Morgan Stanley Swings To Profit (WSJ)
Morgan Stanley on Friday reported a profit of $507 million, compared with a year-earlier loss of $250 million. The per-share profit, which reflects the payment of preferred dividends, was 25 cents, compared with a loss of 15 cents a year earlier. The most recent period included a net tax benefit of about $155 million. The year-earlier period included a pretax loss of about $1.7 billion related to a settlement with MBIA Insurance Corp. Banks have to take an accounting charge when their earnings improve and the price of their own bonds rises. Stripping out the impact of debt-valuation changes, the per-share profit was 28 cents, versus a year-earlier loss of 13 cents. Revenue rose 23% to $6.97 billion, or to $7.48 billion stripping out the effect of debt valuation. Analysts polled by Thomson Reuters expected earnings of 27 cents, excluding debt-valuation adjustments, on revenue of $7 billion.
Morgan Stanley Cuts Investment Bank Pay Costs 7.6% for 2012 (Bloomberg)
Morgan Stanley, the bank that’s deferring all bonuses for top earners, set aside $6.65 billion in 2012 to pay investment-bank employees, a 7.6 percent decline from a year earlier. The ratio of compensation to revenue in the unit fell to 44 percent from 53 percent in 2011, when excluding accounting gains and losses related to the firm’s debt prices, according to figures posted today on the company’s website. The bank doesn’t disclose how many people work in the division.
Geithner Muses On Crisis Era (WSJ)
WSJ: You often use the analogy of sports to give people an idea of where we are in recovering from this devastating recession. So where do you put us? Mr. Geithner: I think in the recovery, if you do basketball, we're in the early part of the fourth quarter because unemployment is still very high and still going come down gradually over time. But if you look at how far people have gone to bring debt more in line with income and how far we've moved to bring down leverage risk in the financial system and how far we are through the big adjustment in housing—we're five years into the housing adjustment—that process is very advanced. We're way ahead of other countries in going through that process.
Cyprus May Trigger Big Trouble in Europe (CNBC)
Cyprus may seem too small for markets to care. But UBS has warned that the Mediterranean island is big enough to cause trouble in the euro zone after seeking a bailout from the troika, made up of the International Monetary Fund, the European Commission and the European Central Bank. After all, this is not the first time a relatively small economy has threatened to trigger a pan-European domino effect ranging from Ireland, to Greece and Portugal. "The Cypriot case has all the ingredients to raise questions about the consistency of the euro project again, comparable to -albeit possibly less dangerous than - the Grexit hysteria less than a year ago," said economist Martin Lueck from UBS.
Cayman Islands Opens Up To Scrutiny (FT)
The British overseas territory, which wants to shed its reputation for clandestine financial activity, is introducing sweeping reforms that will make public the names of thousands of previously hidden companies and their directors. In proposals sent to Cayman-based hedge fund businesses and seen by the Financial Times, the islands' powerful monetary authority, CIMA, has outlined plans to create a public database of funds domiciled on the island for the first time. The database will also list funds' directors, pending an ongoing consultation process due to close in mid-March.
Police Say Man Was Too Drunk To Pull Off Attempt Robbery (Lex18)
Wearing a ski mask and sunglasses, police say 25-year-old Ryan Hopkins stumbled into the Little Caesar's on the bypass in Versailles with the intent to steal. An employee told LEX 18 the man walked in before the restaurant had opened smelling of alcohol, and appeared extremely intoxicated. The employee said Hopkins said, "this is a hold up," while badly slurring his speech. The employee asked him to leave the premises, and Hopkins walked out. Hopkins was later picked up by police, and charged with public intoxication. Police say he will not be charged with attempted robbery because he didn't actually have a weapon.
Mary Jo Eyes For SEC Job (Bloomberg)
Mary Jo White, the former Manhattan US Attorney, is under consideration to become the next chairman of the Securities and Exchange Commission, three people with knowledge of the matter said. White, now a partner at law firm Debevoise & Plimpton in New York, would succeed Elisse Walter, who took over as SEC chairman last month. As US Attorney for the Southern District of New York from 1993 to 2002, White became a leading terrorism prosecutor, winning the conviction of four followers of Osama bin Laden for the 1998 bombings of two US embassies in Africa. Under her direction, prosecutors won convictions for the 1993 World Trade Center bombing and a failed plot to blow up the United Nations headquarters and other New York landmarks.
Buying 'Political Intelligence' Can Pay Off Big For Wall Street (WSJ)
When Edward Kennedy Jr. launched Marwood Group more than a decade ago, he named it after the Maryland estate his grandfather, Joseph Kennedy, lived in when he was the first chairman of the Securities and Exchange Commission in the 1930s. Now, the SEC has issued subpoenas to Marwood, asking for emails and other documents that show how the political research firm was able to warn its Wall Street clients that regulators might delay approving a promising drug in the fall of 2010. The scrutiny doesn't mean any accusations of impropriety will follow, against Marwood or anyone else. But emails subpoenaed in the inquiry, some of them reviewed by The Wall Street Journal, open a rare window into a burgeoning business known as political intelligence, in which firms gather information and analysis about activities in Congress, the White House and federal agencies and sell these insights to investors looking for an edge. A look at Marwood shows how one leading player in this field—an industry that operates with little regulatory oversight—managed to distribute prescient information about a future government decision that ended up sharply moving a stock.
A Reboot For Buyouts? Depends On Dell Deal (WSJ)
The deal, which people familiar with the discussions say could be announced as early as next week, is being closely watched. Mr. Dell and private-equity firm Silver Lake Partners seek some $15 billion in financing, the people said. A success could open the doors to other large deals that may be waiting in the wings. A deal that struggles or even fails to find financing could stymie those plans. "I think if Dell gets done, it certainly will mean that the jumbo LBOs are back," said Richard Farley a lawyer who represents banks in buyouts.
Rental Bonds Hit Snag (WSJ)
Real-estate investors racing to create securities backed by the rental payments of single-family homes have hit a speed bump, with one of the major credit-ratings firms warning it would probably assign ratings just one to three notches above "junk" to a popular structure for the deals. In a research report published Friday, Moody's Investors Service said the structure favored by bankers for the deals would pose serious risks to investors in the securities.
BNP Paribas eyes 1 billion euro overhaul to cut costs (Reuters)
The French bank plans to spend 1 billion euros ($1.3 billion) over three years to pare down its businesses in response to lackluster growth in Europe, according to a union source. Analysts and investors expect France's largest bank to lay out its new strategy in the coming months after a rocky year spent selling assets and cutting jobs.
$4K golden vibrator stolen in armed Brazil heist (AP)
An armed man in Brazil has heisted an 18-carat gold-plated vibrator selling for $4,000 at a luxury sex shop. Police say he walked into the Erotica Luxo store in Brasilia, tied up a clerk and took the item from its display case. He stole nothing else. It's high season for erotic shops in Brazil as the nation celebrates its own Valentine's Day in less than two weeks. Store owner Vanessa Baldini tells the G1 news website the robber might get no satisfaction from Wednesday's theft. She says the Swedish-made vibrator has a stainless steel core, making removing any gold plating extremely difficult. And she notes the robber didn't take the vibrator's charger. She says: "I really don't know what he'll do. I'll leave it up to his imagination."