|Bid||0.00 x 900|
|Ask||0.00 x 1100|
|Day's range||197.13 - 203.00|
|52-week range||130.85 - 250.46|
|Beta (5Y monthly)||1.47|
|PE ratio (TTM)||10.69|
|Earnings date||15 Jul 2020|
|Forward dividend & yield||5.00 (2.53%)|
|Ex-dividend date||29 May 2020|
|1y target est||227.22|
(Bloomberg) -- During a Grand Prix competition on an Azerbaijan track in June, Alexander Albon, a Formula One driver on the Red Bull Racing team, downshifted along a steep curve then accelerated into a straightaway. But something was wrong: His internet was lagging. “I can’t race like this,” he said to his engineer.Albon took off his headphones. The 24-year-old driver stood up from the black gaming chair in his house and tried to fix the glitchy internet connection that was hurting his time. Earlier this year, with the coronavirus pandemic spreading around the planet, Formula One canceled 10 races and moved the action online, launching an esports series called the Virtual Grand Prix. The pro drivers who chose to participate raced against each other on F1 2019, a popular video game made by the British publisher Codemasters, and streamed their gaming exploits live on Twitch, a video platform owned by Amazon.com Inc. More than half the F1 grid took part in the series. Beginning on Friday, July 3, the popular motorsport will return to the actual racetrack, kicking off its delayed 2020 season with the Austrian Grand Prix, the first of eight confirmed races. According to Frank Arthofer, F1’s global head of digital media and licensing, the 2019 season had the youngest grid in the sport’s history. This year’s roster will likewise feature several young drivers, such as Albon, who are as comfortable live-chatting with fans on Twitch as they are blazing down roads in Monte Carlo. All of which is by design. At a time of declining TV ratings, the virtual races are part of Formula One’s broader efforts to lure in a new generation of fans. “You’ve really seen the driver’s personality show through virtual racing,” said Arthofer. “That’s one of the really exciting elements of it. You get a feel for the characters behind the visor that you don’t get when they’re in Formula One cars necessarily.”When billionaire John Malone’s Liberty Media Corp. acquired F1 for $4.4 billion in 2017, the sport’s TV viewership was already in decline. According to Goldman Sachs, Formula One’s overall TV audience shrank by two-fifths between 2008 and 2017. Last year, total viewers decreased by a further 3.9%, according to a study by Statista researcher Christina Gough.To try to reverse the trend, Formula One is ramping up its outreach to fans on social-media networks and streaming services. Pivotal Research Group analyst Jeffrey Wlodarczak said that young, digitally savvy racers—such as Charles Leclerc, a 22-year-old driver for Scuderia Ferrari, who has 3.2 million followers on Instagram and 489,000 on Twitch—can attract new fans to the sport. Wlodarczak said the Netflix documentary series “Formula 1: Drive to Survive,” which gives viewers behind-the-scenes access to all 10 F1 teams, has also helped the sport connect with a younger audience. The online charm offensive appears to be gaining traction. Since March 16, the Virtual Grand Prix has generated some 94 million video views, including 22 million on live streams, according to F1. The sport’s overall social-media engagement is up 30% year over year. Back on the virtual roads of Azerbaijan, after fighting through the technical difficulties, Albon finished in second place. On Twitch, fans sprinkled the chat zone with green “GG” stickers. Translation: “good game.”Afterward, Albon jumped on Discord, an online platform popular with gamers, and spoke to George Russell, a 22-year-old British racer with team Williams, who would go on to win the entire Virtual Grand Prix. Last year, during his rookie season, Russell had finished in last place in the actual 2019 Formula One season.Now, he is the motorsport’s virtual champion. “I mean, I got more publicity from winning an esports race than I got from any single Formula One race last year by coming around at the back of the grid,” Russell later told Sky Sports F1. As the streaming session wound down, Albon proposed that he and the other drivers play another video game just for fun, even if had nothing to do with racing. But the virtual crowd wasn’t ready to give up the racetrack action just yet. Their suggestion: time for some Nintendo Mario Kart. For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Goldman Sachs has a new title it may have to live with: America’s riskiest big bank, according to the Federal Reserve. This week the Fed slapped Goldman with a total capital requirement higher than any other US bank, thanks to a large “stress capital buffer” the regulator wants all banks to maintain to see them through the severest of shocks. The resulting requirement for tier 1 common equity — largely generated from retained profits and share sales — is at least 13.7 per cent of Goldman’s risk-weighted assets.
(Bloomberg) -- Lemonade Inc., the online home insurance provider backed by SoftBank Group Corp., is set to raise $319 million in its U.S. initial public offering.The company will sell 11 million shares at $29 apiece, Lemonade said in a filing, confirming an earlier Bloomberg News report. It was marketing 11 million shares at $26 to $28 each after boosting the range from $23 to $26, according to filings with the U.S. Securities and Exchange Commission.At $29, Lemonade would have a market value of $1.6 billion, based on the number of shares outstanding listed on its IPO filings.SoftBank led a $300 million funding round in Lemonade last year, valuing the company at $2.1 billion at the time, Bloomberg News previously reported. SoftBank will own a 21.8% stake in the company upon the IPO, the filing shows. Sequoia Capital Israel and General Catalyst are also among backers.Lemonade has yet to turn profitable since its inception in 2015, it said in its prospectus. It reported a $36.5 million net loss in the three months ended March compared to a net loss of $21.6 million during the same period last year. Its sales have more than doubled in that period.The company allows customers to buy insurance policies on a mobile app after answering several questions. It also pledges to donate the leftover funds, after expenses, to a charity in order to discourage fraudulent claims.While the company is headquartered in New York, it has roots in Israel and it has 123 full-time employees there, its filing showed.Goldman Sachs Group Inc., Morgan Stanley, Allen & Co. and Barclays Plc are leading the offering. Citadel Securities is the designated market maker for the listing.Lemonade will list on the New York Stock Exchange Thursday under the symbol LMND.(Updates with details from statement in second paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The case related to the multibillion-dollar 1Malaysia Development Bhd (1MDB) scandal which involved Goldman (GS) might be resolved soon post-decision of pleading guilty by the bank.
(Bloomberg Opinion) -- A few weeks ago, the expectation was that the onset of the third quarter would mark the close of a highly damaging and uncertain second quarter for the U.S. economy and, importantly, herald a sharp and durable reversal. Instead, with health concerns forcing a growing number of states to either stop or reverse their reopenings, and with some businesses and households withdrawing from active economic re-engagements, a cloud is now forming over the third quarter, threatening the depth and breadth of the economic recovery.With an initial phase of seemingly healthy reopenings, and with government relief measures in full force, high-frequency indicators of economic well-being (household confidence, new jobs and retail sales) started improving in May or deteriorated at a slower rate (jobless claims). Such absolute and relative improvements were countering what was shaping up to be a brutal set of economic data for the second quarter as a whole, including the largest contraction in gross domestic product on record. But with a continuing uptick in economic data that repeatedly beat consensus expectations, the thinking was the hit to this year’s GDP could be contained to 5% to 8%, with the prospects of recovering the entire loss of output in 2021.Since then, however, confidence in improving high-frequency data has been dented by indications that the “R-naught” of Covid-19 — the average number of people who catch the virus from a single infected person — has increased above 1 once again in a majority of states. Even though hospitalizations and deaths have not surged at the same rate as the sharp increase in positive cases because of the much lower average age of the newly infected, there is little confidence that this will continue given the material risk of younger people, especially those who are asymptomatic, turning into super-spreaders — a concern accentuated by evidence that this group has shown little inclination to modify its behavior yet. Policy makers are reacting, including either halting or reversing economic reopenings in about 40 states, according to Goldman Sachs, but many health experts view the cumulative response by local, state and federal officials as too incremental and overly hesitant.Consistent with these developments, the highest-frequency indicators of household economic activity, such as mobility and restaurant bookings, have already flattened or started to head back down in a growing number of states. Some businesses, such as Apple, have decided to reclose stores in certain places. And this process has been accelerated in recent days with some states and cities closing bars and barring in-restaurant dining.Over the next few weeks, this will lead economists and Wall Street analysts to revise down growth projections for the third quarter and to push out the process of recovery. Both will be less consistent with a sharp and lasting V-shaped recovery and more likely will align with my previous characterization of a square-root-shaped recovery. And with certain relief measures scheduled to sunset soon, including the Paycheck Protection Program and the supplementary unemployment benefits, the U.S. economy would be exposed to a bigger risk of short-term problems becoming structurally embedded. This would include a significantly larger number of corporate bankruptcies and greater risk of long-term unemployment in which jobless workers run a high risk of becoming unemployable.Absent any policy and behavioral changes, the overall impact of these measures would most likely be an overall GDP contraction for 2020 in the 8% to 12% range, assuming no second round of infections in improving states such as New York. Moreover, the recovery of lost output would not be completed in 2021. And the uncertainty surrounding these predictions would notably increase, with the balance of risk tilted to the downside.Such a diminished outlook would worsen the already-concerning inequality trifecta of income, wealth and opportunity at a time of greater recognition and heightened sensitivity to long-standing social injustices. It would also undermine the type of synchronized global recovery in which external demand reinforces domestic economic improvements. It would increase the likelihood of more protectionism and faster deglobalization. And it would risk pulling down longer-term economic growth and prosperity.The answer is not to roll back health measures aimed at regaining control of what is a worrisome acceleration of infections. Rather, it is to ensure changes in behavior and policy that allow for healthier and sustainable economic reopenings during this tricky period of living with Covid-19.A necessary component of the answer is to combine policy relief measures with greater emphasis on steps to reduce the risk of infection and deal better with the ill, as well as to counter more quickly a post-virus world of low productivity and high household insecurity. But it is imperative the private sector joins in — whether through individuals and companies better adopting health safeguards or by working harder to protect the most vulnerable segments of the population.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Mohamed A. El-Erian is a Bloomberg Opinion columnist. He is the chief economic adviser at Allianz SE, the parent company of Pimco, where he served as CEO and co-CIO. He is president-elect of Queens' College, Cambridge, senior adviser at Gramercy and professor of practice at Wharton. His books include "The Only Game in Town" and "When Markets Collide." For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Goldman Sachs Group Inc. is in the final stages of resolving its biggest legal threat in a decade after tussling with the government on one critical issue: a potential guilty plea for the first time in Goldman’s history.To avert such a penalty over its work for a Malaysian sovereign fund, Goldman has appealed to the Justice Department’s highest ranks. Attorney General William Barr began overseeing the case after obtaining a waiver because his former law firm represents Goldman. The department’s No. 2 official has also been directly involved.Now, a deal may be near. Prosecutors were emboldened to press Goldman for a guilty plea after a high-ranking Goldman banker pleaded guilty in 2018 and described a secretive corporate culture that sidelined compliance staff, people familiar with the case said. Since then, Goldman has pushed back on that narrative and elevated its case to the nation’s top law enforcement officers.Goldman’s defense is led by Karen Seymour. She was brought in two years ago as general counsel with a mandate to end the years-long U.S. criminal investigation over the billions of dollars Goldman raised for the Malaysia fund, known as 1MDB. Much of that money was allegedly siphoned by people connected to the country’s former prime minister.If Goldman escapes without a guilty plea, it will be a big victory for the bank. If not, Seymour may still be able to soften the blow by bartering over what details are included -- and not included -- in a statement of facts outlining Goldman’s conduct in Malaysia.Jake Siewert, a Goldman Sachs spokesman, wouldn’t comment on the status of the negotiations. “We are trying to resolve this matter as expeditiously as possible,” he said.John Marzulli, a spokesman for the U.S. attorney’s office in Brooklyn, New York, that’s handling the case, declined to comment.Abacus DealSeymour, 59, knows from her experience representing Goldman as an outside lawyer that an all-out battle could backfire. The bank tried that approach a decade ago after the Securities and Exchange Commission accused it of fraudulently marketing a mortgage investment known as Abacus that was secretly meant to fail.Whereas banks typically respond to new investigations with deference and promises to cooperate, Goldman pushed back hard against the SEC action, vowing to defend itself and describing the SEC’s allegations as “completely unfounded in law and fact.” Over several months, the legal exposure and bad publicity lopped almost 25% from the firm’s market value.At the time, Seymour was a partner at Sullivan & Cromwell, Goldman’s outside law firm, and was dispatched to clean up the mess generated by Goldman’s fighting words. Ultimately, she negotiated a pact with the SEC that included a hefty $550 million fine but no admission of wrongdoing.In the 1MDB case, the bank is awaiting word from Justice Department leaders about whether they agree with their prosecutors in Brooklyn that any deal must include a guilty plea by a subsidiary in Asia, according to a person familiar with the matter. (Prosecutors’ insistence on an admission of guilt was reported earlier by the New York Times and the Wall Street Journal.) A decision would clear the way for a settlement, the person said.Once the Justice Department renders its decision about a guilty plea, a resolution could follow quickly, including a penalty as high as $2 billion.Darkest DaysThe sprawling investigation into 1MDB, known formally as 1Malaysia Development Bhd., is the biggest threat to Goldman Sachs since the darkest days of the 2008 financial crisis.In September of that year, following the collapse of Lehman Brothers and the sale of Merrill Lynch to Bank of America Corp., the Federal Reserve allowed Goldman and Morgan Stanley to convert themselves into bank holding companies, giving them access to the Fed’s discount window and allaying concerns about their viability. The Abacus case grew out of the mortgage meltdown at the center of the crisis.In Malaysia, Goldman helped the government raise $6.5 billion for the 1MDB fund, collecting an unusually high $600 million in fees from bond sales in 2012 and 2013, according to court filings in the case. Prosecutors allege that roughly $2.7 billion of that money was diverted to 1MDB officials and their associates.Prosecutors have received help from Tim Leissner, a former Goldman banker who led the fund-raising for 1MDB. He pleaded guilty to conspiracy to bribe foreign government officials and money laundering. Goldman says Leissner was a rogue actor who deceived his superiors at the bank. Prosecutors appear to have taken a different view, that Leissner was acting in his capacity as an agent of the bank.S.D.N.Y. VeteranSeymour is probably best known for her work as a federal prosecutor in winning the 2004 conviction of Martha Stewart, who made false statements to prosecutors conducting an investigation of her stock trading.A Texas native, Seymour served as a federal prosecutor in Manhattan the 1990s before moving to Sullivan & Cromwell. She returned to the office, known as the Southern District of New York, in 2002 to serve as head of its criminal division under then-U.S. Attorney James Comey.Friends and former colleagues say Seymour’s biggest asset in her current role is her history negotiating with the government on behalf of global banks including Goldman and BNP Paribas SA.“She is the picture of credibility and integrity,” said Michael Schachter of Willkie, Farr & Gallagher, who was Seymour’s co-prosecutor in the Martha Stewart case. “When you are trying to represent a financial institution in a government negotiation, nothing is more important than making sure the government is able to trust what they’re hearing, and nobody inspires trust in their word like Karen Seymour.”With Seymour fully engaged in the 1MDB settlement negotiations, Goldman’s chief executive officer, David Solomon, bolstered the firm’s oversight functions in April, naming former Obama White House Counsel Kathryn Ruemmler as global head of regulatory affairs, overseeing the bank’s compliance department.The bank is separately negotiating a settlement with Malaysian authorities, who recently said they would reject offers of as much as $3 billion in contrast to the previous administration that had floated lower figures.MORE:U.S. Said to Discuss Goldman 1MDB Penalty Below $2 BillionGoldman Sachs Is in Talks for Asia Unit to Admit Guilt in 1MDBHow Malaysia’s 1MDB Scandal Shook the Financial WorldLeissner Was a Classic Goldman Power Player Before His FallFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Investing.com - Goldman Sachs (NYSE:GS) Stock rose by 4.02% to trade at $196.77 by 12:33 (16:33 GMT) on Tuesday on the NYSE exchange.
JPMorgan Chase, Bank of America, Citigroup, Morgan Stanley, and Goldman Sachs all say they plan to maintain dividends in Q3, despite the Fed's restrictions.
(Bloomberg Opinion) -- China is attempting to create its own JPMorgan Chase & Co. The ambitions could prove hard to satisfy.Regulatory authorities may allow some of the largest commercial lenders into the brokerage industry to perform services that include investment banking, underwriting initial public offerings, retail brokering, and proprietary trading, local media outlet Caixin reported. With capital markets flailing and direct financing struggling to take hold as debt rises across the economy, what better way than to bring in its trillion-dollar whales to boost the financial sector?There is logic to this. Size matters, and the volumes could lead to success. China’s banks have more than $40 trillion in assets; the securities industry’s amount to around 3% of that. The largest lender, Industrial & Commercial Bank of China Ltd., had 32.1 trillion yuan ($4.5 trillion) in assets and 650 million retail customers as of March, according to Goldman Sachs Group Inc. The biggest broker, CITIC Securities Co., had 922 billion yuan and 8.7 million retail clients. Banks have thousands of branches with deeper distribution channels.But banks are the load-bearing pillars of China’s financial system. Regulators have asked lenders to show leniency with hard-up borrowers and to forego profits in the name of national service, in both tough and normal times. Granting brokerage licenses could help them create another channel of (small) profits.Banks stepping in where brokers have failed could help the broader capital markets. In theory, commercial lenders know how to deal with different types of risk, like with the ups and downs in the value of a security and market movements. They’re already big participants in bond markets and have access. Bringing banks into mainstream brokering could help reduce the intensity of risk associated with the trillions of dollars of credit being created in China every month. It may also help solve a persistent problem: the inefficient allocation of credit that has led to mispriced assets.All of this is contingent upon the banks pulling their weight. Going by past experiments, they haven’t brought the heft that Beijing had hoped. Consider China’s life insurance industry. It took bank-backed players in this sector a decade to build a foothold. Their market share grew to 9.2% last year from 2.5% in 2010. The brokerage arms of Chinese banks in Hong Kong have fared little better. Bank of China International Securities, set up in 2002 by Bank of China Ltd., remains a mid-size broker by assets and revenue, Goldman Sachs says. Top executives come from the bank; related-party transactions with the parent account for just about 14% for underwriting business and around 39% for income from asset management fees.Catapulting ICBC to the same stature as JPMorgan — a full service bank with a 200-year history — may take a while. The American financial giant has hired big, and opportunistically built out businesses. It bought and merged with firms like Banc One Corp. and Bear Stearns Cos. and is in consumer banking, prime brokerage and cash clearing. The services it offers run the gamut of credit cards, retail branches, investment banking, and asset management. Shareholders have mostly rewarded the efforts.For China’s biggest lenders, conflicting and competing priorities will make this challenging. They’re already being required to take on more balance sheet risk, lend to weak companies and roll over loans while maintaining capital buffers, keeping depositors happy and essentially martyring themselves. Now, they’ll be adding brokering at a time when traditional revenue sources are shrinking in that business. And it won’t happen overnight, or even in the next two years. As for brokers? Their stock prices dropped on the news that banks would be wading into their territory.Beijing’s efforts to shore up its capital markets may look OK on paper, but they’re increasingly muddled and interests aren’t aligned. As China attempts to make its financial sector more institutional and less fragmented while it’s also letting in foreign banks and brokers, allowing the big homegrown institutions to do more, with additional leeway, doesn’t necessarily make for a stronger system. As I’ve written, experiments like these can have unexpected results.Over time, it won’t be surprising to see China’s large brokers and banks start looking very similar; for instance, big securities firms becoming bank holding-type companies, as one investor suggested. That may be a laudable goal for Beijing, but is it realistic? And does it take into account the problems on the financing side, such as misallocation and transmission? Ultimately, none of this really gets at one big problem: unproductive credit.All the while, regulators are inviting in the likes of the actual JPMorgan Chase and Nomura Holdings Inc. and giving them bigger roles. China won’t be ready. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Anjani Trivedi is a Bloomberg Opinion columnist covering industrial companies in Asia. She previously worked for the Wall Street Journal. For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Not everyone in the market is buying hand over fist. Interactive Brokers founder and chairman Thomas Peterffy joins Yahoo Finance to discuss markets.
Goldman Sachs can meet additional capital demands from the Federal Reserve without changing its strategy, the Wall Street bank said on Monday night. Goldman is the only major bank that was left with a capital shortfall after the Fed last week gave banks indicative requirements for the “stress capital buffer” which they must meet by October 1. The new buffer, which will be finalised by August 31, is tailored to the risk profile of individual banks based on the results of last weeks’ bank stress tests and is designed to ensure they have a cushion if the economy or financial markets worsen sharply.
(Bloomberg) -- Billionaire Jack Ma’s newest chieftain is accelerating Alipay’s evolution into an online mall for everything from loans and travel services to food delivery, in a bid to claw back shoppers lost to Tencent Holdings Ltd.Ant Group Chief Executive Simon Hu is aggressively pitching digital payment and cloud offerings to the local arms of KFC Holding Co. and Marriott International Inc., expanding the firm’s focus from banks and fund managers on its ubiquitous app.The Alibaba Group Holding Ltd. affiliate’s strategy is two-pronged. It halts Tencent and food delivery giant Meituan Dianping’s run-away success in attracting local merchants to their platforms, eroding Ant’s dominance of China’s $29 trillion mobile payments space. It also diversifies Ant’s business into less-sensitive areas after the firm drew regulatory scrutiny for its blistering expansion in financial services with in-house products.“We want to help digitize the services industry,” said Hu in his first interview with foreign media since taking on the CEO role in December. “We’ve been pursuing the strategy to evolve Ant into a tech company, with an open-platform strategy for many years.”Hu wants users to think of Alipay not as a niche provider of financial services and the payments gateway for the world’s biggest e-commerce platform, but as the go-to app for a wide array of needs from groceries to wealth management, and hotel booking to loan applications. He aims to simultaneously peddle technology solutions like artificial intelligence, blockchain and risk control to the businesses that use the platform.His goal is for more than 80% of Ant’s revenue to come from local merchants and finance firms in five years, up from about half at the end of 2019. The contribution from proprietary services, such as Ant’s own money market fund and loans, would shrink as a result.“We want to share the technology and resources we’ve developed as an online financial platform with more companies in finance, local services, public services and other countries,” he said. The shift doesn’t hinder any initial public offering plans and the company is still open to listing, he said, declining to provide a time frame.To mark the transformation, Ant changed its registered name to Ant Group Co. from Ant Financial Services Group at the end of May. Alibaba owns a 33% stake in Ant.Unusual PositionThe focus on everyday consumer services puts Ant in the unusual position of underdog, despite its reach into the spending patterns of 900 million users. While Alipay still controls more than half of all mobile transactions in China, it’s been late to so-called mini programs, an innovation championed by Tencent three years ago.The lite apps have allowed the gaming and social media giant to host more than a million service providers in its WeChat environment, with 400 million users a day tapping in to rent bicycles, order food, pick cinema seats and even buy apartments through a single interface. Their popularity has swelled Tencent’s share of mobile payments and ad revenue.Hu’s most important task has been to fend off competition from players like Tencent. But companies like Meituan and live-streaming site Kuaishou have added to the challenge, encroaching on the greater Alibaba ecosystem, chipping away at e-commerce and payments.“Ant and Alibaba are battling companies traditionally not even operating in their fields of payments and e-commerce,” said Mark Tanner, founder of Shanghai-based research and marketing company China Skinny.Personalized ContentThe Alipay platform offers some natural advantages to make up lost ground, Hu said. Its interface lets users personalize and pin frequently-used services and the company plans to use algorithms to further customize Alipay’s landing page.Ant currently has about 600 million monthly users for its 2 million mini programs after two years. Hu didn’t provide a forecast for its expansion.For the first time, the app has elevated local neighborhood services to the same level as its finance vertical. Its moved services such as Ele.me and Fliggy, Alibaba’s food delivery and travel units, to Alipay’s front page. Alipay will also enhance the importance of its search function, so people can find the mini programs of local services more easily, Hu said.“Alipay is weaving the advantages of a super app with that of mini programs, users can have faster access to services via our platform compared with WeChat,” he said.Such efforts are showing results. Alipay’s share of mobile payments has increased for three consecutive quarters, rising to 55.1% in the fourth quarter, according research consultant iResearch. Tencent has 38.9% of the market.Hu, who joined Alibaba in 2005 after working at China’s second-largest lender China Construction Bank, has built a reputation for rolling out new innovations such as using data analytics to offer collateral-free financing services to small businesses and helping Alibaba beat Amazon.com Inc. to build Asia’s largest cloud business.His experience will help Ant target small companies in the consumer services sector looking to digitize, said Michael Norris, research and strategy manager at Shanghai-based consultancy AgencyChina.Hu must also navigate Ant through a coronavirus-induced economic downturn, which will test the resilience of the lending portfolio it has built in the past decade along with about 200 partner banks in China.Its Huabei, which means “just spend,” is on track to help banks issue 2 trillion yuan ($283 billion) of consumer loans by 2021, according to Goldman Sachs Group Inc. analysts. Online lender MYbank, where Ant is the largest shareholder, has helped banks issue 600 billion yuan of credit to 10 million small and medium businesses as of end May.So far, the company’s risk controls have held up, Hu said. The bad loan ratio for Huabei and MYbank rose to about 2% compared with about 1.5% before the virus outbreak, the company said. By comparison, Fitch Ratings estimates that the non-performing loan ratio for Chinese banks may rise 2 percentage points to 3.5% compared with the first half of last year.“We’ve seen a slight up-tick in non-performing loans among our SME and young credit borrowers after Covid,” said Hu, adding that he expects the bad loan ratio to drop to pre-Covid levels by March next year.Wealth ManagementAlongside easy loans, Ant is also keen to introduce the 600 million users of its money market fund platform Yu’e Bao to wealth management options.It will cross-sell products such as equity and bond-backed investments offered by banks as well as work with more foreign asset managers to provide advisory services, similar to a venture established with Vanguard Group. The robo adviser with Vanguard has attracted 100,000 people since its April launch.“An open platform strategy is what we’ve always pursued, so we will definitely work with more partners in the future,” Hu said.(Adds final three paragraphs on wealth management services)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Wall Street banks will soon be able to boost investments in venture capital funds and pocket billions of dollars they’ve had to set aside to backstop derivatives trades as U.S. regulators continue their push to roll back post-crisis constraints.The Federal Reserve, Office of the Comptroller of the Currency and Federal Deposit Insurance Corp. approved changes to the Volcker Rule Thursday that let banks increase their dealings with certain funds by providing more clarity on what’s allowed. The regulators also scrapped a requirement that lenders hold margin when trading derivatives with their affiliates.Read More: Wall Street’s Win Streak With Trump Regulators Dangles by ThreadThe revisions will complete what watchdogs appointed by President Donald Trump have referred to as Volcker 2.0 -- a softening of one of the most controversial regulations included in the 2010 Dodd-Frank Act. Last year, the Fed, FDIC, OCC and other agencies eased the better-known aspect of Volcker that restricts lenders from engaging in proprietary trading -- the practice of making market bets for themselves instead of on behalf of clients.Thursday’s separate reversal of the interaffiliate margin requirement for swaps trades could free up an estimated $40 billion for Wall Street banks, though regulators added a new threshold that limits the scale of margin that can be forgiven.The KBW Bank Index rose 3.4% Thursday, with Bank of America Corp. and JPMorgan Chase & Co. among the gainers.Key DetailsVolcker 2.0 allows banks to take stakes in venture-capital funds that were previously banned in an effort to provide “greater flexibility in sponsoring funds that provide loans to companies.” The change is mostly similar to what regulators proposed last year.The Volcker Rule changes were also approved by the Securities and Exchange Commission and Commodity Futures Trading Commission.The FDIC board passed the new rule in a 3-1 vote, with Chairman Jelena McWilliams saying the changes “should improve both compliance and supervision.” Democratic board member Martin Gruenberg opposed the move, saying it leaves Volcker “severely weakened” and “risks repeating the mistakes” of the 2008 financial crisis.Volcker 2.0 didn’t include all of the industry’s demands for relief. In a March comment letter, Goldman Sachs Group Inc. had urged regulators to eliminate certain Volcker interpretations that have “restricted our ability to invest in certain incubator companies that provide capital and ‘know-how’ to startup companies and entrepreneurs.” The agencies didn’t act on that request.In scrapping the requirement that banks post margin for trades between affiliates, regulators did add a new threshold to prevent banks from abusing the relief: If a firm operating under the old rule would have had to set aside initial margin exceeding more than 15% of its so-called “Tier 1” capital, then it still has to set aside margin that surpasses that amount. The demand, which is meant to boost the safety and soundness of the new approach, will force banks to continue calculating on a daily basis what their margin requirements would have been under the rule that’s been eliminated.The industry and regulators argued that requiring margin for interaffiliate transactions made it difficult banks to manage their risks. But critics say forcing banks to maintain an extra cushion against losses helped protect subsidiaries that are backed by the federal government, including through deposit insurance.The FDIC’s Gruenberg opposed the change to swaps rules, arguing that it removes a critical protection for banks. Fed Governor Lael Brainard reiterated that concern, saying in a statement that she dissented from the Fed’s approval because she fears the deregulatory move “could again leave banks exposed to the buildup of risky derivatives.”Read MoreWall Street’s Win Streak With Trump Regulators Dangles by ThreadTrump Regulators Hand Wall Street Banks a Big Win on Swaps Rule(Updates with index price in fifth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The Fed will bar big banks from increasing their dividend payments, following the central bank’s annual stress tests that included a “sensitivity” analysis incorporating the impact of the COVID-19 crisis.
(Bloomberg) -- Goldman Sachs Group Inc. and JPMorgan Chase & Co. are among banks that have started trading credit-default swaps referencing bonds with high sustainability credentials.Goldman sent prices on the new iTraxx MSCI ESG Screened Europe Index to clients this week, according to people familiar with the matter, who asked not to be identified. A spokesman for Goldman declined to comment.Aymeric Paillat, JPMorgan’s global head of credit index trading, confirmed his bank’s involvement.The benchmark started trading on Monday and currently has five dealers offering prices, according to a spokesman for IHS Markit Ltd. which oversees credit-derivative benchmarks. By the end of the week, the firm hopes to have six market makers on board, he said.Socially-conscious investing has ballooned in recent years to become a $30 trillion plus industry with investors buying up assets with high scores for environmental, social and governance values. IHS Markit expects the gauge to be useful for investors to gain exposure to credits that score well on those criteria and to hedge their existing holdings.While volumes aren’t yet near the established European benchmark indexes, the ESG gauge “has attracted a lot of interest and some trades,” according to New York-based Paillat. “I’m very confident something similar will come out in the U.S. at some point.”Still, some European investors are awaiting more visibility on volumes before trading.“This index should make it simpler for some strategies but it won’t be our hedging tool of choice,” said Gordon Shannon a portfolio manager at TwentyFour Asset Management, which oversees about 18 billion pounds ($22 billion). “To be confident, we’d like to see a lot of volumes and see how tradeable the index is during tougher periods of volatility.”Pension funds, private equity firms and hedge funds are all touting their sustainability credentials and hiring ESG professionals.Some see ESG as a way to pressure companies to cut their greenhouse gas emissions or increase the number of women in leadership positions. Others view it as a marketing opportunity at a time when asset managers are being squeezed by declining fee income.The new benchmark was quoted at a spread of 59 basis points on Thursday, about 10 basis points tighter than the broader investment-grade index. That indicates investors see the new benchmark as a safer risk gauge.The index tracks the same companies as the frequently-traded European investment-grade benchmark but removes any that don’t apply “stringent ESG criteria”, according to IHS Markit. The result is that it includes fewer energy and consumer companies and more technology, media and telecoms firms.The start of the gauge was delayed from March when markets were hit by extreme volatility caused by the coronavirus pandemic.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Roman Abramovich is taking a stake in Russia’s largest internet company, Yandex NV, giving it more firepower to buy out ecommerce partner Sberbank PJSC and accelerate a push into online retail. The billionaire owner of Chelsea Football Club and two partners -- VTB Bank PJSC and a company owned by steel billionaires Alexander Abramov and Alexander Frolov -- bought into Yandex as part of a $1 billion share sale to fund growth and strategic projects. In total, Yandex sold 20.3 million new shares at $49.25 apiece, including $400 million on the market and $600 million in a private placement to investors, including Abramovich.The sale on the market was double the planned size of $200 million, Yandex said in astatement Thursday, citing results of the offering managed by Goldman Sachs Group Inc. Yandex closed at a record high of $50.3 a share last night.Yandex also announced it will spend $570 million to end the ecommerce and online payments venture with Sberbank, Russia’s largest lender. The move signals a change of tack by Yandex founder Arkady Volozh, who until now used joint ventures to share the burden of heavy startup investments in ecommerce and ride-hailing and may now feel confident enough to go it alone.Yandex would be interested in buying out Uber Technologies Inc. from their Russian ride-hailing venture “at a reasonable price,” Chief Financial Officer Greg Abovsky said Wednesday on an investor call, confirming a Bloomberg News report earlier this month. “We are in constant dialog with Uber representatives,” he said. “There is no deal on the table.”Yandex is also looking to restructure the partnership with Uber, possibly combining the venture’s taxi business with Yandex’s car-sharing activities, Abovsky said. The taxi unit’s self-driving vehicle division could be also spun off, with both Yandex and Uber retaining ownership, he said.Kirill Panarin, a Moscow-based analyst at Renaissance Capital, said Yandex had over $2.5 billion in cash on its balance sheet as of March 31, which would have been enough to buy out Sberbank without the need for fresh funds.“Raising funds from the market means Yandex may have more deals to follow, like buying out Uber from their ride-hailing and foodtech JV,” Panarin said by phone.The Sberbank venture hasn’t been an easy one for Volozh, who’s had a tense relationship with the bank’s Chief Executive Officer Herman Gref. Last year, Gref announced a partnership with Yandex’s rival Mail.ru Group Ltd. to develop ride hailing and food delivery.Read More: Yandex, Sberbank Look at Splitting E-Commerce, Fintech Projects“Given the great potential for further growth of e-commerce in Russia, we believe now is the right time for us to fully consolidate operating control over Yandex.Market and accelerate our e-commerce strategy,” Yandex Chief Financial Officer Greg Abovsky said in the statement on the Sberbank buyout.Record HighUnder the two-pronged deal, Yandex will buy Sberbank’s 45% stake in ecommerce company Yandex.Market for 42 billion rubles ($610 million) and sell to Sberbank its remaining 25% holding in online-payments business Yandex.Money for 2.4 billion rubles.Sberbank had invested 30 billion rubles in Yandex.Market in 2018, giving Yandex more resources to transform its price-comparison site into an online marketplace. The partners launched ecommerce platform Beru which entered the top-12 of Russian online retailers last year, according to researcher Data Insight, and reached monthly sales of 4 billion rubles.The share placement is well timed as Yandex shares reached a record high this week, taking its market value above $16 billion, after President Vladimir Putin agreed to give unprecedented tax breaks to information technology companies, BCS Global Markets said in a note.Bringing in Abramovich and the two co-founders of steelmaker Evraz Plc “could raise some eyebrows,” said BCS, but a two-year lockup for them to sell shares and a clause that forbids any of the three investors from acquiring more than 3.99% of the stock “may provide some comfort.”The new funds boost Yandex’s finances just as it grapples with the coronavirus pandemic, which contributed to a 41% fall in its earnings before interest, taxes, depreciation and amortization in the second-quarter.(Adds offering price, updates volume from second paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Editor’s Note: No city is more important to America’s economy than New York, and none has been hit harder by the coronavirus. “NYC Reopens” examines life in the capital of capitalism as the city takes its first halting steps toward a new normal.Wall Street deals are on hold. Its skyscrapers are mostly hushed. But, in a subtle sign of New York City’s reopening, Franco Anzalone is finally cutting hair again.On Monday, the 34-year-old barber rose at 5 a.m., walked into the Conrad Hotel in lower Manhattan and opened the door to his Salvatore salon for the first time in three months. Then, the bankers came.One top executive got his eyebrows trimmed. A young financier complained about bossy politicians. A managing director from Goldman Sachs Group Inc. said it felt like the first day of school.Neighborhood barbershops and salons across the U.S. are reopening, but none is quite like Anzalone’s. He works in the shadow of Goldman, whose headquarters towers over his Battery Park City shop. As Wall Street financiers trickle into offices again, they’re helping to breathe life back into an ecosystem of bakers, barrooms, bodegas and barbers.Anzalone has been giving bankers haircuts for years, as did his father, Salvatore, for decades before him. The salon has a private room for pedicures, and photos over the cash register of hedge fund billionaire Paul Tudor Jones and former Treasury Secretary and Goldman boss Hank Paulson. Anzalone charges about $38 for a cut, a price that shrewd traders would favor to the $1,000 trims Julien Farel gives at his salon inside the Loews Regency hotel uptown.Read more: The $1,000 Haircut Is Alive and Well in Midtown ManhattanTina Peiss, a Romanian-born barber, walked in and greeted Anzalone in the Italian that she learned decades ago in Bucharest. Returning to her chair here suited her better than sitting at home in Queens.“I like to work, I don’t want to be home,” she said. “When you work, you move.”Vin DeSantis walked in wearing a camouflage-patterned mask. He’s an executive at a nearby security company whose dogs sniff for bombs inside investment firms and sports events. While Anzalone cut his hair, a big-time banker sat down. He’s so high on Wall Street’s ladder of power and prestige that he said his very presence here, and the words he spoke while Peiss gave him a trim, were off the record. Anzalone made sure the policy was enforced.We’re tracking everything you need to know as New York reopens after the Covid-19 shutdown. Read our explainer and sign up for alerts sent directly to your inbox.James Mann, a lawyer, stepped inside after taking an Uber from Brooklyn.“I think there’s going to be trouble in the long run,” he said, keeping his face covered while Peiss trimmed his hair. “If we all have to wear masks for a really long time, I would consider leaving New York. I’m not from here, and I can move somewhere else. I can practice from anywhere, right?”His mood lifted once Peiss finished.“Now I feel ready to face the world again,” he said. “It makes a difference.”At least two more financiers came in. Even though bankers have barely begun to get back into their offices, the stock market has been booming, thanks in part to trillions of dollars of stimulus and support from the Federal Reserve. The government’s Paycheck Protection Program was supposed to help small businesses. Anzalone said he tried and failed to get a PPP loan.“We have to move forward,” he said. “Everything will work out in time. It has to — it should.”The business has survived bear markets, a terrorist attack and now a pandemic. Anzalone remembers how his father used to cut hair for Goldman bankers from a shop that shared another downtown building with the firm. His dad died at home two years ago this July. Anzalone gave him his final shave.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- SoftBank Group Corp. offloaded a large chunk of its stake in wireless carrier T-Mobile US Inc. stake at a discount, cementing a series of transactions that could fetch as much as $20 billion for the Japanese investment giant.The Tokyo-based company raised $14.8 billion from a sale of T-Mobile shares to institutional investors, SoftBank said in a statement. The offering of 143.4 million shares was priced at $103 apiece, representing a 3.9% discount to T-Mobile’s record high closing price on Tuesday.SoftBank is set to raise another $4.1 billion through several related deals that will see shares sold to Marcelo Claure, a T-Mobile board member, and other investors, according to the statement Wednesday. The total proceeds would rise to $20 billion if so-called over-allotment options are exercised.The deals are part of SoftBank’s broader $42 billion push to unload assets to finance stock buybacks and pay down debt. Masayoshi Son, the company’s founder, is dealing with steep losses in his Vision Fund after writing down the value of investments in the sharing economy from WeWork to Uber Technologies Inc.T-Mobile’s controlling shareholder, Germany’s Deutsche Telekom AG, has also been granted the right to buy 101.5 million shares in the U.S. carrier currently held by SoftBank, according to the statement. The stake is worth about $10.9 billion based on Wednesday’s closing price. Deutsche Telekom can exercise its options to buy the stock up to June 2024, according to a T-Mobile filing.SoftBank will now turn its attention to other assets in its portfolio and may pursue an outright sale of part of its stake in e-commerce giant Alibaba Group Holding Ltd. Son has said $11.5 billion raised from issuing contracts to sell stock in the Chinese company was a first step toward unwinding more of its holdings. SoftBank also plans to sell a 5% stake in its Japanese wireless subsidiary.Read more: SoftBank to Sell Slice of T-Mobile in a $21 Billion DealSoftBank agreed to pay T-Mobile $300 million as part of the transaction and will cover all fees and expenses related to the deal. The company became a co-owner of T-Mobile with Deutsche Telekom after the carrier took over Sprint Corp. this year in a $26.5 billion merger.SoftBank “needs to further enhance its cash reserves,” the Japanese company said in a statement on Tuesday, citing concerns for “a second and third wave of spread of Covid-19.” The Japanese investment giant may invest the proceeds in high-quality securities until they are used for buybacks or debt reductions.The stock offering was overseen by Goldman Sachs Group Inc., Morgan Stanley, Citigroup Inc., JPMorgan Chase & Co., Barclays Plc, Bank of America Corp., Deutsche Bank AG and Mizuho Financial Group Inc. PJT Partners Inc. served as financial adviser to T-Mobile’s board.(Updates with details of related transactions from third paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Palantir Technologies Inc., the data-mining company that has become a quiet force in government, policing and business since its founding in 2003, is adding the first woman to its board ahead of a planned public stock listing.The Silicon Valley company named a journalist, Alexandra Wolfe Schiff, as director, along with two men, according to an email sent to investors that was seen by Bloomberg. Wolfe Schiff is the daughter of novelist Tom Wolfe, who wrote “The Bonfire of the Vanities,” and has been a reporter at the Wall Street Journal since 2013. A spokeswoman for the paper said late Tuesday that Wolfe Schiff will be resigning before joining Palantir’s board.The other new directors are Spencer Rascoff, a founder of Zillow, and Alexander Moore, an early Palantir employee who is now a partner at venture capital firm 8VC. The group will consist of seven directors, expanding the four-man board chaired by billionaire co-founder Peter Thiel.The homogeny of Palantir’s board has been an obstacle standing in the way of its plan to hold an initial public offering this year. The Palo Alto, California-based company is looking to file paperwork confidentially with U.S. regulators this month and go public as soon as the fall, Bloomberg reported earlier this month. Palantir’s home state requires public companies by law to have at least one woman on their boards, and large financial firms, including BlackRock Inc. and Goldman Sachs Group Inc., have said they won’t support companies without demographically diverse boards.A complicating factor for Palantir’s public profile is the controversial uses of its products by some public agencies. The company supplies law enforcement and U.S. immigration officials with tools that have sparked protests over alleged discrimination, invasions of privacy and abuses of power. Unlike other tech leaders that have bowed to public pressure, Palantir Chief Executive Officer Alex Karp has resisted calls to sever contracts. He has maintained that Palantir has a moral obligation to provide the U.S. military with the best technology available, while arguing that it’s not a company’s role to decide public policy.Palantir told investors earlier this year it expects to break even for the first time in 2020 and generate $1 billion in revenue, with business split evenly between government and corporate customers. For the director search, a name on the wish list for several Palantir insiders was Condoleezza Rice, the former secretary of state who has worked with Palantir in various capacities over the years.It’s possible Palantir expands the board again later. The other three board members, besides Thiel and the new additions, are co-founders Karp and Stephen Cohen as well as longtime Thiel acquaintance, Adam Ross of Dallas-based Goldcrest Capital. They’re all White, except for Karp, who is half-Black.(Updates the status of Wolfe Schiff’s employment in the second paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.