Morning Coffee: EU Rescue to Result in Thousands of Job Cuts

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Are Spanish bankers optimists, or pessimists? The European Commission on Wednesday approved plans to rescue Spain's four nationalized banks, providing a ray of hope to an otherwise crippled banking system. The bad news: the banks will be required to cut their balance sheets in half, slashing thousands of jobs and unloading much of the burden on shareholders and bond investors.

Bankia, the largest of the four banks, said it will cut roughly 6,000 jobs, or 28% of its staff, by 2015, according to The Telegraph. The bank will also close more than 1,000 branches.

The smallest bank, Banco de Valencia, will be sold to Spanish lender Caixabank, while NCG Banco and Catalunya Banc will need to cut their balance sheets by 60% over the next five years, at which time they will be liquidated or sold, according to Reuters. And in return, the banks will receive $52 billion in funding from the EU.

While a lifeline was clearly needed, the restructuring effort will only add to Spain’s ballooning unemployment rate, which currently sits at 26%, the highest in the EU.

As for the rest of the European Union, keep your chin up. German Chancellor Angela Merkel said she is "very optimistic" the Eurozone crisis will be solved in her lifetime. She’s just 58-years-old.

Swift Justice (The Telegraph)

Barclays has terminated five traders involved in the Libor rate-fixing scandal with several others waiting to hear the results of their appeals. The firm has also notified the employers of the role played by those embroiled in the scandal who voluntarily left Barclays before they could be punished.

Charges Looming (Reuters)

Federal regulators are considering bringing civil insider trading charges against SAC Capital Advisors.

Shorting People (Bloomberg)

“SAC founder Steven Cohen treats his portfolio managers and analysts in the same way he does stocks: If someone doesn’t perform, he is quickly tossed aside.”

Knight Merger? (BBW)

Knight Capital confirmed on Wednesday that market-maker Getco Holding Co. has made an offer for the embattled firm.

FX Ailing (WSJ)

Foreign currency trading has become more automated and, in turn, more competitive. The end result is better terms for customers and much lower margins for banks.

Turning Over (FIN Alternatives)

A former Level Global Investors employee testified against his former boss, co-founder Anthony Chiasson, who is accused of using information provided by Chiasson to increase the firm’s short bet against Dell.

Whoops!

In yesterday’s Morning Coffee, we incorrectly identified JPMorgan Chase chief executive Jamie Dimon as the CEO of Citigroup. Our apologies.

Buzz Around the Office

What the ####? (MSN)

If you needed more evidence of Twitter’s reach, here it is. A couple this week named their newborn girl Hashtag.

List of the Day: Career Lessons

Thomas Edison, Steve Jobs and Charles Darwin can teach you much about mastering your career.

  1. Dream big while thinking small.
  2. Follow your passion.
  3. Train yourself in the art of focus.

(Source: WSJ)

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