New York Times Sep 21, 08 10:11 PM CDT
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Goldman Sachs and Morgan Stanley, the nation's last two major independent investment banks, have gotten permission to become bank holding companies, the Federal Reserve said tonight. A fundamental rearrangement of Wall Street, the move will allow them to create commercial banks, which would bolster their resources, while inviting increased regulation. It reflects the Fed's determination not to let Goldman and Morgan Stanley fail, the New York Times notes.
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No. 2 investment bank looks to avoid Lehman's mistakes
CNBC Sep 17, 08 7:25 AM CDT
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Morgan Stanley is rumored to be considering whether to merge with a deposit-taking bank, reports CNBC, in the wake of Lehman's collapse after repeatedly shunning buyout offers. And while the company hasn’t yet found a partner, insiders say that its sliding stock price makes survival unlikely without a well-capitalized bank as a partner.
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OPINION
Financial meltdown has small effect on 'real economy': Kaletsky
Times (UK) Sep 15, 08 9:29 AM CDT
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Fannie and Freddie have been nationalized, Lehman has collapsed, Merrill Lynch has been bought out—an economic disaster, right? Not really, Anatole Kaletsky writes in the Times of London: The US economy is actually showing signs of improvement. More than ever, "there is no contradiction between expecting a recovery, or at least stability, in the US economy and chaos in its financial system."
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Specialized investment industry dragged back to earth by shaky market
New York Times Sep 12, 08 12:41 PM CDT
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The recent market turmoil has taken a good deal of the shine off of hedge funds, as managers are unable to reproduce their heretofore exemplary results in poor market conditions, the New York Times reports. The average hedge fund lost 4% this year, the worst overall results in the industry’s short history, and 2008 has seen some high-profile collapses.
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Company to dump commerical real estate holdings, slash dividens
Wall Street Journal Sep 10, 08 8:09 AM CDT
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Facing a record third-quarter loss of $3.9 billion, beleaguered investment bank Lehman Brothers is planning a fire sale of assets to help shore up its sagging capital base, reports the Wall Street Journal. The company said it would spin off its commercial real estate holdings, and auction of a majority share in its investment-management business. The bank also plans to cut dividends 93%.
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Newspaper says Korea Development Bank plans a consortium to pay for the deal
Associated Press Sep 3, 08 7:47 AM CDT
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Korea Development Bank—which in August backed out of negotiations to acquire struggling Lehman Brothers—is back with bid for a 25% stake in the capital-starved bank for as much as $5.3 billion, reports the AP. The state-owned lender says it will form a consortium of South Korean banks to pay for the deal, and could increase its stake later.
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Firm may be too big a risk: official
Financial Times (UK) Aug 25, 08 2:49 PM CDT
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The Korea Development Bank was warned today of rushing into a bid for Lehman Brothers by South Korea’s top banking official, the Financial Times reports. A Lehman investment may constitute too much risk for a state-owned bank, Jun Kwang-woo warned after last week’s news that, though KDB’s talks with the US investment giant hadn’t reach a deal, one was still a “possibility.”
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South Korean, Chinese investors balk at hefty $5B price for half
of troubled bank
Financial Times (UK) Aug 21, 08 9:48 AM CDT
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Secret talks earlier this month to sell up to half of struggling US investment bank Lehman Brothers to South Korean or Chinese buyers fell apart after last-minutes squabbles over details, the Financial Times reports. The bank, which is expected to announce up to $4 billion in writedowns next month, was said to be asking 50% above its book value.
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Reuters Aug 14, 08 6:19 PM CDT
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An investment banker in Kiev predicted the Georgian conflict two days before it occurred, Reuters reports. "So whaddaya think?,” Geoff Smith wrote on Aug. 5 to a fellow strategist at Renaissance Capital. “I say Saakashvili is going to 'restore the territorial integrity of Georgia' five minutes before the opening ceremony starts in Beijing and dare the Russians to invade while the Games are on."
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Boston Globe Aug 8, 08 10:56 AM CDT
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UBS, pressured by state and federal authorities, has agreed to buy back $19.4 billion in risky auction-rate securities that were widely sold as cash-like and safe, the Boston Globe reports. The market for the securities, which are a type of bond sold by non-profits, art institutions and local governments, collapsed in February. The Swiss bank will also pay $150 milion in fines, split between New York and Massachusetts.
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glossies
They claim hedge funds, Goldman Sachs invented bad news for profit
Vanity Fair Jul 5, 08 12:06 PM CDT
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Bear Stearns' collapse and shotgun marriage to JP Morgan were sparked by little more than a rumor, Vanity Fair reports. True, the investment bank had stumbled—a $1.6 billion bailout of troubled funds hurt its image—but whispers of liquidity problems were false: Bear had $18 billion in cash reserves. Now former executives and the SEC want to know who killed the company.
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Firm will cut 10% of its investment-banking group
Wall Street Journal Jun 22, 08 7:53 PM CDT
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After being in the red for two quarters, Citigroup will this week hand out pink slips in its investment-banking division, looking to sack 10% of the group’s 65,000 employees. The move, which would eliminate entire trading desks worldwide, is unusually severe, the Wall Street Journal says. CEO Vikram Pandit hopes to cut Citi’s annual expenses by $15 billion.
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Earnings
Business bad all around, with declines in sales, trading, and investment banking
Bloomberg Jun 18, 08 8:00 AM CDT
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Morgan Stanley profits were sliced in half this quarter, the company announced today, as stock slingers failed to offset real estate writedowns. The 57% drop, which brought earnings to $1.03 billion or $0.95 per share, was in line with analyst expectations. CEO John Mack said that thanks to “careful management of our capital, risk and liquidity” the US' second-largest investment bank isn't in danger.
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