The strength of financials are they still a "?"

http://finance.yahoo.com/news/Citi-closes-gaslinked-apf-1579141505.html?x=0



Citi closes gas-linked MasterCards without warning

Citigroup shuts down many MasterCards without warning consumers; letters sent 5 days later

• 
  By Eileen Aj Connelly, AP Personal Finance Writer
  
• On 7:17 pm EDT, Monday October 19, 2009
  

NEW
YORK (AP) -- Shannon Burdette tried to pay with her Shell Mastercard
after filling up her gas tank this weekend but found the card rejected.

Confused,
she called the customer service line on the back of the card, issued by
Citibank, and was told the account was closed because of something that
appeared on her credit report. But when the Sykesville, Md., resident
got a copy of her credit report online, the only negative thing she saw
was "closed at credit grantor's request" on the Shell MasterCard
account."They said there was a routine review," said Burdette,
who maintained that she and her husband, Brian, used the card regularly
and always paid the bill on time.Burdette isn't alone. People
across the country have been reporting similar experiences in postings
on various consumer Web sites.Citi confirmed the basics. The
bank said in a statement it "decided to close a limited number of oil
partner co-branded MasterCard accounts." That includes not only Shell,
but Citgo, ExxonMobil and Phillips 66-Conoco cards.The close
date was Wednesday, and letters were sent out Monday to customers
informing them of the change, a Citi spokesman said. The bank would not
say how many cards were shut down or how much available credit they
represented.But unlike the bank's move to shut down its Home
Depot cards, Citi did not discontinue the sale of these cards
altogether. It is still accepting applications, promising rewards like
3 percent cash back on fuel purchases and 1 percent cash back on other
spending.No law, including the Credit CARD Act that has started
to take effect, prevents banks from closing down credit accounts
without warning. Credit card issuers all maintain the right, typically
listed in the fine print on credit card agreements.Citi would
not say why the cards in question were shut down, issuing a statement
that said only it continuously evaluates its products."It is
kind of an extraordinary action, but these are extraordinary times,"
said Ben Woolsey, director of marketing and consumer research for
CreditCards.com.He noted that Citi is not the healthiest bank.
In fact, Citi posted $8 billion in consumer credit losses for its third
quarter last week, including both mortgages and credit cards. Like many
banks with big consumer lending portfolios, Citi is expecting defaults
on credit cards to rise in coming months. Credit card delinquencies
typically track the unemployment rate, which is at 9.8 percent and is
expected to top 10 percent soon.Analysts noted following the earnings report that Citi has sharply reduced its outstanding credit to consumers.A card being closed may, but does not always, damage a person's credit score.Such
scores, which lenders use to determine if you're a good credit risk,
take into account a series of factors, including how long you've had
credit accounts, your payment history and the balance versus available
credit.It could be that last factor that hurts consumers most,
said John Ulzheimer, president of educational services for Credit.com.
If a consumer had a high credit limit on the closed account, and that
credit is no longer available, it could alter the "utilization ratio"
for the person's remaining credit. If another type of credit carries a
high balance, the loss of the credit line could push down their score.Ulzheimer
said banks have been routinely making such moves in the past year and a
half, mostly on a case-by-case basis. "Every once in a while you'll get
a huge pop in one particular card product," he said.Card holders
who think their cards were unfairly shut down can try to contact the
bank and ask for reinstatement, but Ulzheimer didn't hold out much hope
for success. "In this environment," he said, "it's not as successful as
it was in the heyday of credit cards, where you could in fact call and
plead your case."

Maybe U.S.'European financials are not looking attractive from a commercial/retail-banking standpoint but Investment banking has been tremendous. This is imminent in examining WFC, CS, MS, JPM, GS, and my favorite CitiCorp. Even if consumer/commercial lending is at near all-time lows at least the Capital Markets have returned us to a sense of normalcy. Remember where we were one year ago. 2 of our most prized Investment banks collapsed. This may be part of the reason we are seeing bolstered revenues from IB's. However, my point is Capital markets have recovered and this we should be thankful for. I will let policy makers worry about "main street" if you will. Besides, "too big to fail" actually means "too big to fail." Earnings:


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Investment banking boosts Credit Suisse

By Haig Simonian in Zurich
Published: October 22 2009 07:34 | Last updated: October 22 2009 11:56

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Thursday unveiled bumper third-quarter results as the Swiss banking
group reported a surge in its investment banking activities and solid
results in private banking. Group net profit reached SFr2.35bn
($2.33bn), up from SFr1.57bn in the second quarter and in line with
some of the bank’s best earnings at the height of the credit boom. The upbeat results prompted a confident outlook statement from Brady Dougan, the bank’s normally cautious chief executive.“We
are confident about our business model and out competitive position. If
markets remain constructive, we expect to be able to maintain our
momentum. Even if markets become more difficult, we believe that Credit
Suisse is still positioned to perform well,” said Mr Dougan. The strong earnings followed
impressive results from Goldman Sachs and JPMorgan Chase last
week, and reflected the recovery in investment banking, where a smaller
number of leading players are enjoying a larger slice of the market
thanks to difficulties at some other banks and the collapse of Bear Stearns and Lehman Brothers.Credit
Suisse said its robust third-quarter results had pushed up its return
on equity to 25.1 per cent for the period, while its tier one capital
ratio – a key measure of financial strength – had risen to 16.4 per
cent, the highest for any of the world’s big banks. Net profits in the
first nine months amounted to SFr5.9bn, giving a return on equity of
21.8 per cent. Investment banking rebounded amid good results
in fixed income, foreign exchange and cash equities. The bank also
reported positive trading in previously troubled asset classes such as
US leveraged finance and trading in US residential mortgage-backed
securities. “In the third quarter we achieved very good
performances in our client and flow based businesses, as well as in our
repositioned businesses”, noted Mr Dougan. Pre-tax
profits in investment banking amounted to SFr1.75bn, in spite of a
SFr251m negative element based on accounting changes in the value of
Credit Suisse’s own debt. Pre-tax earnings were 5 per cent higher than
in the second quarter, although revenues fell by 16 per cent to SFr5bn,
partly reflecting the traditional summer slowdown. Private
banking reported net new money of SFr13.1bn, significantly higher than
expected and indicating a return of confidence among clients. While
SFr5.6bn came from Swiss clients, SFr7.5bn stemmed from other customers
around the world. Pre-tax profits in private banking were down 7 per cent on the previous quarter at SFr867m.Even
asset management, usually one of the group’s weakest businesses,
reported solid profits of SFr311m and SFr3.9bn in net new money.
However, earnings were boosted by a one-off gain of SFr207m on the sale
of part of the business to Aberdeen Asset Management. Shares in
Credit Suisse were 2.5 per cent lower at SFr58.55 in lunchtime Zurich
trading, in line with a generally weaker European banking sector.


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Merger savings bolster Wells’ profits

By Saskia Scholtes in New York
Published: October 21 2009 14:23 | Last updated: October 21 2009 18:34

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by assets, on Wednesday posted record third-quarter profits as revenues
outstripped loan losses, and savings from its merger with East coast
rival Wachovia began to materialise. Net profit almost doubled
to $3.2bn over the same quarter last year, boosting diluted earnings
per share by 14 per cent to 56 cents.


Credit
costs were higher quarter-on-quarter, but the rate of growth began to
slow amid aggressive efforts to modify the terms of home loans and
refinance struggling borrowers with new mortgages. Wells’ strong third-quarter results follow similarly positive results
in the second quarter. The San Francisco-based bank has benefited from
record-low mortgage rates that allowed it to earn substantial revenue
from borrowers refinancing into cheaper home loans. Mortgage
origination fees of $1.13bn in the third quarter were up $849m from a
year ago. Unlike many of its peers, the bank also benefited from higher
revenues from consumer businesses such as credit cards and auto loans. Wells
said the rate of growth of credit losses slowed for consumer loans in
the quarter, while losses on commercial loans declined in absolute
terms. Provisions for credit losses were $6.11bn, more than double the
level a year earlier and up 20 per cent from the prior quarter. Net
charge-offs rose to 2.5 per cent of average loans from 1.96 per cent a
year earlier, and 2.11 per cent last quarter. The bank expects loan
losses to peak next year. Wells said its estimate for lifetime
losses on Wachovia’s portfolio of option adjustable rate mortgages –
long a source of concern – were now “meaningfully” lower than its
original projections. The improvement in the portfolio of
option ARMs, adjustable-rate mortgages that allow borrowers to choose
when to pay interest or principal, was the result of aggressive efforts
to modify the terms of the loans or refinance borrowers into more
traditional mortgages, combined with lower interest rates that have
helped borrowers keep up with their payments.Wells’ integration
of Wachovia also contributed to the strong quarter as Wells said the
bank had now realised a third of the $5bn annual projected savings from
the merger. Wells said it would now spend about $5.5bn in merger costs,
compared with its previous $7.9bn estimate. “We’re seeing a
contribution ... from Wachovia that is occurring earlier and better
than originally anticipated,” said Howard Atkins, chief financial
officer.Strong revenues helped Wells generate $20bn of capital
in the past six months, the bank said, allowing it to plug the $13.7bn
capital shortfall identified by the government’s bank stress tests in
the spring.


=========================================================================================================================

M Stanley reports $757m in earnings

By Greg Farrell in New York
Published: October 21 2009 13:42 | Last updated: October 21 2009 17:58

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Wednesday reported its first quarterly profit in a year, led by a
rebound in income from underwriting debt and equity issues as well as
an infusion of new revenues from its Morgan Stanley Smith Barney
network of financial advisers.The bank reported third-quarter
earnings of $757m, a turnaround from a loss of $159m the previous
quarter. Revenues jumped to $8.7bn in the quarter from $5.4bn the
second quarter.The US bank
set aside $5bn for compensation expenses in the third quarter, up 28
per cent from $3.9bn in the second quarter. For the first nine months
of 2009, Morgan Stanley has accrued $10.9bn in compensation, down 9 per
cent from $12bn in the first nine months of 2008.John Mack, Morgan Stanley’s chief executive, said in a statement: “Morgan Stanley continued to build momentum across our business this quarter.”Mr Mack announced last month that he was stepping down from the chief executive’s position at the end of December, in favour of one of his lieutenants, co-president James Gorman.Cubillas
Ding, research director with consulting firm Celent, said: ”After
surviving ‘perfect storm’ conditions exactly a year ago, things appear
to be on the mend, but they need to move more swiftly. The risks here
are that competitors are eating their lunch and gaining share while the
business is recuperating”.As was the case in the second quarter,
Morgan Stanley’s earnings were distorted by the effects of improvements
in the bank’s credit spreads on some of its long-term debt. The
improved spreads - a sign that Morgan Stanley’s debt is being valued
closer to par - resulted in a paper charge of $900m for the quarter,
compared with a $2.3bn paper loss due to the same movement in spreads
the previous quarter.The fair valuation of its own debt, which
Morgan Stanley has applied since becoming a bank holding company last
year, led to a large distortion in revenues for the third quarter of
2008. For that period, the bank recorded net earnings of $7.7bn and net
revenues of $18bn, of which $9.7bn resulted from lower valuations of
its own debt during a time of financial turmoil in the US and abroad.In
investment banking, underwriting revenues jumped 74 per cent from the
third quarter last year, while fixed income sales and trading revenues
were $2.1bn. Equity sales and trading revenues were $1.1bn.In
its financial advisory business, Morgan Stanley’s results reflect the
first full quarter of revenues since it acquired a majority stake in Citigroup’s Smith Barney network of advisers.Shares of Morgan Stanley were up 6.5 per cent, to $34.62, in afternoon trade.


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