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Citigroup Said to Push for Bailout-Payback Agreement This Week
Morgan Stanley Said to Name Kelleher for Securities
Soros Says Hedge Funds’ Pay Shouldn’t Be Regulated
Pimco Hires Former TARP Chief Kashkari
BofA Merrill Hires Butler as Head of Asia Electronic Trading

Citigroup Said to Push for Bailout-Payback Agreement This Week

Source: Bloomberg; December 8, 2009 - Citigroup Inc. Chief Executive Officer Vikram Pandit is pressing the U.S. Treasury Department and regulators to agree as soon as this week on a plan to pay back $20 billion remaining from a government bailout, people familiar with the matter said. Pandit, 52, wants an agreement in place this week or next, the people said, speaking on condition of anonymity because the discussions are private. He accelerated efforts after last week’s announcement by Bank of America Corp. that it had won approval to pay back $45 billion of taxpayer funds and exit the Troubled Asset Relief Program, they said. Citigroup is trying to avoid being the only large U.S. bank left on “exceptional assistance,” a Treasury designation reserved for companies including American International Group Inc. and General Motors Co. that are surviving on taxpayer aid. Such companies are subject to government-imposed pay limits that may make Citigroup vulnerable to employee-poaching by unfettered Wall Street rivals. We do not comment on individual institutions but it’s fair to say that since Bank of America announced its intention to repay the government, others are pursuing discussions to understand what needs to be done to move ahead with repayment,” Treasury spokesman Andrew Williams said. “We continue to believe that banks and our financial system are better off with private capital instead of government capital.” Jon Diat, a spokesman for New York-based Citigroup, declined to comment.
In October, Pandit said he was “focused on repaying TARP as soon as possible.” He said, “We’re going to do so in consultation with the government and our regulators.”
Citigroup, which took $45 billion of TARP funds last year, in September converted about $25 billion of that into common stock, equivalent to a 34 percent stake. The Treasury Department, which is free to sell the stock at any time, is holding off on a sale until a plan can be reached with regulators for a payback of all remaining obligations from the bailout, a person close to the Treasury said last week. Citigroup still has $20 billion in bailout funds along with guarantees from the Treasury, FDIC and Federal Reserve on $301 billion of devalued securities, mortgages, auto loans, commercial real estate and other assets. Citigroup paid $7 billion in advance for the guarantees, which last five to 10 years, depending on the type of underlying assets. The lender’s exit plan may be more complicated than Bank of America’s because the government must decide how to handle the Treasury’s common stake and what to do about the asset guarantees, the person close to the department said.
The bank’s regulators, which include the Federal Reserve, Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp., haven’t commented on when the bank might be allowed to exit. The government is trying to wind down bailout programs extended as financial markets convulsed late last year. Treasury Secretary Timothy Geithner said in a Dec. 4 interview that most taxpayer money injected into banks through the Troubled Asset Relief Program will eventually be recovered.
JPMorgan Chase & Co., Goldman Sachs Group Inc. and Morgan Stanley, all based in New York, repaid bailout funds in June. San Francisco-based Wells Fargo & Co., with $25 billion of TARP money, isn’t subject to pay limits because it never needed a second helping of bailout funds. Citigroup’s talks with regulators likely will center on the amount of capital the bank must raise to assure it can weather expected loan losses, the people familiar with the matter said.

Morgan Stanley Said to Name Kelleher for Securities

Source: Bloomberg; December 8, 2009 - Morgan Stanley’s James Gorman, set to be promoted to chief executive officer at year’s end, may unveil management changes including a new role for Chief Financial Officer Colm Kelleher, said a person familiar with the matter.
Kelleher, 52, would be co-head of the institutional- securities business with Paul Taubman, the 48-year-old chief of investment banking, according to the person, who declined to be identified because the plans aren’t public. Gorman, the co-president who is taking over the CEO role from John Mack, would be installing his own team of people at the New York-based firm. The Financial Times reported the possible changes earlier today. Morgan Stanley, the second-biggest U.S. securities firm behind Goldman Sachs Group Inc. before both companies converted to banks, combined its retail-brokerage division with Citigroup Inc.’s Smith Barney earlier this year. The deal, hatched by Gorman, sharpens a focus on providing individuals with investment advice.
Kelleher, who has worked at Morgan Stanley since 1989, held management positions in fixed income and global capital markets before becoming CFO in 2007. Taubman, who started his career at the firm in 1982, helped make Morgan Stanley the No. 1 adviser on global mergers and acquisitions this year, according to data compiled by Bloomberg.
Mark Lake, a spokesman for Morgan Stanley, declined to comment. Kelleher and Taubman didn’t respond to requests for comment. Institutional securities, which includes mergers and acquisitions, underwriting and sales and trading, has lagged behind Goldman Sachs this year. The company is hiring 400 employees for sales and trading. Gorman, 51, is likely to remain president after becoming CEO, according to the person familiar with the matter. Walid Chammah, the 55-year-old co-president with Gorman, is giving up that role and keeping his other position of chairman of Morgan Stanley International in London.

Soros Says Hedge Funds’ Pay Shouldn’t Be Regulated

Source: Bloomberg; December 8, 2009 - Billionaire investor George Soros said hedge funds’ pay shouldn’t be regulated as they were “not too big to fail.”
“Hedge funds are speculating with money that is well advised in advance that is at risk,” he said at a conference organized by the Wall Street Journal in Horsham, England. “Investment banks are speculating with depositors’ money.”

Pimco Hires Former TARP Chief Kashkari

Source: AP; December 8, 2009 - Neel Kashkari, the first head of the government's $700 billion financial rescue program, will join Pacific Investment Management Co. as a managing director and head of new investment initiatives, the company said Monday.
Pimco, one of the world's largest bond managers and a unit of Germany Allianz, said Kashkari will be based in its Newport Beach, Calif., office. Kashkari, a former official at Goldman Sachs, was selected by then-Treasury Secretary Henry M. Paulson Jr., a former chairman of Goldman, to run the financial bailout effort in the fall of 2008.
Kashkari stayed on in the early months of the Obama administration to run the Troubled Assets Relief Program. He was replaced in the spring by Herbert M. Allison Jr., who now serves as assistant Treasury secretary for financial stability. The hire will help cement Pimco's status as one of the firms closest to the Treasury Department and Secretary Timothy F. Geithner. Geithner's calendars from the early months of the Obama administration show multiple contacts with Pimco founder and co-chief investment officer Bill Gross. While Geithner was president of the Federal Reserve Bank of New York, it awarded Pimco contracts to help manage the response to the financial crisis. Pimco has helped oversee a program that guarantees on assets owned by Citigroup and Bank of America, and helped run a Fed program to buy $1.25 trillion in mortgage bonds,according to the Government Accountability Office. Kashkari ran some of those programs from his Treasury post. Spokesmen for Pimco and the Treasury Department did not immediately respond to requests for comment Monday afternoon. In a Washington Post article Sunday, Kashkari was portrayed as an eager refugee from Washington, now living a secluded life with his wife in a mountainous area of Northern California.
In the story, Kashkari said the $700 billion figure "was a number out of the air," arrived at after Paulson told him Congress wouldn't approve $1 trillion.

BofA Merrill Hires Butler as Head of Asia Electronic Trading

Source: Bloomberg; December 8, 2009 - Bank of America Merrill Lynch hired Gabriel Butler as the head of Asia Pacific electronic trading sales, the company said in an internal memo today. Butler, who’s hired as director, was director of sales and trading for Asia Pacific at ITG prior to joining Merrill, according to the memo. Vicki Kwong, a Hong Kong-based spokeswoman at Bank of America, confirmed the content of the memo.
Butler, based in Hong Kong, will report to Mark Wheatley, head of Asia Pacific electronic trading, and Andy Maynard, head of Asia Pacific equity flow sales, the memo said.