News and views on the asset management industry from Reuters and elsewhere:
A bitter U.S. tax row has hit UBS harder than many investors thought and the Swiss wealth management giant is still losing more rich client money than what it manages to attract, its disappointing third-quarter results showed.
UBS shares tanked and the data suggest turnaround maestro Oswald Gruebel may have to work a bit harder to bring home the profit that will convince the super rich to stick around.
“Reputation is a fragile dimension, painstaking to build but easily broken. It will take a more than persuasive convincing for wealthy clients to fully perceive the firm as a safe haven again, even though there are positive shoots of normality returning,” said Cubillas Ding, senior analyst at international financial research and consulting firm Celent.
HSBC (0005.HK) (HSBA.L) has resumed talks with Royal Bank of Scotland (RBS.L) over the purchase of the remaining retail and commercial units that bailed-out RBS owns in Asia, according to sources. RBS is selling its remaining retail and commercial banking units in China, India and Malaysia, worth ” a few hundred million” dollars. The talks are in early stages as Standard Chartered’s exclusive negotiations with RBS only ended within the past week or so.
For these stories and more deals-related news from Reuters, click here.
Here’s what we found in Thursday’s newspapers:
* Part-nationalised British lender Lloyds Banking Group (LLOY.L) is sounding out investors about a 15 billion pound ($23.81 billion) rights issue to help it avoid a government scheme to insure it against credit losses, The Financial Times reports.
* Chinese metals conglomerate Chinalco may be interested in acquiring a stake in UC RUSAL when the indebted Russian aluminium giant lists shares in Hong Kong, the Vedomosti business daily cites two banking sources as saying.
Belgium’s Solvay is selling its drugs unit to U.S. partner Abbott Laboratories for 4.5 billion euros ($6.6 billion) in cash and reinvest in chemicals and plastics. Sources familiar with the deal have earlier told Reuters Abbott had agreed to buy the unit to bloster its flagging prescription drug business.
Australia’s biggest department store chain Myer plans to raise up to $2 billion in a share offering that will test investor appetite for retail stocks.
In M&A news reported by Reuters and elsewhere on Monday:
* A Saudi prince is set to spend up to 350 million pounds ($558 million) to buy a 50 percent stake in English soccer club Liverpool, al-Riyadh newspaper quoted him as saying on Sunday.
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.
That’s JPMorgan Chase CEO Jamie Dimon’s biting sense of humor on display yesterday as he read a mock letter to U.S. Treasury Secretary Timothy Geithner before the Annual NYU International Hospitality Industry Investment Conference in New York. Dimon’s sarcastic tone shocked some participants and cheered others, according to sources who attended the meeting.
“I congratulate him not only for his candor but for his wit,” said Mark Grant, managing director of structured finance at Southwest Securities in Dallas. “The fact that Jamie Dimon had the self composure, the sense of humor and the fortitude to make such a statement in public not only made me smile but it reminded me of days seemingly long past when men stood up on their own two feet and played the Great Game with style.”
Opponents seeking to slow down Chrysler’s blitz through bankruptcy court received unexpected support for their argument on Wednesday: Chrysler’s lead attorneys.
An email that turned up during discovery showed that Jones Day attorneys tried to discourage the U.S. government from setting a June 15 deadline for completing a sale of most of the automaker’s assets to a group led by Fiat.
A lawyer for a group of Indiana pension funds, which oppose the sale, read the email in court which showed Jones Day attorneys said the tight schedule would undermine the credibility of their case, called the time frame a mistake and said it would “stuff the judge” by forcing such a rapid hearing schedule.
“The debtor lost that one,” said the Indiana fund’s attorney, Glenn Kurtz of White and Case, referring to Jones Day recommendation regarding the deadline.
Judge Arthur Gonzalez overruled Jones Day attorneys who objected to entering the email, which the U.S. Treasury released during discovery, because it was not meant to be public and tapped into Chrysler’s legal strategy.
-By Tom Hals and Emily Chasan
Express Scripts has agreed to buy health insurer WellPoint’s prescription business for $4.68 billion in a significant expansion for the U.S. pharmacy beenfit manager. The deal will be a concoction of cash and up to $1.4 billion in common stock, and will generate more than $1 billion of incremental EBITDA.
This comes on the heels of Pfizer’s $68 billion acquisition of Wyeth, Merck’s $41.1 billion takeover of Schering Plough and Roche Holding’s $46.8 billion buyout of Genentech. Granted, this isn’t a pharma deal, but it still falls under the umbrella of the healthcare sector.
Poor Dow Chemical.
Not only did the company end up having to buy Rohm and Haas at basically the same steep price it agreed to last year, but it has also become the favorite target of lawyers, bankers and maybe even judges at the Tulane Corporate Law Institute, an annual gathering of top dealmakers.
Timothy Ingrassia, head of Goldman Sachs mergers and acquisitions business in the Americas struck the first blow on Thursday morning.
”You’ve already had Dow Chemical’s unique interpretation of the merger agreement. There was never a transaction that made Apollo look better,” Ingrassia said, referring to private equity firm Apollo’s previous efforts to get out of an agreement to buy Huntsman Corp.
JPMorgan is cutting 30 percent of its research department, according to two former employees, but the bank is keeping mum about its plans and declined to give details of the cuts.
David DeRose and Leighton Thomas, co-founders of a Bear Stearns alternative research unit that moved to JPMorgan when that bank acquired Bear a year ago, said on Wednesday they sold the unit to an investment firm largely because they could not hire more staff under JPMorgan’s management.
“If you stay under a research division that’s being cut 30 percent, we can’t get any headcount,” said DeRose.
JPMorgan intends to shed 1,000 to 2,000 jobs from its investment bank this year, co-investment bank chief Steve Black said at the bank’s investor day in February.
It was unclear whether the cuts DeRose mentioned are included in these figures and a JPMorgan spokesman declined comment.
Research staff may be an easy target for cuts, since it is hard to quantify their contribution to the bank’s bottom line.
And banks’ research divisions across Wall Street have been shrinking since the Securities and Exchange Commission in 2002 banned firms from using banking fees to pay analysts.
By Elinor Comlay