Almost everyone passed the stress tests.
Odd man out was Zions, though others cut it close. Barclays: "Overall, the biggest pre-tax losses estimated under the stress test were located at Bank of America ($50.8bn), Citigroup ($49.9bn), and JPMorgan ($39.2bn), largely due to loan-loss provisioning and trading losses." Tune in next week, when we'll learn who gets to return capital.
The Bank of England was cool with FX manipulation.
Remember we talked yesterday about what market manipulation is? Is it market manipulation if you share your client orders with other dealers in order to smooth out volatility at the end-of-day foreign exchange fixing? Ooh I really don't know, but apparently the Bank of England didn't think so in 2012, and so told currency dealers to go right ahead and do it. Reuters says that a dealer who attended a Bank meeting "told fellow traders the next day that Bank officials had agreed there were advantages to sharing client order information to minimize market volatility around daily reference rates known as 'fixings.'" You can easily sympathize with that goal while also thinking this is kind of scandalous, especially in hindsight. And especially with regulators having acted so shocked, shocked by the information-sharing.
Masayoshi Son is not cool with Barclays.
Basically every bank is underwriting the hugely lucrative Alibaba initial public offering, except Barclays, which advised Charlier Ergen's efforts to buy Sprint, which SoftBank also wanted and eventually got. SoftBank, founded by Masayoshi Son, is also a big Alibaba shareholder, and convinced Alibaba to cut Barclays out of its IPO. Because revenge is best served in the form of denying league table credit and fees. Here's Erik Gordon, a Michigan business professor:
“It is counter to the interest of a company to cut out a globally important underwriter simply because a major stockholder wants to punish it,” he wrote in an e-mail. “Powerful people who want revenge should not use third parties to wreak it.”
Possibly true, though I have my doubts that Alibaba really needs nineteen bookrunners or whatever they're up to. In any case, that's life. If you think your client is just the abstract corporation, and not its managers and directors and major shareholders, you will not get very far in banking.
Banks like rich clients.
"The needs of the ultrahigh-net-worth [individuals] go beyond the management of their money," says the former head of Citi Private Bank's concierge service, which is absolutely true though not in itself an argument that banks should be meeting those needs. As a not-ultrarich person, I am perfectly happy with my bank meeting my money needs and my, like, coffee shop meeting my coffee needs. The ultrarich seem to be different, so banks are offering "so-called lifestyle-advisory services, which are typically included in a wealth-management plan, as a tool to attract and retain ultrarich clients at a time of heightened competition." and it's things like helping them buy art or planes or hiring eldercare nurses or arranging charter flights or getting their kids into college. Really -- one advisor not only set up a college tour for a client's kid, but also "got another client to provide an alumni recommendation for the child at one college." The kid got in, though I would love to have seen that recommendation.
Airbnb might be worth more than Hyatt.
A lesson here is that the riskless middleman model might be more attractive than, like, owning buildings and employing hotel staff and so forth.
Bond dealers price discriminate.
The SEC is investigating. Here is one view:
Electronic credit trading “replicates and automates how the market works,” reflecting that for years dealers have shown investors different prices depending on how much business they do, said Brad Golding, a managing director at Christofferson Robb & Co., a New York-based asset manager.
You know who else shows customers different prices depending on how much business they do? Yep, that's right, pretty much every business.
I was not nominated to be the next Delaware Chancellor.
Some guy named Andre G. Bouchard was. Apparently he is a leading Delaware lawyer and recently won the Rural Metro M&A case, which is nice for him, but I blogged about it, so. DealBook thinks that "he is unlikely to be as colorful as Chancellor Strine, who would often pepper his remarks with quips and references to popular culture," which I hope Bouchard takes as a challenge.
Don't use Hotmail!
Apparently a Microsoft employee leaked some code to a journalist, Microsoft found out about it, and Microsoft searched the journalist's Hotmail account to find more information. That seems ... bad? Microsoft thinks you should be cool with it though.
To contact the writer of this article: Matt Levine at email@example.com.
To contact the editor responsible for this article: Tobin Harshaw at firstname.lastname@example.org.