Opening Bell: 02.03.09

Author:
Publish date:

Banks' Urge To Merge (NYP)
Union Bank of Wachovia? UBS and WB are in talks to possibly merge their wealth-management units, a la Morgan Barney.
UBS Talked With Morgan Stanley On US Brokerage (Reuters)
It looks like the more tax-evadey Swiss bank in town and Morgan Stanley *were* in talks wherein the latter would consume the formers brokerage unit - no reason is given for either member walking away from the table.
"Last month Morgan Stanley agreed to combine its brokerage with Citigroup (C.N) Inc's Smith Barney unit, paying Citi $2.7 billion and initially taking a 51 percent stake.
Talks for a sale of the brokerage unit by the Swiss bank are not unexpected. Last summer, sources told Reuters that the bank was considering a sale of its U.S. wealth management business, formerly known as PaineWebber, as part of a review of its business."
In quasi-related news, the Times has a piece on the IRS expanding its probe into UBS and the bank's graceful attempt to defraud the US Tax System on a mind numbing scale.
"The Internal Revenue Service, which is participating in a broad federal investigation into UBS and its offshore private banking services, is widening its scrutiny to include ordinary accounts owned by Americans who work overseas, according to a person briefed on the issue."
Citigroup Leads Tumble in Hybrid Bonds on Nationalization Bets (Bloomberg)
"The hybrids, which typically count as regulatory capital to cushion against losses, fell 11 percent last month in the U.S., more than they did in all of 2008, according to Merrill Lynch & Co. index data. Citigroup and Bank of America bonds lost as much as 34 percent of their value.
"The danger is the government's going to take over everything and not pay anything," said Gregory Habeeb, who manages $7.5 billion in fixed-income securities at Calvert Asset Management Co. in Bethesda, Maryland. "It could happen.""
Citi's been having a rough go at it lately (to put it lightly) - what with having to return their new plane and take on three hundred billion plus in capital from the government. Sadly but not that surprisingly, they're looking at backing out of the marketing deal with the Mets, and while I'm sure they could use the money (the Mets) there has to be some kind of collected wiping of the sweat off the brow - you'd almost need a public relations team to handle the marketing nightmare.


Citi's also announced that it's going to be extending about $36.5B in loans across sectors - no doubt in response to the Government's call for action. The swift response rings more of rehearsed timing than some insane Administration/Bank synergy though: there's an eerie "we're all ready in charge you fools" quality to it. The numbers:
"Citi's management will allot $25.7 billion for U.S. residential mortgages, $5.8 billion to credit card loans, $2.5 billion for personal and business loans, $1.5 billion for corporate loans and $1 billion for student loans, the AP report said.
Of the residential mortgage funds, $10 billion will go toward buying securities backed by mortgages that conform to Fannie Mae and Freddie Mac standards while $7.5 billion will be used to buy prime home mortgages in secondary markets.
The final $8.2 billion will be mortgages issued to homeowners."
Callin' The Bottom, Again (CNBC)
"The Dow Jones Industrial Average won't find a secure base until it sheds another 1,000 points, which it could do before March, but that will signal the capitulation is over, Alpesh Patel, principal from Praefinium Group, told CNBC.
"We think the Dow's going to hit probably about 7,000 and that means it's going to go below its lows that it hit last year - that'll be the capitulation, that'll be when we get some indication of things having cleared out," Patel said."
Barclays Cut (NYT)
"Barclays stock fell in trading in London after Moody's Investors Service cut the bank's long-term debt rating by two levels, citing the possibility of more credit write-downs and bad loans. Moody's lowered the rating to Aa3, its fourth-highest grade, the firm said. The outlook was "stable," Moody's said, and it reduced the financial-strength rating one level. Barclays fell 11 percent, to 94.9 pence. Barclays said it wrote off about £8 billion ($11.5 billion) of credit assets in 2008."

Related