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)
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.