24/7 Wall St. » DB

Are Bank Guarantees Coming For Europe? (NBG, IRE, STD, BBVA, DB, BCS, UBS)

Administrator — Mon, 21 May 2012 18:30:41 +0000

It is never a good thing to see a run on the banks. That is what the fears were recently indicating in Greece. The problem is that Spain is a much larger problem due to excessive lending and the notion that it is a much larger economy than Greece. And what about Italy? Spain and Italy have just recently seen bank rating downgrades. And you know more downgrades are coming.

So the question is, ahead of a summit aimed at putting up fences in Europe to contain problems can the banks really make it. We have heard all sorts of new stories and rumors and frankly it is hard to know what is posturing, what is malarkey, and what is reality. Some talk about bank guarantees is out there, and other chatter is on deeper assistance. And what about lending directly to banks but not the nations? Reuters has a speech today worth a read that underpins some of the problems and hopes for Europe given by ECB policymaker Joerg Asmussen.

A look at the banking ADRs today signals that the bank issues “may” be manageable for Greece or Ireland. The problem is that this could just be a short-covering head fake too. The ADRs for Spain are still in the red.

National Bank of Greece SA (NYSE: NBG) is up 4% at $1.56 against a 52-week range of $1.45 to $7.65. The Bank of Ireland (NYSE: IRE) is up 3.8% at $4.93 against a 52-week range of $3.99 to $17.50.

Banco Santander, S.A. (NYSE: STD) is down 1.2% at $5.70 against a 52-week range of $5.52 to $11.92; Banco Bilbao Vizcaya Argentaria, S.A. (NYSE: BBVA) is down 1.1% at $6.19 against a 52-week range of $5.96 to $12.13. An IIF report on loan losses is holding these banks down today.

And what about broader exposure? The ADR of Deutsche Bank AG (NYSE: DB) is up 2.6% at $36.95.

Barclays PLC (NYSE: BCS) is technically not even a part of the Euro-woes as far as sovereignty, but it would be absolutely naive to think they have no exposure. Ditto for UBS AG (NYSE: UBS) in Switzerland. Barclays is up 2.6% at $11.44 against a 52-week range of $8.38 to $18.40; and UBS is up 1.6% at $11.44 against a 52-week range of $10.41 to $19.62.

JON C. OGG

Filed under: ADR, Banking, Bankruptcy, International Markets Tagged: BBVA, BCS, DB, IRE, NBG, STD, UBS

Can Big U.S. Banks Escape Europe’s Malaise?… Meredith Whitney Chimes In (DB, STD, NBG, BAC, JPM, C, WFC)

Administrator — Thu, 03 May 2012 18:31:07 +0000

The financial sector was the best performing index out of the S&P 500 during the first quarter. That was when investors were decoupling from the woes of Europe. With European bank shares falling now that European nations are back front and center, the obvious fear is that the big US banks are going to get pulled down much further as their brethren get pummeled overseas.

Deutsche Bank AG (NYSE: DB) is down 3.7% today at $40.70. Banco Santander, S.A. (NYSE: STD) hit a new 52-week low this week and shares are down $0.01 at $6.02 today for its ADR in New York trading. National Bank of Greece SA (NYSE: NBG) is up only $0.01 at $2.18 for its ADR in New York.

Meredith Whitney told Bloomberg today that first quarter bank results were boosted from one-time issues and that after a very dismal April it will be challenging in the second and third quarters of this year. It is no wonder that investors are still betting against banks here in the United States when you see Europe in a mess and when you keep getting come-along analyst calls driving things down.

Bank of America Corporation has broken down back under $8.00 today to $7.93 after a 2.8% drop. That marks only the second time being under $8.00 for a lowest print on the day going back to early March and it is down from peak of just over $10.00 back on March 26. Citigroup, Inc. (NYSE: C) is down less than 1% today at $32.41 in late-day trading and that is down from almost $36.00 as recently as April 18.

J.P. Morgan Chase & Co. (NYSE: JPM) is down 0.7% at $42.91 in late Thursday trading and this was a $46.00 stock at the start of April. This one has held up better considering that it is one of the two healthiest U.S. banks in America. Wells Fargo & Co. (NYSE: WFC) is down 0.5% at $33.40 and still at a premium to its book value and down only $1.20 from its 52-week high of $34.59.

The long and short of the matter is that investors are still abandoning Bank of America even though the bank showed only a small exposure in total to the PIIGS in Europe. The fear is either surrounding more mortgage woes or more European bank woes… or both.

JON C. OGG

Filed under: ADR, Banking, Brokerage Firms, Financial Stocks Tagged: BAC, C, DB, JPM, NBG, STD, WFC

The Return of the Euro-Bank Fears (NBG, STD, BBVA, IRE, DB, UBS, CS, BCS, RBS)

Administrator — Wed, 02 May 2012 15:45:11 +0000

The U.S. stock markets have by and large been decoupled from the woes of Europe most of this year, as well as the slowing of growth in the key markets of China, India, and in many parts of South America. While “Sell in May and go away!” looks less evident this year, there are some new concerns brewing over the European Union and its banking sector.

S&P actually raised its rating on Greece this morning, but this was a technical upgrade rather than any real improvement. The fears elsewhere are outweighing the hopes right now as French and Dutch austerity measures are now being fought in the political scene. Even more fresh data from various purchasing managers readings from France, Germany, Spain, and elsewhere are only adding fuel to the fire that the recessionary climate in Europe is worse than many have hoped.

Greece saw something highly unusual today: A RATINGS AGENCY UPGRADE! After the distressed debt exchange, Standard & Poor’s removed the SD rating (selective default) up to a rating of “CCC” and said that the long-term outlook is STABLE. The short-term foreign and local currency sovereign credit rating was raised to “C” from the “SD” rating and the outlook is now STABLE as well. Unfortunately this is of no help to National Bank of Greece SA (NYSE: NBG) with its ADRs down 4% at $2.19 in New York trading.

More fears are coming up in Spain as the bank leverage is high. Banco Santander, S.A. (NYSE: STD) is down almost 6% at $6.01 in New York trading, and the prior 52-week trading range was $6.08 to $12.48. Banco Bilbao Vizcaya Argentaria, S.A. (NYSE: BBVA) is down 5.5% at $6.45 and shares briefly dipped to a 52-week low today under the prior 52-week range of $6.43 to $12.96.

Can you leave Ireland out? No, and the ADRs of The Bank of Ireland (NYSE: IRE) are down 4.8% at $5.92 in low-volume trading mid-day in New York.

Deutsche Bank AG (NYSE: DB) is down 4.5% at $452.16 in New York trading of its ADRs.

As Switzerland is being considered a haven, there is a mixed reaction. UBS AG (NYSE: UBS) is up 1.3% at $12.84, while Credit Suisse Group (NYSE: CS) is down 4.2% at $22.51 in New York ADR trading.

England is certainly not in the Euro, but the banks there have deep ties to dealings in Europe. Barclays PLC (NYSE: BCS) is down 4.4% at $13.88 and Royal Bank of Scotland Group plc (NYSE: RBS) is down 2.4% at $8.02 in New York ADR trading.

JON C. OGG

Filed under: ADR, Banking, Economy, International Markets Tagged: BBVA, BCS, CS, DB, IRE, NBG, RBS, STD, UBS

Euro Bank Bashing Comes Back With Force (BCS, DB, STD, BBVA, IRE, NBG)

Administrator — Wed, 04 Apr 2012 18:38:05 +0000

European banks are taking it right on the chin, or maybe the chin and the nose. The reports of a bad Spanish debt auction managed to push up borrowing costs again and it only makes one wonder what the Europeans will do when every European is taking their two to three-week holidays in the summer rather than buying government bonds. Some may try to again blame the end of the stimulus from Ben Bernanke and friends but this is frankly something we take serious issue with.

Today’s move has been brutal on the key ADRs out of Europe, and oddly enough the damage may seem counterintuitive if you just look at the ADRs. Barclays PLC (NYSE: BCS) is down 4.9% at $14.04 against a 52-week range of $8.38 to $20.32, but Deutsche Bank AG (NYSE: DB) is down 3.9% at $46.40. How are the drops of the top British and German banks worse than Spain?

Banco Santander, S.A. (NYSE: STD) is down 2.4% at $7.18 against a 52-week range of $6.77 to $12.57; Banco Bilbao Vizcaya Argentaria, S.A. (NYSE: BBVA) is down 2% at $7.40 against a 52-week range of $7.02 to $13.01.

Head north to Ireland and The Bank of Ireland (NYSE: IRE) is down 4% at $6.03 versus an adjusted 52-week trading range of $3.99 to $24.90. Then head back into the Mediterranean and National Bank of Greece SA (NYSE: NBG) is down the worst of the Euro-Zone banks with a drop of 10.2% at $2.118 against an adjusted 52-week range of $1.64 to $9.40.

Another day, one less Euro…

JON C. OGG

Filed under: ADR, Banking, Financial Stocks, International Markets Tagged: BBVA, BCS, DB, IRE, NBG, STD

Solar Company BrightSource Preps IPO (GS, C, DB, GOOG)

Paul Ausick — Thu, 22 Mar 2012 12:56:34 +0000

Solar thermal generation provider BrightSource Energy Inc. has filed an amended Form S-1 with the US Securities and Exchange Commission for an IPO of 6.9 million shares at a price of $21-$23/share. The company’s stock will trade on Nasdaq under the ticker symbol ‘BRSE’. The offering date has not been set yet.

Underwriters include Goldman Sachs Group Inc. (NYSE: GS), Citigroup Inc. (NYSE: C), and Deutsche Bank AG (NYSE: DB). The underwriters have a 30-day over-allotment option for 1.035 million shares.

The company will also make private placements valued at $65 million and $10 million with France’s Alstom Power and Caithness Development LLC, respectively. At an estimated price of $22/share, the total number of shares outstanding following the IPO and the private placements will be 45,448,425. The IPO will offer about 15% of the company to new shareholders.

BrightSource estimates that it will raise $210.1 million ($231.3 million if the underwriters execute the over-allotment options) and the company plans to use the proceeds “for working capital, capital expenditures and general corporate purposes, which may include domestic and international development activities, hiring additional personnel and investing in research and development.”

BrightSource is currently constructing the 377-megawatt Ivanpah solar thermal project in southern California, and has received an investment of $168 million from Google Inc. (NASDAQ: GOOG) as well as a federal loan guarantee for $1.6 billion.

The full filing is available here.

Paul Ausick

Filed under: Alternative Energy, Green Biz, IPOs Tagged: C, DB, GOOG, GS

Media Digest (3/22/2012) Reuters, WSJ, NYT, FT, Bloomberg

247wallst — Thu, 22 Mar 2012 10:37:55 +0000

Goldman Sachs (NYSE: GS) tries to end a legal case concerning fraud in its CDO sales. (Reuters)

China’s factory activity slows, as evidenced by the HSBC flash PMI of 48.1, a low reading. (Reuters)

A Brazilian court brings charges against Chevron (NYSE: CVS) and Transocean (NYSE: RIG) over an oil spill. (Reuters)

The inspector general at the Federal Housing Finance Agency finds fault with Fannie Mae and Freddie Mac for spending lavishly on an industry conference. (Reuters)

Royal Dutch Shell (NYSE: RDS-A) receives permission to drill for shale gas in China. (Reuters)

The Joint Committee on Taxation says the so-called Buffett bill would not raise as much money as anticipated as the rich would often find ways around the levy. (WSJ)

Deutsche Bank (NYSE: DB) changes the structure of its U.S. operation to skirt Dodd-Frank rules. (WSJ)

Hartford Financial (NYSE: HIG) to leave the annuity business. (WSJ)

Jim Skinner, CEO of McDonald’s (NYSE: MCD), to retire. (WSJ)

The U.S. is running out of storage facilities for natural gas. (WSJ)

Gary Pruitt, CEO of McClatchy (NYSE: MNI), will become the CEO of the Associated Press. (WSJ)

Verizon (NYSE: VZ) and Comcast (NASDAQ: CMCSA) defend the right of telecoms to buy spectrum from cable companies. (WSJ)

Microsoft (NASDAQ: MSFT) says China still blocks sales of some of its products, including versions of its Xbox. (WSJ)

The Consumer Financial Protection Bureau says student loans now total more than $1 trillion. (WSJ)

German politicians intend to balance its budget in two years. (WSJ)

Watson Pharmaceuticals (NYSE: WPI) will buy Actavis for $5.9 billion in a consolidation of the generics industry. (WSJ)

Morgan Stanley (NYSE: MS) and Citigroup (NYSE: C) may speed plans for the brokerage to take over Morgan Stanley Smith Barney. (WSJ)

Bernanke and Geithner praise the financial progress of Europe in testimony before Congress. (NYT)

Homebuilder stocks reach a two-year high as it appears the housing market may have stabilized. (NYT)

Alaska will support a $40 billion gas line project to transport liquid natural gas. (FT)

Jaguar may invest $3 billion in Chinese car company Chery. (Bloomberg)

The head of airline Emirates says more airlines will falter because of fuel prices. (Bloomberg)

Japan posts a trade surplus. (Bloomberg)

Douglas A. McIntyre

Filed under: Press Digest Tagged: C, CMCSA, CVS, DB, GS, HBC, MCD, MNI, MS, MSFT, RDS-A, RIG, VZ, WPI

Moody’s Bank Downgrade Warnings Look Very Staged (CS, MS, UBS, BCS, DB, GS, HBC, BAC, NMR, FAS)

Administrator — Thu, 16 Feb 2012 14:14:37 +0000

If you think ratings agencies do not quite matter any longer, today may be a reminder that they can still create at least some nervousness even if they are just late to the party. Moody’s has a downgrade warning on 17 banking and investment banking outfits. While this is a ‘warning’ rather than a downgrade, this certainly looks and feels staged to the point that the downgrades on most of the banks and investments seems assured on level or another. In short, this is being staged.

In the Moody’s warning, Credit Suisse Group (NYSE: CS), Morgan Stanley (NYSE: MS), and UBS AG (NYSE: UBS) were put on notice that their credit ratings could be downgraded potentially by as many as three notches. That is a very aggressive downgrade warning, and it now almost assures that a downgrade of one or two notches is almost certain.

Warnings of a two notch downgrade were handed out to Barclays PLC (NYSE: BCS), BNP Paribas, Credit Agricole, Deutsche Bank AG (NYSE: DB), Goldman Sachs Group Inc. (NYSE: GS) and HSBC Holdings PLC (NYSE: HBC). This seems to all but assure that at least a one notch downgrade could come on these.

Interestingly enough, Bank of America Corporation (NYSE: BAC) and Nomura Holdings, Inc. (NYSE: NMR) were “only” given warnings of a possible one notch downgrade.

Moody’s noted that these existing ratings just do not reflect the current market challenges. Here are the pre-market trading indications on each, in New York trading indications:

Credit Suisse Group (NYSE: CS) -0.7% at $25.36;
Morgan Stanley (NYSE: MS) -2% at $18.58;
UBS AG (NYSE: UBS) is down only $0.01 at $13.91;
Barclays PLC (NYSE: BCS) is down 0.4% at $14.97;
Deutsche Bank AG (NYSE: DB) is down 1.2% at $42.45;
Goldman Sachs Group Inc. (NYSE: GS) is down 0.5% at $112.55;
HSBC Holdings PLC (NYSE: HBC) is down 0.5% at $44.69;
Bank of America Corporation (NYSE: BAC) is down 0.8% at $7.72.

Even the triple-leveraged Direxion Financial Bull 3X Shares (NYSE: FAS) is down ‘only’ 0.7% at $86.30 in the pre-market.

What is interesting here is that the move lower this morning is on the heels of major moves higher since the first of the year. The downgrades seem assured on at least some level now, but the market is not really acting as though it is ready to panic.

JON C. OGG

Filed under: 24/7 Wall St. Wire, Analyst Calls, Banking, Financial Stocks Tagged: BAC, BCS, CS, DB, FAS, GS, HBC, MS, NMR, UBS

Greek Debt & Austerity Deal, Cheered With a Thud (NBG, GREK, FXE, ALU, DB, STD)

Administrator — Thu, 09 Feb 2012 14:06:09 +0000

Reports are out that parties in Greece have finally agreed to a debt and austerity deal that will allow it to get its bailout funding and to remain part of the Euro. This is great news on the surface, but the market investors are not exactly climbing all over each other to load the boat on Greek trading. Maybe the moves to watch are in the Euro currency because the ADRs are just not really moving.

National Bank of Greece (NYSE: NBG) is up 1% on its ADR trading in New York to $3.96 this morning. Keep in mind that this has already more than doubled from the $1.64 low that was seen as recently as January 10, 2012. Not a year ago.. a month ago.

And the Greek stock market ETF, the Global X FTSE Greece 20 ETF (NYSE: GREK) has not even yet traded this morning and it has extremely thin volume even during the trading day. Shares closed Wednesday at $19.16 and its post-launch range has so far been $12.70 to $19.54.

The Rydex CurrencyShares Euro Currency (NYSE: FXE) is up by 0.15% at $132.21.

As far as other “pro-Euro” trading ADRs, we are only seeing mixed action on that front as well:

Alcatel-Lucent SA (NYSE: ALU) is up 1.5% at $1.98 but that may be after a Cisco earnings report (although Cisco is indicated lower).

Deutsche Bank AG (NYSE: DB) is trading up 1.2% at $46.82 in New York.

Banco Santander, S.A. (NYSE: STD) of Spain is trading down 0.5% at $8.71 in active pre-market trading.

Great news may finally be here, but the market has been expecting a deal or has at least been trying to come up with a fair market value around the issue of “Greece, or no Greece…”

As always, until a deal is signed this may be hearsay. Future politicians may also not choose to live up to the agreements. Sad, but possible.

JON C. OGG

Filed under: 24/7 Wall St. Wire, ADR, Currency, International Markets Tagged: ALU, DB, FXE, GREK, NBG, STD

What’s Important in the Financial World (2/9/2012) A Mortgage Deal With Banks, Yahoo! to Sell Alibaba?

247wallst — Thu, 09 Feb 2012 11:38:05 +0000

As one set of government suits against America’s largest banks is settled, another is about to begin. Media reports say that federal regulators and state attorneys general have set a $25 billion deal with Ally Financial, Bank of America (NYSE: BAC), Citigroup (NYSE: C), JP Morgan (NYSE: JPM) and Wells Fargo (NYSE: WFC). These lenders have been accused of abusing the foreclosure process for their own financial advantages. States and the federal government would receive payments, along with thousands of people whose homes were foreclosed on from 2008 to 2011. Just as this home mortgage matter is settled, the government means to sue banks that misrepresented the value of mortgage backed securities that they sold to other large institutions. The Wall Street Journal reports that the banks that are part of the second investigation include Ally Financial, Bank of America, Citigroup, Deutsche Bank (NYSE: DB) and Goldman Sachs (NYSE: GS). Between mortgages and mortgage instruments, the housing collapse will cost major banks tens of billion of dollars.

Greeks in Brussels

The Greeks have departed for Brussels, where they will plead with the European Union, International Monetary Fund and European Central Bank for the money needed to cover the nation’s financial needs next month. The parties have until February 15 to reach a settlement. The Greeks say they have given in to all austerity requests but have no deal to cut some government-controlled pensions. So, after all of the negotiations, that single issue may drive Greece into default.

Luxury Car Sales

At least some rich people around the world do not think their wealth will be entirely stripped away by taxes. Daimler said it had a 39% increase in fourth-quarter profits. It said the primary driver was an upswing in sales of high-end Mercedes, particularly the car company’s M-Class SUV. Daimler is not alone. BMW posted similarly impressive earnings, as did Volkwagen’s Audi division.

Yahoo! and Alibaba

Yahoo! (NASDAQ: YHOO) may finally get some tangible value from its 39% holding in large China e-commerce company Alibaba. Rumors suggest that Alibaba is close to securing bank loans of as much as $3 billion. Wall St. thinks the Alibaba stake is worth closer to $5 billion, so the firm may have to use some of its own money. Now, investors will have to wait to see what Yahoo! does with the cash. There is almost no optimism that Yahoo! has the management and prospects to use the billions to rebuild its troubled businesses. Yet, with a new CEO and newly constituted board, a turnaround is at least a long shot.

Douglas A. McIntyre

Filed under: 24/7 Wall St. Wire, Market Open Tagged: BAC, C, DB, GS, JPM, WFC, YHOO

What’s Important in the Financial World (2/2/2012) AstraZeneca Layoffs, Sony Losses

247wallst — Thu, 02 Feb 2012 11:47:21 +0000

Today is Facebook Day. It will be remembered that way as long as there are IPOs. The Facebook public offering has every aspect of what makes IPOs the focus of so much interest. No large medium in the U.S., or for the most part overseas, lacks a prominent headline about the Facebook news. Almost all of them question whether the company is worth $100 billion, or how much Mark Zuckerberg will be worth, or whether he should have voting control of Facebook. But the hard part is about to start for the social network company, the part that goes on year after year. The next big wave of media coverage will come when the shares of Facebook are listed. The press will cover the rise and fall of the shares for a few weeks or a few months. After that, Facebook will face the endless road of earnings expectations, PR announcements and quarterly calls. It will just be another fairly large American company, which is the fate of every other exciting IPO.

Sony Slashes Forecast

Sony’s (NYSE: SNE) new CEO-elect, Kazuo Hirai, will not get a honeymoon at all. The Japanese company said it expects an annual loss of $2.8 billion. Hirai said he will address Sony’s problems immediately, which he has to say. Any other reaction would be less than responsible, at least in the eyes of shareholders. Hirai sounds quite a bit like Howard Stringer, the lame duck CEO, did when he took the job. Sony, he said, has become too inward looking. Its engineering culture was isolated from the world of electronic product consumption. Stringer said he would tear the curtains away so that Sony employees could see the world of the consumers who bought its products and those of its competitor’s. The process did not work. Now Hirai can repeat it.

Deutsche Bank’s Q4 Loss

Deutsche Bank (NYSE: DB) is the largest bank in Europe, as well as one of the largest in the world. It is also the flagship financial firm of the strongest economy in Europe. Those things have not insulated it from the region’s deepening problems. Deutsche Bank announced that it lost $463 million in the final quarter of 2011. It blamed a collapse in investment banking brought on by the extreme caution of businesses in the region. These results are the swan song for Europe’s most powerful banker, Josef Ackermann. What it took him a decade to create could be gone in a short year. It may be he is lucky to be leaving when he is.

AstraZeneca Cuts 7,000

Drug maker AstraZeneca (NYSE: AZN) will lay off 7,000 people. At least the move is not part of the fallout from Europe’s problems. The reasons are more mundane. Like most major pharma firms, AstraZeneca’s major products are quickly losing their patent protection. The R&D arm of the company cannot replace them with new blockbuster treatments fast enough. Smaller and nimbler biotech firms have become the sector’s innovators. The size of these firms makes it possible for them to prosper on just one or two successes. That has prompted companies like AstraZeneca to buy these smaller companies. But the M&A process must be too slow to refill AstraZeneca’s pipeline, as the layoffs show.

Douglas A. McIntyre

Filed under: 24/7 Wall St. Wire, Market Open Tagged: AZN, DB, SNE