Kraven Posted October 29, 2012 Share Posted October 29, 2012 I have really enjoyed reading the last few pages of this post. Very insightful. Thanks guys. Another insight concerns Merril Lynch. I have noticed that UBS, and Royal Bank of Scotland, are cutting way down on Investment banking. There are probably others of which I am not aware. This may well leave something of a vacuum to be filled. BAC is clearly aiming to keep ML as strong as possible, as evidenced by the recent pillage from MS. I believe those moves are all on the brokerage side, not the investment banking side. Investment banks are like lemmings, they all do what the others do. If a couple are making cuts, guaranteed they will all be making cuts. Business is business and typically it's the proverbial rising tide lifts all boats. Rarely is one investment bank going to do well while others are starved for business. Kraven, very interesting comment. Could you please elaborate? Anything specific? I don't really have much more to say than what I wrote. Basically, think of the things that investment banks do. Simplistically, mergers, raising capital, etc. So in the most general sense either there is enough business around to sustain the banks at a certain level (starting of course with the bulge bracket banks and the best boutiques and then working down) or there isn't. Once one bank starts laying people off the others reasses their needs and typically decide that the future isn't as bright as they once thought either and follow suit. Banking is a business where they lay off too many people as business slows and hire too many when it picks up. Generally though they can ramp up pretty fast. There are usually a lot of bankers from the last wave of lay offs still around when hiring needs pick up. Link to comment Share on other sites More sharing options...
xazp Posted October 29, 2012 Share Posted October 29, 2012 I view this in a different light, similar to the way WFC is today enjoying BAC's lunch in mortgage. That is to say U.S. banks are going to eat the European banks' lunch in various global businesses. UBS is under pressure to cut risk and raise capital they are exiting certain business lines. The rumor is they are severely curtailing or even eliminating their FICC business lines (fixed income, currency, commodities). In general, I believe European banks will be cutting back on FICC. On the other side of the pond, U.S. banks are doing great: http://www.reuters.com/article/2012/10/24/idUSWNA831620121024 "Aggregate capital markets revenues (excluding debt valuation adjustments) for the top five U.S. trading banks rose 13% sequentially and 40% from third-quarter 2011, according to Fitch Ratings, recovering from the effects of significant market turmoil in the prior period. Fixed income, currencies and commodities (FICC) trading revenues drove the bulk of the gains in the quarter, accounting for 55% of aggregate capital markets revenues for the top five banks." I'd expect the U.S. banks to gain share as the European banks are shrinking. If nothing else, simply having a competitor leave will boost revenues. Page 116 of this document: http://www.scribd.com/doc/100885646/JPMorgan-Global-Investment-Banks-13Mar2012#outer_page_115 shows who the FICC players are, you can see that U.S. banks are dominant. If UBS' exit indicates that other European banks at that same size or smaller are going to exit, I think you'd see big market share/profit increases with the U.S. banks on this line item. Here is BAC's specific data: http://crapstocks.com/files/BAC/2012-Q3-Supplement.pdf page 31, ex-DVA, their FICC revenues went up 4-5x y/y. I view JPM, C, BAC as winners as the European banks exit this business. Anything specific? I don't really have much more to say than what I wrote. Basically, think of the things that investment banks do. Simplistically, mergers, raising capital, etc. So in the most general sense either there is enough business around to sustain the banks at a certain level (starting of course with the bulge bracket banks and the best boutiques and then working down) or there isn't. Once one bank starts laying people off the others reasses their needs and typically decide that the future isn't as bright as they once thought either and follow suit. Banking is a business where they lay off too many people as business slows and hire too many when it picks up. Generally though they can ramp up pretty fast. There are usually a lot of bankers from the last wave of lay offs still around when hiring needs pick up. Link to comment Share on other sites More sharing options...
xazp Posted October 30, 2012 Share Posted October 30, 2012 I missed this - first time I'd heard of this. http://www.npr.org/2012/10/16/162988702/bank-of-america-improves-foreclosure-image?ft=1&f=1095 ROSE: So when housing counselors gathered at a conference a few weeks back in Charlotte, I frankly expected to hear a lot of criticism aimed at Bank of America. SHERYL MERRITT: I think they're trying to be proactive. Trying to, you know, make it easier for counselors and agencies to just... ROSE: Wait a second. Proactive? Making it easier for counselors? That's Sheryl Merritt with Consumer Education Services in Raleigh. And she wasn't the only housing counselor talking like that. I spoke with at least half a dozen at that conference - from around the country - and all gave props to Bank of America. Still skeptical, I cold-called some more housing counselors around North Carolina to ask which mortgage servicer they think is doing the best job. STEVE OBENDORF: OK, I think Bank of America probably is. Probably the one that's stepped forward the most. ROSE: That's Steve Obendorf with Consumer Credit Counseling Services. Same goes for Bruce Hamlett at Community Link in Charlotte. In fact, you know what goes through his mind when a client comes to him for help with a Bank of America mortgage? Relief. Link to comment Share on other sites More sharing options...
value-is-what-you-get Posted October 31, 2012 Share Posted October 31, 2012 I remember seeing an interview with Moynihan early on in the process and when bankrupting countrywide came up he said that from a strictly numbers perspective it made sense but that he was keeping in mind that behind each individual foreclosure is a family that s in trouble and that in the long run it s better business to help them with a solution than to cut it all loose. At the time I liked the sound of that as its the right thing to do really, but wondered if it was just talk. Apparently it wasn t! Link to comment Share on other sites More sharing options...
Guest Dazel Posted October 31, 2012 Share Posted October 31, 2012 Anyone know when the government get submissions for the stress tests? Link to comment Share on other sites More sharing options...
mysticdrew Posted October 31, 2012 Share Posted October 31, 2012 Anyone know when the government get submissions for the stress tests? http://www.foxbusiness.com/news/2012/10/09/us-banks-to-start-stress-tests-in-2013/ "Banks with more than $50 billion in assets will have to comply with the stress-test rule this year. Many of them have been participating already in the Fed's separate stress-testing process, which is in its fourth year. Regulators say they will have the scenarios out by Nov. 15 each year. Regulators are also giving midsize banks more time each year to report their results. Banks with more than $50 billion must report results to regulators by Jan. 5, and smaller banks covered by the rule have until the end of March." Looks like by early January based on that article... although I'm a little confused as to whether it's just 1 set of stress tests or does the Fed and FDIC each do their own different tests? Link to comment Share on other sites More sharing options...
Guest Dazel Posted October 31, 2012 Share Posted October 31, 2012 Thanks. Link to comment Share on other sites More sharing options...
AZ_Value Posted October 31, 2012 Share Posted October 31, 2012 UBS is under pressure to cut risk and raise capital they are exiting certain business lines. The rumor is they are severely curtailing or even eliminating their FICC business lines (fixed income, currency, commodities). In general, I believe European banks will be cutting back on FICC. Looks like this is turning out to be right http://dealbreaker.com/2012/10/ubs-is-done-losing-money-on-ficc-will-focus-on-losing-money-in-equities/ http://www.ubs.com/global/en/about_ubs/investor_relations/releases/news-display-investor-releases.html/en/2012/10/30/20121030b.html Link to comment Share on other sites More sharing options...
Guest Dazel Posted October 31, 2012 Share Posted October 31, 2012 Big Ben is buying too remember.....the buy backs may not be that bad...Which will be negotiated with Fannie which is where the majority of exposure is. In the spring people alluded to the fact they would probably make money on some of the Freddie loans they bought back... Maiden lane securities definitely went up after they bought them. Dazel. Link to comment Share on other sites More sharing options...
Guest Dazel Posted October 31, 2012 Share Posted October 31, 2012 Even shiller has come out and said housing has bottomed...his index trails by 2 to 3 months.... Remember all collateral in these bonds are houses and property... By waiting Bank of America has strengthened their bargaining position....it was a calculated risk that seems to have worked out very well. Make no mistake housing is the key to the recovery of Bank of America... Dazel. Link to comment Share on other sites More sharing options...
Uccmal Posted October 31, 2012 Share Posted October 31, 2012 yeah, the ultimate irony occurs when they actually make money on forced buy backs. Even shiller has come out and said housing has bottomed...his index trails by 2 to 3 months.... Remember all collateral in these bonds are houses and property... By waiting Bank of America has strengthened their bargaining position....it was a calculated risk that seems to have worked out very well. Make no mistake housing is the key to the recovery of Bank of America... Dazel. Link to comment Share on other sites More sharing options...
xazp Posted November 1, 2012 Share Posted November 1, 2012 The g-sifi surcharge came in, and BAC is lower than expected, meaning they're only required to hold 8.5% B3 capital (I had assumed 9%). In turn this means they're above the mark already today... http://www.reuters.com/article/2012/11/01/globalbanks-capital-idUSL1E8M1FR120121101 C, JPM - 9.5% GS, BAC - 8.5% Link to comment Share on other sites More sharing options...
Parsad Posted November 1, 2012 Share Posted November 1, 2012 The g-sifi surcharge came in, and BAC is lower than expected, meaning they're only required to hold 8.5% B3 capital (I had assumed 9%). In turn this means they're above the mark already today... http://www.reuters.com/article/2012/11/01/globalbanks-capital-idUSL1E8M1FR120121101 C, JPM - 9.5% GS, BAC - 8.5% Awesome! It will be up even more tomorrow. Cheers! Link to comment Share on other sites More sharing options...
Grenville Posted November 1, 2012 Share Posted November 1, 2012 Here is the release from the Financial Stability Board with SIFI for all the banks: https://www.financialstabilityboard.org/publications/r_121031ac.pdf Thanks for the post. I was wondering why BAC was up today. Link to comment Share on other sites More sharing options...
ECCO Posted November 1, 2012 Share Posted November 1, 2012 Here is the release from the Financial Stability Board with SIFI for all the banks: https://www.financialstabilityboard.org/publications/r_121031ac.pdf Thanks for the post. I was wondering why BAC was up today. Yeah, you were wondering why the stock was up today....well can someone explain me why it was up? That news came in after closing of the market. It seems a lot of people had that news before closing... I like the news, but today's pop in the stock price does not smell good to me. Link to comment Share on other sites More sharing options...
Guest rimm_never_sleeps Posted November 1, 2012 Share Posted November 1, 2012 Here is the release from the Financial Stability Board with SIFI for all the banks: https://www.financialstabilityboard.org/publications/r_121031ac.pdf Thanks for the post. I was wondering why BAC was up today. Yeah, you were wondering why the stock was up today....well can someone explain me why it was up? That news came in after closing of the market. It seems a lot of people had that news before closing... I like the news, but today's pop in the stock price does not smell good to me. pretty easy to reverse engineer...they've had great news in recent days. the earnings were good. the economy is perceived to be getting better. housing is thought to be getting better. bac has more capital than people thought. it will probably pay dividends in first half of 2013. lots of people are short it. and It's Cheap. a stock with those kind of attributes is likely to go up faster than the market does. Link to comment Share on other sites More sharing options...
Parsad Posted November 1, 2012 Share Posted November 1, 2012 Here is the release from the Financial Stability Board with SIFI for all the banks: https://www.financialstabilityboard.org/publications/r_121031ac.pdf Thanks for the post. I was wondering why BAC was up today. Yeah, you were wondering why the stock was up today....well can someone explain me why it was up? That news came in after closing of the market. It seems a lot of people had that news before closing... I like the news, but today's pop in the stock price does not smell good to me. pretty easy to reverse engineer...they've had great news in recent days. the earnings were good. the economy is perceived to be getting better. housing is thought to be getting better. bac has more capital than people thought. it will probably pay dividends in first half of 2013. lots of people are short it. and It's Cheap. a stock with those kind of attributes is likely to go up faster than the market does. You're correct Rimm, but Ecco is right too. Unless that meeting occurred during market hours, and the release just came after hours, some people probably got a sniff of what was going to be announced. Not necessarily from BAC or anyone related to them, but they got wind somehow. Cheers! Link to comment Share on other sites More sharing options...
meiroy Posted November 2, 2012 Share Posted November 2, 2012 Well, JPM also went up considerably and it got 2.5%, unless it's because people were expecting 4% or something, that might not be it. Must be Halloween. Link to comment Share on other sites More sharing options...
ERICOPOLY Posted November 2, 2012 Share Posted November 2, 2012 BAC will probably get to 9.5% B3 ratio before they pay out their first elevated dividend in March/April? So that's a 100bps buffer. So a $15-$20b capital return for next year? The low range of that being what they can generate without dipping into their 100bps buffer. Yet it trades at $105b. Link to comment Share on other sites More sharing options...
Parsad Posted November 2, 2012 Share Posted November 2, 2012 BAC will probably get to 9.5% B3 ratio before they pay out their first elevated dividend in March/April? So that's a 100bps buffer. So a $15-$20b capital return for next year? The low range of that being what they can generate without dipping into their 100bps buffer. Yet it trades at $105b. Yeah, I would agree with that. I think they are very, very likely to increase the dividend to 5-7 cents a quarter, plus $6-8B buyback authorization at the very least. Cheers! Link to comment Share on other sites More sharing options...
Guest Dazel Posted November 2, 2012 Share Posted November 2, 2012 Sanjeev, We look forward to the December tangible book... It would be a very merry x-mas! Dazel. Link to comment Share on other sites More sharing options...
wescobrk Posted November 2, 2012 Share Posted November 2, 2012 If it's like March we could see 11 very quickly. That would be nice although that deprives those of us that would like to buy in the low 9's. Link to comment Share on other sites More sharing options...
ERICOPOLY Posted November 2, 2012 Share Posted November 2, 2012 If it's like March we could see 11 very quickly. That would be nice although that deprives those of us that would like to buy in the low 9's. Yeah, like there haven't been any opportunities to buy cheap... like all year long already and the second half of last year... Link to comment Share on other sites More sharing options...
Parsad Posted November 2, 2012 Share Posted November 2, 2012 Sanjeev, We look forward to the December tangible book... It would be a very merry x-mas! Dazel. Running out of time, so it's going to be tough, but I still think it's going to break $11-$11.50 before Christmas. Who knows, it may pull an Overstock and shoot up 100% in a couple of months! Cheers! Link to comment Share on other sites More sharing options...
Guest Dazel Posted November 2, 2012 Share Posted November 2, 2012 Wonder why the 8.5%....deposit stability? Anyone know why? Surpassed that Citigroup needs a bigger capital buffer. Dazel. Link to comment Share on other sites More sharing options...
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