Now that Goldman Sachs has succeeded in its mission of helping Apple fend off David Einhorn’s demand that it raise a two hundred plus billion dollars of preferred stock, I guess it’s time for someone at Goldman to sit down with Apple and say “now, guys, really, you ought to think about raising two hundred billion dollars of preferred stock, it’s just the sensible thing to do.” Or something. This debt-financed share-buyback plan doesn’t sound like too much fun for the bankers:
On April 23, Cupertino, California-based Apple said it would return an additional $55 billion in cash to shareholders to compensate for a stock that’s dropped on signs that the company’s growth is slowing. Although it has $145 billion of cash, Apple said it will use debt to help finance a total capital reward of about $100 billion to shareholders. …
Because investment-grade debt offerings typically pay low fees, banks may offer to do the transaction for little or no charge, [Sanford Bernstein analyst Brad] Hintz said.
“This is going to be a prestige-per-share, not an earnings-per-share, deal,” said Hintz, who worked as Morgan Stanley’s treasurer and as the chief financial officer at Lehman Brothers Holdings Inc. earlier in his career. “We’re really talking about a deal that’s going to be done as close to gratis as you can get.”
The amount Apple will be raising is a little unclear but $50 billion over the next three years is … possible? Maybe?1 Read more »
I’m beginning to get the hang of how Deutsche Bank works, which seems to be:
- When they lose money, that strengthens their capital position, and
- When they make money, that weakens their capital position, requiring them to sell shares.
Maybe? Three months ago we talked about how … well, I said “Deutsche Bank Improved Its Balance Sheet By Losing A Lot Of Money,” which I guess seemed funnier at the time, but to be fair (1) Bloomberg said “Deutsche Bank ‘took pain’ in the quarter by booking a loss to boost its capital ratio without selling shares,” which is about equally funny or unfunny, and (2) Deutsche did in fact have a 4Q loss of €2.2bn and yet increased its Tier 1 capital ratio by 90bps.
Today, on the other hand, Deutsche pre-announced – good! positive! €1.7bn! – first-quarter earnings and also:
The Management Board of Deutsche Bank AG resolved today, with the approval of the Supervisory Board, to execute a capital increase, which is intended to raise gross proceeds of approximately EUR 2.8 billion. The purpose of the capital increase is to strengthen the equity capitalisation of the bank. Read more »
Stefan Krause has faced up to the fact that the hedge funds will inherit the earth. Read more »
Remember Deutsche Bank’s rather poor earnings report a couple of months ago? Well, it turns out that things have gotten worse, because people and regulators continue to sue Frankfurt’s most downtrodden bank. Read more »
No jurisdiction can hold me.
Hedge fund manager Phil Goldstein once said that when Massachusetts Secretary of the Commonwealth Bill Galvin looks in the mirror in the morning, he sees Eliot Spitzer. Granted, he said this before certain aspects of Client Number Nine’s private life hit the front pages, but the point was made.
And while Spitzer moves from one failed media venture to another—undoubtedly paying very close attention to a certain South Carolina House race—Galvin still carries the torch and a copy of the Bay State’s securities law. That law must be unusually broad, because he’s used it to fine a German bank $17.5 million for naughtiness related to a CDO created with an Illinois-based hedge fund. Read more »
Remember when Citigroup announced it was going to save a bunch of money by banning color copies and requiring employees to print on both sides? Deutsche Bank appears to be taking a play from that playabook. Read more »
Getting caught money-laundering for the Iranians and drug cartels is pretty bad for business, as HSBC’s 2012 results demonstrate. But coming into compliance with all these new banking regulations is even worse.
Disgraced though HSBC may be, what with the $4 billion-plus it paid in fines to regulators last year, and the 17% drop in profit that entails, the old Hongkong and Shanghai Banking Corp. managed to shrink less than its friends in Frankfurt in an unusual race backwards, thereby dethroning the Germans as Europe’s largest bank. Read more »
I realize it doesn’t actually work this way but I always imagine that sell-side analysts at big banks who cover other big banks enjoy sabotaging each other a little. “Take that, you Deutsche Bank jerks!,” Jernej Omahen might have thought as he hit send on this one:
Deutsche Bank AG fell the most in more than five months after Goldman Sachs Group Inc. cut the company to sell from hold, saying it may have to transfer $13 billion to its U.S. unit under new capital rules.
Deutsche Bank slid as much as 6.2 percent, the biggest intraday drop since Sept. 26, and traded at 33.07 euros at 1:40 p.m. in Frankfurt [closing at 33.66 / down 4.6%]. The stricter requirements may hurt profit at Europe’s biggest bank by assets and require it to ask shareholders for more money, Goldman Sachs analysts including Jernej Omahen wrote in an e-mailed report from London today.
Goldman’s note addresses two impacts of recent Fed moves to make international banks’ US operations safer: the capital impact, and the funding impact. The capital stuff is wholly imaginary, though I guess the economic consequences might be real enough. Start with this chart, and note that “Taunus” is basically shorthand for “Deutsche Bank’s US operations”:
If GS is right – I have no idea, I’ll just assume they are, but there are some assumptions and guesses here – the problem with Deutsche’s U.S. operations isn’t that they’re undercapitalized; it’s that they have negative capital. Read more »
According to the police, they found Brian Mulligan high on bath salts after “several” calls had been placed about a man in the area “trying to break into cars” that fit Mulligan’s description. He supposedly told them he was “tired,” which they say is why they drove him to a motel to get some shuteye. When he (allegedly) emerged hours later and started running through traffic despite officers’ orders to get out of the street, later assuming a “fight stance,” they decided it was necessary to deal with him in an aggressive manner. Didn’t want to, felt they owed it to him. According to Mulligan, it was more like this: Read more »
That’s them up there on the giant logo. Read more »
The good news: there will still be bonuses this year, which is something. The even better news, for the tantric bonus fans among us: it’ll be a while before you see it all. Read more »