Here’s your Cheat Sheet to this week’s financial industry business headlines:
On Monday, Sun Life Financial (NYSE:SLF) said that Delaware Life Holdings, which is owned by shareholders of Guggenheim Partners, will acquire Sun Life’s domestic annuity unit and certain life insurance divisions for a base price of $1.35 billion as adjusted to reflect the performance of the unit through closing.
UBS (NYSE:UBS) is likely to have to pay a fine of 1.5 billion Swiss francs or $1.63 billion to resolve interest rate rigging charges according to sources on Saturday to Tages-Anzeiger, saying that the bank would concede that 36 traders worldwide manipulated yen Libor between the years 2005 and 2010. A settlement in the amount of 1.5 billion francs would represent the largest ever paid by UBS which is recovering from a $2.3-billion trading fraud by London-based trader Kweku Adoboli for which it was fined $48.36 million in November. This resolution would make UBS the second big bank to be sanctioned for its activities in the Libor scandal as the United Kingdom’s Barclays (NYSE:BCS) paid a $450 million fine in June.
JPMorgan Securities (NYSE:JPM) and Bear Stearns & Co were sued Monday by the National Credit Union Administration due to alleged misconduct in the sale of $3.6 billion in mortgage securities to credit unions which subsequently collapsed on losses from the securities. More specifically, the suit claims that Bear Stearns made misrepresentations linked with the underwriting and following sale of mortgage-backed securities to Western Corporate, U.S. Central, Southwest Corporate and Members United Corporate federal credit unions.
The Royal Bank of Scotland Group (NYSE:RBS) continued to have no comments Sunday night regarding speculation that the firm will see a fine of £350 million from regulators in both the United States and the United Kingdom for its role in the Libor rate-rigging affair. Reportedly, RBS was nearing a deal that would have regulators fine it more than the £290m hit on its rival Barclays following an admission of its own guilt. RBS Chief Executive Stephen Hester said at the recent pre-close trading update that he hoped there would be news on the subject prior to RBS posting its 2012 results in February.
Morgan Stanley (NYSE:MS), as lead underwriter for Facebook’s (NASDAQ:FB) initial public offering, will shell out a $5 million penalty to Massachusetts to resolve claims that its bankers improperly influenced its research analysts when the firm went public. William Galvin, the state’s chief securities regulator, charged that Morgan Stanley improperly aided Facebook in its disclosure of sensitive financial information selectively, keeping what he calls “an unlevel playing field” between Wall Street and Main Street going.
Regions Financial Corporation (NYSE:RF) and its subsidiaries have been upgraded at Moody’s Investors Service from Ba3 to Ba1 for senior debt. The Regions Bank was upgraded to Baa3 from Ba1 for long-term deposits and to Prime-3 from Not-Prime for short-term deposits. The bank’s financial strength rating was affirmed at D+ while its baseline credit assessment was elevated to Baa3 from Ba1. Following the rating action which began on October 3rd, the outlook is stable.
Knowledgeable sources say that Symetra Financial (NYSE:SYA) has joined Apollo Global Management to bid for Aviva’s United States division and that the parties are in advanced discussions to purchase the unit and could reach a deal within days. Guggenheim Partners, which had previously joined with Apollo to pursue the bid for the Aviva assets, is no longer part of the group.
Two Harbors investment Corp. (AMEX:TWO) on Monday declared a quarterly dividend of 55 cents per share of common stock for the fourth quarter, payable on January 18th to common stockholders of record at the close on December 31st. The dividend is supposed to distribute the remaining REIT taxable income earned during the current year, including taxable income from Two Harbors contribution of its single family residential portfolio to Silver Bay Property Trust Corp. and also from realized gains in the residential mortgage-backed securities portfolio.
Bank of America Corporation (NYSE:BAC) and Citigroup (NYSE:C) get the thumbs-up from Meredith Whitney who is currently advising the purchase of banks stocks — quickly — according to CNBC. Whitney successfully called the subprime mortgage crisis and has been bearish on banks for awhile, saying back in the summer that Wall Street would lose some 50,000 jobs in future months. However, things have changed in her eyes as she looks towards March when the Federal Reserve will post the results of its CCAR stress tests which she believes will indicate that the banks are adequately capitalized.
JPMorgan Chase & Co. (NYSE:JPM) said Tuesday that Kevin Watters would be appointed chief executive of Mortgage Banking. Prior to this, Watters ran Mortgage Origination and headed Customer Experience across Mortgage Banking, having been with Chase and its predecessor firms for 13 years.
On Tuesday, the Securities and Exchange Commission charged TheStreet, which operates the website TheStreet.com (NASDAQ:TST), with filing false financial reports throughout the year 2008 by posting revenue from fraudulent transactions at a subsidiary it had bought the previous year. Gregg Alwine and David Barnett, co-presidents of the subsidiary, are alleged to have entered into sham transactions with friendly counterparties that had little or no economic substance.
American International Group (NYSE:AIG) has raised $6.45 billion from the divestiture of its remaining interest in AIA Group, pricing shares in the top half of the range. On Tuesday, AIA reported that AIG sold 1.65 billion shares at HK$30.30 each.
The United States Federal Housing Administration is poised to divest more than 40,000 bad mortgages in 2013, through which to fortify its insurance fund, after conceding that it could require a Treasury Department subsidy for the first time in its 78-year history. Meanwhile, hedge funds and private-equity companies are betting on the delinquent home loans being sold, as the agency steps up debt sales to avert a bailout and deter foreclosures. One in particular, Bayview Financial, a firm backed by The Blackstone Group (NYSE:BX), paid as little as 26 cents on the dollar for the FHA loans at auction.
Annaly Capital Management’s (NYSE:NLY) board has declared the fourth quarter 2012 common stock cash dividend of 45 cents per common share, which is payable January 29th, to common shareholders of record on December 28th. The ex-dividend date is December 26th.
Goldman Sachs (NYSE:GS) and Carlyle Group (NYSE:CG) are among a number of defendants that will go before United States District Judge Edward Harrington in Boston, for what they say are legitimate private-equity practices against investor allegations that buyout firms and their bankers colluded to rig offers on takeovers, according to Bloomberg.
The proposed divestiture of ING Groep’s (NYSE:ING) South Korean life insurer, ING Life Insurance, fell through on Tuesday, subsequent to Seoul-based KB Financial Group withdrawing its off of $2.1 billion, saying that the deal was too risky. This development poses a problem to ING, since the terms of its government bailout dictate that it sell off its controlling interests in each of its Asian insurance divisions prior to the end of 2013, and then the remainder by 2016.
American Express Company’s (NYSE:AXP) Chief Executive Kenneth Chenault is said to have been approached by officials from the White House as to his possibly joining President Obama’s administration in the second term, say inside sources, who think that Obama has not yet settled on a replacement for Timothy Geithner at the Treasury. Chenault is a longtime supporter of the President and could also be headed for the Commerce Depertment, according to the sources.
On Wednesday in Italy, four major banks, including Deutsche Bank (NYSE:DB) and UBS (NYSE:UBS), were found guilty of fraud in the sale of derivatives contracts to the city of Milano. The landmark decision might pose a precedent for a number of cases which involve other local governments in the country.
Main Street Capital Corporation (NYSE:MAIN) will pay a special cash dividend of 35 cents per share in January which is in addition to the firm’s regular monthly dividends of 15 cents per share to be paid in January, February and March. A press release describing the payouts was issued Wednesday as a reminder with respect to the January special cash dividend and relevant dates so as to avert potential confusion. This special dividend will be payable to stockholders who buy shares prior to and hold such shares on the January 2nd ex-dividend date.
Oaktree Capital Group (NYSE:OAK) sees its Buy reiterated at Goldman Sachs with its price target elevated from $55.00 to $58.00 in a Wednesday report. Goldman comments that, “OAK announced a $1.26 billion distribution to investors in Opportunities Fund VIIb. Following this distribution, investors would have received their capital and preferred return, implying OAK can now recognize incentive income with incremental distributions in the fund beginning in the first quarter of 2013. As per OAK’s European-style waterfall following the $1.26 billion distribution, OAK is entitled to 80 percent of each incremental distribution until the firm has ‘caught up’ or recognized its portion of incentive income or 20 percent of the total gain since inception.”
Bank of America Corporation (NYSE:BAC) has built up an array of $64 billion worth of mortgages at a minimum six months delinquent but have not yet entered foreclosure, which is more than twice the amount held by its four largest rivals combined. The company’s stockpile of troubled loans were obtained in most part from its 2008 purchase of Countrywide Financial, which was at one time the nation’s biggest mortgage provider. By comparison, Wells Fargo & Co. (NYSE:WFC), the largest domestic mortgage servicer, presently has $15.3 billion of such unpaid loans.
First among global investment banks as to market share for 2012, is JPMorgan Chase & Co. (NYSE:JPM) with 7.6 percent, calculated from preliminary data by Dealogic. However this number is below the 8.1 percent the bank sported in 2011, but it was sufficient for the latest victory over competitors in the fourth consecutive year.
On Wednesday, Western Asset Mortgage Capital Corporation (WMC) said that its board has declared a regular quarterly cash dividend of 90 cents per share for the fourth quarter, and an additional dividend of 22 cents per share. The firm is making the additional dividend to distribute the estimated undistributed taxable income from 2012 net realized gains, along with other tax adjustments. The dividends are payable on January 29th to common shareholders of record as of December 31st, with an ex-dividend date of December 27th.
MetLife (NYSE:MET) is in advanced discussions to acquire the Chilean pension-management unit of Banco Bilbao Vizcaya Argentaria, which has a market value in excess of $2 billion, according to knowledgeable sources, who added that the deal could still founder.
Barclays (NYSE:BCS) and UBS (NYSE:UBS) could soon see their legal travails intensify if Fannie Mae and Freddie Mac follow the advice of an internal report by a federal watchdog that was sent to the mortgage companies’ regulator and reviewed by The Wall Street Journal. The report said that Fannie and Freddie could have lost in excess of $3 billion resulting from the banks’ alleged manipulation of a key interest rate. The unpublished report urges the two to consider suing the banks involved in setting the Libor, adding to the mounting legal problems they already face from insurers, cities, investors and lenders over claims linked to the benchmark rate.
Prospect Capital Corporation (NASDAQ:PSEC) on Thursday increased total commitments to its five year, $650 million revolving credit facility by $35.0 million to an aggregate of $552.5 million. The facility includes an accordion feature allowing Prospect to accept a total amount of $650 million of revolving commitments which the firm anticipates reaching with additional and existing lenders. The new $35 million commitment is from a new lender, bringing the total number of lenders to seventeen. Prospect Capital holds an investment grade Moody’s rating of Aa3.
According to a knowledgeable source, Chief Executive Brian T. Moynihan of Bank of America Corporation (NYSE:BAC) blocked a proposal to reduce the main component of pay for most brokers for next year. The defeated plan would have shrank the so-called grid payout for Merrill Lynch financial advisers by two percent.
The Pittsburgh-headquartered asset management firm Federated Investors (NYSE:FII) will be added to the S&P MidCap 400 GICS Asset Management & Custody Banks Sub-Industry index at the close on December 31st.
BlackRock (NYSE:BLK) and others may shield their funds from a deluge of money that could gush out of domestic banks when a federal guarantee on bank deposits lapses on around $1.7 trillion in the banks. The worry is that cash pouring into the $2.65 trillion money-fund industry will further depress record low yields and could also close some money-market funds to new investors, say sources to the Wall Street Journal.
Once bitten, twice shy – Citigroup (NYSE:C) and Bank of America Corporation (NYSE:BAC) are not in on the biggest mortgage profits on record, subsequent to their catastrophic losses during the crash of the housing market, that made them wary of new loans. Scott Simon, the mortgage chief at Pacific Investment Management Co., remarked that, “Loans have never been safer, they’ve never been more profitable. Bank of America is the biggest mystery to us. Now, I get that they got their faces torn off, but this is a different environment.”
“London Whale”, meet J.P. Morgan Chase & Co. (NYSE:JPM), officially, that is. Comptroller Thomas Curry, of the Office of the Comptroller of the Currency, is poised to take a formal action mandating that the firm remedy its lapses in risk controls which permitted a small group of London traders to amass losses in excess of $6 billion in 2012, according to knowledgeable sources who also believe that the Office, which is the main regulator for J.P. Morgan’s deposit-accepting bank, will not initially levy a penalty.
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