Tag Archives: Citigroup

Trump says he’s thinking about breaking up the big banks

President Donald Trump said Monday he was contemplating breaking up the big Wall Street banks.

“I’m looking into that right now,” he told Bloomberg about bringing back the “old system” that separated consumer lending and investment banking.

Continue reading Trump says he’s thinking about breaking up the big banks

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Banks probed over automated forex deals

Wall Street banks are facing the threat of new and more damaging allegations about their rigging of foreign exchange markets, as New York’s banking regulator intensifies a probe into computer-driven currency trading — raising the prospect that the total penalties arising from the scandal will exceed the $10bn already paid.

The New York Department of Financial Services, run by Benjamin Lawsky, has become increasingly convinced that banks have been systematically abusing forex markets through the use of automated trades driven by computer algorithms, according to people familiar with its investigation.

Findings from the probe may indicate more widespread market abuse than US and UK authorities disclosed on Wednesday, when detailing their settlement with six global banks, the people added.

They pointed out that this $5.6bn settlement related to allegations of market manipulation in the forex spot market — but Mr Lawsky’s probe covers electronic trading, which accounts for the majority of forex transactions.

Trading platforms at Barclays and Deutsche Bank are being scrutinised by the DFS, and the regulator has also subpoenaed information from BNP Paribas, Credit Suisse, Goldman Sachs and Société Générale.

Its investigation into Barclays is the most advanced, and several bank employees have been called to give evidence, according to people familiar with the case. So far, the probe has led the agency to suspect that the bank intentionally sought to gain unfair advantages over clients and counterparties through its forex trading platform, the people claimed.

The DFS has reached similar initial conclusions in its Deutsche Bank probe but, as it is only at the document review stage, it is not as advanced as the Barclays investigation, the people said.

They added that the DFS investigations into the banks that received subpoenas are at an earlier stage and no initial conclusions have been reached.

All of the banks declined to comment.

On Wednesday, the US Department of Justice and other agencies announced that they had reached a $5.6bn settlement with Barclays, Citigroup, JPMorgan Chase, Royal Bank of Scotland and UBS over a series of allegations of foreign exchange manipulation.

However, while the DFS was one of the agencies involved in the settlement with Barclays, its trading platform investigation remains separate.

The regulator has jurisdiction over banks that hold a New York state banking license — which includes many foreign banks but excludes most domestic groups, which are overseen by other regulators.

On Wednesday, Mr Lawsky announced he would be leaving the agency in late June. He plans to start his own law and consulting firm, in addition to becoming a visiting scholar at Stanford University as part of the school’s cyber initiative.

Whoever replaces Mr Lawsky at the DFS is expected to continue his hardline approach to dealing with Wall Street banks, people familiar with the case said.

Man Who Said No to Soros Builds BlueCrest Into Empire

When BlueCrest Capital Management LLP founder Michael Platt expanded into stocks this year to compete with Millennium Management LLC and SAC Capital Advisors LLP for traders, he tapped an unusual funding source: his banks.

He received a $750 million loan from 16 banks in July, enabling his hedge-fund firm, which oversees $34.2 billion, to hire at least 25 equity money managers and provide them with capital to start trading immediately, said two people with knowledge of the loan, who asked not to be identified because it isn’t public. Typically, hedge funds need to persuade clients to invest in new ventures and expand gradually, the people said.

HSBC Holdings Plc (HSBA), Citigroup Inc. (C),JPMorgan Chase & Co. (JPM) were among the banks eager to burnish their relationship with Europe’s third-biggest hedge-fund firm, which pays banks tens of millions of dollars a year in fees for trading and other services. The loan shows Platt’s clout as one of Wall Street’s most coveted clients and how aggressive he is to keep gathering assets and add new investing strategies, investors and executives at other funds said.

“I can’t think of any other examples like this,” said Daniel Celeghin, a partner at Casey Quirk & Associates LLC, a Darien, Connecticut-based firm that advises hedge funds on fundraising. “It’s just the nature of finance where if you are big and successful, people want to do business with you. If you are small and struggling, then it’s wait and see.”

Soros Rebuffed

Bankers and former colleagues describe Platt, 45, as a tough negotiator. He’s also loathe to cut deals that might cost him money, even when the person sitting on the other side of the table is hedge-fund royalty. After George Soros decided in 2011 to stop managing money for outside clients and turn his hedge-fund firm into a family office, the billionaire investor went to other money managers to ask whether they would oversee some of his $25.5 billion of assets.

Among those Soros spoke to was Platt, saying he would like him to take on more than $1 billion, while paying BlueCrest a 0.5 percent management fee and a 10 percent performance fee, according to a person with knowledge of their discussion. Platt thanked Soros, 83, for the meeting and declined the offer, saying plenty of investors were willing to pay BlueCrest 2-and-20, the industry standard of charging a 2 percent management fee and 20 percent of any profits, the person said.

Michael Vachon, a spokesman for Soros, and BlueCrest declined to comment on the meeting.

It’s Time To Talk About That Other Thing That Destroyed Wall Street Earnings

woman new york city bags grocery cart cans garbage

All of the big American Wall Street banks have reported their fourth-quarter earnings, and you can pretty much use one word to describe them — rotten.

Most of the talk has centered on a full-on rout in trading revenue, especially in the bond, currency, and commodities markets. Citi’s trading revenue was down 14% overall from the same time last year. JPMorgan Chase’s bond trading revenue fell 23% from the same time last year.

Even Goldman Sachs, the only bank to eke out an earnings beat, saw its bond-trading revenue fall 29%. It was the talk of Goldman’s conference call — the fact there was a difference between good volatility in markets (just a touch) and bad volatility in markets (too much).

But while the focus on trading revenue makes for sexy headlines, it leaves out one big unsexy factor that decimated bank earnings. Yes, we’re talking about legal costs.

Perhaps people are simply tired of talking about this factor, because a lot of the transgressions banks are paying for date back to the financial crisis. Perhaps cynics are just tired of repeating the phrase “cost of doing business.”

Here’s the scoreboard for you:

  • Bank of America shelled out $393 million for legal expenses, down from $2.3 billion a year before. That said, in the third quarter the bank shelled out $5.6 billion for legal costs — so there’s that.
  • JPMorgan’s legal expenses held steady for the fourth quarter of 2013 and 2014, roughly hovering at about $1 billion.
  • Goldman Sachs fared better, spending $161 million legal expenses in the fourth quarter of 2014, down from $561 million at the same time last year and $194 million the previous quarter.
  • Citigroup’s legal expenses increased from the same time last year to $3.5 billion from $1 billion. In the third quarter of 2014 the bank spent $1.3 billion on legal expenses.
  • Morgan Stanley’s legal expenses aren’t totally clear. We know only that the bank spent $284 million “for legacy residential mortgage related matters” and that “Non-compensation expenses of $2.8 billion decreased from $4.1 billion a year ago, primarily reflecting lower legal expenses.”

It looks bad, sure, but we’ve seen worse.

The issue is that, seven years after the crisis, Wall Street is starting to settle into a new normal.

Eric Thayer/Reuters

If these legal issues — some from the crisis, some not —  are merely the “cost of doing business,” then it’s starting to look as if business is costing too much. Two or three years ago it seemed clear that these fines would, sooner rather than later, become a thing of the past. A big Wall Street bank would announce a massive legal cost, and that bank’s stock wouldn’t move an inch. Investors didn’t really care.

But that kind of thinking is becoming increasingly problematic as it is clear these expenses actually do matter, and this quarter is an excellent example of why. Combine a weak quarter in trading (or equity underwriting, or any other sector of the business) along with legal costs, and all of a sudden you have a nasty cocktail of big-bank failure. With these legal costs as they are, it doesn’t take much to tip the scales.

Trading issues happen — the market is cyclical and every trader will tell you that one minute you’re killing it, and the next minute you’re getting your face ripped off. That’s natural. The mess that those losses make when combined with legal expense, however, is not so natural.

The longer this goes on, the more people will catch on to that.

Raiffeisen, SocGen Plummet as Ruble Slide Triggers Bank Worries

Raiffeisen Bank International AG (RBI) and Societe Generale SA (GLE), the European banks with most at stake in Russia, led European lenders lower as the ruble continued its slide today, defying a surprise rate increase.

Raiffeisen fell as much as 10.3 percent to 11.40 euros in Vienna, the lowest level since it went public in 2005. Societe Generale dropped as much as 7.3 percent to 31.85 euros, hitting the lowest intraday level since August 2013. The STOXX 600 Banks index was 1.4 percent lower at 2:25 p.m. in London.

“More fundamental concerns are building over the outlook for Russia’s economy and the likely policy response,” Neil Shearing, an economist at Capital Economics in London, wrote in a note to clients. “There remains a huge amount of uncertainty at this juncture, but the key point is that there are no benign scenarios. Even if the ruble does stabilize over the coming weeks, the economic crisis facing Russia has much further to run.”

Societe Generale is the bank that has the biggest absolute exposure to Russia, at 25 billion euros ($31 billion), according to Citigroup Inc. analysts led by Kinner Lakhani. That’s equivalent to 62 percent of the Paris-based bank’s tangible equity.

Raiffeisen has 15 billion euros at risk in Russia, almost twice its tangible equity, and it also has the biggest exposure to Ukraine, with 4.9 billion euros, according to Citigroup.

UniCredit, the third European bank strongly invested in the former Soviet Union, has 18 billion euros at stake in Russia, or 40 percent of its tangible book value, Citigroup said.

The ruble plunged to 80 a dollar for the first time today as investors speculated Russia will announce capital controls after the largest interest-rate increase in 16 years failed to revive confidence in the currency.

The currency sank as much as 19 percent to 80.10, before trading at 78 at 3:14 p.m. in Moscow. That was the biggest drop since 1998, the year Russia defaulted on its local debt.

GoPro zooms in on IPO plan

A skier with a GoPro camera on his helmet

GoPro, the maker of small action cameras beloved of surfers and snowboarders, on Friday broadcast its plans for a multibillion-dollar initial public offering.

The company is expected to raise $300m-$500m, one person close to the process said.

JPMorgan, Citigroup and Barclays are advising on the IPO, people familiar with the situation added. JPMorgan and Barclays declined to comment and Citi did not immediately respond.

The Californian device maker has become the latest group to take advantage of rules that allow companies to file their financial documents to the Securities and Exchange Commission in secret.

Twitter used the 2012 Jumpstart Our Business Start-ups (Jobs) Act ahead of its blockbuster stock market debut last year and other tech groups including cloud storage company Box and games developer King have also used the rules to keep their financial information private in the regulatory run-up to an IPO.

In the past few years, GoPro’s $300-$400 Hero devices pioneered the market for hardy, wide-angle-lens cameras that people use to film their own extreme sports activities, sharing videos through social sites such as YouTube.

It sponsors several athletes competing at the Sochi 2014 Winter Olympics including former gold medallists Shaun White, a snowboarder, and Julia Mancuso, a slalom skier. The cameras were worn by Felix Baumgartner for his 2012 free fall from the edge of space for Red Bull’s Stratos campaign.

The first Hero, released in 2005, used 35mm film and was created by GoPro’s founder Nick Woodman, whose previous internet company had failed in the dotcom bust. It has been followed by other point-of-view video cameras from Sony and now faces new competition from wearable devices such as Google Glass.

“The wearables segment is hot right now and despite all the hype around smart watches and fitness bands, GoPro’s sales to date mean it is up there as one of the best-selling wearable devices on the market,” said Ben Wood, analyst at technology research group CCS Insight.

Mr Wood says GoPro sold 4m of the 5m “lifelogging” cameras shipped last year, making it the “heavyweight” despite growing competition. CCS Insight estimates almost 7m of these cameras will be shipped this year, taking the total number in use to more than 15m.

“I’d assume that GoPro has realised that now Sony is stepping up with the ActionCam and others like Samsung are doubtless eyeing the category it needs to build a war chest to cement its position as the leading wearable camera brand,” Mr Wood added.

GoPro’s IPO will be one of the first of a new generation of consumer hardware companies to test the appetite of Wall Street investors at a time when Apple, the tech group, has seen its stock price held back by fears about innovation and long-term growth.

In late 2012, a $200m investment by Foxconn, the Taiwanese electronics manufacturer, valued GoPro at $2.25bn, suggesting that investors would expect its forthcoming IPO to value the company into the several billions. GoPro had been considering an IPO but the investment allowed it to delay its plans.

In an interview with Forbes last year, Mr Woodman, 38, said that GoPro’s sales topped $500m in 2012 and were on track to double in 2013.

Only this week, GoPro appointed a new chief financial officer, Jack Lazar, formerly of wireless chipmaker Atheros, a publicly traded company until it was acquired by Qualcomm in 2011. Mr Lazar, who describes himself as an avid mountain biker, has previously acted as CFO at Netratings and Apptitude and is a former PwC accountant.

In a brief press release, GoPro said that it expected the IPO to commence after the SEC had reviewed its confidential submission of its draft registration statement on Friday.

MassMutual Senior Vice President Found Dead, Stabbed In Chest In Apparent Homicide

A week after stunned Tribeca woke up to news of a grizzly death in which a Citigroup managing director living on Greenwich Street was found dead in his bathtub with a slashed throat and the lack of a suicide weapon on the scene suggesting there was foul play involved, another banking executive was killed over the weekend, when 54-year-old Melissa Millian, a senior vice president at MassMutual, was found lying in a road in Simsbury, Connecticut, having been stabbed in the chest.

As CBS reports, initially there was speculation Millian may have been in a bicycle accident, or may have been the victim of a hit-and-run.  However on Saturday, the office of the Chief State Medical examiner said the cause of her death was a stab wound to the chest, and the manner was homicide.

According to WCVB, Millan, a mother of two, was a senior vice president at MassMutual in Springfield. A spokesman for the company said she was a tremendous leader and deeply caring and that she would be missed.

Passing motorists found Millan lying on the ground Thursday at 8:04 p.m., according to Simsbury police.

Police said she could have been out jogging but that they did not yet know what happened and are investigating. Millan was taken to St. Francis Hospital where she died, according to police.

Police announced Saturday they were investigating the incident as a homicide.

As Breaking911 further adds, MassMutual was shocked by the news, with a company spokesperson saying that “Melissa’s tremendous leadership qualities, business acumen and deeply caring nature will be missed by those who had the opportunity to work with her.”

Friends, who gathered to pay their respects, said Millan was a dedicated athlete and an incredible mother.

“Devastated…shocked and angry. That a woman, such a woman’s life, could have been ended so senselessly and so cruelly,” said friend Lynne Tapper.

According to MassLive, people using the popular bike path that runs through the town said they were shocked to hear someone as stabbed to death along the trail which they consider safe.

The path is connected to a series of linked bikeways that start in Westfield and head south, running though most of Connecticut. It is popular with Western Massachusetts residents.

Sunday several people stopped at the memorial to mourn the death of the woman who was known as a triathlete as well as a parent and a skilled professional. They declined to talk to the media. A vigil was held earlier on Sunday in Farmington sponsored by Team Training New England.

The organization’s website called Millan an “an extraordinary human being” and set up a memorial page for her.

“Melissa has been a pillar of the TTNE community since she first trained with us in 2006. Regardless of her formidable responsibilities at home and at work, she made every effort to mentor ‘newbie’ triathletes and provide moral and other support to her team members year in and year out, without fail!” the website said.

People who use the path said it is well-lit and there are always people walking or driving by.

“I was very surprised,” said Donna Morris, of Simsbury, who was walking her four-month-old mixed breed dog at dusk Sunday. “I walk here sometimes and I haven’t had a problem.”

The path runs along Iron Horse Boulevard, a divided roadway with plenty of traffic. The memorial was set up less than 20 feet from a popular playground which was filled with children and their parents Sunday afternoon. Behind the playground is a dog park that is also popular. Across the street from the playground is a group of shops.

“It looks like someone would have seen something,” Morris said. Tonia Kagan, of West Hartford, reacted with shock when she learned the bouquets had been placed there to remember Millan.

“I love this path,” she said. “My husband is in the dog park now. It is a lovely place.” She likened Simsbury to West Hartford, saying it is usually peaceful and violence is rare.

“I use this path a lot and I’m shocked and surprised…I always feel very safe,” said Lucinda, who declined to give her last name.

Was this another targeted murder in an otherwise sleepy neighborhood, and if so, what was the motivation to take out a mother of two and active member of the local community? The police investigation is ongoing.

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