Receiving Wide Coverage ...
No Mayo: CLSA Americas, the brokerage firm owned by China's Citic Securities, unexpectedly closed its stock research unit on Monday, costing about 90 people their jobs, more than half of them research analysts. Among those let go was the company's "outspoken" banking analyst Mike Mayo, "one of the best known" in the industry who "over the years had developed a reputation for not mincing words about the banks he covers," according to the Wall Street Journal. "The analyst butted heads numerous times with some of the largest U.S. banks and in some cases even their chief executives." Wall Street Journal, New York Times
Loans sold: Prosper Marketplace said it reached a deal to sell up to $5 billion of consumer loans over the next two years to a consortium of investment firms, including an affiliate of Fortress Investment Group, Soros Fund Management, Third Point and Jefferies LLC. The deal won't come cheap to Prosper, however. "As part of the deal," the Journal said, "the investor group will receive warrants to buy Prosper shares that are tied to the volume of loans that they buy at face value. If the group buys the full $5 billion, they would have the right to purchase shares representing 35% of the company." The marketplace lender also lined up financing for an additional $1 billion of loans from Credit Suisse, Deutsche Bank, Goldman Sachs and Morgan Stanley. Wall Street Journal, Financial Times, American Banker
Wall Street Journal
Compliance chief: Citigroup named Mark Carawan, the bank's chief internal auditor, as its chief compliance officer. Carawan, who had been Citi's chief internal auditor since joining the bank in 2011, will continue to report to CEO Michael Corbat.
Break up the banks: Shareholders of several big banks, including Wells Fargo, will have the opportunity to vote on whether the companies should divest themselves of certain businesses or be broken up. The proposals were submitted by Bartlett Naylor, who the Journal describes as a "shareholder activist and financial-policy advocate at the liberal lobbying group Public Citizen." Naylor said he has made similar, if unsuccessful, proposals at Bank of America, Citigroup and JPMorgan Chase but told the paper he may have better luck at Wells in the wake of last year's phony accounts scandal. Wells tried to keep the proposal off the proxy ballot but was overruled by the Securities and Exchange Commission.
My bad: Morgan Stanley said it set aside $70 million to cover the costs of rectifying wrong information it provided to a "significant number" of its wealth management clients that caused them to underpay or overpay their taxes over the past five years. The company said it is in "advanced discussions" with the Internal Revenue Service to settle the matter at no cost to clients, including paying back taxes and reimbursing clients who overpaid.
Talk ain't cheap: Asset managers and banks "are locked in fierce negotiations" over how much the fund companies should pay the banks for investment research, "with some lenders demanding $10,000 for a single phone call with their most senior analysts," the paper reports. "Banks have put forward quotes of as much as $10 million a year to provide fund companies with complete access to their research," the paper said, while "fund managers who want additional services, such as face to face meetings with analysts or invitations to events with companies, are being asked to pay more."
Full access: Nick Ogden, the founder of British payments group Worldpay, is launching what the paper calls the U.K.'s "first purpose-built clearing bank in nearly 200 years, opening up Britain's payment systems so that other financial services companies can offer retail banking." Clear Bank will provide smaller financial institutions and fintech companies "with access to all the major payment and card schemes, including Faster Payments, which allows people to send and receive money instantly online or through mobile."
New York Times
Blockchain alliance: About 30 large corporations, including JPMorgan Chase, are expected to announce Tuesday the formation of the Enterprise Ethereum Alliance "to create a standard version of the Ethereum software that businesses around the world can use to track data and financial contracts," the paper reports. "The new Ethereum alliance has been described by some of its backers as a way to insure that the IBM-led blockchain effort is not the only option for businesses looking to use the technology."
"I'm at the top of my game, and I intend to stay in it." — CLSA Americas bank stock analyst Michael Mayo, after losing his job on Monday