Goldman's biggest deal in two decades; Metro raises more than planned
Receiving Wide Coverage ...
Goldman makes a move
As expected, Goldman Sachs formally announced that it is buying boutique wealth-management firm United Capital Financial Advisers for $750 million in cash, “striking its biggest deal in two decades as it accelerates a push away from Wall Street into lower-octane businesses.”
“Goldman’s new chief executive, David Solomon, is pushing the firm to be more diversified and dependable, less a Wall Street powerhouse and more a financial supermarket modeled after JPMorgan Chase,” the Wall Street Journal says. “That pivot is sending Goldman in search of steadier businesses that will prosper in hot markets and cold ones and suck up little of the firm’s capital, a precious resource since the financial crisis.”
Joe Duran, CEO of United Capital Financial, which has $25 billion of client assets under management, said he thinks the firm can double in size in three years by leveraging Goldman’s resources. “Goldman sees this [acquisition] as a complement to its digital bank Marcus, workplace financial counselling division Ayco, its high-end private bank and its asset management division, which creates products for wealth managers to sell,” the Financial Times says.
Shares on sale
Metro Bank, the “under-fire” British bank, raised more equity than it expected Thursday but at a lower per-share price than anticipated. The bank had expected to sell £350 million of new stock “to prop up its capital levels and allow it to return to lending growth after the discovery of a reporting error earlier this year.” But it raised the offering to £375 million after receiving about £1 billion worth of orders. However, the shares were sold around 6% below where the bank’s stock was trading during the past week.
“Metro will be hoping the capital raising allows it to move on from the worst of its recent troubles, securing its financial position and enabling it to return to growth, albeit at a slower rate than in the past. However, the bank will still have to answer questions over the sustainability of its business model and how it managed to ignore more than a year of warnings over how it calculated its capital,” the paper says. The bank’s stock jumped 18% on Friday.
Italian prosecutors are asking for prison time for four former Deutsche Bank employees and two former Nomura employees “for their alleged role in a complex derivatives scandal at Italian bank Monte dei Paschi di Siena.” The prosecutors also want to seize about €441 million from Deutsche Bank and €445 million from Nomura. “The two-and-a-half-year-old trial has struck at the core of European finance and is related to allegations complex derivatives deals were undertaken at what was Italy’s third-largest bank by assets to mask losses from investors.”
Taking it seriously
The U.K.’s Financial Conduct Authority is considering launching a formal investigation into the alleged rape and groping of a former UBS graduate trainee in two separate incidents. “The watchdog’s interest in the men represents an escalation of its inquiries, which have so far centered on how seriously the Swiss bank took the former trainee’s allegations and whether it was fully frank with the regulator.”
New York Times
Craig S. Phillips, a top aide to Treasury Secretary Steven Mnuchin who “helped create a blueprint for relaxing financial regulations imposed after the 2008 financial crisis,” is returning to the private sector next month. Phillips, “who was among the first people on Wall Street ever to package and sell mortgages to investors, was expected to apply his experience to the problem of how to get Fannie and Freddie back into private hands, instead of operating under federal control. However, more than two years later, that ambitious agenda [is] far from fruition.”
“The future of Deutsche Bank’s investment banking operations has returned to the fore” following the collapse of merger talks with rival Commerzbank, with investors “renewing calls for it to scale back” the division ahead of next week’s annual shareholder meeting. “The division generates about half of Deutsche Bank’s revenue but is also considered its Achilles heel, with European regulators fearful that it will fail the next round of stress tests in the United States.”
Fintech startup OpenFin, which has “developed an operating system that enables financial institutions to more easily create and upgrade their computer applications, similarly to how consumer apps are updated on smartphones,” has raised $17 million in new funding from Wells Fargo and Barclays. “Existing investors including JPMorgan Chase, Bain Capital Ventures and Pivot Investment Partners, also participated in the round.”
“We intend to do what we have done before but on a much bigger scale than we’ve ever been able to do it. We have AUM (assets under management) of $25 billion. I do not see a reason why we can’t be at $50 billion in a relatively short period of time.” — United Capital Financial Advisers’ CEO Joe Duran, after the company was purchased by Goldman Sachs