Thu, Jun. 11, 11:23 AM
- Corporate brokering doesn't generate much in the way of fees, but investment banks see the gig as getting a foot in door for more lucrative work like advising on M&A and capital raises.
- For Bank of America (NYSE:BAC), it would be getting the job just as Royal Bank of Scotland is set to begin one of the largest privatizations in U.K. history.
- Previously: U.K.'s Osborne: Government to begin selling RBS shares (June 10)
- Bank of America also acts as corporate broker to Lloyds - another bailed-out U.K. bank returning to being privately owned. RBS's current brokers are Morgan Stanley and UBS, with UBS reportedly dropping out of the role due to conflicts of interest with existing privatization work.
- Source: WSJ
Wed, Jun. 10, 10:01 AM
- More than six years after the bottom, only four of the globe's biggest banks sport stock prices trading at a premium to book value. Leading the way is UBS at about 1.4x book. Goldman Sachs (NYSE:GS), JPMorgan (NYSE:JPM), and Morgan Stanley (NYSE:MS) also trade for north of book.
- Deutsche Bank (NYSE:DB) - whose ROE of 2% is about one-tenth of what it was pre-crisis - brings up the rear at just about 0.5% of book. Barclays (NYSE:BCS) sells for roughly 0.7x book, and Bank of America (NYSE:BAC) only slightly more than that.
- Checking further on ROE, Goldman leads the way at about 12%. Citigroup (NYSE:C) is less than 5%, but stands out as being the only bank with a higher ROE today than before the crisis.
- Looking at total return since the crisis, Goldman again leads the way at about 170%, with Morgan Stanley and JPMorgan a close second/third. Citigroup is the only major bank with a negative total return over that time frame.
- Source: Bloomberg
Tue, Jun. 9, 2:45 PM
- Yield-starved financial sector names were mercilessly punished to start 2015 as sharply falling interest rates in January again disappointed investors waiting for the return of some spread income.
- The rout in bond prices since, alongside what now seems the near-certainty of the beginning of Fed rate hikes in as soon as three months has helped turn things around, and the sector - as measured by the Financial Select SPDR (NYSEARCA:XLF) - is now in the green for the year, and trails the S&P 500 by just about 150 basis points.
- Among the notable movers today as the 10-year yield rises to another 2015 high: Bank of America (BAC +1.4%), Wells Fargo (WFC +1.2%), U.S. Bancorp (USB +1.4%), Regions Financial (RF +1.3%), Huntington Bancshares (HBAN +1.6%), KeyCorp (KEY +1.6%), PNC Financial (PNC +1.3%), M&T (MTB +1.1%), Bank of Hawaii (BOH +1.6%), First Horizon (FHN +1.2%), Lincoln National (LNC +1.1%), E*Trade (ETFC +0.9%)
- ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, BTO, IAT, SEF, IYG, FXO, FNCL, KBWB, FINU, QABA, KRU, KBWR, RWW, RYF, PSCF, FINZ, KRS
Fri, Jun. 5, 2:36 PM
- Cost-cutting is still a catalyst for Bank of America (BAC +2.5%), says JPMorgan's Vivek Juneja, noting the lender could add another $0.06 to annual EPS and improve its efficiency ratio by 100 basis points by cutting LAS expenses another $250M (as it plans to do). The bank has also just begun its SIM program (Simplify and Improve) to find cost savings which will free up money for growth investments.
- Goldman Sachs (GS +0.5%), says the team at Wells Fargo, is set to benefit from continued strength in M&A, plus potential to see greater client activity as rates rise. The bank's greater expense flexibility suggests it will maintain a healthy ROE advantage to peers. The consensus for peer ROE next year is 8.8% - for Goldman to maintain its edge, says Wells, it would need to generate a ROE of 15.4% vs. the 14.7% it posted in Q1 this year.
- Previously: Financials on the move as rate hike draws nearer (June 5)
Fri, Jun. 5, 10:27 AM
- This morning's strong nonfarm payroll report may put to rest the idea of a continuing economic slowdown and puts on the table a rate hike maybe as soon as September.
- The 10-year Treasury yield is up nine basis points to 2.40%.
- The KRE +1.5%, KBE +1.6%, and the XLF +1.1% amid a flat S&P 500.
- Regional banks: Regions Financial (RF +3.3%), KeyCorp (KEY +2.5%), PNC Financial (PNC +1.9%), SunTrust (STI +2.3%), U.S. Bancorp (USB +2.2%), Zions (ZION +3.7%), First Niagara (FNFG +1.4%)
- Too Big Too Fails: Citigroup (C +2.2%), Bank of America (BAC +3.4%), JPMorgan (JPM +2.2%), Wells Fargo (WFC +1.9%)
- Life insurers: MetLife (MET +2.7%), Prudential (PRU +2.8%), Sun Life (SLF +1.9%), Lincoln Financial (LNC +2.5%)
- Online brokerage: Schwab (SCHW +3.8%), TD Ameritrade (AMTD +2.8%), E*Trade (ETFC +2.3%), Interactive Brokers (IBKR +2.5%)
- Previously: Jobs up 280K in May; UE rate ticks higher (June 5)
- Previously: Treasury yields surge amid strong job gains, boosted wage growth (June 5)
- ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, BTO, IAT, SEF, IYG, FXO, FNCL, KBWB, QABA, FINU, KBWR, KRU, RWW, RYF, FINZ, KRS
Wed, Jun. 3, 12:36 PM
- “A clear separation has emerged between the biggest brokers and the rest of the market,” says Jay Bennett of Greenwich Associates. A survey by his firm finds the top four U.S. equity brokers - Goldman Sachs (NYSE:GS), JPMorgan (NYSE:JPM), Bank of America (NYSE:BAC), and Morgan Stanley (NYSE:MS) - are widening their market share lead over the rest of the industry.
- According to Greenwich, all had more than an 8% share of trading, with number five Credit Suisse (NYSE:CS) at 6.9%.
- Bennett calls it a segmented market composed of the big four, the rest of the bulge bracket, and a long tail of competitors with relatively smaller shares.
- ETFs: IAI, KCE, KBWC
Tue, Jun. 2, 3:31 PM
- The averages are flat to negative this session, but yield-starved financials are digging the big jump in interest rates - the 10-year Treasury yield is up nine basis points on the session to 2.27%, and 15 bps for the week.
- Previously: Yields surge as European deflation fears abate (June 2)
- The Regional Bank ETF (KRE +1.3%) and the Bank ETF (KBE +1.2%).
- Individual names: Regions Financial (RF +1.6%), New York Community Bank (NYCB +1.3%), Huntington Bancshares (HBAN +1.3%), KeyCorp (KEY +1%), Fifth Third (FITB +1.3%). Thought of as perhaps the most asset-sensitive of the large lenders, Bank of America (BAC +1%) is leading the TBTFs higher.
- Life insurers: MetLife (MET +1.2%), Prudential (PRU +1.5%), Lincoln Financial (LNC +0.9%), Primerica (PRI +1.2%).
- ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, BTO, KIE, IAT, SEF, IYG, IAK, FXO, FNCL, KBWB, QABA, FINU, KBWR, KRU, RWW, RYF, KBWP, KBWI, FINZ, KRS
Thu, May 28, 2:30 AM
- The world's most popular sport was plunged into turmoil on Wednesday as U.S. authorities announced charges against nine FIFA officials and five sports executives, alleging they were part of a scheme in which more than $150M in bribes were paid in exchange for the commercial rights to soccer tournaments.
- The bribes were reportedly paid using accounts at major global banks, raising the prospect that Wall Street could be in the spotlight again over its involvement in yet another scandal. Banks involved: JPMorgan (NYSE:JPM), Citigroup (NYSE:C), HSBC, BofA (NYSE:BAC), UBS and Julius Baer (OTCPK:JBAXY).
- Nike, which also might be in the hot seat, said it would cooperate with authorities.
Wed, May 27, 9:13 AM
- "If the environment stays sort of flattish, less volatility, we'll have to keep working that expense base down," says Bank of America (NYSE:BAC) CEO Brian Moynihan, speaking at the Bernstein Strategic Decisions Conference.
- The Global Markets unit at his bank posted a Q1 profit of $945M - down 28% year-over-year, with FICC revenue of $2.75B down 7%. Estimates had been for about $3B in revenue, and competitor JPMorgan, to name one, saw a 5% Y/Y increase.
- Source: Bloomberg
- Previously: Stronger mortgage numbers, but weaker trading results as BofA beats estimates (April 15)
Thu, May 21, 9:17 AM
- New additions to Goldman's hedge fund hotels - 50 stocks which most frequently appear among the largest ten holdings of hedge funds: AerCap (NYSE:AER), Assured Guaranty (NYSE:AGO), Baker Hughes (NYSE:BHI), Citizens Financial (NYSE:CFG), Colony Capital (NYSE:CLNY), Dresser-Rand (NYSE:DRC), Family Dollar (NYSE:FDO), Hospira (NYSE:HSP), Netflix (NASDAQ:NFLX), NXP Semi (NASDAQ:NXPI), Pharmacyclics (NASDAQ:PCYC), Visa (NYSE:V), and Walgreens (NASDAQ:WBA).
- Since 2001, the basket has outperformed the S&P 500 in 66% of quarters by an average of 73 basis points. YTD, however, it has underperformed by nine bps. Goldman notes the current basket overweights Consumer Discretionary (22%) and underweights Consumer Staples (2%).
- Looking at the full list, Actavis (NYSE:ACT) leads the way, with 77 funds naming the stock as a top 10 holding. Next up is Apple (NASDAQ:AAPL) with 69, then Facebook (NASDAQ:FB) at 42. For the entire list of 50, the average is 26 funds making a stock a top 10 holding.
- The rest in order: Valeant (NYSE:VRX), Microsoft (NASDAQ:MSFT), DirecTV (NASDAQ:DTV), Citigroup (NYSE:C), Time Warner (NYSE:TWC), Delta (NYSE:DAL), Cheneire (NYSEMKT:LNG), Yahoo (NASDAQ:YHOO), Liberty Global (NASDAQ:LBTYK), AIG, SunEdison (NYSE:SUNE), Air Products (NYSE:APD), Amazon (NASDAQ:AMZN), GM, BofA (NYSE:BAC), JPMorgan (NYSE:JPM), Macquarie Infrastructure (NYSE:MIC), American Airlines (NASDAQ:AAL), Charter Communications (NASDAQ:CHTR), Google (GOOG, GOOGL), Ally Financial (NYSE:ALLY), NorthStar Realty (NYSE:NRF), Priceline (NASDAQ:PCLN), eBay (NASDAQ:EBAY), MasterCard (NYSE:MA), Alibaba (NYSE:BABA), Micron (NASDAQ:MU), Williams (NYSE:WMB), Gilead (NASDAQ:GILD), Berkshire Hathaway (BRK.A, BRK.B), Dolar General (NYSE:DG), NorthStar Asset (NYSE:NSAM), Brookdale Senior (NYSE:BKD), DISH Network (NASDAQ:DISH).
- See also: Goldman updates list of hedge funds most-shorted stocks (May 21)
Wed, May 20, 10:10 AM
- Those facing criminal charges from the DOJ are UBS (already reported, the stock is up 3.4% today), Barclays (BCS +2.5%), Citigroup (C -0.5%), JPMorgan (JPM -0.4%), and RBS (RBS +1.6%).
- Bank of America (BAC -0.4%) faces a $205M fine by the Fed, but no criminal charges. Fines by the Fed for the other banks range from $274M-$342M.
- There are fines from other regulators as well, with the total for all the banks summing to $5.8B. Barclays looks to be hit the hardest on that front, with total monetary penalties of $2.4B.
Fri, May 15, 2:42 PM
- Any talks between Charter Communications (NASDAQ:CHTR) and Time Warner Cable (NYSE:TWC) about a merger may be up in the air, but bankers won't be the bottleneck, as they're ready to talk about $25B or even more to make it happen.
- Following previous reports that Charter could go for $25B-$30B in debt, the cableco is talking with the same four bankers that committed $24B to Charter's early-2014 bid: Bank of America Merrill Lynch (NYSE:BAC), Credit Suisse (NYSE:CS), Deutsche Bank (NYSE:DB) and Goldman Sachs (NYSE:GS).
- As one banker noted, "it should be quick to move to next steps, as the banks know the company pretty well," and said the package should end up as two-thirds bonds.
- Aside from any regulatory issues, leverage seems to be foremost on the mind of dealmakers (and investors). Liberty Broadband's (NASDAQ:LBRDA) Greg Maffei has gone public with the notion that Liberty could raise capital through rights offerings or tap $700M in cash to help with funding while maintaining its 25% stake in Charter.
- Other banks could join in too, which could make such a deal one of the largest junk bonds ever. Time Warner's on the edge of junk status, rated BBB/Baa2 by S&P and Moody's.
Fri, May 15, 7:32 AM
- Bank of America's (NYSE:BAC) stock price and financial performance trail that of its three closest rivals by any number of measurements since he took over in 2010, writes Christina Rexrode, but for now he has the full support of the board (where he became chairman in a controversial move) and an inner circle of lieutenants.
- Moynihan says comparisons may not be fair, noting the Countrywide purchase gave the bank more of a mortgage issue than peers.
- Still, some investors question whether Moynihan's push to greater size and scale will ever pay off. Amid another stress test fumble and a disappointing Q1, BofA is lower by 7.7% YTD vs. a 2.2% gain for the KBW Bank Index. "We've been saying these guys can earn $1.70 or $1.80 [per share], but they continue to struggle to get just to $0.30," says FBR's Paul Miller.
- See also on SA today: Bank Of America: Diamonds Are Forever (May 15)
Thu, May 14, 3:27 PM
- WIth companies holding off on IPOs and investors looking for alternatives to high-priced publicly-traded stocks, private-placements is a growth business, and Bank of America (BAC +0.2%) is looking to get its piece of that expanding pie, forming a new team - the Strategic & Private Capital Solutions Group.
- There are some deals outside of tech, but tech is where the real cheese is, and part of the bankers' job is to convince the companies to use a bank rather than raising money themselves
- Earlier this week, JPMorgan hired a Barclays banker to run private stock placements, and Credit Suisse pulled a former Morgan Stanley rainmaker for similar work.
- Already a big player in the field, Morgan Stanley has bulked up its efforts of late, as has Goldman Sachs.
- Source: WSJ
Fri, May 8, 10:28 AM
- Not one of four Bank of America (BAC -0.1%) directors on the board's governance committee received more than 71.9% of the votes cast this year, compared to all receiving 98% at a minimum in 2014.
- At issue was last year's decision to change the company bylaws to allow CEO Brian Moynihan to also be named chairman. Shareholder advisory firm ISS subsequently recommended voting against the group of four which recommended that change.
- Ahead of the election, the board made a last-minute move to cool heads by promising a full shareholder vote on the new bylaw no later than the 2016 annual meeting.
- Previously: BofA owners to get vote on CEO/Chairman bylaw change (May 4)
Fri, May 8, 8:03 AM
- Bank of America (NYSE:BAC) and JPMorgan (NYSE:JPM), along with Citigroup (NYSE:C) and Synchrony Financial (NYSE:SYF) are being sued for their charming practice of using fancy footwork to keep debts alive on consumers' credit reports after those debts have been legally eliminated in bankruptcy.
- Both BofA and JPMorgan have agreed to update borrowers' credit reports within the next three months to reflect the fact that those debts are no longer there. Last year Synchrony agreed to a similar move at least on a temporary basis.
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Bank of America Corporation is a bank holding and a financial holding company. Through its subsidiaries, it provides banking and non-banking financial services and products throughout the United States and in selected international markets.
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