Investment bank pretax profit -36% to 827M francs, undershooting forecasts of 1.02B. Revenue from debt trading -25% to 1.49B francs, hurt by a lower contribution from rates and emerging markets businesses. Equities revenue -7.4% to 1.2B francs.
Earnings at Credit Suisse's private banking and wealth management unit, increased 15% to 1.01B, topping estimates of 941M francs.
A federal judge rejects a request by Standard & Poor's (MHFI) to split up the U.S. government's $5B lawsuit accusing it of lying about its credit ratings, but the judge gives S&P permission to obtain evidence the government may have sued in retaliation for the agency's decision to lower the U.S. credit rating in 2011.
S&P has said former Treasury Secretary Geithner angrily told McGraw Hill Chairman Terry McGraw in an Aug. 8, 2011 phone call, three days after the downgrade, that he was "accountable" for the company's actions and that S&P's conduct would be "looked at very carefully."
In order to comply with the Volcker Rule, RBC (RY -0.2%) plans to spin off its proprietary trading desk into a standalone hedge fund the bank will likely invest in (but not own outright), the WSJ reports.
Prop desk chief Richard Tavoso will reportedly leave RBC for the hedge fund, as will various RBC traders and portfolio managers.
Morgan Stanley has already spun off its prop desk, and Goldman and Citi have moved to liquidate theirs.
New York's bank regulator reportedly has sent a subpoena to Credit Suisse (CS -0.5%) demanding the bank turn over a wide range of materials from its NYC office, an escalation of its ongoing investigation into potential tax evasion.
The Department of Financial Services is said to have sent the subpoena last week, requesting documents, emails, hard drives, calendar entries and travel and expense reports for all bankers passing through the office; the subpoena also seeks human resource and compensation plans for the bankers.
Ben Lawsky and the agency has been investigating whether CS helped clients avoid paying state taxes; the bank also faces an ongoing federal probe over similar allegations.
Morgan Stanley (MS +0.7%) is upgraded to Buy from Neutral with a $35 price target at BofA/Merrill, based on a more attractive risk/reward given the recent pullback; earnings upside in wealth management, equities and investment banking; and long-term upside from increasing efficiencies and capital return.
Immelt is slated to complete his 20-year run at General Electric (GE) in 2021.
Directors at GE are reportedly rethinking the concept of a 20-year run for a CEO.
The talk is likely to lead to increased speculation on who the company will tap to replace Immelt. Lorenzo Simonelli, head of GE's oil and gas unit, and Steve Bolze, who directs the power and water business, are two of the leading contenders.
GE Capital does plan to sell off assets in which it holds an equity stake, such as buildings, but it still sees providing financing for commercial real estate properties including refinancings and loans for new buildings as a core function; GE says it's an asset class it knows well, but some analysts, such as Morningstar's Daniel Holland, says, "You have to think really hard about a good reason for them owning that business."
Thursday's earnings report from GE presents the next chance for analysts to address the company's strategy.