Paritosh Bansal

John Thain says he put shareholders first and his interests second in deciding to sell Merrill Lynch to Bank of America.

Thain, speaking at the Reuters Global Finance Summit in New York, said a deal to sell a partial stake in Merrill Lynch to Goldman Sachs would have been better for him, but the sale of the entire Wall Street firm to Bank of America was the best outcome for shareholders.

Over a fateful weekend in September 2008, as Lehman hurtled toward bankruptcy, AIG floundered and the financial system looked into the abyss, Merrill held discussions with Bank of America, Goldman Sachs and Morgan Stanley for various transactions, Thain said.

Initial discussions with Bank of America involved either the sale of the entire company or a 9.9 percent stake and a multibillion credit line, the former Merrill CEO said.

With Goldman, discussions only involved the stake sale and the credit line. Discussions with Morgan Stanley about a strategic transaction were brief, he said.

"When Bank of America offered $29 a share on Sunday afternoon, it was clear to me that was the best thing for our shareholders," Thain said. 

Thain was fired by Bank of America soon after the deal closed, and is now considering a career in private equity and other jobs. 

"The risk to the shareholders, the risk to the company that a 9.9 percent stake and a multibillion dollar credit facility might not be enough was much too high," Thain said. "Now, for me personally, it might have been better. But my job was to protect the shareholders."

For asset managers, the shedding season seems to have no end in sight.

More asset management units of financial institutions are likely to find their way into the market in the months ahead, as they look to separate distribution from product creation, Jefferies & Co's financial institution group predicts. 

More than two-thirds of global asset management deal activity came from such divestitures in the third quarter, a record level in a three-month period, Jefferies said.

These included deals such as Bank of America's agreement to sell the long-term asset management business of Columbia Management to Ameriprise, Bank of New York Mellon's acquisition of Insight Investment from Lloyds, and the purchase by Sumitomo Trust & Banking of Citigroup's 64 percent interest in Nikko Asset Management. 

"As larger financial institutions refocus on strategic strengths, we expect they will continue to separate asset management distribution from manufacturing," said Aaron Dorr, a managing director.

There were 38 deals in the third quarter, down from  66 in the same period last year, but disclosed deal value climbed to $4.5 billion from $4.2 billion and managed assets transacted rose to $749 billion from $728 billion, Jefferies said.

How long will it take the U.S. government to disentangle itself from the financial services sector?

More than 16 years, according to a new Piper Jaffray paper.

"The more likely answer may be that the U.S. government may never be fully repaid," reads the paper, "Opportunities for Private Equity in Financial Services," released last week.

The estimate is based on assumptions, including that $3 trillion of U.S. government funding has to be fully repaid and no addition funds are drawn from $23.7 trillion in commitments. 

For private equity investors, who are the focus of the paper, that's the new reality to keep in mind when making decisions about invesmtents in this field.

"The U.S. government's direct stakeholdings in the financial services sector will persist for many years and private equity investors should be prepared for the U.S. government's involvement to span multiple investment, economic and political cycles," it reads.

Still, the industry that includes banks, insurers, specialty finance and financial technology companies is likely to present ample opportunities for private equity to invest, according to the 49 page report, which also includes a sector-by-sector update on the state of affairs.

"We believe that in this period of extinction, re-birth and evolutionary change, the financial services sector will present many complex challenges for private equity investors but those will be outweighed by extraordinary opportunity," the paper reads.

TD's U.S. bank CEO Bharat Masrani loves his bank's slogan.

Maybe a little too much, if his Tuesday afternoon presentation at the Barclay's Global Finance Services Conference is any indication.

Masrani -- CEO of Toronto-based TD Bank Financial Group's American arm -- repeatedly appended the company's slogan "America's Most Convenient Bank" after TD Bank's formal name, in both his prepared remarks and the Q&A period responding to audience members. 

At least nine times in a 40-minute period, by a reporter's informal count, Masrani provided the rote recitation that, yes, the bank with 1,100 branches and 23,000 employees along on the Eastern Seaboard is America's most convenient.

Just don't go to the West Coast.    

The statement isn't part of the company's formal name, according to FDIC bank records.

So what's driving Masrani's obsession with the slogan? 

A company spokesman said the slogan attachment to the name is part of an effort to differentiate the American operations from the Canadian businesses of essentially the same name. The phrase is attached in all forms of communication, from the company's website to, yes, speeches, and has been in place since 2008.

On top of the slogan reptition, Masrani's speech broke ranks with the bulk of presentations at the two-day investor conference in other ways.

Masrani cited a photo of a man on stilts outside a TD Bank branch as evidence branch events are sights to behold.

The company's "Penny Arcade," a free change sorter in TD Bank branches, is a hit with the kids. "Just ask them," he implored the audience, a part of a larger description of the former Commerce Bank's "legendary" customer service.

(Reporting by Joe Rauch)

If they don't have bread, will they eat chocolates?

Cadbury's hold on emerging markets such as India is part of the reason why Kraft wants the company so much, the Wall Street Journal said. 

The paper points out that Cadbury estimates more than half of India's more than 1 billion people have never tasted chocolate, providing an opportunity for growth.

That's a big number, but not necessarily a huge market. 

India measures poverty line in terms of daily calorie intake -- 2,400 calories for folks living in rural areas and 2,100 for those living in cities. On that basis, the government estimates 27.5 percent of Indians lived below the poverty line in 2004-05. The measure might be conservative. As this New York Times report points out some say the number is at least 50 percent, and the actual caloric intake of the poorest 25 percent just 1,624 calories. 

The World Bank has set a poverty line at $1.25 per day. Under that measure, 42 percent of India's population, or 456 million people, lived below the poverty line in 2005.

A 200 gram Dairy Milk bar has more than 1,000 calories, and it costs about 250 rupees, which is roughly $5. 

That could partly explain why even after 60 years of Cadbury in India, more than 500 million have never tasted chocolate.

Alabama's Colonial Bank collapsed Friday under the weight of the financial crisis and allegations of fraud - making it the biggest bank to fail this year. 

US regulators shuttered the bank and sold its assets to BB&T, which got Colonial's $20 billion deposits and an FDIC guarantee on $15 billion of assets. 

One analyst questioned how much of those deposits will stick with BB&T after the takeover, though. Colonial was paying about 100 basis points more for funds than BB&T, said Richard Bove of Rochdale Securities, in a research note.

But in these times, the question probably is which bank is next. 

The Financial Times reported regulators are seeking bids for Guaranty Financial by Monday.

Asset managers are in for some deal-making as the sector tries to deal with the chinks exposed by the financial crisis, KBW analysts predict.

"Stressed capital markets have depressed profitability at most asset managers and brought to the fore many of the challenges that have been confronting the industry but were obscured by the bull market," the analysts write in a report.

Some of the deal activity has already been playing out as divestitures by financial services companies, with negotiations ongoing for such units as AIG's business and Bank of America's Columbia.

KBW's analysts predict most acquisitions are likely to be smaller transactions.

Possible buyers? Invesco, BlackRock, Bank of New York Mellon, Franklin Resources, Legg Mason, Affiliated Managers Group, Federated Investors, Blackstone, Fortress, GLG Partners and others have expressed a continued interest in acquisitions, they said.

Those hungry for larger deals could include Franklin and Bank of New York Mellon, the analysts said, adding that they see little likelihood of deals between publicly traded asset managers.

Attention cats and dogs: this deal affects you. 

Germany's Boehringer Ingelheim is now the front-runner to buy certain animal health assets of Fort Dodge, which makes drugs like ProMeris, ProHeart 6 and the Duramune vaccine line, sources told Reuters. 

The assets are being sold by Wyeth to gain approval for its $68 billion merger with Pfizer. 

Wyeth is not selling its entire Fort Dodge business, just certain assets within the unit that are valued at roughly $400 million to $500 million, the sources said.  

Bidder Novartis has dropped out, while Bayer's interest appears to be waning, the sources said. 

 The talks are yet another sign that animal health, long dismissed as a secondary business, is coming out of the doghouse. 

French drugmaker Sanofi-Aventis last week expanded its animal health business by buying the other half of Merial from its U.S. partner Merck for $4 billion in cash. The two firms also may create a pet and livestock joint venture that could be a leader in the $19 billion animal health market.

A Warburg Pincus deal to invest $115 million in Webster Financial on Monday left at least some folks scratching their heads. 

The private equity firm agreed to start with an initial investment acquiring 5.9 percent of Webster's common stock, to be raised to 15.2 percent after getting regulatory and other approvals. 

On the face of it, the 5.9 percent figure was unusual because the stake threshold for private investors in banks is 9.9 percent -- beyond which they need to get the Fed to sign off on the deal.

So, why 5.9 percent and not 9.9 percent (or even nothing) before all approvals?

As it turns out, the 5.9 percent is actually like 9.9 percent -- when you include the warrants that Warburg is getting as part of the deal, according to a source familiar with the matter. 

When the Fed works out the 9.9 percent number, it takes into account the warrants -- even if they have not or will not execute them, the source said.

Harleysville's advisers shopped the bank around as they tried to raise capital to help it deal with credit issues.

Banks in the mix included People's United, New York Community Bancorp and M&T Bank, according to a source familiar with the matter. It ultimately agreed to be bought by First Niagara for $237 million. 

The bank also tried to raise capital from private equity sources but those did not bear fruit.

"After careful consideration, we found that the transaction with First Niagara was clearly the best alternative at this time, and a better alternative than raising private equity capital," Harleysville Chief Executive Paul Geraghty wrote in an email to employees.

For First Niagara, the deal may not be the last. "I think in this kind of environment, there will be multiple opportunities to further explore and consider," Chief Executive John Koelmel told Reuters reporter Archana Shankar in an interview.

Harleysville, M&T and People's United could not immediately be reached for comment. New York Community declined to comment.