So after the New York Post reported this morning that Citadel Investment Group had taken a look at Bank of America’s prime brokerage unit, Citdadel attempted to throw cold water on the story by denying it was in negotiations to buy the unit.
But don’t take this denial at face value. The Post reported this morning that Citadel "has recently inspected the books of BofA's prime brokerage business.” And the Citadel denial consisted of the statement that it is “not negotiating to buy” to buy the business. Which doesn’t mean they didn’t look at the books, consider buying it, have talks about buying it or even begin negotiating. Essentially, all the said was that they are not currently in negotiations.
What’s more, the denial comes from an anonymous source at Citadel. The spokeswoman, Katie Spring, declined to comment on the record. If there was nothing at all to the story, why wouldn’t Miss Spring deny it on the record? Bank of America also wouldn’t comment, which means they also haven’t denied shopping the prime brokerage or giving Citadel a look at their books.
None of this means that Citadel is buying the prime brokerage. But it does make the denial a little less plausible. Instead of “throwing cold water” on the Post’s story, it throws some smoke at it.
Citadel not eyeing BoA unit: source [Reuters]
Posted by , Dec 20, 2007 4:06PM
wow dude thats a stretch
Posted by , Dec 20, 2007 4:11PM
Morgan needing more cash 2points above Treasurey:
Morgan Stanley $2.5B 10Yr Global Priced At Treasurys +2.00
Last update: 12/20/2007 3:48:23 PM
NEW YORK (Dow Jones)--Morgan Stanley (MS) priced $2.5 billion of senior unsecured global medium-term notes in a self-led deal on Thursday, according to people familiar with the deal.
Terms were as follows:
Amount: $2.5 billion
Maturity: Dec. 28, 2017
Coupon: 5.95%
Price: 99.717
Spread: 200 basis points over Treasurys
Settlement: Dec. 28, 2007 (flat)
Ratings: Aa3 (Moody's Investors Service)
AA- (Standard & Poor's)
I guess the YE is going to be tight...
Posted by Random Banker , Dec 20, 2007 4:18PM
What the fuck, is Bofa just going slink back to North Carolina? How the fuck can they sell their prime brokerage, they're out of the business of servicing hedge funds? They might as well shut down everything but the retail branches and change their name back to Nations Bank.
Posted by , Dec 20, 2007 4:27PM
MS had a billion on reverse inquiry is what even launched this deal to begin with
Posted by Yo! MG , Dec 20, 2007 4:27PM
haven't really been following this rumor, but it just doesn't make much sense to me. what advantage to the customer (the hedge fund) would Citadel have as prime broker? Seems to me that the hedge fund customer wants more than just trade clearing and back-of-shop type stuff; teh hedge fund (equity side) also wants access to IPOs, management roadshows, analysts, derivatives, stock borrow, etc. I could be wrong, but I don't see how Citadel would appeal to customers as PB.
Posted by another HF , Dec 20, 2007 5:09PM
@4:27 - have you seen what PBs charge for services? Citadel is top notch in IT and I am sure they could deliver leading frontier reporting, accounting and execution at a fraction of what is being charged in the market. Add leverage and financing I am sure alot of funds would at least have a look.
I just saw where CNBC has posted their Candidates for "Face of '07" - any suggestions for the same here? I propose Maria B's ass (big and ugly just like most of '07)
Posted by sledgehammer , Dec 20, 2007 5:24PM
Citadel bases everything in their dealings with the outside world on what works at Citadel. They have already struggled to get things up and running for Citadel Solutions and should have just as brutal a time with PB
Posted by Hf , Dec 20, 2007 6:02PM
I looked (very briefly) at Citadel Solutions as our administrator. However, the idea of sending Ken Griffen our trades each night was not appealing. The idea of sending them to him in real time is even less appealing. There are already plenty of places to get excellent reporting, accounting and execution (and nothing more) dirt cheap.
Posted by another HF , Dec 20, 2007 6:57PM
o.k. so you had a look - that was the point. also citadel has so many algorithms running you actually think you are not already sending trades to him? and do you think he cares what you are doing? hubris
Posted by Hf , Dec 20, 2007 7:06PM
Are you seriously trying to compare data culled from the market and the information obtained via an administrative relationship?
We don't prime with anyone who runs a prop desk, and we sure as shit won't do business with a giant prop desk with a PB on the side.
Posted by just me , Dec 21, 2007 8:53AM
when hedgies start arguing about who clears best and how much it costs, that is a sure sign they're losing money..........in good times, nobody cares what a broker skims
Posted by LL Cool J , Dec 21, 2007 10:36AM
I care.
Posted by , Dec 21, 2007 11:16AM
Still just unsubstantiated rumors. BofA will NOT get out of the investment banking business.
Posted by Richie , Jan 07, 2008 10:16PM
Citadel has backed ETRADE Financial with $$billions. Are they the next take over target for the Citadel Investment Group? It seems like it might be well worth it for them considering what they have done already for them. This was posted on ETRADE web site:
"This morning we announced that E*TRADE FINANCIAL has strengthened its capital position and eliminated exposure to the types of mortgage securities that have been generating business losses, as well as headlines, over the last several months. This has been accomplished through a strategic transaction with affiliates of Citadel Investment Group.
As part of this transaction, E*TRADE has received a $2.5 billion capital infusion. This transaction, led by affiliates of Citadel, not only strengthens our capital position but also represents a significant vote of confidence from one of the world's leading investment firms. Further, Citadel has removed the entire $3 billion asset-backed securities portfolio from the Company's balance sheet, solving our most significant balance sheet issue. Citadel understands we have been faced with a challenged balance sheet, not a challenged business.
Posted by Richie , Jan 07, 2008 10:42PM
How can Citigroup release this announcement! What a great time to come out with this! Idiots! What happens to analyst that assume wrong?
Citigroup reiterates Sell . Target $4.5 to $2.75. Citigroup cuts their tgt on ETFC to $2.75 from $4.50 and reits their Sell, as they estimate that ETFC
**** has lost about $30 bln of client assets (15% of total) in just over 2 months, and they believe the attrition will continue. Furthermore, ...
Makes no sense when ETRADE announced this..note the growth spots:
****NEW YORK, Dec 21 (Reuters) - Online brokerage E*Trade Financial Corp (ETFC.O: Quote, Profile , Research) said on Friday retail customer cash and deposit balances totaled about $33 billion as of this week, up 14 percent from the end of October.
The company also on Friday said a customer "win-back" plan, introduced earlier this month, was starting to pay off. It started the drive to win back customers who fled after it disclosed large losses in its mortgage business earlier in the year.
Further details on E*Trade's turnaround plan and its outlook for 2008, will be disclosed when it reports fourth-quarter earnings on Jan. 24.
The company's shares, which reached a year-low of $3.37 on Thursday, rose 2 cent to $3.39 in Nasdaq trading on Friday.
On Nov. 29, E*Trade said it was on the road to mending its balance sheet, announcing a $2.55 billion cash infusion from Chicago hedge fund Citadel Investment Group.
"Since the announcement of the cash infusion, customer cash trends have shown significant improvement," acting Chief Executive Jarrett Lilien said.
Rival brokerages Charles Schwab (SCHW.O: Quote, Profile , Research) and TD Ameritrade (AMTD.O: Quote, Profile , Research) recently disclosed that November average daily trades had surged 36 percent and 37 percent, respectively. Analysts predicted the companies would continue to benefit from E*Trade's recent troubles.
"We believe that December activity trends have been relatively strong to date and we anticipate that (TD Ameritrade) will continue to benefit from the dislocation at E*Trade," Goldman Sachs analyst William Tanona wrote in a note this week.
In November, E*Trade said it would no longer issue monthly reports on trading activity. The company did however disclose some month-to-date trading data on Nov. 29, including 4.7 percent growth in daily average trades, while client deposits had fallen 15 percent from the end of October. (Reporting by Lilla Zuill; Editing by Derek Caney)
Posted by guest , Aug 07, 2008 3:04PM
Bofa is evil. I hope they fall on their face.
http://www.ripoffreport.com/reports/0/360/RipOff0360292.htm
Posted by guest , Aug 07, 2008 3:15PM
really good analysis by everyone who posted comments.
Bofa may not want to sell to a "banking" competitor.
That random guy is right, if they dump prime, they may as well pack in in NYC.