Financials Weekly Notes: Goldman, Morgan Stanley & BofA

by Trefis Team
Goldman Sachs
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The banking sector had a roller coaster of a week at the stock market, with many of the bank stocks recording both their lowest share prices, as well as some of the largest one-day gains for the year within a span of three days. Investors started the week on a pessimistic note with concerns about a slow down in the U.S. economy and implications of a default by Spain or Italy continuing to weigh down on bank stocks. But confidence levels received a boost on Wednesday when both the Federal Reserve and the European Central Bank (ECB) vouched to spin into action to ensure that another slump is kept at bay (see Bank Stocks Continue To Rally On Possible Fed & ECB Intervention).

There were notable events to report for Goldman Sachs (NYSE:GS), Morgan Stanely (NYSE:MS) and Bank of America (NYSE:BAC) this week.

Goldman Sachs

Goldman Sachs is selling a little more than a quarter of its stake in pipeline giant Kinder Morgan (NYSE:KMI) – a move that comes within a month of the latter’s acquisition of El Paso. [1] Goldman Sachs will pocket about $1.2 billion from this stake sale, while retaining a little under 100 million shares of Kinder Morgan.

Goldman Sachs had earlier run into a controversy about the Kinder Morgan-El Paso deal, when it was disclosed that its private equity arm had a substantial stake in Kinder Morgan while it also maintained strong banking relations with El Paso. Goldman had to defend claims that there was a conflict of interest from its involvement in the deal – something it did successfully.

See our full analysis for Goldman Sachs

Morgan Stanley

Morgan Stanley is on the lookout for buyers for all or a part of its commodities trading business. The pioneer and once the leader in the commodities market, the investment bank has cut down significantly on this business in recent years to combat growing costs and to brace itself for the Volcker Rule which bans some of this unit’s activities. PE giant Blackstone has reportedly shown an interest in Morgan Stanley’s commodities business

Read more about Morgan Stanley’s commodities business and the reasons for the bank to consider a sale of this unit in our article Morgan Stanley May Sell Commodities Unit As Volcker Rule Looms .

See our full analysis for Morgan Stanley

Bank of America

Bank of America is selling the servicing rights for residential mortgages worth $10.4 billion to Nationstar Mortgage Holdings (NYSE:NSM) as the troubled bank works its way through its ‘mortgage problems’. The bank has suffered more losses due to its mortgage business since the economic downturn than any other bank and exited its wholesale lending, reverse mortgage and correspondent mortgage lending businesses in recent months. Notably, Bank of America still services a mortgage portfolio worth about $1.7 billion.

More information about this can be found in our article, BofA Sells Mortgage Service Rights Worth $10.4 Billion To Nationstar.

See our full analysis for BAC

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  1. Kinder Morgan announces 63M stock offering, Bloomberg Businessweek, Jun 7 2012 []
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