Tag: Goldman Sachs

Goldman Sachs, Prysmian, others lose challenge against EU cartel fine

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Investment bank Goldman Sachs, the world’s biggest cablemaker Prysmian, Nexans and eight other cable companies on Thursday lost their challenge against a 302 million euros ($353 million) EU cartel fine.

The companies had appealed to the General Court, Europe’s second-highest court, asking for the European Commission’s 2014 decision to be thrown out and their fines reduced.

The EU antitrust enforcer said the group ran a power cable cartel for almost 10 years from 1999, sharing markets and allocating customers between themselves. ABB escaped a 33 million euro sanction by alerting the authorities.

The court rejected the appeals.

“The General Court confirms the fines of over 300 million euros that the Commission imposed on the main European and Asian producers of (extra) high voltage power cables for their participation in a worldwide cartel,” judges said.

Prysmian was hit with the biggest fine at 104.6 million euros, which included a joint fine of 37.3 million euros with Goldman Sachs. The bank acquired the Italian company via one of its private equity funds in 2005 but has since sold its holding.

The group said in a statement it would appeal the general court’s decision at the EU’s highest court, the European Court of Justice.

Other cartel members were Japanese cable firms Exsym Corporation, J-Power Systems Corporation and Viscas Corporation, Korean peer LS Cable & System and General Cable Corp via its subsidiary Silec.

Fines were also given to Danish company NKT Holding, South Korean firm Taihan Electric Wire, Mitsubishi Cable Industries, Sumitomo Electric Industries and Hitachi Metals Ltd. Sumitomo and Hitachi were J-Power Systems’ previous owners.

Antitrust enforcers in Japan, South Korea and Australia have already levied million-dollar fines against cable companies for anti-competitive practices.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Deutsche Bank investors unshaken by US stress test failure

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Deutsche Bank investors took a largely long view on its failure in this year’s US stress tests, with its shares recovering on Friday from a record low hit earlier this week.

Goldman Sachs analysts said the US Federal Reserve’s issues with Deutsche Bank were “long standing” and “not new”, while UBS said the failure was “not a total surprise.”

The Fed last year classified Deutsche Bank‘s US unit as troubled and Deutsche Bank‘s shares had been falling in anticipation of the stress test verdict on Thursday.

Shares in the German bank, which are down 42% this year, were up 1.4% at 9.19 euros at 1401 GMT, above Wednesday’s record low of 8.76 euros.

The test was the second stage in the Fed’s annual health check of banks. Deutsche Bank passed the first phase last week, but was the only lender to fail the second, in another blow to its fragile reputation as it struggles to revive profitability.

The Fed, which regularly checks banks’ financial strength, cited “widespread and critical deficiencies” in Deutsche Bank‘s capital planning controls.

“It does seems like Deutsche Bank at the moment is the worst student in the class that can’t get anything right,” said Octavio Marenzi, CEO of consultancy Opimas.

Deutsche Bank Chief Executive Officer Christian Sewing said the bank was making “good progress” on improving.

“We are completely committed to work with authorities to get that even better … over the next year,” Sewing said in an interview on CNBC on Friday.

The bank said on Thursday it had made significant investments to improve its capital planning capabilities, controls and infrastructure at its US subsidiary.

The European Central Bank, which oversees Deutsche Bank, and German financial market watchdog BaFin both declined to comment.

Deutsche Bank will now need to obtain the Fed’s permission before making capital payouts to its German parent.

But the overall impact will be limited, Marenzi said. The bank may need to invest just about $10 million in additional stress testing technology and external consultants.

Michael Huenseler, head of credit portfolio management at Assenagon, said the Fed’s assessment could spook clients in the United States just as the bank tries to regain its footing there after announcing deep cuts in its US and Asian operations.

“The US plays a major role for their investment banking revenues and if the US doesn’t deliver the results they are expecting, what else does compensate for this? That is really a concern,” Huenseler said.

Analysts at UBS said that, while expected, the Fed’s results are “an unwelcome outcome as it adds to weak sentiment and we think various stakeholders such as clients/counterparts could raise concerns.”

The Fed’s assessment follows months of turmoil at Deutsche, which abruptly reshuffled management in April after three consecutive years of losses. It then began plans to scale back its investment bank to refocus on Europe and its home market.

It has flagged cuts to US bond trading, equities and the business that serves hedge funds.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

We have changed, Uber says, in court battle to keep London licence

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Uber accepted it had made mistakes but said it had changed as it went to court on Monday to overturn a decision stripping it of its licence in London after it was ruled unfit to run a taxi service in its most important European market.

Regulator Transport for London (TfL) shocked the Silicon Valley firm last September by refusing to renew its licence, citing failings in its approach to reporting serious criminal offences and to background checks on drivers.

Uber, backed by Goldman Sachs and BlackRock among others and valued at over $70 billion, has faced protests, bans and restrictions around the world as it challenges traditional taxi operators and angers some unions.

Its chief executive Dara Khosrowshahi, who took charge the month before TfL’s decision, has pledged to “make things right” in London, and the court case is a test of how far Uber can demonstrate it has changed.

While the appeal process is ongoing, Uber can continue to operate in the city.

The firm has introduced several new initiatives in London since losing its licence, including 24/7 telephone support and the proactive reporting of serious incidents to the city’s police. It has also changed senior management.

Uber‘s lawyer Thomas de la Mare said the company accepted the September ruling and the focus of the appeal should be on its reforms.

“It’s no part of our case to say it was wrong. We accept it was right,” de la Mare told Westminster Magistrates Court in London. “It’s that acceptance that has led to wholesale change in the way that we conduct our business.”

The appeal is due to be heard over three days and will hear from witnesses including Uber‘s UK Chairman Laurel Powers-Freeling, UK Head of Cities Fred Jones and TfL’s Interim Director of Licensing Helen Chapman.

‘Lack of understanding’

Uber UK’s General Manager Tom Elvidge admitted the company’s correspondence with TfL had at times been inaccurate, incomplete and inadequate across a range of issues.

He said inaccuracies in letters sent in 2014 about whether Uber‘s business model was legal under London‘s regulatory framework stemmed from a “lack of understanding” on Uber‘s part, but that new people as well as the new policies would help to avoid a repeat of the problems in future.

“It was very clear to ULL (Uber London Limited) that a change in structure, a change in leadership, and a fundamental change in the way we were managing and governing operations was essential,” he told the court.

In May, Uber appointed a new boss for Northern and Eastern Europe, which includes Britain, after its previous head Jo Bertram quit last year following the decision to strip Uber of itsLondon licence.

After its application for a five-year licence was rejected last year, Uber is now seeking an 18-month one to prove to the authorities that it has reformed.

Judge Emma Arbuthnot may take weeks before making her decision, which is likely to be subject to further appeal by the losing side, meaning the whole legal process could take years.

However, she signalled any renewal of the licence could be for a shorter period.

“I would’ve thought, if I were to renew the licence, 18 months would be rather too long,” she said.

At stake for the U.S. firm is one of its most crucial foreign markets. Of its over 60,000 drivers in Britain, about 45,000 are in London.

Since September’s TfL decision, Uber has also been stripped of its licence by the southern coastal city of Brighton, in a decision which it is appealing, and the northern city of York.

It has, however, gained new licences in Sheffield, Cambridge, Nottingham and Leicester.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Goldman Sachs sees slightly easier China monetary policy amid trade tiff with US

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Goldman Sachs said it expected China to adopt a slightly easier monetary stance in the face of tit-for-tat tariffs between Beijing and Washington that, while likely to have limited immediate impact on the economy, were at risk of escalating.

On Friday, the Trump administration imposed tariffs on $50 billion of imports from China, a move that came on top of hefty duties on steel and aluminum imports implemented at the start of June. China retaliated swiftly by announcing reciprocal tariffs on US products, ranging from soybeans and autos to seafood.

Goldman Sachs analysts forecast that the negative growth impact on China of the tariffs would be 10-20 basis points of gross domestic product (GDP), while the effects on Chinese consumer price index (CPI) inflation would be “modest, on the order of 10-20 basis points”.

Goldman has forecast China’s gross domestic product growth to be 6.6 percent this year. Last week, it said it expected inflation to remain “mild” in coming months after the May CPI number came in unchanged at 1.8 percent year-on-year.

“The tariffs announced thus far should have relatively small macro effects, but there is clearly a risk of further escalation,” its analysts wrote in a note late Sunday.

Goldman also adjusted its forecasts for the reserve requirement ratio in China and the rate on the country’s seven-day reverse repurchase agreements, the tool of choice for the central bank in managing interbank liquidity, reflecting “an expectation of slightly easier policy going forward”, they wrote.

The investment bank lowered its forecast for the seven-day repo rate to 2.75 percent from 3 percent at year-end, and said it expected the People’s Bank of China to cut the reserve requirement ratio by 50 basis points per quarter for the rest of the year.

In April, the PBOC unexpectedly cut the RRR by 100 basis points to 16 percent for large institutions and 14 percent for smaller banks.

The tariffs are scheduled to take effect in July, leaving some room for discussions to head them off.

But Wang Jun, the Beijing-based chief economist at Zhongyuan Bank, thinks China and the United States have entered a “talk and fight” era in which trade frictions will become normal and the impact will be unavoidable.

“We are likely to see a cold war from economics to other areas,” he said. “We should be ready for sustained conflict and long-term frictions and maneuvering between the two countries.”

The tariffs come at a time when China’s economy is already showing signs of weakness, but while the spat adds to headwinds “they point to a slowdown not a slump”, Mark Williams, chief Asia economist at Capital Economics, wrote in a note.

The impact will be small – even if the US tariffs are tripled, as the Trump administration has threatened – amounting to probably “well under” half a percent of GDP for China.

“And that could be offset by policy loosening,” he wrote.

“Neither side will be brought to its knees – which is one reason to think the trade dispute could drag on.”

Lu Zhengwei, chief economist at Industrial Bank in Shanghai, said the Chinese countermeasures would eventually eat into US jobs, but China would feel little impact from the tariffs against its exports.

Economists have said the impact on the US economy would be muted.

“Chinese exports of products under the new tariffs to the US will be affected but not other overseas markets. China’s market is big enough to support the development of relevant industries. Hence, its impact on the economy is limited,” Lu said.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

RBI to keep policy rates unchanged in June, says Goldman Sachs

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Reserve Bank is likely to keep policy rates unchanged in the forthcoming monetary policy review, but will have a hawkish tone on concerns over inflation and as crude oil prices remain elevated, according to a report.

Retail inflation moved up to 4.58 percent in April from 4.28 per cent in March. It was at 2.99 percent in April last year.

The Reserve Bank will announce it’s second bi-monthly monetary policy on June 6.

“Although better activity data, higher inflation, and rising crude oil prices all point towards a more hawkish RBI and could warrant a policy rate hike, we think the RBI will await clarity on minimum support price (MSP) hikes for summer crops, monsoon out-turns, and more inflation data before embarking on a rate hiking cycle,” Goldman Sachs said in a report here today.

The probability of a June hike would increase if international oil prices rise further, or the rupee depreciates significantly ahead of the June meeting.

The report said the RBI will likely begin hiking policy rates in August this year.

The key downside surprise this year has been the developments in the banking sector (Punjab National Bank fraud, higher-than-expected haircuts on existing non-performing loans), which led us to reduce our FY19 real GDP growth forecast by 40 basis points earlier this year.

“We continue to think that the bank recapitalisation programme will help kick-start a powerful positive impulse between credit and investment growth, boosting overall activity growth in the second half of the fiscal year,” it said. The report said headline inflation has bottomed and will likely rise over the coming months.

Headline inflation had moderated to 4.3 per cent y-o-y in March 2018 from 5.2 percent in December 2017, leading the RBI to lower its headline inflation forecasts by 40-50 basis points at its April monetary policy meeting.

It forecasts FY19 headline CPI inflation to average 5.3 percent y-o-y.

“The recent spike in oil prices following the withdrawal of the US from the Iran nuclear deal poses additional upside risks to our headline inflation forecasts,” the report said.

While fiscal slippage risks appear to be priced into bond and currency markets, higher oil prices are less factored in, it said.

The report sees FY19 current account deficit at 2.4 per cent of GDP, but expects the economy to be able to withstand external shocks better than it did in 2013 around the taper tantrum.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Goldman looks to partner with Apple on credit card

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Goldman Sachs and Apple are looking to partner together to create a new credit card, the first foray by Goldman Sachs into the $1 trillion credit card market, The Wall Street Journal reported Thursday, citing unnamed sources.

The Goldman-Apple credit card would be tied to Apple’s payment service known as Apple Pay and Apple’s co-brand partnership with Barclays would come to an end, the Journal said.

Goldman has been incrementally pushing into consumer banking products. It does personal loans and savings accounts under the brand Marcus, and has been looking at other consumer products.

A co-brand credit card is when a company partners with a bank to create a credit card that will spur loyalty and spending with the company. There are hundreds of co-brand partnerships, with brands large and small, and it’s an intensely competitive business for credit card companies.

Apple is a huge and iconic brand, and it would be a symbolic success for Goldman as it enters the consumer credit card market, industry experts said, But it is not a large co-brand partnership like American Express’ partnership with Delta Air Lines, Citigroup’s partnerships with Costco and American Airlines or JPMorgan Chase’s partnerships with Marriott and United.

“It’s not going to put them on the map when it comes to market share, but it’s definitely a strong customer base you want to have,” said Brian Riley with Mercator Advisory Group, which specializes in consulting with companies looking to do co-brand credit cards.

This is the second time Apple and Goldman have been mentioned together as potential partners. The Journal reported earlier this year that Goldman was looking to take over Apple’s iPhone financing program from Citizens Bank.

Goldman Sachs declined to comment on the report. Apple did not immediately respond to requests for comment on the report as well.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Goldman outpaces peers in debt underwriting, bond trading

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Goldman Sachs Group Inc on Tuesday reported a year-on-year jump in debt underwriting revenue after working on financing for big M&A deals that some peers missed out on.

Analysts have feared slower corporate issuance could weigh on Wall Street debt underwriting and also crimp credit trading as companies adjust for higher interest rates and the US tax code overhaul.

Debt underwriting revenues slumped from a year earlier at other US banks that reported first-quarter results.

At Morgan Stanley, which reports on Wednesday, fixed-income underwriting revenue could fall 11 percent from the year-ago quarter, analysts at Keefe, Bruyette & Woods said in a report earlier this month.

Goldman’s debt capital markets (DCM) business fell from a record fourth quarter but notched its second-best result with $797 million in revenue.

“It’s really M&A as the driver for demand, for the issuance, and you’ve seen the results flow through into revenues,” said Goldman finance chief R. Martin Chavez on a call with analysts.

He highlighted Goldman’s role in CVS Health Corp’s $40 billion bond issuance to help fund its acquisition of health insurer Aetna Inc.

The bank also said credit trading, which can be supported by issuance, was a factor behind its 23 percent rebound in fixed income, currency and commodities (FICC) revenue.

A rebound in commodities and currencies trading during an uptick in broad market volatility also helped the improvement from a weak year-ago period.

Structured trading in particular boosted the credit business year on year, Goldman said. Peers had called out credit as an area of weakness in first-quarter FICC trading.

Bank of America Corp Chief Financial Officer Paul Donofrio told reporters on Monday that FICC income for credit products in particular fell from a year earlier because the bank did not see as much DCM activity.

JPMorgan Chase & Co on Friday said lower client activity in credit and rates weighed on fixed-income trading.

On a call with analysts, JPMorgan CFO Marianne Lake said the bank missed out on some “larger fee events,” and its pipeline for equities underwriting was likely stronger than for DCM given rising interest rates.

New issues for corporate investment-grade debt fell in the first quarter for the first time in four years to $343.23 billion, according to Thomson Reuters IFR data. That was the lowest outright value since 2014.

Shares in Goldman were trading lower Tuesday afternoon, with some analysts citing concerns about the volatile nature of its core businesses.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Goldman Sachs buys personal finance startup Clarity Money

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Goldman Sachs Group Inc bought Clarity Money, a personal finance startup, to bolster its Marcus online lending business, it said Sunday.

Buying Clarity Money, a free app that helps consumers manage their personal finances, is expected to add over 1 million customers to the financial service firm’s Marcus business. Marcus offers tools to help customers save and borrow. Clarity Money will be rebranded as Marcus by Goldman Sachs over time, the company said.

Goldman launched Marcus in October 2016 as a way to court Main Street borrowers saddled with credit card debt. It offers loans from $3,500 to $40,000 and targets credit card borrowers who can benefit from consolidating debt into a single loan with a lower interest rate.

GS Bank, a subsidiary of Goldman Sachs, is making the acquisition. Clarity Money CEO Adam Dell will join Goldman Sachs as a partner.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow