Were we all too fast to blame AIG (AIG)?

The insurance giant's role in precipitating the worldwide financial crisis has been covered at length since it teetered on the edge of disaster in September 2008, thanks to a series of high-risk transactions executed through its financial products group. Well, Goldman Sachs (GS), which has recovered quickly from last year's woes and is already figuring out how to pay some hefty bonuses, may have played a larger role in these transactions than everyone realized.

Continue reading Goldman Sachs had bigger role in AIG than realized

Goldman Sachs had bigger role in AIG than realized originally appeared on BloggingStocks on Mon, 14 Dec 2009 08:40:00 EST. Please see our terms for use of feeds.

Last night, Apple Inc. (NASDAQ: AAPL) announced plans to build its first East Coast data center. The facility will be located in North Carolina, which recently enacted tax breaks to lure the popular tech company, but no specific site has yet been selected. Apple is expected to pour more than $1 billion into the project over the next nine years.

Apple spokeswoman Susan Lundgren declined to say how the data center will be used. In a statement, the tech firm said only, "We're looking forward to building a new data center in North Carolina, and we appreciate the efforts of Gov. Perdue and state lawmakers who helped make it possible." Construction is expected to begin soon.

In other Apple news today, the company is attracting bullish attention from Societe Generale. The brokerage firm started coverage of AAPL with a Buy rating and a $160 price target.

Continue reading Apple sets sights on North Carolina, scores Buy recommendation

Apple sets sights on North Carolina, scores Buy recommendation originally appeared on BloggingStocks on Thu, 04 Jun 2009 12:30:00 EST. Please see our terms for use of feeds.

Banks around the world have been raising capital in the last few months. If the market is efficient, then the cost of capital for these banks should tell us something about how risky they are. Based on the relative cost of capital of banks in the U.S. compared to those in France, Germany and Switzerland, the world's riskiest banks are right here in the good old USA. The safest banks? French ones.

How so? Here is the rough (due to different capital structures) after-tax cost of capital for the banks in different countries:

• U.S.: Morgan Stanley (NYSE: MS) is paying a 17% interest rate and Goldman Sachs Group (NYSE: GS) pays almost 17%
• UK: Barclays pays 16%; HBOS, Lloyds TSB; and Royal Bank of Scotland pay about 12%
• Germany: Commerzbank pays 10%
• Switzerland: UBS's interest rate is relative bargain of 9.9%
• France: BNP Paribas, Societe Generale, and four others pay the lowest rate -- 5% -- for their capital

Maybe there's some sort of trading opportunity to short U.S banks and go long French ones. C'est la vie!

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College. His eighth book, You Can't Order Change: Lessons From Jim McNerney's Turnaround at Boeing, will be published by Portfolio on December 26, 2008. He has no financial interest in Goldman or Morgan Stanley securities.

American banks pay the most for their capital originally appeared on BloggingStocks on Wed, 19 Nov 2008 16:45:00 EST. Please see our terms for use of feeds.

The Wall Street Journal's lead (subscription required) tells the story without a hint of irony:

The French Banking Commission Friday said it fined Société Générale €4 million ($6.3 million) for failures in its internal procedures relating to the €4.9 billion loss linked to an alleged rogue trader fraud.

I'm all for regulating being tough on corporate governance, but this fine is a head scratcher. Isn't losing $7.7 billion a sufficient punishment for failures in internal procedures? Do we really need to tack on another $6.3 million. Is this supposed to serve as a deterrent? I can imagine the boardroom discussion:

"Ya know how we lost $7.7 billion?"

"Yeah! Who cares? It's just money."

"We're being fined 1/10th of 1% percent of that amount as punishment for it."

"Oh dear! We better get cracking on fixing our internal controls!"

I'm just not sure what the point of this fine and, by fining the company, the only ones who are hurt are the shareholders, albeit not on a material scale. This fine is the equivalent of giving time out to a child who just got hit by a car to teach him not to cross the street without looking both ways.

Why is Societe Generale being fined for losing $7.7 billion? originally appeared on BloggingStocks on Sun, 06 Jul 2008 11:40:00 EST. Please see our terms for use of feeds.

The growth of the ultra-rich is not just something happening in the U.S. It's a global megatrend, especially in light of the commodities boom in developing nations.

The trend is a big opportunity for wealth managers, such as Rockefeller Financial Services (RFS). In fact, according to a piece in Reuters, the firm has struck an alliance with Societe Generale (SocGen). To this end, SocGen has purchased a 37% stake in RFS (the dollar amount was not disclosed).

SocGen, which has a wealth management division, is no slouch in helping the ultra-rich. But with the strong growth rates and premium fees, why not expand the platform?

As for RFS, it has roughly $29 billion in assets. Oh, and to qualify as an ultra-rich person (and become a client of RFS), you'll need to show that you're worth at least $30 million. There are about 40,000 of them in the US.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

SocGen and Rockefeller team up for the ultra-rich originally appeared on BloggingStocks on Tue, 17 Jun 2008 10:48:00 EST. Please see our terms for use of feeds.

Societe Generale rogue trader contests his firing originally appeared on BloggingStocks on Thu, 03 Apr 2008 14:54:00 EST. Please see our terms for use of feeds.

Broker arrested as Societe Generale plot thickens originally appeared on BloggingStocks on Wed, 12 Mar 2008 14:37:00 EST. Please see our terms for use of feeds.

MOST NOTEWORTHY:

• Oppenheimer upgraded shares of Northrop Grumman (NYSE: NOC) to Outperform from Perform after the Pentagon selected the company over Boeing (NYSE: BA) for the newly designated KC-45A Aerial Refueling Tanker with a potential value of $35B.
  
• Citigroup upgraded shares of Groupe Danone (OTC: GDNNY) to Buy from Hold on valuation, as they believe the sell-off on commodity cost concerns is overdone.
  
• MercadoLibre (NASDAQ: MELI) was raised to Outperform from Sector Perform at RBC Capital, as they believe MELI's long-term thesis is more compelling now vs. six months ago and notes favorable reaction to Mercado Pago v2.0.

• Goldman upgraded Societe Generale (OTC: SCGLY) to Neutral from Sell.
  
• Jefferies upgraded Exelon (NYSE: EXC) to Buy from Hold.
  
• Deutsche Telekom (NYSE: DT) was raised to Neutral from Underweight at JP Morgan.

Analyst upgrades: NOC, GDNNY and MELI originally appeared on BloggingStocks on Mon, 03 Mar 2008 11:11:00 EST. Please see our terms for use of feeds.

MOST NOTEWORTHY:

• Lehman upgraded Pfizer (NYSE: PFE) to Equal Weight from Underweight on valuation.
  
• Friedman Billings raised Dell (NASDAQ: DELL) to Outperform from Market Perform, citing expectations for improved margins next quarter, and valuation.
  
• Quest Diagnostics (NYSE: DGX) was upgraded to Outperform from Neutral by Credit Suisse, which cited valuation.
  
• Lehman upgraded shares of Societe Generale (OTC: SCGLY) to Overweight from Underweight to reflect a potential takeover by BNP Paribas and limited downside.

• Bayer (OTC: BAYRY) was raised to Overweight from Equal Weight by Lehman.
• Deutsche Telekom (NYSE: DT) was upgraded to Hold from Sell by Citigroup.
• Public Storage (NYSE: PSA) was raised to Buy from Hold by Deutsche Bank.
• UBS raised Entergy (NYSE: ETR) to Buy from Neutral.

Analyst upgrades: PFE, DELL DGX and SCGLY originally appeared on BloggingStocks on Fri, 29 Feb 2008 11:28:00 EST. Please see our terms for use of feeds.

Societe Generale, in trouble because of losses suffered due to transactions by one trader, will raise almost $8 billion. The rights offering is at an astonishing 39% discount to the price as of the Friday close.

According to The Wall Street Journal, "the bank also said write-downs linked to fallout from the U.S. subprime-debt crisis would be €2.6 billion, compared with the €2.05 billion announced in January." In other words, it is in deep distress.

A sale of shares at a 39% discount raises a question about the valuation of US banks, should they be put in a position to raise more money due to larger subprime write-offs or write-downs in their LBO portfolios. American money center banks may have to take more losses in the early quarters of this year as a recession further devalues some of their assets.

To put it in stark relief, a rights offering at Citigroup (NYSE:C) at a 39% discount would price shares at $16 compared to their current $26 level which is down from a 52-week high of $55.55.

Douglas A. McIntyre is an editor at 247wallst.com.

With Societe Generale raising capital at discount, what is value of US banks? originally appeared on BloggingStocks on Mon, 11 Feb 2008 04:30:00 EST. Please see our terms for use of feeds.

Continue reading What Jerome Kerviel demonstrated, MIT proves

What Jerome Kerviel demonstrated, MIT proves originally appeared on BloggingStocks on Thu, 31 Jan 2008 10:58:00 EST. Please see our terms for use of feeds.

While investors on the west side of the Atlantic lament the corruption in the U.S. banking system, it could be that the French system takes home the gold medal. Reports out of the Paris prosecutor's office indicate that rogue trader Jerome Kerviel told investigators, "I can't believe that my superiors were not aware of the amounts that I was committing, it is impossible to generate such profits with small positions."

If this is true, and SocGen knew what was happening all along, then former CEOs like Citigroup's (NYSE: C) Chuck Prince and E*Trade's (NASDAQ: ETFC) Mitch Kaplan will look like choir boys in comparison.

One company that has actually gained from all of this, especially on the heels of the SocGen announcement, is the Israeli security company NICE Systems (NASDAQ: NICE). They recently purchased a company called Actimize which has a anti-fraud product for banks, to help prevent situations like this recent debacle.

What to make of all of this? There will always be banks, and they will always get a little too piggy and screw things up. It's NICE to know that there are some company's out that can try and reign in these guys and save the investor some money.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer has a position and is long NICE and ETFC. He has no positions in any other stock mentioned as of 1/29/08.

Did SocGen know about all the risk taking? originally appeared on BloggingStocks on Tue, 29 Jan 2008 15:48:00 EST. Please see our terms for use of feeds.

Societe Generale trader Jerome Kerviel may face criminal charges originally appeared on BloggingStocks on Mon, 28 Jan 2008 13:47:00 EST. Please see our terms for use of feeds.

French bank Société Générale says that it has uncovered a "fraud" by a single trader which lost the bank $7.1 billion. According to MarketWatch, the fraudulent trades were made in 2007 and 2008. The trader, whose role at the bank was to make "plain vanilla" hedges on European stock-market indexes, used his knowledge of the bank's control procedures "to conceal these positions through a scheme of elaborate fictitious transactions."

Société Générale plans to raise €5.5 billion to help offset the loss.

The French bank did not disclose much about how the loss happened or what the trader's motivation might have been. Perhaps that does not matter. What does matter is the the actions get to the heart of risk management at big banks. At a number of U.S. financial companies, traders clearly took huge positions in subprime instruments. That has cost some of the largest banks in this country billions in write-offs. No one has offered an adequate explanation of who was minding the store when those risky decisions were made.

The Société Générale news is just more of the same. Managements at big banks have not learned the lesson.

Douglas A. McIntyre is an editor at 247wallst.com.

Societe Generale's $7.1 billion fraud: Will managements ever learn? originally appeared on BloggingStocks on Thu, 24 Jan 2008 08:57:00 EST. Please see our terms for use of feeds.

The Associated Press reports that France's second-largest bank by market capitalization, Societe Generale, has uncovered a rogue trader who reportedly stole $7.14 billion -- forcing the bank to raise $8.02 billion and suspending trading in its stock on the Paris stock exchange.

Details are sketchy. The bank discovered the fraud on January 19 and 20th. It said a trader at the futures desk had misled investors in 2007 and 2008 through a "scheme of elaborate fictitious transactions." The trader used his knowledge of the group's security systems to conceal his fraudulent positions. The unnamed trader beats Nicholas Leeson, whose 1995 $1.38 billion trading fraud in Singapore brought down Barings Bank and was made into a movie.

Societe General, whose stock has lost about half its value over the last six months, has already taken a $3 billion charge for bad subprime mortgages. No word on what happened to the trader's $7 billion -- or whether this discovery will have repercussions throughout the global financial markets.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.

French trader's $7 billion swindle slams Societe Generale originally appeared on BloggingStocks on Thu, 24 Jan 2008 08:23:00 EST. Please see our terms for use of feeds.

A government bail-out of UK mortgage bank Northern Rock sent Europe banking shares sharply lower and set similar trouble for US bank shares. Northern Rock was down 27% on news that the Bank of England had to supply it emergency funding.

Barclays was off 3.2% Commerzbank fell almost 5%. BNP Paribas and Societe Generale were of about 3.5%.

Flash: Europe banking shares collapse on mortgage problem originally appeared on BloggingStocks on Fri, 14 Sep 2007 07:12:00 EST. Please see our terms for use of feeds.