Receiving Wide Coverage ...
BNY Mellon Yields to Trian: If Bank of New York Mellon, which has been around for more than two centuries and safeguards more than $28 trillion in assets, can't stare down an activist investor, who can? The trustee bank BNY Mellon has decided to avoid a proxy fight with activist investor Trian Partners and give the firm a seat on its board. The decision means BNY Mellon won't get bogged down in a potentially lengthy and costly proxy fight, but it also means that Trian's Nelson Peltz will have more influence to push his agenda of more-aggressive cost cuts and a potential break-up of the bank's various business units, such as spinning off its asset-management business. The move also highlights yet again the increasing influence of activist investor firms, which have targeted companies across multiple industries. Trian will be represented on BNY Mellon's board by Ed Garden, who co-founded the firm with Peltz and Peter May. BNY Mellon's decision stands in contrast to DuPont, which has fought off Trian's attempts to snag a board seat for more than a year.
Wall Street Journal
There's more than one way to skin a cat, and apparently there are also lots of ways to appraise the value of real estate. Credit Suisse built its own better mouse trap in the mid-2000s for appraising ski resorts and other "luxury properties," and now that method may get the bank into trouble. Emails have surfaced showing Credit Suisse appraised the properties using "total net value," which relied on future revenue, rather than traditional methods. A lawsuit alleges this innovative method of real estate appraisals artificially inflated the value of the properties. The technique also generated more fees for Credit Suisse when it made the loans, but when the loans went bad, it led to more losses for investors, the hedge fund Highland Capital alleges in its lawsuit. A Credit Suisse spokesman said the hedge fund is attempting to "misuse the legal system to recover losses."
The collapse in oil prices could end up punishing Texas banks, says John Carney in a "Heard on the Street" column. OPEC's decision to continue pumping oil at current rates and thus put downward pressure on oil prices may not have an outsized effect on the Texas economy, as the state has diversified to be less reliant on oil. But it will have some negative effects on Texas banks, both those with large loan portfolios in the energy sector, like Cullen/Frost Bankers (which has about 15% of its loan book in energy loans), and for those banks with little exposure to energy but lots of exposure to industries that rely on the health of the energy industry to feed the broader economy. Texas Capital Bancshares falls in the latter category.
Financial Times
Citigroup will shut down one of its so-called dark pools. Citi will close its electronic trading platform LavaFlow amid heightened regulatory scrutiny. The SEC last year fined Citi alleging the bank didn't safeguard order information on LavaFlow, which is supposed to be a private trading network. Citi plans to keep running its other dark pools.
Elsewhere ...
Politico: As Republicans assume more authority in both the House and the Senate, party leaders will put added pressure on Fed chair Janet Yellen to be more transparent and more accountable to Congress for monetary policy decisions.
Boston Globe: The paper has a story about the $448 million-asset Reading Co-operative Bank in Reading, Mass., which is voting this week on proposed amendments to its by-laws that would make it more difficult for the institution to convert to a publicly owned bank. Reading is led by Julieann Thurlow, president and chief executive, who was named as one of American Banker's 25 Women to Watch this year. Reading is one of a handful of institutions fighting against the tide of mutuals and cooperatives that are selling shares to the public. "These transactions ultimately result in the sale of the local bank and local asset to a regional bank while significantly enriching the senior leadership that took the bank public," Thurlow wrote in a recent letter to the bank's depositors.
Bonnie McGeer contributed to this report.
