There are a lot of things in the financial industry that you could legitimately get upset about and so it seems sort of wasteful when people go around getting upset about the other things.1 Like: the too-big-to-fail banks have a lot of subsidiaries, which is bad for some reason. Complexity! Opacity! Subsidiaries. I dunno.2
Anyway one of the big ones is going away:
Bank of America Corp., the second-biggest U.S. lender, plans to merge its Merrill Lynch subsidiary into the parent company to reduce complexity and costs.
The move could happen as early as the fourth quarter and means Charlotte, North Carolina-based Bank of America assumes all the investment bank’s obligations and debt, Merrill Lynch said in an Aug. 2 filing. Dissolving the legal entity also ends Merrill Lynch’s need to file separate regulatory disclosures.
It’s true! Read more »
Feel free to exchange exultations, insults and sour-grape rationalizations below. Read more »
Honestly bank earnings week has been a little boring, no? It’s been quarters since anyone announced a six billion dollar trading loss, and the recent news is pretty much modest beats from a diverse mix of businesses and where is the fun in that I ask you. Financial-market memories are short and … have negative serial correlation, or something … which might explain why Goldman is down today despite announcing a $4.29 EPS vs. analysts’ $3.87, with strength in principal investments and debt underwriting making up for so-so FICC revenues.
The call: variations on boring. Goldman CFO Harvey Schwartz painted a picture of Goldman clients who are deterred from strategic activity by macro uncertainty – “oh we can’t do that merger, because, uh, Cyprus” – and so spend their time refinancing their loans every six months to get lower interest rates.1 I suppose their bankers have to make fees somehow. And there don’t seem to be many conclusions to draw from the numbers: FICC revenues are down because there is noise in FICC revenues, not due to any change in business mix or performance. VaR is down because market vols are down, not because of any change in risk appetite. Private equity gains in investing & lending reflect stronger public equity markets because private equity is just beta. I guess.
Nor is Harvey your go-to guy to fulminate about regulation, though these days really no one is. He said various nice things about how the regulators are working hard and getting it right, and how Goldman doesn’t act in anticipation of regulations but only responds to them when they’re final. Others have phrased this less charitably. Thus Goldman’s new BDC is not a preemptive effort to fit prop traders into the Volcker Rule, but just a client-driven part of Goldman’s asset management strategy – “deploying our competencies into opportunities we feel like our clients would benefit from.”
So what’s left? There’s comp, of course: comp accruals were 43% of revenue ($4.34bn), versus 44% in 1Q2012 ($4.38bn), and headcount is down 1%. Analysts tried to push Schwartz to extrapolate a trend there, but again he mostly resisted. Keep enough people to serve clients, etc. Read more »
They said it couldn’t be done. They said it didn’t matter if it was $4.5 million or $2.5 million or if they were giving it away. They said potentials buyers wouldn’t be swayed by the pitch to “sleep where Angelo Mozilo hath slept, after a few too many troughs of Boone’s farm” (AKA “The Mozilo Bedroom”), or to impress guests with the cocktail party fodder that “that chair you’re sitting in right now the very one Ken Lewis was sitting in when he decided to buy Merrill Lynch, can’t get better investing karma than that.” They said the vomit stains on the rug would not be a selling point. They were wrong. Read more »
Financial Services Employees To Spend The Month Of January Subsisting On Garlic-Oregano Shots And Self-LoathingBy Bess Levin
…a growing number of self-flagellating New Yorkers who treat — then beat — themselves post-holidays by temporarily giving up vices such as alcohol and sweets, sometimes replacing them with liquid diets (blue-green algae juice and garlic-oregano shots, among them). According to Denise Mari, owner of Organic Avenue, the uber-popular NYC-based juicing mecca, business has doubled year over year since 2006, with an explosion in volume in 2012. And there’s always a spike in sales this time of year with those desperate to cleanse away their sins. “People tend to go extreme — they need to be kicked in the ass,” says Danielle Pashko, a longtime NYC nutritionist who guides high-rollers from Citibank, J.P. Morgan and Merrill Lynch. “It’s kind of like a bipolar attitude — splurging with mayhem and nonstop debauchery for weeks, and then total self-deprivation.” “These people are highly successful, competitive and stressed out. They’re cosmopolitan and social and mostly men,” says Pashko…John Cholish may look like any other ripped stud to an outsider: The smoking-hot energy options broker who boasts 6 percent body fat could intimidate most superheroes. “I’ve always been competitive, and like to challenge myself,” says the 29-year-old from Long Island City who has detoxed regularly for more than a decade. But he’s no match for his 110-pound feather of a girlfriend, Brianna Cole, 24. “My girlfriend and I will do a little competition, but she tends to beat me; I’m probably 0 for 4,” he admits sheepishly of their fasts — during which they give up sugar, caffeine, alcohol and simple carbs for a minimum of several days. [NYP]