Citadel is often described as an investment bank masquerading as a hedge fund. And it looks like it may be moving even further in the direction of becoming a full-fledged investment bank. This morning Roddy Boyd and Zach Kouwe report for the New York Post that Citadel is in talks to buy Bank of America's prime brokerage business.
It's not surprise that Bank of America wants to get out of its investment banking business. Ken Lewis made that clear earlier this year, and BofA has been shedding senior bankers ever since. According to the Post, both the head of the prime brokerage unit and the head of its fixed-income business have recently left.
But would hedge funds be comfortable putting their trades through with CItadel on the other end of the line? There is already resentment about the way some prime brokers take positions conflicting with those of their clients. JP Morgan has been sued by Amaranth over such conflicts and there are perennial complaints about Goldman Sachs. Still, both JP Morgan and Goldman make good coin with their prime brokerage business, so the talk about conflicts hasn't hurt them.
Still, there a plenty of folks who are suspicious of anything those boys with the white boards over at Citadel do. They have proven eerily apt at turning positions that ruin competitors into money makers. One hedge fund manager we spoke with this morning laughed out loud when we asked if he would run his trades through Citadel.
"Then again, they seem to know my positions and strategy anyway. So why not? Maybe they'll accidentally tip me off," he said.
Citadel, BofA In Brokerage Sale Talks [New York Post]
Posted by 1234 , Dec 20, 2007 12:47PM
Hedge fund Citadel not eyeing BoA unit (Reuters) Excerpt: Citadel Investment Group is not negotiating to buy Bank of America's prime brokerage unit, a source close to Citadel said, throwing cold water on a media report the hedge fund firm has inspected the bank's books. "There have been no conversations about it and Citadel has not looked at the books," said the source, who is close to the situation but not authorized to speak about it...Bank of America spokeswoman Melissa Kitlowski said, "We decline to comment on market rumors." Coverage also appeared in the New York Post, Bloomberg and Dow Jones
Posted by slimjim , Dec 20, 2007 12:47PM
Only if someone over there is wearing a merkin.
Posted by 1234 , Dec 20, 2007 12:48PM
Hedge fund Citadel not eyeing BoA unit (Reuters) Excerpt: Citadel Investment Group is not negotiating to buy Bank of America's prime brokerage unit, a source close to Citadel said, throwing cold water on a media report the hedge fund firm has inspected the bank's books. "There have been no conversations about it and Citadel has not looked at the books," said the source, who is close to the situation but not authorized to speak about it...Bank of America spokeswoman Melissa Kitlowski said, "We decline to comment on market rumors." Coverage also appeared in the New York Post, Bloomberg and Dow Jones
Posted by Anal_yst , Dec 20, 2007 1:32PM
WTF is BofA gonna do with that nice new building on Bryant Park after they sh!tcan their entire investment bank? WTF are they gonna bring up all the commercial bankers from Charlotte?
Although, on the other hand shouldn't be too hard the BS aggreement they got for the subsidies on the property only mandate they have something like 3,000 people in there by like 2010, which in a what 65+ story bldg leaves plenty of space to lease out.
Posted by just me , Dec 20, 2007 2:05PM
Maybe they could turn it into a massive Korean massage parlor....a happy ending with every trade?
Posted by investorcluzo , Dec 20, 2007 2:26PM
I heard whispers that bofa is getting ready for another round of pink slips. after the 500 in november, there are only 2,900 bankers/traders left. by the time their lease runs out at 9 west next year, they will have just enough people to fill the retail space on the first floor of the bryant park building. sounds like a great place to put all those commercial bankers from charlotte...could I get a roll of quarters, I need to do laundry today.