According to news reports, Barclays Bank's co-president, Jerry del Missier, has busted the rank of two executives: John Kreitler, U.S. head of credit trading, and Vince Balducci, U.S. head of credit derivatives. The two will remain with the firm, however, and work with del Missier, says a spokeswoman. It is expected that their successors will be announced on Nov. 27 as part of a bigger restructuring. Del Missier has had credit trading shifted to his auspices from that of co-president Grant Kvalheim, who will continue to oversee investment banking, and loan origination and syndication. Ending rumors of double-digit write-downs that had plagued its stock prices, Barclays disclosed net charges and write-downs last week totaling GBP1.3 billion ($2.67 billion) but announced strong pretax profit. Shares rose 4% in early London trading. The British bank booked credit, mortgage and leveraged finance related charges and write-downs worth GBP500 million in the third quarter. It said it booked an additional GBP800 million in net charges and write-downs in October, reflecting "the impact of rating agency downgrades on a broad range of CDOs and the subsequent market downturn."
Meanwhile, Michael Strange left Barclays Capital, where he was director of financial institution securitization in London. The circumstances of his departure were unclear as of press-time. Strange was a protagonist of the Russian existing-asset business, involved in arranging such transactions as mortgage deals for Gazprombank with Euro and ruble tranches and a dollar RMBS for Vneshtorgbank.
Victoria E. Kess, a longtime fixture in the asset-backed commercial paper (ABCP) sector, retired from her company last month, said sources familiar with the company. Most recently, Kess was a senior structured product analyst for Western Asset Management, and worked out of its New York office. Before that, Kess was a director and senior credit analyst in Citigroup's asset management division. Her departure does not bode well for the ABCP market, one market source said, because Western Asset Management was a major investor in ABCP and her departure likely means that an enormous source of liquidity has left the sector. "Her senior management was probably cracking down on the purchase of ABCP in general," he said.
Aquiline Capital Partners, a New York-based private equity firm, has recruited GE Capital Markets' former president and CEO, Steven F. Kluger, as a senior advisor. Along with Rick Wolfert, former vice chairman of Commercial Finance for CIT Group, Kluger will evaluate opportunities in the commercial and specialty finance sectors. Aside from serving as CEO of GE Capital Markets, Kluger was vice president of General Electric Co. He expanded the capital markets unit to the point where it employed more than 250 professionals in 22 cities worldwide. Before joining GE, Kluger worked at Irving Trust Co. He serves as a member of the International Monetary Fund's capital markets consultative group.
Fremont General Corp. appointed Stephen H. Gordon as chairman and CEO of the company. Gordon cofounded Commercial Capital Bancorp, and served as chairman and CEO from June 1999 until CCBI was acquired by Washington Mutual in October 2006. New additions to Fremont also include several of Gordon's former colleagues at CCBI, including David S. DePillo, who will serve as vice chairman and president; Richard A. Sanchez, who joins as executive vice president and chief administration officer; Thea Stuedli, as executive vice president and chief financial officer; and Donald E. Royer, who will serve as the executive vice president and general counsel. Louis J. Rampino and Wayne R. Bailey, formerly president and CEO and executive vice president and COO, respectively, have stepped down from the board. Federal regulators halted Fremont's subprime loan business in March, citing unaffordable loans made to subprime borrowers and shady management practices.
E*TRADE FINANCIAL Corp. reported a third quarter write down of $450 million in its $3 billion ABS portfolio, including approximately $50 million of AAA' rated asset-backed CDOs that were downgraded to below investment grade. The affected securities were predominantly ABS CDO and second-lien securities. The company also said that it expects further write downs in the fourth quarter, exceeding the company's previous expectations. However, actual securities-related losses will depend on future market developments, including the potential for downgrades by rating agencies, E*Trade said. Management said that it will not provide earnings expectations for the remainder of the year.
The International Organization of Securities Commissions (IOSCO) created a task force to review the issues facing securities regulators following the recent events in the global credit markets as a result of the subprime crisis. The IOSCO will conduct a preliminary review of the current market issues and then address the implications for securities regulators. The review will examine what types of data investors, and in particular mutual funds, rely on for investing in structured products; how broker dealer firms assess risk; whether alternative models of valuation outside of credit ratings are needed and whether the IOSCO should develop valuation principles or best practices in this area. The task force will also examine credit rating agencies and evaluate problems associated with the accounting treatment of structured products. The task force expects to present its final report to the Technical Committee in May 2008 during IOSCO's Annual Conference in Paris.
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