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Today's Top News1. Bank of America urges employees to provide better service
When it comes to customer service, Bank of America is apparently going back to basics. The bank had the lowest score among national banks in the most recent American Customer Satisfaction Index, and big banks in general lagged thrifts and small banks. Bank of America CEO Brian Moynihan sent a letter to all 270,000 employees informing them that better customer service is now a priority at the bank. "Giving an example of how to improve customer service, Moynihan says in the letter that customer call centers should provide the same 'problem-solving approach' to helping customers as the bank's Merrill Lynch financial advisers and U.S. Trust private bankers, which work with wealthier clients. The letter also highlights efforts to provide more clear communications with customers and initiatives to put investment specialists and mortgage loan officers in branches," according to the Chicago Tribune. The detailed strategy was not released in the letter, but employees will no doubt be hearing more about this. The company kicked off a new customer service push this week, and meetings with top company executives about customer service will be scheduled soon. In the end, it's the little things that might prove helpful at the retail level. A simple smile would do wonders. On the phone, a perky voice always helps. No matter how good the service, surly reps leave a sour taste in the mouths of customers. For more: Related articles: Read more about: banks, Customer Service 2. Dick Bove even more bullish on banks
Star bank analyst Dick Bove, newly ensconced at Rafferty Capital, sees a virtuous 14-year cycle opening up for banks. He's bullish on the entire industry, a point of view he made clear in a lunch with journalists this week. "What I'm suggesting is for the next 14 years — you'll have some setbacks, some recessions — (but) bank earnings will do what they did from 1992 to 2006," according to a quote in CNBC. "They're going to go straight up." There will of course be some setbacks along the way, but he fully expects bank stocks to end much higher. Right now, he's especially bullish on Goldman Sachs, with Bank of America, JPMorgan Chase and Citigroup not far behind. He also likes regional banks PNC Financial, Comerica and Fifth Third, as well as boutiques such as Lazard Capital, Greenhill and Evercore among advisory firms. He's less bullish on Wells Fargo and State Street, given their lofty current valuations. His long-term bull view is predicated on a rebound in economic growth, which he expects to be evident in the second half of 2013. He thinks that QE3, unlike QE1 and QE2, will be a stunning success, as the money targeted at mortgages will boost the economy. Combined with bank cost controls now in place, the results will be record earnings. For more:
Read more about: Richard Bove, Bank Stocks 3. Deal environment improves for all but largest mergers
The fourth quarter marked a long-talked about turnaround in the market for mergers. Global M&A volume soared 40 percent in the quarter, hitting its highest level since the financial crisis of 2008 set in, by one estimate. We're seeing lots of confirmation of this general sentiment. A great example is the strong earnings from Evercore. Earnings excluding special items surged to $35.3 million, or $0.81, topping the average analysts' estimate of about $0.52. The big driver was the bank's deal-making units. For the fourth quarter, Evercore rang up $195.5 million in investment banking revenue, compared with $92.6 million year over year. Evercore advised on deals including auto lender Ally Financial Inc.'s $4.1 billion sale of its Canadian assets to RBC and MetroPCS Communications' planned merger with T-Mobile USA. Bloomberg, however, notes that despite the resurgence, "history shows that the largest mergers are often more trouble than they're worth. About two-thirds of company takeovers exceeding $20 billion since 1996 -- including the unions of Pfizer Inc. and Pharmacia Corp., Sprint Corp. and Nextel Communications Inc., and Daimler- Benz AG and Chrysler Corp. -- generated losses for the acquirer's shareholders, according to data compiled by Bloomberg. The 78 buyers lagged behind the MSCI World Index by a median of 13 percentage points in the three years after completing the transactions, falling 21 percent, the data show." That said, we're likely to see more big deals, especially if Dell is able to pull off an LBO. One might argue that the prospects for better returns are in place, as target prices, while getting pricier, remain favorable, as interest rates remain low and as the economic cycle turns up. Bankers will no doubt be making a better case for the returns on big deals going forward. For more: Read more about: mergers, deals 4. Bank regulatory push weakens, but isn't a failure
Five years have past since the financial crisis of 2008, and it should be acknowledged that the banking industry's lobbyists have been successful in shaping the once-aggressive regulatory push. Lobbyists have scored some significant wins in terms of the long-running implementation of Dodd-Frank in key areas. A great example might be the on-going, Dodd-Frank-mandated effort to re-create the OTC derivatives markets. Banks have been able to influence the implementation in key technical areas, such that the move to central clearinghouses and SEFs and the like. At this point, it would appear that the emerging trading structure will likely prove favorable to the big dealers. Another win was delivered recently, when banks were given a significant reprieve on the liquidity coverage ratio (LCR). They'll have four more years to meet key targets, and they'll be able to use a longer list of assets that will satisfy the requirement, including mortgage-backed securities. The additional securities, however, will be marked down more aggressively than those that would have been eligible under the original LCR, and they will only be able to count for up to 15 percent of a bank's LCR buffer. The Washington Post notes the big picture here, writing that, "some of the proposals once considered core to a safe, post-Lehman system have been delayed and weakened, and others have been played down, at least for now, as too politically complex. In other cases, the world is heading toward a patchwork." Still, it would be hard to argue that the system isn't safer. The progress might not have been as strong as originally intended, but the system on balance may be better off. For more: Related articles: Read more about: capital 5. Wasendorf gets 50 years in prison
The saga of Russell Wasendorf Sr. was riveting from the start. The CEO of the Peregrine Financial Group, based in Cedar Falls, Iowa, an unlikely locale for high financial crimes, was found unconscious and near-death in his car in the company parking lot. He had tried and failed to kill himself, leaving a detailed note that ran through his crimes over 20 years in the futures industry. All told, he was able to steal $215 million, which goes a long way in Cedar Falls. For 20 years, he was able to get away with stunning embezzlement, leading some to later dub him the Bernard Madoff of the Midwest. He achieved his crimes less by technical knowledge of market structure and proprietary technology and more by sheer force of personality. He was the only employee with access apparently to accounts owned by clients, and he became adept at forging statements before they were forwarded to the client. Some of that $215 million was put toward good causes. He was a rock star in the regional philanthropic scene. But none of that excuses what he did. A judge has fittingly sentenced him to 50 years in prison, with no chance of parole, which is what the prosecution had requested. He is 64 years old now. For more: Related articles: Read more about: fraud, prison Also NotedSPOTLIGHT ON... Blackstone earnings sparkle Blackstone's reported "economic net income" of $0.59 per share in the fourth quarter, easily beating the average estimate of about $0.47. The earnings report bodes well for other private equity-oriented alternative investment companies that will report soon. The earnings at Blackstone were powered in part by strong business in core private equity, hedge funds and credit units. Earnings from real estate were a bit disappointing. Article Company News: Regulatory News:
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Friday, February 1, 2013
| 02.01.13 | Bank of America urges employees to provide better service
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