Tag Archives: JP Morgan

MARKET REPORT: Footsie falters despite flurry of M&A news

In the first session of the week, a flurry of M&A news offered a welcome distraction from the dire economic consequences of the ever sliding price of crude oil and the run on commodities, but the Footsie nevertheless closed at a two-week low.

Vodafone fell 6.75p to 227.2p on unconfirmed reports the telecoms group is considering acquiring Liberty Media.

The Footsie closed to a two-week low yesterday as mineral-exposed companies fell

However, Balfour Beatty was in demand after receiving a £1billion approach for its lucrative Public Private Partnership division from the John Laing Infrastructure Fund, which intends to finance the offer with a major rights issue. Shares were up 7.8p to 191.1p.

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JPMorgan Banker Backed $200 Million Madoff Loan in 2008

Daniel Bonventre (Bloomberg)

Daniel Bonventre (Bloomberg)

According to Bloomberg,

A former JPMorgan Chase & Co. (JPM) banker who managed Bernard Madoff’s account said the con man was on track to receive a $200 million loan less than a month before his arrest if the request hadn’t been dropped.

Daniel Bonventre, one of five ex-Madoff employees on trial for allegedly aiding the fraud, asked JPMorgan in November 2008 to borrow twice Madoff’s credit limit of $100 million, with U.S. Treasuries as collateral, Mark Doctoroff, who left the bank last year, testified yesterday in federal court in Manhattan.

“They are doing well financially,” Doctoroff said of Madoff’s securities firm in an e-mail to JPMorgan’s credit department on Nov. 17, 2008. “They are looking at the current market as an opportunity to make investments, true to their value investing style.”

The five former employees are accused of helping Madoff hide his fraud from customers, banks and regulators for years, and getting rich in the process. It’s the first criminal trial stemming from the scheme, which prosecutors say started in the early 1970s and imploded at the peak of the financial crisis.

The loan was part of a last-ditch attempt by Madoff to  secure cash as his Ponzi scheme was collapsing and  Bonventre’s role in the application process was one of the  many examples of his involvement in the fraud, prosecutors  have said.

Doctoroff, who was Madoff’s relationship manager at the bank from about February 2008 until Madoff’s arrest in December that year, said he didn’t know at the time Madoff had a formal investment advisory unit — the center of the Ponzi scheme involving fake trades — or that Madoff’s JPMorgan account was used for that business.

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J.P. Morgan’s Mortgage Deep Troubles

J.P. Morgan bundled 4,209 loans from New Century Financial. (Reuters)

According to The Wall Street Journal, a 1,625-square-foot bungalow at 51 Perthshire Lane in Palm Coast, Fla., is among the thousands of homes at the heart of J.P. Morgan Chase JPM +0.34% & Co.’s $5.1 billion settlement with a federal housing regulator on Friday.

In 2006, J.P. Morgan bought one of two mortgage loans on the home made by subprime lender New Century Financial Corp. J.P. Morgan then bundled the loan with 4,208 others from New Century into a mortgage-backed security it sold to investors including housing-finance giantFreddie MacFMCC +7.73%

By the end of 2007, the borrower had stopped paying back the loan, setting off yearslong delinquency and foreclosure proceedings that halted income to the investors, according to BlackBox Logic LLC, a mortgage-data company.

The Palm Coast loan wasn’t the only troubled one in the New Century deal: Within a year, 15% of the borrowers were delinquent—more than 60 days late on a payment, in some stage of foreclosure or in bankruptcy—according to BlackBox. By 2010, that number exceeded 50%.

“That’s much worse than anyone’s expectations when the deal was put together,” said Cory Lambert, an analyst at BlackBox and former mortgage-bond trader. “It’s all pretty bad.”

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Kyobo Life Bids for Fifth-Largest Insurer, ING Life South Korea

South Korea's third largest insurer, Kyobo Life Insurance, has made a bid for the country's fifth largest insurer, ING Life South Korea. (Picture from Associated Press)

South Korea’s third largest insurer, Kyobo Life Insurance, has made a bid for the country’s fifth largest insurer, ING Life South Korea. (Picture from Associated Press)

Joyce Lee from Reuters reports that Kyobo Life Insurance, South Korea’s third-largest insurer, said on Friday it had made a bid for a controlling stake in ING’s South Korean insurance unit, breathing new life into a delayed deal previously valued at roughly $2 billion.

Kyobo, whose investors include Ontario Teachers’ Pension Plan, Singapore sovereign fund GIC GIC.UL and private equity firm Affinity Equity Partners, is set to compete against the country’s second-largest insurer Hanwha Life Insurance Co Ltd, which is expected to submit its own bid, according to a source with direct knowledge of the matter.

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Knight Is Said To Have Spurned $500 Million Citadel Loan

Knight Capital Group Inc. (KCG) rejected a last-minute, $500 million rescue-loan offer from Citadel LLC on Aug. 5 as it worked on a competing plan from a group of investors, said two people with knowledge of the matter.

The loan terms would have given Citadel a minority stake inJersey City, New Jersey-based Knight’s stock and an interest in the market maker’s HotSpot foreign-exchange subsidiary, said the people, who spoke on condition of anonymity because the talks were private. Citadel, the $12.5 billion hedge fund run by billionaire Ken Griffin, competes with Knight’s market-making and electronic-trading business.

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RBS’s CEO Blames Libor-Manipulation On ‘Handful’ Of Individuals

Royal Bank of Scotland Group Plc Chief Executive Officer Stephen Hester sought to limit the damage from the Libor-rigging scandal, blaming a “handful” of employees for attempting to manipulate the benchmark rate.

RBS dismissed four employees for trying to influence the individual responsible for Libor submissions following an internal investigation, the bank said today, without identifying the staff involved. Hester said it is too early to estimate the potential cost of fines and litigation linked to rate-rigging.

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Standard Life’s Grimstone Says Libor Scandal Is Hurting London

London’s reputation as a global financial center has been marred by the Libor-rigging scandal, said Gerry Grimstone, chairman of Standard Life Plc (SL/), Scotland’s largest insurer.

He was speaking on Bloomberg TV’s “The Pulse” show with Maryam Nemazee in London.

On London’s reputation after the Libor scandal:

“I’ve been in the financial services for 30 years and I’ve never known a time like this. It’s been terrible. Some of the language people use has been terrible. I’m concerned that the public don’t really understand it. The public talks about hanging bankers. We shouldn’t use words like cesspit to describe the City of London.”

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