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Bankers in Davos; Deutsche Bank Settles with FERC; Why Firms Keep 'Foreign' Cash in U.S. Bank Accounts

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Highlights from Davos: The World Economic Forum just began in Davos, Switzerland, but has already produced plenty of interesting news for bankers. According to the FT, preliminary buzz around the event is that arriving executives "are plagued with concerns about growth, restive shareholders and declining margins." The article goes on to note that Goldman Sachs CEO Lloyd Blankfein is attending the event for the first time since 2008, though it's unclear how he specifically feels about his bank's balance sheet or the "fractious relationships with shareholders" the FT suggests is collectively percolating among top execs. JPMorgan CEO Jamie Dimon, who spoke earlier this morning, however, may have inadvertently nodded to investor concerns when he dropped this qualified apology for the London Whale: "If you're a shareholder might I apologize deeply. But we did have record results and life goes on." He also went on to criticize regulators, saying "It's five years after the crisis OK, we still have not fixed a lot of the things you are talking about. Part of the reason we are trying to do too much too fast." Meanwhile, a Dealbook article criticizes the forum itself for not devoting enough of its agenda to dissecting the financial crisis. "The World Economic Forum and its leaders appear to be moving on," the author writes. "but if the financial titans gathered there are really going to fight off the small but growing number of critics who are calling for the breakup of the big banks or even more likely a stronger Volcker Rule, they should put forth an alternative or an explanation for why these blowups keep occurring."

Those looking for more WEF news throughout the day can follow the FT's, the Journal's or Reuters' live blogs of the event. Or you can simply keep hitting the refresh button over at Dealbook, which has been in Davos overload since this weekend, going so far as to cover its (dwindling) party scene. "For those worried that there won't be any parties on Friday, fear not: Marissa Meyer, ex-Google who now heads up Yahoo, has stepped in to sponsor a cocktail party," writes Andrew Ross Sorkin. "And rumors are rampant that Sean Parker, the Internet entrepreneur, is holding an exclusive party Friday night."

Wall Street Journal

Some companies, including Google, Microsoft and EMC, are actually keeping cash tied to their foreign subsidiaries in U.S. financial institutions. The tactic is an attempt to have the best of both worlds. "As long as it doesn't flow back to the U.S. parent company, the U.S. doesn't tax it," the author explains. "And as long as it sits in U.S. bank accounts or in U.S. Treasurys, it is safer than if it were plowed into potentially risky foreign investments."

A Texas banking tycoon is looking to bring together "aggrieved bondholders" in order to investigate possible infractions by the banks who sold the mortgage-backed debt. The article notes this effort is a long shot, for a variety of reasons. However, "if the groups can prove the mortgages that underlie the bonds were approved through shoddy underwriting, they could be entitled to compensation."

Financial Times

Barclays is set to cut up to 2,000 jobs in its investment bank as part of its revamping efforts.

Another CEO is speaking out against efforts to break up big financial institutions. "By creating an artificial split ... you would impose a huge burden on society … and on our corporate clients," Deutsche Bank's co-chief executive Anshu Jain said. The article notes Deutsche Bank is among those that have been asked by German financial sector supervisor BaFin to assess the effects of splitting trading activities into a separate unit.

New York Times

Deutsche Bank has agreed to pay a $1.5 million fine and "surrender around $170,000 in profit" in order to settle charges with the Federal Energy Regulatory Commission that the bank manipulated California's energy markets in 2010. As per the standard, Deutsche Bank's statement regarding the settlement notes it "neither admits nor denies the violations."

This article examines whether Morgan Stanley's decision to defer bonus payments on top earners for up to three years will ultimately hurt the investment bank. Or, as the author puts it, "is Morgan Stanley mortgaging its future through compensation?"

Federal class-action securities lawsuits are on the decline. According to a study by Cornerstone Research, 152 cases were filed in 2012, well below the average of 193 suits in the previous 15 years.

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Comments (1)
It's funny. In nearby Lucerne, Switzerland, the people were similarly plagued with concerns about whether their friends really like them, how their kids are doing in school, and various preoccupations with slight defects in their physical appearances. - Harry Terris, data editor, American Banker
Posted by hterris1 | Wednesday, January 23 2013 at 9:51AM ET
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