Sep. 16, 2014, 7:20 AM
- Morgan Stanley's (NYSE:MS) chairman of China investment banking Alex To plans to exit soon to run Bank of America's (NYSE:BAC) investment bank in that country. To joined Morgan in 2006 and played a key role in Shuanghai's purchase of Smithfield foods last year. His bank currently ranks sixth in investment banking revenue in Asia ex-Japan, according to Dealogic. BofA ranks ninth.
- The move is the latest in a series of management moves in China investment banking - in July JPMorgan grabbed UBS's top guy, and last month Morgan Stanley lured over a Deutsche Bank executive.
Sep. 10, 2014, 11:43 AM
- Cost savings of $2B from the New BAC initiative were originally expected by mid-2015, but with $1.8B already booked by Q2, Bank of America (BAC +0.5%) expects to hit $2B by the end of this year, says CFO Bruce Thompson. The other savings initiative - Legacy Assets and Servicing costs are expected to fall to $1.1B by 2015 Q1. They were $1.4B in Q2 of this year.
- Presentation slides
- Turning to capital, the bank's fully phased-in Basel 3 common equity tier 1 ratio of 9.9% compares to the proposed minimum of 8.5% by 2019.
- As for net interest income, it's holding steady - $10.4B in Q2 vs. $10.5B two years ago - but, like everyone else in financial services, the bank awaits higher interest rates for growth in this segment.
- Credit quality trends continue to improve, and the bank is highly provisioned: Its allowance for loans and losses - $15.8B in Q2 vs. $21.2B two years ago - is 3.67x the annualized charge-off rate vs. 2.51x two years ago.
- Guidance for capital returns in 2015? The new CCAR rules aren't even out yet, says Thompson, but the bank is particularly focused on improving its metrics at those points where it was closest to failing in this year's test.
Sep. 9, 2014, 12:24 PM
- The Fed intends to impose a capital surcharge on banks tougher than the international standard, according to Fed Governor Daniel Tarullo's prepared remarks for the Senate Banking Committee. Those banks with heavier reliance on short-term funding like overnight loans - i.e. Goldman Sachs (GS -1%) and Morgan Stanley (MS -1.8%) - will likely face even more rigorous requirements.
- Officials haven't yet decided on a number, but reportedly are considering as much as 200 basis points more than the top range of 2.5% of risk-weighted assets agreed to by international regulators.
- What's not yet clear is who would need to raise capital to meet the new, tougher standard.
- Citigroup (C -1%), Bank of America (BAC -0.6%), JPMorgan (JPM -1.3%), Wells Fargo (WFC -0.4%), State Street (STT -1.1%), Bank of New York Mellon (BK -0.9%)
- ETFs: XLF, FAS, FAZ, UYG, VFH, IYF, IAI, SEF, IYG, FXO, FNCL, FINU, KCE, RWW, RYF, KBWC, FINZ
Sep. 9, 2014, 11:46 AM
- Michele Foresti was supposed to take over FICC trading in the EMEA region for Bank of America (BAC -1%) in June, but he's currently in the bank's London offices working, but not taking part in management duties.
- Foresti comes over from Deutsche Bank, but the lender hasn't yet given regulators the clearance necessary for him to begin his new job. At issue are tougher background checks for new hires, and while Foresti - who was at Deutsche for 18 years - has never been accused of wrongdoing, "At the moment, it's safer to say no than yes," says a bank analyst.
- Previously: Banks reportedly delaying hiring on increased scrutiny
Sep. 8, 2014, 8:41 AM
- "The major catalyst for shares in our opinion is the resolution of the bulk of Bank of America's (NYSE:BAC) legal issues with its AG settlement," says analyst Richard Ramsden, upgrading to a Buy with price target lifted to $19 from $17.
- "Legal costs have obscured much of the fundamental improvement at BAC."
- Shares +1.1% premarket
Sep. 5, 2014, 3:41 AM
- U.S. Federal Judge Denise Cote has ruled that investors may press claims against 12 major banks for violating antitrust law by limiting competition and fixing prices in the $21T CDS market, even though improved liquidity should have driven costs down.
- The defendants include BofA (NYSE:BAC), Barclays (NYSE:BCS), BNP Paribas (OTC:BNPZY), Citigroup (NYSE:C), Credit Suisse (NYSE:CS), Deutsche Bank (NYSE:DB), Goldman Sachs (NYSE:GS), HSBC (NYSE:HSBC), JPMorgan (NYSE:JPM), Morgan Stanley (NYSE:MS), RBS (NYSE:RBS) and UBS (NYSE:UBS).
Sep. 4, 2014, 3:18 AM
- U.S. regulators have approved of the proposed liquidity rules to safeguard banks in case of a financial crunch.
- The rules are requiring large U.S. banks to load up on ultra-safe assets to ensure enough cash and securities to fund their operations for 30 days. Separate liquidity rules for foreign banks will be drawn up at a later date.
- Big banks will need to hold a total of about $2.5T in easy-to-sell assets by 2017, which would result in a $100B shortfall if the threshold applied today.
- Related tickers: JPM, C, BAC, WFC, GS, MS, BK, STT, ZION
- Previously: Bank regulators to vote on new liquidity rules
Sep. 3, 2014, 7:39 AM
- "CCAR represents the binding capital constraint for Bank of America (NYSE:BAC)," says analyst Steven Chubak, pulling his Buy rating on the stock. The higher required capital, he says, cuts the ROE potential by 120 basis points to just 13%, supporting a price target cut to $17, and a downgrade to Neutral.
- Alongside the cut in BofA, Chubak upgrades JPMorgan (NYSE:JPM) to a Buy with price target hiked to $69 from $64. Citigroup (NYSE:C) remains Nomura's top pick among the banks.
Sep. 3, 2014, 3:16 AM
- JPMorgan (NYSE:JPM) is in talks to sell its oil-supply agreement with Philadelphia Energy Solutions to Bank of America (NYSE:BAC).
- Operated as a joint venture between Sunoco and the Carlyle Group (NASDAQ:CG), Philadelphia Energy Solutions is one of the largest refineries in the country, processing 330K barrels of crude a day.
- Under the terms of the current agreement, JPMorgan supplies the refinery with crude oil and credit and receives refined fuel products that it can trade.
Sep. 3, 2014, 2:39 AM
- Bank regulators are expected to finalize rules today that would require banks to hold capital against every asset on their books, and approve of a "liquidity-coverage ratio", which would require large banks to load up on ultra-safe assets to fund their operations for 30 days.
- The new rules have Wall Street concerned due to the likely harm to earnings and lending restrictions, although regulators say the policies will create a safer financial system.
- Related tickers: JPM, C, BAC, WFC, GS, MS, BK, STT, ZION
Sep. 2, 2014, 2:49 PM
- Bank of America (BAC +0.5%) is offering $2B of benchmark perpetual shares with a 6.25% coupon, reports Bloomberg. Also being sold is $1B of perpetual preferred stock with a 6.625% coupon - callable in five years.
- The bank in August sold $4.5B in a three-part note sale after agreeing to more than $16B in mortgage-related fines. Included in that offering were $3B of 4.2% 10-year notes. They closed last week priced to yield 4.06%.
Sep. 1, 2014, 1:56 AM
- America Movil (NYSE:AMX) has hired Bank of America (NYSE:BAC) to sell a significant amount of its wireline/mobile assets, in order to lower its market share by less than 50%.
- Potential buyers include AT&T (NYSE:T) and SoftBank (OTCPK:SFTBY), a source tells Bloomberg.
- The move is in response to new Mexican regulation designed to curb the company's dominance. America Movil announced the sale in July.
Aug. 30, 2014, 6:48 PM
- "Most of the reason that banks are underearning relative to their historical norms ... is economic and not regulatory," says Richard Pzena (NYSE:PZN), who remains bullish on the TBTFs. Low interest rates, weak trading, and "government persecution" are the three factors, and - should these normalize - earnings could nearly double at Bank of America (NYSE:BAC) and Citigroup (NYSE:C), though JPMorgan's (NYSE:JPM) boost would be more modest. Goldman Sachs (NYSE:GS) is another favorite.
- Broad financial ETFs: XLF, FAS, FAZ, UYG, VFH, IYF, SEF, IYG, FXO, FNCL, FINU, RWW, RYF, FINZ
- Another cheap sector is energy, says Pzena, and based on relative valuation against the broader market - whether price-to-book or price-to-earnings - the major integrated oil companies are selling near all-time lows.
- What the market is missing, says Pzena, is the nature of oil investment. The old days saw capital spending one year, and boosted volume the next. Projects nowadays are far larger and require several years of spending before returns roll in. "We think those big new projects are going to perform and produce decent returns." HIs favorites: BP, RDS.A, RDS.B, XOM, TOT.
- Broad energy ETFs: XLE, ERX, VDE, OIH, ERY, DIG, DUG, IYE, PXJ, FENY, RYE, FXN, DDG
Aug. 29, 2014, 2:01 AM
- Bank of America (NYSE:BAC) has asked Judge Jed Rakoff to dismiss the jury verdict which found its Countrywide unit guilty of past mortgage fraud that resulted in a $1.3B penalty.
- Known as the "hustle" case, the lawsuit accuses BofA of selling toxic mortgages to Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC), although the bank argues that the evidence at the trial does not support the claims.
- The motion comes just one week after BofA agreed to a record $16.7B settlement with the U.S. government to settle charges over its role in mortgages leading up to the financial crisis.
Aug. 25, 2014, 12:44 PM| 16 Comments
Aug. 21, 2014, 2:51 PM
- "We can start to see how [Brian Moynihan] can start running the company for shareholders and not litigants," says analyst Marty Mosby following Bank of America's (BAC +3.8%) $16.65B mortgage settlement with the government.
- The removal of the legal overhang is nice as is today's rally, says portfolio manager Dave Ellison (an owner of the stock), but higher interest rates are necessary for a sustained move upward in the shares.
- "We believe they have a wonderful franchise - the question now is, 'Do they,'" says fund manager Greg Donaldson. "If they do, their earnings will move sharply up because all of their energies will be poured into making their businesses better."
- And from The Oracle - whose 700M warrants struck at $7.14, if exercised, would make Berkshire Hathaway BofA's largest shareholder? "[Moynihan] is nurturing a huge and attractive underlying business that will endure long after today's problems are forgotten," he said in his annual letter in 2012.
- Previously: Bank of America confirms U.S. deal; +1.1% premarket
BAC vs. ETF Alternatives
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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