The Pressure Is On at Citigroup

PRESSURE IS ON AT CITI  |  The new chief executive of Citigroup, Michael L. Corbat, “may have to impress quickly, given the pent-up frustrations among shareholders,” DealBook's Peter Eavis writes. With the stock price having fallen 89 percent under Mr. Corbat's predecessor, Vikram S. Pandit, investors want the new leader to speed up the bank's overhaul and be more transparent about the process. But it was not clear on Tuesday what his actual plan was. “Today's changes do not alter the strategic direction of Citi, which we believe is a good one,” Mr. Corbat said during his first public conference call as chief executive. Still, he suggested the personnel change itself signaled change: “I wouldn't minimize the impact you can have on a place.”

The transition on Tuesday caught Wall Street off guard, surprising even the bank's employees. But the board had been preparing for weeks, Jessica Silver-Greenberg and Susanne Craig report for DealBook. The chairman, Michael E. O'Neill, and other board members “had been mapping out the transfer of power during meetings that occurred, in part, while Mr. Pandit was in Japan last week attending a gathering of the International Monetary Fund and the World Bank,” DealBook reports. Mr. Pandit, though, said in an interview that the decision to resign was his alone.

Shareholders seemed to welcome Tuesday's news. Christine Harper of Bloomberg News noted on Twitter: “Citigroup ousts C.E.O., shares rise 1.6%. Goldman Sachs reports profit that beats analyst estimates, shares fall 1%.” Citigroup's board, wrote James Greiff of Bloomberg View, seemed to have arrived at “the same conclusion that many in the financial world had settled on long ago.”

 

BANK OF AMERICA EKES OUT A PROFIT  |  Bank of America managed to post a slim third-quarter profit after agreeing to settle legal claims stemming from its acquisition of Merrill Lynch. The bank reported net income of $340 million, compared with $6.23 billion in the quarter a year ago. The earnings amounted to zero cents a share, better than the loss of 6 cents a share that analysts were expecting. The conference call on Wednesday to discuss the results is being held at 8:30 a.m.

BlackRock said its third-quarter profit rose 17 percent on an adjusted basis, to $610 million. The firm's diluted earnings amounted to $3.47 a share, beating analysts' expectations of $3.32 a share.

 

LAWMAKERS FOCUS ON CAPITAL  |  Two Senate lawmakers, Sherrod Brown of Ohio and David Vitter of Louisiana, are raising concerns about bank capital rules in a letter to be sent to regulators on Wednesday morning. The letter, which was o btained by DealBook, elaborates on one the pair sent to Ben S. Bernanke in August. And it is notable for its bipartisan nature: Mr. Brown, a Democrat, and Mr. Vitter, a Republican, tend not to agree on many issues. “We write today to urge your agencies to simplify and enhance the capital rules that will apply to U.S. banks,” they say in the letter to the Federal Reserve, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency. Mr. Vitter is appearing on CNBC at 10:30 a.m.

The debate over Wall Street regulation has been a feature (although perhaps not a huge one) in the presidential race, with Mitt Romney arguing that the Dodd-Frank law should be repealed. But getting rid of the regulatory overhaul “will turn back the financial clock to 2006” for big banks, Steven M. Davidoff writes in the Deal Professor column. “That doesn't seem very smart given what happened, something that Mr. Romney recognizes when he talks of replacing the act rather than repealing it. The problem is that possible replacements are unlikely to work.”

 

ON THE AGENDA  |  Knight Capital, Bank of New York Mellon, U.S. Bancorp and PepsiCo report earnings before the opening bell on Wednesday. American Express, eBay and Kinder Morgan are reporting after the market closes. Paul A. Volcker, a former Fed chairman, is set to testify on banking before a British parliamentary commission at 9 a.m. John Mack, Morgan Stanley's former leader, is on Bloomberg TV at 10 a.m. Jim O'Neill, chairman of Goldman Sachs Asset Management, is on CNBC at 12:30 p.m. Martha Stewart is on CNBC at 1:30 p.m. Solyndra, the failed solar company, is seeking bankruptcy court approval of its plan to pay creditors.

 

HIGH-SPEED FIRM SHUTTERS  |  Computerized traders are beginning to look less mighty. Two pioneers of the industry, Steve Swanson and Peter Kent, are shutting down their firm, Eladian Partners, Nathaniel Popper reports in DealBook. The official reason is “market conditions.” In any case, it is the latest sign that the high-speed trading industry may be shrinking.

 

 

 

Mergers & Acquisitions '

Dutch Tech Firm ASML to Buy Cymer for $2.6 Billion  |  In a bid to speed development of new technology, the Dutch semiconductor equipment manufacturer ASML has agreed to buy Cymer, a maker of microchip components based in San Diego. DealBook '

 

French Bank Agrees to Sell Greek Unit  |  Crédit Agr icole of France is selling its Emporiki Bank division in Greece to Alpha Bank for a “token price” of 1 euro, Bloomberg News reports. BLOOMBERG NEWS

 

SoftBank Chief Looks to Build Support for Sprint Deal  |  This week, Masayoshi Son of SoftBank “heads to the U.S. to lobby major Sprint shareholders to gain support for the complex transaction,” The Wall Street Journal reports. WALL STREET JOURNAL

 

News Corporation Board Members Are Re-elected  |  The New York Times reports: “For a second year in a row, Rupert Murdoch faced shareholder critics of his News Corporation at the company's annual meeting. And for a second year in a row their proposals for management changes were shot down.” NEW YORK TIMES

 

A False Choice in Glencore-Xstrata Deal?  |  Shareholders are able to vote against retention packages in the Glencore-Xstrata deal while still voting in favor of the deal itself. But Reuters writes: “As unpopular as the retention packages are, fund managers may prove too worried about threatening the commercial promise of the union - and going against the advice of Xstrata's board - to risk making a stand.” REUTERS

 

INVESTMENT BANKING '

Moody's Cuts Jefferies Rating to Lowest Investment Grade  |  The growth of the Jefferies Group “introduces risks as the firm integrates the people and operations that it has acquired,” Moody's said. BLOOMBER G NEWS  |  MOODYS

 

Visa Said to Plan to Name New C.E.O.  |  The Wall Street Journal says Visa “is preparing to name a new chief executive as soon as this month to succeed Joseph Saunders,” who is expected to retire in March. WALL STREET JOURNAL

 

Citigroup Said to Hire Bankers in Japan  |  The bank is preparing for more cross-border deals in Japan, Bloomberg News reports, citing two unidentified people with knowledge of the situation. BLOOMBERG NEWS

 

JPMorgan Moves to Stem Losses in Money Funds  |  JPMorgan Chase plans “to offer clients of it s two large euro-denominated money market funds a way to address losses from investing in short-term bonds where interest rates have fallen sharply,” The Financial Times writes. FINANCIAL TIMES

 

PRIVATE EQUITY '

CVC to Swallow a Loss on Nine Entertainment  |  Creditors of the struggling Australian entertainment company Nine reached a deal on Wednesday that “handed CVC Capital Partners the largest loss for a private equity company on a single transaction in the Asia-Pacific region,” The Wall Street Journal writes. WALL STREET JOURNAL

 

HCA's Private Equity Backers to Receive Dividend  |  The hospital company HCA will use new debt to finance a special payment to sh areholders, including the private equity firms Bain Capital and K.K.R., The Wall Street Journal reports. WALL STREET JOURNAL

 

Chinese Private Equity Firm Considers a New Strategy  |  A move by SAIF Partners, a Chinese buyout firm, to consider incorporating hedge fund investing into its business “has industry experts questioning whether this is a wise decision,” The Wall Street Journal reports. WALL STREET JOURNAL

 

HEDGE FUNDS '

A Helipad for Bridgewater  |  New zoning documents offer more details of a construction plan by the hedge fund Bridgewater Associates. The Stamford Advocate reports: “In addition to a five-story, 850,000-square-foot office, the campus for Bridgewater Associates calls for a helipad, a floating recreational barge, a restored estuary and a marina.” STAMFORD ADVOCATE

 

SkyBridge to Increase Investments in Asia  |  SkyBridge Capital, the fund of hedge funds hosting an industry event in Singapore, plans to increase allocations to managers based in Asia to about 30 percent of capital over the next decade. BLOOMBERG NEWS

 

Icahn Fails to Revive Lawsuit Over Bond Offering  |  Carl C. Icahn had been seeking at least $100 million from a Texas hedge fund and other defendants. BLOOMBERG NEWS

 

I.P.O./OFFERINGS '

Tax Credi ts for Telefonica's German Unit  |  Telefónica's German division, which is looking to go public, “can skip paying taxes the next three years because of tax credits that may make its initial public offering more attractive,” Bloomberg News writes. BLOOMBERG NEWS

 

Canadian Mining Company Prices I.P.O. Within Range  |  Ivanplats is expected to raise about $306.9 million in the offering. WALL STREET JOURNAL

 

VENTURE CAPITAL '

Battery Maker Backed by U.S. Files for Bankruptcy  |  The struggling battery maker A123 Systems “was once considered one of the most promising grant recipients” under a federal program, The New York Time s reports. NEW YORK TIMES

 

Start-Ups Hit the Road for Los Angeles  | 
BLOOMBERG NEWS

 

LEGAL/REGULATORY '

N.Y.U. Law Plans Overhaul of Students' Third Year  |  Officials at New York University School of Law said they were trying to shift the curriculum to match what today's legal profession demands. DealBook '

 

R.B.S. to Leave British Protection Program  |  The Royal Bank of Scotland is exiting a government program that covered potential losses on risky assets, without having had to draw on the policy, Bloomberg News reports. BLOOMBERG NEWS

 

Google Chief Addresses Antitrust Issues  |  Larry Page, whose voice was sounding raspy, spoke publicly on Tuesday for the first time in several months. He said he hoped Google would be able to “work well” with antitrust regulators. WALL STREET JOURNAL

 

Criminal Trial for Accountants in Stanford Scheme  |  Two accountants accused of assisting in R. Allen Stanford's big Ponzi scheme are set to face trial in Houston. BLOOMBERG NEWS

 

Insider Trading Charges for Banker's Former Girlfriends  |  Two former girlfriends of a onetime Mizuho banker are accused of illegally trading on tips about an acquisition. BLOOMBERG NEWS