The European plan to take money from bank depositors to help pay for a bailout of Cyprus has set off alarm bells among some analysts and politicians. But the move, far from setting a precedent for other countries, has a lot to do with the particulars of Cyprus, Andrew Ross Sorkin writes in the DealBook column.
The proposal has understandably caused turmoil and anger in that part of the world. “A bailout deal that was supposed to calm a financial crisis in an economically insignificant Mediterranean nation spread it wider,†The New York Times writes. The fear among analysts is that imposing a levy on depositors could create a dangerous precedent and, in a doomsday scenario, prompt depositors to move their money elsewhere.
But that does not seem likely to happen, some observers argue. “I would assume that anyone in Spain, Portugal or elsewhere who knows about the taxation of Cypriot depositors also would know that the Cypriot banking system is a very different animal than anywhere else in the euro zone,†Erik Nielsen, chief economist at UniCredit, wrote in a note to clients. Mr. Sorkin writes: “Cyprus is unique. Besides being tiny, its banking system looks different from those in most other countries. Much of the big money deposited in its banks is from foreign investors, including Russians who have long been suspected of money laundering. Those investors had fair warning that Cypriot banks were troubled.â€
As for the bailout’s implications for Europe, there may be an upside. The willingness to impose so-called haircuts on depositors “shows that the European Union is still grappling for ways to reduce the region’s debt levels, a process known as de-leveraging,†DealBook’s Peter Eavis writes. “Some experts think Europe’s economy and employment levels won’t grow in earnest until debt is substantially reduced. As a result, they are, with some reservations, optimistic after the moves taken in Cyprus.â€
OBSTACLES TO A HIGHER PRICE FOR DELL  | Shareholders of Dell appear to be expecting a higher bid than the offer of $13.65 a share by the company’s founder, Michael S. Dell, and the private equity firm Silver Lake. But a richer offer may not readily materialize, DealBook’s Michael J. de la Merced writes.
For one thing, the current bidders may not be willing, or able, to pay more than their $24.4 billion offer. “Here’s one way of looking at it: Raising the bid by a dollar a share would cost about $1.8 billion, so getting to the $15-a-share bid that some analysts see as necessary would add about $2.3 billion to the deal’s price. It’s unclear who might bear the cost of providing the additional capital,†Mr. de la Merced says. “Silver Lake is balking at adding more money to the deal, according to people briefed on thinking at the private equity firm.â€
The second possibility would be for a competing bid to emerge as part of the so-called go-shop process, which has attracted the likes of Hewlett-Packard, Lenovo and the Blackstone Group. “But it’s unclear whether anything definitive will come from the go-shop process. H.P. and Lenovo are widely seen as taking a free look at their rival’s books,†as was Blackstone. Although none were expected to bid, Bloomberg News reports that Blackstone may change its mind.
WHAT’S NEXT FOR SAC  | The $616 million penalty that SAC Capital Advisors is paying to resolve insider trading lawsuits does not end the possible legal troubles for the giant hedge fund. The firm’s president told investors on a conference call on Monday that the scrutiny could continue, according to The Wall Street Journal. Friday’s settlements suggested that the Securities and Exchange Commission “concluded that there was enough evidence to go after SAC itself for its involvement†in suspicious trading, DealBook’s Peter J. Henning writes in the White Collar Watch column. “Because the CR Intrinsic settlement deals only with trading in Wyeth and Elan shares in late July 2008, the S.E.C. is free to pursue additional transactions by SC in those companies if there is evidence that it received other inside information.â€
“One problem the agency could face in pursuing a case involving earlier trading, however, is that a recent Supreme Court decision limits its ability to obtain penalties for violations that are more than five years old, unless the firm waived the statute of limitations.â€
ON THE AGENDA  | The Frankfurt Finance Summit features speeches by, among others, Jens Weidmann, the president of the Bundesbank; Christine Lagarde, the managing director of the International Monetary Fund; and Anshu Jain, the co-chief executive of Deutsche Bank. A Senate Judiciary subcommittee holds a hearing at 10 a.m. about the effects of a merger between American Airlines and US Airways. A Senate Banking subcommittee has a hearing at 3 p.m. about improving regulation and increasing competition in insurance markets. Adobe Systems reports earnings after the market closes. Richard Branson of Virgin is on CNBC at 8 a.m. Michael O’Leary, chief of Ryanair, is on Bloomberg TV at 9:45 a.m.
WHITE’S BIG DAY  | The Senate Banking Committee meets in executive session at 10 a.m. to consider the nomination of Mary Jo White to be the next leader of the Securities and Exchange Commission. If confirmed, she would serve through the remainder of the term expiring on June 5, 2014. The committee will also consider the nomination of Richard Cordray to continue as director of the Consumer Financial Protection Bureau for a five-year term. In a hearing last week, Ms. White faced questions about her work representing Wall Street clients, pledging that, as a regulator, “the American public will be my client, and I will work as zealously as is possible on behalf of them.â€
Liberty Media Said to Approach Deal With Cable Operator  | John Malone’s Liberty Media “is close to an agreement†to buy a 25 percent stake in Charter Communications for about $2.5 billion, according to The Wall Street Journal, which cites unidentified people familiar with the situation. WALL STREET JOURNAL
Cynosure to Buy Palomar, Laser Maker, for $294 Million  |Â
REUTERS
Chief of ARM Holdings, British Chip Designer, to Retire  |Â
WALL STREET JOURNAL
BlackRock Said to Plan Almost 300 Layoffs  | The giant asset manager BlackRock “will lay off nearly 300 of its work force and shift some staff to other locations and areas of its business, according to an internal memo,†Reuters reports. REUTERS
An Expanded Bonus Cap Draws Ire in Europe  | The news that a cap on banker bonuses might be broadened to apply to certain fund managers did not sit well with those in the industry, The Financial Times says. FINANCIAL TIMES
An Often-Skeptical Analyst Sounds a Positive Note  | Meredith Whitney told CNBC: “I have not been this constructive, this bullish on the U.S., on equities, in my career.†CNBC
Royal Bank of Canada Hires Co-Heads of U.S. Technology Banking  | The Royal Bank of Canada has hired Michal Katz and Michael Carter as co-heads of its United States technology investment banking group, and Erik-Jaap Molenaar as a technology deal maker. DealBook »
Photos From a Blankfein Wedding  | Lloyd C. Blankfein, the chief executive of Goldman Sachs, has gained a daughter-in-law. DealBook has collected some Instagram pictures of the event. DealBook »
N.F.L. Teams Up With Private Equity Firm  | The National Football League is working with Providence Equity Partners in a plan to jointly invest about $300 million “in start-ups that work within sports, media and technology,†The Wall Street Journal reports. WALL STREET JOURNAL
Investors Fuel a Boom in Farmland  | With farmland prices soaring, some farmers are taking an opportunity to sell to investors, pushing prices up higher. “The potential dangers for the economy are nowhere near as serious as the consequences of the housing collapse. But for individual farmers and farming communities, as well as rural farming banks, the repercussions could be severe,†Julie Creswell writes in The New York Times. NEW YORK TIMES
Avenue Capital Promotes a Portfolio Manager  | Avenue Capital named Richard Furst the new chief investment officer, amid speculation that the hedge fund’s co-founder, Marc Lasry, might become the next ambassador to France, Fortune reports. FORTUNE
Man Group Imposes Limits on Cash Bonuses for Executives  | The Man Group, the largest publicly traded hedge fund firm in the world, said annual cash bonuses for its top executives would be capped at no more than 250 percent of salary. DealBook »
Activist Investors Come of Age  | A cottage industry has grown up around activist investors, The Wall Street Journal writes. WALL STREET JOURNAL
Paulson Seeks Dismissal of Lawsuit Over Mortgage Investment  |Â
REUTERS
For MGM, an I.P.O. May Not Be Likely  | “Knowledgeable sources say the Lion won’t likely launch an I.P.O. any time in the near future. In the meantime, MGM has been exploring other options to help cash out its shareholders,†Variety writes. VARIETY
Electronic Arts Chief Resigns, and Stock Rises  |Â
NEW YORK TIMES
‘Copycat Kings’ Turn to Venture Capital  | The Samwer brothers of Germany, known for striking it rich by starting “copycat†versions of successful Internet companies, are joining with another entrepreneur to start a $194 million venture fund, Bloomberg Businessweek writes. BLOOMBERG BUSINESSWEEK
The Surfers Versus Khosla  | The Surfrider Foundation, a coastal protection group, claims in a lawsuit that the owner of a beachfront property near San Francisco has cut off access to Martin’s Beach, reports PE Hub. The article cites “a person familiar with the matter†who says “the owner is Vinod Khosla, a co-founder of Sun Microsystems.†DealBook »
Former Calpers Chief Indicted Over Fraud  | Federico R. Buenrostro and an associate are charged with defrauding Apollo Global Management. DealBook »
Citigroup Agrees to Settle Lawsuit for $730 Million  | The class-action lawsuit was on behalf of investors in the Citigroup’s debt and preferred stock, who claimed to have been misled by the bank’s disclosures, Reuters reports. REUTERS
For Fannie Mae, a Path to Repaying the Government  | With the housing market on the mend, Fannie Mae now might be able “to do the once unthinkable: repay as much as $61.5 billion in rescue funds to the U.S. Treasury,†The Wall Street Journal writes. WALL STREET JOURNAL
With New Chinese Leaders in Place, Waiting for an Agenda to Emerge  | Premier Li Keqiang pledged in his first news conference to fight graft and pollution, but no one expects quick solutions, Bill Bishop writes in the China Insider column. DealBook »
Senate Report on JPMorgan Loss May Provide Fresh Evidence  | The Senate report and hearing on JPMorgan Chase’s $6 billion trading loss provides a portrait of a bank that went right to the edge of acceptable practices, and may have even stepped over the line, Peter J. Henning writes in the White Collar Watch column. DealBook »
Lawyer for French Rogue Trader Is Found Dead  | Olivier Metzner, the lawyer who represented Jérôme Kerviel, the former Société Générale trader convicted in 2010 of creating more than $6 billion in losses on unauthorized trades, was found dead in Brittany on Sunday morning, an apparent suicide, The Guardian reports. DealBook »
