JPMorgan Has 2nd-Qtr Profit, Crimped by Trading Drop

(Bloomberg) -- JPMorgan Chase & Co., the third- biggest U.S. bank, posted its lowest quarterly profit in a year because of costs for legal settlements and a 50 percent decline in trading revenue.

The New York-based bank reported second-quarter earnings of $994 million, or 28 cents a share, compared with a loss of $548 million, or 27 cents, a year earlier. Revenue rose 48 percent to $12.7 billion, boosted by JPMorgan's July 2004 acquisition of Bank One Corp., the bank said in a statement today.

JPMorgan lost money on equity trades and, like rivals Citigroup Inc. and Bank of America Corp., made wrong-way bets on interest rates. Trading revenue fell $622 million, with particular weakness in Europe, results that Chief Executive Officer William Harrison, 61, described as ``very weak.''

``JPMorgan and Citi had the same bug,'' said Anton Schutz, who oversees $220 million at Burnham Financial Funds, including JPMorgan shares. ``The numbers would have been down substantially more without Bank One.''

Total revenue would have fallen 4.2 percent had JPMorgan and Bank One been a single company in the year-ago period.

Excluding $1.9 billion in pretax legal reserves and costs related to the $58 billion Bank One purchase, JPMorgan said second-quarter profit would have been $2.3 billion, or 66 cents a share, The company was expected to earn 64 cents a share, the average estimate of 18 analysts surveyed by Thomson Financial.

Shares of JPMorgan rose to $35.25 in 8:52 a.m. trading before U.S. stock exchanges opened from $35.21 yesterday.

Fixed-Income Dependency

JPMorgan has been even more dependent on buying and selling bonds and debt derivatives than Citigroup, which on July 18 reported a 28 percent drop in revenue from fixed-income trading. Today, JPMorgan said it suffered losses in equity trading on ``client-driven positions'' and wrote down the value of some receivables over a disputed claim.

``Market conditions, as you've heard from competitors and us, were very difficult,'' Chief Financial Officer Michael Cavanagh said on a conference call with reporters. ``It made it very difficult for traders to make money.''

Revenue from fixed-income trading fell 27 percent to $940 million. In equity trading, JPMorgan's loss widened to $280 million from $86 million in the year-earlier period.

Trading conditions improved in June and ``we see that continue in July,'' Cavanagh said. He declined to specify which equity positions lost money.

Trading Bet

JPMorgan's value at risk, a mathematical estimate of how much the bank could lose trading in single day if markets turned against it, rose to $102 million in the recent period from $65 million in the first quarter.

Profit at JPMorgan's investment bank, which includes trading, fell 6 percent to $606 million. Fees from advisory work rose 34 percent to $359 million, as JPMorgan ended the quarter ranked No. 1 in completed mergers and acquisitions.

By June 1, when JPMorgan said trading results for the two months ended in May were ``the worst the firm has experienced in some time,'' Standard & Poor's had cut its credit ratings on General Motors Corp. and Ford Motor Co. to non-investment grade and investors were demanding a greater premium to buy corporate bonds.

Citigroup Chief Financial Officer Sallie Krawcheck on July 18 highlighted the so-called flattening yield curve -- when the gap between short-term and long-term interest rates narrows -- as one of the biggest challenges in fixed-income trading during the second quarter.

Legal Costs

The changing market conditions caught most Wall Street firms off-guard. Morgan Stanley reported a 28 percent drop in fixed-income trading revenue for the three months that ended in May. Goldman Sachs Group Inc.'s fell 20 percent, and profit at both declined.

JPMorgan set aside $1.2 billion after tax in June to settle claims it played a role in the frauds at WorldCom Inc. and Enron Corp. That's down from the $2.3 billion that the bank added to reserves a year ago, leading to the quarterly loss.

Shares of JPMorgan have declined 9.7 percent this year, making it the third-worst performer in the Philadelphia Stock Exchange KBW Bank Index. The shares fell 30 cents to $35.21 yesterday in New York Stock Exchange composite trading.

Analysts' estimates have missed JPMorgan's earnings by an average of 11 percent in the past five quarters, overestimating results in one quarter by as much as 18 percent and underestimating them by 17 percent in another.

a.m. New York time.)

To contact the reporter on this story:
Justin Baer in New York at jbaer1@bloomberg.net

Last Updated: July 20, 2005 08:55 EDT

Citibank Suspected of Illicit Interest Gains

By Kim Yon-se
Staff Reporter

Citibank Korea has been suspected of having reaped about 12 billion won ($12.4 million) in illegal gains involving its mortgage loan businesses over the past few years.

The suspicion has surfaced after the labor union at KorAm Bank, acquired by Citigroup last year, on Tuesday filed a complaint against Citibank Korea and its vice president, Richard Jackson, with the prosecution.

The union alleges that the bank booked the irregular gains by charging fixed interest rates on mortgage loans it sold though the interest rate on the loans should have floated according to market rates under initial contracts during 2002 and 2005.

During the period, floating rates hovered below the initial lending rate of 7.9 percent due to a series of rate cuts by the Bank of Korea (BOK). But the bank maintained the fixed rate on mortgage loans in the breach of contracts with its clients, the union said.

``Considering that the average loan rate offered by other banks stood at around 6.5 percent over the period, it is estimated that Citibank enjoyed 12 billion won in illegal gains,’’ a union official said.

He said the bank lowered the lending rate for only customers who had complained about the fixed interest rates.

``Citi continued to charge the initial rate of 7.9 percent on borrowers who filed no complaint,’’ the union official said.

The number of customers of the Citi’s mortgage loan product was about 30,000 at the end of 2002 and 13,000 at the end of February 2005.

The union said vice president Richard Jackson, an Englishman who has been in charge of consumer lending since before the merger between KorAm and Citibank, is allegedly responsible for the fraudulent loan practices.

Jackson, who joined the Citibank in 1985, has been in charge of the consumer businesses even after the bank’s acquisition of KorAm Bank in 2004.

Citibank Korea cut the interest rate on the product by 1 percentage point to 6.9 percent in April 2005 as financial regulators intervened in the case, according to the union.

In its official letter to Citibank in March 2005, the Financial Supervisory Service (FSS) ordered the bank to correct the improper lending practices.

The FSS also said Citibank Korea violated the basic principle of equality by lowering rates for only borrowers who filed complaints.

Meanwhile, the FSS and the U.S. Federal Reserve have recently launched a joint probe into Citibank Korea. It is the first time that foreign financial firms here have been investigated by regulators from their own countries.

The Korean and U.S. regulators are keeping the purpose of the probe confidential, while financial sources allege the action has been motivated by U.S.-based Citigroup’s series of illegal business activities worldwide.

Citigroup has been penalized for a variety of rule-breach, such as unfair bond trading in Europe, illegal private banking in Japan, illegal stock issuance in China and involvement in Enron’s accounting scandal in the U.S.

As the global investment bank continued to push for mergers and acquisitions (M&As) despite the illicit practices at branches all over the world, the Federal Reserve Board ordered the bank in March 2005 to hold back the M&A business.

``We believe the union’s case is without merit. Our pricing was both responsible and in line with market conditions at the time. It is also consistent with our agreements with our customers,’’ Citibank Korea said in a statement.

``We aim to provide the best competitive financial products and services in the Korean market. For example, we offer one of the highest rates of interest for time deposits, currently at 3.85 percent,’’ it added.

Citi, Bank of America fall on earnings

Citi, Bank of America fall on earnings
MarketWatch, Inc
Greg Morcroft

NEW YORK (MarketWatch) -- Shares of Citigroup and Bank of America fell in early trading after reporting earnings that showed growing margin pressures. Citi share fell 1.9% to $45.55 and Bank of America shares slipped 1.5% to $45.31. In the broader financial sector, the Amex Securities Broker/Dealer Index fell 0.1 %, the Philadelphia Bank Sector Index fell 0.4% and the S&P Insurance Index fell 0.1%

(c) 1997-2005 MarketWatch.com, Inc. All rights reserved.

Citibank may lose China IPO

By Cathy Chan Bloomberg News

FRIDAY, JUNE 3, 2005
HONG KONG China Construction Bank, China's third-largest lender, may exclude Citigroup from its planned $5 billion initial public offering this year, people involved in the transaction said.

Construction Bank did not invite Citigroup to meetings with investment bankers from Morgan Stanley and China International Capital during the past two weeks, the people said Wednesday.

Citigroup, Morgan Stanley and CIC were hired last year to prepare the bank for an IPO. Citigroup was in talks to buy a stake in Construction Bank, but those talks had stalled, the people said.

Underwriters of Construction Bank's IPO probably will be paid about $150 million in fees, equal to 3 percent of the transaction's value.

The high-profile offering will be the first overseas share sale for one of the four largest state-owned lenders in China.

"It would be a slap in the face if they lose out," said Sam Ho, a fund manager at KDB Asia in Hong Kong. "The extent of the damage remains to be seen."

Richard Tesvich, Citigroup's spokesman in Hong Kong, declined to comment.

Cai Xiang, a spokesman for Construction Bank in Beijing, also declined to comment, as did Nick Footitt, his counterpart at Morgan Stanley in Hong Kong, and China International Capital's Beijing-based spokesman, Feng Danyun.

Citigroup replaced the head of its China investment banking business last July and Construction Bank removed its chairman in March. Both took part in the talks that led to Citigroup's inclusion among the banks preparing the offer.

Citigroup still is negotiating to remain in the transaction, the people said. Citigroup's chief executive, Charles Prince, met with Construction Bank's new chairman, Guo Shuqing, in Beijing as recently as two weeks ago, they said, without being more specific.

Prince declined to disclose details of Citigroup's plans to expand in China, when asked at a conference in Beijing on May 18. Guo said on May 5 that Construction Bank was negotiating with several investors to sell a stake before the public offering.

"Losing a major investment bank handling the sale would be challenging," said Bryan Yip, a fund manager at Standard Life Investments in Hong Kong. "The huge supply of stock needs as many distribution channels as possible."

Tokyo share offer on track

The Tokyo Stock Exchange said it would push ahead with a plan to sell shares by the end of March, and that it would allow domestic investors to trade stocks in some other Asian markets in 12 months.

"Our goal is still to list this fiscal year," Toshitsugu Shimizu, the exchange's executive officer, said in an interview at a World Federation of Exchanges conference in Beijing on Thursday.

A weekend newspaper report said the exchange had backed away from plans for a public offering by March because regulators doubted that it could oversee itself as a for-profit company. Shimizu declined to comment on discussions with the Financial Services Agency.

Shimizu said he also expected the exchange to enable investors to buy and sell shares of companies in other Asian markets, including Singapore and Australia, within 12 months.

The exchange "won't be able to survive by itself," said Shimizu. "Twenty years ago, Tokyo Stock Exchange was the only giant in the region, but nowadays it isn't and in the future it won't be" unless it pursues broader regional alliances.


HONG KONG China Construction Bank, China's third-largest lender, may exclude Citigroup from its planned $5 billion initial public offering this year, people involved in the transaction said.

Construction Bank did not invite Citigroup to meetings with investment bankers from Morgan Stanley and China International Capital during the past two weeks, the people said Wednesday.

Citigroup, Morgan Stanley and CIC were hired last year to prepare the bank for an IPO. Citigroup was in talks to buy a stake in Construction Bank, but those talks had stalled, the people said.

Underwriters of Construction Bank's IPO probably will be paid about $150 million in fees, equal to 3 percent of the transaction's value.

The high-profile offering will be the first overseas share sale for one of the four largest state-owned lenders in China.

"It would be a slap in the face if they lose out," said Sam Ho, a fund manager at KDB Asia in Hong Kong. "The extent of the damage remains to be seen."

Richard Tesvich, Citigroup's spokesman in Hong Kong, declined to comment.

Cai Xiang, a spokesman for Construction Bank in Beijing, also declined to comment, as did Nick Footitt, his counterpart at Morgan Stanley in Hong Kong, and China International Capital's Beijing-based spokesman, Feng Danyun.

Citigroup replaced the head of its China investment banking business last July and Construction Bank removed its chairman in March. Both took part in the talks that led to Citigroup's inclusion among the banks preparing the offer.

Citigroup still is negotiating to remain in the transaction, the people said. Citigroup's chief executive, Charles Prince, met with Construction Bank's new chairman, Guo Shuqing, in Beijing as recently as two weeks ago, they said, without being more specific.

Prince declined to disclose details of Citigroup's plans to expand in China, when asked at a conference in Beijing on May 18. Guo said on May 5 that Construction Bank was negotiating with several investors to sell a stake before the public offering.

"Losing a major investment bank handling the sale would be challenging," said Bryan Yip, a fund manager at Standard Life Investments in Hong Kong. "The huge supply of stock needs as many distribution channels as possible."

Tokyo share offer on track

The Tokyo Stock Exchange said it would push ahead with a plan to sell shares by the end of March, and that it would allow domestic investors to trade stocks in some other Asian markets in 12 months.

"Our goal is still to list this fiscal year," Toshitsugu Shimizu, the exchange's executive officer, said in an interview at a World Federation of Exchanges conference in Beijing on Thursday.

A weekend newspaper report said the exchange had backed away from plans for a public offering by March because regulators doubted that it could oversee itself as a for-profit company. Shimizu declined to comment on discussions with the Financial Services Agency.

Shimizu said he also expected the exchange to enable investors to buy and sell shares of companies in other Asian markets, including Singapore and Australia, within 12 months.

The exchange "won't be able to survive by itself," said Shimizu. "Twenty years ago, Tokyo Stock Exchange was the only giant in the region, but nowadays it isn't and in the future it won't be" unless it pursues broader regional alliances.


HONG KONG China Construction Bank, China's third-largest lender, may exclude Citigroup from its planned $5 billion initial public offering this year, people involved in the transaction said.

Construction Bank did not invite Citigroup to meetings with investment bankers from Morgan Stanley and China International Capital during the past two weeks, the people said Wednesday.

Citigroup, Morgan Stanley and CIC were hired last year to prepare the bank for an IPO. Citigroup was in talks to buy a stake in Construction Bank, but those talks had stalled, the people said.

Underwriters of Construction Bank's IPO probably will be paid about $150 million in fees, equal to 3 percent of the transaction's value.

The high-profile offering will be the first overseas share sale for one of the four largest state-owned lenders in China.

"It would be a slap in the face if they lose out," said Sam Ho, a fund manager at KDB Asia in Hong Kong. "The extent of the damage remains to be seen."

Richard Tesvich, Citigroup's spokesman in Hong Kong, declined to comment.

Cai Xiang, a spokesman for Construction Bank in Beijing, also declined to comment, as did Nick Footitt, his counterpart at Morgan Stanley in Hong Kong, and China International Capital's Beijing-based spokesman, Feng Danyun.

Citigroup replaced the head of its China investment banking business last July and Construction Bank removed its chairman in March. Both took part in the talks that led to Citigroup's inclusion among the banks preparing the offer.

Citigroup still is negotiating to remain in the transaction, the people said. Citigroup's chief executive, Charles Prince, met with Construction Bank's new chairman, Guo Shuqing, in Beijing as recently as two weeks ago, they said, without being more specific.

Prince declined to disclose details of Citigroup's plans to expand in China, when asked at a conference in Beijing on May 18. Guo said on May 5 that Construction Bank was negotiating with several investors to sell a stake before the public offering.

"Losing a major investment bank handling the sale would be challenging," said Bryan Yip, a fund manager at Standard Life Investments in Hong Kong. "The huge supply of stock needs as many distribution channels as possible."

Tokyo share offer on track

The Tokyo Stock Exchange said it would push ahead with a plan to sell shares by the end of March, and that it would allow domestic investors to trade stocks in some other Asian markets in 12 months.

"Our goal is still to list this fiscal year," Toshitsugu Shimizu, the exchange's executive officer, said in an interview at a World Federation of Exchanges conference in Beijing on Thursday.

A weekend newspaper report said the exchange had backed away from plans for a public offering by March because regulators doubted that it could oversee itself as a for-profit company. Shimizu declined to comment on discussions with the Financial Services Agency.

Shimizu said he also expected the exchange to enable investors to buy and sell shares of companies in other Asian markets, including Singapore and Australia, within 12 months.

The exchange "won't be able to survive by itself," said Shimizu. "Twenty years ago, Tokyo Stock Exchange was the only giant in the region, but nowadays it isn't and in the future it won't be" unless it pursues broader regional alliances.


HONG KONG China Construction Bank, China's third-largest lender, may exclude Citigroup from its planned $5 billion initial public offering this year, people involved in the transaction said.

Construction Bank did not invite Citigroup to meetings with investment bankers from Morgan Stanley and China International Capital during the past two weeks, the people said Wednesday.

Citigroup, Morgan Stanley and CIC were hired last year to prepare the bank for an IPO. Citigroup was in talks to buy a stake in Construction Bank, but those talks had stalled, the people said.

Underwriters of Construction Bank's IPO probably will be paid about $150 million in fees, equal to 3 percent of the transaction's value.

The high-profile offering will be the first overseas share sale for one of the four largest state-owned lenders in China.

"It would be a slap in the face if they lose out," said Sam Ho, a fund manager at KDB Asia in Hong Kong. "The extent of the damage remains to be seen."

Richard Tesvich, Citigroup's spokesman in Hong Kong, declined to comment.

Cai Xiang, a spokesman for Construction Bank in Beijing, also declined to comment, as did Nick Footitt, his counterpart at Morgan Stanley in Hong Kong, and China International Capital's Beijing-based spokesman, Feng Danyun.

Citigroup replaced the head of its China investment banking business last July and Construction Bank removed its chairman in March. Both took part in the talks that led to Citigroup's inclusion among the banks preparing the offer.

Citigroup still is negotiating to remain in the transaction, the people said. Citigroup's chief executive, Charles Prince, met with Construction Bank's new chairman, Guo Shuqing, in Beijing as recently as two weeks ago, they said, without being more specific.

Prince declined to disclose details of Citigroup's plans to expand in China, when asked at a conference in Beijing on May 18. Guo said on May 5 that Construction Bank was negotiating with several investors to sell a stake before the public offering.

"Losing a major investment bank handling the sale would be challenging," said Bryan Yip, a fund manager at Standard Life Investments in Hong Kong. "The huge supply of stock needs as many distribution channels as possible."

Tokyo share offer on track

The Tokyo Stock Exchange said it would push ahead with a plan to sell shares by the end of March, and that it would allow domestic investors to trade stocks in some other Asian markets in 12 months.

"Our goal is still to list this fiscal year," Toshitsugu Shimizu, the exchange's executive officer, said in an interview at a World Federation of Exchanges conference in Beijing on Thursday.

A weekend newspaper report said the exchange had backed away from plans for a public offering by March because regulators doubted that it could oversee itself as a for-profit company. Shimizu declined to comment on discussions with the Financial Services Agency.

Shimizu said he also expected the exchange to enable investors to buy and sell shares of companies in other Asian markets, including Singapore and Australia, within 12 months.

Getting An Offshore Bank Account Via The Internet

There is no need to use the many middleman websites you will find via a search engine. Most of these are *bogus*, even the slick-looking ones. More and more banks are offering offshore bank accounts direct. Just get a list of banks in the country you're interested in, and go to their web sites.

See the Google Open Directory

and also here.
and the list at EscapeArtist.Com.

Opening an offshore bank account is like opening one in your high street; meet their criteria, and you're in. The only difference is you're not there in person.

The first thing is to find out whether they will accept citizens or residents of your country. For example, Swiss banks tend not to want US customers; they don't want the hassle from the IRS.

You will need to prove your identity, and the legal existence of your company, if you wish to open an account for it.

If applying by mail, DO NOT PART WITH ORIGINAL DOCUMENTS. Get copies notarised by a notary public. Originals can be used for fraud or identity theft. Or they can get lost.

A Notary Public is a public officer commissioned by the State to perform notarial acts. A Notary is an impartial witness. The notary is empowered to issue an apostille.

Apostille - Is a method of certifying a document for use in another country pursuant to the 1961 Hague Convention. With this certification by apostille, a document is entitled to recognition in the country of intended use, and no certification or legalization by the embassy or consulate of the foreign country where the document is to be used is required.

In practice this means you provide evidence to this man that you are who you say you are, and/or that your company is what you say it is. You take an oath on the Bible. That's right, it's not a joke.

Due diligence: Banks need to show they have checked who their customers are, and how they came by their money.

Passport - If you apply by post a notarised copy is needed;

Information about yourself - name, date of birth, address, phone number etc.

Your economic background - documents showing how you earn your money (work contract, bank statement, tax return, company documents);

Origin of your deposits - documents showing how you earned them. If you sell a house, proof of the sale, a copy of the estate agent's listing, and so on;

Information about your deposits - how much you plan to deposit, and what you plan to do with the money once you've banked it.

If opening a company account, you send an apostilled copy of the certificate of incorporation to the bank providing your account, along with evidence of your identity, an application form, and any other documents they ask for.

If you want to get an offshore bank account, *consider visiting the bank in person*. If you can, travel to the country in question, and open a bank account there. You probably live near one tax haven at least. This especially applies if you are planning to deposit large sums; find out who you're dealing with!

NOTES:

1. Don't pay a middleman to open a bank account for you. See above.

2. Do not use services which offer bank accounts in Eastern European countries.

You are likely to be cheated, possibly by the bank itself. Avoid Latvia!

3. Do not give anyone Power Of Attorney.

You can kiss your money goodbye. You may have legitimate reasons for not wishing to broadcast what you're doing. The problem is: *How can you obscure that you are the owner of the company, or bank account, without losing control of it?*

Don't get too clever, or too greedy.

4. Avoid web sites where:

The business address is a P.O. Box, or a 'Suite';

The site is on a free web host;

The site is badly translated into English;

You have the sense you are dealing with Africans or Eastern Europeans;

The site has not been updated recently e.g. the Copyright reads 2001;

They've only been running for a few years;

They offer a range of dubious products - second passports, citizenships, anonymous debit cards;

You cannot pay via credit card - it's much harder to get refunds on banker's drafts, Western Union and e-Gold etc;

They require you sign a confidentiality agreement, or you have the sense you are entering quasi-legal or illegal territory.

Bogus offshore banking sites can threaten to report you to your tax authority if you question their methods. It's an old con trick; get the mark involved in something illegal, then he can't go to the authorities.

Offshore bank accounts and company formations are just like their onshore equivalents; there's no big mystery about them. If you want a company formation, contact a local registration agent, who speaks English, in the country of registration. Then use another local agent to check what the first one's done.

Open your bank account yourself.

One last thing: *don't think that because your bank account and company are offshore you can do business in your home country, and/or with fellow residents, and avoid taxes there*.

You'll find plenty of websites that'll purport to help you, right up until the time you get a small brown envelope from your country's tax inspectors, inviting you in for a little chat.


About the Author
About the author: T. O' Donnell (http://www.tigertom.net) is an ecommerce consultant and offshore banking adviser in London, UK.

Citizens South Banking Q1 net interest income up

Mon Apr 18, 2005 05:23 PM ET

BANGALORE, April 18 (Reuters) -

CITIZENS SOUTH BANKING CORP.

Latest Forecast* Yr ago qtr EPS (diluted, $/shr) 0.13 -- 0.12 EPS# (dil, $/shr) 0.12 0.11 0.10 Net Income ($ thousands) 902 -- 971 Net Int. Income ($ million) 3.6 -- 3.3

*Source: Reuters Estimates - 2 analysts
#Reflects the operating earnings of the company
--The latest quarter diluted earnings per share are based on 7.2 million shares outstanding, while those of the year-ago quarter are based on 8.3 million shares outstanding.
(Source)

citi gossip

citi gossip