Just Trust Me …
Vikram Pandit has been keeping Citigroup Inc. on a pretty straight line to recovery these past few quarters, but when it came to answering questions this week about the veracity of Citi's loan valuations, the chief executive employed some logic that was positively circular.
After Pandit gave a speech Tuesday at the ISI Group Inc. investor conference, an audience member mentioned that another presenter at the conference — he didn't say which one — had complained about the extend-and-pretend game that some banks have been accused of playing to avoid further markdowns to their real estate loan books.
Asked whether anyone could be confident in Citi's valuations, Pandit had this to say: "I wouldn't be able to sign any of my statements unless I thought the books and records were correct. So by definition they are what we think are the right approaches to not only marking but reserving against these assets."
Well, that clears that up.
… But Not Us
After taking a hit along with other risky asset classes during the financial crisis, "stupid things" may be poised for a comeback, Jamie Dimon said this week.
The JPMorgan Chase & Co. chairman and CEO made his prediction while discussing the Federal Reserve's expected approval of dividend increases at some big banks. If the increases aren't large enough or fast enough, "in 12 months we may be looking at a lot of capital and maybe it will make some people do some stupid things," he told analysts at an investor day in New York.
Of all the rationales the banking industry has trotted out in support of drastically higher dividends, Dimon's may inspire the least confidence: It's akin to telling your spouse to let you buy a Mercedes, or you're just going to blow all your money at the dog track.
Though Dimon backtracked to say that JPMorgan Chase wasn't currently pursuing stupid investments, we would have hoped that the banking industry might have learned a bit more self-control than that. Still, if a bull market in stupid is in fact on its way, perhaps it's time for sophisticated investors to front-run it.
School's Out Forever
Some Bank of America Corp. employees may soon lose a rather unique perk: an elite school for their children.
The superintendent of Duval County Public Schools has recommended the shutdown of the Bank of America Learning Academy, an elementary school in Jacksonville, Fla., exclusively for the children of the company's employees.
The school, which has 175 students, was established through a partnership with Bank of America predecessor Barnett Bank in 1992, said district spokeswoman Jill Johnson. A provision in Florida state law allows for such partnerships.
Bank of America has since provided some funding, and currently owns the school building, Johnson said.
The closing has been recommended for the 2012-13 school period, so the academy will remain open for one more full year. It is the only school closing that has been recommended, Johnson said, though the district is going through a review of its more than 170 schools "due to the current $91 million budget shortfall facing the district."
Christina Beyer Toth, a spokeswoman for the company, said Bank of America supports the recommendation of the superintendent, Ed Pratt-Dannals.
Huntington's Midwestern Steal
Huntington Bancshares Inc. has recruited an architect of Fifth Third Bancorp's capital markets business, Jeffrey Chapman, to lead the expansion of its own investment banking division.
It named Chapman executive managing director of capital markets in charge of foreign exchange, derivatives, trading, loan syndication and other services.
Chapman began his career at Huntington in 1982 and did stints at a predecessor bank to KeyCorp and at National City Corp. before joining Fifth Third in 1993, where Huntington said in a press release Wednesday that he "was instrumental" in building its capital markets business. He was most recently a Fifth Third managing director.
Cheers from a JPM Alum
Bill Winters, former co-chief executive of JPMorgan Chase's investment bank, Thursday said he has started an asset management company backed by listed investment vehicles RIT Capital Partners PLC and Reinet Investments SCA.
The new company, Renshaw Bay, will be owned half by Winters — who will be chief executive and chairman — and half by RIT and Reinet. The company said it will advise new and existing funds and investment companies and may create or acquire its own investment management capabilities.
RIT is a London-listed investment trust whose chairman is Jacob Rothschild. Reinet Investments trades in Luxembourg under the chairmanship of Johann Rupert.
Winters left JPMorgan Chase in September 2009, after having been pegged as a potential successor to Dimon. Since then his activities have included sitting on the U.K.'s Independent Commission on Banking studying ways to improve competition and financial stability in U.K. banking.
