Aug. 27, 2014, 6:58 AM| Comment!
Aug. 25, 2014, 11:49 AM
- Following major-league mortgage-related settlements with JPMorgan, Citigroup, and Bank of America, the DOJ has turned its attention to Goldman Sachs (GS +2.2%) and Morgan Stanley (MS +3.2%), and both are in early discussions, reports the FT. Evidence is still being gathered, say the FT's sources, and negotiations over a deal are still a ways off.
- Neither Morgan nor Goldman were as big of players in mortgages as the other banks, so the terms and numbers are likely to be somewhat eased from the headline-grabbing ones of JPMorgan, Citi, and BofA.
- Previously: Goldman settles with FHFA, will buy back RMBS for $3.15B
Aug. 13, 2014, 3:14 AM
- Bank officials, trade groups and lawmakers are quietly pressing the Federal Reserve for a delay of up to seven years regarding the rule that limits their investments in private-equity and venture-capital funds
- The "Volcker rule," part of the Dodd-Frank legislation, restricts banks' ownership stake in hedge funds and private equity funds, and prohibits banks from making speculative bets with their own money.
- Regulators finalized the rule in December but agreed not to enforce it until 2015.
- Related tickers: JPM, C, BAC, WFC, GS, MS, BK, STT, ZION
Aug. 6, 2014, 8:48 AM
- The Federal Reserve and the FDIC say the bankruptcy plans submitted by 11 of the largest banks make "unrealistic or inadequately supported" assumptions and "fail to make, or even to identify, the kinds of changes in firm structure and practices that would be necessary to enhance the prospects for" an orderly failure. Ouch!
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- The 11 dinged: BAC, BK, C, GS, JPM, MS, STT, and the U.S. units of BCS, CS, DB, and UBS.
- To review: Dodd-Frank requires banks annually submit a "living will" detailing their operations and exposures and how they could be dismantled without the need of a bailout in the event they near failure. Pleasing the regulators is a must as they have the power to force tougher capital rules or restrictions on growth, or even mandate a breakup of the lenders. As for the current failures, the banks have about a year to address D.C.'s concerns.
- "Despite the thousands of pages of material these firms submitted, the plans provide no credible or clear path through bankruptcy that doesn't require unrealistic assumptions and direct or indirect public support," says the FDIC's #2 official, Thomas Hoenig.
- ETFs: XLF, FAS, FAZ, UYG, VFH, IYF, SEF, IYG, FXO, FNCL, FINU, RWW, RYF, FINZ
Aug. 6, 2014, 1:58 AM
- Morgan Stanley (NYSE:MS) and Goldman Sachs (NYSE:GS) have now been added to the long list of banks being investigated for their dark pools.
- The probes started with a lawsuit from the New York Attorney General in June which accused Barclays of favoring high frequency traders over other investors within the pool.
- Since then, investigations have spread to Deutsche Bank, UBS and Credit Suisse.
Aug. 5, 2014, 5:55 PM
- Morgan Stanley (NYSE:MS) discloses its Q2 earnings were $0.02/share lower than it initially reported last month, bringing final Q2 earnings to $0.92, after it increased legal reserves by $53M to reflect settlements of mortgage-related claims.
- According to a 10-Q form filed with the SEC, MS reached agreements to settle three mortgage-related class-action lawsuits in July.
- MS also says California's attorney general may sue the bank over its alleged misrepresentations of mortgage bonds before the financial crisis; the AG believes "the company's conduct violated California law and that it may seek treble damages, penalties and injunctive relief."
Aug. 3, 2014, 10:28 AM
- Wall Street firms led by Goldman Sachs (NYSE:GS) are closing in on a deal to purchase a stake in chat and instant messaging start-up Perzo as an alternative to Bloomberg's similar application, Reuters reports.
- Bloomberg has dominated Wall Street for years, but banks have been looking for a substitute as sluggish trading volumes and higher regulations weigh on revenues. Bloomberg's trading and news terminal costs about $20,000 a year, while Perzo's applications are open-source and free. Bloomberg customers must also buy an entire terminal, and cannot just buy the messaging system and adapt it.
- Several other banks and asset managers have received term sheets for the Perzo deal and have recently signed non-disclosure agreements including Morgan Stanley (NYSE:MS), JPMorgan (NYSE:JPM), Bank of America (NYSE:BAC), Deutsche Bank (NYSE:DB), HSBC (NYSE:HSBC), and BlackRock (NYSE:BLK).
- Goldman has been looking at alternatives to Bloomberg's messaging program for years, and launched a project internally called "Babel" in early 2013 to develop a competitor.
Jul. 30, 2014, 10:26 AM
- Attempting to "enhance the work experience" for younger employees, Morgan Stanley (MS +1.2%) is raising base salaries for junior bankers and junior workers by as much as 25%. Bonuses aren't part of the raise, and could conceivably fall thanks to the higher salaries.
- The big banks have made it a focus of late to improve working conditions for those on the lower rungs, and Morgan formed a committee several months ago to look into just that.
Jul. 24, 2014, 2:51 PM
- Affirming Morgan Stanley's (MS +0.1%) Baa2 senior debt rating, Moody's boosts its outlook to positive from stable, meaning there's a likelihood of an upgrade in the medium term.
- Noted by Moody's is the contribution to earnings from non-capital markets businesses (now about half of core earnings) which provide a "shock absorber" to more volatile results in capital markets.
- "Notwithstanding these improvements, Morgan Stanley remains more heavily reliant on its capital markets business than many of its global investment bank peers. In particular, Moody's believes a critical challenge to improving firm-wide profitability will be strengthening returns in fixed income without adding more risk."
Jul. 24, 2014, 11:35 AM
- At issue are two residential MBS from 2007 underwritten by Morgan Stanley (MS +0.5%). The SEC found the bank misrepresented the current or historical delinquency status of the underlying loans.
- "Morgan Stanley understated the number of delinquent loans behind these securitizations during a critical juncture of the financial crisis and denied investors the full extent of the facts necessary to make informed investment decisions," says the SEC's Michael Osnato.
- The money will be returned to the harmed investors.
Jul. 17, 2014, 7:33 AM
- Excluding DVA, income of $1.9B or $0.91 per share vs. $900M and $0.37 one year ago. The quarter also included a discrete tax benefit of $609M - excluding that brings income down to roughly $1.3B and $0.60 per share, so the "beat" is closer to a nickel.
- Institutional Securities pre-tax income of $927M vs. $806M one year ago on roughly flat revenue of $4.16B (excl. DVA). FICC revenue of $1B slips from $1.2B, partially offset by higher advisory revenue. Equity sales and trading revenue of $1.8B was about flat. Compensation expense slipped by $100M to $1.7B.
- Wealth Management pre-tax income of $767M rises from $655M a year ago on revenue of $3.715B up from $3.531B. Pre-tax margin rises above 20%, coming in at 21%.
- Investment Management pre-tax income of $205M up from $160M a year ago on revenue of $692M up from $673M. AUM of $396B up from $347B thanks to market appreciation and positive flows.
- About $284M or 9.3M shares of stock repurchased during quarter. Morgan has approval from the Fed for $1B in buybacks through the end of 2015 Q1.
- MS +2.2% premarket
- Previously: Morgan Stanley beats by $0.35, beats on revenue
Jul. 17, 2014, 7:16 AM
Jul. 16, 2014, 5:30 PM
Jul. 15, 2014, 1:11 PM
- The team - collectively managing $650M in assets - left Morgan Stanley's (MS +0.5%) Portland office today and immediately set up Encompass Wealth Advisors using trading systems, research, lawyers, and office space arranged by Tru Independence, which will collect a portion of management fees for its services.
- A number of businesses are forming to help wealth managers exit the large banks and go it alone, and the head of one notes typically 95% of client assets follow those exits.
Jul. 2, 2014, 6:44 PM
- Rosneft (RNFTF) has submitted a deal to buy a Morgan Stanley (MS) oil trading unit to the confidential U.S. committee that weighs national security risks, WSJ reports, in a deal likely to face close scrutiny with Rosneft CEO Igor Sechin part of a U.S. sanctions list following the turmoil in Ukraine.
- Since a foreign government controls Rosneft, U.S. law directs the CFIUS committee to scrutinize the case at length, and top U.S. officials likely will take into account broader Russian economic and security factors that go beyond the specific risks of the business being sold.
- A CFIUS decision is likely to come 75 days after the filing, which means the deal could close in Q3.
Jul. 2, 2014, 12:31 PM
- Global M&A deals in H1 totaled $1.571T, according to Mergermarket, up 56% over the same period in 2013, and up 29.8% from last year's 2nd half. in the U.S., $694.6B of deals in H1 nearly doubled that of one year prior. European deals of $453.6B gained 35.5%, and Asian deals of $286.7B rose 56.8%.
- The M&A boom could help offset at least some of the widely expected continued trading slowdown this quarter (banks begin reporting their Q2s in about 10 days), and Goldman (GS +0.1%) tops the advisor tables with $533.8B in deals in H1, up 112% from a year ago. With $495.6M (up 180.4% Y/Y), Morgan Stanley (MS +0.5%) in in 2nd place. In third place, Bank of America (BAC +2.3%) deals grew 141.7%, and in fifth place, Citigroup (C +1.5%) saw a 177.2% boost in deals. JPMorgan (JPM -1.1%) took 4th place with $324.8B in deals, but saw just a 25.3% rise.
- ETFs: XLF, FAS, FAZ, UYG, VFH, IYF, IAI, SEF, IYG, FXO, FNCL, FINU, KCE, RWW, RYF, KBWC, FINZ
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