The ax fell on Deutsche Bank staffers last week. Sources close to the bank said that the lay-offs were in the sales and trading division as well as research. These lay-offs did not come as a surprise to people familiar with the situation.
Morgan Joseph & Co., a full-service investment bank, expanded its analytics and trading group, which operates in the secondary market for fixed-income structured products. The firm hired two new members to the team, including Thomas Carter, a 13-year veteran in the structured transaction field. Carter joins as an analyst and marketing representative. Andrew An, who has been involved in fixed income for 11 years, will handle sales on the West Coast. Carter and An were brought on as managing directors. Previously, Carter was at General Electric Capital Corp., first as a vice president in structured transactions, and later as business development manager in capital markets. In February 2001, he was named a director at Guggenheim/Liberty Hampshire/Links Securities, in New York City, where he was responsible for all aspects of the CDO transaction process, and served for three years. Thereafter, he became a managing director at Broadstreet Group, originating and structuring new issue CDOs, and then went to Pali Capital in January 2005 as a managing director where he headed up structured products activities, his last position before joining Morgan Joseph. An most recently served as vice president of the structured products group at Countrywide Securities Corp., where he covered large Tier 1 residential non-agency and agency MBS clients.
Los Angeles-based Oaktree Capital Management has raised almost $2.2 billion for a new distressed debt fund, according to the Los Angeles Times. The new fund, dubbed the OCM European Principal Opportunities Fund II, will concentrate on distressed European companies. The firm boosted the size of the fund by $762 million from its original target after receiving strong demand from investors. The fund's strategy for taking control of companies is to offer equity in exchange for debt.
Tarun Jotwani has been appointed head of global fixed-income at Nomura, also taking on the position of senior managing director of Nomura Securities. He will work alongside Zenji Nakamura, who has been named co-head of global fixed-income, and will focus on Europe and the Americas. Prior to joining Nomura, Jotwani worked at Lehman Brothers, most recently as chairman and chief executive of the firm's Indian business, and previously as co-head of fixed-income for Europe and Asia.
The Federal Reserve announced last Tuesday that it will extend three of its liquidity programs through April 30. The Primary Dealer Credit Facility (PDCF), the ABCP Money Market Fund Liquidity Facility, and the Term Securities Lending Facility (TSLF) had been scheduled to end on Jan. 30. The three-month extension means that these programs will now phase out at the same time as the other facilities the Fed has introduced, such as the Commercial Paper Funding Facility (CPFF) and the Money Market Investor Funding Facility (MMIFF). Fed Chairman Ben Bernanke has repeatedly assured market participants that liquidity programs will stay in place as long as they are needed. As such, further extensions beyond April are possible. The extended programs target liquidity in different sectors of the market. The PDCF lends to investment banks or the investment bank units of commercial banks, while the commercial paper facility provides loans against ABCP held by financial institutions. The TSLF auctions Treasury securities.
Last Wednesday, the Securities and Exchange Commission (SEC) approved final rule changes that relate to Nationally Recognized Statistical Rating Organizations (NRSROs), as well as proposed additional NRSRO rules. However, the SEC did not enforce rule proposals for the removal of references to credit ratings in SEC rules and forms. The final rules include new prohibited conflicts of interest, new disclosure obligations, and new reporting and record-keeping requirements. Comments on the new proposal and re-proposal will be due 45 days after publication in the Federal Register. The effective date for the final rules has not been disclosed, but will be available as soon as the rules are published in the Federal Register.
Credit card issuer Capital One Financial Corp., based in McLean, Va., agreed last week to purchase Chevy Chase Bank and its B.F. Saul Mortgage (BFSM) unit in a stock deal valued at $520 million. Figures compiled by the Quarterly Data Report show that Maryland-based BFSM is the nation's 40th largest lender and 34th largest servicer, with $20 billion in housing receivables. A few years ago, the card company bought Long Island-based North Fork Bank and its residential division, Greenpoint Mortgage, a large Alt-A player. Capital One eventually closed the unit, booking a large loss on the deal. BFSM, until recently, funded risky payment option ARMs both nationally and in the Washington, D.C. area, where the mortgage firm is based.
The Bank of New York Mellon (TBNYM) was appointed by Greek bank Marfin Egnatia to act as corporate trust provider for a E3 billion covered bond program, the first direct covered bond program to be implemented in Greece. Marfin Egnatia Bank is a result of the consolidation of Greek banks Egnatia, Laiki and Marfin, and is a 95%-owned Greek subsidiary of Marfin Popular Bank. TBNYM will act as trustee, principal paying agent, Luxembourg listing agent, transfer agent, exchange agent, registrar and calculation agent.
Fitch Ratings said last week that it is strengthening its originator review program across all global structured finance sectors. Aside from management meetings for all sectors, the rating agency will also perform file reviews on all asset classes considered high risk to better identify areas of concern. Fitch will decline to rate deals if it cannot get comfortable with these firms' origination practices. The agency will also include commentary about the originator in its presale reports.
Separately, Fitch Solutions has created new liquidity scores and percentile rankings for widely traded credit derivative assets to assist banks in identifying their exposure to the most liquid and least liquid assets; the new scores and rankings should also help banks to strengthen their liquidity risk management procedures. The scores and rankings cover over 3,000 of the most widely traded CDS assets. Each asset will be assigned a score, representing the most through the least liquid names, and then be given a global percentage ranking based on its liquidity profile against the overall CDS universe.
Moody's Investors Service commented on both the Federal Deposit Insurance Corp.'s (FDIC) and the Federal Housing Administration's (FHA) Hope for Homeowners (H4H) loan modification programs last week. The FDIC's program, Moody's said, could potentially have positive implications for a large number of distressed homeowners and, if successfully and widely implemented, might eventually reduce cumulative losses for mortgage loans backing U.S. RMBS. The rating agency said that the FHA's program could also benefit some homeowners and moderately reduce severities on loans that default. However, the rating agency thinks participation in the FHA program, in its current form, might be limited, and thus might have much less of an impact on cumulative losses.
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