Author Archives: Blanco

Goldman Sachs beats analysts’ estimates for first quarter profit while markets impacted revenue

15 Apr 19
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By Hugh Son

Source https://www.cnbc.com/2019/04/15/goldman-sachs-earnings-1q-2019.html

 

Goldman Sachs posted first quarter profit that exceeded analysts’ expectations, while company-wide revenue missed on tougher market conditions for two of the firm’s main divisions.

The bank generated $2.25 billion of profit in the period, or $5.71 a share, compared with the $4.89 estimate. Meanwhile, revenue dropped 13% to $8.81 billion on lower results in the bank’s Wall Street trading and Investing and Lending segment, below analyst’s $8.9 billion estimate. Shares seesawed from losses to gains following the report.

“We are pleased with our performance in the first quarter, especially in the context of a muted start to the year,” Goldman CEO David Solomon said in the release. “Our core businesses generated solid results driven by our strong franchise positions. We are focused on new opportunities to grow and diversify our business mix and serve a broader range of clients globally.”

Goldman’s investment banking division posted revenue of $1.81 billion, roughly unchanged from a year earlier, as the firm’s advisory revenue jumped 51%

The bank’s board voted to increase its quarterly dividend by 5 cents to .85 cents per share, a move that had been expected by investors.

It’s only Solomon’s second quarter running the bank, but analysts will have plenty of questions for him.

The investment bank, which historically counted governments, corporations and hedge funds as clients, took a notable step in its journey into consumer finance last month when its joint credit card with Apple was announced. Analysts will want to know what the economics of the deal mean for the New York bank.

Still, of the six biggest U.S. banks, Goldman is the most dependent on Wall Street activities, and that means analysts will want to know how the firm’s trading operations fared in the quarter. J.P. Morgan Chase said last week that first-quarter trading revenue dropped 17 percent to $5.5 billion.

Solomon or his CFO Stephen Scherr might also provide updates on a strategic review announced in October and progress on the bank’s $5 billion revenue-boosting plan, according to analyst Jason Goldberg of Barclays.

Another topic of discussion may be the bank’s 1MDB scandal. Goldman’s shares were battered last year in part because of the ordeal, in which an ex-Goldman partner admitted to helping a Malaysian financier loot an investment fund of billions of dollars.

The shares have partially recovered this year, climbing more than 20 percent.

Here’s what Wall Street expected:

Earnings: $4.89 a share, down 30% from a year ago, according to Refinitiv.
Revenue: $8.9 billion, down 10% from a year earlier.
Trading Revenue: Equities $1.81 billion; Fixed income $1.77 billion, according to FactSet
Investing Banking: $1.65 billion

Catalent to buy Paragon Bioservices for $1.2 billion

15 Apr 19
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Source https://www.cnbc.com/2019/04/15/catalent-to-buy-paragon-bioservices-for-1point2-billion-wsj.html

 

Catalent said on Monday it would buy privately held gene therapy-focused Paragon Bioservices in an all-cash deal for $1.2 billion, helping the drug developer expand its capabilities to make specialized and costly treatments.

Paragon, backed by private-equity firms Camden Partners and NewSpring Capital, focuses on developing and manufacturing products such as complex biopharmaceuticals for its clients.

Catalent also develops drugs for other companies and does business in Asia, Europe, and North and South America.

The deal follows other multi-billion dollar deals as drug companies have been aggressively moving into the potentially $40 billion addressable market for gene therapy, where treatments for rare, genetic diseases command some of the highest prices.

In Februray, Swiss drugmaker Roche agreed to buy U.S.-based gene therapy specialist Spark Therapeutics for $4.3 billion, while Novartis purchased U.S.-based Avexis for $8.7 billion last year.

Catalent expects the transaction to add to its adjusted earnings in the second full fiscal year after closing.

The company said it will fund the deal with proceeds from a $650 million incremental term loan and issuance of $650 million of a new series of convertible preferred stock.

After the deal closes, Paragon will be led by its Chief Executive Officer Pete Buzy.

The Wall Street Journal reported on Sunday that Catalent had agreed to buy Paragon.

Former VW boss charged over diesel emissions scandal

15 Apr 19
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Source https://www.bbc.com/news/47937141

 

The former chief executive of the carmaker Volkswagen has been charged in Germany over his involvement in the company’s diesel emissions scandal.

The public prosecutor in Braunschweig charged Martin Winterkorn and four other managers with fraud.

Mr Winterkorn is already facing criminal charges in the US, but is unlikely to face trial, as Germany does not extradite its citizens.

The 71-year-old resigned soon after the scandal erupted in September 2015.

In a statement, prosecutors accused Mr Winterkorn of a “particularly serious” fraud.

They said Mr Winterkorn should have alerted car owners and authorities in Europe and the US about the manipulation of diesel emissions tests sooner.

If found guilty, the former executive could face a prison sentence of up to 10 years.

Prosecutors did not name the other four senior managers charged.

VW first admitted in September 2015 that it had used illegal software to cheat US emissions tests.

To date, the scandal has cost Volkswagen roughly €28bn, ($31bn; £24bn)

Wall Street treads water after rally, Walgreens slumps on profit warning

02 Apr 19
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By April Joyner

Source https://www.reuters.com/article/us-usa-stocks/wall-street-treads-water-after-rally-walgreens-slumps-on-profit-warning-idUSKCN1RE14G

 

NEW YORK (Reuters) – The benchmark S&P 500 stock index paused on Tuesday, taking a breather from Monday’s strong quarterly kickoff as a decline in shares of Walgreens Boots Alliance Inc weighed and economic data did little to ease growth concerns.

Walgreens shares slumped 12.8% after the drugstore chain cut its 2019 profit growth forecast and reported a quarterly profit that missed analyst estimates.

The S&P 500 consumer staples index, which includes Walgreens, dropped 0.8%. Shares of rival drugstore company CVS Health Corp fell 3.8%. Shares of drug wholesalers AmerisourceBergen Corp, Cardinal Health Inc and McKesson Corp also slid.

Walgreens shares weighed the most on all three of Wall Street’s major indexes. CVS and the drug wholesalers were also among the biggest drags on the S&P 500.

The Nasdaq moved higher, however, as shares of Facebook Inc jumped 3.3%.

Data showing that new orders for key U.S.-made capital goods slipped in February and that shipments were flat did little to lift tepid investor sentiment.

Orders for non-defense capital goods excluding aircraft, or core capital goods orders, a closely watched proxy for business spending plans, fell 0.1%. Economists polled by Reuters had forecast it to remain unchanged.

The data comes on the heels of a survey showing a surprise rebound in China’s manufacturing activity and better-than-expected U.S. numbers, which drove the S&P 500 to near six-month highs on Monday.

“We’re still seeing mixed signals in terms of economic data,” said Emily Roland, head of capital markets research at John Hancock Investments in Boston.

The Dow Jones Industrial Average fell 79.29 points, or 0.30%, to 26,179.13, the S&P 500 gained 0.05 points to 2,867.24, and the Nasdaq Composite added 19.78 points, or 0.25%, to 7,848.69.

Despite coming under pressure, the S&P 500 is only 2.2% below a record closing high hit in late September as the Federal Reserve has paused interest-rate hikes and investors have grown optimistic about a resolution to the U.S.-China trade war.

Yet with the first-quarter corporate earnings reporting season about two weeks away, investors are bracing for what may be the first U.S. profit decline since 2016. Analysts expect quarterly earnings to fall 2%, according to Refinitiv data.

“There are reassuring signs that the global economy isn’t tumbling into a recession,” said Kate Warne, investment strategist at Edward Jones in St. Louis. “But it’s not sufficient to have economic growth. We also need earnings growth.”

Airline stocks got a lift from Delta Air Lines Inc’s better-than-expected first-quarter profit forecast. Its shares jumped 6.0%, while the Dow Jones US Airlines index advanced 2.8%.

Dow Inc shares rose 5.1% in the company’s stock market debut following its spinoff from DowDuPont Inc.

Declining issues outnumbered advancing ones on the NYSE by a 1.13-to-1 ratio; on Nasdaq, a 1.04-to-1 ratio favored advancers.

The S&P 500 posted 45 new 52-week highs and five new lows; the Nasdaq Composite recorded 54 new highs and 41 new lows.

Volume on U.S. exchanges was 6.45 billion shares, compared to the 7.46 billion average over the last 20 trading days.

Former Barclays traders jailed over Euribor rate-rigging

02 Apr 19
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By Andy Verity

Source https://www.bbc.com/news/business-47779993

 

Two traders have been jailed after being convicted of conspiring to rig the Euribor global interest rate.

 

Colin Bermingham, 62, and Carlo Palombo, 40, both former Barclays traders, were convicted of conspiracy to defraud.

Mr Bermingham received a five year jail term, while Mr Palombo was jailed for four years.

Another trader, Sisse Bohart, has been acquitted.

The sentences bring to an end the biggest trial so far for rigging interest rates – in this case the Euribor benchmark used to fix the interest rates of millions of euro-denominated loans.

Lisa Osofsky, director of the Serious Fraud Office, said: “These men deliberately undermined the integrity of the financial system to line their pockets and advance the interests of their employers.

“We are committed to tracking down and bringing to justice those who defraud others and abuse the system.”

Euribor is a key euro benchmark borrowing rate, underpinning about $180tn of financial products, and the accuracy of the rate is important to maintaining trust in the financial system.

Every day, one trader at each bank would estimate the interest rate he or she thought the bank would have to pay to borrow cash from other banks, based on the rates banks were paying that morning.

The estimates would be submitted to the European Banking Federation (EBF), based on current market transactions. Those submissions would then be averaged and a rate would be published.

In the 1990s and 2000s, traders routinely requested that the submissions be tweaked up or down by tiny amounts to suit their banks’ commercial interests. Banks typically had trading positions or investments that would benefit from higher or lower submissions.

The traders’ defence has been that this was normal commercial practice. The Serious Fraud Office (SFO) says it is corrupt.

During the sentencing hearing, Judge Michael Gledhill echoed controversial remarks by Mr Justice Cooke, who presided over the first interest rate rigging trial in 2015 of former UBS trader Tom Hayes, saying he wanted “a message sent out to the world of banking”.

“Those convicted of manipulating interest rates will face substantial custodial sentences,” he said.

Mr Hayes was sentenced to 14 years in prison, which was reduced on appeal to 11 and a half years.

Judge Gledhill said it was difficult to understand why Mr Bermingham had become involved in conspiracy, because there was no personal gain to him from accepting requests from traders to put in higher or lower submissions.

But, he added: “Part of the answer lies in a desire to help Barclays prosper, and perhaps it is something to do with the desire to be respected by others. Whatever the reasons, you have been convicted of being knowingly and dishonestly involved in this conspiracy.”

A second trial

Mr Bermingham, Mr Palombo and Ms Bohart were tried a second time by the SFO, after a jury failed to reach a majority verdict in an earlier trial in 2017.

Ahead of that trial, Christian Bittar, a former Deutsche Bank trader, pleaded guilty to conspiracy to defraud.

Another former Barclays trader, Philippe Moryoussef, attended earlier hearings but decided not to attend the trial, with his lawyer saying he could not be confident of a fair trial.

 

 

He was convicted in his absence and is now a fugitive from British justice.

Both Mr Palombo and Mr Bermingham were convicted by majority verdicts, with two jurors against a guilty verdict in both cases.

Carlo Palombo’s lawyer John Hartley said Mr Palombo and his family were devastated by the outcome.

“Mr Palombo started at Barclays as a junior trader and was taught by his management from an early stage about making requests of the submission desk,” said Mr Hartley in a statement.

“He gave evidence during the trial that this was an ordinary course of business at the bank and there was never an issue of any of his actions being dishonest at that time and that he had received no training on Euribor submissions. No senior members of management were on trial.”

In a BBC Panorama programme “The Big Bank Fix” in 2017, the BBC revealed a secret recording which implicated the Bank of England in a practice called “lowballing”.

Lowballing occurred during the 2008 financial crisis, when banks artificially lowered their estimates for Libor (the London Interbank Offered Rate) – the dollar and sterling equivalent of Euribor.

In a statement to the BBC, the Bank of England said Libor was unregulated at the time.

At the 2016 trials, the SFO said it was investigating lowballing. However, after years of investigation, no prosecution has been mounted.

Libor submissions defence

Mr Hayes’s case is now with the Criminal Cases Review Commission (CCRC) amid growing doubts about the safety of his conviction. The evidence against him also consisted of “trader requests” to put in higher or lower libor submissions.

 

 

His defence in 2015 was that there were a range of potential submissions, based on the slightly differing interest rates banks were paying to borrow money on any given morning.

Requests to raise or lower it within that range were legitimate, his lawyers argued. Prosecutors dismissed the notion of a range.

However, in 2017, at the trial of Barclays traders for rigging rates, John Ewan, the former Libor manager at the British Bankers Association, agreed requests for higher or lower submissions within a range could be acceptable. The two defendants in that trial, Ryan Reich and Stelios Contogoulas, were acquitted.

The trial of Palombo and Bermingham heard similar evidence from Helmut Konrad, a retired banker who helped set up Euribor in 1999, who told the court in 2018 it was “okay” for banks to submit a rate from a number of options that were equally good, even if one rate would be more profitable for the bank.

At this year’s trial, he told the court “as long as we’re talking about the range of permissible rates, it’s fine”.

Mr Hartley said Mr Palombo was considering an appeal.

Sea Trade Financial is investing in COLOMBIA

19 Mar 19
Blanco
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Sea Trade Financial is financing a project called “Sociedad Portuaria de Turbo Pisisí S.A”, a massive endeavor to build a port in Turbo Bay, Uraba, Colombia.

3D models demonstrating the size of the port

This will bring big commercial benefits to the zone, and the construction of this port will also create thousands of jobs in Uraba, Colombia.

Sea Trade Financial’s CEO Enrique Perez in a meeting in Colombia.

Our goal is to give to the community of Uraba the means and tools to achieve financial success.