Markets

By Margot Patrick WSJ Dana Cimilluca WSJ Liz Hoffman WSJ Tues., Jan. 15, 2019 Andrea Orcel, one of Europe’s highest-profile investment bankers, found himself out of a job Tuesday, when Spain’s Banco Santander SA said it would be unacceptable to pay him the amount of money it would have cost to make him chief executive. Santander said it was canceling Mr. Orcel’s September appointment after finding out how much it would need to compensate him for shares he would leave behind at his former employer, UBS Group AG, a figure that people familiar with the matter said was above €50 million ($57.4 million). The amount was more than it expected and could have become a fuse for anti-bank sentiment in its home market, people close to the bank said. Spain is still recovering from a banking crisis a decade ago during which hundreds or thousands of people lost their homes. The unusual U-turn highlights the fraught issue of executive … [Read more...] about Santander Withdraws CEO Job Offer Over Concerns on Compensation

By Saumya Vaishampayan WSJ Tues., Jan. 15, 2019 Chinese companies have kept issuing high-yield dollar bonds, even as sales from their U.S. peers shuddered to a halt. The amount of junk-rated dollar bonds sold by Chinese companies surpassed U.S. sales of such bonds in November and December, according to Dealogic data. Chinese issuance hit $3.43 billion in November, the highest in seven months. The American high-yield market is usually far busier: Dealogic data shows it surpassed Chinese volumes for every other month in the past five years, for example. Unusually, the difference in issuance this month has so far been negligible, too. Investors have broader concerns about trade relations between the world’s two largest economies. But Chinese companies, the biggest issuers of bonds in Asia, are willing to pay up to borrow in dollars. That’s especially true for property developers, said Yin Chin Cheong, an analyst at CreditSights in Singapore. Article … [Read more...] about Dollar-Hungry Chinese Borrowers Flock to Junk Bond Market

By Dawn Lim WSJ Tues., Jan. 15, 2019 Boston investment advisory firm Meketa Investment Group is merging with Pension Consulting Alliance, a Portland, Ore., boutique consultant. The deal would create a firm with roughly 200 clients and 190 employees. The planned merger, expected in the first half of 2019, could be announced as soon as Wednesday, and it is the latest sign of consolidation among investment-consulting firms. These firms rose to prominence as purveyors of investment advice to pensions, endowments and foundations. But the industry lately has faced increased competition, fee pressures and shifting investor tastes. The combined firm will have roughly $1.7 trillion in assets under advisement and $11 billion in assets it manages on behalf of clients, said people familiar with the matter. It will operate under the Meketa name and be led by Meketa co-Chief Executives Stephen McCourt, 46 years old, and Peter Woolley, 53. The new firm will be based out of … [Read more...] about Meketa and Pension Consulting Alliance to Merge

By Peter Rudegeair WSJ Emily Glazer WSJ Tues., Jan. 15, 2019 The honeymoon period for big banks when it comes to higher interest rates is stretching out longer and longer. The Federal Reserve’s decision to raise its benchmark short-term rate four times in 2018 helped lift revenue at JPMorgan Chase & Co. and Wells Fargo & Co. during the last three months of the year. The cost to borrow on credit cards and other types of loans without fixed interest rates is tied to the Fed actions, allowing banks to pocket higher interest payments on those loans. The higher rates have yet to sting banks’ bottom lines. They have been able to hold off on raising rates too much on deposits to prevent customers from seeking better returns elsewhere. Markets have been on edge in recent weeks after investors revised their outlook around global economic growth, the pace of future Fed rate increases and the effect of the partial U.S. government shutdown on the … [Read more...] about Big Banks Find Sweet Spot

By Kate Davidson WSJ Tues., Jan. 15, 2019 The Federal Reserve’s 12 regional banks were split ahead of the Fed’s December policy meeting over whether to raise the rate on discount-window loans, according to meeting minutes released Tuesday. Only three of the regional banks supported an increase in the discount rate at the beginning of the month, but three more decided to support an increase days before the Fed’s Dec. 18-19 policy meeting. The directors of the Boston, Richmond and Chicago Fed banks voted Dec. 6 to raise the discount rate to 3% from 2.75%, “in light of the outlook for continued above-trend economic growth, further tightening of labor markets and inflation remaining near the [Federal Open Market Committee’s] 2% objective,” the minutes said. Members of the other nine regional reserve banks voted to maintain the discount rate, offered directly by the Fed to healthy banks on short-term loans, at its existing level of … [Read more...] about Fed’s Regional Banks Split Over Whether to Raise Discount Rate in December