Morgan Barney In The Making (Bloomberg)
The numbers everyone is running with (at this point shit's fluid people) are $2.5 to $3B cash to Citi, and $5 to $6B in tax incentives. The end deal would have Morgan Stanley controlling 51% of the endeavor. David Trone puts it best:
"You're selling out the future to get through the crisis of the present, and unfortunately they don't have a lot of other choice,"
See? Now that leaves you feeling all warm and fuzzy inside, doesn't it? The combination of the two houses will mean about 22,000 brokers for the newly formed entity (pre-attrition) whereas the Bank of America team is sporting about 20,000 right now.
The Journal points out that closing the deal would lead to a higher probability of seeing James Gorman stepping into Mack's role, who's scheduled to retire in 2010.
The biggest hurdle over the course of the integration is going to be retention; the numbers are looking a lot like the ones that ML and Bank of America hashed out - somewhere in the neighborhood of 100% of T12. But, that's not going to mean shit if the companies come in and step on each other's toes, which has been known to happen.
Related, on Gorman:
"When Gorman started at Morgan Stanley in February 2006, the firm had about 9,000 financial advisers producing an average annualized revenue of $554,000. Gorman reshaped the business by jettisoning brokers who were less productive and hiring top producers from rivals.
By the end of August 2008, Gorman had whittled the corps of advisers down to 8,500 and raised revenue per representative to $741,000. The firm also almost doubled the assets it managed from the wealthiest customers, those with $10 million or more, to $223 billion from $129 billion. Asset values and revenue per adviser fell in the last quarter of 2008 as markets tumbled."
Obama SEC Choice Under Fire (NYT)
"Mary L. Schapiro, who appears this week at a confirmation hearing on her selection to head the Securities and Exchange Commission, has been accused in two lawsuits of making misleading statements to quickly complete a merger of regulatory organizations after which she received a 57 percent raise in her pay."
It's Monday, an as such I'm not much in the mood to talk politics, but I will say this: with the tightening of regulations and all-eyes-on that the regulatory people are going to have to face, it seems prudent to bring someone into office that's above reproach.
Possible Banks/Weapons Link Investigated (FT)
There's an ongoing investigation as to whether or not European banks were stripping wire transfer information in order to hide originating information in a scandal that ultimately has Iran purchasing Tungsten. The metal, it appears, is used in the manufacturing of long-range missiles and the quantity ordered was enough to meet the refrigeration (the other Tungsten use, one would suppose) needs of every home/business in the Middle East.
Madoff Blistered His Sister (NYP)
Of course he did. For $3 million.
GM Warns It's Coming Back For More (Reuters)
The Downside: "Chief Executive Rick Wagoner said the struggling automaker had enough funding to last through March but could still seek additional U.S. government loans beyond the $13.4 billion it has already been pledged."
The Upside: "GM has set a goal of reducing its debt by almost $36 billion by asking bond holders to swap out of existing debt for shares and by negotiating new terms for its promised $21 billion contribution to a trust fund for retiree health care that will be run by the UAW."
In related news, Chrysler has announced it's not for sale, and that it's doing its best not to die.
Citi Board Backs CEO as Outlook Worsens (WSJ)
They might lose $10 billion. NBD.
Madoff Apologizes to Neighbors for the Ultimate Co-op Crime (NYT)
Sayeth Bernie:
Dear neighbors,Please accept my profound apologies for the terrible inconvenience that I have caused over the past weeks. Ruth and I appreciate the support we have received.
Best regards,
Bernard Madoff
Posted by guest , Jan 12, 2009 7:52AM
Morning peeps.
Posted by guest , Jan 12, 2009 7:55AM
Is there anyone that Obama could pick that doesn't have a skeleton (or 3) in his/her closet?
I vote Fuld for SEC chair.
Posted by Phobos , Jan 12, 2009 8:00AM
@2 He'd almost have to go academic, which I don't think would be a bad thing to do at this point. It would be a good signal to the American public..
Posted by guest , Jan 12, 2009 8:12AM
academic? Pfff... Loser!!!
Posted by guest , Jan 12, 2009 8:16AM
Wouldn't it be fair to say that someone that knows how to put skeletons in closets is the right choice? Kind of like the spotters in Vegas casinos?
Posted by Phobos , Jan 12, 2009 8:19AM
@4 You're obviously a mental powerhouse.
This guy doesn't look so shabby, and I'm 30 seconds into the search:
http://www.law.georgetown.edu/Faculty/facinfo/tab_faculty.cfm?Status=FullTime&ID=214
Posted by guest , Jan 12, 2009 8:31AM
@6
Looks like he has some experience. Whether he or any other academic would be considered is questionable - Obama may not owe any of these potential candidates anything - if you know what I mean.
:-(
Posted by guest , Jan 12, 2009 8:34AM
quite surprised at no posts regarding Boaz deciding now is a great time to start his own fund.
Posted by guest , Jan 12, 2009 8:38AM
@8 that's because there was a post on it friday, moron.
http://dealbreaker.com/2009/01/2009-year-of-the-hedge-funds.php
Posted by guest , Jan 12, 2009 8:41AM
Harbinger limiting redemptions:
http://dealbook.blogs.nytimes.com/2009/01/12/harbinger-said-to-limit-redemption-requests/
How soon the worm has turned for this "genius" hedge fund manager, no?
Posted by guest , Jan 12, 2009 8:45AM
There's a lot of fucking anger this morning.
Posted by guest , Jan 12, 2009 8:51AM
probably cause those animals from philly get to celebrate at our expense for the second time in ~ 3 mos
Posted by guest , Jan 12, 2009 8:52AM
The symbol for Tungsten is W. That's right, W. Crazy world.
Posted by guest , Jan 12, 2009 8:53AM
what about madeoff energy llc? i think the birdseed trail is winding back to the lipstick bldg.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a_4lrbqOtHbU
"Madoff’s Sons, Niece Started Energy-Exploration Company in 2007 "
"Energy Outsiders
Traditionally, investors who wanted a direct stake in oil and gas projects would invest in partnerships set up by energy- industry veterans to drill wells or acquire acreage. Rising oil prices, which almost tripled from a low of $50 a barrel in January 2007 to a peak of $145 in July 2008, have spurred many people who lack experience to take a stab at becoming oil barons.
“Over the past two years, we have seen a tremendous increase in the number of private partnerships formed to explore for oil and gas,” said Dan Waller, a managing partner at Dallas-based law firm Secore & Waller LLP. “Unfortunately, a lot of the ones we have seen have not been profitable because they have been run by people who are not in the oil and gas business.” Waller’s firm helps set up at least a dozen energy partnerships each month, he said. "
Posted by guest , Jan 12, 2009 8:57AM
Bring on the Morgan Smith Barney merger. A marriage made in heaven.
Kind of like having a strip steak with tater tots smothered in mayo and marsh mellow fluff.
Yum.
Posted by guest , Jan 12, 2009 9:05AM
giants suck. what a lackluster effort. pathetic.
Posted by guest , Jan 12, 2009 9:06AM
18-1
Oh wait that was last year.
Posted by guest , Jan 12, 2009 9:07AM
@9, I was hoping for a few vitriolic rants from unemployed analysts living in their parents basement, like you.
Posted by Seaman Bodine , Jan 12, 2009 9:12AM
any of you geniuses have thoughts on why MS is up 80 cents in pre-market?
Posted by guest , Jan 12, 2009 9:15AM
does anyone know how the 51% is going to be handled?
other than that, I like the deal..
Posted by guest , Jan 12, 2009 9:19AM
19- some folks think they got a steal. just note that C traded up the first ~2 days after they took their first writedowns because it was "behind them"
Posted by guest , Jan 12, 2009 9:29AM
Curious: why has their been no speculation as to the size of "overlap" between SB/MS and projected layoff numbers? I have a good friend at Smith Barney, and there must be someone who covers his same accounts at MS - what happens to him or anyone else?
Posted by guest , Jan 12, 2009 9:33AM
@22
Um they get laid off?
Of course seeing that MS is the suitor, is the more prestigious firm and has the majority stake which side do you think is going to get the brunt of it?
Posted by guest , Jan 12, 2009 9:34AM
@22
Probably nothing. People who want more than one retail broker working on their shit will always want more than one retail broker working on their shit. If there are cuts, it's going to be from the bottom producers, not because of an overlapping in client funds. The last thing anyone would want to do is scare a client off by telling them who they had to invest with, or making them choose between two brokers.
Posted by guest , Jan 12, 2009 10:13AM
Institutional sales has to take a hit. You don't need 2 guys to cover every buy-side account.
Posted by guest , Jan 12, 2009 12:33PM
@12: And lovin' too!
The Other Guy from Delaware