Magazine article American Banker

Morning Scan: Credit Suisse CEO Blindsided; A CIT Comeback?

Magazine article American Banker

Morning Scan: Credit Suisse CEO Blindsided; A CIT Comeback?

Article excerpt

Byline: Tanaya Macheel

Editor's note: Morning Scan will not publish on Friday, March 25 in observance of Good Friday. We'll be back on Monday, March 28.

Receiving Wide Coverage ...

Blindsided: Credit Suisse chief executive Tidjane Thiam has said neither he nor his CFO were aware of the size of the bank's "positions in risky, illiquid segments," following a bad first quarter for trading that saw revenues fall 40%-45% (analysts' expectations were revenues would decline 37%). Apparently staff had concealed risky exposures from senior management last October. Thiam said some of the positions were accumulated before he joined the bank in July and they had been problematic in recent years as trading limits were raised. "A limit that keeps moving is not a limit," he said on a conference call. "That's really where things went wrong." It "was a surprise for a number of people and was not a widely known fact," he said, that there are consequences involved. Thiam said he asked the board to cut his bonus by 40%. Wall Street Journal, New York Times, Financial Times

Extradited: A British trader who allegedly contributed to the so-called stock market "flash crash" in 2010 will be extradited to the U.S. after losing a court battle Wednesday. The U.S. has alleged that Navinder Singh Sarao, 37, used spoofing -- an illegal trading strategy in the U.S. and U.K. whereby traders place orders with the intention of canceling them -- helped stocks fell sharply in May 2010. He has been accused of making $900,000 in profits that day and $40 million over four years using similar trading tactics. Sarao faces 22 criminal charges from the Justice Department and a civil case from the U.S. Commodity Futures Trading Commission. The U.S. has sought his extradition since last year. Wall Street Journal, New York Times, Financial Times

Wall Street Journal

Next week Ellen Alemany will take the helm at CIT Group, a firm struggling to get back on track after facing a series of obstacles under John Thain. On an analyst call Wednesday, she termed the firm's share-price performance "unacceptable." Whether she can bring the bank remains to be seen; its executives aren't expecting to see a boost in shareholder returns anytime this year. The bank intends to focus on domestic banking and continue a plan to exit its commercial-air business. But Alemany didn't offer any new strategies. Even after separating out the air-leasing unit, CIT will have more than $50 billion in assets, and still be considered systemically important. CIT has been weighed down by restructuring, regulatory compliance and credit risk management costs; its deal with OneWest was muddled with accounting issues and culture clashes; and investors have been pushing it to downsize further. …

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