TOO BIG TO MANAGE?  | A day after Citigroup’s capital plan failed the Fed’s stress test for the second time in three years, the bank’s executives were still struggling to understand the Fed’s decision and how best to respond. But the regulator’s rebuke should not have come as a complete surprise, Michael Corkery and Jessica Silver-Greenberg write in DealBook. With the Fed’s decision, a question that has dogged Citigroup for nearly two decades has resurfaced: Is the bank simply too big to manage?
Most of the nation’s largest banks operate globally, but few banks have the reach of Citigroup. The bank has a physical presence in more than 100 countries, generating roughly half of its total revenue from countries outside the United States. More than many of its peers, Citigroup also lends directly to consumers and companies outside the United States, a strategy that may have contributed to the $400 million fraud recently uncovered in Citigroup’s Mexican banking unit, Banamex.
Citigroup’s failure was a personal blow to Michael L. Corbat, the bank’s chief executive, who has been praised for improving the bank’s relations with regulators. His predecessor, Vikram S. Pandit, was pushed out after the bank failed to pass the stress test in 2012. Mr. Corbat has vowed to restructure the bank by cutting costs and shedding unwanted businesses. But alas, as if to underscore the bank’s global sprawl, Mr. Corbat found out about the bank’s failure from a hotel room in South Korea.
I.P.O. TO RELIEVE CBS OF AN AWKWARD FIT  | When CBS Outdoor begins trading on the New York Stock Exchange on Friday, its parent company, CBS, may breathe a sigh of relief, David Gelles writes in DealBook. CBS Outdoor is among the largest advertising companies in the country, but its core focus â€" operating billboards, airport signs and digital displays â€" was an awkward fit for CBS, best known for its broadcast television network. CBS Outdoor’s shares were priced on Thursday at $28 apiece.
“Outdoor doesn’t quite fit with us because it’s sales, but not content. The synergies didn’t really exist,†said Leslie Moonves, chief executive of CBS. After the initial public offering, CBS Outdoor, which will be renamed in the coming months, will be a stand-alone advertising company with a market capitalization expected to be about $3.3 billion. Jeremy J. Male, chief executive of CBS Outdoor, said the spinoff will allow his company to be able to make its own capital decisions without having to fight for capital allocation. For his part, Mr. Moonves said CBS Outdoor would be “a fabulous stand-alone company.â€
FACEBOOK GETS INTO DRONES Â |Â In his second mind-boggling announcement of the week, Mark Zuckerberg, the co-founder and chief executive of Facebook, revealed on Thursday that the company was creating a new lab charged with figuring out how to beam Internet from the sky. To that end, Facebook is buying a small British company called Ascenta, which makes solar-powered drones, Vindu Goel writes in The New York Times. The deal comes only days after Facebook announced that it would spend at least $2 billion to buy Oculus VR, a maker of virtual reality headsets.
Facebook’s new lab is part of Mr. Zuckerberg’s Internet.org project, which aims to bring Internet to the two-thirds of the world’s population without Internet access. The company envisions using satellites, drones and lasers to reach the 10 percent of the world’s population that are in areas difficult to reach via traditional Internet solutions.
Facebook’s recent initiatives have prompted some to wonder whether the company is trying to keep up with its bigger Silicon valley rival, Google, which already has its own head-mounted computing project, Glass, and is trying to bring the Internet to the middle of nowhere. (Google, however, is trying to do so through a network of high-flying balloons).
ON THE AGENDA  | Personal income data for February is out at 8:30 a.m. The Thomson Reuters/University of Michigan consumer sentiment index for March is released at 9:55 a.m. Michael Carr, the head of Goldman Sachs’s mergers and acquisitions group in the Americas, is on CNBC at 8:10 a.m. Leslie Moonves, the chief executive of the CBS Corporation, and Jeremy J. Male, the chief executive of CBS Outdoor Americas, are on CNBC at 9:45 a.m. Richard W. Fisher, the president of the Dallas Fed, is on CNBC at 7 p.m. John S. Chen, the executive chairman and chief executive of BlackBerry, is on Bloomberg TV at 11:30 a.m. Sunday Morning Futures with Maria Bartiromo debuts on the Fox News Channel on Sunday.
MYSTERIOUS DEWEY SEVEN REDUCED TO SIX Â |Â In a statement unsealed on Thursday, Francis J. Canellas, the former finance director of the bankrupt law firm Dewey & LeBoeuf, pointed fingers at his former co-workers, Matthew Goldstein writes in DealBook. Mr. Canellas is one of seven former Dewey employees who pleaded guilty to taking part in a four-year plan to manipulate the financial statements of the once-mighty law firm, but whose identities and plea agreements were being kept under wraps by New York prosecutors. The pleas of most of the other employees are expected to be unsealed on Friday.
The cooperation of Mr. Canellas and some of the other former employees is regarded as crucial in the criminal case against the firm’s former chairman, two other former top executives and a low-level employee, who were indicted this month by a New York grand jury on multiple counts of grand larceny and falsifying business records. The four men have pleaded innocent to the charges. The unsealing of Mr. Canellas’s plea deal came after The New York Times filed a motion asking the judge to unseal the cases.
A Nasty Corporate Divorce, With Insults Traded on Twitter  | The breakup of an Indonesian coal company and its co-founders is turning out to be nasty, culminating with a tirade of schoolboy insults hurled across Twitter.
DealBook »
Shareholders of Brazil’s Oi Approve Capital Increase  | The telecommunications company takes a step closer to a merger with Portugal Telecom.
DealBook »
Adviser on Dell Buyout Questions a Tumultuous Process  | At the Tulane Corporate Law Institute, an adviser on Dell’s leveraged buyout wondered whether the myriad steps the board took to ensure the integrity of the sales process could have been improved.
DealBook »
Big Deals Drive Global M.&A. Recovery  | A spate of big transactions drove the value of global mergers and acquisitions activity up by 54 percent in the first quarter compared with the same period a year ago, Reuters writes.
REUTERS
A Buying Spree for Tech  | Deep pockets and ambition are fueling one of the biggest buying and investing sprees for the technology industry’s giants â€" including Facebook, Google and Amazon â€" since the dot-com era of the late 1990s, The Wall Street Journal writes.
WALL STREET JOURNAL
Intesa Sanpaolo Posts Steep Fourth-Quarter Loss  | The Italian lender took a €5.8 billion impairment on the goodwill of some of its business and set aside more than €3 billion for bad loans in the quarter.
DealBook »
Backlash for the Fed Over Stress Test Results  | Bank executives and investors criticized the Federal Reserve on Thursday after the results sent Citigroup’s share price tumbling, The Financial Times writes.
FINANCIAL TIMES
Bank of China to Sell Soured Loans to Investment Bank Unit  | The Bank of China, one of the country’s state-owned banks, has started unloading troubled loans to its investment banking unit, The Wall Street Journal writes, citing unidentified people familiar with the situation. The unit is expected to try to restructure the debt in hopes of recovering more than it paid for the loans.
WALL STREET JOURNAL
TPG Said to Be in Talks to Invest in Chobani  | Chobani, the yogurt maker, has been in discussions with potential investors to help it grow internationally, and TPG, the private equity giant, is now apparently the lead bidder.
DealBook »
Tiger Global Looks to Invest in Start-Ups  | Tiger Global Management is among the investment firms turning to Silicon Valley, as an increasing number of technology companies hold off on initial public offerings, Reuters reports.
REUTERS
Ares Management Said to Prepare to File I.P.O. Â |Â The Los Angeles investment firm Ares Management, which oversees $74 billion in credit and private equity, is said to be preparing to sell shares in the biggest initial public offering of an alternative asset manager since the Carlyle Group went public in 2012, Bloomberg Businessweek writes, citing unidentified people familiar with the situation.
BLOOMBERG BUSINESSWEEK
El Pollo Loco Planning to Go Public  | The private equity owners of the fast food chicken chain El Pollo Loco are planning an initial public offering of the company’s shares, The Wall Street Journal reports.
WALL STREET JOURNAL
Falcone Accused of Using Company Assets in Cash Crunch  | Faced with investor redemptions in the weeks after an S.E.C. settlement, Philip Falcone used his publicly listed company to “bail himself out,†an investor contends in a lawsuit.
DealBook »
A Boom Now, but Hurdles Ahead for Activist Investors  | “A lot of people coming to this space where I question their skills,†says an adviser at the Tulane Corporate Law Institute. “I do have concern about less-than-intelligent activists.â€
DealBook »
Distressed Debt Investors Gear Up for Energy Future Restructuring  | Distressed debt players, including hedge funds and sell-side trading desks, have been taking positions in Energy Future Holdings in the last year in anticipation of a debt restructuring or a filing for Chapter 11 bankruptcy protection, The Wall Street Journal writes.
WALL STREET JOURNAL
SAC Urges Approval of Insider Trading Settlement  | Steven A. Cohen’s hedge fund, SAC Capital Advisors, urged a federal judge to approve its $1.8 billion insider trading settlement with the government, Bloomberg News reports.
BLOOMBERG NEWS
Bernanke Seen Dining with Hedge Fund Billionaires  | Ben S. Bernanke, the former chairman of the Federal Reserve, was spotted on Wednesday enjoying dinner with several hedge fund billionaires including David Einhorn, Louis M. Bacon and Larry Robbins, Forbes writes.
FORBES
U.S. to Shrink Stake in Ally Financial  | The Treasury Department plans to sell 95 million shares of the former financing arm of General Motors in an initial public offering.
DealBook »
Specialty Insurer Brit Raises Nearly $400 Million in London I.P.O. Â |Â The insurer, which is based in the Netherlands, is the latest private equity-owned company to seek to publicly float its stock in recent months.
DealBook »
Baxter to Split Into 2 Health Care Companies  | Baxter International plans to spin off its biopharmaceuticals business to shareholders by the middle of next year.
DealBook »
Conscious Uncoupling for Drug Makers  | In the wake of Baxter’s split, Merck, Bayer and Johnson & Johnson may find it hard not to jump on the bandwagon, Robert Cyran of Reuters Breakingviews writes.
DealBook »
Spotify Said to Be Planning I.P.O. Â |Â The music streaming service Spotify is said to have participated in informal talks with investment banks likely to seek a role in a potential initial public offering, Quartz reports, citing unidentified sources familiar with the situation.
QUARTZ
Andreessen Horowitz Raises Another $1.5 Billion Fund  | The venture capital firm Andreessen Horowitz has closed it fourth fund at $1.5 billion, Reuters writes.
REUTERS
Intel Exits a Data Analysis Business and Invests in Another One  | Intel said on Thursday that it was making a “significant†equity investment in Cloudera, which produces the most popular version of the Hadoop software framework for big data analysis, the Bits blog reports. Intel is also turning over to Cloudera its own version of Hadoop and would seek to move its customers over to Cloudera.
NEW YORK TIMES BITS
Tweets About Music to Get a Billboard Chart  | Twitter and Billboard plan to create the Billboard Twitter Real-Time Charts: continuously updated lists of the songs being discussed and shared the most on Twitter in the United States. For Billboard, the deal adds some Silicon Valley cachet as it tries to reinvent itself as a more consumer-oriented publication, The New York Times writes.
NEW YORK TIMES
Judge Urges Dismissal of Mortgage Suit Against Bank of America  | The recommendation to toss out a Justice Department lawsuit over a soured mortgage deal at Bank of America could inspire other banks to test their luck in court.
DealBook »
S.E.C. Official Criticizes Proxy Proposals on Social Issues  | Daniel M. Gallagher, an S.E.C. commissioner, argued that the agency must clamp down on the filing of shareholder proposals unrelated to the long-term interests of corporations, such as those relating to climate change or sustainability.
DealBook »
Appeals Court in Gupta Case Chooses Not to Admonish Bad Behavior  | The court hearing the appeal of Rajat Gupta, former managing director of McKinsey & Company, did not take up the opportunity to make a statement about improper business conduct, David Zaring writes in Another View.
DealBook »
With Banking, What Happens in Europe Does Not Stay in Europe  | The creation of a Single Resolution Mechanism to resolve a failing bank in Europe is an important step forward, but it faces a number of hurdles, writes Mayra RodrÃguez Valladares in an Another View column.
DealBook | Another View »
Congress Approves $1 Billion in Aid for Ukraine  | The measure passed after the White House dropped efforts to tie it to an overhaul of the International Monetary Fund negotiated by President Obama, The New York Times writes.
NEW YORK TIMES
Disabled Borrowers Trade Loan Debt for a Tax Bill From the I.R.S. Â |Â The Internal Revenue Service may count a forgiven debt as income, leaving some disabled borrowers with tax bills they cannot pay, The New York Times reports.
NEW YORK TIMES
Growth in the Fourth Quarter Is Revised Up a Shade, to 2.6%  | The Commerce Department’s final revision for gross domestic product growth in the fourth quarter of 2013 ticked up to 2.6 percent, slightly higher than previously estimated, The New York Times writes.
NEW YORK TIMES
