Receiving Wide Coverage ...
PetSmart's Debt Financing: That whole thing about regulators cracking down on big banks for providing too much debt-financing in takeover deals? Eh, who cares? Citigroup is one of five banks that's underwriting billions of dollars in in debt to help finance the $8.7 billion private-equity acquisition of retailer PetSmart led by BC Partners. The debt in the PetSmart deal, in the most recent negotiations, equates to more than six times cash flow. That would surpass the upper threshold regulators have set for levels of debt. But an executive at BC Partners, Raymond Svider, pooh-poohed any notion of the PetSmart deal triggering regulatory pushback. The PetSmart takeover is in a "totally different category," Svider told the Wall Street Journal. "It's really, really different," Svider said, pointing to the deal's leverage levels coming and down and PetSmart's palatable levels of cash flow. Joining Citigroup in arranging PetSmart's debt financing are Barclays, Deutsche Bank, Jefferies and Nomura.
Big Win on Derivatives: JPMorgan Chase CEO Jamie Dimon personally called members of Congress last week to lobby them to ditch the rule that stipulates where banks must book derivatives. The point of the rule was to prevent banks from storing derivatives in banks' insured depository accounts and thus receiving federal deposit insurance on something other than customer deposits. The Financial Times notes the several reasons Dimon supports the removal of the rule, not the least of which is the possibility of potentially higher capital requirements. The New York Times observed that by killing off the derivatives rule, big banks have learned how to dismantle portions of Dodd-Frank. "I thought that, when Dodd-Frank started, that the banks would not succeed in influencing it, having lost all the prestige they lost," Fed vice chair Stanley Fischer said Friday at the Peterson Institute for International Economics in Washington, adding, "Boy, was I wrong."
Wall Street Journal
With stories like this, it becomes easier to understand how the Securities and Exchange Commission missed Bernie Madoff's Ponzi scheme and the subprime mortgage meltdown. The SEC is now pushing big banks to submit data on things like bank-account holdings in "computer-readable format," instead of the hard-copy formats banks had been using to deliver the reports. The computer formats "can make it easier to detect frauds such as Ponzi schemes, the SEC told the Journal. Does the SEC still use typewriters, too?
European rules forcing banks to pay now for the costs of any future financial crises are making things hard on Deutsche Bank, because the German company relies so heavily on its trading businesses, the "Heard on the Street" column points out. That's in contrast to other European banks that have strong businesses in other areas, like UBS' private banking and Barclays' retail U.K. banking. Deutsche Bank is faced with making tough choices in its investment banking, corporate banking, securities and trading units, such as raising prices on the services it provides customers.
New York Times
The Times has a long look the fascinating story of Suresh Ramamurthi and the Citizens Bank of Weir in Kansas. Ramamurthi and his wife, Suchitra Padmanabhan, bought the Citizens Bank of Weir in 2009, renamed it CBW and plan to remake the institution as a developer of cutting-edge financial technology products. The husband-and-wife team, who lived in Silicon Valley and worked at Google and Lehman Brothers before moving to Kansas, want to offer instant payments, direct remittance transfers and specialized debit cards. In one interesting anecdote (in a story full of them), Ramamurthi and Padmanabhan persuaded the Quik Shop convenience store in Weir to install a device that lets customers pay with smartphones.
The New Yorker offers a tongue-in-cheek "report" on Citigroup's plans to move its headquarters.