A consortium of Chinese investors, both public and private, purchased an 80.1% stake in International Lease Finance Corp (ILFC), the aircraft leasing arm of American International Group (NYSE:AIG), for $4.2 billion. AIG plans to retain at least 10% of its stake in ILFC while the Chinese consortium will have an option for an additional investment that will increase its ownership to 90%. The transaction is expected to close by Q2-2013. The consortium includes New China Trust, China Aviation Industrial Fund and P3 Investments. Earlier, it was also announced that ICBC and New China Life Insurance might also join the deal but since then, Bloomberg reported that neither of the two have any such plans.
The banking industry seems to have set its eyes on the Asian Market. UBS AG (NYSE:$UBS) recently launched its locally-incorporated unit in China, which will allow it to conduct business in areas like wealth management. UBS operates brokerage and mutual fund joint ventures with local partners along with private equity units. The Zurich-listed bank is the first Swiss bank to setup a wholly-owned subsidiary in China.
Despite headlines – and some data—to the contrary mortgage difficulties and increasing litigation costs plagued both Citigroup (NYSE:$C) and Bank of America (NYSE:$BAC) fourth quarter results. Both of them have been looking to focus on even more cost cutting measures.While the housing market may be improving somewhat there is still not only a ton of shadow inventory weighing on prices but also the continued hollowing out of the real economy in the U.S. at the expense of keeping the banks afloat.Any credit bubble the Fed manages to reflate will only result in another round of liquidations later with Citi and BofA at ground zero of the bust again.
HSBC (NYSE:$HBC), the biggest Asia-focused European bank, has agreed to pay a record $1.921 billion fine to settle the U.S. money laundering probe being conducted by the U.S. Department of Justice and other regulators, the biggest ever by any bank. Earlier in June, ING Bank (NYSE:$ING) was penalized $619 million for similar crimes for dealing with Cuba and Iran. HSBC was allegedly involved with Mexican drug cartels and Saudi terrorist organizations. More recently, after HSBC, another British bank Standard Chartered Plc was also slapped a fine of $327 million by U.S. regulators over its dealings with Iranian clients in violation of U.S. sanctions. This is in addition to the fines imposed earlier and has taken the total tally to $667 million.
Jefferies Group (NYSE:$JEF) posted better than expected results for its fiscal fourth quarter that saw profits jump by 48% from last year to $71.6 million. Revenues increased by 37% to $760.6 million which is about $38 million more than analysts’ expectations. It should be noted that Q4-2011, from which the current results are being compared, was particularly tough for Jefferies in which its income, excluding extraordinary items, dropped by 38% from 2010 to $39 million. Although the current year-over-year increase in profits is 48% but sequentially, they are up a more modest 2.04%.
Peter Pham is an author, international fund manager, and a registered financial director by the Cayman Monetary Authority (CIMA). In 2013 he published his first book entitled, The Big Trade: Simple Strategies for Maximum Market Returns. He currently manages the portfolio of a global hedge fund and runs an asset management company, Phoenix Capital. (read more)
The Big Trade: Simple Strategies for Maximum Market Returns
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