Something you may have picked up on is that lately? Customers are not so happy with their banks, particularly if their banks are Bank of America or Citigroup. The websites apparently never work, there are the rage-inducing fees, and there’s the general feeling that Brian Moynihan and Vikram Pandit? Don’t actually care about them. When was the last time Brian or Vik called, huh? When was the last time they did something nice, for no reason other than wanting to? When was the last time they thought to say “You look really pretty tonight”? Can’t remember, stopped counting and not since the checking account was opened. And while it would be one thing if every other bank treated its customers like they were expendable, some don’t. Take Société Générale Group-owned-Komerční Banka. Not only do they act like they really care but give people a reason to be loud, proud customers. Continue reading »
Archive for October 2011
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Posted in:
Banks
UBS Is Going To Take Some Time To Really Optimize How To Lose All Its Clients’ Money
By Matt Levine
The slow implosion of UBS investment banking is of interest at Dealbreaker not only because of our sympathy for the good men and women who sell “a whole lot of brown-bagged bottles of liquor to UBS employees every evening,” but also because of UBS management’s constantly repeated theme that the investment bank is just a helpful service provider for their real business, which in the Swiss tradition consists of managing rich people’s tax liabilityprivate wealth.
So today:
The question is whether UBS can shrink the investment banking business enough to satisfy investors and Swiss regulators without disrupting its other operations, losing lucrative clients or costing too much. With a smaller investment bank, UBS expects earnings growth to come from attracting high-net-worth clients with services and products created by linking investment banking and wealth management closer together, especially in Asia. For example, UBS would help a family-owned business in Hong Kong sell shares on the stock market and then offer advice on how to manage the proceeds.
“The increasingly close relationship we enjoy with wealth management allows its clients to more actively benefit from the full capabilities the investment bank offers,” Mr. Kengeter said in an interview this month. “In today’s market and regulatory environment, that proposition has never been more compelling.”
Now, this is sort of self-serving and ridiculous. If my family owned a Hong Kong IPO-candidate business, I would want the best capital markets bank to take it public, and then I’d want the best private wealth bank to manage my loot. If those two banks were the same, great, but I’m not going to give that IPO business to a bunch of incompetents just because they work for the same legal entity as a guy who’s the best in the world at getting Knicks tickets and investing all of my money in phantom swaps with Kweku Adoboli.
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Posted in:
Hedge Funds
SAC Capital Has No Idea What The Wall Street Journal Is Talking About
By Bess Levin
Earlier this morning, the Journal reported that certain trades made by SAC Capital’s CR Intrinsic unit were being “examined” by the Securities and Exchange Commission. Specifically, the regulator was said to be “trying to determine whether SAC used inside information to profit from Johnson & Johnson’s 2009 takeover of Cougar Biotechnology Inc.” It was also reported that:
The civil inquiry also encompasses whether an “expert network” business that is part of an investment bank leaked nonpublic information to traders, people said…SAC also is facing a criminal probe by federal prosecutors in New York examining trades made in an account overseen by the fund’s billionaire founder, Steven A. Cohen, according to court documents and people familiar with the matter. Representatives for SAC, Mr. Cohen, Johnson & Johnson and Cougar declined to comment. SAC has said it is cooperating with the probe.
While the Journal noted that SAC has not been accused of any wrongdoing, nor was it clear if “the inquiries, which have been ongoing for more than a year, will result in any charges,” it also wrote that “SAC has said it is cooperating with the probe.” According to representatives for the hedge fund uh…what? Continue reading »
It might feel like a thing of the past, but it’s only a matter of time before stock-picking savvy will seriously matter again.
Right now, everything in the financial markets is correlating, says Alan Zafran, Partner at Luminous Capital. These days, it’s not unheard of for 90 percent of all stocks on the S&P to move up or down the same direction on a single day. So stock-to-stock comparisons can feel redundant.
In 2012, however, Zafran predicts the markets will start balancing out, “returning to the mean.” Long/short equity financial managers and hedge funds with the skills to identify outperforming stocks will be the big winners.
“Once we return to an environment where stock picking matters, [hedge funds] with stock-picking skills and [quality] analysis will do well,” he says.
If your employment with the Swiss bank falls in the investment bank, consider getting to keep your job this year’s bonus. Continue reading »
SAC Capital Faces Second Deal Probe (WSJ)
The SEC is trying to determine whether SAC’s CR Intrinsic unit used inside information to profit from Johnson & Johnson’s 2009 takeover of Cougar Biotechnology Inc., the people said. The civil inquiry also encompasses whether an “expert network” business that is part of an investment bank leaked nonpublic information to traders, the people said. The hedge fund held 7,800 Cougar shares at the end of 2008. By March 31, 2009, SAC owned 632,291 shares, according to SEC filings. Johnson & Johnson announced its Cougar deal on May 21 of that year. SAC also is facing a criminal probe by federal prosecutors in New York examining trades made in an account overseen by the fund’s billionaire founder, Steven A. Cohen, according to court documents and people familiar with the matter. Representatives for SAC, Mr. Cohen, Johnson & Johnson and Cougar declined to comment. SAC has said it is cooperating with the probe. The SEC hasn’t accused SAC or the other entities involved in the Cougar probe of wrongdoing. It is unclear whether the inquiries, which have been ongoing for more than a year, will result in any charges.
Protests Show Capitalism ‘Nearly Broken’ (Bloomberg)
The protesters camping in London in support of the Occupy Wall Street demonstrators may be right and capitalism risks losing its “license to operate,” Generation Investment Management LLP’s David Blood said. Blood, who worked at Goldman Sachs Group Inc. (GS) for 18 years before starting fund manager Generation with former U.S. Vice President Al Gore in 2004, said the protesters’ message is that the financial system is “broken” and “unfair.” “In many respects, their concerns are right, and their assessment of where we’ve got to is right,” Blood, 52, said yesterday at a debate at St. Paul’s Cathedral, London, near where the protesters have gathered. “The problem is that capitalism itself is broken or nearly broken.”
Investment Banking’s Uncertain Future At UBS (NYT)
The abrupt resignation of Oswald J. Grübel as chief executive last month over the trading loss left the new investment banking strategy mainly in the hands of Mr. Zeltner and Mr. Kengeter, the head of investment banking, who came from Goldman Sachs three years ago. UBS’s interim chief executive, Sergio P. Ermotti, came to UBS only in April and it was unclear whether his role would be made permanent. “What they are trying to do has never been done before,” Christopher Wheeler, an analyst at Mediobanca, said. “They want to shrink the investment bank by choice, which means unwinding positions without loss and running down their books while keeping the morale among staff, and it’s unclear who’s running the shop.”
Howard Camping, Rapture Prophet, Hedges New Bet (SF Gate)
“I do believe we’re getting very near the very end,” Camping, 90, said during a podcast recorded earlier this month and posted on his Family Radio website. “Oct. 21, that’s coming very shortly, that looks like it will be, at this point, it will be the final end of everything.” After his last apocalyptic prediction failed to materialize, Camping said he was “flabbergasted” and was reconsidering his calculations. Continue reading »
$$$ EU ban on ‘naked’ CDS to become permanent (FT)
$$$ BlackRock says risky ETFs need more regulations (Reuters)
$$$ Former Florida Congressman Readies Hedge Fund (FINalternatives)
$$$ Morgan Stanley Vs. Goldman Sachs: The Shrinking Pay Gap (WSJ)
$$$ Alec Baldwin not so sure about ending the Fed (NYO)
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Blogs. Continue reading »
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Posted in:
Private Equity
Yahoo Gives Up, Why Don’t You Just Tell It How To Run Its Business
By Matt Levine
Compared to strategic mergers, LBOs – particularly those not led by managers – are relatively easy for target companies to understand and evaluate. Generally speaking, shareholders are paid out in cash, so you don’t need to figure out what the merger currency is worth. You don’t have to negotiate “cultural” issues like whose name and/or irritating punctuation goes first in the surviving company’s name. You don’t have to figure out whose employee benefit plans will continue in force because everyone will be fired anyway.
And, because there won’t be any synergies and you won’t be taking stock in the acquirer, you don’t have to care about how they’ll run the business going forward. If your only goal is maximizing shareholder value, you just compare the expected value of your plan for the company’s independent operations to the actual cash value that a sponsor is offering. You don’t care if they’re going to make their 30% IRR by bringing in an operational genius to improve your products, or by the usual method of 8x leverage and mass firings. Maybe that’s an exaggeration – you care about things like “will they be able to sell the acquisition debt?” and “will my employees cause me physical harm between the time we announce this deal and the time I escape to a tropical island?” – but their long-term value creation plans aren’t really your concern. And, on their side, the sponsor has no interest in telling you, since their plans to improve your business just give you leverage to jack up the price.
Aaaaaand then there’s Yahoo! They figure, what the heck, they have all these smart people around, maybe they can get some free tips on how to improve things:
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The ultra-rich bankers, hedge fund managers and private equity executives of New York City have long enlisted private security firms to help safeguard them and their wealth. But as the mood on Main Street turns increasingly hostile, New York’s financial titans are cranking their security measures up to 11…One executive contacted Insite requesting help planning his escape from the United States in the event the federal government was overthrown, said Howard A. Shapiro, Insite’s chief technology officer. The executive wanted to know how much gold to keep on hand and how to escape the United States by submarine in the event of a major incident. [NYT via BI, related]
Analyst Who Fears His “Overly Muscular Stature” Won’t Work For Wall Street Seeks Advice
By Bess LevinEarlier this week, a young financial services employee posed a question to the universe about a problem vis-à-vis size. He wrote:
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Tags: a rather large man (both in stature and in the pants.), advice, college, discrimination towards large muscular guys, football, handshakes, I have honestly never come across anyone even close to the size I am at the office, just kidding about the penis size comment, max 10% body fat, serious question of the day, tips