BofA to cut 30,000 Merrill Lynch jobs
BofA could cut 30,000 jobs as it absorbs Merrill Lynch
Sources said layoffs resulting from Bank of America's acquisition of Merrill Lynch would reach at least 10,000, but some said that figure could be three times as much. Kenneth Lewis, CEO of Bank of America, is looking to save $7 billion from the merger during the next couple of years, so sources estimated that job losses would be closer to 30,000. Some of the cuts would likely come from the sale of businesses or attrition, but the bulk would probably be in investment banking.
(full article)CNBC/Reuters Labels: banking, BofA, investment banking, job cuts, Merrill Lynch
Goldman works on half of global buyouts
Goldman works on almost half of private-equity dealsSo far this year, Goldman Sachs has been involved in almost 50% of private-equity deals worldwide. The industry is on pace for a record year, with $483 billion worth of deals having been announced by the end of May. That's more than twice as much as last year at this time.
Goldman works on half of global buyoutsJames Mawson
04 Jun 2007
Goldman Sachs has worked on nearly half of all private equity deals around the world so far in 2007, in what is turning out to be a record year for the industry.
The combined value of buyouts in the first five months of this year has climbed to nearly $500bn (€372bn), according to data provider Dealogic, and Goldman has worked as an adviser or finance arranger on 50 deals worth a combined $226.5bn.
Goldman pushed JP Morgan and Citi into second and third place respectively, but was boosted by the firm advising its in-house private equity arm’s $87.7bn of deals. Based on an assumed 1% to 2% advisory and debt arrangement fee, Goldman Sachs could have earned $4bn in the first five months, if all announced deals are completed.
By the end of May, private equity firms had announced $483bn of deals, more than double the total by the same stage of 2006 and nearly 30 times the value a decade before.
A third of the year’s deals were announced last month, Dealogic said, including Goldman Sachs and TPG Capital’s agreed $25bn take-private of US telecoms company Alltel. However, Kohlberg Kravis Roberts has taken the top spot for financial sponsors having agreed $123bn of deals.
KKR’s global buyout total was nearly the same size as the entire value of announced deals in Europe, according to Dealogic, which was $734bn.
goldman sachs, private equity, investment banking, global marketsLabels: global markets, goldman sachs, investment banking, private equity
Battered home-loan industry gets boost from big investors
Battered home-loan industry gets boost from big investorsPrivate equity, hedge funds and investment banks are all jumping into the subprime-mortgage business, which has been plagued by decreased volume and rising defaults. "There is a lot of money pent up," said Steve Probst, national sales manager with Fairway Independent Mortgage. "And a lot of people are betting that the market will snap back quickly."
Big Investors Jumping Back Into Shaky Home LoansBy VIKAS BAJAJ and JULIE CRESWELL
The subprime mortgage business is in tatters: loan volume is plummeting, defaults are rising and some of the biggest lenders have cut back or shut down.
So what is the smart money — private equity, hedge funds and investment banks — doing? They are swooping in and taking over those battered businesses, seeing opportunity amid the wreckage.
“There is a lot of money pent up,” said Steve Probst, national sales manager with Fairway Independent Mortgage, a lender based in Sun Prairie, Wis. “And a lot of people are betting that the market will snap back quickly.”
It is a risky proposition.
In many parts of the country, there is a glut of unsold homes. Defaults and foreclosures are rising, putting further pressure on home prices and mortgage lending. Some housing industry officials worry that the new infusion of capital may refuel aggressive and risky lending to people with poor credit, known as subprime borrowers, delaying a much needed winnowing of the business.
Those dark clouds do not faze the new money in subprime. Among those making the biggest bets is Cerberus Capital Management, which first made its name investing in distressed debt. One of the country’s largest private equity firms, Cerberus has a record of making risky contrarian bets, including its recent agreement to take control of the troubled Chrysler Corporation for $7.4 billion.
Cerberus acquired control of the subprime lender Residential Capital last year, when it led an investment consortium that bought a 51 percent stake in G.M.A.C., the finance arm of General Motors. And in April, Cerberus, which also owns Aegis Mortgage, a subprime lender based in Houston, announced plans to acquire Option One, the troubled mortgage subsidiary of H&R Block.
Taken together, these acquisitions would make Cerberus the biggest subprime lender in the country, far ahead of large mortgage giants like Countrywide, Wells Fargo and others, according to first-quarter lending statistics from Inside Mortgage Finance.
It is unclear whether Cerberus will combine its mortgage operations into one company or operate them autonomously. Consolidating the businesses would offer streamlining and cost-cutting advantages, analysts say. Executives at Cerberus, which closely guards details about its strategy and investments, declined to be interviewed for this article and did not respond to written questions.
“They have certainly double-downed and have bought some extremely attractive operations — companies that have dominated their space,” said Brenda B. White, a managing director with Deloitte & Touche Corporate Finance. “But now they’re faced with executing on a plan, whatever that plan might be.”
This year, when rising mortgage defaults and a credit squeeze on Wall Street have forced many subprime mortgage companies into bankruptcy, some analysts predict that the industry might shrink by a third or more. Many industry officials acknowledged that a shakeout was necessary to cull the industry of the lenders that led in making risky loans and forcing rivals to match them or lose business.
In the last several months, however, private equity firms and others have acquired, taken stakes in or provided fresh capital to companies that wrote nearly 20 percent of last year’s $600 billion in subprime loans. It is, analysts and industry officials suggest, an unusually quick and substantial bet on a distressed business that by most indications is in the early phases of a long-term retrenchment.
With billions in capital available to them, investors like Cerberus, Ellington Capital and the Citadel Investment Group see an ideal buying opportunity. Yet trying to time the bottom of a sliding market has been tricky, even for smart-money investors like Cerberus. For instance, rising defaults and the cost of buying back poorly performing loans from investors left Residential Capital with more than $1.5 billion in losses in the six months that ended in March and the losses are expected to continue. (In March, General Motors, which still owns 49 percent of G.M.A.C., was forced to put an additional $1 billion into the unit because of the division’s mortgage woes.)
Cerberus has insisted on a number of terms and conditions in its deal to buy Option One, suggesting that the firm has become more vigilant about not paying too much. As announced, Cerberus agreed to pay slightly less than $1 billion, but the final amount could range from as little as $400 million to $800 million, depending on how well Option One’s business fares from now to the transaction’s closing in October, according to estimates prepared by Kelly Flynn, an analyst with UBS.
That is a far cry from the $1.3 billion H&R Block executives said earlier this year that they expected to get for the unit. H&R Block could get more money from Cerberus if Option One turns a profit within 18 months after the deal closes. Barrett Burns, who has run lending businesses for Citibank and Ford Credit, says that Cerberus and the other investors in the mortgage business are being far more prudent in their purchases than big Wall Street firms like Merrill Lynch and Morgan Stanley were when they paid hundreds of millions of dollars for subprime companies last year.
“The investment banks that were buying last year were buying at the high,” said Mr. Burns, who is now chief executive of Vantage Score, a company that provides credit scores that lenders use to evaluate borrowers.
(Both Merrill and Morgan have said they are comfortable with what they paid for their subprime acquisitions.)
Astute buyers, Mr. Burns noted, are picking up loan servicing businesses, which earn a predictable stream of fees for handling collections and dealing with defaults, and retail branch networks, which are difficult to build and tend to produce better-quality loans than wholesale channels like mortgage brokers.
Even so, industry officials say new entrants to the subprime business may be in for nasty surprises if they think the current difficult stretch represents a bottom. Making money in the business, they say, is difficult and getting harder.
Investors who buy subprime mortgages are demanding higher-quality loans after being burned by high rates of defaults and fraud in loans written during 2005 and 2006. That is forcing mortgage companies to tighten lending standards by demanding that borrowers make bigger down payments and have better credit histories, changes that have significantly reduced the pool of qualified borrowers.
“The reality is that the mortgage business for the foreseeable future is not a growth business,” said Jeffrey Kirsch, president of American Residential Equities, which buys defaulted mortgages. “So, it is surprising to see things frankly where they are.”
Mr. Kirsch and others say buyers like Cerberus will have to be willing to lose money and invest in the companies they are acquiring for some time before things pick up.
“They’re taking enormous risks here in hoping that they’ll be able to stabilize these businesses, keep them going, and get the types of regulatory approval they need to originate and service mortgages,” said Rick Antonoff, a partner in the bankruptcy and restructuring practice at the law firm of Pillsbury Winthrop Shaw Pittman. “They have put a lot of capital in already, and it’s going to take additional capital to keep these businesses going for a while.”
Those concerns are a major reason other subprime lenders have not succeeded at selling assets. New Century Financial, which was one of the biggest subprime lenders in the nation before it filed for bankruptcy protection in April, failed to attract bids for its loan origination unit in a bankruptcy auction because regulators in several states including California had restricted it from making more loans. (Cerberus had briefly considered acquiring New Century before it filed for bankruptcy, according to industry officials who asked not to be identified because they were not authorized to speak about the matter.)
In other instances, investors have put more capital into subprime after securing concessions that would have been unthinkable even six months ago.
In April, Accredited Home Lender, a San Diego-based lender, raised $230 million in loans from Farallon Capital, an investment firm based in San Francisco. The mortgage company agreed to pay a 13 percent interest rate and penalties if it sought to pay off the debt ahead of time. The company also gave Farallon warrants that would allow it to increase its stake in Accredited to 19 percent, from 7 percent. The warrants allow Farallon to buy the company’s shares for $10 apiece, a discount to the stock’s $13.99 closing price yesterday.
Another hedge fund, Second Curve Capital, that bought an 8.5 percent stake in Accredited in early February when the stock was trading at $25 to $30, has increased its stake in the company to 11.2 percent as the stock has fallen.
Citadel, an aspiring financial conglomerate based in Chicago, picked up the lending business of ResMae for just $22 million. Ellington Management, a hedge fund based in Greenwich, Conn., that specializes in mortgage-backed securities, has agreed to pay an undisclosed sum for the lending business of Fremont General, which has not made a subprime loan in almost three months and has cut 2,400 jobs in its lending business.
It is unclear how these investors will operate their new subprime businesses — most declined to discuss their plans or did not return calls for comment — but at least one mortgage company said it was concerned about lending standards weakening again.
“There is a lot of fear that expansion starts again because liquidity is coming in,” said Stephanie Christie, a senior vice president in charge of nonprime lending at Wells Fargo Home Mortgage. “The industry needs to be very serious about prudent underwriting and make sure we don’t go back to making bad loans.”
At the same time, however, analysts note that the new capital could help alleviate the credit squeeze many regulators and housing advocates feared would impede borrowers who want to buy homes or need to refinance out of onerous mortgages.
“No one wants to see subprime lending dry up altogether,” said Kathleen Shanley, an analyst with Gimme Credit, a research firm, “because of the potential implications for growth in the housing market and the hardship for existing borrowers who may need to refinance their loans.”
full articlemortgages, subprime, investment banking, private equityLabels: investment banking, mortgages, private equity, subprime
How to handle the MA boom
How to handle the M&A boomBy Mohamed El-Erian
The boom in mergers and acquisitions has underscored the disparity between rising market values and serious economic concerns, writes Harvard Management Company President Mohamed El-Erian in this Financial Times commentary. Meanwhile, equity investors are enjoying benefits as investors looking for markets to "revert to the mean" have been stymied.
The mergers and acquisitions boom rolls on, slowly but surely changing the financial and corporate landscape. Spurred on by a record surge in private equity flows and enormously accommodating debt markets, the momentum of this shift is showing little sign of fading.
The impact is being felt across markets, particularly in the US where several indices have reached record levels.
But the M&A boom has helped to accentuate the contrast between buoyant market valuations and concerns about a US economy facing headwinds on account of a difficult housing market, a subprime mortgage debacle, high energy prices and large consumer debt.
The joy of equity investors, especially leveraged ones, also contrasts vividly with the frustration of others. Investors betting on continued historical aberrations in market trends have continued to benefit so far. In contrast, those looking for markets to "revert to the mean" have been left frustrated.
The latter have continued to observe stark historical inconsistencies in market valuations, volatilities, correlations and liquidity. Yet their attempt to exploit these inconsistencies has been repeatedly disturbed by yet greater market aberrations. The "Theory of Second Best", which dates back to the 1956 work of two economists Kelvin Lancaster and Richard Lipsey, provides a useful framework for thinking about all this.
Essentially, this theory looks at what happens when, in certain circumstances, one of the optimal conditions of a model is not fully met. Intuitively, when this happens, it might be supposed that the second-best solution involves continuing to meet the other optimal conditions of the model. The Theory of Second Best cautions against this. Instead, it suggests that a better outcome may involve deviating from these conditions.
When applied to today's financial markets, the second best theory illustrates one of the ways in which investors have had to adjust their approach to take into account the manner in which emerging economies are allocating their large and increasing reserves.
These economies' large "non-commercial" purchases of US fixed income products have introduced and sustained significant pricing distortions. And, as the Theory of Second Best suggests, the next-best solution for investors has implied betting on additional historical anomalies in other markets.
How has this worked? Large foreign purchases of US bonds have led to an unusual compression in bond yields and credit spreads. The resulting misalignment versus the equity risk premium has encouraged increasingly large leveraged buy-out activities which, in turn, attract even more capital to private equity.
No wonder M&A activity has surged. And, as the corporate landscape changes, companies with large cash holdings have been forced in, with some playing defence and others offence.
How long can this go on? For a while; but not forever. In the short term, the phenomenon has significant momentum that can only be derailed by a series of economic and technical dislocations. A single dislocation will not suffice as illustrated by the temporary setbacks of May-June 2006 and February 2007.
Over the longer term, valuations will be excessively divorced from the underlying economic realities, especially if the US economic slowdown intensifies. In addition, the risk of regulatory and political backlash will rise. Finally, the distortion that lies at the heart of it all – the non-commercial allocation of sovereign wealth funds – will slowly fade as emerging economies face pressure to increase the rate of return on their reserves and to allocate more funds to domestic uses.
Therefore, the basic challenge for investors is an outlook that is inherently fluid and potentially dualistic. The solution may well have three principal components: a strategic asset allocation that emphasises secular themes and a long-term destination; portfolio overlays that recognise the reality of an historically unusual journey; and a risk management process that is sensitive to the nature and evolution of the underlying market distortions.
Mohamed El-Erian is president and chief executive of Harvard Management Company.mergers, acquisitions, M&A, investment banking, private equityLabels: acquisitions, investment banking, MA, mergers, private equity
Dark-liquidity pools cooperating as they gain in popularity
Dark-liquidity pools cooperating as they gain in popularityAs the number of dark-liquidity pools increases, traders have to confront the challenge of fragmentation. Growing from four a year ago to a recent count of 40, dark pools are now trying to entice traders through partnerships, cooperation and linkages.
Dark Pools Link and Partner to Combat Fragmented LiquidityDark pools are partnering and linking as they grow in popularity and in number to benefit the buy side.
May 21, 2007
Joe Gudorf is head trader at Des Moines, Iowa-based Principal Global Investors, a diversified asset management business with more than $200 billion in assets covering a range of equity, fixed-income and real estate investments.
Gudorf actively trades in dark liquidity pools, and to execute his trades and serve his clients better, Gudorf needs to be in as many dark pools as possible. But as dark pools multiply — from only four a year ago to as many as 40 by recent counts — dealing with the fragmentation becomes increasingly challenging for Gudorf and his buy-side peers.
But all dark pools aren't the same and can't be lumped together under a single classification. In fact, there are four types of nondisplayed liquidity pools — the independent or agency-owned platforms, which include the likes of Instinet, Liquidnet and ITG's Posit; the broker-dealer internalization engines, such as Goldman Sachs' Sigma X, Credit Suisse's CrossFinder and UBS' PIN; the consortium-owned pools in which many broker-dealers are investing, such as BIDs and LeveL; and the exchange crossing networks that are anonymous and complete matches at set times during the day.
Gudorf employs a focused strategy for accessing these fragmented dark pools. He says he connects to a handful of the major dark pool platforms that are independent and broker-neutral, and then depends on these to connect to other dark pools, such as broker-dealer internalization engines and other crossing networks, to provide an extended reach and ensure he's in as many liquidity pools as possible.
But as the dark pools continue to proliferate, the reality has set in that it's impossible for a buy-side trader to connect to each as a one-off trading destination. And of course, there are different types of dark pools for different types of orders and different trading strategies. As a result, through partnerships, linkages or cooperation, operators of these dark pools are trying to find ways to offer more liquidity to keep traders coming back.
Dark Is Here to Stay
While traders grapple with the best strategies for trading in dark pools' nondisplayed waters, the amount of dark pool action will only continue to rise. TABB Group predicts that the combined daily volume of dark crossing networks and internal markets will increase from 512 million shares a day this year to nearly 1.5 billion per day by 2010. That would account for about 15 percent of total market share among the major exchanges, the regionals and ECNs.
"One hundred percent of the buy side is crossing some portion of their orders," contends Jeromee Johnson, senior analyst at TABB Group. "As the percentage of orders crossed continues to go up, by the nature of better tools to tap into different crossing networks the liquidity is improved and the hit rates are improved."
According to TABB Group, consolidation, aggregation and interconnectivity will be par for the course. But, the consultancy notes, the dark pools that will thrive will focus more on innovative types of liquidity and ways to differentiate themselves.
Principal's Gudorf found out the hard way that paying attention to which dark pools he's connected to and which are the most successful for his trading strategy was an ongoing process to be continually assessed and reassessed. "If you think the dark pools you're currently in are working well, I would recommend trying others," says Gudorf. "We were pleasantly surprised when we added another one or two and found we had been missing significant volume. The landscape is dramatically changing on a daily basis."
Let the Linking BeginDark pool aggregation is occurring on a higher level and is likely to continue until the dark pools shake out their competitive advantages. One major move came in March when Lehman Brothers and Fidelity Brokerage Services announced a direct link via FIX connection between their dark pools. This allows traders on both sides to access Lehman's Liquidity Center Cross and Fidelity's CrossStream to improve their hit rates.
And Lehman isn't stopping there. "We will be looking to link up with others as well and already have tentative agreements with some and are in talks with others," says Michael Bleich, the firm's head of liquidity strategy. "We're competitors but there's value we can deliver to customers by working together."
Lehman also is a Streaming Liquidity Partner on Liquidnet H20. The block-trading system opens up trading for buy-side members against smaller size order flow from the partners at the midpoint of the NBBO.
Additionally, Lehman is a member of LeveL, the consortium of dark ATSs that allows users to cross orders internally using LeveL as the internalization engine or interact with liquidity provided by other LeveL members. The LeveL joint venture also includes Citigroup, Credit Suisse, Fidelity and Merrill Lynch.
"It's a big plus that we're seeing these linkages now," says Principal's Gudorf. "The fragmentation of the marketplace is very real, and without gaining some efficiencies through these linkages, the market would be a tough place to operate, especially for institutional accounts."
Joan Stack, trading manager at the Ohio Public Employees Retirement System (OPERS), agrees that the fragmentation of dark liquidity has become a burden. "It's reached a point where fragmentation is more of a detriment than a benefit," she says. "Linkages will consolidate some of the liquidity, and I think it's a good thing."
Who's Linking to Whom?"Most of our major competitors have begun running crossing networks within their firms," notes Lehman's Bleich. "So how do you unlock value by linking these different pools together?" he asks, adding that the marketplace is in a phase of experimentation with linking these dark pools.
Michael Plunkett, president of Instinet North America, says his company's CBX dark pool is "aggressively" linking to other dark pools, including Credit Suisse, Fidelity, Liquidnet H2O and ISE's MidPoint Match. Instinet made the decision a year ago to link to and form partnerships with other dark pools and "never looked back," he says.
However, Plunkett adds, while the physical FIX connection is relatively simple to establish, it's the philosophy and strategy of partnership and linkage deals that delay the process. For example, pricing — how much is paid to each partner when a transaction is passed though a linkage — is up in the air. "People will charge whatever price they want to, and we agree to that with each of our partners individually," says Plunkett. "Our opinion is that we should treat each other as partners and charge a fair rate that encourages trading with each other's platforms on behalf of our clients."
ITG was selective about with whom it partnered for its Blockalert product, according to Chris Heckman, the firm's managing director of U.S. sales and trading. "Our strategy was to initially focus on one partner, and a large partner like Merrill Lynch made the most sense for us," he says. "Over time we will evaluate adding other partners. But historically, when these consortium-type arrangements get too large it becomes impossible to move forward."
NYFIX Millennium saw the writing on the wall and also moved toward relationships with clients and passive liquidity providers. CEO Brian Carr says a formal aggregation effort around nondisplayed liquidity is in the works. "Liquidity begets liquidity, and the more we can match, the more compelling it is to put an order in," he says.
Differentiating PoolsThe ultimate success or failure of the multitude of dark liquidity pools will depend on "unique liquidity offerings," according to Tim Reilly, managing director and head of North America electronic execution sales at Citigroup, which operates the dark book Liquifi. He says that major broker-dealers with their own internal crossing networks that are profitable and complement their existing business will continue to operate separately. Reilly points to UBS' PIN crossing network, which offers unique liquidity in the Schwab retail order flow.
But Reilly also says that Citigroup won't turn away affiliations with other liquidity pools for Liquifi. "They're in vogue now," he notes. "On the other hand, if you're Citigroup and you have Smith Barney retail flow and a healthy institutional business and principal liquidity that you can market in an appealing way, then why would we open up to another big guy and say, 'Come play in our thing'?"
The unique liquidity that Reilly points to as a driving force for successful dark liquidity pools includes consolidated retail order flow, derivatives flow, or delta hedge flow and transition services, he explains.
Trading costs also can make a platform stand out, says TABB Group's Johnson. "It's one of the biggest considerations when searching for liquidity and the judgment by a trader or algorithm where the total best execution is." But cost isn't the only factor in best execution. Are you getting the best execution if an order is being routed to multiple dark pools and taking longer to hit each than if it were to be routed to more-aggregated pools directly?
Principal's Gudorf explains that coming into a dark pool via a secondary linkage may have its disadvantage. "You're not getting the first look at liquidity, so there is a trade off," he says. "If I was going through the main pipe to hit Fidelity's CrossStream, then I'm getting in the fastest and time priority. If I come in through other means, though, ... I am kind of disadvantaged in some ways and can miss liquidity. But at the same time, if I had to physically cut my order into 10 pieces and route into 10 different places, I would be even more disadvantaged."
Gudorf adds that pricing among dark pools and whether orders are routed out to other pools doesn't matter much to him. "That's between the brokers themselves, really. Our commission is with the sponsor broker and the platform we use," explains Gudorf.
OPERS' Stack also cautions that algorithms hitting linked dark pools should be closely monitored. She wants to know if her algorithms are hitting internal pools first and how long they stay in certain pools and at what parameters. "I don't want the opportunity cost of missing liquidity somewhere because an order is lingering too long in a broker's internal pool," Stack says.
full articledark liquidity pools, private trading, investment banking, asset managemetLabels: asset managemet, dark liquidity pools, investment banking, private trading
Credit-Default Swaps Spur Fastest Derivatives Growth
Derivatives market grows at fastest pace in nine yearsThe Bank for International Settlements said today that the global derivatives market during 2006 rose $15 trillion, the fastest pace in nine years. To beat estimates, Bear Stearns, Deutsche Bank and Morgan Stanley relied on credit derivatives. "Derivatives are now a major contributor to investment bank earnings," said Jerry Del Missier, co-president of Barclays Capital in London.
Credit-Default Swaps Spur Fastest Derivatives GrowthThe global derivatives market grew at the fastest pace in at least nine years during 2006 as the amount of contracts based on bonds more than doubled to $29 trillion, the Bank for International Settlements said today.
Derivatives covering bonds and loans rose by $15 trillion last year, the Basel, Switzerland-based bank said on its Web site. The total amount of over-the-counter contracts whose value is derived from price changes of bonds, currencies, commodities and stocks, or events like interest rates or the weather rose 39.5 percent to $415 trillion, the biggest jump since the BIS began compiling the data.
Morgan Stanley, Bear Stearns Cos. and Deutsche Bank AG depended on credit derivatives to report first-quarter profits that beat analyst forecasts. Federal Reserve Chairman Ben S. Bernanke said last week that the contracts ``increased the resilience'' of financial markets, while warning that they may be exploited by investors to profit from insider trading.
``Derivatives are now a major contributor to investment bank earnings,'' said Jerry Del Missier, co-president of Barclays Capital in London, the biggest underwriter of European bonds last year.
``Credit derivatives will continue their high growth path for a long time yet, and that growth rate will be higher than any other market.''
The actual money at risk through credit derivatives increased 93 percent to $470 billion last year, the BIS said. The amount at stake in the entire derivatives market is $9.7 trillion, according to the BIS, which was formed in 1930 to monitor financial markets and regulate banks.
Salomon Brothers
The market, started by Salomon Brothers Inc. in 1981 when the firm arranged for International Business Machines Corp. and the World Bank to swap debt payments in Swiss francs and German marks for dollar obligations, has become Wall Street's most- profitable activity.
Morgan Stanley, the world's second-biggest securities firm by market value, said a jump in revenue from credit products helped spur a 70 percent increase in first-quarter profit to an all-time high.
Bear Stearns, the fifth-biggest U.S. securities firm, said credit derivatives trading contributed to an 8 percent increase in first-quarter profit.
Deutsche Bank reported record revenue from trading debt and credit derivatives, helping lift first-quarter profit by 30 percent.
Contracts on bonds took off in the 1990s when New York-based JPMorgan Chase & Co. led banks creating credit-default swaps. The contracts allow bond investors to hedge against the risk of a company or country defaulting on interest payments or speculate on its creditworthiness.
Market DeclinesDerivatives helped investors hedge their risks and contained a decline in bond prices during 2005 when the credit ratings on debt of Ford Motor Co. in Dearborn, Michigan, and Detroit-based General Motors Corp. was reduced to below investment grade.
The contracts also limited the fallout from Greenwich, Connecticut-based Amaranth Advisors LLC's record $6.6 billion loss last year and this year's slump in the U.S. subprime mortgage market, said Anshu Jain, head of global markets at Deutsche Bank in London.
``We have been through several market corrections in the past few years and in each case, markets have recovered,'' Jain said in an e-mail. ``In retrospect, people think the market has been characterized by calm, continuous and even benign conditions. Derivatives are a big part of explaining that phenomenon.''
Financial StabilityIn a separate report, a group of central bankers, finance ministries and financial regulators known as the Financial Stability Forum called on hedge funds to improve risk management to prevent shocks to the financial system. The group's Secretariat is based at the BIS.
The Forum's report, dated May 19, said there has been ``some erosion in counterparty discipline recently,'' citing the competition among banks for hedge fund business. The world's more than 9,000 hedge funds move money in and out of markets faster and in larger quantities than mainstream funds, raising concerns about the stability of global markets.
Banks and hedge funds say it's cheaper and easier to use credit-default swaps than buying or selling the underlying securities. Investors who buy the contracts are paid the face value of the underlying debt in exchange for the defaulted notes should the company fail to adhere to debt agreements.
Interest-rate swaps remain the biggest part of the derivatives market, growing 15 percent to $292 trillion, compared with 38-percent growth the previous year, the report said. The contracts allow companies to switch between fixed-rate and floating-rate interest payments.
Growth in the overall derivatives market outpaced the previous record increase of 39.2 percent in 2003.
Foreign-exchange derivatives rose 28 percent to $40.2 billion in 2006. Contracts based on commodities such as gold and oil expanded by 27.7 percent to $6.9 trillion.
The BIS surveyed 62 institutions for its semi-annual report.
The outstanding amounts of derivatives ($ trillion).
End-Dec 2006 End-June 2006 End-Dec 2005
- Interest rates 292 262 212
- Credit 29 20 14
- Equity 7.5 6.8 5.8
- Commodities 6.9 6.4 5.4
- Foreign Exchange 40 38 31
Full ArticleLabels: capital markets, credit derivatives, investment banking
Recruitment heats up on Wall Street
Recruitment heats up on Wall StreetInvestment bankers and traders are in high demand, as the market weathers recent shake-ups in the mortgage world and an abundance of cash in hand. Top banks continue to recruit heavily from top M.B.A. schools, although a strong influx of foreign candidates has begun to make its presence known.
full storyjobs, careers, investment banking, sales, trading, finance, derivatives, MBALabels: careers, derivatives, finance, investment banking, jobs, MBA, sales, trading
Private Equity's New Entrepreneurs
Private Equity's New EntrepreneursThey run their own firms, seek out smaller deals that don't generate headlines—and make returns that are on par with the big boys
Read moreprivate equity, finance, leveraged finance, LBO, investment banking, careers
Labels: careers, finance, investment banking, LBO, leveraged finance, private equity
Royal Bank of Scotland strives to become a bigger player in U.S.The Royal Bank of Scotland is planning to move its global banking and markets staff to Connecticut, hire hundreds of people for its U.S. offices and construct the largest trading floor in the world. "The biggest dollar opportunity is in the U.S. where we are an established top-10 player. The next stage is to consolidate a top-five position," said Johnny Cameron, chief executive of global banking and markets division of RBS.
Full story RBS, careers, jobs, trading
Labels: careers, derivatives trading, investment banking, jobs, RBS
Providence Equity's CEO tackles "myths" of private equity
Providence Equity's CEO tackles "myths" of private equity: Jonathan Nelson, chief executive officer of Providence Equity, set out recently to discredit what he says are "myths" about the private-equity business. Among these alleged falsehoods: Private equity is private, and the private-equity bubble is about to burst.
full storyprivate equity, investment banking, underwriting, M&A, mergersLabels: investment banking, MA, mergers, private equity, underwriting
Jobs: Financial Reporting, Controllers Analyst (NYC)
Role: Analyst - Financial Reporting Controllers/New YorkCompany: Goldman SachsIndustry: Investment BankingJob Description:The intermediate/senior analyst will be an integral part of the GS Execution and Clearing financial reporting team. This includes assisting in the preparation and submission of the balance sheet and supporting schedules on monthly basis. The analyst will interact with other divisions throughout the firm with regards to Consolidated reporting, FAS 140 disclosure, Inventory and other balance sheet and P&L transactions. Also experience with FAS 109 tax reporting would be a plus.
Principal Responsibilities:- Assist with Monthly Balance sheet preparation
- Subsidiaries financial statement preparation
- Estimate to actual reviewInventory broadening and review
- Tax accruals and associated analysis
- FAS 140 calculation
- Participate in the semi-annual and year end audits
- Special projects
Experience/Skills:
- Degree in Accounting
- 1-3 years relevant work experience (preferably with a public accounting or financial services firm)
- CPA a plus, but not requiredStrong PC skills (Excel, Word, Essbase, DBS Ledger)
- Strong analytical skills and detail orientation
- Excellent Interpersonal and communication skills
Contact via email for further information.
Careers@BizAnalyst.net and gloria.chen-li@gs.com
HR, jobs, derivatives, trading, risk management
Labels: accounting, careers, derivatives, electronic trading, finance analyst, goldman sachs, hr, investment banking, jobs, risk management, trading
Jobs: FIX Market Data Administrator Consultant
I currently have a long-term consulting position with an Investment Bank located in midtown, Manhattan. Please review the details below and let me know if you are available and interested. Also, please be sure to include your resume in word format and you rate requirements.
Major investment bank is looking for a consultant with excellent knowledge of market data products who will be essentially`cleaning up the inventory`. This position requires FIX knowledge. This position will require a lot of administrative work (Inputting, data,liaising with vendors, and data analysis etc..)
Claudia C. El AmraniInfinity Consulting Group,LLC
450 7th Avenue, 44thFloor
New York, NY 10123
Phone: 212-967-0300x0576
Fax: 212-967-2828
email:
celamrani@infinitygroup.comweb:
www.infinitygroup.comHR, jobs, derivatives, electronic trading, trading, IB, investment banking, sales, risk managementLabels: derivatives, electronic trading, hr, IB, investment banking, jobs, risk management, sales, trading
QuantJobs.com: Jobs for quantitative and finance professionals
QuantJobs.comJobs for quantitative and finance professionals
From Sales to Psychology, Finance to Biostatistics,Software Development to Data Mining, Legal to Accounting,
quantitative and problem solving skills are indemand.
QuantJobs.com is dedicated to serving quantitative professionals bybringing them together with Top Tier employers across industry sectorswhich demand quantitative and problem solving skills.Companies that hope to stay ahead of their competition in todays dynamicand competitive marketplace need well educated and mathematically versedemployees to help them remain innovative. We serve professionals in all industries includingInsurance, Consulting, Academia, Technology/Computing, Legal,Accounting, Scientific, Health and Medical, Government,Engineering/Design, Entrepreneurial/Startup, Transport/Logistics,Banking/Finance, Market Research/Data Mining and other sectors as well.
JOBSEEKERS: Get a better job, make more money with your quantitative and problem solving skills. Tell your friends about us!
Sign up and POST your resume for FREE. Manage multiple resumes and coverletters to cater to specific job openings. You also have the option to make your resume unsearchable by employers and recruiters, allowing you to apply to jobs at your discretion without having your resume made public.
EMPLOYERS and RECRUITERS: (FREE and PAID SUBSCRIPTION PLANS......Why hire anywhere else?)
Tired of looking through tens of THOUSANDS of resumes on the larger job boards for the right candidate(s)? If you are in the market for the best and brightest candidates with strong quantitative and problem solving skills, QuantJobs is the site for you. We focus on candidates with core Math, Science, or Engineering degrees. QuantJobs allows you to manage your jobs, search resumes, view hits and clicks on all of your job postings, save searches for resumes, maintain your company profile and logo, set up screening questions for your job postings, and receive email alerts for all applications from JOBSEEKERS. We have a number of plans available to help you meet your specific hiring needs, including our FREE INTRODUCTORY SERVICE valid for 90 days after you register as an employer with us. For more detailed information, SIGN UP NOW and from your EMPLOYER CONTROL PANEL hit Activate/Manage my Account for more information. We thank you for your interest in our site and look forward to becoming the #1 career site worldwide for quantitative professionals.
Best Regards,
-the
QuantJobs.com team
HR, jobs, derivatives, electronic trading, trading, IB, investment banking, sales, risk management, quants, structured products, quantitative analysis, financial modelingLabels: derivatives, electronic trading, hr, IB, investment banking, jobs, quantitative analysis, quants, risk management, sales, structured products, trading
Management Leadership for Tomorrow: Career Prep Programs
MLT Mission:Increase the presence of minorities in fast track entry-level jobs and major graduate business schools as preparation for leadership positions in corporations, non-profit organizations and entrepreneurial ventures.
MLT Vision:A world where all motivated minorities have the opportunity to realize their career full potential
MBA Preparation for Professionals with an interest in pursuing an MBA
Career Preparation for Rising College Juniors with an interest in a career in business.
MBA, careers, grad school, graduate school, HR, jobs, derivatives, electronic trading, trading, IB, investment banking, sales, risk management, quants, structured products, quantitative analysis, financeLabels: careers, derivatives, finance analyst, graduate school, hr, IB, investment banking, jobs, MBA, quantitative analysis, quants, risk management, sales, structured products, trading
Action Words & Phrases: Power Vocabulary
|
Action Words & Phrases:
When constructing a CV or
completing an application form, it’s important to project a positive image of
yourself. The words and phrases you use can help to create this image.
Action Words:
These are some general examples
of positive "action/achieving" words to use when applying for jobs:
achieved
administered
analysed
built
capable
competent
communicated
consistent
controlled
co-ordinated |
created
designed
developed
directing
efficient
established
expanded
experience
guided
implemented |
improved
initiated
lead
managed
monitored
organised
participated
positive
processed
produced |
proficient
profitable
qualified
resourceful
specialised
successful
supervised
trained
versatile
willing |
Action Phrases:
 |
Analysed
problems and developed solutions |
|
Excellent
interpersonal and people management skills |
|
Able
to analyse and interpret data |
|
Able
to exercise good judgement and sound reasoning |
|
Good
interpersonal skills |
|
Able
to concentrate and pay attention to detail |
|
Can
work well on own initiative |
|
A good communicator |
|
Experienced,
self motivated and energetic |
|
Ability
to organise and motivate staff |
|
A good planner |
|
Careful
and methodical approach |
|
Able
to work accurately under pressure |
|
A good organiser with an eye for detail |
|
A good team worker |
|
Patient,
tolerant and able to communicate |
|
A good listener with a common sense approach |
|
Persuasive
but tactful |
|
A flexible approach to changing situations |
|
A manager of change |
|
Determination
and drive to see projects to successful completion |
|
An
active decision maker |
|
An
effective time manager |
|
Highly
numerate and computer literate |
|
Adaptable
to team or individual roles |
|
Produces
to deadlines |
|
Extensive
visual memory |
Always remember
to give examples of what you have actually achieved, you must always justify
those bold claims of expertise. careers, HR, jobs, derivatives, electronic trading, trading, IB, investment banking, sales, risk management, quants, structured products, quantitative analysis, finance
|
Labels: careers, derivatives, electronic trading, finance, hr, IB, investment banking, jobs, MBA, quantitative analysis, quants, risk management, sales, structured products, trading
Jobs: TECH LEAD PROJECT PLANNER (Project Management)
TECH LEADS / PROJECT PLANNER
PROJECT RELATED COMPETENCIES
- Solution Development and Delivery
- Provides technical direction for the development, design, and systems integration for client engagement from definition phase through implementation.
- Applies significant knowledge of industry trends and developments to improve service to our clients.
- Reviews work of development team.
- Easily recognizes system deficiencies and implements effective solutions.
- Technical Effort Management
- Creates and executes development plans and revises as appropriate to meet changing needs and requirements.
- Keeps product sponsors / managers well informed of status of development effort and serves as liaison between development staff and project manager.
- Ensures technical teams are contributing to our code library.
- Owns the development lifecycle and is responsible for managing technical risks throughout the project.
- Communicates and enforces coding standards
- Performs code reviews and mentors junior developers.
- Manages technical resources within budget and project schedule.
- Consistently delivers high-quality services
CAREER PATH CORE COMPETENCIES
Technical Expertise
Understands complex database concepts and effectively employs different database design techniques.
Possesses demonstrated work experience with more than one relational database management system.
Understands the benefits of the various programming languages.
Possesses significant knowledge of client/server and internet systems architectures.
Understands browser / client specific compatibility issues.
Communication
Facilitates team meetings effectively.
Holds regular status meetings with development team.
Resolves and/or escalates issues in a timely fashion.
Understands how to communicate difficult/sensitive information tactfully.
PROFESSIONAL QUALITIES
Leadership
Challenges others to develop as leaders while serving as a role model.
Manages the development of team by ensuring that project tasks are in line with each Innovator's career interests when possible.
Inspires coworkers to attain goals and pursue excellence.
Identifies opportunities for improvement and makes constructive suggestions for change .
Manages the process of innovative change effectively.
Remains on the forefront of emerging industry practices.
Teamwork
Facilitates effective team interaction.
Acknowledges and appreciates each team member's contributions.
Effectively utilizes each team member to his/her fullest potential.
Keeps track of lessons learned and shares those lessons with team members.
ORGANIZATIONAL RESPONSIBILITIES
Innovator Development
Seeks and participates in personal development opportunities above and beyond training required by us.
Trains other innovators and open source developers through both formal and informal training programs.
Encourages more junior Innovators to take responsibility for their development within the company.
Challenges fellow innovators to progress toward their professional development goals.
Internal Operations
Suggests areas for improvement in internal processes along with possible solutions.
Complies with and helps to enforce standard policies and procedures.
For immediate consideration, please contact
jobs@catalystsolutionsllc.com.
Referred by: Victor Smith & Ronney John
careers, HR, jobs, derivatives, electronic trading, trading, IB, investment banking, sales, risk management, quants, structured products, quantitative analysis, finance, consultant, consulting, IT, technologyLabels: careers, derivatives, electronic trading, hr, IB, investment banking, jobs, quantitative analysis, quants, risk management, sales, structured products, trading
