of your contract The letter seen by Reuters said tenants needn t do anything
It did not mention what would happen after the contracts ended nor did it refer to reduced rents These were separate arrangements that each tenant made with their state landlord For instance if a tenant lost their job they would submit documentation and IVIMA would grant a discretionary reduction for a fixed period documents seen by Reuters show Of the 20 000 homes IVIMA now owns around 27 percent have a formal rent reduction of between 5 percent and 95 percent a source close to IVIMA said
Late last year Encasa Cibeles invited four tenants representatives from Bouzelmat s block to a meeting The company told them rent reductions would not be renewed once contracts expired Encasa Cibeles told us they would respect reductions until the contract ended but then it would return to the base rate because they were not a charity said Saida Juarez the tenant representative from the block
FULL PAYMENT
Unemployed hairdresser and mother of three Yasmin Rubiano lives in a flat now owned by Goldman and Azora Rubiano said she stopped getting a printed rent bill once her reduced rent of 50 euros per month ended in December but got no word from the new owners
In January she started to receive monthly text messages from her bank which she showed a reporter advising that it had received a demand for 498 18 euros She has been paying 100 euros a month to show goodwill but cannot pay more In March Rubiano said she received a letter from Encasa Cibeles demanding full payment or threatening legal action
The Encasa Cibeles spokesman said it had nothing to do with the text messages Social workers have been working for some time to find the best solution for the family who still live in the flat he added Encasa Cibeles has not started any legal action against them
The situation with Blackstone and Magic Real Estate is slightly different Their tenants generally have longer contracts and fewer formal deals for reduced rents though most pay below market rates As with the Goldman flats tenants were told nothing would change The contracts are guaranteed seller EMVS said in a July news release The only thing that will change in the rent statement is the issuer
As leases near expiry at least 20 tenants in one block have signed new contracts for sharp rent rises said a source with knowledge of the matter
When Blackstone and Magic Real Estate bought the flats Jaime Gamarra an unemployed 62 year old receiving benefits of less than 400 euros a month had not been paying full rent for around a year After he lost both his jobs a woman at the council had told him to pay what he could afford
On March 12 he got a letter from the new management company Fidere saying he owed them 5 133 54 euros in inherent obligations to be paid by March 5
I started to panic he said He met Fidere and was told his arrangement with the council was not viable for the firm On June 24 he got a letter of eviction A judge overruled this in September but Fidere can appeal Gamarra fears he will be thrown out
These flats were built with public money for people in difficulty Gamarra said
Jorge Arriba a 37 year old car mechanic lives in a Blackstone flat his 10 year contract ended in August He used to pay 415 euros per month in rent around a third of his salary When he met Fidere in May he said they told him the rent would go up from September
On Aug 6 the 20 tenants in Arriba s block signed new contracts with Fidere some of them seen by Reuters which stipulate a rise of more than 40 percent in rent over three years Blackstone referred inquiries to Fidere
It is not true that it is our intention to increase rent once the contracts end Fidere spokesman Miguel Onate said in an email Later he said some people have lost the public subsidy they received from the council Of the flats under Fidere s management he said fewer than 2 percent have recurring problems with payments
Six sources involved in the bidding process told Reuters that bidders knew the straitened circumstances of the tenants The funds that entered final bidding nine in all were given detailed information The sale terms seen by Reuters show the regional government stressed that the new owners must honor all the tenants rights and obligations
Goldman went for the Madrid homes after a successful pair of similar deals in Germany a person familiar with the matter said Goldman looked at the profiles of the tenants and considered whether the properties were under managed from a yield perspective and whether new ownership could improve rents The deal was particularly appealing because 85 percent of the flats were occupied and most tenants were paying rent in contrast to other properties with high percentages of defaulted mortgages or laws that made it hard to raise rents
Some local politicians say IVIMA acted illegally by selling the flats cheap IVIMA Director Ana Gomendio declined to comment
Now a judge will decide who if anyone to blame Any tenants evicted can reapply for social housing Around 13 000 households are already on the waiting list for flats owned by Madrid city council a source close to the council said
Edited by Sara Ledwith | 10/24/2014 |
GS | Asian shares mixed as investors look ahead to Federal Reserve meeting | Investing com Asian shares were mixed on Tuesday in anticipation of U S Federal Reserve announcements that could provide clues on its interest rate policy A two day meeting by the U S central bank begins later Tuesday putting investors off making big trades including on Wall Street where stocks finished little changed Monday The Nikkei 225 fell 0 8 as the yen weakened despite Japan s September preliminary retail sales surging 2 3 well above a forecast of a 0 6 gain on year posting a third straight year on year rise and beating a 1 2 increase in August But stocks in Hong Kong and Shanghai rebounded Tuesday with gains of 0 5 and 0 9 respectively They had lost ground Monday because of the delay in a trading program linking the two markets that had been slated to launch before the end of October There is no indication when the connection will start Hong Kong s exchange chief said Sunday Korea s Kospi and Australia s S P ASX 200 were both down 0 4 Overnight U S stocks drifted lower in listless trading as investors bought and sold equities betting on winners and loser from falling oil prices while fears that an Ebola outbreak in the U S was still possible pressuring prices lower as well The Dow 30 rose 0 07 the S P 500 index fell 0 15 while the NASDAQ Composite index rose 0 05 Oil prices dropped though they came off earlier lows after Goldman Sachs Group Inc NYSE GS cut its oil price forecast for WTI in the first quarter of next year by 15 to 75 a barrel The bank expects Brent prices to average 85 a barrel in the first three months of 2015 down from a previous estimate of 100 Goldman analysts expect WTI to fall as low as 70 a barrel and Brent to 80 in the second quarter of 2015 when it expects oversupply to be most pronounced OPEC countries have hinted recently they may leave output quotes unchanged and have stressed the need to adapt to lower prices OPEC will hold its next meeting on Nov 27 but investors bought and sold stocks ahead of time on concerns energy companies may see less revenue while others may see energy costs fall Soft numbers out of the housing sector watered down U S equities The National Association of Realtors reported earlier its pending home sales index rose by 0 3 last month disappointing expectations for a 0 5 gain Pending home sales in August fell by 1 Year on year pending home sales rose 1 0 in September missing expectations for a 2 2 reading following a 4 1 decline in August Moderating price growth and sustained inventory levels are keeping conditions favorable for buyers Housing supply for existing homes was up in September 6 from a year ago which is preventing prices from rising at the accelerated clip seen earlier this year said Lawrence Yun the association s chief economist The numbers clouded expectations as to when the Federal Reserve may hike benchmark interest rates While the U S central bank is seen closing its monthly bond buying stimulus program likely at a policy meeting ending Wednesday spotty U S data have made it unclear when rate hikes might begin in 2015 leaving stock investors unsure as to the pace of U S recovery Ebola fears kept investors on the sidelines as well The state of New Jersey forced a quarantine on a nurse working with Doctors Without Borders who recently returned to the U S and while she was later released concerns of civil rights issues surrounding the case unnerved a handful of investors Also a five year old boy in New York City recently in from the West African nation of Guinea was reportedly undergoing testing for the deadly virus On Tuesday the U S is to release data on durable goods orders and a report by the Conference Board on consumer confidence Stocks will also move on earnings this week | 10/27/2014 |
GS | Deutsche Bank reshuffles management board names new CFO | FRANKFURT Reuters Deutsche Bank DE DBKGn will reshuffle top management by naming Marcus Schenck former finance chief at energy group E ON DE EONGn and Goldman Sachs banker as chief financial officer and putting current CFO Stefan Krause in charge of operations and strategy the bank said on Tuesday
Henry Ritchotte age 51 will continue as chief operating officer with responsibility for technology and operations and will in addition assume responsibility for the bank s global digital agenda Deutsche said in a statement
Krause will take on strategy alongside his CFO duties on Nov 1 and Schenck will assume the CFO title on May 21 2015
Corrects dates in last paragraph
Reporting by Thomas Atkins Editing by Christoph Steitz | 10/28/2014 |
GS | Deutsche Bank slumps to quarterly net loss as legal costs weigh | By Thomas Atkins and Arno Schuetze FRANKFURT Reuters Deutsche Bank AG DE DBKGn fell to a net loss in the third quarter after falling victim to the legal costs which already this week prompted a management reshuffle designed to help tackle a long list of unresolved litigation issues Germany s top lender has stumped up around 7 billion euros 8 9 billion in fines and charges since 2012 overshadowing management efforts to restructure and reform the bank and making its stock one of the worst performers in the European sector so far this year The bank which in June raised 8 5 billion euros to strengthen its balance sheet originally hoped to clear the decks of legal issues in 2014 but has postponed that target to 2015 There continues to be significant uncertainty about the timing and size of potential impacts of litigation Chief Finance Officer Stefan Krause said Its shares fell 1 4 percent by 7 03 a m EDT on Wednesday contributing to a 28 percent fall so far this year and placing the bank just a notch ahead of National Bank of Greece AT NBGr in performance rankings in the STOXX Europe 600 index of European banks Deutsche Bank also sounded a note of caution on some of its revised 2015 profit goals after spending 894 million euros on litigation in the quarter saying conditions remained challenging in several areas including transaction banking or the provision of money transfers trade finance and treasury services to corporations Signaling it had not done enough to resolve a long list of lawsuits and investigations in areas such as the setting of benchmark interest rates the bank had said on Tuesday it was reorganizing its management board and had created a new role focused on legal issues to be taken by audit head Christian Sewing We aim to resolve these issues as soon as possible co Chief Executive Officer Anshu Jain said on a conference call Separately Deutsche named Marcus Schenck a London based Goldman Sachs N GS investment banker and former finance chief of German energy group E ON DE EONGn to replace CFO Krause who will take on a new board seat in charge of strategy FURTHER PENALTIES The bank is two years into a turnaround plan that has led to costs falling and operating profit rising but the threat of further penalties from alleged misconduct has cast a shadow over its share price and management s success claims Investigators are looking into possible attempts at interest rate and forex benchmark manipulation high frequency trading possible violations of U S sanctions on Iran and other activities Deutsche fell to a quarterly net loss of 92 million euros from a 51 million profit in the year earlier period while net revenue increased a modest 2 percent Pretax profit rose 3 6 percent in Deutsche s important investment banking division boosted by a 15 percent jump in revenue derived from trading debt and foreign exchange But that trading jump lagged a 24 percent rise seen by U S rivals such as Citibank N C and JP Morgan N JPM according to Reuters calculations Other banks took better advantage of market opportunities in this quarter than Deutsche Bank said analyst Guido Hoymann at brokerage Metzler Securities Additional reporting by Clare Hutchison Editing by David Holmes | 10/29/2014 |
GS | Exclusive Apollo Riverstone plan IPO for Talos Energy sources | By Greg Roumeliotis and Soyoung Kim Reuters Apollo Global Management LLC N APO and Riverstone Holdings LLC are preparing Talos Energy LLC for an initial public offering that could value the oil and gas company at over 2 billion including debt according to people familiar with the matter
Private equity firms Apollo and Riverstone are working with a group of banks including Goldman Sachs Group Inc N GS and Citigroup Inc N C to register Talos with U S regulators for the potential IPO as early as this month the people said
The roles of banks in the IPO have not yet been finalized the people added
The sources asked not to be identified because the discussions are private Representatives of Apollo Riverstone Talos and Goldman Sachs did not immediately respond to requests for comment while a Citigroup spokesman declined to comment
News of Talos IPO preparations comes one week after Canada s Encana Corp TO ECA agreed to buy for 5 9 billion another company that Apollo took public last year Athlon Energy Inc N ATHL Apollo stands to make more than seven times its money on that deal according to a person familiar with the matter
Apollo and Riverstone formed Houston Texas based Talos in 2012 committing up to 600 million in capital for the company so it can acquire and develop oil and gas assets in the Gulf Coast of the United States and the Gulf of Mexico
The Talos management team s previous company Phoenix Exploration was sold to Apache Corp N APA in 2011 for an undisclosed sum Before that the team worked at Gryphon Exploration which was sold to Woodside Petroleum Ltd s AX WPL U S unit for around 300 million
Using seismic data to identify promising properties Talos said on its website it plans to have drilled 15 prospects in 2014 and 15 to 18 additional prospects in 2015 both in shallow water and on its developed deepwater acreage
Reporting by Greg Roumeliotis and Soyoung Kim in New York editing by Matthew Lewis | 10/6/2014 |
GS | Banks need overhaul but risk to recovery IMF says | By Douwe Miedema WASHINGTON Reuters A much needed pruning of banks across the world could stifle lending and dampen economic recovery the International Monetary Fund said on Wednesday
To boost profits banks need to raise prices in certain business lines pull out of others altogether and put their money where it yielded more the Fund said
The transition to new business models could potentially create a headwind against the recovery the IMF said in its biannual Global Financial Stability Report
After the devastating 2007 09 financial crisis regulators across the world have forced banks to raise more shareholder equity as a buffer against losses and to pull out of the riskiest investments and loans
But the industry had been slow in finding new ways to make money and the return on equity of banks representing 80 percent of the assets of the largest institutions now was lower than what was required by shareholders the IMF estimated
An overhaul would not be easy however the IMF said and it pleaded for ailing banks to be shut down
This would help relieve competitive pressures in a context of excess capacity and allow viable banks to build and maintain capital buffers and meet credit demand it said
In a model run the IMF found that 20 percent of more than 300 banks measured by assets would need to raise lending margins by more than 50 basis points on their entire loan book a level it said was not realistic
The largest transitions were needed in some euro area countries in the United Kingdom and in Japan Many banks in the euro area had been slow to adjust and an upcoming test of their financial health by the European Central Bank created a golden opportunity to clean up balance sheets
Banks should also stop selling products at low prices or even at a loss to lure clients and try to sell them other products the IMF said Regulators should encourage them to adopt more transparent pricing models
The report also showed how banks had started pulling back though only two the UK s Royal Bank of Scotland L RBS and Switzerland s UBS VX UBSN had completely exited a business
The fixed income business in which banks trade non equity products for clients showed the largest exodus with banks such as Goldman Sachs Group Inc N GS JPMorgan Chase Co N JPM and Barclays PLC L BARC all selectively shrinking the IMF said
That business is under pressure as a result of some of the biggest regulatory changes introduced after the crisis
Reporting by Douwe Miedema Editing by Jonathan Oatis | 10/7/2014 |
GS | Banks to change rules governing derivatives market FT | Reuters The world s biggest banks have agreed to change rules that govern the 700 trillion derivatives market the Financial Times reported on Tuesday
Eighteen banks ranging from Credit Suisse Group AG VX CSGN to Goldman Sachs Group Inc N GS have agreed to give up the right to close out deals on derivatives contracts if a financial institution runs into trouble the newspaper said citing people familiar with the matter
The International Swaps and Derivatives Association ISDA the body leading the negotiations with regulators on behalf of the industry said last month that a contractual solution for a temporary stay on derivatives close outs was progressing well
When Lehman Brothers collapsed in September 2008 there was a rush to close derivatives contracts on the bank s books which caused chaos in the financial markets
The agreement to change the protocols governing the derivatives market which will take effect from Jan 1 2015 will be announced in the next few days the Financial Times said
Goldman Sachs spokesman Michael DuVally declined to comment on the issue
Credit Suisse another financial institution believed to be a part of the negotiations was not available for comment
The ISDA was unavailable for comment outside regular business hours
Reporting by Sudarshan Varadhan Editing by Ken Wills and Lisa Shumaker | 10/7/2014 |
GS | Banks accept derivatives rule change to end too big to fail scenario | By Huw Jones LONDON Reuters The 700 trillion financial derivatives industry has agreed to a fundamental rule change from January to help regulators to wind down failed banks without destabilising markets The International Swaps and Derivatives Association ISDA and 18 major banks that dominate the market will now allow financial watchdogs to apply temporary stays to prevent a rush to close derivatives contracts if a bank runs into trouble the ISDA said on Saturday A delay would give regulators time to ensure that critical parts of a bank such as customer accounts continue smoothly while the rest is wound down or sold off in an orderly way That would help to avoid the type of market chaos sparked by the collapse of Lehman Brothers in 2008 and also end the problem of banks being considered too big to fail The Financial Stability Board FSB a regulatory task force for the Group of 20 economies G20 had asked the ISDA to make the changes with the aim of ending the too big to fail scenario in which banks are propped up with taxpayer money to avoid market disruption Under the new contract terms default clauses in derivatives contracts such as interest rate or credit default swaps would be suspended for a maximum of 48 hours EVOLUTIONARY PROCESS Ending too big to fail is going to be an evolutionary process but the agreement of the first wave of banks to sign the protocol is a big step forward ISDA Chief Executive Scott O Malia said The ISDA template for millions of derivatives trades will now include the possibility of stays on both new and existing contracts with the 18 leading players including the likes of Credit Suisse VX CSGN and Goldman Sachs Group N GS agreeing to change their contracts from January Many derivatives are traded among banks Well over 90 percent of the outstanding derivatives notionally held by the G18 banks will be covered with stays which will give regulators some time to deal with a resolution of a bank in an orderly way O Malia said More banks are expected to follow suit as regulators across the G20 countries introduce new rules next year to require counterparties to derivatives trades to accept stays Mandatory rules will also mean that another big user of derivatives the asset management industry will have little choice but to accept stays
Asset managers have resisted so far arguing that they have a legal duty to their clients not to delay getting their money back from a failed bank and that agreeing to stays voluntarily could leave them open to lawsuits Editing by David Goodman | 10/11/2014 |
GS | U S stocks mixed after choppy session Dow down 0 15 | Investing com U S stocks finished Thursday mixed as investors applauded upbeat U S data and earnings though concerns economies elsewhere may be cooling allowed for choppy trading
At the close of U S trading the Dow 30 fell 0 15 the S P 500 index rose 0 01 while the NASDAQ Composite index rose 0 03
The Volatility S P 500 index which measures the outlook for market volatility was down 2 44 at 25 61
Upbeat U S data released earlier Thursday drew applause on Wall Street
The U S Department of Labor reported earlier that the number of individuals filing for initial jobless benefits in the week ending Oct 11 fell by 23 000 to 264 000 from the previous week s total of 287 000
Analysts had expected jobless claims to rise by 3 000 to 290 000 last week
Elsewhere on Thursday data revealed that U S industrial production climbed 1 0 last month beating expectations for a 0 4 rise The August figure was revised to a 0 2 slip from a previously estimated 0 1 downtick
In addition the Federal Reserve of Philadelphia said its manufacturing index fell to 20 7 this month from a reading of 22 5 in September Analysts had expected the index to decline to 20 0 in October
Stocks also saw support after U S President Barack Obama said on Wednesday that the country s Center for Disease Control and Prevention would send rapid response teams to any new suspected Ebola cases in the U S
Mr Obama s comments came after the infection of a second Texas healthcare worker
Upbeat earnings from Goldman Sachs Group Inc NYSE GS and other financials buoyed stocks as well though concerns a cooling global economy may drag on U S recovery allowed for choppy trading especially after China s consumer price index fell to near five year lows
Official data released on Wednesday showed that Chinese inflation for September slowed to 1 6 on year from 2 0 in August below expectations for a reading of 1 7
The weaker than expected data underlined concerns about China s economy and sparked speculation policymakers in Beijing will have to introduce fresh stimulus to meet the government s 7 5 growth target
Leading Dow Jones Industrial Average performers included UnitedHealth Group Incorporated NYSE UNH up 3 95 Nike Inc NYSE NKE up 2 18 and Chevron Corporation NYSE CVX up 1 60
The Dow Jones Industrial Average s worst performers included Goldman Sachs Group Inc NYSE GS down 2 78 on profit taking Merck Company Inc NYSE MRK down 2 46 and Pfizer Inc NYSE PFE down 1 86
European indices meanwhile ended the day largely lower
After the close of European trade the DJ Euro Stoxx 50 fell 0 38 France s CAC 40 fell 0 54 while Germany s DAX rose 0 13 Meanwhile in the U K the FTSE 100 fell 0 25
On Friday the U S is to round up the week with reports on building permits and housing starts as well as a preliminary report on consumer sentiment | 10/16/2014 |
GS | Goldman curbs bankers compensation even as revenue surges | By Lauren Tara LaCapra NEW YORK Reuters Top Goldman Sachs Group Inc N GS executives are determined to keep compensation costs under control And that means even when the bank s revenue spikes higher bankers bonuses won t
On Thursday Goldman reported a 25 percent increase in quarterly revenue but the money it set aside for compensation and benefits rose only 18 percent from the same period a year earlier The amount of money it has set aside for compensation is more or less unchanged as is the average compensation per employee at around 320 000 for the first nine months of the year
Sources familiar with the matter inside Goldman Sachs described the restraint as a sign of the shifting mentality about bonuses at the bank it wants to tightly control compensation even if it has good quarters with big revenue gains That translates to bigger profits for the bank and more money for shareholders
Compensation experts say similar changes are happening across Wall Street
Morgan Stanley N MS which is Goldman s chief investment banking rival has set a maximum target for compensation as a percentage of revenue in each of its business lines Its progress in curbing compensation may be a key part of its third quarter results which are due out on Friday
There is a desire to share more with shareholders and that means holding the line on compensation expense said Rose Marie Orens a pay consultant for financial firms at Compensation Advisory Partners Just because revenue is up 20 percent that doesn t mean bonuses will necessarily be up 20 percent
It wasn t always that way In the third quarter of 2007 for example when the financial crisis was in its preliminary stages Goldman Sachs s revenue rose 63 percent from the same quarter a year earlier But its compensation expense rose 67 percent
The bank has taken myriad steps to cut compensation costs It has let dozens of high earning partners walk out the door to make room for more junior employees who earn less It has also moved as many jobs as it can to cities like Bangalore in India and Salt Lake City and Dallas in the U S where wages are lower than in places like New York or London
CAPITAL RULES
Before the crisis Goldman often boasted an annualized return on equity a measure of how effectively the bank wrings profit from shareholder money of 30 percent or higher More recently those figures have been between 10 and 12 percent Other banks including Morgan Stanley are still struggling to get returns above 10 percent the minimum that analysts say is required to meet their cost of capital
Those returns have been hurt by new capital rules that make it more expensive to keep risky assets on balance sheets Weak trading volumes have also kept a lid on revenue growth A study in July from consulting firm Federal Financial Analytics estimated that new rules cost the six biggest U S banks some 70 17 billion in 2013 about double banks regulatory and capital costs in 2007 just before the financial crisis
Some of Goldman s peers have tried to boost returns by getting rid of assets that can force the bank to hold more capital under new regulations and exiting some types of trading but Goldman has stuck with those businesses Instead it is trying to drive returns higher by cutting costs and hoping it can capture more trading revenue and increase its ability to charge more for its services
As the bank boosts profits it can afford to buy back more shares which boosts its return on equity It can also raise dividends a step it has taken four times since 2012 an unusual move for a bank that had previously shown little interest in the size of its dividend payments
Several stock analysts who cover Goldman Sachs commented on its compensation move on Thursday saying it was a big reason the bank s earnings were better than expected
JPMorgan analyst Kian Abouhossein said Goldman s adjusted compensation ratio was 7 percentage points lower than he had estimated it would be
Fourth quarter results will tell but we would be surprised if it the ratio were not down again for the fourth year in a row said Chris Kotowski an analyst with Oppenheimer Co
One employee on a Goldman trading desk who spoke with Reuters noted the gap between its revenue increase and compensation increase taking it as a sign that even if the fourth quarter produces great results bonuses for this year s work might be disappointing
People now understand you re not going to double your compensation every year said Brian Byck a recruiter who works with traders and sales staff at Odyssey Search Partners | 10/17/2014 |
GS | SEC probing Goldman Sachs internship for brother of Libyan ex official WSJ | Reuters U S regulators are investigating a Goldman Sachs Group Inc N GS internship for the brother of a former official at Libya s sovereign wealth fund and perks allegedly offered by the bank to the fund the Wall Street Journal reported on Thursday citing people familiar with the matter
As part of an ongoing investigation into Goldman s ties to Libya s sovereign wealth fund the Securities and Exchange Commission is reviewing the company s decision in June 2008 to hire the brother of Mustafa Zarti then deputy chief of the Libyan Investment Authority as an intern the WSJ report said
The report comes in the wake of allegations by Libya s sovereign wealth fund that the Wall Street bank exploited a position of trust by encouraging the fund to invest more than 1 billion in trades that ended up worthless
The SEC opened its inquiry in 2011 the same year Col Muammar Gaddafi was toppled by Libyan revolutionaries after 42 years ruling the country the WSJ said
The investigators are also examining why the brother Haitem Zarti was permitted to remain employed by the firm for almost a year longer than most internships according to the report
The SEC s investigation could lead to enforcement actions as soon as early next year the paper cited one of its sources as saying
A spokesman at Goldman Sachs declined to comment on the reported SEC investigation but confirmed that Zarti was an intern at the time
Reporting by Devika Krishna Kumar in Bangalore Editing by Ken Wills | 9/18/2014 |
GS | Secret tapes of Fed meetings on Goldman prompt call for U S hearings | By Jonathan Spicer and Emily Stephenson NEW YORK WASHINGTON Reuters An influential U S senator wants to hold hearings into disturbing issues raised by secretly taped conversations between Federal Reserve supervisors and officials at Goldman Sachs Group Inc N GS a bank the Fed was tasked with policing
Elizabeth Warren a Democrat on the Senate Banking Committee on Friday called for hearings after portions of the recordings from 2011 and 2012 were made public Fellow Democrat Sherrod Brown also a committee member called for a full and thorough investigation into the allegations they raised
Carmen Segarra a former New York Fed bank examiner who brought a wrongful termination lawsuit against her former employer recorded the conversations and provided them to the investigative news outlet ProPublica and the public radio show This American Life to illustrate what she saw as an inappropriately close relationship between regulator and bank
The tapes appear to show an unwillingness among some Fed supervisors to both demand specific information from Goldman about a transaction with Banco Santander MC SAN and to strongly criticize what Segarra concluded was the lack of an appropriate conflict of interest policy at Goldman
Political interest in the recordings could feed suspicion among Americans that little has changed on Wall Street since bank regulators failed to identify and stop the risk taking that led to the 2007 2009 financial crisis and deep U S recession
When regulators care more about protecting big banks from accountability than they do about protecting the American people from risky and illegal behavior on Wall Street it threatens our whole economy Warren said in an emailed statement Congress must hold oversight hearings on the disturbing issues raised by today s whistleblower report when it returns in November
Brown in an email said For too long too many financial regulators have been too cozy towards the very industry that they are meant to police
Segarra was fired after nearly seven months at the New York Fed as a so called embedded supervisor at Goldman She later sued the branch of the U S central bank for 7 million but the suit was dismissed in April for failing to state a claim that merited whistleblower protection a decision she is appealing
The New York Fed categorically rejects the allegations being made about the integrity of its supervision of financial institutions it said in a statement on its website
On Friday Goldman tightened rules on investments its bankers can make in individual stocks and bonds a company spokesman told Reuters
A source familiar with the situation said the bank s new conflict of interest rules on Friday were in the works for some time and were unrelated to the Segarra case
Asked about the possibility of hearings both the New York Fed and Goldman Sachs declined to comment
Segarra stands by her allegations against the Fed said Linda Stengle her lawyer The audio on the tapes speaks for itself Regardless of whether our case proceeds on appeal we are gratified that Carmen is vindicated by the recorded words of employees of Goldman Sachs and the New York Fed she said
Segarra filed the wrongful termination suit in October claiming she was fired after refusing to alter a critical examination of Goldman s legal and compliance units In claims she repeated in Friday s media reports she said superiors were too deferential to the bank and they pressured her to back down
Some 46 hours of meetings and conversations were recorded according to ProPublica
In one conversation said to be among Fed examiners following a meeting with Goldman officials one participant appeared concerned about pushing the bank too hard for details on the Santander deal
I think we don t want to discourage Goldman from disclosing these types of things in the future and therefore maybe you know some comment that says don t mistake our inquisitiveness and our desire to understand more about the marketplace in general as a criticism of you as a firm necessarily the unidentified examiner told his colleagues according to a transcript provided by This American Life
Reporting by Jonathan Spicer and Emily Stephenson Additional reporting by Amrutha Gayathri in Bangalore and Lauren LaCapra in New York Editing by David Gregorio and Lisa Shumaker | 9/26/2014 |
GS | Exclusive Silver Lake explores sale of IPC Systems sources | By Soyoung Kim and Greg Roumeliotis NEW YORK Reuters Private equity firm Silver Lake Partners LP is looking to sell IPC Systems Inc a provider of communication systems for Wall Street traders to exit one of its longest held investments according to people familiar with the matter
Silver Lake which acquired IPC from Goldman Sachs Group Inc s N GS private equity arm in 2006 for 800 million has hired Goldman and Evercore Partners Inc N EVR to run an auction for the company the people said this week
IPC has annual earnings before interest taxes depreciation and amortization of close to 160 million and could be valued at more than 1 4 billion in a sale including debt the people added
The sources asked not to be identified because the sale process is not public Silver Lake IPC Goldman Sachs and Evercore declined to comment
Based in Jersey City New Jersey IPC makes specialized telephony systems for financial institutions ranging from investment banks to hedge funds It is present in 5 000 customer sites in more than 60 countries according to its website
IPC s market for trading turret systems has limited growth prospects in the near to intermediate term Moody s Investors Services Inc said in April
Moody s added that it expected IPC s business risk to increase as the company seeks faster growth in sales of data and network services to financial services customers These services are highly commoditized and IPC s competitors in this area have significantly larger scale and resources Moody s said
In August IPC announced it had named Neil Barua a Silver Lake operating partner and interim chief executive of IPC since February as its permanent CEO Barua was previously an operating adviser at private equity firm Francisco Partners
Private equity funds typically hold companies three to seven years making Silver Lake s ownership of IPC for more than eight years atypical
Silver Lake has also been looking to exit another financial technology company this year high frequency trading firm Virtu Financial Inc
Virtu postponed an initial public offering indefinitely in April following the release of Michael Lewis s book Flash Boys A Wall Street Revolt and the subsequent public and regulatory scrutiny of high frequency trading
Reporting by Soyoung Kim and Greg Roumeliotis in New York Editing by Steve Orlofsky | 10/2/2014 |
GS | Exclusive Goldman considering setting up new infrastructure fund | By Greg Roumeliotis NEW YORK Reuters Goldman Sachs Group Inc N GS is considering raising a new infrastructure fund according to three people familiar with the matter even as U S regulations threaten to reduce its profits from such endeavors
The bank s plans are tentative and in the early stages and there is currently no fundraising process or target size for the fund the sources cautioned Goldman Sachs declined to comment
When Goldman last raised an infrastructure fund in 2010 it met with lukewarm demand Like that fund the one being envisaged would have a global focus with a mandate to buy a variety of infrastructure assets such as airports power grids and toll roads
In recent years investors such as pensions and insurers have grown increasingly keen on infrastructure funds as they look for assets that are safer than stocks but offer better returns than low yielding bonds
Under a federal regulation known as the Volcker Rule part of the 2010 Dodd Frank financial reform act a bank cannot own more than 3 percent of an infrastructure fund or any other private equity type fund The regulation is meant to limit banks bets on risky assets
Before the Volcker rule Goldman would typically invest around 10 percent of the capital in an infrastructure fund it set up and 30 to 35 percent of its private equity funds
There is a loophole in the rule though A bank can spend as much of its own money as it likes to buy infrastructure assets like roads and airports or invest in the kinds of corporate assets owned by private equity firms provided it doesn t use a fund that includes outside investors
The bank is taking that route with private equity as Reuters first reported last year For example it is currently leading a deal to acquire Neovia Logistics LLC which helps companies with inventory management and warehousing Reuters reported last week
But the bank is reluctant to use that loophole for infrastructure assets because the potential returns are usually only about half the 18 to 20 percent it can earn from private equity investments The bank will earn a management fee and likely a 20 percent cut of fund profits but will not earn much in the way of additional returns given the 3 percent limit on its investment
UNINTENDED CONSEQUENCES
Infrastructure assets such as ports toll roads and airports may offer lower returns than private equity investments but they are also lower risk because they typically operate through government granted monopolies
Signs that Goldman is going to make most of its infrastructure investments with other peoples money while making riskier private equity investments with its own money underscore how the Volcker rule may have unintended consequences
The rule was designed to make banks safer but it may be encouraging banks to focus their own money on riskier assets instead of making bets on a range of assets from the relatively safe to the risky
Goldman Sachs is thinking about its next infrastructure fund now in part because its second and most recent such fund raised before the Volcker rule in 2010 has invested about 65 percent of the capital pledged to it one of the sources said The fund sought to raise about 7 5 billion but ended up getting less than half that Managers of alternative investments like infrastructure funds typically begin raising a new vehicle when the previous fund is about 75 percent invested
U S banks have taken varied approaches to infrastructure funds after the Volcker rule Citigroup Inc N C for example is winding down its infrastructure investment unit while Morgan Stanley N MS is currently aiming to raise 4 billion for an infrastructure fund It has so far raised more than 1 5 billion it said in regulatory filings in July
Strong demand has helped the average size of infrastructure funds raised so far this year increase by 44 percent compared with the corresponding period in 2013 according to market research firm Preqin
Reporting by Greg Roumeliotis Editing by Dan Wilchins and Martin Howell | 10/3/2014 |
GS | NY pension fund enters 2 billion investment venture with Goldman Sachs | By Lauren Tara LaCapra NEW YORK Reuters A New York state pension fund has given Goldman Sachs Group Inc N GS 2 billion to invest with outside managers Goldman and the fund said in a statement on Wednesday a first for a fund that has traditionally picked managers itself Officials in charge of overseeing the 180 7 billion New York State Common Retirement Fund wanted to invest more in markets outside the U S and decided it was best to outsource the task to a company that had the skills and resources to put money to work quickly staff in the New York comptroller s office said In talks with fund officials over the past year Goldman executives presented an analysis of the fund s allocations based on publicly available data and suggested areas it could improve such as where to spend the risk budget and whether to be more active or passive in certain portfolios said the comptroller staffers who spoke on the condition they not be named Those analytics combined with the size of Goldman s fund selection and due diligence team and a competitive pricing structure led the comptroller s office to partner with the bank The partnership is the latest step in Goldman s effort to grow its investment management business as new regulations and lower trading volume have pressured profits in other businesses the bank has traditionally relied on for growth The office of New York State Comptroller Thomas P DiNapoli is in talks with other potential partners to ink similar deals staff said Under the agreement with Goldman the bank s Alternative Investments and Manager Selection AIMS Group will select managers for 2 billion worth of the pension fund s stock portfolio that focuses on making investments abroad with active managers The fund is also in talks with Goldman about so called sustainable investments which focus on environmentally friendly or socially responsible companies The deal with New York is not the first business Goldman has won with a state pension fund but it is the largest In 2008 South Carolina Retirement Systems entered a 1 5 billion partnership with the bank s investment management unit and in 2010 the Alaska Permanent Fund awarded it over 500 million AIMS which had 156 billion in assets under supervision at June 30 is an open architecture platform which means none of the investments Goldman selects can be invested in funds that the bank s own portfolio managers oversee
Goldman and the pension fund declined to comment on fees Reporting by Lauren Tara LaCapra Editing by Bernard Orr | 9/10/2014 |
GS | Sinopec to sell 17 5 billion retail stake in privatization push | By Stephen Aldred and Charlie Zhu HONG KONG BEIJING Reuters State controlled oil giant Sinopec Corp HK 0386 on Sunday unveiled a plan to sell a 17 5 billion stake in its retail business marking the country s biggest privatization push since President Xi Jinping came to power almost two years ago
The sale is a reflection of the government s drive to restructure the country s many sprawling state owned enterprises PetroChina HK 0857 the nation s No 1 energy producer has divested part of its pipeline business raising billions of dollars from domestic institutional investors
The sale also highlights Sinopec s hope that outside investors would be a catalyst for growth and reform at its currently low margin retail unit But some analysts say a lack of retail names on the investor list is lowering their expectations of a quick turnaround The presence of private equity firms also presents a risk in which they may exit the business when Sinopec lists the subsidiary in a couple of years
Sinopec s retail unit will issue new shares to a group of 25 largely deep pocketed financial companies like insurers and funds and raise 107 1 billion yuan 17 5 billion the company said in a filing with the Hong Kong and Shanghai bourses
The investors will get a combined 29 99 percent stake in the unit which comprises a wholesale business more than 30 000 petrol stations over 23 000 convenience stores as well as oil product pipelines and storage facilities Each investor would not hold a stake exceeding 2 8 percent
Besides capital the investors are expected to bring in strength and vitality that will help reform and grow the retail unit Sinopec Chairman Fu Chengyu said in a statement
Sinopec will use the 17 5 billion from the sale to optimize its fuel retail business boost non fuel sales and pay down debts owed to parent company Chai Zhiming deputy chief executive of the retail unit told Reuters in a telephone interview on Monday
Sinopec is looking for expertise and ideas to boost its non fuel businesses which include convenience stores and services such as fast food and car washes Unlike the West where non fuel revenue can account for more than half of a filling station s profits over 99 percent of Sinopec s retail sales come from petrol
Definitely this is an area that has room for growth James Roy associate principal of Shanghai based business consultancy China Market Research Group said of Sinopec s non fuel business
Leading investors on the deal include one of China s biggest asset managers Harvest Fund Management Co Ltd which will pay 15 billion yuan for a joint stake with its subsidiary Harvest Capital Management China Life Insurance SS 601628 and a consortium including People s Insurance Group of China Co Ltd HK 1339 and Tencent Holdings Ltd HK 0700 are each taking 10 billion yuan stakes
Other investors include Fosun International HK 0656 China gas supplier ENN Energy Holdings Ltd HK 2688 and white goods maker Haier Electronics Group Co Ltd HK 1169
Asia private equity firm RRJ Capital founded by former Goldman Sachs N GS and Hopu Investment Management dealmaker Richard Ong is among the foreign investors in the deal with a 3 6 billion yuan stake
THE SCEPTICS
The addition of private sector capital is highly complementary to a state owned business Sinopec SS 600028 N SNP Chairman Fu said
Sinopec has signed agreements with multiple Chinese firms this year to expand the spectrum of services offered by its petrol stations The companies include Tencent Holdings delivery service firm S F Express retailer Ruentex Group e commerce firm YHD com and Taiping Insurance Group
Sinopec s retail unit is aiming for fairly high growth in its non fuel business in the coming years Chai said The unit will deploy capital to refurbish convenience stores set up joint ventures with its partners boost its car wash and other automobile related services and build up its network of natural gas refuelling stations he added
But it is no easy task
While Sinopec boasts the world s largest single country retail network analysts say the profitability of the Chinese convenience market is hindered by fierce competition as well as rising labor and rental costs
Investors may also have a lack of influence on the firm s business strategy hiring as well as day to day operations analysts say
The retail unit plans to appoint 11 board directors including three from the latest investors four from Sinopec three independent directors and one representing employees a company source familiar with the matter told Reuters
The stake sale plan has been viewed by sceptics as largely a response to Beijing s policy drive to scale down the monopolies controlled by state owned enterprises and promote private investment in the world s second largest economy
Some also view it as an attempt by Chairman Fu to cash in on a volume driven low margin and perhaps deteriorating business and raise capital to repair the firm s battered balance sheet Sinopec needs capital to bolster its finances and reinforce investment in exploration and production analysts say
Sinopec s marketing business has been a relatively stable and major source of profit for the group But the division has suffered a decline in earnings in recent years due to slowing fuel demand growth and cost inflation
Shares of Sinopec tumbled over 5 percent in Hong Kong on Monday after the announcement of the stake sale which Sinopec said represented a premium of more than 20 percent to the book value of the business
The shares had gone up sharply since late February when Sinopec announced its stake sale plan
Reporting by Stephen Aldred and Charlie Zhu in HONG KONG and Shen Yan and Benjamin Kang Lim in BEIJING Additional reporting by Donny Kwok in HONG KONG Editing by Michael Urquhart and Ryan Woo | 9/15/2014 |
GS | Goldman Sachs revises price guidance on debut sukuk books at 1 4 billion leads | DUBAI Reuters Goldman Sachs N GS will complete a 500 million debut sukuk issue later on Tuesday with price guidance tightened slightly from earlier indications due to strong demand from investors a document from lead managers showed on Tuesday
The latest price guidance for the five year transaction was revised to a range of between 90 and 95 basis points over midswaps the document showed having been marked earlier in the day in the area of 95 bps over the same benchmark
The offer expected to be rated A minus by Standard Poor s and A by Fitch Ratings has garnered orders worth 1 4 billion from investors Books will close at 1000 GMT the document added
The sukuk is being issued through a vehicle called JANY Sukuk Co and will be guaranteed by Goldman Sachs
Abu Dhabi Islamic Bank AD ADIB Emirates NBD DU ENBD National Bank of Abu Dhabi AD NBAD QInvest the investment banking arm of Saudi Arabia s National Commercial Bank and Goldman Sachs itself are arranging the deal
Reporting by Archana Narayanan Editing by David French | 9/16/2014 |
GS | China Huarong says Goldman Warburg others to buy 2 4 billion stake | HONG KONG Reuters China Huarong Asset Management Co Ltd the country s biggest bad debt manager said on Thursday regulators have approved a deal for it to sell a 20 98 percent stake to a consortium of eight investors for 14 5 billion yuan 2 4 billion The deal for new shares in the company is to raise funds for Huarong ahead of a planned initial public offering Reuters reported in July The consortium includes China Life Insurance Group Co SS 601628 U S private equity firm Warburg Pincus WP UL Goldman Sachs N GS CITIC Securities International Co Ltd SS 600030 Malaysian sovereign wealth fund Khazanah Nasional Bhd KHAZA UL COFCO Corp CNCOF UL Fosun International HK 0656 and International Capital Corp The investors will improve corporate governance and operations at the company said Huarong chairman Lai Xiaomin Huarong which was founded in 1999 will also launch partnerships with the investors in areas like asset management investment and financing investment banking and financial leasing the firm said State owned bad debt managers like Huarong are benefiting from a rise in non performing loans in China as the economy slows The company had assets worth 65 7 billion under management at end 2013 and its net profit for last year jumped 44 percent to 10 1 billion yuan
The deal was signed at Huarong s Beijing headquarters on Thursday Reporting by Stephen Aldred Editing by Denny Thomas and Matt Driskill | 8/28/2014 |
GS | U S bank regulators set to adopt liquidity swaps margin rules | WASHINGTON Reuters U S bank regulators plan to adopt on Wednesday rules forcing big banks to hold more assets that they could sell easily in a credit crunch a requirement that is closely linked to the experience of the 2007 2009 financial crisis
Regulators also will unveil a separate proposal governing how much money swaps buyers and sellers must set aside when they make trades outside central clearing houses
The rules from the Federal Reserve Federal Deposit Insurance Corp FDIC and Office of the Comptroller of the Currency OCC are part of a series of reforms aimed at making banks sturdier and heading off another economic meltdown
The liquidity rules which call for big banks to hold enough liquid assets to meet their cash needs for 30 days are a key pillar of the international agreement known as Basel III They aim to ensure banks have easy to sell assets on hand so they could meet customer withdrawals or post collateral in a crunch
U S regulators in October 2013 proposed liquidity requirements that were more stringent than the global agreement with a shorter phase in period for domestic banks such as JPMorgan Chase N JPM and Goldman Sachs N GS than their foreign counterparts would face
The final rules to be unveiled on Wednesday have already sparked protests That is because regulators will spell out which assets count as highly liquid Banks will have to hold a minimum amount of these assets such as U S Treasuries
As in the initial proposal municipal bonds will not count toward that buffer a person familiar with the situation said That has angered state officials who say banks will buy fewer of their bonds and taxpayers will shoulder more costs for projects such as new roads
As stewards of our states coffers and protectors of our states financial resources state treasurers were surprised to learn that federal regulators quietly posted their intent to vote on significant and potentially very harmful rules the National Association of State Treasurers said in a statement
SWAPS MARGIN
In a separate action regulators expect to re propose margin requirements for swaps trades conducted outside clearing houses
Those rules were proposed in 2011 but were never made final The new proposal due out Wednesday is expected to tie into guidelines released by the global Basel group last year
Swaps which mushroomed during the pre crisis boom and were lightly regulated largely must now be routed through clearing houses or middlemen that take on the risk that trading partners will not deliver on their promises
But some swaps are complicated and are still not cleared The new rules will regulate how much margin counterparties must set aside for these riskier deals
Experts said banks are keeping a close eye on the margin rules which could be costly for them
The regulators also are expected to take a third unrelated action to finalize rules proposed in April 2014 that specify how banks must calculate their capital requirements
Reporting by Emily Stephenson Editing by Cynthia Osterman | 9/3/2014 |
GS | Goldman Sachs wins role stabilizing early trade in Alibaba IPO source | Reuters Goldman Sachs Group Inc N GS will be the bank in charge of overseeing early share trading in China s Alibaba Group Holding Ltd s initial public offering according to a source
Other banks working on the e commerce company s IPO were eager for the role also known as the stabilization agent because of the status and the potential of additional fees associated with it the source said
Stabilization agents support the share price by purchasing additional shares on the market
Barclays Plc L BARC will be the lead floor trader at the New York Stock Exchange the source added
A date for the IPO has not been announced but is expected next week
Alibaba which powers 80 percent of all online commerce in the world s second largest economy is expected to raise more than 20 billion and could top the 16 billion pulled in by Facebook Inc FB O when it listed in 2012
The Wall Street Journal was the first to report the matter
Reporting by Amrutha Penumudi in Bangalore | 9/3/2014 |
GS | Goldman Sachs plans sukuk issue as Islamic finance goes mainstream | By Archana Narayanan and Al Zaquan Amer Hamzah DUBAI KUALA LUMPUR Reuters Goldman Sachs N GS is reviving plans to issue at least 500 million worth of Islamic bonds a sign that Islamic finance is going mainstream as big conventional banks seek to tap Middle Eastern money
The U S bank will meet investors in Qatar next Wednesday and the United Arab Emirates on the following day to discuss issuing sukuk a document from lead managers of the sale said on Thursday There was no immediate comment from Goldman
If the issue then goes ahead Goldman will become only the second non Islamic bank to sell sukuk after the Middle Eastern unit of HSBC L HSBA did a ground breaking 500 million deal in 2011
Other global banks are poised to follow suit In recent months France s Societe Generale PA SOGN and Bank of Tokyo Mitsubishi UFJ T 8306 Japan s largest lender have been preparing to issue sukuk in Malaysia
An initial attempt by Goldman to sell sukuk in 2011 ran into controversy as some in the industry accused it of failing to follow Islamic principles which include bans on the payment of interest and pure monetary speculation
But the U S bank is now returning to the market as the Islamic finance industry grows rapidly fueled by booming economies in the Gulf and southeast Asia
New issues of sukuk so far this year total 85 9 billion through 456 deals globally up from 74 9 billion through 558 deals a year earlier according to data from Zawya a Thomson Reuters company
Those volumes remain small compared to conventional finance but are now big enough to make it worthwhile for Western borrowers to get in on the act
Governments in non Muslim countries are also starting to issue sukuk in June Britain became the first Western government to do so while Hong Kong South Africa and Luxembourg all plan sales this year
CONTROVERSY
For some investors Goldman is a symbol of Western banking and its first attempt to enter the sukuk market a 2 billion issuance program registered with the Irish Stock Exchange three years ago was dogged by suspicions that it might exploit Islamic finance
Some analysts suggested Goldman might use the proceeds of the issue to lend money to clients for interest or that the issue might not trade at par value which could also contravene sharia principles
Although Goldman insisted that these concerns were unfounded and Islamic scholars had given its 2011 plan adequate certification it never made a public issue of sukuk
This time the U S bank appears to taking pains to avoid controversy The document from lead arrangers said it would use a wakala structure for its sukuk instead of the murabaha structure planned in 2011
Murabaha is a cost plus sale arrangement which is commonly used in some parts of the Islamic world but has been criticized by some scholars for being too close to conventional financial engineering
Goldman s latest plan may indicate that wakala in which one party manages assets on behalf of another is becoming the structure of choice for big global banks The HSBC issue in 2011 was wakala and Societe Generale and Bank of Tokyo Mitsubishi UFJ have both chosen that structure for their plans
Initial indications are that Goldman s new sukuk plan may be received positively by the market The involvement of top Western banks could help to develop Islamic finance by expanding its investor base and the pool of expert bankers involved in it
It has always been my view that it s good for them to make a comeback This is a market that welcomes all kinds of issuers Daud Bakar chairman of the sharia advisory council under Malaysa s central bank told Reuters
They need to make sure there is full disclosure on what the underlying project is Also they need to consult with sharia scholars
Mohamad Akram Ladlin executive director at the International Shari ah Research Academy for Islamic Finance said As with any issuance it is encouraged if the purpose of it is for good to develop infrastructure to enhance Islamic finance for example
The earlier controversy was with their background their image in the industry There were also issues with the structure of the sukuk If they can overcome these why not
Goldman Sachs chose itself Abu Dhabi Islamic Bank AD ADIB Emirates NBD DU ENBD National Bank of Abu Dhabi and the investment banking arm of Saudi Arabia s National Commercial Bank to arrange the investor meetings the document from lead managers said
The sukuk would be issued through a vehicle called JANY Sukuk Co and be guaranteed by Goldman Sachs The issue is expected to be rated A minus by Standard Poor s and A by Fitch Ratings identical to the ratings of the investment bank the document added
Additional reporting by Bernardo Vizcaino in Sydney Editing by David French and Andrew Torchia | 9/4/2014 |
GS | Carlyle raises 3 9 billion for private equity s second biggest Asia fund | By Stephen Aldred HONG KONG Reuters Carlyle Group O CG one of the world s largest private equity firms said on Monday it has closed its fourth Asia fund at 3 9 billion the second largest private equity fund ever raised for Asia investments
The new fund adds to an estimated record 140 billion of uninvested capital or dry powder that private equity firms have raised for the region prompting worries that there is too much money chasing too few deals
But Carlyle s co head of Asia buyouts X D Yang dismissed those concerns
The regional economy has become much much bigger Ten years ago a 500 million equity investment was huge but today it s a medium sized deal Yang told Reuters in an interview
The companies are getting bigger the economies are getting bigger and the private equity funds and deals are getting bigger he added
Carlyle Asia Partners IV which will invest in deals in Asia excluding Japan is 53 percent larger than the firm s previous fund for the region and exceeded its target of 3 5 billion
It is second only to KKR Co s N KKR 6 billion Asia fund raised last year and has already invested 700 million in equity in security systems firm ADT Korea
By comparison since the close of KKR s fund in July last year KKR has announced eight deals which if completed would be worth around 2 billion in equity
Carlyle is also raising funds for a separate fund to invest in Japan aiming to gather as much as 1 billion investors with knowledge of the plans have told Reuters
FEES CUT
The fundraising for Carlyle s fourth Asia fund was not easy with KKR s record fund as well as other rivals providing stiff competition for capital Like others in the industry Carlyle cut its fees and brought in high net worth investors to help with the fund raising
Investors with direct knowledge of the matter said Carlyle reduced its management fees to 1 5 percent from the usual 2 percent It also hired Goldman Sachs N GS to raise money from the bank s private wealth clients at a fee of 3 percent of capital raised They declined to be identified as Carlyle has not made the details public
Carlyle declined to comment on aspects of its fundraising A representative for Goldman Sachs was not immediately available for comment
Yang said many of Carlyle s investments over the next five to seven years would be in companies likely to benefit from strong economic growth in the region
He believes restructurings of China s state owned enterprises like the one being conducted at oil giant Sinopec Corp HK 0386 as well as growth in the country s emerging technology companies offer opportunities for big ticket deals
Look at the new economy in China and you see the scale of companies like Alibaba IPO BABA N That s a sector where you could see someone make a 500 million investment at the right time and maybe achieve a 5 billion profit he said
Yang who joined Carlyle in 2001 after stints at Merrill and Goldman is the man behind the firm s signature Asia deal an investment in China Pacific Insurance Group Co Ltd SS 601601 CPIC
It gave Carlyle its biggest dollar profit on an investment globally with the private equity firm garnering a total profit of over 4 billion five times the amount it invested between 2005 and 2007 for a 17 percent stake
Reporting by Stephen Aldred Editing by Edwina Gibbs | 9/8/2014 |
GS | Banks push U S Fed to delay Volcker rule WSJ | Reuters Banks are lobbying U S policy makers for a delay of up to seven years from a provision requiring them to sell investments in private equity and venture capital funds the Wall Street Journal reported citing people familiar with the matter
Bank officials trade groups and lawmakers are quietly pressing the Federal Reserve for a multiyear delay of the rule that limits their investments in private equity and venture capital funds the Journal said
The Volcker rule part of the Dodd Frank law restricts banks ownership stake in hedge funds and private equity funds
The rule prohibits banks from making speculative bets with their own money
A delay of the rule would affect large banks such as Goldman Sachs Group Inc N GS JPMorgan Chase Co N JPM and Morgan Stanley N MS the Journal said
The private equity business has become less appealing in general to banks because of the 2010 Dodd Frank financial reform law The Volcker rule expected to be implemented in a few years prohibits banks from investing in any fund they do not manage
Since the Volcker Rule was adopted some banks have already made changes
The Federal Reserve could not be reached for comment outside of business hours
JPMorgan on Monday spun off its last remaining private equity business One Equity Partners and sold almost half of its stake in the portfolio Morgan Stanley in 2011 spun off most of its ownership in the 4 5 billion hedge fund FrontPoint Partners
Representatives from Morgan Stanley JPMorgan and Goldman Sachs also could not be reached outside of their business hours
Reporting by Kanika Sikka in Bangalore Editing by Lisa Shumaker | 8/12/2014 |
GS | Goldman Sachs a final bidder for 1 6 billion Tokyo building sources | By Junko Fujita TOKYO Reuters A Goldman Sachs Group Inc unit is a final bidder for a Tokyo office tower in a deal that could fetch about 165 billion yen 1 6 billion said people familiar with the deal which could be the biggest office property deal in six years Secured Capital part of Asian private equity firm PAG is trying to sell the 32 storey Pacific Century Place Marunouchi in a prime spot near the Tokyo railway station It bought the property for about 144 billion yen in 2009 Investors are aggressively seeking properties as Tokyo prices are expected to continue a rebound they have seen under Prime Minister Shinzo Abe s growth policies of massive monetary and fiscal stimulus Among other recent deals Japan s Orix Corp and New York investors Angelo Gordon Co are seeking around 40 billion yen for their stake in a Tokyo office building Goldman Sachs Asset Management is competing against at least two other investors with similar bids said the people with knowledge of the deal The investors were screened in an initial bid and the sellers will award one of the final bidders exclusive rights to negotiate the deal The other bidders could not immediately be confirmed A Goldman Sachs spokeswoman declined to comment Officials at Secured Capital could not be reached for comment The bids represent the biggest deal for an office property in Japan since the global crisis of 2008 even though it looks set to fall short of the 180 billion yen that Secured Capital initially sought Pacific Century Place Marunouchi completed in 2001 was bought by K K daVinci Holdings in 2006 for 200 billion yen at a market peak Shinsei Bank Ltd extended loans for the highly leveraged transaction and took control of the property when daVinci became unable to repay on time after Japan s real estate market crashed in the global financial crisis Pacific Century is located in Tokyo s Chiyoda ward where rents are the highest and vacancy rates remain the lowest in Tokyo 1 US dollar 102 4600 Japanese yen Reporting by Junko Fujita Editing by William Mallard and Matt Driskill | 8/13/2014 |
GS | Goldman to face Libya s sovereign wealth fund in court over trades | LONDON Reuters Goldman Sachs N GS and Libya s sovereign wealth fund are set to meet in a London court over claims the Wall Street bank exploited a position of trust by encouraging the fund to invest more than 1 billion in trades that ended up worthless
Goldman had filed a summary judgment application a request to decide a claim without going to trial in the case brought by the Libyan Investment Authority LIA in January but has recently withdrawn it the LIA said in a statement
Following the serving of the LIA s reply evidence Goldman Sachs has withdrawn its summary judgment application the LIA said
A case management hearing has now been scheduled for early October
Goldman did not immediately respond to requests for comment A spokesperson previously described the claims as without merit and said the bank would defend them vigorously
The LIA brought a lawsuit to London s High Court over a series of equity trades executed between January and April 2008 that expired as worthless in 2011
The fund which became a Goldman client in 2007 alleges that the bank deliberately exploited the relationship of trust and confidence it had established with LIA staff causing the fund to enter into the disputed trades
The LIA estimates that Goldman made substantial profit of around 350 million on the trades while it was left with colossal losses
Reporting by Clare Hutchison editing by David Evans | 8/19/2014 |
GS | S P 500 sets record high but fails to hold 2 000 mark | By Chuck Mikolajczak NEW YORK Reuters The S P 500 was unable to hold the 2 000 mark after moving above the milestone level for the first time on Monday but still managed to close at a record high buoyed by financials and biotechnology stocks The significance of the milestone was more psychological than fundamental and it represents the high point of a nearly six year rally that has boosted retirement accounts for Americans from Wall Street to Main Street though the gains have largely benefited wealthier Americans On a total return basis the S P 500 has more than tripled from its 2009 low hit during the financial crisis The day s gains were broad with each of the 10 primary sectors on the benchmark S P index advancing Psychologically it is somewhat important to close above 2 000 but it only becomes of increasing importance if we see the markets vacillate around this number for an extended period said Sean Lynch managing director of global equity strategy for Wells Fargo Private Bank in Omaha Nebraska Investors are going back to the fundamentals and the strong earnings season we saw in the U S in the second quarter and an improving economy The index has managed to climb despite cautious signals investors including a reduction in stimulus from the Federal Reserve and a simmering conflict between Ukraine and Russia In the latest economic data reads on both the U S services sector and the housing market came in below forecasts but indicated the economy remains on a solid growth path Biotech stocks which have recovered from a sharp drop earlier this year to become a primary driver of recent equity gains continued to outperform on Monday The Nasdaq Biotech index rose 2 4 percent and is up 8 6 percent for the month InterMune shares surged 35 4 percent to 72 85 to help lift the sector after it agreed to be acquired by Roche Holding AG for 8 3 billion in cash the latest vote of confidence in a sector that many including Federal Reserve Chair Janet Yellen worry is overvalued The Dow Jones industrial average rose 75 65 points or 0 44 percent to 17 076 87 the S P 500 gained 9 52 points or 0 48 percent to 1 997 92 and the Nasdaq Composite added 18 80 points or 0 41 percent to 4 557 35 Financial shares were among the strongest of the day rising on expectations Europe may see more aggressive monetary stimulus Morgan Stanley which has heavy exposure to Europe rose 2 2 percent to 34 20 while Goldman Sachs Group Inc a Dow component was up 1 4 percent at 177 87 The S P financial sector gained 0 8 percent U S stocks have been strong of late The Dow and S P have notched gains in seven of the last 10 sessions while the Nasdaq has climbed in eight of the last 10 trading days Burger King is in talks to acquire Canadian coffee and doughnut chain Tim Hortons Inc in a deal that would be structured as a so called tax inversion transaction to move Burger King s domicile to Canada which has lower overall corporate taxes Shares of Burger King jumped 19 5 percent to 32 40 while U S shares of Tim Hortons shot up 18 9 percent to 74 72 Volume was light with about 4 07 billion shares traded on U S exchanges well below the 5 51 billion average so far this month according to data from BATS Global Markets
Advancing stocks outnumbered declining ones on the NYSE by 1 858 to 1 172 while on the Nasdaq advancers beat decliners 1 573 to 1 131 Reporting by Chuck Mikolajczak Editing by James Dalgleish | 8/25/2014 |
GS | Citigroup unit to pay 5 million to settle SEC charges | By Sarah N Lynch and John McCrank Reuters A private trading venue owned by Citigroup N C will pay a 5 million penalty to settle charges that it failed to protect customers data marking the latest case in a crackdown by U S regulators over alleged market rule violations
The Securities and Exchange Commission said the unit LavaFlow Inc is settling the civil case without admitting or denying the charges
The SEC said LavaFlow failed to put adequate safeguards and procedures in place to protect its subscribers confidential trading information from March 2008 through March 2011
As a result another affiliate was then able to access the data and use it to help determine where to route certain orders the SEC said
A Citigroup spokesman said the bank is pleased to put this matter behind us
The charges against LavaFlow which were filed on Friday mark the fourth case since 2011 that the SEC has filed against an alternative trading system ATS a type of trading platform that competes with traditional exchanges
Most recently the SEC in June levied charges against another ATS operator called Liquidnet also in connection with a breach of confidential subscriber data
In that case the SEC said Liquidnet used the private trading data of customers to market its services Liquidnet settled the case and paid a 2 million penalty
The SEC said on Friday that LavaFlow s 5 million penalty is the largest ever imposed on an ATS operator
The SEC s prior three cases against ATS venues were targeting a type of platform known as a dark pool which lets investors trade anonymously and does not publicly display quotes
LavaFlow is distinct in that it is not a dark pool Rather it operates as an electronic communications network or ECN a trading venue that displays some information about pending orders in the system
The SEC s enforcement crackdown on ATS operators comes as the agency drafts new rules to make private trading venues more transparent
SEC Chair Mary Jo White announced earlier this year she plans to eventually propose new rules that would require ATS operators to disclose more details to the public about the way they operate
Dark pool venues in particular have come under scrutiny in recent years amid concerns that their unlit markets may be driving too much volume away from traditional exchanges and harming price quality
Other regulators besides the SEC also have been turning their attention to dark pools
On July 1 Goldman Sachs N GS agreed to pay an 800 000 fine to the Financial Industry Regulatory Authority FINRA to settle a case over pricing rule violations in its ATS
In addition New York Attorney General Eric Schneiderman is pursuing fraud charges against a dark pool run by Barclays L BARC saying the bank lied to clients about how it policed the pool for high speed traders
Barclays on Thursday filed court documents seeking to dismiss the case which it said had fatal flaws
Reporting by Sarah N Lynch in Washington and John McCrank in New York Editing by Paul Simao | 7/25/2014 |
GS | Goldman mortgage deal with federal agency could reach 1 25 billion source | By Lauren Tara LaCapra NEW YORK Reuters A deal to resolve a U S regulator s claims against Goldman Sachs Group Inc NYSE GS over mortgage backed securities sold to Fannie Mae and Freddie Mac leading up to the financial crisis could cost the bank between 800 million and 1 25 billion according to a person familiar with the matter
The person said Goldman Sachs is discussing a settlement with the Federal Housing Finance Agency FHFA which filed 18 lawsuits against Goldman and other banks in 2011 over about 200 billion in mortgage backed securities that later went sour
Goldman Sachs and the FHFA declined to comment on Saturday
The upper end of the range matches the amount Morgan Stanley agreed to pay in February to resolve the FHFA s claims against it The person familiar with the matter said the negotiations are still ongoing and the final amount of any deal remains fluid The person was not authorized to speak publicly on the matter
The Wall Street Journal first reported the settlement talks
The FHFA has recovered 16 1 billion in agreements with other banks Goldman is among four banks still facing FHFA mortgage related lawsuits along with HSBC Holdings PLC Nomura Holdings Inc and Royal Bank of Scotland Group PLC
On Wednesday Goldman HSBC and Noumra argued that U S District Judge Denise Cote in New York who is overseeing the litigation should reconsider her decision that the agency did not wait too long in suing the banks
The renewed bid to dismiss the lawsuits based on timeliness issues stemmed from a June ruling from the U S Supreme Court The court ruled in an environmental case that a federal law did not preempt a state law statute that placed time limits on bringing a lawsuit that applied even if a plaintiff did not know it had a claim
But Cote warned the banks on Wednesday they faced a steep hill to climb
Goldman Sachs and HSBC are scheduled to face trial Sept 29 A trial in the Nomura case is due for Jan 26 2015
The case is Federal Housing Finance Agency v HSBC North America Holdings Inc U S District Court Southern District of New York No 11 6189
Reporting by Lauren Tara LaCapra Additional reporting by Nate Raymond Writing by Joseph Ax Editing by Bernard Orr | 7/26/2014 |
GS | Morgan Stanley lends to Lotto winner to boost tailored loans | By Lauren Tara LaCapra NEW YORK Reuters Early this year a New York State Lottery winner in Brooklyn approached Morgan Stanley with a problem he needed to borrow hundreds of thousands of dollars before he collected his prize money The man a Russian immigrant wanted money to help move his family to a secure location before he redeemed his ticket and possibly became famous according to people familiar with the matter who spoke on the condition of anonymity He also wanted advice about what to do with his prize money which was in the hundreds of thousands of dollars The bank s wealth management unit decided to make the loan to win a new customer a step it is increasingly willing to make as it builds up its brokerage unit Making unusual loans is critical for Morgan Stanley The bank has bet its future in large part on its wealth management business which produces more stable revenue than the trading unit that nearly wiped out Morgan Stanley during the financial crisis Providing unconventional loans is a reliable way to win customers and keep them Morgan Stanley is playing catch up against rivals including JPMorgan Chase Co Citigroup Inc Deutsche Bank AG and Credit Suisse Group AG which offer loans collateralized by everything from art collections to cases of wine Industry sources said they had never heard of a loan against a lottery ticket though they cited other examples of atypical collateral that other banks have loaned against including a client in Texas who borrowed against the future offspring of his prize bulls and a client who borrowed against future ticket sales of a professional sports team he owned We ve got 3 million clients and they ve got borrowing needs Eric Heaton who runs Morgan Stanley s private bank said in an interview Reuters attempted to track down the Lotto winner by the description provided by sources familiar with the matter but was unable to confirm his identity Tailored loans are lucrative for the bank which can help Morgan Stanley reach its profitability targets for wealth management Morgan Stanley s pretax profit margin target is 22 percent to 25 percent by the end of next year compared with a current level of 20 6 percent assuming interest rates do not rise To spearhead Morgan Stanley s efforts to build up what it calls tailored lending the bank hired a team from Deutsche Bank led by Marcus Mitchell Although Morgan Stanley has been making these loans since 2010 it is ramping up its efforts now It can make more loans now because it received extra deposits when it bought the portion of Citigroup s retail brokerage that it did not already own last year Morgan Stanley now has 130 billion of deposits SMITH BARNEY Morgan Stanley spent billions of dollars buying the Smith Barney retail brokerage business from Citigroup between 2009 and 2013 and adding it to its own wealth management unit In public presentations executives have continually trumpeted the reliable earnings that wealth management offers as opposed to businesses like trading where profit can oscillate wildly Investment management and retail brokerage accounted for about 30 percent to 40 percent of the bank s quarterly revenue in 2007 a figure that grew to more than half in the second quarter of 2014 As its lending effort has gotten under way over the past year or two Morgan Stanley has about 2 billion of tailored loans outstanding which now account for about 5 percent of the total loans outstanding at its wealth management unit Heaton and other executives who spoke to Reuters said they expect tailored lending to remain a relatively small sliver of the wealth management unit s loans Mortgages in contrast account for about a third of loans at the unit But tailored loans can be much more profitable for some banks can earn 7 5 percentage points more than their funding costs said one adviser at a rival firm who spoke on the condition of anonymity Morgan Stanley said its profits are much lower on the loans But even if the bank s margins on these loans are less than 7 5 percent industry experts said they are likely much higher than margins on mortgages which tend to be one percentage point or less The wider margins on tailored loans come in part because the loans are so unique Morgan Stanley mitigates its risk by making sure it has access to collateral that can be sold quickly to recoup the cost of the loan or that loans have a guarantor with enough assets to repay It hires appraisers to assess the value of assets it is lending against Wealth management clients can borrow against one of a kind assets like rare coins but tailored loans can also be for assets like commercial real estate which make up about a quarter of Morgan Stanley s tailored loan book For loans that fall outside of the bank s comfort zone like auto loans the bank refers clients to other lenders Heaton said
In the case of the lottery winner while Morgan Stanley executives would not acknowledge having any relationship with such a client they did stress that the bank usually has ample collateral and would not rely on expected lottery winnings alone to back a loan We don t chase Lotto winners in hopes of establishing a relationship said Heaton But if there s a client that comes in with a liability need we ll look at their financial position and see what we can do to help Reporting by Lauren Tara LaCapra Editing by Dan Wilchins and John Pickering | 8/3/2014 |
GS | Goldman Sachs says alternative trading system being investigated | Reuters Goldman Sachs Group Inc N GS said it was being investigated for its U S alternative trading system and for the potential misuse and circulation of non public information related to its corporate developments
Fox Business Network reported this week that New York s attorney general was investigating the alternative trading systems also known as dark pools run by Goldman and Morgan Stanley N MS
Goldman in a filing on Thursday did not specify who was conducting the investigation
A unit of Goldman Sachs was fined in July over pricing rule violations stemming from its dark pool SIGMA X
Dark pools are broker run trading venues that let investors trade shares anonymously and only make trading data available afterwards reducing the chance of information leaking about trade orders
Goldman also lowered its unreserved legal costs to 3 2 billion at the end of June from 3 7 billion at the end of March it said in the filing
Reporting by Tanya Agrawal Editing by Saumyadeb Chakrabarty | 8/7/2014 |
GS | At KKR Nuttall and Bae are favorites to fill founders shoes | By Greg Roumeliotis NEW YORK Reuters KKR Co LP s N KKR co founders Henry Kravis and George Roberts have indicated they intend to stay at the buyout firm for at least five more years but two men Scott Nuttall and Joseph Bae are emerging as front runners to eventually succeed them
Interviews with more than half a dozen current and former KKR executives reveal that the firm is likely to preserve the co chairman and co chief executive jobs currently held by Kravis and Roberts Nuttall 41 head of the global capital and asset management group and Bae 42 who leads the firm s operations in Asia are now seen within the buyout shop as the most likely people to take those spots the sources said
Kravis and Roberts both 70 have kept details of the succession plan a secret even within the firm The sources who requested anonymity based their assessment on their observations of interactions among senior KKR executives including the founders and firsthand knowledge of the inner workings of the firm
Their assessment provides the clearest indication yet of how succession may play out at one of the world s oldest and largest private equity firms It is a question that has become increasingly important within the private equity industry as many of these firms have gone public and their larger than life founders have aged
Nuttall and Bae are part of a wider list of potential candidates for the job the sources said
The bench of possible successors includes Alexander Navab 48 head of KKR s Americas private equity business Todd Fisher 48 the firm s chief administrative officer Marc Lipschultz 45 global head of energy and infrastructure investments and Johannes Huth 54 who heads KKR s operations in Europe the Middle East and Africa the sources said
Kristi Huller a spokeswoman for KKR declined to comment on behalf of individual KKR partners Henry and George are very proud that the firm they have built has such a deep bench of leaders she said
Kravis and Roberts made more than 160 million each in 2013 and Forbes pegs the net worth of each at more than 5 billion However most of their earnings are due to their collective ownership of close to a quarter of the firm
The succession race is far from over Kravis and Roberts remain actively involved in the management of the firm
Last month Roberts told an investment management committee meeting of the Teacher Retirement System of Texas that having two co leaders had worked pretty well for KKR He told the KKR investor that he and Kravis were thinking of a transition where they would put new leaders in place but stay on as chairmen for a while
What we have told the firm is we are going to be here God willing for at least another five years so don t push us out the door just yet Roberts said He added that such a time period of five years could be renewed
SENSE OF CONTINUITY
Kravis and Roberts who are cousins pioneered leveraged buyouts through the eponymous firm they created in 1976 alongside Jerome Kohlberg Jr with 120 000 Kohlberg 89 left KKR in 1987
By attracting money from some of the world s largest institutional investors such as pension plans and sovereign wealth funds the firm grew from a single 30 million fund in 1978 to more than 100 billion in assets under management currently It raised more than 20 billion from its fund investors just in the last 12 months to the end of March The firm employs more than 1 100 people in 15 countries
Henry and George provide a sense of continuity and stability to KKR s fund investors and remain very active in the investment process said David Fann chief executive officer of TorreyCove Capital Partners LLC a private equity advisory firm They still source deals and can be very persuasive with CEOs and boards of directors
Unlike publicly listed peers such as Blackstone Group LP N BX Carlyle Group LP O CG and Apollo Global Management LLC N APO KKR has never named a president or someone with an equivalent title a job that could serve as a stepping stone to leading the entire firm
This is partly because of Kravis and Roberts concerns about alienating other members of their senior leadership team the sources said
Kravis and Roberts also like the flexibility that comes with not having to commit to successors the sources said This allows them to easily modify their plans based on the potential candidates future successes and failures
COLLEGIALITY AND LOYALTY
KKR is one of the more tightly knit firms in the private equity industry Both Kravis and Roberts speak often about the importance of preserving KKR s culture and values shaped by collegiality old school Wall Street loyalty and valuing long timers in the firm more
Your word is your bond If you say something to someone you re speaking on behalf of KKR Whether you ve been here six weeks or you ve been here 30 years it s your obligation to stand behind what you say Kravis said in a promotional video in 2012
He rejected the eat what you kill culture seen in many investment firms in the video We didn t want people running around here and saying That s my idea and raising their hand patting themselves on the back and so forth Kravis said
The perception within KKR that Nuttall and Bae are currently frontrunners is closely linked to that culture as well as Kravis and Roberts business priorities
Bae has proven he can renew and grow KKR s franchise of buying and selling companies while Nuttall has emerged as a strategist who can launch and expand related businesses such as credit and special situations as well as represent the firm to investors
KKR insiders who know Nuttall and Bae said their relationship is close and friendly a key consideration in any decision to appoint them as co CEOs Bae also has a loyal following among people who have worked with him praised both for his management style and his ability to socialize with and motivate staff the sources said
GROWING UP AT KKR
Nuttall and Bae joined KKR in 1996 Nuttall had previously spent less than two years at Blackstone while Bae had a similarly short stint at Goldman Sachs Group Inc s N GS principal investments group
Nuttall rose to head of KKR s financial services investment team and also became involved early on with the firm s diversification into debt investments which started in 2004 He now oversees KKR s credit investment capital markets and fundraising activities
Nuttall also played a key role in taking KKR public a process that involved merging the firm with an Amsterdam listed fund in 2009 and then moving the listing to New York in 2010 He now leads KKR s earnings calls with investors
Bae was sent to Hong Kong in 2005 at the age of 33 to kick start the firm s business in Asia a diverse and fast growing region whose capital markets are for the most part less developed and in which several private equity firms accustomed to Western style leveraged buyouts have struggled
The Korean American dealmaker s team launched its first Asian private equity fund in 2007 raising 4 billion from investors Its success led to KKR raising a successor fund last year that amassed 6 billion making it the largest private equity fund dedicated to Asia
THE BENCH
Bae s front runner status leaves KKR s two other regional private equity heads Navab and Huth trailing in succession odds in the eyes of many of their peers
Navab who heads KKR s biggest and longest running business had been previously perceived among the front runners
Navab has been seeking to diversify KKR s more mature private equity business in North America by expanding in Latin America He led the creation of KKR s Sao Paulo office and the firm announced its first private equity investment in Brazil earlier this year
Nevertheless Latin America offers fewer investment opportunities at this stage of the economic cycle than some Asian counties for which Bae is responsible the sources said
Navab was co head of the Americas private equity business between 2008 and last May at which point the other co head Michael Michelson gave up that title to return to investing This allows Navab to assume more ownership of his group
Some KKR investors raised concerns last year over Navab s heart arrhythmia but insiders said that he has treated this condition effectively and is healthy
Fisher is seen inside KKR as an effective operator who knows the ins and outs of the firm and is credited with setting up its real estate business
Lipschultz KKR s global head of energy and infrastructure investments has managed to defy the negative headlines on the bankruptcy of Energy Future Holdings a Texas power utility that KKR and other private equity investors acquired in 2007 for 48 billion He has emerged as a potential candidate thanks to the assets in energy and infrastructure he has amassed for the firm since
Reporting by Greg Roumeliotis in New York Editing by Paritosh Bansal John Pickering and Lisa Shumaker | 7/16/2014 |
GS | Goldman Sachs says BES investment was on behalf of clients | LISBON Reuters Goldman Sachs s N GS 2 27 percent interest in Portugal s Banco Espirito Santo LS BES was acquired on behalf of clients the U S investment bank said in a statement on Wednesday afternoon
Shares in BES soared as much as 19 6 percent Wednesday after the bank announced on Tuesday evening that Goldman Sachs Group had acquired the interest in the bank and U S hedge fund DE Shaw had taken a 2 71 percent position
Goldman Sachs International has entered into positions in Banco Espirito Santo by virtue of its facilitation of client transactions the bank said in an emailed statement
This activity has triggered a disclosure under the requirements of the Transparency Directive as implemented in Portugal
Reporting By Laura Noonan Editing by Andrei Khalip | 7/23/2014 |
GS | JPMorgan profit declines 8 percent as fixed income trading slides | By David Henry and Tanya Agrawal Reuters JPMorgan Chase Co JPM N the biggest U S bank by assets said on Tuesday that second quarter profit fell 8 percent after customer stock and bond trading volume dropped and mortgage lending fees plunged The results were not as bad as investors had feared and the bank s shares rose 3 8 percent to 58 44 shortly after midday Chief Executive Jamie Dimon said the bank had seen encouraging signs across its businesses toward the end of the quarter including businesses drawing more from credit lines But the bank s executives also sounded notes of caution noting that it was too early to assume that this momentum will continue Speaking on a conference call with analysts Dimon said that companies are still not stepping up capital spending On a conference call with reporters Chief Financial Officer Marianne Lake said the pickup in bond trading revenue that the bank saw in June has not continued through July The report is the bank s first since Dimon disclosed that he had throat cancer Dimon told reporters on Tuesday I feel great and added that he would stay engaged with the business as he underwent treatment He said for the first time that he was advised to take a few weeks of rest after his eight weeks of treatment The bank s net income fell to 5 99 billion or 1 46 per share from 6 5 billion or 1 60 per share in the same quarter of 2013 Revenue fell 3 percent to 24 45 billion Analysts on average had expected earnings of 1 29 per share according to Thomson Reuters I B E S Revenue from fixed income and equity markets fell 15 percent to 3 5 billion in the quarter ended June 30 compared with the same quarter last year but the drop was less than the 20 percent decline that JPMorgan had forecast in May Investors had broadly expected trading revenue drops in the 20 percent range for the big banks but stronger activity in June helped dampen the declines that banks posted Goldman Sachs Group Inc GS N posted a 10 percent decline in stock and bond trading revenue for customers excluding a business it sold last year Citigroup Inc C N which reported on Monday said income from stock and bond trading fell 15 percent excluding an accounting adjustment well below the 20 25 percent fall it had braced the market for in May JPMorgan executives have said that institutional investors seem to be shying away from bonds because of a lack of strong opinions about future moves in interest rates and currencies MORTGAGE LENDING DROPS JPMorgan the second largest U S mortgage lender after Wells Fargo Co WFC N said its profit from mortgage lending fell 38 percent to 709 million while mortgage application volumes dropped 54 percent to 30 1 billion Overall U S mortgage demand has fallen for more than a year as mortgage rates have risen Demand for loans was also hit by a weaker spring selling season compared with last year
JPMorgan said total assets at end June stood at 2 52 trillion up from 2 48 trillion at the end of March Reporting by David Henry and Tanya Agrawal Editing by Ted Kerr and Phil Berlowitz | 7/15/2014 |
GS | Goldman Sachs up 2 after Q2 earnings crush expectations | Investing com The Goldman Sachs Group NYSE GS posted better than expected earnings results for the second quarter ahead of the opening bell on Tuesday sending shares higher in the pre market
The largest U S investment bank said earnings per share came in at 4 10 easily surpassing expectations for earnings of 3 09 per share
The firm s second quarter revenue totaled 9 13 billion beating estimates for revenue of 7 98 billion
Net revenues in Investment Banking were 1 78 billion for the second quarter of 2014 15 higher than the second quarter of 2013 and essentially unchanged compared with the first quarter of 2014
We are pleased with our results for the quarter in the context of mixed operating conditions during the period said Lloyd C Blankfein Chairman and Chief Executive Officer
Shares of Goldman NYSE GS were up 2 in pre market trade following the upbeat results
Meanwhile the outlook for U S equity markets was modestly higher The Dow futures indicated a gain of 0 15 the S P 500 pointed to a rise of 0 1 while the Nasdaq 100 indicated an increase of 0 1 | 7/15/2014 |
GS | India s Energy Import Bill Could Nearly Double In 10 Years Report | By In less than a decade India could spend almost twice as much on energy imports as it does now the Press Trust of India or PTI reported citing a report from Goldman Sachs NYSE GS
According to the report India could spend 230 billion on energy imports in 2023 up from its current annual bill of 120 billion While India is expected to attract huge investments from within and abroad drawn in by reforms expected from the new government led by Narendra Modi the country faces a major challenge in matching growing demand with anemic supply India which has a fifth of the world s population has only one thirtieth of its energy and reforms in the country s power sector are widely expected to be on Modi s priority list
Reforms in the energy sector could reduce India s annual energy import bill by USD 40 billion by FY 23 Energy imports in a reform scenario could come down to about 4 percent of GDP from 6 3 percent of GDP currently Goldman Sachs said in the report according to PTI
Steps like moving to natural gas will reduce India s expenditure on energy significantly according to the report which added that if India became more efficient at using its energy resources by 15 percent in the next 10 years the country could shave 32 billion off its energy bill
The country is also looking to lower its dependence on conventional energy sources and has started focusing on increasing the use of renewable energy according to a report on Monday by Mint a local newspaper The country s energy ministry is also reportedly looking to create two companies that will supervise construction of renewable energy projects
The project report for the joint venture companies has been prepared by Engineers India Ltd Even some projects have been identified for development by the new firms A background note on the same has been prepared Mint reported citing sources | 6/20/2014 |
GS | Goldman Sachs fined over trade rule violations in dark pool | WASHINGTON Reuters A unit of Goldman Sachs N GS will pay an 800 000 fine and return funds to harmed investors to settle charges that its dark pool trading venue violated rules designed to get customers the best prices the Financial Industry Regulatory Authority said on Tuesday
FINRA as the brokerage industry self regulator is known said that SIGMA X an alternative trading system that lets investors trade stocks anonymously did not have proper policies in place to protect customer orders from November 2008 through August 2011 Goldman Sachs Execution Clearing LP is settling the case without admitting or denying the charges Reporting by Sarah N Lynch Editing by Susan Heavey | 7/1/2014 |
GS | Goldman Sachs Hostile To Women Claim Former Employees In Lawsuit | By A number of former female employees at Goldman Sachs Group Inc NYSE GS filed court documents Tuesday supporting the certification of a gender discrimination case against the Wall Street firm as a class action lawsuit in which they say Goldman operates like a boys club and maintains a corporate culture that is hostile to women
Goldman s male employees routinely entertained clients at strip clubs characterized female employees as bimbos excluded their female co workers from golf outings and after hours drinking and denied women promotions in favor of men who were less deserving of the positions claim the female plaintiffs
Goldman Sachs didn t directly comment on the allegations in a statement sent to International Business Times but the firm called the filings a normal and anticipated procedural step for any proposed class action lawsuit and does not change the case s lack of merit
Here are seven of the most damning claims revealed in the documents
1 A woman was punished for reporting a sexual assault by a male co worker
I was afraid to report the assault to management due to fear that I would be retaliated against for speaking up former Goldman vice president H Cristina Chen Oster one of the plaintiffs in the suit said I finally reported the assault because I felt uncomfortable working with the man who had assaulted me and wanted to work in another office After I reported the sexual assault to my supervisor I began to experience increased hostility and marginalization at work Soon after I reported the incident existing job duties and responsibilities were taken away from me My desk was moved to the seat farthest from senior management near empty chairs This signified a demotion and restricted me from cultivating important relationships
2 Goldman hired beautiful women but mocked their intelligence
More than twenty times I heard male traders at Goldman Sachs say the female associated and vice presidents were hired for sales for their attractiveness and not their intelligence and these women were bimbos Denise Shelley a former Goldman vice president said I remember a particular instance when Goldman Sachs hired a woman a beauty pageant winner and the whole trading floor was laughing about her under the assumption that she was not very intelligent I believe she was an Ivy League graduate
3 Goldman paid women less because they didn t consider them heads of household
In my experience Goldman Sachs maintains a culture where gender stereotypes are prevalent Lisa Parisi a former Goldman managing director said For example if male employees have children they are considered heads of households who deserve higher pay On the other hand female employees are not considered heads of household and therefore are not considered to deserve comparable pay
4 Escorts were hired for a holiday party
In my experience Goldman Sachs maintains a culture that is hostile to women ex Goldman associate Shanna Orlich said For instance in December 2007 a male managing director hired female escorts to attend my group s holiday party The escorts arrived wearing short black shirts strapless tops and Santa hats and socialized with male guests during the event
5 Women were worried that becoming pregnant would threaten their chances at a promotion
In 2007 my manager a male managing director informed me that I would be nominated for promotion but volunteered that I should adopt instead of becoming pregnant alleged Goldman vice president Allison Gamba I had never discussed with him or any of my co workers at that time even the possibility of having children
6 Male Goldman Sachs employees took clients to strip clubs
I was aware that in certain instances my male colleagues at Goldman Sachs took their clients to strip clubs as part of the process of luring business Parisi said
7 Women weren t take seriously when socializing at bars and clubs after work hours
A male managing director began referring to me as a party girl in front of other colleagues Parisi added Other men did not receive this kind of treatment and I found it embarrassing and detrimental to my profession reputation | 7/1/2014 |
GS | Former Goldman staff seek class action status for discrimination | Reuters Two former female employees of Goldman Sachs Group Inc N GS who have accused the bank of gender discrimination are seeking class action status for their case If class action is granted the two former employees will be able to press the case on behalf of all female associates and vice presidents in the company s investment bank investment management and securities divisions Cristina Chen Oster a former vice president and Shanna Orlich a former associate filed their suit in 2010
The two accused Goldman of fostering a boys club atmosphere where binge drinking was common and meetings were held at strip clubs The case is In re Chen Oster vs Goldman Sachs Co 10 06950 U S District Court Southern District of New York Reporting by Tanya Agrawal in Bangalore Editing by Saumyadeb Chakrabarty | 7/2/2014 |
GS | Investment banks jockey for 100 million Samsung restructuring bonanza | By Lawrence White and Joyce Lee HONG KONG SEOUL Reuters Investment bankers are jostling to win plum roles from the founding Lee family of Samsung Group South Korea s top fee payer as it prepares to hand the baton to the next generation in a restructuring that could land more than 100 million in advisory fees alone Foreign and Korean investment banks are bringing in their chief executives and top dealmakers to pitch for a glut of deals as the 407 billion Samsung Group SAGR UL untangles an empire that ranges from electronics to financial services Banks top executives have long courted the Samsung Group as it s among Asia s top fee payers Citigroup s chief executive Mike Corbat flew to Korea last year to meet with Samsung management according to a source with direct knowledge of the matter while last month Asia Pacific head Stephen Bird traveled to Seoul A spokesman for Citigroup declined to comment Now as the group s restructuring accelerates Korean and foreign investment banks are assembling large teams sending their CEOs to pay their dues at Samsung HQ and boosting research coverage of the group to try and win lucrative work from the conglomerate There are potentially hundreds of transactions that can be done to simplify the Samsung group structure said Shaun Cochran head of Korea at CLSA an investment bank which published a 178 page report on the group on June 16 As well as untangling the group s complex web of businesses the restructuring could also ease a potential 6 billion tax bill faced by the Samsung heirs Unlike large Western companies that often retain a house bank bankers say Samsung keeps them on their toes by fostering competition for each and every deal as it believes it gets better service that way Since 2010 the group has paid an estimated 167 million in fees the most among Korean corporates and the tenth highest in Asia outside Japan according to data from Freeman Consulting So far this year it has paid 21 million in fees compared with 13 million for all of 2013 Bankers estimate Samsung could pay more than 100 million in fees over the next two years With revenues from trading and dealmaking dwindling global banks in Asia have culled staff and focused on cross selling to the region s few serial fee payers That makes a group like Samsung whose Samsung Electronics Co Ltd is the world s biggest smartphone maker a top target for banks In return Samsung is a demanding client even by investment banking standards For a one hour meeting with them we ll do thirty man hours of preparation so we don t waste their time said a senior executive at a foreign investment bank in Seoul SPRAWLING EMPIRE The sprawling Samsung conglomerate whose 2012 revenues accounted for more than a quarter of South Korea s nominal gross domestic product appears to be accelerating a restructuring after patriarch Lee Kun hee 72 was hospitalized in May Last month Samsung Everland Inc a key holding company within the group announced plans for an IPO following a similar announcement in May by IT solutions unit Samsung SDS Other mandates include battery maker Samsung SDI Co s acquisition of electronics materials affiliate Cheil Industries Inc and a potential renminbi denominated bond for Samsung Electronics Banks are also pitching for at least three sell side mandates from Samsung as it prepares to divest non core businesses a person familiar with the process said The estimated 100 million payday for banks in the next two years excludes fees from ancillary business such as providing foreign exchange or hedging which could push the total even higher Samsung s business style is we won t skimp on the payment let s make sure the work is right said a Korean banker working on one of the listings A spokesman for Samsung said in an emailed statement that the group could not comment on fees or the details of its subsidiaries process of selecting banks NEED TO IMPRESS Banks pitching Samsung must impress panels headed by management of the group subsidiary doing a given deal bankers said They must also woo Samsung heir apparent Jay Y Lee who is overseeing the restructuring and taking a keen interest on major transactions such as the Everland IPO Banks working on the SDS IPO were not short listed for the Everland deal sources with direct knowledge of the matter said as SDS officials did not want their bankers distracted Korean banks unsurprisingly have tended to win the lion s share of the work in the past four years with Samsung s own securities arm earning 16 percent of all estimated fees Goldman Sachs has earned an estimated 19 1 million in fees or 11 percent of the total paid by the group since 2010 the most among foreign banks according to Freeman Consulting and Thomson Reuters data
Other foreign banks on Samsung s books include Citigroup which provides cash management and foreign exchange services for Samsung in some 67 countries and JPMorgan Chase Samsung are the epitome of Korea in how they handle banking relationships not looking to favour any firm outright spreading the wealth around but laser focused on quality of execution said a Seoul based executive at a foreign bank Reporting By Lawrence White in HONG KONG and Se Young Lee and Joyce Lee in SEOUL Editing by Denny Thomas Rachel Armstrong and Ron Popeski | 7/2/2014 |