Archive for Government and Legislation
Citigroup (NYSE: C) Says Mexico Debt to be Listed in World Government Bond Index
Posted by: | CommentsCitigroup (NYSE: C) said that Mexico’s bonds are eligible to be included in the New York-based bank’s World Government Bond Index in an emailed statement on Wednseday.
Mexico “satisfies all three World Government Bond Index requirements — size, credit and barriers to entry,” said the company.
Mexico will join the World Government Bond Index after meeting the criteria for three straight months, becoming the first Latin American country in the index, said Citigroup.
The country’s inclusion will be effective in October 2010.
According to State Street Global Advisers, Citigroup’s World Bond Index “includes the most significant and liquid government bond markets globally that carry at least an investment grade rating. Currently, this includes all countries in the Citigroup EMU Governments Index (EGBI) and Australia, Canada, Denmark, Japan, Sweden, Switzerland, United Kingdom and the United States. Index weights are based on the market capitalization of qualifying outstanding debt stocks.”
This article (Citigroup (NYSE: C) Says Mexico Debt to be Listed in World Government Bond Index) was originally developed by and is property of American Banking News. Checkout American Banking News for up-to-date banking news and peer to peer lending news.
Morgan Stanley (NYSE: MS) To Win Big in Government Sale of Citigroup (NYSE: C) Shares
Posted by: | CommentsInvestment banking giant Morgan Stanley (NYSE: MS) will be a significant beneficiary in the US government plan to sell off its stake in Citigroup (NYSE: C) over the course of 2010. A contract between Morgan Stanley and the Treasury Department allows the company to charge a management fee for assisting in the sale of Citigroup shares and advising the government on additional bailout procedures in the future.
The Treasury Department recently chose Morgan Stanley to manage the sale process of its 7.7 billion shares in Citigroup. The agreement between the government and Morgan Stanley, stipulates that the bank will receive fees of $0.003 and $0.0175 per share, which equates to a range of $23 million to $135 million of estimated fees on the transaction. (these figures reported here by the New York Times) In addition to these fees, Morgan Stanley also stands to collect a $500,000 “administration fee” for its role. You can review the contract between Morgan Stanley and the Treasury Department here, thanks to the New York Times.
The governments’ 7.7 billion shares represent approximately 27% of outstanding shares of Citigroup, which were acquired in an effort to stabilize the company by purchasing preferred shares under the Troubled Asset Relief Program (TARP). The preferred shares were converted into common shares last summer, making the US government the largest stakeholder in Citigroup, and the Treasury Department indicated last month that it would begin divesting itself of its stake in Citigroup over the remainder of 2010.
There are justified fears that selling such a large stake in Citigroup will cause volatility in not only Citigroup shares, but also in the broader market. To counter those fears, the Treasury Department stated during its announcement that it would conduct the sale in “various means in an orderly and measured fashion.”
Despite initial fears that the sale would result in a loss for the Treasury, it now appears the Treasury Department will likely realize a gain on the sale of the shares. The shares were converted to common stock at approximately $3.25 per share, and Citigroup stock is currently trading well above the $4 per share mark, which if the price remains in this range, would equate to a gain in the billions of dollars.
The sale of Citigroup shares will end the short, but extremely controversial, stint of direct ownership of a bailed out financial institution during the US economic crisis. The Obama Administration, the Treasury Department, and the head of the Treasury Department – Timothy Geithner, have endured blistering criticism over the TARP program and ownership of Citigroup shares, and likely look forward to putting this controversial period behind them.
This article (Morgan Stanley (NYSE: MS) To Win Big in Government Sale of Citigroup (NYSE: C) Shares) was originally developed by and is property of American Banking News. Checkout American Banking News for up-to-date banking news and peer to peer lending news.
Similar to the health care bill, financial reform promises to be a battle as well with giant banks like Bank of America (NYSE:BAC), JPMorgan Chase (NYSE:JPM), Wells Fargo (NYSE:WFC) and Citigroup (NYSE:C) ready to go to war.
The question probably isn’t so much whether a financial reform bill will pass, but more if the bill will have any meaning to it, or whether it goes too far.
Republicans are ready to battle against much of the existing bill – which was largely drafted by Sen. Chris Dodd (D., Conn.) – by adding possibly into the hundreds of amendments to it, making it something completely different than Dodd envisioned.
Sen. Bob Corker (R., Tenn.), who has led negotiations for the Republicans concerning the bill, said it will pass through the banking committee, but only with Democratic votes propelling it forward. Corker added it will have a good chance of passing through the full Senate, assuming it’s in a highly modified form from what it is now.
The bill needs 60 votes to pass, and seems to have 59 votes at this time. Some feel it can be passed at this time, but has to be put together with a version from the House before a vote can take place. Because of that, certain procedural barriers could be used to keep the vote in limbo, effectively keeping the vote from coming to the floor.
There are quite a few amendments to be added to the bill before it has a chance of passing, including getting rid of a proposed liquidation fund which would put the burden of costs on the banking industry rather than taxpayers. Another amendment would keep the bulk of the power with the Federal Reserve rather than the Federal Deposit Insurance Corp. This supposedly is because the FDIC is more strict in its regulatory role than the Federal Reserve is.
Some of the more costly parts of the bill are being battled against as well by the industry, who presumably would look bad because these ultimately would be passed on to the consumer, making it more costly to do business with the banks.
It will be interesting to see if there’s anything left to Dodd’s bill once the changes are made, and whether it’ll be better to start over from scratch with input from other lawmakers included in the process of writing the bill.
This article (Bank of America (NYSE:BAC), JPMorgan Chase (NYSE:JPM), Wells Fargo (NYSE:WFC) and Citigroup (NYSE:C) Will Fight Financial Reform) was originally developed by and is property of American Banking News. Checkout American Banking News for up-to-date banking news and peer to peer lending news.