Following the recent slump in mortgage demand, Citigroup Inc. (C) announced 1,000 job cuts in its mortgage business units. The job cuts will take place primarily in Las Vegas, Nev. and Irving, Texas. This move follows the banking major’s shuttering of its Danville office in Illinois, which resulted in service termination of 120 employees.
Through this move, Citigroup joins other banking giants like Wells Fargo & Company (WFC), JPMorgan Chase & Co. (JPM) and Bank of America Corporation (BAC) that have shut down offices catering to the mortgage business.
Citigroup today announced an agreement with Freddie Mac to resolve potential future repurchase claims for breaches of representations and warranties on 3.7 million loans sold to Freddie Mac between 2000 and 2012 (“Included Loans”). Citi agreed to pay Freddie Mac $395 million under the agreement, all of which was covered by Citi’s existing mortgage repurchase reserves as of June 30, 2013.
Jane Fraser, CEO of CitiMortgage, said, “Today’s agreement with Freddie Mac marks another important milestone in successfully resolving Citi’s remaining legacy mortgage issues. Looking forward, Citi remains focused on continuing to provide high quality mortgage products and service to our customers.”
Citi’s agreement with Freddie Mac covers potential future origination-related representation and warranty claims on the Included Loans. It does not release Citi’s liability with respect to its servicing or other ongoing contractual obligations on the Included Loans. It also does not release liability to a population of fewer than 1,000 loans originated between 2000 and 2012 with certain characteristics such as loans sold with recourse or some guarantee of performance and loans currently in the repurchase process. Citi currently believes it is adequately reserved for the loans not covered by the agreement. Citi has and will continue to work with Freddie Mac on the timely repurchase of any mortgage loans sold to Freddie Mac that do not meet Freddie Mac’s requirements.
Citi the leading global bank, has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. Citigroup provides consumers, corporations, governments and
Citigroup Inc on Wednesday said it agreed to pay $395 million to Freddie Mac (FMCC) to resolve claims on potential flaws in roughly 3.7 million mortgages it sold to the housing finance company from 2000 to 2012. The third-largest U.S. bank said the settlement also covers potential future claims arising from the loans.
Citigroup said the $395 million payment is covered by its existing mortgage repurchase reserves as of June 30.
Freddie Mac was bailed out by the government in 2008, like its larger rival Fannie Mae (FNMA.OB).
The stock is trading 0.20 after hours
China has officially opened the Shanghai Free Trade Zone (FTZ), which the government sees as a major step in liberalizing the country's economy and enacting other reforms. The FTZ will be used as a place to test those reforms, such as with the convertibility of the yuan.
Twenty-five companies have received approval to establish operations in the zone, including Citigroup (C). Banks are expected to have more leeway in setting interest rates, while foreign institutions will be able to issue bonds in the domestic market. The government also intends to create an international oil futures trading platform.
Overseas firms will be able to manufacture video-game consoles in the FTZ and sell them in China.
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NEW YORK - Bank of America (BAC_)'s cost cuts and low valuation are the chief reasons Raymond James analyst Anthony Polini is leaving a "strong buy" on the stock going into third-quarter earnings. Polini expects the bank to earn 22 cents per share vs. a consensus of 20 cents, with a range of between 14 and 27 cents.
Bank of America says it has eliminated 31,000 full-time jobs, or just under 11% of its workforce, between the second quarter of 2011 and the second quarter of 2013.
After the government is done relieving JPMorgan shareholders of something in the area of $11B, Citigroup (C -0.5%) could be the next target, suggests Charles Peabody. U.S. Attorney General Holder has already said to expect announcements aimed at banks other than the House of Dimon and Citigroup makes for a plump target.
Citigroup's litigation costs since 2008 have summed to $8.1B - chicken feed compared to about $20B for both JPMorgan and BofA. The government may just want to bring that more into line. Citigroup has upped its legal cost reserve from $4B to $5B In the past year.
Citigroup Inc. (NYSE:C) was reiterated as Outperform but the price target was raised to $65 from $60 (versus a $48.51 close) at Credit Suisse, and the call was based on what it called a conservative sum-of-the-parts valuation.
With more than 200 years of experience, Citigroup (C) is one of the most well-known banking institutions in the world. Beginning with about $2 million in capital, the international giant now holds nearly $2 trillion in capital and is quickly approaching the trillion-dollar milestone. Citigroup recently received approval for its Chinese unit to start building branches in Shanghai's new free-trade zone [FTZ], which will make Citigroup one of the first foreign banks able to target businesses in the FTZ.
JPM is aware that the cost is almost certainly mounting. J.P.M. said in a regulatory filing this summer that it believes it could suffer as much as $6.8 billion worth of lawsuit-related losses over and above the reserves it has set aside for such costs. At the end of 2012, that tally was just $6.1 billion. At the end of 2011, it was $5.1 billion. In the same quarterly filing, the bank warned that it still faces a raft of legal claims, “some of which present novel legal theories.”Costs have only grown since that August filing. Just last month, J.P. Morgan agreed to pay $920 million to tie up some investigations related to the London Whale trading loss. It also agreed to pay the equivalent of $389 million to settle accusations that it charged credit card customers for card services they never received. And that’s not to mention the far bigger kahuna: J.P. Morgan is reportedly in talks with the Justice Department to settle accusations over how it sold mortgage-backed securities to investors, and other issues, in an atonement that could mount to $11 billion or more. Peabody points out that J.P. Morgan’s rising estimates for over-and-above legal costs contrast to what’s happening at Bank of America Corp. BAC +1.19%, which is the country’s second-biggest bank behind No. 1 J.P. Morgan. In the post-crisis world, Bank of America has chosen to settle lawsuits and investigations early and often, even though that has many times meant sacrificing quarterly profits. Bank of America said this summer that it believes it could suffer up to $2.8 billion in over-and-above legal costs — a big number, sure, but down from $3.1 billion at the end of 2012 and $3.6 billion at the end of 2011.
Government shutdowns are bullish? That's been the history over the past 30-plus years, though there's always the possibility that this time could be different. Since 1981, the law has required that whenever Congress fails to pass a budget on time the government has to shut down. While the idea of a shutdown sounds ominous, markets historically have shrugged it off. There even have been violent gains afterwards, such as the roaring rally that occurred after the Sept. 30, 1982 event. The S&P 500 ripped 12.7 percent higher in the next month.
New York Attorney General Eric Schneiderman announced Wednesday that he is suing Wells Fargo (WFC_) for its alleged failure to adhere to the terms of the $25 billion national mortgage settlement.
He also said he was dropping a lawsuit against Bank of America over similar complaints, with the bank agreeing to improve its practices. Shares of Wells Fargo were down 1% in morning trading at $41.06. Shares of Bank of America were trading flat to slightly lower at $13.89.
Schneiderman said in May that he intended to sue the two banks for failing to adhere to servicing standards established by the mortgage settlement in early 2012 to help struggling borrowers. Under the settlement, the nation's five largest servicers - Bank of America, Wells Fargo, JPMorgan Chase, Citigroup and Ally Financial agreed to provide billions of dollars in relief through refinancing, loan modifications, principal reductions and short sales, following allegations of illegal foreclosure proceedings.
Shutdowns are relatively predictable and have happened before. The longest shutdown, equivalent to the current situation, occurred in 1995 and lasted five days. Multinationals Are Hedging Their Bets, Have You?
Financial market volatility has pushed multinational companies to buy more foreign exchange protection. Citigroup (C), the market leader in foreign exchange trading by non-financial institutions, said its business with companies hedging exchange rate risk had risen by over 12% since June.
Bank of America has reduced its loan servicing portfolio by almost half since 2010 through the use of sub-servicing arrangements and sales of mortgage servicing rights, says Moody's Investors Service in a Servicer Report published today. Bank of America in 2010 decided to shed its portfolio of high-risk loans. At the end of 2010 it identified 6.5 million of the 13 million mortgage loans in its servicing portfolio as high risk and targeted these loans for sale and subservicing."This strategy significantly changes Bank of America's servicing operations," said Moody's Assistant Vice President and author of the report Gene Berman. "It involves cutting staff levels and closing or consolidating servicing sites." As of 31 August, the servicing portfolio totaled around 6.7 million loans with an unpaid principal balance of approximately $910.1 billion, a significant decline from the last review when it serviced around 10.5 million loans with an unpaid principal balance of $1.5 trillion as of 31 August 2012. It has already significantly reduced its employee roster (full-time, contract and vendor) to 42,000, down from its peak of 59,000 employees.
Bank of America has 33 servicing locations, including 8 vendor sites, in 13 states, down from 51 locations in our last review, and may eliminate other sites or transition them to origination platforms. Vendor relationships have not escaped the cuts either; the bank now outsources 25% of its primarily early-stage collections activity, down from a peak of 70%. Its use of single point of contacts to coordinate loss mitigation activities has also fallen to just under 2,000, from 9,000 in November 2012.
Say what you will about Bank of America (NYSE: BAC ) and its shoddy reputation -- I, for one, have said my fair share -- but one thing continues to hold true: People love giving it their money.
Data released by the FDIC this week showed that the nation's second largest bank by assets has once again secured its place as the king of deposits. At the end of the second quarter, it reported an industry-leading $1.15 trillion in deposits, equating to a 12.2% share of the national market.
If you think Bank of America (NYSE: BAC ) is a bank that's just too complicated to ever own stock in, think again. Though BofA does have a derivatives portfolio and an investment banking that has trading operations, a huge chunk of the bank's income still comes from basic banking businesses. And it's in those basic banking businesses that the bank has a big advantage.
The federal government may not be hit with a double whammy on top of the ongoing shutdown, as House Speaker John Boehner told a group of fellow GOP legislators that he won't let the nation default on its debt, according to a House Republican. Boehner said that he'd set aside the "Hastert Rule" -- that Republicans would only bring measures up for a vote if they are backed by a majority of their caucus -- and rely on Democrats to pass a measure to raise the nation's debt limit, said the House member. This legislator attended a meeting Wednesday involving Boehner, but requested anonymity because that gathering was private.Congressional Republicans remain divided on how to structure legislation to raise the government's borrowing level. And an aide to the House speaker downplayed the development, saying, "Boehner has always said the United States will not default on its debt, so that's not news." Still, at least one Democrat -- Sen. Charles Schumer of New York -- cheered the prospect of the GOP leader refusing to block at least this measure that President Barack Obama and his fellow Democrats strongly support. "This could be the beginnings of a significant breakthrough," Schumer said in a statement. "Even coming close to the edge of default is very dangerous, and putting this issue to rest significantly ahead of the default date would allow everyone in the country to breathe a huge sigh of relief."'lThe Ohio Republican's vow comes exactly two weeks before the government is set to run out of money to cover its roughly $16.7 trillion debt, unless Congress agrees to lift the so-called debt ceiling. That had long been routine in Washington -- until recently, that is, when conservative Republicans have pushed not to allow more borrowing without significant cuts.
Citigroup expects revenues from Africa to grow by 10 percent a year for at least the next five years on the back of soaring prosperity on the continent, the head of its sub-Saharan Africa business, Ade Ayeyemi, told Reuters on Friday.
A team of financial advisers managing more than $1 billion in client assets has left the brokerage arm of UBS AG (UBS, UBSN.VX) to join Bank of America Corp.'s ( Bank of America Corp) Merrill Lynch.
Stephen Ruvituso, Lee Konopka, Robert Matluck, and Todd Stankiewicz joined Merrill Lynch's Private Banking & Investment Group last week, a Merrill spokeswoman said. The team, now based in White Plains, N.Y., managed more than $1 billion and had a production of more than $11 million in fees and commissions while at UBS, the spokeswoman said. A spokesman for UBS declined to comment on the departures.
Merrill's private banking group handles accounts averaging $10 million or more. Standard retail brokers' clients typically have from $250,000 to $10 million in assets.
Messers Ruvituso, Konopka and Stankiewicz had been working in UBS Wealth Management's Stamford, Conn., office since 2008, and Mr. Matluck had been working in Stamford for UBS since 2009, according to Financial Industry Regulatory Authority records.