Wall Street workers shouldn’t be too excited for bonus season (NYP)
After a year of record fines, sluggish trading and low interest rates, bankers hoping for richer payouts should prepare to be disappointed when bonus season gets underway next week. By most estimates, the pool of money set aside for Wall Street workers is expected to be flat with the previous year, when the industry took home $16.7 billion, or an average of $164,530 per person. Last year, big banks were slammed by billions in fines and penalties — Bank of America paid the largest fine ever for a single company, $16.7 billion — for offenses ranging from toxic mortgage securities to money laundering to tax evasion. “The fines have come to roost,” said Michael Karp, CEO and co-founder of headhunting firm Options Group. “The bonus pool and compensation are the most vulnerable for banks to make up the shortfall.”
Banking bonuses set to disappoint in City and on Wall Street (FT)
Bankers on both sides of the Atlantic are fighting over a diminished bonus pool this year, according to executives. In the UK, most investment banks expect to see bonuses fall after a tough year, but are still braced for political sensitivities over the topic given the looming general election. At US banks, several of which report results this week, payouts are also set to fall. Traders can expect the worst declines after a weak fourth quarter. Citigroup decided last week that the bonus pool for traders would fall about 5-10 per cent, according to people familiar with the matter, after earlier pledging to hold it flat. Citi’s advisory bankers can expect a modest increase. One finance officer at a large Wall Street bank said it had been difficult to satisfy the warring parties: mergers and acquisitions and equity underwriting enjoyed a good year but these advisory bankers never suffered the same bonus cuts as traders so they should not expect a big rebound in payouts.
Paulson Event-Driven Fund Said to End Last Year Down 36% (Bloomberg)
Billionaire John Paulson posted the second-worst trading year of his career in 2014 as a wrong-way energy bet added to declines tied to a failed merger and investments in Fannie Mae and Freddie Mac. The worst performance was in the Advantage Plus fund, which plummeted 36 percent last year, two people with knowledge of the returns said. The event-driven strategy, which uses leverage to make bets on companies undergoing transformations such as spinoffs and bankruptcies, lost 3.1 percent in December, said the people, who asked not to be identified because the information is private. The 59-year-old manager also lost money in a credit pool and barely broke even in a fund that bets on company mergers.
Lax Morgan Stanley security has some blame in data leak, too (NYP)
Former Morgan Stanley adviser Galen Marsh — who was fired by the investment bank, accused of brazenly stealing an encyclopedia full of client data and then selling it online — still professes his innocence, but pros say the bank should not get off so easy. Dumbfounded cyber-security experts and financial execs contend that Morgan will need a good defense. Early “evidence” that Marsh stole and posted 900 pieces of client data for sale late last month for 78,000 electronic speedcoins on controversial Web site Pastebin is laughable, they say.
Former MIT professor ‘robs bank,’ films ‘heist’ (NYP)
Joseph Gibbons, 61, a filmmaker and “visual artist’’ who taught for a decade at one of the world’s most prestigious universities, has gone rogue, robbing banks as part of his latest “art’’ project. Gibbons was charged on Friday with robbery after allegedly making off with $1,000 from a Capital One branch at Bowery and Grand Street in Chinatown. While waiting for his arraignment, the eccentric academic boasted to fellow inmates that his crime was for art’s sake. “He was doing research for a film,” said his dazzled cell-mate Kaylan Sherrard, 27. “It’s not a crime; it’s artwork… He’s an intellectual,” Sherrard gushed. In former interviews, Gibbons has admitted to using illegal drugs to inspire his short, semi-autobiographical films.
Oil Falls to 5 1/2-Year Low as Goldman Sees Need for $40 Crude (Bloomberg)
Oil fell to the lowest level in more than 5 1/2 years in New York and London as Goldman Sachs Group Inc. reduced its price forecasts while Venezuela called on OPEC producers to spur a recovery. Futures slid as much as 3.8 percent in London after a seventh weekly drop. Crude has to “stay lower for longer” if investment in shale is to be curtailed to re-balance the global market, according to Goldman analysts.
As Oil Prices Fall, Banks Serving the Energy Industry Brace for a Jolt (NYT)
Tumbling oil prices are dimming one of the few big bright spots that banks have enjoyed since the financial crisis. Banks have been lending hand over fist to companies in the nation's energy industry, underwriting bonds, advising on mergers, even financing the building of homes for oil workers. All of this has provided a boon to banks that have been struggling to find more companies and consumers wanting to borrow. Yet with the price of crude oil falling below levels sufficient for some energy companies to service their huge debts, strains are being felt and defaults are likely. While it may take some time for the crunch in the oil industry to translate into losses, one thing already seems clear: The energy banking boom is over.
Venezuela, Iran plea for oil cut hits Gulf OPEC brick wall (Reuters)
...the Gulf members of the Organization of the Petroleum Exporting Countries, who account for more than half of the 12-member group's output, are holding to their stance from OPEC's November meeting in Vienna. "There's a push from Venezuela for a cut, this is what they argued in Vienna and this is what they are lobbying for now. But from what I see there is no sign of cutting production from the Gulf states," a Gulf OPEC delegate said. "The only solution is to have the market absorb this surplus and the extent of that will be assessed by OPEC by ministers during their meeting in June."
Banks Prepare For Potential Greek Exit (WSJ)
Banks and other financial institutions in Europe are stress-testing their internal systems and dusting off two-year-old contingency plans for the possibility that Greece could leave the region’s monetary union after a key election later this month. Among the firms running through drills are Citigroup Inc., Goldman Sachs Group Inc. and brokerage ICAP PLC, according to people familiar with the matter. The firms’ plans include detailed checks on counterparties that could be significantly affected by a Greek exit, looking at credit exposures and testing how they would provide cross-border funding to local operations.
Bondholders Attempt to Push Caesars Unit Into Bankruptcy (WSJ)
In a statement released through a spokesman, Caesars labeled “meritless” the claims of “certain junior creditors,” who are hoping to improve their standing in restructuring negotiations. While it prepares a formal response to the attempt to force it into bankruptcy, Caesars said “all business operations will continue normally and without interruption.”
Ex-Credit Suisse Trader Banned for Life by Hong Kong SFC (Bloomberg)
A former trader for Credit Suisse Group AG (CSGN) was banned from Hong Kong’s financial industry for life after he made fictitious trades and covered up losses in 2012. Jagjit Singh Dhillon, who traded equity derivatives, hid losses and his true exposure to risk in trading books, booked fake trades and entered incorrect market data, the city’s Securities and Futures Commission said on its website today. The trader’s actions led to overstated profits and understated risk exposure, resulting in Zurich-based Credit Suisse having to make $5.4 million of adjustments to the cumulative monthly profit and loss figure for its trading book on May 18, 2012, the regulator said. Dhillon made no personal gain from his conduct, it said.
NYPD Takes Down ‘Feisty’ Upper West Side Coyote (Daily Intel)
A female coyote spent her Saturday night trotting around Riverside Drive in between 72nd and 79th streets, forcing some Upper West Side cops out into the freezing air. It took more than three hours for the authorities to capture the creature on a Riverside Park basketball court, partially because, as the 24th Precinct tweeted, it was "so cold out, the tranquilizer in the darts kept freezing!" Coyotes aren't exactly common in New York, but they're not unheard of: At least six have been spotted around the city over the last five years..."We knew it had to be a girl," one cop observed, "because she was so feisty."