Exclusive outtakes from industry leaders
Is Todd Thomson, former head of global wealth management at Citigroup, angling to return to his former employer as CEO?
Thomson was forced out of his job in January after an incident in which he was reported to have returned from a business trip to China on a Citi corporate jet accompanied only by CNBC TV journalist Maria Bartiromo, and amid allegations of lavish spending.
But others, including Thomson, have said the main issue was tension with Citi’s then CEO Chuck Prince, who quit over the weekend.
So now that Prince is gone, could Thomson, who also previously served as the bank’s chief financial officer be a candidate for the job?
James Dunne, chief executive of Sandler O’Neill, a boutique brokerage which specializes in advising banks and other financial services companies on mergers and takeovers, expects foreign buyers to become increasingly active players in financial institutions M&A in the U.S. He says they will be drawn by the weakness of the U.S. dollar and as many domestic players retreat from making takeovers amid the current credit markets turbulence.
European and Canadian banks are already leading the takeover wave as shown by Royal Bank of Canada’s recent deal to buy Alabama National BanCorporation and Toronto-Dominion Bank’s planned takeover of Commerce Bancorp.
Independent analyst Charles Peabody of Portales Partners freely admits he looks at the financial services industry from a decidedly pessimistic viewpoint. It’s no big surprise, then, that he’s a big skeptic when it comes to Goldman Sachs Group Inc., which has so far wowed investors with its ability to weather a subprime crisis that has forced multibillion-dollar writeoffs at rivals such as Citigroup and Merrill Lynch & Co.
What raised his eyebrows in this regard was Citigroup’s contention today that it was having trouble hedging its collateralized debt obligation exposure. He says that bolsters his suspicions that Goldman may not be quite as well hedged as its rosy third-quarter results made it appear.
Howard Lutnick, the head of Cantor Fitzgerald, says he fears that bankers may start to behave like George Bailey and his father in the iconic 1946 movie “It’s a Wonderful Life,” and keep loans on their books to maturity.
While this may be a reasonable response to the credit crunch and the losses that might be suffered if those loans are offloaded, Lutnick told the Reuters Finance Summit in New York that it would present a serious risk to the U.S. economy.
A proposal to overhaul one of the government’s pension systems was cleared by congressional committees this week in a rare agreement between Mexico’s top political parties. The legislation introduces private retirement accounts for public-sector workers but still needs approval from the Congress lower chamber and Senate.
If passed, the new pension system could push the government to take extra debt but would bolster public finances in the long term.
US Airways Group’s takeover bid for Delta Air Lines is “the first step in a long dance” of increasing consolidation in the U.S. airline industry, Lazard Freres & Co. Deputy Chairman Kenneth Jacobs told the Reuters Investment Banking Summit in New York. ”I think that the massive restructuring that has gone on through the bankruptcy process, which is still underway for at least two of the players, probably enables more activity to take place now than at any other period of time. So, we are on the tip of the iceberg here.”
…getting dinged at your job.” These are the things that CreditSights analyst David Hendler says often hit paycheck-to-paycheck borrowers when they take out loans, dealing a blow to banks that go down-credit in pursuit of higher margins and yields. He said even unemployment rates in the 5 to 6 percent range could start to cut into the performance of loans to the riskiest borrowers.
Blackstone Group President Tony James thinks so. When asked if he foresees a $40 billion deal in the next year, he said:
“Go out on a limb here, yeah I think so,” he said at the Reuters Investment Outlook Summit.
He added that it would be very difficult to do a leveraged buyout that reaches beyond that. Leveraged buyouts have been getting increasingly large this year as private equity firms have been said to raise funds around the $20 billion level.