Financials Weekly Notes: Morgan Stanley, BofA & Barclays

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Morgan Stanley

A reality check this week by investors on share prices across market sectors helped arrest the free-fall in bank stocks over the last two weeks. Investor confidence levels have not improved much with a Greek exit from the euro becoming a very real threat and with economic indicators for Europe and even Chine not looking too bright.

But that did not stop the market from noticing the fact that shares of banks – especially those based in Europe – had been oversold in preceding weeks. This is what led to the noticeable recovery in the banking sector this week. The KBW Bank Index regained 3% through Thursday after losing nearly 13% of its value in two weeks since the beginning of the month. There were notable events to report this week for Morgan Stanley (NYSE:MS), Bank of America (NYSE:BAC) and Barclays (NYSE:BCS).

Morgan Stanley

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The much-awaited Facebook (NASDAQ:FB) IPO roped in a handsome fee income for Morgan Stanley last week. The bank’s lead left role helped it pocket the largest share of the approximately $175 million in fees for the 11 underwriters and brokers for the deal. And it is believed that the bank would have made millions more by exercising its over-allotment options.

But things didn’t end too well for the bank, which is now caught up in lawsuits and a possible SEC inquiry over reports that it shared new information with certain sets of investors just before the IPO pricing – something which is believed to have triggered a sell-off in Facebook’s shares after the IPO.

Details about the revenue for investment banks that played a part in Facebook’s IPO can be found in our article Banks Earn Nice Facebook Fees Despite Shares Trading Lower Post IPO.

See our full analysis for Morgan Stanley

Bank of America

Late last week, reports that Bank of America is looking for buyers for its non-U.S. wealth management business surfaced. The bank reportedly received bids from Royal Bank of Canada (NYSE:RY) and Credit Suisse (NYSE:CS) with the Swiss bank Julius Baer also showing an interest in the on-sale units. The sale could raise as much as $2 billion for Bank of America by the end of this year.

Read more about the deal and its impact of Bank of America’s value in our article BofA’s Good For $10, Non-U.S. Wealth Unit Attracts Several Bids .

See our full analysis for Bank of America


Barclays is all set to get rid of its 19.6% stake in BlackRock (NYSE:BLK). The decision by the largest British bank was made public earlier this week with details of the actual sale plan being furnished this Thursday. BlackRock will buyback 6.4 million shares for a billion dollars, while Barclays will sell the remaining 26.2 million BlackRock shares it holds at $160 apiece through an underwritten public offering. Barclays Capital, Morgan Stanley (NYSE:MS) and Bank of America-Merrill Lynch (NYSE:BAC) will act as underwriters for the sale.

The sale will raise $5.5 billion for Barclays. More information about this can be found in our article, Barclays Plans To Dispose Of Its BlackRock Stake.

See our full analysis for Barclays

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