Tag Archive | "banks"

LinkedIn: IPO Pop Was Undewriters’ Mistake, Says FT

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And you thought LinkedIn (LNKD) was fantastically overpriced?

The Financial Times’s April Dembosky yesterday wrote that Facebook investor and PayPal co-founder Peter Thiel thinks LinkedIn’s underwriters, Morgan Stanley, Merrill Lynch, and JP Morgan drastically underpriced the company’s IPO two weeks ago, which seems plainly evident given the stock price today is at $85.80, 91% above the $45 IPO price the banks set.

That means LinkedIn left a lot of money on the table for the rich clients of the banks to scoop up in the after-market.

Thiel predicts Facebook, and others, when and if they go public, will drive a much harder bargain to prevent the Street from such terrible under-valuation of their shares.

Granted, there’s a complaint here — no one likes to leave money on the table — but who’s to say the shares are worth what they trade for today — about 20 times this year’s likely revenue?

Article courtesy of Tech Trader Daily

DE Shaw Might (Help) Start A Bank

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With Indian billionaire Mukesh Ambani.

Ambani is known for keeping his cards close to his chest. No surprise, then, that more than a month after he announced his entry into India’s financial services sector via a joint venture with DE Shaw, the US hedge fund, few know exactly what he intends to do in the world of finance. The union between the secretive businessman behind Reliance Industries and the $20bn fund known for using complicated mathematical models to spot market trends has left investors and market observers guessing.

But behind closed doors and in the exclusive clubs where many of Mumbai’s most influential spend their weekends, rumours abound that the billionaire aims to found the first bank owned by an Indian conglomerate.

“[Mukesh] Ambani definitely wants to open a bank,” says a person close to the chairman of Reliance Industries, his flagship holding company. “The man likes to think big when it comes to investing in a new business.” His end goal, say people familiar with the matter, is a “Bank of Ambani” – as some financiers have termed the budding financial venture – that can compete with ICICI Bank, India’s largest private sector lender and retail bank.


Article courtesy of Dealbreaker

Area Man Pleads Guilty To Using Both UBS And Credit Suisse To Evade Taxes

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Just because UBS is trying to get away from the whole ‘tax evasion’ specialists branding doesn’t mean this betrayal hurts any less.

A Credit Suisse client pleaded guilty to evading U.S. taxes on Tuesday, marking the first time the government publicly mentioned the bank in its latest wave of tax evasion probes. Defendant Edward Gurary was originally charged with hiding assets at accounts at Swiss bank UBS AG, but he now also admits he hid assets at Credit Suisse. U.S. officials are investigating other banks after UBS in 2009 paid $780 million to settle tax evasion charges.

Credit Suisse Client Pleads Guilty To Tax Evasion [Reuters]

Article courtesy of Dealbreaker

Write-Offs: 11.30.10

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$$$ Hedge Funds Flock Back To Asia [WSJ]

$$$ Barclays Capital Said To Plan More Cuts [Bloomberg]

$$$ Like we asked earlier: what can WikiLeaks do that would actually embarrass the banks? [Fortune]

$$$ Winning Over Shareholders In Management-Led Buyouts [Dealbook]

$$$ Peak Ridge Seeks $30 Million in Morgan Stanley Gas Trade Case [BW]

$$$ Airports, airlines increase traveler access to alcohol [USA]

Article courtesy of Dealbreaker

Bonus Watch ‘10: Bankers And Traders Working For UK Firms To Get Nada After Taxes?

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The numbers have been crunched and there’s good news and less good news.

The good news is you’re getting a bonus. The less good news is you don’t get to keep it.

The highest paid bankers and traders in the UK and Europe who receive a bonus of £1m this year could end up receiving no money at all after tax in 2011 – and may face a tax bill that is bigger than the upfront cash part of their bonus – under current European proposals to reform remuneration. Calculations by Financial News based on the latest bonus proposals by the Committee of European Banking Supervisors show that anyone in the UK – or working for a UK bank anywhere in the world – who receives a £1m bonus would receive a maximum of £200,000 in cash upfront.

Of this, £100,000 would be payable in income tax and, depending on the nature and structure of the award, another £100,000 could be payable in tax immediately. Including national insurance, or higher marginal tax rates in some European countries, the upfront tax liability could be more than the upfront bonus.

Bonuses Go Up In Smoke [eF]

Article courtesy of Dealbreaker

Breaking: Banks May Actually Just Pretend Publicly To Be Playing By New Rules, Proceed To Do Whatever They Damn Well Please

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While Wall Street publicly is dismantling its dedicated proprietary trading desks, some veterans of the Street are skeptical that the banks will really stop trading with their own money. They say banks could continue making house bets by disguising proprietary trading as making markets for clients. House bets, when they are mixed with client trades, are more difficult for regulators to detect. “To me, it is all smoke and mirrors,” one former Goldman managing director said. “The truth is that most of the position-taking occurs at the market-making level.” [Reuters]

Article courtesy of Dealbreaker

Bank Lobbyists Fighting New Provision on Trust Preferred CDOs

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Turns out mortgages weren’t the only toxic assets Wall Street decided to package into CDOs. Small community banks issued billions of dollars in trust preferred securities before the credit crunch as a way to prop up their capital cushions. Problem was, the only way they could sell the so-called TruPS to investors was to combine them with other trust-preferreds in CDOs.

Now, those CDOs, which were purchased by some of the same small banks that issued them, are beginning to default, leading to a downward spiral of losses for banks. A provision in the new financial reg bill passed by the Senate forbids counting TruPs as Tier 1 capital. If it passes, smaller banks could be forced to raise $130 billion to meet capital requirements or sharply curtail lending. (Big banks like Citigroup have issued trust preferred’s for a long time, but most of those were not packaged into CDOs.)

Not surprisingly, the banking lobby is fighting the provision. But that could be tough given the FDIC and Sheila Bair support the proposal. There’s also this:

TruPS CDOs are also at the heart of a series of lawsuits brought by the liquidation trustee for Northbrook, Illinois- based Sentinel Management Group Inc., a cash-management firm that collapsed in 2007. The trustee sued First Horizon, KBW and Cohen & Co., a Philadelphia-based securities firm affiliated with a family involved in almost half of such CDOs, saying their bankers bribed a Sentinel employee with Super Bowl tickets, strip-club visits and dinners at restaurants such as Tao in New York to get him to buy risky low-ranking slices of the CDOs.

Banks in ‘Downward Spiral’ Buying Capital in CDOs [Bloomberg]

Article courtesy of Dealbreaker

More Subpoenas for Big Banks, This Time from Cuomo

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After filing suit earlier this week against Ivy Asset Management for feeding pension fund money to Bernie Madoff, NY Attorney General Andrew Cuomo is turning his attention back to the big banks, which will obviously score many more political points when he runs for governor in November.

The latest probe from Cuomo involves the banks’ efforts to mislead the ratings agencies on structured products. His office is looking into whether Moody’s, S&P and Fitch tinkered with their models so banks could get higher ratings on CDOs and other products.

Subpoenas recently went out to Goldman Sachs, Morgan Stanley, UBS, Citigroup, Credit Suisse, Deutsche Bank, Crédit Agricole and BofA/Merrill Lynch, according to the New York TImes.

Cuomo is also looking into former rating agency employees who left to join the mortgage operations of big banks during the boom. The Times cites a former Fitch Ratings employee named Shin Yukawa, who was recruited by Goldman in 2005.

At the height of the mortgage boom, companies like Goldman offered million-dollar pay packages to workers like Mr. Yukawa who had been working at much lower pay at the rating agencies, according to several former workers at the agencies.

Around the same time that Mr. Yukawa left Fitch, three other analysts in his unit also joined financial companies like Deutsche Bank.

In some cases, once these workers were at the banks, they had dealings with their former colleagues at the agencies. In the fall of 2007, when banks were hard-pressed to get mortgage deals done, the Fitch analyst on a Goldman deal was a friend of Mr. Yukawa, according to two people with knowledge of the situation.

Article courtesy of Dealbreaker

Opening Bell: 05.12.10

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US Probes Morgan Stanley (WSJ)
Among the deals that have been scrutinized are two named after U.S. Presidents James Buchanan and Andrew Jackson, a person familiar with the matter said. Morgan Stanley helped design the deals and bet against them but didn’t market them to clients. Traders called them the “Dead Presidents” deals.

Roubini Says Greece May Lead Euro Exodus, China Faces Slowdown (Bloomberg)
A “real depreciation” in the euro is needed to restore competitiveness in nations including Spain, Portugal and Italy, he said in an interview on Bloomberg Television today. The euro will remain the currency for a smaller number of countries that have “stronger fiscal and economic fundamentals,” Roubini said.

`Perfect Quarter’ for Four Banks Shows Fed-Linked Revival on Wall Street (Bloomberg)
“The trading profits of the Street is just another way of measuring the subsidy the Fed is giving to the banks,” said Christopher Whalen, managing director of Torrance, California- based Institutional Risk Analytics. “It’s a transfer from savers to banks.”

Market Inquiry Focuses On One Trader (NYT)
Gary Gensler, the chairman of the Commodity Futures Trading Commission, said at a Congressional hearing on Tuesday that during that crucial time period, the futures trader, whom he would not identify, accounted for about 9 percent of trading volume in the most actively traded stock-index derivative contract, known as the 500 e-mini futures contract.

Fragments from Goldman Sachs! The Musical (New Yorker)
John Paulson! Singing and dancing!

Miracle Boy
A Libyan plane crashed Wednesday on approach to Tripoli’s airport, killing at least 96 people and leaving a field scattered with smoldering debris that included a large chunk of the tail painted with the airline’s brightly colored logo. A 10-year-old Dutch boy was the only known survivor.

Article courtesy of Dealbreaker

Write-Offs: 05.06.10

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$$$ Nasdaq to Cancel All Trades of Stocks Moving More Than 60% [Bloomberg]

$$$ Porn Company Has Plan to Stop SEC Time-Wasting [Asylum]

$$$ Mark Haines FTW [CWS]

$$$ Reid Backs Breaking Up Banks, Auditing Fed [HuffPo]

Article courtesy of Dealbreaker