atans1

“30-yr” GIC investment Citi almost junk

In Banks, GIC on 23/06/2012 at 9:25 am

15 major banks* (including another GIC investment UBS)  were hit with credit downgrades on Thursday that could do more damage to their profitability, credit worthiness and further unsettle equity markets.

The credit agency, Moody’s Investors Service, which warned banks in February that a downgrade was possible, cut the credit scores of banks to new lows to reflect new risks that the industry has encountered since the financial crisis.

Citigroup was among the hardest hit. After the downgrades, the bank stands barely above the minimum for an investment grade rating, a sign of the difficult business conditions it faces.

Banks have struggled to improve their profits against the backdrop of the European sovereign debt crisis, a weak American economy and new regulations. The downgrades may amplify their problems. With lower ratings, creditors could charge the banks more on their loans. Big clients may also move their business to less-risky companies, further affecting earnings.

Wonder if LKY, who made the 30-yr comment, has repented making the comment?

Update

Citi bitches: Citi said in a statement that Moody’s approach “fails to recognize Citi’s transformation over the past several years,” adding that “Citi strongly disagrees with Moody’s analysis of the banking industry and firmly believes its downgrade of Citi is arbitrary and completely unwarranted.”

But more woes: Citigroup seen as vulnerable to emerging markets’ currency movements Charles Peabody, an analyst for Portales Partners, estimated on “Bloomberg Surveillance” that $3 billion to $5 billion of Citigroup’s book value was vulnerable to changes in the value of the Mexican peso and the Brazilian real http://www.bloomberg.com/news/2012-06-20/citigroup-may-take-5-billion-hit-on-forex-peabody-says.html

Good news: It claims it is boosting revenue at its corporate and investment banking unit in with rising fees from debt underwriting and cash management as initial public offerings shrink http://www.bloomberg.com/news/2012-06-18/citigroup-asia-fees-rising-as-debt-sales-counter-equity-slowdown.html.

—–

*Bank of America, Citigroup Morgan Stanley, JPMorgan Chase, Goldman Sachs, Credit Suisse, Deutsche Bank, UBS, HSBC, Barclays, BNP Paribas, Crédit Agricole, Société Générale, Royal Bank of Canada, and Royal Bank of Scotland.

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  1. The world’s biggest bank isn’t in the U.S., where regulators banned lenders from proprietary trading, nor in Switzerland, which is doubling capital requirements. BNP Paribas SA is in France, which is doing neither.

    BNP Paribas’s assets rose 34 percent in the three years through June, reaching 2.24 trillion euros ($3.2 trillion), equal to the size of Bank of America Corp., the largest U.S. bank, and Morgan Stanley combined.

    At the end of the piece, there’s even a league table of what Bloomberg calls “the world’s 15 biggest banks by assets”, with BNP Paribas in first place and BofA in 5th.
    http://blogs.reuters.com/felix-salmon/2010/11/04/bnp-paribas-is-not-the-largest-bank-in-the-world/

  2. The concept of the 30 year bill/bond assumes that, along with managing it with short term debts.
    Everything is based on premise that national debts WILL be paid.

    No one every questions or challenges it because more paper is being printed. But it gets stuck in the banks, floats around in the financial industry and never gets out of the loop.

    The chance appearance once in a while is through speeding Ferraris & Luxury yachts.
    You & I will see higher prices rather than more money in our wallets.

    The banks have it all.. it is a closed circuit… the only thing that is left out to roam is inflation.

  3. That wasn’t an “investment.” These stocks are great for traders, not investors. You can make a fortune or lose your shirt quickly.

  4. Big banks craft “living wills” in case they fail
    NEW YORK/WASHINGTON (Reuters) – Five of the biggest banks in the United States are putting finishing touches on plans for going out of business as part of government-mandated contingency planning that could push them to untangle their complex operations.
    http://finance.yahoo.com/news/big-banks-craft-living-wills-075041248.html

  5. Barclays Fined £290m as Bid to Manipulate Interest Rates is Exposed
    By Jill Treanor, City Editor, The Guardian – June 28, 2012
    http://www.guardian.co.uk/business/2012/jun/27/barclays-chief-bob-diamond-bonus-fine

  6. CNBC Admits We’re All Slaves To ROTHSCHILD CENTRAL BANKERS GLOBAL GOVERNMENT

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