The news on Wall Street has been pretty grim, no doubt about it. Here, in the manner in which we would normally bow our heads for a moment of silence, we recap the avalanche of write-downs and looming layoffs announced by major financial institutions this week.
On Tuesday, January 15, 2008, Citi dropped the bomb that it would be writing down $18 billion in the fourth quarter because of its subprime mortgage exposure. The Glass Hammer published an article in November about star analyst Meredith Whitney of CIBC World Markets and her prediction that Citi would be forced to cut dividends in the wake of the subprime debacle. At the time, this call was met with stiff denials by Gary Crittenden, Citi’s CFO, during a November 5 conference call and a general backlash by other investors. However, as reported in the New York Times Dealbook blog, Citi was forced to eat a huge slice of humble pie yesterday when it announced that it would cut its dividend by a whopping 41% in order to shore up capital.
Oh, and as if that weren’t bad enough, Citi is likely to announce job cuts of about 4,000 positions, many of which will be in investment banking. That would follow the bank’s announcement that it was cutting 17,000 jobs in April 2007. At the end of 2006, Citi had about 327,000 employees.
Despite Bank of America’s $4 billion deal to buy floundering mortgage giant Countrywide this week, the bank announced a 32% drop in third quarter profits, a 93% hit to investment banking profits and big layoffs to come. In light of this, in a much maligned and scoffed at cost-cutting measure, BofA released a memo indicating that it would no longer be stocking its office kitchenettes with the following items, “soup, crackers, flavored teas, sugar free hot chocolate, and soap.” What? This American banking giant can’t spring for soap anymore? Can a sister get some Purell around here? However, BofA spin managers responded to the outrage by promising to bring back the soap. Still, this sign of the times is too depressing.
Is there a light at the end of the tunnel? If so, it’s probably in the form of a sovereign wealth fund. Citigroup and Merrill Lynch both announced on Tuesday that they would raise a combined $19.1 billion from government-backed funds in Korea and Kuwait. Never thought you’d see the day when Japan, Saudi Arabia, Kuwait, Singapore, Korea and China joined forces to bail out America’s largest investment banks? Well then you might be the only one on Wall Street who’s having a lucky day.
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Facebook: The Employer in YourSpace
Next LevelContributed by Rebecca Chong
The social networking website Facebook has become an increasingly popular way to resolve the time consuming and financially intensive burden of socialising, and brings it straight to the monitors of the internet generation, including at work. Indeed, many employees whose companies do not restrict access to the internet while away the days surfing the web, posting pictures to their Facebook accounts and reconnecting with friends in the virtual world.
Employers are now divided between embracing this new opportunity for marketing on a global scale (even princess of pop Kylie Minogue has launched ‘KylieKonnect’ a social networking site), and a cautiousness bred from the early ages of the blog; which led to media horror stories of employees flaunting their right to free speech and publishing derogatory pieces about their employers for the world to see.
The line for the employer to draw depends on business objectives; but for every successful business, evaluating how to tailor employment practices for the changes brought on by the growing impact of online social networking is vital to development.
A free subscription to socialize for the employee may come at a heavy price to employers. A recent study by Peninsula found that companies in the UK lose £132 million a day in lost productivity to employees wasting valuable time on Facebook. The ease with which a lot of employees are able to browse the net inevitably gives rise to temptation to do so during work hours and for lengthy periods that would be impossible to expend on most other extra curricular activities. Only last month, Neath Port Talbot Council dismissed three of their employees for spending too much of their working day dealing on the auction site eBay.
Time wasters are not the only concern. Facebook and its kin enable employees to disseminate confidential information easily, albeit unwittingly. Through personal profiles which may include job details, they make themselves vulnerable to being targeted by unscrupulous ‘cyber sharks’, or by competing businesses hoping to learn from the eyes and ears of the opposition.
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Spotlight on Leadership: Hillary Clinton
Breaking the Glass CeilingIn the presidential election playing out in primaries across America, front-runner Hillary Clinton has the best chance of becoming president of any woman to date. Though The Glass Hammer typically confines its discussion to issues that deal directly with women in finance and law, Senator Clinton’s leadership style and the role of gender in presidential politics has been a hot button topic among all of the professional women we know.
Last night’s debate in South Carolina demonstrated that race and gender issues have dominated the Democratic debates in recent days. Both Barack Obama and Hillary Clinton sought to de-emphasize race and gender and focus on their qualifications. However, all of the Democratic candidates, including John Edwards, recognized the importance of appealing to African-American and female voters. One of the highlights of the debate occurred when Senator Clinton, in an effort to transcend divisive race and gender issues, quoted Frederick Douglas, who ran the slogan on the masthead of his newspaper The North Star that “right has no sex and truth has no color.” More than 150 years later, are voters finally ready to accept that?
In a much discussed article in the New York Times last week, Gloria Steinem, women’s movement leader and founder of Ms. Magazine, advocated persuasively on behalf of Hillary Clinton’s bid for the presidency. In her article, entitled “Why Women are Never Frontrunners,” she raises some troubling questions about the way in which gender and race are perceived as characteristics of a leader. When comparing Senator Clinton to Senator Obama, she writes, “what worries me is that he is seen as unifying by his race while she is seen as divisive by her sex.” She goes on to note the disparity between the media’s criticism of Senator Clinton for “playing the gender card,” where Senator Obama is seen as unifying by referring to the civil rights movement.
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Happy Martin Luther King Day!
Pipeline, What's OnIn celebration of Martin Luther King Day here in the U.S., the Glass Hammer will not be publishing today. That gives you more time to go along with today’s theme, “A day on, not a day off,” and do something to commemorate or demonstrate for civil rights.
In the future, The Glass Hammer will be publishing some articles on the outstanding accomplishments of women of color, and the unique challenges still faced by minority women in the workplace. If you are interested in seeing more coverage of this area, please write in and tell us what you think!
Additionally, The Glass Hammer is now following a new editorial calendar, which looks like this:
Mondays– Voice of Experience interviews- we interview women who have broken the glass ceiling and have made it to the top. What advice do they have for our readers? Mondays are also a chance for us to interview outstanding human beings who contribute to society greatly (as well as being excellent in their careers!). Look out for these articles under Spotlight on People.
Tuesdays– Work/life issues. How to have it all. We also cover Returner Programs on Tuesdays- so if you are looking to off-ramp or perhaps return after a career break, then watch this space!
Wednesdays– Career advice on to “how to” get to the next level. Expert answers from career coaches, lawyers, peers and mentors.
Thursdays– Industry news. We get deep into the functions of different parts of the sellside and buyside. We cover industry events.
Fridays- Fridays is when we can all have a little fun. Tune in for some hilarious true life tales from our writers and readers about what its like to work in financial services. We also cover ” passions” and we would love to hear what you live to do on the weekends! Evolved People have interesting lives.
As always, we love feedback. Write to our editor at erin@theglasshammer.com to let us know what you love, hate, or can’t get enough of.
When a Woman Cries …
Breaking the Glass CeilingWhat is it about a few tears, or just a misty eye at a poignant public moment that spurs a media frenzy and possibly a turning point in the presidential election?
Tuesday night, January 8, was the night of the New Hampshire presidential primary. As the election results were coming in, I stepped out after work to meet two women friends for a burger and beer. One of the main topics of conversation – along with year-end bonuses and spring vacation plans – was Hillary Clinton tearing up at a campaign event a few days beforehand. My friends said they easily understood how stress, lack of sleep and frustration in a high stakes situation could lead a person to shed a few tears. One friend remarked, “She’s human – it’s normal.” But as the three of us were leaving the restaurant, we passed a group of men laughing, and overheard them making fun of Hillary’s emotional moment on the campaign trail.
Some people felt that the moment showed a more human side of Senator Clinton, and demonstrated how much she cared about her country and the American people, while others thought that her tears seemed insincere. No matter what side of last week’s debate you were on, you’ll have plenty of company, as everyone weighed in on this subject via every media outlet imaginable. Here at the Glass Hammer, this media scrutiny brought to mind another issue we’ve covered: how the same behavior in women and men can be perceived differently. (See “Can Women Win” from November 8, 2007)
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Movers and Shakers: East Coast Round-Up
Movers and ShakersThe summer may be the time when things tend to slow down, but for women in the top industries, things have been heating up. Here are some of the women who’ve recently made their way along the executive path:
Financial Services
Suzanne B. Schiavelli was hired as a principal in specialty finance to Bank of America. The only woman in this class of nine new hires, she will serve as a senior member of the equity research platform at Bank of America. According to the Bank of America announcement, Ms. Schiavelli joins from Morgan Stanley where she most recently covered emerging specialty finance stocks. Prior to Morgan Stanley, she worked as an investment banker in the financial institutions group at Lehman Brothers. Ms. Schiavelli received a bachelor of arts in economics from Providence College and a master’s degree in business administration from The Stern School at NYU.
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Meet the Managers
NewsInvestment Week has joined forces with HSBC Investments to present a panel of top fund managers in front of an audience of intermediaries and discretionary advisers.
Security Traders Meet To Navigate New Landscape
Pipeline, What's OnThe older generation of traders wouldn’t even recognize the U.S. markets anymore. The past decade has brought so many changes to the trading landscape that even today’s traders need help navigating the new territory. Technology has reduced the number of floor traders because of its ability to speed up an order as well as make the trade more efficient. The arrival of Order Management Systems has allowed traders to place orders in multi-asset classes. While the Reg NMS standards have been put in place to keep a fair and competitive U.S. marketplace, they too have altered the landscape…and we haven’t even gotten into the European markets with its MiFID initiative.
To discuss these and other recent developments, traders and industry professionals gathered at the Security Trader’s Association (STA) 82nd Annual Mid-Winter Event. The conference, which was put together by the Chicago division of STA, was held January 10-13, 2008 at the Chicago Hilton.
The three-day conference had a packed agenda including a panel covering Chicago’s buy side perspective on the marketplace. The discussion touched upon the sometimes volatile relationship between the buy and sell sides. During one heated panel discussion, buy side traders accused the sell side of exaggerating the amount of trades they actually made and the sell side accused the buy side of not making their orders clear enough. After the discussion calmed down, the participants on the panel explained that it was important to have a personal relationship with their sell-side counterparts. The panelists agreed that trust between the two parties is a key factor in successfully executing trades.
Alternative Trading Systems were also a hot topic. Kain Cederberg who sat on the panel from Institutional Capital, explained that, with the emergence of electronic venues, buy side institutions felt that they might be “in it for a while,” with regard to ATS.
Among the buy side speakers, the ominous sounding topic of “dark pools of liquidity” had many participants following the discussion. Joe Buerillo of IronBridge Capital Management, said his problem with these black holes in the marketplace is that you don’t know who is seeing the trades take place. He did admit that dark pools are part of the trading landscape and that the buy-side would have to learn to live with them, for now.
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Taking Your Leadership Skills to the Next Level: Unique Challenges, Opportunities and Trends
NewsThe Financial Women’s Association is offering a fast-paced workshop to enhance and fine-tune your leadership skills. The speakers panel will include: Carol Frohlinger, Jane Linder, Stacie Nevadomski Berdan, and Shoya Zichy.
The Write-Down and Layoff Roundup
NewsThe news on Wall Street has been pretty grim, no doubt about it. Here, in the manner in which we would normally bow our heads for a moment of silence, we recap the avalanche of write-downs and looming layoffs announced by major financial institutions this week.
On Tuesday, January 15, 2008, Citi dropped the bomb that it would be writing down $18 billion in the fourth quarter because of its subprime mortgage exposure. The Glass Hammer published an article in November about star analyst Meredith Whitney of CIBC World Markets and her prediction that Citi would be forced to cut dividends in the wake of the subprime debacle. At the time, this call was met with stiff denials by Gary Crittenden, Citi’s CFO, during a November 5 conference call and a general backlash by other investors. However, as reported in the New York Times Dealbook blog, Citi was forced to eat a huge slice of humble pie yesterday when it announced that it would cut its dividend by a whopping 41% in order to shore up capital.
Oh, and as if that weren’t bad enough, Citi is likely to announce job cuts of about 4,000 positions, many of which will be in investment banking. That would follow the bank’s announcement that it was cutting 17,000 jobs in April 2007. At the end of 2006, Citi had about 327,000 employees.
Despite Bank of America’s $4 billion deal to buy floundering mortgage giant Countrywide this week, the bank announced a 32% drop in third quarter profits, a 93% hit to investment banking profits and big layoffs to come. In light of this, in a much maligned and scoffed at cost-cutting measure, BofA released a memo indicating that it would no longer be stocking its office kitchenettes with the following items, “soup, crackers, flavored teas, sugar free hot chocolate, and soap.” What? This American banking giant can’t spring for soap anymore? Can a sister get some Purell around here? However, BofA spin managers responded to the outrage by promising to bring back the soap. Still, this sign of the times is too depressing.
Is there a light at the end of the tunnel? If so, it’s probably in the form of a sovereign wealth fund. Citigroup and Merrill Lynch both announced on Tuesday that they would raise a combined $19.1 billion from government-backed funds in Korea and Kuwait. Never thought you’d see the day when Japan, Saudi Arabia, Kuwait, Singapore, Korea and China joined forces to bail out America’s largest investment banks? Well then you might be the only one on Wall Street who’s having a lucky day.
Read more
The Central & Eastern European Forum 2008
NewsEuromoney is sponsoring the premier investment event for the CEE region. Speakers will include Dr. Hannes Androsch, & Dr. Leszek Balcerowicz.