Citigroup (C) and Scotiabank (BNS) Ink Business Deal

Category: Personal Loans
Published: Thursday, 25 December 2014
Written by Admin

In furtherance of its strategy to reduce costs through streamlining and enhancing returns to serve its clients better, Wall Street giant Citigroup Inc. (C - Analyst Report) inked a deal with Canada-based The Bank of Nova Scotia (BNS - Snapshot Report) to sell its consumer and commercial banking operations in Peru. Notably, Scotiabanks Peruvian subsidiary will acquire Citigroups operations.

Financial terms of the acquisition were not disclosed and the deal awaits regulatory approvals. Notably, the deal will impact Scotiabanks common equity tier 1 capital ratio by less than 10 basis points.

Strategic Benefits of the Deal

Though Citigroup is reducing its consumer banking operations in Peru, the company still considers it as a strategic market for growth in other operations. The bank foresees its clients and employees to benefit from the Scotiabanks existing large market share in Peru and expects further growth. Notably, driven by market growth in Peru, Citigroup will hold back its institutional client businesses including Corporate and Investment Banking, Markets and Securities Services, Treasury and Trade Solutions and Private Banking in Peru.

The deal is a strategic fit for Scotiabank as it will enhance the banks already established position in Peru and place it among the top major lenders in the South American country. Further, the acquisition will extend existing customer relationships along with serving new customers and strengthening market share in credit cards and personal loans in Peru. The deal fits well with Scotiabanks strategy to expand banking operations in Peru as well as in other Pacific Alliance economies of Mexico, Colombia and Chile.

Citigroup has operations in Peru since 1920, including eight branches serving more than 130,000 retail and commercial banking customers. The completion of the deal will transfer Citibank employees from the retail and commercial banking businesses in Peru to Scotiabank Peru. Notably, Scotia Bank operating in Peru since 1997 currently holds C$15.7 billion in assets and 306 branches.

Conclusion

Amid troubled tides, while Citigroup is encountering issues from various fronts including the ongoing investigations related to the Mexican fraud and the Federal Reserves rejection of its 2014 Capital Plan, the deal will give the company some financial flexibility.

On the capital front, Citigroup is working to improvise the loopholes of the rejected 2014 Capital Plan and is preparing for the 2015 Capital Plan.

We believe the company is well positioned to resolve its internal inefficiencies and setbacks. Further, we believe these streamlining initiatives will bolster the companys capital position, reduce expenses and drive operational efficiencies.

Citigroup currently carries a Zacks Rank #3 (Hold). Two better-ranked finance stocks include SunTrust Banks, Inc. (STI - Analyst Report) and LNB Bancorp Inc. (LNBB - Snapshot Report), both with a Zacks Rank #2 (Buy).



Scotiabank to add 10% more Peru clients with Citi purchase

Category: Personal Loans
Published: Thursday, 25 December 2014
Written by Admin

The financial services group did not disclose how much it is paying for the assets, which include eight bank branches. Scotiabank has 306 branches in Peru, where it is one of the largest foreign players.

Scotiabank said that the purchase forms part of a regional strategy to grow its footprint in the Pacific Alliance trading bloc countries: Chile, Colombia, Mexico and Peru.

Through the deal, Scotiabank Peru will increase its credit card and personal loans market share, said Dieter Jentsch, group head of Scotibanks international banking operations. The Peruvian operations also include pension fund manager Profuturo AFP.

As part of a global plan, Citigroup announced in October it would sell its consumer banking operations in Costa Rica, El Salvador, Guatemala, Nicaragua, Panama and Peru.

The decision to exit consumer operations in these markets is consistent with the companys global strategy of allocating resources to higher return opportunities, Citi told BNamericas at the time of the announcement.

Citibank will stay in Peru and focus on its corporate, institutional and private banking businesses.

In Latin America, the company will retain a consumer presence in Argentina, Brazil, Colombia, Mexico and Venezuela.



Liquidators try to bankrupt LM's founder

Category: Personal Loans
Published: Wednesday, 24 December 2014
Written by Admin

Mr Drake has been ordered by the Federal Court to hand his passport over to a court-appointed trustee in bankruptcy and has been banned from travelling until the orders lapse on January 21.

In a pre-Christmas filing, KordaMentha this week secured orders from the Federal Court that are a step towards the once high-flying tycoon being officially declared bankrupt.

KordaMentha is seeking to bankrupt Mr Drake over a $20million personal loan he took out from the company.

At the end of the day Im technically bankrupt, or will be, Mr Drake told The Australian yesterday.

Im living week to week. I just want to get on with my life.

Mr Drake said investors who complained about losing their life savings in his investment schemes without first speaking to him about their concerns were idiots, but added that he accepted full responsibility for the groups $1 billion collapse.

Im distressed at the way some of the processes have been handled. Im not angry but its sad that so many investors havent been looked after, Mr Drake said.

The worst thing that ever happened in my life was being told about a fricking administration.

He said there was not much he could do to stop the bankruptcy proceedings, adding that he had represented himself in court this week to honour the process.

Mr Drake denied suggestions he had assets offshore, saying his ex-wife owned a house in Monaco where she lived with his children and he rented his London pad.

I have no assets offshore. This is something that has been completely made up, Mr Drake said.

He said he had no money to repay the $20m being sought by the receivers to the Managed Performance Fund, and said that KordaMenthas statement to the court that he was a flight risk was unfair. My passport has expired, he said.

Mr Drake said it was common for directors to have personal loans from their businesses but said he had not used any investor funds for personal purposes.

The bankruptcy proceedings come a little over a month after the Australian Securities amp; Investments Commission decided not to pursue criminal charges against Mr Drake.

Instead, ASIC has launched civil penalty proceedings against Mr Drake and other former LM directors over breaching their directors duties. Mr Drakes property fund management company, which at one stage boasted it controlled a $3bn empire, collapsed in March last year.

Since then its two main funds have plummeted in value.

KordaMentha are receivers to the largest fund established by Mr Drake, the $400m LM Managed Performance Fund, which was touted to investors offshore. The Managed Performance Fund, the entity behind the firms big-ticket development Maddison Estate in the Gold Coast hinterland, racked up debts of $400m, according to the trustees.

KordaMentha believes the assets of the fund are less than $12m and returns to investors could be as low as 5c in the dollar.

ASIC has alleged Mr Drake used his position to gain an advantage for himself at the expense of the group by having it approve a hazardous loan of up to $280m to the Maddison Estate property development he controlled.

Mr Drake also allegedly benefited by using about $26m of LM money to meet his personal expenses, ASIC said in a statement of claim filed with the Federal Court in November.

The ASIC and bankruptcy proceedings continue.



Stock Watch: General Electric Company (NYSE:GE)

Category: Personal Loans
Published: Wednesday, 24 December 2014
Written by Admin

[Business Wire] General Electric Company (NYSE:GE) Capital's Healthcare Financial Services (HFS) business announced today that it has agented a $500 million credit facility for Brookdale Senior Living Inc. HFS is administrative agent and GE Capital Markets is sole lead arranger on the transaction. The funds may be used to finance acquisitions, to fund working capital and capital expenditures, and for other general corporate purposes. Brookdale is the leading operator of senior living communities throughout the US It currently operates nearly 1,150 independent living, assisted living, dementia care and continuing care retirement centers in 46 states. Through its ancillary services programs, Brookdale also offers a range of outpatient therapy, home health, personalized living and hospice services.

You can read the full article here.

Stock Analysis

In terms of market cap, General Electric Company (NYSE:GE) is now valued at 269.83 billion. The company is expected to report earnings per share next year 7.66% higher than this year.  The five year earnings per share estimate is at 7.58%.

In terms of ownership, company insiders have purchased3.50% of their stock over the past quarter while institutions have increased their positions by 0.50%.  As a whole, institutions own 54.50% of the total outstanding shares.

Analysts Perspective

Several analysts have recently issued updates on the company. One recent update included RBC Capital Mkts initiating coverage of the stock on November25thwith aOutperform rating and $30 price target.  Prior to that, Stifel also weighed in on the stock.  Stifel initiated their Buy stance on the company on September 17th moving their price target from $30. Analysts as a whole have a target price of $29.00 and a recommendation score of 2.10.

Company Profile

General Electric Company operates as an infrastructure and financial services company worldwide. The companys Power and Water segment offers gas, steam and aeroderivative turbines, generators, combined cycle systems, controls, and related services; wind turbines and solar technology; and water treatment services and equipment. Its Oil and Gas segment provides surface and subsea drilling and production systems, equipment for floating production platforms, compressors, turbines, turboexpanders, reactors, industrial power generation, and auxiliary equipment. The companys Energy Management segments offers electrical distribution and control products, lighting and power panels, switchgears, and circuit breakers; engineering, inspection, mechanical, and emergency services; motors, drives, and control technologies; and plant automation, hardware, software, and embedded computing systems. Its Aviation segment offers jet engines, turboprop and turbo shaft engines, related replacement parts, and aerospace systems and equipment for military and commercial aircrafts; and maintenance, component repair, and overhaul services. The companys Healthcare segment provides medical imaging and information technologies, medical diagnostics, and patient monitoring systems; and disease research, drug discovery, and remote diagnostic and repair services. Its Transportation segment offers freight and passenger locomotives, diesel engines for rail, marine, and stationary power applications; railway signaling and communications systems; underground mining equipment; motorized drive systems; energy storage systems; and information technology solutions. Its Home and Business Solutions segment manufactures home appliances and lighting products. Its GE Capital segment offers commercial loans and leases, fleet management, financial programs, home loans, credit cards, personal loans, and other financial services. The company was founded in 1892 and is headquartered in Fairfield, Connecticut.