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Big banks take on Project Scalpel; Scaramucci may get government job in 2 months


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Big banks take on Project Scalpel; Scaramucci may get government job in 2 months

Things may be looking up for banks, but the cuts aren't done. Sources for The Wall Street Journal say "Project Scalpel" talks could lead to a joint venture allowing the likes of Goldman Sachs Group Inc., Morgan Stanley and Bank of America Corp. to share resources with one another. If successful, at least $2 billion a year could be shaved from expenses. An investment firm, Motive Partners, has been formed in line with the effort.

Relocating because of Brexit? The European Central Bank has a word of caution: "We will only grant licences to well-capitalized and well-managed banks. ... Any new entity must have adequate local risk management, sufficient local staff and operational independence."

In more banking news:

Goldman is running the planned sale of Aviva Plc's Friends Provident International, say sources for The Wall Street Journal. The deal could bring the U.K. insurer up to $750 million; Fosun Group and HNA Group are said to be interested.

Citigroup Inc. was coordinator, mandated lead arranger and bookrunner of Tencent Holdings' $4.65 billion loan deal with several banks, according to Thomson Reuters' Basis Point.

Wells Fargo & Co.'s robo-adviser will be available to individual investors in the coming months. But those interested in Intuitive Investor will need at least $10,000 to open an account and must pay a fee equal to 0.50% of the assets they put in. For comparison, The Wall Street Journal notes, BofA's Merrill Edge Guided Investing has a $5,000 minimum and a 0.45% fee. Betterment LLC has no minimum and charges 0.25%. Wealthfront Inc. charges 0.25% on accounts above $10,000.

Home BancShares Inc. of Arkansas is buying Stonegate Bank in a $778.4 million deal that will see Home Bancshares having $13.5 billion in assets and a Florida footprint that's even larger than the one in its home state.

Meanwhile, it turns out the previously announced Illinois merger between WB Bancorp Inc. and MC Bancorp Inc. was valued at approximately $5.5 million.

And the Independent Community Bankers of America has decided not to appeal the dismissal of its suit against the National Credit Union Administration. It will, however, "explore all avenues for redress of NCUA's unjustified and outrageous expansion of limitations."

The Financial Times makes this argument: You can criticize hedge funds over their recent returns, but when it comes to knowing when to go public, sell their firms or close shop, their timing is "consistently ... razor sharp." Noting the examples of Och-Ziff Capital Management Group LLC, GLG Partners Inc., Blackstone Group LP and Carlyle Group LP, the FT points out "the closure of Eton Park may well mark an ominous sign for an increasingly toppy-looking market."

Pacific Investment Management Co. LLC's long history with Bill Gross has reached another turning point. The two have settled the lawsuit — reportedly for $81 million, a "founders room" at PIMCO headquarters, a "Bill Gross Award" for community organizations and the title of PIMCO Foundation director emeritus. The Wall Street Journal's sources say some of PIMCO's top executives had already complied with a judge's order to give depositions, and that there were worries the revelations would mean more bad press for the firm and for Gross.

Specialty lender Ocwen Financial Corp. entered into a consent order with New York's Department of Financial Services, terminating operations monitor oversight in the next three weeks. But while Piper Jaffray's Kevin Barker calls the development a clear positive, he also writes that Ocwen's eventual return to buying mortgage servicing rights will be dampened by the lack of available non-agency servicing portfolios.

CreditEase's Offshore Private Credit Fund just invested $30 million in On Deck Capital Inc. and LendingHome Funding Corp. According to the press release, it became the first Chinese offshore fund to invest in loans issued by Western platforms when it put money last year in Avant and Prosper Marketplace Inc.

On Capitol Hill today: The House Financial Services Committee will hold hearings on "The arbitrary and inconsistent non-bank SIFI designation process" and on "The state of bank lending in America." The Senate Banking Committee will hold one on "Fostering economic growth: The role of financial companies." The latter will include testimony from former Federal Reserve Board Governor Robert Heller and former Federal Deposit Insurance Corporation Chairman Donald Powell.

President Donald Trump will nominate Makan Delrahim as Justice Department antitrust division head. Recode notes the man who may someday have a say on mergers has already gone on record on BNN in support of the AT&T-Time Warner deal. Delrahim had been a partner at Brownstein Hyatt Farber Schreck LLP before joining Trump's transition team.

And a government post may still be waiting for Anthony Scaramucci. In an interview with The Street, he disclosed White House Chief Strategist Steve Bannon and Chief of Staff Reince Preibus had told him to "come down and see us" when his sale of SkyBridge Capital II LLC was closer to completion. He added he hopes that the closing will occur "in the next 46 to 60 days."

In other parts of the world

Asia-Pacific: 3 firms shortlisted for ICICI Lombard stake; Singapore, France ink fintech deal

Europe: BoE outlines stress-test scenarios; OneSavings Bank stake sold; NN Group sued

Middle East & Africa: Gordhan ordered home; Ghana rate cut; Gulf's 1st green bond

The day ahead

Early morning futures indicators pointed to a mixed opening for the U.S. market.

In Asia, the Hang Seng rose 0.63% to 24,345.87, while the Nikkei 225 gained 1.14% to 19,202.87.

In Europe, around midday, the FTSE 100 climbed 0.07% to 7,298.59, and the Euronext 100 lifted 0.14% to 969.77.

On the macro front

The international trade in goods report, the Redbook, S&P Corelogic Case-Shiller HPI report, the consumer confidence report, the Richmond Fed manufacturing index and the State Street Investor Confidence Index are due out today.

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