Receiving Wide Coverage ...
UBS' Restructuring Efforts: An internal memo reviewed by the New York Times revealed UBS' plan to combine its currency, interest rates and credit trading businesses into a single unit. The move, confirmed by the bank, is part of UBS' ongoing efforts to "to shrink its investment bank and shift focus away from riskier trading activities to its wealth management and retail operations," Dealbook notes. The bank also plans to buy back bonds to cut borrowing costs and shrink its balance sheet ahead of ahead of more stringent Basel capital rules, the FT reports.
Appointed: Lloyds Banking Group has appointed boardroom veteran Norman Blackwell as chairman, reports the Journal. Current chairman Winfried Bischoff is set to retire. Per the FT, "Blackwell's style will contrast with the ebullient ways of the outgoing [chairman]. But he is expected nonetheless to gel well with Ant-nio Horta-Os-rio, chief executive."
Wall Street Journal
Anonymice tell the paper that the Justice Department's antitrust probe into banks' credit-default swaps business is winding down. No penalties are expected for the banks involved in the civil investigation, which included Citigroup, Goldman Sachs, Morgan Stanley, Barclays and JPMorgan Chase. These developments "underscore the difficulties U.S. authorities have had in pursuing financial-crisis-era cases," the paper notes.
The Federal Reserve has its eye on short-term funding, which it views as a persistent source of risk to the U.S. financial system, and is considering a two-pronged approach to rein in the market soon. "One prong would target large financial firms, forcing them to hold more loss-absorbing capital if they rely heavily on short-term loans," the paper reports. "Another would require that all borrowers in the markets pay a sort of tax by posting minimum amounts of collateral." However, reforming the market will be easier said than done, given how reliant financial institutions are on the financing.
The bond-issuing business has gone "gangbusters" in recent months and some large companies are getting creative in order to attract investors. Bank of America, for instance, has issued a $500 million "green bond" in which proceeds will be used to finance renewable-energy and energy-efficient projects, and Goldman Sachs has issued a $1 billion bond that offers variable interest rates for 10 years.
The U.S. will get its first de novo bank in almost three years thanks to the U.S. Bank of Bird-in-Hand, which is backed by Amish investors and set to open in Lancaster, Pa. American Banker reported earlier this year that Bank of Bird-in-Hand was designed "to cater to Amish and Mennonite farmers and small-business owners in eastern Lancaster, a target market that the organizers say is underserved." But despite this niche, "its creation will be closely monitored as a potential indicator of a nascent banking recovery in the U.S.," the FT notes.
Co-operative Bank's retail bondholders have voted "almost unanimously" to back a rescue restructuring plan that cedes control of the bank to institutional investors in order to fill a £1.5 billion capital hole by the end of the year.
New York Times
This Dealbook article doubles as a profile of Citi CEO Michael Corbat and a critique of JPM CEO Jamie Dimon. According to a whole bunch of unnamed sources, Corbat's low-profile approach and quiet demeanor are well-suited to Wall Street's current regulatory environment. The Citi CEO is also (and note, closely, the company in the forthcoming attribution) "proof, say people close to JPMorgan, that a skilled but relatively unknown insider can run a large, complex financial institution, helping dispel a view that Mr. Dimon will be nearly impossible to replace as chief when he leaves the bank."
Columnist Floyd Norris takes on ongoing efforts to "gut" Dodd-Frank's risk retention rule: "Most of the regulators appear to have been convinced that there is too much risk that a nascent housing recovery would be threatened if banks had to be responsible for the lending decisions they made. The question is whether others will give in and agree."