U.S. banks' Russian investment banking fee income in doubt after Moscow sanctions - Reuters

Investment

U.S. banks' Russian investment banking fee income in doubt after Moscow sanctions – Reuters

Published

2 years ago

February 27, 2022

FILE PHOTO: The logo of VTB Group is seen through a window of Imperia Tower on the facade of the Federatsiya (Federation) Tower at the Moscow International Business Center also known as “Moskva-City”, in Moscow, Russia, in this August 5, 2015. REUTERS/Maxim Zmeyev/File Photo

Register now for FREE unlimited access to Reuters.com

NEW YORK, Feb 27 (Reuters) – Western sanctions on Moscow could throw the small but lucrative Russian investment banking business that several large U.S. banks have maintained into question, lawyers said, which could deal a hit to tens of millions of dollars in fees.

Major U.S. banks, including JPMorgan Chase & Co (JPM.N), Morgan Stanley (MS.N) and Citigroup Inc (C.N), have continued to underwrite and advise on Russian deals, often alongside the investment banking arm of state-owned VTB (VTBR.MM). VTB Capital is the largest investment bank by fees in Russia.

But U.S. sanctions placed on Thursday on VTB and Sberbank (SBER.MM) in the wake of Russia’s invasion of Ukraine make the prospect of doing so in the future difficult, lawyers said. That’s only been compounded by the moves to block certain Russian banks’ access to the SWIFT international payment system, announced Saturday. read more

Register now for FREE unlimited access to Reuters.com

All the U.S. banks declined comment.

Under the U.S. sanctions, any assets of VTB, including 20 subsidiaries, that touched the U.S financial system would be frozen and U.S. persons would be prohibited from dealing with them. read more

The sanctions against VTB, which one lawyer said were as severe as those placed against terrorist organizations, would raise new reputation and compliance risks for banks doing business in Russia and make it impossible for U.S. banks to work with VTB on any deals, that lawyer said.

“These are very strong sanctions on the financial system,” said Clay Lowery, executive vice president at the Institute of International Finance, a Washington-based bank group.

One of the lawyers who advises financial institutions said the sanctions were “a brick wall,” and for banks there was now a reputation risk of dealing with Russia, even when it is not one of the sanctioned entities.

Ross Delston, a U.S. lawyer and former banking regulator, said that the moves on SWIFT would result in Russia being viewed as “radioactive” by banks in the U.S. and Europe.

Still, some see a future for U.S. banks in Russia despite the measures.

A source familiar with one U.S. bank in Moscow said that they were working out how to apply the sanctions and recognized there would be an impact on how to conduct investment banking business. But the source added that the bank was not considering pulling out of the country.

A source close to another U.S. bank said that even if VTB could not be in deals such as IPOs or M&A, other banks could replace it – as long as those banks are not also subjected to sanctions. That source said the sanctions were not an insurmountable problem for the international banks, adding that there were other segments of the market and sources of revenue for international banks.

VTB said in a statement on Thursday that sanctions had “been a reality for us over the past few years” and the bank has “had time to learn the lessons and prepare for the most severe scenario.” The bank did not respond to follow up questions.

Investment banking business in Russia has been dwindling since 2014, when the United States sanctioned Moscow for invading Crimea. But U.S. banks managed to retain a toehold in the market.

Russia accounted for 0.27% of the global fee pot last year, including advisory and underwriting fees on mergers and acquisitions, equity and debt capital markets. In 2013, Russia accounted for nearly 1% of the fee pool.

Even so, the number translates to sizeable fees. The investment banking arm of Russia’s No.2 bank, VTB Capital, collected $142.9 million – or a third – of the fees earned in Russia in 2021, Refinitiv data showed.

JPMorgan was second overall with $32.8 million, Morgan Stanley fourth, generating $27.3 million, and Citigroup fifth with $22.8 million, while Goldman Sachs was seventh, generating $19.5 million.

Register now for FREE unlimited access to Reuters.com

Reporting by David French and Megan Davies; additional reporting by Pete Schroder; Editing by Paritosh Bansal, Marguerita Choy and Diane Craft

Our Standards: The Thomson Reuters Trust Principles.

Adblock test (Why?)

Source link

Investment

Everton search for investment to complete 777 deal – BBC.com

Published

1 hour ago

April 23, 2024

Getty Images

Shamoon Hafez

BBC Sport football news reporter

@ShamoonHafez

2 hours ago

Everton are searching for third-party investment in order to push through a protracted takeover by 777 Partners.

The Miami-based firm agreed a deal to buy the Toffees from majority owner Farhad Moshiri in September, but are yet to gain approval from the Premier League.

On Monday, Bloomberg reported the club’s main financial adviser Deloitte has been seeking fresh funding from sports-focused investors and lenders to get 777’s deal over the line.

BBC Sport has been told this is “standard practice contingency planning” and the process may identify other potential lenders to 777.

Sources close to British-Iranian businessman Moshiri have told BBC Sport they remain “working on completing the deal with 777”.

It is understood there are no other parties waiting in the wings to takeover should the takeover fall through and the focus is fully on 777.

The Americans have so far loaned £180m to Everton for day-to-day operational costs, which will be turned into equity once the deal is completed, but repaying money owed to MSP Sports Capital, whose deal collapsed in August, remains a stumbling block.

777 says it can stump up the £158m that is owed to MSP Sports Capital and once that is settled, it is felt the deal should be completed soon after.

Warren Buffett Predicts 'Bad Ending' for Bitcoin — Is It a Doomed Investment? – Yahoo Finance

Published

2 hours ago

April 23, 2024

NanoStockk / Getty Images

Currently sitting in sixth on Forbes’ Real-Time Billionaires List, Berkshire Hathaway co-founder, chairman and CEO Warren Buffett is a first-rate example of an investor who stuck to his core financial beliefs early in life to become not only a success but a once-in-a-lifetime inspiration to those who followed in his footsteps.

One of the most trusted investors for decades, the 93-year-old Buffett isn’t shy to pontificate on his investment philosophy, which is centered around value investing, buying stocks at less than their intrinsic value and holding them for the long term.

He’s also quite vocal on investments he deems worthless. And one of those is Bitcoin.

Sponsored: Protect Your Wealth With A Gold IRA. Take advantage of the timeless appeal of gold in a Gold IRA recommended by Sean Hannity.

Buffett’s Take on Bitcoin

Over the past decade, it’s been clear that the crypto craze isn’t something Buffett wants any part of. He described Bitcoin as “probably rat poison squared” back in 2018.

“In terms of cryptocurrencies, generally, I can say with almost certainty that they will come to a bad ending,” Buffett said in 2018. And his stance hasn’t wavered since. According to Benzinga, Buffett believes that cryptocurrencies aren’t a viable or valuable investment.

“Now if you told me you own all of the Bitcoin in the world and you offered it to me for $25, I wouldn’t take it because what would I do with it? I’d have to sell it back to you one way or another. It isn’t going to do anything,” Buffett said at the Berkshire Hathaway annual shareholder meeting in 2022.

Although the Oracle of Omaha has his misgivings about the unpredictable investment, does that mean crypto is doomed as an investment? Not necessarily.

For You: 10 Valuable Stocks That Could Be the Next Apple or Amazon

Is Buffett Wrong About Bitcoin?

Bitcoin bulls argue that while it’s not government-issued, cryptocurrency is as fungible, divisible, secure and portable as fiat currency and gold. Because they occupy a digital space, cryptocurrencies are decentralized, scarce and durable. They can last as long as they can be stored.

Crypto boosters continue to predict massive growth in the coin’s value. Earlier this year, SkyBridge Capital founder and former White House director of communications Anthony Scaramucci told reporters that Bitcoin could exceed $170,000 by mid-2025, and Ark Invest CEO Cathie Wood predicts Bitcoin will hit $1.48 million by 2030, according to Fortune.

“They really don’t understand the concept and the whole history of money,” Scaramucci said of crypto critics like Buffett on a recent episode of Jason Raznick’s “The Raz Report.” Because we place a value on “traditional” currency, it is essentially worthless compared with the transparent and trustworthy digital Bitcoin, Scaramucci said.

Currently trading around the $66,000 mark, Bitcoin is up nearly 50% in 2024. This means it’s massively outperforming most indexes this year, including the S&P 500, which is up about 6% in 2024.

Although Berkshire Hathaway has invested heavily in Bitcoin-related Brazilian fintech company Nu Holdings, which has its own cryptocurrency called Nucoin, it’s possible Buffett will never come around fully to crypto, despite its recent surge in value. It’s contrary to the reliable investment strategy that has served him very well for decades.

“The urge to participate in something where it looks like easy money is a human instinct which has been unleashed,” Buffett said. “People love the idea of getting rich quick, and I don’t blame them … It’s so human, and once unleashed you can’t put it back in the bottle.”

More From GOBankingRates

This article originally appeared on GOBankingRates.com: Warren Buffett Predicts ‘Bad Ending’ for Bitcoin — Is It a Doomed Investment?

Adblock test (Why?)

Source link

Investment

Ping An Profit Falls as Market Declines Hurt Investment Returns – BNN Bloomberg

Published

7 hours ago

April 23, 2024

(Bloomberg) — Ping An Insurance (Group) Co.’s profit dropped 4.3% in the first quarter as stock-market declines and falling bond yields eroded investment returns.

Net income fell to 36.7 billion yuan ($5 billion) in the three months ended March 31, from 38.4 billion yuan a year earlier, the Shenzhen-based company said in a filing to the Hong Kong stock exchange Tuesday.

Operating profit, which strips out one-time items and short-term investment volatility, fell 3%.

China’s stock market rout at the start of the year and lower bond yields have weighed on insurers’ investment returns. They hurt profit even as more customers seek to buy savings products. Co-Chief Executive Officer Michael Guo said last month that profitability will recover after a 23% drop in net income last year.

“China’s macroeconomy gradually recovered in the first three months of 2024, but there were still challenges,” the company said in a statement, citing weak domestic demand. “In response to volatile capital markets and declining treasury yields, Ping An continued to pursue long-term returns through cycles via value investing.”

Read More: Ping An Trust Wins First Court Ruling Over Delayed Trust Product

Net investment yield of insurance funds dropped to 3%, the statement said, down from 3.1% a year earlier. Real estate investments fell to 4.2% of the 4.9 trillion yuan portfolio, from 4.6% the year earlier.

The CSI 300 Index slumped as much 7.3% this year through the start of February, before government intervention fueled a rally.

New business value, which gauges the profitability of new life policies sold, rose 21% in the first quarter. That followed a 36% jump last year as the company’s efforts to improve the productivity of life agents started to bear fruit. NBV per agent jumped 56% from a year earlier, the statement said.

Ping An shares rose 3% to HK$33.00 in Hong Kong trading on Tuesday, trimming the year’s loss to 6.7%.

(Updates with company comment in fifth paragraph, more details afterwards)

Adblock test (Why?)

Source link