Citigroup Downgrade Pushes Apple Shares Near $500

Shares of Apple (AAPL), one of the most popular stocks among retail investors and hedge funds alike, broke through a psychological level this morning by falling to $499 in premarket trading. The stock is down 28 percent from its all-time high of $702 two months ago (but it’s still up more than 25 percent on the year).

Some of the movement is due to a Citigroup (C) report, published today, that downgrades Apple to a “neutral” rating over concerns that it has scaled back orders from its Asian suppliers. At least four other banks have lowered their guidance on Apple this month, according to Bloomberg data, although 84 percent of analysts still rate the stock a buy. Fewer than 5 percent label it a sell.

Plenty of Apple bulls still exist—one example being Brian J. White, an analyst at Topeka Capital Markets, who this morning reissued his Apple price target of $1,111 per share. White cited record iPhone 5 sales in China of 2 million, in the device’s first three days in stores.

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Citigroup Lobbyist Casts Doubt on Obama’s Recess Appointment

January 11, 2012, 10:56 PM EST By Donal Griffin

Jan. 11 (Bloomberg) -- Citigroup Inc.’s lobbyist said President Barack Obama’s decision to make Richard Cordray head of the new financial watchdog agency wasn’t a “recess” appointment and may face a court challenge.

Naming Cordray to run the Consumer Financial Protection Bureau while the Senate held “pro forma” sessions left the White House open to legal action, especially from financial firms facing new rules, Candida Wolff, Citigroup’s executive vice president for global government affairs, said in an interview today.

“I don’t think this was a recess appointment,” said Wolff, who was chief lobbyist for President George W. Bush and now represents the third-biggest U.S. bank by assets. “I struggle with the fact that a session is still a session, and you can have business within that session.” Cordray’s authority to oversee non-banks and non-financial companies “will probably be one area where I can see action,” she said.

Obama had drawn fire for using his power to make appointments while Congress is out of session. Obama installed Cordray, a former Ohio attorney general, as consumer bureau director on Jan. 4, drawing objections from Republicans who opposed the agency’s creation. Senate members met every few days specifically to block recess appointees.

Court Challenges

“Legal challenges to the appointment are likely to come from every quarter -- from individuals to community and labor groups to possibly even Congress,” Wolff said in comments posted on the New York-based bank’s website. “Will the rules, regulations and proposals coming out of the bureau be stuck in limbo for the foreseeable future, and what impact will such uncertainty have on those who must decide how to comply with their rulings?”

Wolff said she’s not aware of any litigation planned by Citigroup or the American Bankers Association, the industry’s Washington lobby. Citigroup supports the goal of more transparency, choice and control for banking customers, according to Molly Millerwise Meiners, a Citigroup spokeswoman. She declined to comment on Cordray’s appointment as a matter of company policy.

“We’re not weighing in on the political arguments,” Wolff said in the interview. “We’re weighing into some of the questions that have to be resolved.”

Citigroup received a $45 billion U.S. bailout during the financial crisis, which has since been repaid.

White House Response

“The Senate has effectively been in recess for weeks, and is expected to remain in recess for weeks,” White House spokesman Eric Schultz said in a statement. Lawyers who advised President Bush also rejected pro-forma sessions, said Schultz, who called them a “sham” designed to keep Obama from doing his job. “Gimmicks do not override the president’s constitutional authority to make appointments to keep the government running,” he said.

Wolff is a lawyer whose career included a stint as deputy staff director for the Senate Republican Policy Committee, according to an April 2011 Citigroup statement when she joined the bank. She wondered on Citigroup’s website whether Cordray’s elevation -- as well as three recess appointments to the National Labor Relations Board -- would further damage relations between Republicans and Obama while setting a precedent for future contentious hires.

“If things weren’t tense before, the political stakes have been upped,” Wolff wrote. “Add to that a hostile election-year environment and even the most non-controversial piece of legislation may not make it in 2012.”

Maurice “Hank” Greenberg, who led bailed-out insurer American International Group Inc. for almost four decades until he was ousted in 2005, called Cordray’s appointment unconstitutional. Greenberg, 86, is chairman and chief executive officer of insurer C.V. Starr & Co.

“The president’s stuck his finger in the eye of Congress,” Greenberg told Betty Liu today on Bloomberg TV’s “In the Loop.” “You need the approval of the Senate for that appointment. It was bypassed. That doesn’t lead for a great relationship.”

--With assistance from Phil Mattingly, Hans Nichols and Kathleen Hunter in Washington and Noah Buhayar in New York. Editors: Rick Green, Steve Dickson

To contact the reporters on this story: Donal Griffin in New York at dgriffin10@bloomberg.net;

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net.

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Itau Takes Top Brazil Bank Rankings From Citigroup, Rothschild

December 05, 2011, 9:04 AM EST By Cristiane Lucchesi

Dec. 5 (Bloomberg) -- Banco Itau BBA SA has taken over the top rankings in Brazil for merger advice, equity underwriting and initial public offerings, supplanting foreign banks Citigroup Inc., Rothschild and Credit Suisse Group AG.

Itau BBA, whose parent is the biggest bank in Latin America, pushed Rothschild from the No. 1 spot among advisers on Brazilian mergers and acquisitions with 27 deals totaling $35.4 billion, according to data compiled by Bloomberg for this year through Dec. 2. Sao Paulo-based Itau BBA also replaced Citigroup as the top equity underwriter, and pushed Credit Suisse off the No. 1 spot among IPO managers.

Foreign firms are facing more competition from local rivals as they try to hold on to their share of the investment-banking market in Brazil, where an emerging middle class is propelling one of the world’s fastest-growing economies. Brazilian banks such as Itau BBA and Banco BTG Pactual SA boosted their capacity to finance deals and hired executives with the ability to provide services once offered only by larger global lenders.

“Our market position is the result of a long and consistent investment we have been making over the years,” Jean-Marc Etlin, chief executive officer of Itau BBA Investment Bank, said in an interview. “Our strategy was essentially centered on bringing Brazil and now also Latin America to global investors and corporations by building, over the years, a world-class distribution platform.”

Magazine Luiza

For the first time, Brazilian banks including Itau BBA led an IPO for a Brazilian company, Magazine Luiza SA, without the help of an international bank, Etlin said.

“Our revenues will grow this year even in a shrinking-fee- pool market,” he said.

Itau BBA’s M&A team also participated in the biggest transaction of the year, Telemar Participacoes SA’s merger, via a share swap, of two of its units into one entity. The transaction had a total announced value of $17.3 billion, according to Bloomberg data.

BTG Pactual is the second-biggest equity underwriter this year in Brazil, up from seventh in 2010. The company rose to third in M&A from fourth, and jumped to 11th from 19th in international bond issuance. BTG’s investment-banking business expanded to 63 employees from 52, according to Guilherme Paes, head of the unit.

“We had a lot of bigger transactions last year, but with a very small fee,” Paes said, adding that this year the bank doubled its fee revenue compared with 2010.

Revenue Trend

Overall fees for investment banks in Brazil fell this year, to $782.7 million through November from $1.16 billion in 2010, according to Dealogic, which took into consideration bonds, equity, syndicated loans and M&A advisory work.

The volume of announced M&A deals involving Brazilian companies tumbled to $91 billion this year from $161 billion in 2010, Bloomberg data show. Equity offerings decreased 72 percent amid Europe’s debt crisis, to $12.1 billion from $42.5 billion for last year, the data show.

Itau BBA had more investment-banking revenue this year than Zurich-based Credit Suisse for the first time since the boom in that industry started in Brazil in 2007, according to Dealogic. The Brazilian bank was also first in distribution of fixed- income products in the domestic market, according to Anbima, the local investment-bank and capital-markets association.

In the international bond market, Itau BBA ranked fourth, according to Bloomberg data.

‘Quite Active’

“Financial players are keeping the M&A market quite active,” Paes said.

BTG Pactual is helping STP - Servicos & Tecnologia de Pagamentos SA, a Brazilian electronic-toll-collection company, sell a controlling stake, two people familiar with the negotiations said last month.

“A lot of international banks have invested in Brazil, but the most important competitors we have are still the usual suspects,” said Jose Olympio Pereira, co-head of the investment bank at Credit Suisse, referring to local banks.

Credit Suisse is fourth this year in equity underwriting, with 14 percent of the market. Last year, the bank was eighth, with 7 percent. It fell to second place this year on IPOs, with an 18 percent market share.

“The IPO market could take a bit of time to open again as the European crisis is still cloudy and unresolved,” Pereira said. “We have a lot of liquidity in the U.S. markets, and Brazil is very well-positioned to go through this process, so the country continues to be an option for long-term investors.”

Camil Alimentos

Pereira pointed to the purchase of a 31.8 percent stake in Camil Alimentos SA, a food company in Brazil, by JPMorgan Chase & Co.’s Gavea Investimentos Ltda., a private-equity and hedge fund led by former Brazilian central banker Arminio Fraga.

“Although the market is rough, we will have profits in Brazil this year,” Pereira said, without providing a forecast.

Rothschild, which ranked fifth in M&A this year, is “having a good year” and is “still very well-positioned,” Luiz Muniz, head of the company’s Brazil business, said in an interview. The European crisis transformed the M&A market into a more complicated one, with transactions taking longer to close, he said, “but our market share with our clients is growing.”

An official at Citigroup, which didn’t underwrite any Brazilian equity deals in 2011 after taking the top rank in that business last year, declined to comment on the New York-based bank’s rankings.

--Editors: Steve Dickson, Dan Kraut

To contact the reporter on this story: Cristiane Lucchesi in Sao Paulo at clucchesi5@bloomberg.net

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net

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