Swiss Capital Requirements Weigh Heavy on UBS

The Swiss government has proposed heavier capital requirements on UBS, as revealed by UBS Group CFO and Stern-school MBA grad Todd Tuckner (Todd joined UBS in 2004 and is thus a 21 year veteran, prior to which he was an international tax partner at KPMG). 

These capital requirements would up the bar on core capital (removing currently allowed items such as software and deferred tax assets from counting as capital). Software was counted as an intangible asset with some regulatory value, especially if it supported core banking operations. However, concerns that is less loss-absorbing and more volatile in valuation than current treatment requires have prompted its exclusion from core capital (CET1- Common Equity Tier 1 capital, basically the highest form of capital, acting as a high quality shock absorber in the event of losses).

UBS will need to decide what to do - either push back, and hope for the best, or relocate its HQ to be outside of Swiss regulation, or plan both in parallel.

The proposed rules are to avoid an incident such as the collapse of Credit Suisse in 2023 from happening again. UBS has criticised the proposal as being non-proportionate.

Kyndryl Plans Investment in AI Lab in India

Kyndryl, specialist in infrastructure outsourcing and modernisation, is investing $2.25 billion over three years, including building out an AI lab in Bangalore, India.

Kyndryl was divested from IBM three years ago in November 2021, with Martin Schroeter (MBA, Carnegie Mellon) as its first CEO. Around 88,500 engineers moved to Kyndryl as part of the deal.

At the time of the divestment, Martin emphasised that Kyndryl would continue to have strong links to IBM, but being independent they were not free to work with other hyperscalers and grow the business.

Microsoft Quarterly Earnings to Fall Short of Analyst Estimates

So spake Microsoft finance chief Amy Hood (Duke University economics graduate and Harvard MBA, ex Goldman Sachs Investment Banking Associate), and the stock slid 6.2%. Goldman Sachs described the company as "well positioned" to benefit from AI adoption. Mizuho said Microsoft was one of its top picks for 2025.

Activist Hedge Fund Bluebell Closing After Capital Raising Challenges

European activist investor, Bluebell Capital Partners, launched in 2019, is set to close. Co-founders have a background in banking and MBAs from Columbia Business School. In April 2024, they unsuccessfully targeted BlackRock in an attempt to oust Larry Fink.

crating(_GECapital, downgrade(_AAA, -4)) :- payout(_GECapital, usd(8bn)) [Fortune, GE10K]

GE has become the economy's bellwether (MARKET THERMOMETER, LEADING SHEEP) company. (p.s. what is the meaning of bellwether - seems this is a term used by a lot of financial analysts and economists. what is the meaning? wiktionary describes bellwether as the leading sheep of a flock, anything that indicates future trends or a stock/bond indicative of the overall temperament of the marketplace). We should pay careful attention to bellwether stocks.

ceo( _GE, X). ? X = "Jeffrey Immelt".
mba(jeffimmelt, hbs).

CD = crating(_GECapital, downgrade(_AAA, -4))

estEarnings( _GE, 2009, X). ? X = usd(12bn).
estEarnings( _GE, 2009, X), CD :- X = usd(4bn).
divfreq( _GE, X). ? X = quarterly.
exchange( _GE, X). ? X = nyse.

business( _GE, X). ? X = selling(Y), servicing(Z), financing(A). Y=advancedGasTurbines, Z=aircraftEngines, A=businesses, A=consumers.

diamond(CD):- reasons(X). ? X=cashflowstress, X=deterioratingAssetquality, X = not(diamond(borrow( _GE, money)))

motto( _GE, X ). ? X = "imagination at work".

appoint( honda, ceo, X).

? engineer(X), age(X, 55), operationshead(honda, X), X=takanobu_ito.

carpurchases(down, reason(X)). ? X=frozencreditmarkets.

launch( stephenkeating:- formerdirector(3i, X), privetcapital).
focus(privetcapital, X). ? X=lowermidmarketdeals, X=ukdistressedprivateequitydeals.

slashdividend(jpm, percent(X)). ? X=87.
slashdividend(jpm, centspershare(X), centspershare(Y)). ? X=38,Y=5.
ceo(jmp, jamiedimon).
mba(jamiedimon, hbs).

BoA drops 13% Thursday, Thain Leaves Merrills, Tech Ups and Downs, KBC Bailout

Ex-Merrill chief John Thain is ejected from Bank of America.

mba(thain,hbs).

BoA's general counsel Brian Moynihan replaces Thain. ML announced a loss of $15.3 billion in the fourth quarter, or $9.62 a share.

Microsoft, the maniacal operating system giant, announced it was cutting 5,000 employees indicating few companies are immune to recession. Fiscal discipline is necessary for all technology companies in this climate.

Commented one investment firm manager, "it's tough to do well in this environment, and if a company succeeds, it's a huge compliment to management" adding "Microsoft has turned into the big old sluggish company that IBM used to be".

KBC has been bailed out to the tune of €2 billion from the Flemish government (Flemish is Dutch as spoken in Belgium) fueling a rebound in its shares (adding to the existing bailout paid in October). KBC announced it will concentrate its activities on home markets, reduce costs and market risk. It would scale down its derivatives business.