Smith Barney

Citi's research move a good idea

Jim Kim — Wed, 13 Aug 2008 07:12:51 -0400

Citi has confirmed that it is indeed moving its stock research unit out of Smith Barney, where it was placed following the stock research scandals of yesteryear, and back into institutional clients' business. It will become part of a new research unit that will combine fixed income and economic and equities research, and lead to some cost savings. Breakingviews argues this is a good move. The Chinese Walls that the settlement with Eliot Spitzer brought forth will still be in place, and the analysts will not be reporting to banking heads. They'll report instead to chief operating officer Hamid Biglari. It will be interesting to see what kind of research emerges from this move. The bank may try to offer a blend of analysis that treats stocks, debt and other securities as a whole, along the lines of the savvy work at Creditsights. We'll see.

For more:
- here's the Breakingviews article

Citigroup agrees to another bias settlement

Mon, 07 Apr 2008 06:59:58 -0400

Citigroup is finding it hard to shake Smith Barney's "boom-boom room" image that has dogged its reputation. The latest: Smith Barney has agreed to pay $33 million to some 2,500 brokers, who alleged discrimination. The settlement also calls for changes in the way it awards bonuses and new accounts and to do more to promote women. A judge in San Francisco still has to approve the deal. While the suit fortunately lacked some of the lurid details of previous suits, it's indicative of some important issues that can determine success. One big issue was how promising accounts are doled out to brokers. It appears that most of the top banks are promoting their diversity effort--if only for PR purposes. Whether this will make any real difference for women and minorities remains to be seen.

For more:
- here's the article from the Independent

Related Articles:
Morgan Stanley puts discrimination cases in the past. Article
UBS accused of racial discrimination. Article
EEOC sues Merrill Lynch. Article

Pandit against a break up?

Wed, 30 Jan 2008 06:59:58 -0500

We've suggested that the sooner Vikram Pandit gets through the subprime crisis, the sooner he can get to the main issue: whether to break up Citigroup. Well, the subprime crisis isn't over, but CNBC is reporting that Pandit seems to be against such a move. Some investors have been calling for it for awhile now. Typically, they'd like to see the consumer business, the investment banking business and the Smith Barney brokerage business all trading separately. But no Citigroup CEO has ever seen it that way. And Pandit seems to be like-minded. So he'll have to find a way to make the conglomerate work--something his predecessor couldn't do. Job number one will be to get leaner.

For more:
- here's the CNBC article

Citigroup may research under investment bank?

Mon, 15 Oct 2007 06:59:57 -0400

According to the Financial Times, Citigroup's CEO Chuck Prince is supporting a proposal to move its stock research unit back under an institutional clients division. The FT suggests that this is basically a move to bring the unit back under the investment banking umbrella. That may be hard to justify to regulators and retail clients. Recall that in the tainted research scandals--remember Jack Grubman?--Citigroup was forced to move the research unit to its Smith Barney private client business. What's the point? To develop synergies between investment banking and stock research like the old days really isn't a good idea. Unless they want the analysts to somehow support the hedge fund managers.

For more:
- here's the article

ALSO NOTED: Commerce posts Q2 decline; Smith Barney to pay $50 million to settle timing charges; and much more...

Wed, 25 Jul 2007 06:59:50 -0400

Company News:
> Commerce posts Q2 decline. Article
> LaBranche's earnings woes continue. Article
> Countrywide cuts earnings forecast. Article
> Citigroup initiates coverage of Discover. Article
> Evercore upgraded by Keefe Bruyette. Article

Industry News:
> CME, CBOT post strong earnings. Article
> Countrywide issues mortgage warning. Article

Regulatory News:
> Smith Barney to pay $50 million to settle timing charges. Article

And Finally... Homeless guy fares well in financial services. Article

ALSO NOTED: Commerce posts Q2 decline; Smith Barney to pay $50 million to settle timing charges; and much more...

Tue, 24 Jul 2007 20:01:30 -0400

Industry News:
> CME, CBOT post strong earnings. Article
> Countrywide issues mortgage warning. Article

Regulatory News:
> Smith Barney to pay $50 million to settle timing charges. Article

And Finally... Homeless guy fares well in financial services. Article

Morgan Stanley tinkers with branch manager pay

Tue, 06 Feb 2007 19:01:35 -0500

The retail wars have been fairly heated for the last several years. The latest sign comes from Morgan Stanley, where John Mack seems determined to build a top flight organization. It started with some downsizing. Now, he apparently wants to boost the rewards for the companies 400 branch managers. Base salaries, which range up to $150,000, will not change, but bonuses that are pegged to production will rise at least 10 percent if certain benchmarks are hit. The firm is also making a better stock purchase program available to them. Branch manager is a fairly tough job. It's a game of numbers; either you produce or not. Morgan Stanley laid off about 30 last year, and now seems bent on rewarding those who made it. Whether Merrill Lynch and Smith Barney will follow in the same vein is unclear.

For more:
- here's an AP article

Krawcheck's loses chance to run Citigroup

Mon, 22 Jan 2007 19:01:37 -0500

Rumors have a way of intimating truth on Wall Street. Recall that Sallie Krawcheck was said to be unhappy with her job as CFO of Citigroup. Well, now comes the official announcement that she will resign as CFO and basically take her old job. She'll become the chairman and CEO of Citigroup's global wealth management division, which includes Citigroup Private Bank, Smith Barney and Investment Research. This is hardly surprising, and it would be equally unsurprising if the next CFO's prime duty is expense reduction. For Krawcheck, the moves dashes any hope, most likely, of her ever becoming the chairman and CEO of Citigroup, which seemed so possible just a few years ago.

For more:
- here's an update from AP
- read more on Krawcheck here

401k bonanza getting underway

Sun, 21 Jan 2007 19:01:34 -0500

Lots of boomers will be retiring over the next 10 years, and that means lots of 401k money, and I do mean lots, will be rolled over into IRAs. Now, normally, we think of IRAs as fairly small accounts that frankly may not be worth it for top brokerages. But the 401k rollovers are going to be larger. So if you are a big brokerage, or a little one, you may want to get your strategy all lined up. You can bet the big boys, like Smith Barney and Fidelity, are thinking about it. Smith Barney notes that over the past year, it has experienced a 25 percent rise in demand for information on IRA rollovers. The trick for many, such as the big mutual fund companies, will focus on retention, while the big Wall Street wirehouses will have to think about getting people to transfer money. No small task.

For more:
- here's an AP update

JPMorgan poised for a deal

Thu, 18 Jan 2007 19:01:35 -0500

JPMorgan Chase has completed the 2004 acquisition of Bank One and seems fairly satisfied with the results. The bottom line is that it is "open for business," in the words of chief executive Jaime Dimon. The most glaring opportunity is in the retail brokerage realm. Dimon, of course, is the former president of Smith Barney. In the past, Dimon has worked to throw water on the idea that his bank needs to boost its retail brokerage presence. Some think that may be mere posturing. Retail brokerages are pricey these days. And that may play a role in any decision-making. At least one analyst thinks A.G. Edwards would be a good fit. Then again, the bank may want to fill out its national footprint--SunTrust and US Bancorp have been speculated about. We'll see.

For more:
- here's a Forbes update
- JPMorgan buys payments processor. Article