|Bid||27.74 x 1100|
|Ask||27.89 x 800|
|Day's range||27.76 - 28.10|
|52-week range||25.08 - 29.65|
|Beta (5Y monthly)||1.56|
|PE ratio (TTM)||3.64|
|Forward dividend & yield||1.59 (5.58%)|
|Ex-dividend date||30 Mar 2021|
|1y target est||N/A|
(Bloomberg) -- Lex Greensill told lawmakers that investors in loans packaged by his firm were aware of the risks and denied being a “fraudster” in his first public appearance since Greensill Capital collapsed into insolvency in March.The former Morgan Stanley banker, who founded the eponymous firm in 2011, faced questions from the U.K.’s Treasury Select Committee, which is examining what lessons should be learned from the demise of the lender. Greensill told lawmakers that the vast majority of loans it made were backed by real assets, even those tied to sales that hadn’t yet occurred.“Every asset that we ever sold was correctly described and that information was prepared and made available to our investors, to our auditors and to our regulators,” 44-year-old Greensill told the committee on Tuesday.Greensill said that it specialized in working capital finance, a humdrum form of lending where banks buy invoices from companies at a discount. The company also offered a more exotic form of financing it termed “future receivables,” loans that were extended on the basis of the prospect of future invoices, and then insured. Such lending has a far higher risk profile than the funds that bought Greensill products.The collapse of Greensill has drawn intense scrutiny from Germany to Australia as its swift unraveling left investors facing several billion dollars in potential losses. The firm, with the backing of SoftBank Group Corp. and General Atlantic LLC, went from a small startup to a tech unicorn with an estimated $7 billion valuation at one point.It collapsed in March after a key insurance partner didn’t renew coverage on loans Greensill made to key customers, including British steel magnate Sanjeev Gupta’s GFG Alliance and West Virginia miner Bluestone Resources. Greensill emphasized the role of the trade credit insurer, Tokio Marine Holdings Inc, in the firm’s collapse while apologizing for exposing his company to concentration risks.“It is deeply regrettable that we were let down by our leading insurer, whose actions assured Greensill’s collapse,” he said. “I bear complete responsibility for the collapse of Greensill Capital.”Greensill also:said that Sanjeev Gupta’s GFG Alliance was not Greensill’s biggest customer by assetsrevealed Gupta at one point held shares in Greensill but sold them at the same price he’d bought them for as he became a bigger customer of the lendersaid Greensill Capital owes council tax on its London officesacknowledged his company had an over-reliance on insurance generally and had purchased too much from one particular insurerblamed Covid, risk concentration and BaFin’s actions for Tokio Marine’s decision to withdraw its coveragesaid former U.K. prime minister David Cameron wasn’t a director of Greensill, but regularly attended board meetingsflagged last year Greensill funded $143 billion of receivables, less than 20% of those were future receivablessuggested the ultimate form of security the lender had was bricks-and-mortarRead more: David Cameron Told Sunak Excluding Greensill Would Be ‘Nuts’ At the end of 2020, Greensill was working with German regulator BaFin on a plan to reduce the concentration of risk to a single client at its Bremen-based banking unit. Eventually, that made Greensill realize that the business was at risk, and led to the appointment of restructuring advisers at the end of December, he told the committee.Tough TalkGreensill faced often hostile questions from many of the panel members, especially those from the opposition Labour Party. Rushanara Ali accused him of running what amounted to a “Ponzi scheme” that smacked of “fraudulent behavior.” Siobhain McDonagh asked him outright: “Are you a fraudster?” and Angela Eagle said: “it looks increasingly like you were securitizing invoices that didn’t really exist.” Greensill denied the allegations.Earlier on Tuesday, the U.K.’s Financial Conduct Authority told the committee it’s investigating Greensill.The FCA’s Chief Executive Officer Nikhil Rathi wrote in a letter that the regulator is “cooperating with counterparts in other U.K. enforcement and regulatory agencies” and working with German, Australian and Swiss authorities looking into Greensill entities.The agency has oversight of some Greensill entities both under its anti-money laundering rules and through a separate regulated firm Mirabella Advisers LLP, which acted as a representative for Greensill, but not directly on its supply chain financing, according to the letter. A representative for Greensill declined to comment. Officials at Mirabella didn’t respond to calls and emails seeking comment.Chancellor of the Exchequer Rishi Sunak, former prime minister and Greensill’s lobbyist David Cameron and the Bank of England also sent letters to lawmakers ahead of the hearing.Read more: BOE Says It Didn’t See Greensill’s Failure as a Systemic RiskCameron’s TextsSunak wrote his team followed “normal” procedures at all stages as Cameron lobbied the Treasury to allow Greensill to access the Bank of England’s Covid Corporate Finance Facility last year. Sunak and Cameron released details of more than 150 calls, emails, text and Whatsapp messages and meetings relating to Greensill.Greensill’s initial request was rejected because of factors including the ineligibility of financial institutions, a plan to submit non-investment grade assets, and use of some foreign currencies, Sunak said in the letter.After Greensill was barred from accessing the program, Cameron texted Sunak to say the refusal was “nuts,” according to the documents. At the time, he also contacted Prime Minister Boris Johnson’s senior aide and sent texts to Cabinet Office minister Michael Gove to lobby for Greensill.The government then investigated an alternative workaround that would have allowed eligible companies to access funds for supply chains via a special purpose vehicle managed by Greensill. It was abandoned because industry experts found it ineffective, Sunak said.The former prime minister wrote that he first became aware of Greensill’s problems in December 2020 following a call he received from the founder. Cameron will appear on the Treasury Select Committee on Thursday.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- Short selling, a strategy that was all but left for dead in the wake of the meme-stock mania, is working pretty well at the moment.Hedge funds in particular seem to have timed recent tech stock declines almost perfectly, pushing up bearish bets just before the market rolled over. A basket of the 50 most-shorted stocks slipped in 10 of the past 11 sessions, the best run for bears since December 2018, data compiled by Goldman Sachs Group Inc. and Bloomberg show.The reward comes right after professional speculators recharged, boosting short sales on single stocks from a decade low reached in February. Their short book as a percentage of total equity exposure crept up over the last two months, rising roughly 2 percentage points to 26%, according to prime broker data compiled by Morgan Stanley.Short interest is still far from a peak of about 35% that Morgan Stanley’s fund clients accumulated in 2018 and 2020. Still, it’s a victory for short sellers who had been driven almost into extinction as the S&P 500 rallied as much as 90% from the pandemic trough in March 2020, with all but two members climbing. Hedge fund managers bold enough to revive bearish wagers are now reaping gains after being stung by Reddit-driven short squeezes on GameStop Corp. and other meme stocks earlier this year.Morgan Stanley did not specify what kind of stocks hedge funds are targeting, though a look at exchange-traded fund and futures trading shows growing distaste for technology, where stock losses are piling up as inflation concern puts pressure on their stretched valuations. Unprofitable tech firms are particularly vulnerable, having fallen 36% from their February peak as a group.“The timing is coming from the fact that the pull-back in long-term rates that took place in April has come to an end,” said Matt Maley, chief strategist at Miller Tabak + Co. Short interest “is growing now, but it’s not back to extreme levels, so the hedge funds are less worried about getting squeezed. In fact, if the sector continues to fall, they’ll actually add to their shorts.”Both the biggest ETF tracking the Nasdaq 100 and Cathie Wood’s ARK Innovation ETF experienced a spike in short sales in recent weeks. Large speculators in the futures market, mostly hedge funds, were net short Nasdaq 100 mini contracts for an 11th straight week, a stretch of bearishness seen only one other time since the global financial crisis, according to Commodity Futures Trading Commission data.The strategy is paying off, at least for now. The Nasdaq 100 has dropped more than 5% from its April high. The reward is more pronounced among single stocks. Two-thirds of the stocks in Goldman’s most-shorted basket are down this quarter, led by electric-vehicle maker Workhorse Group Inc., which fell 44%, and solar company Sunpower Corp. with a drop of 38%. GameStop, which burned short sellers in January, has worked in bears’ favor as well, losing a quarter of its value.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- About 8,300 miles east of Wall Street, on a stretch of Bangalore’s Outer Ring Road, sits what was once the heart of the global financial industry’s back office.Before the pandemic, this cluster of glass-and-steel towers housed thousands of employees at firms like Goldman Sachs Group Inc. and UBS Group AG who played critical roles in everything from risk management to customer service and compliance.Now the buildings are eerily empty. And with case counts soaring across Bangalore and much of India, work-from-home arrangements that have sustained Wall Street’s back-office operations for months are coming under intense strain. A growing number of employees are either sick or scrambling to find critical medical supplies such as oxygen for relatives or friends.Standard Chartered Plc said last month that about 800 of its 20,000 staffers in India were infected. As many as 25% of employees in some teams at UBS are absent, said an executive at the firm who spoke on condition of anonymity for fear of losing his job. At Wells Fargo & Co.’s offices in Bangalore and Hyderabad, work on co-branded cards, balance transfers and reward programs is running behind schedule, an executive said.While banks have so far avoided major disruptions by shifting tasks to other offshore hubs, India’s Covid crisis has exposed a little-discussed vulnerability for companies that have spent decades outsourcing functions to the country. India’s outbreak is intensifying even as vaccinations fuel economic recoveries in other parts of the world, heightening fears of a back-office bottleneck at a time when Wall Street firms have rarely been busier.“This is not a local, India-only problem, this is a global crisis,” said D.D. Mishra, senior director analyst at researcher Gartner Inc. The current wave will be “significantly bigger” and organizations with India-based staff “will need to take action to plan for and mitigate if needed,” Mishra and his colleagues wrote in a note last week.Nasscom, the key lobby group for India’s $194 billion outsourcing industry and its almost 5 million employees, has downplayed the threat to operations. But Mishra and fellow analysts at Gartner say they’re fielding a daily flood of calls from anxious global clients asking about the Covid-19 situation.India’s total coronavirus infections have risen to almost 23 million, of which about a third were added since mid-April. The state of Karnataka, whose capital is Bangalore, has been hard-hit.Experts have warned the crisis has the potential to worsen in the coming weeks, with one model predicting as many as 1,018,879 deaths by the end of July, quadrupling from the current official count of 249,992. A model prepared by government advisers suggests the wave could peak in the coming days, but the group’s projections have been changing and were wrong last month.In Bangalore, Delhi and Mumbai, the three main bases for the financial giants’ operations, infection rates have reached such alarming levels that local governments have ordered stringent restrictions on movement.While the crisis has hit swathes of the nation’s $2.9 trillion economy, the latest wave has notably affected the twenty-something segment of the population that dominates outsourcing companies and is hard to replace. Most of them are English-speaking, technically-skilled workers.Continuity PlanningFor now, back-office units are marshaling part-time workers or asking employees to perform multiple roles and re-assigning staff to make up for those who are absent. They are scheduling overtime, deferring low-priority projects and conducting pandemic continuity planning exercises for multiple locations should the virus wave intensify.A Wells Fargo employee said some work is getting transferred to the Philippines, where staff is working overnight shifts to pick up the slack. The San Francisco-based bank employs about 35,000 workers in India to help process car, home and personal loans, make collections, and assist customers who need to open, update or close their bank accounts.“Nearly all Wells Fargo employees in India are working remotely, and we are not experiencing significant impacts to our business operations,” spokeswoman Beth Richek said in an email response to questions. “We are continuing to support our employees, and we are helping local communities in India with more than $3 million in grants.”She added that no work has moved out of India and there have not been delays in the work the India team does to support Wells Fargo’s credit card business.An employee at UBS said that with many of the bank’s 8,000 staff in Mumbai, Pune and Hyderabad absent, work is being shipped to centers such as Poland. The Swiss bank’s workers in India handle trade settlement, transaction reporting, investment banking support and wealth management. Many of the tasks require same-day or next-day turnarounds. A UBS representative didn’t respond to a request for comment.With uncertainty surrounding how soon the Indian government will contain the crisis, one executive who asked not to be identified likened the situation to flying blind without any idea how many employees will be affected from one week to the next.Rebalancing Loads“We are looking carefully at how we can rebalance loads,” Standard Chartered Chief Executive Officer Bill Winters said on an earnings call last month, noting that some work has been routed to Kuala Lumpur, Tianjin and Warsaw. “In any case, we think we are very well provided for.”Barclays Plc CEO Jes Staley said some functions were shifted to the U.K. from India. Call volumes have increased and people are distressed, he said, adding that signs of pressure was something to watch for. The bank has 20,000 employees in India.Last year, when a sudden lockdown ordered by Prime Minister Narendra Modi saw these banks scrambling to keep their operations running, the European Banking Authority said the push to outsource support functions “exposed these banks to operational risks.”After asking their employees to work from home en masse last year, most of them have continued to operate at near 100% work-from-home levels. Natwest Group Plc’s workforce in Bangalore, Delhi and the southern city of Chennai -- accounting for a fifth of its global total -- is completely set up to work from home.Management BandwidthSimilarly, thousands of Goldman employees are working from home, doing high-end business tasks such as risk modeling, accounting compliance and app building. A representative for the bank said workflows can be absorbed by the wider team if needed and there’s been no material impact so far.Citigroup Inc. said there’s currently no significant disruption, while Deutsche Bank AG said employees were working seamlessly from home. Morgan Stanley and JPMorgan Chase & Co. detailed relief efforts they are undertaking, but didn’t elaborate on the impact on their operations. HSBC Holdings Plc Chief Executive Officer Noel Quinn said he’s “watching it closely” and ruled out any material impact at this stage.Besides worrying about disruptions to operations, employee well-being and securing medical help are also taking up a lot of management bandwidth at every large outsourcing unit.At a recent all-hands, virtual corporate strategy team meeting at Accenture Plc, for instance, the talk wasn’t about the usual pay-raises or promotions. Instead, worker after worker demanded flexibility, reduced workloads and no-meeting Fridays, an executive said, asking not to be named discussing internal company matters.Their size has become a hindrance, one executive said, but it’s not clear where else they can go for talent and scale, he added.The safety of its people is a top priority and the company is taking various measures to ensure their health and wellbeing, Accenture said in an emailed statement. It also has the ability to transfer work across its global network to continue to meet the needs of clients.“We are telling clients they need to relax service levels and reduce expectations for the coming few weeks,” said Mishra, the Gartner analyst. “This is not a normal situation.”(Updates story from May 8 with comment from Wells Fargo in 15th paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.