Monthly Archives: April 2014




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Dayton Basketball Enters Round of Eight Beating UConn in Revenue

The University of Dayton’s
basketball team is flying high on the court and off, competing
with — and out earning — powerhouses with bigger athletic

Even though it spends less on its program than any other
school remaining in college basketball’s national tournament,
Dayton ranked eighth in profit among the 16 teams that made it
to the second weekend of the National Collegiate Athletic
Association tournament, according to data schools submit to the
US Department of Education.

The 11th-seeded Flyers defeated Stanford 82-72 last night
in Memphis to reach the regional finals and will face top-seeded
Florida tomorrow, with the winner advancing to the Final Four.

Athletic Director Tim Wabler credits the school’s fans —
who contribute $3.3 million annually in required season ticket
donations and have kept the program’s attendance among the
country’s top 30 for the past 17 years. Dayton, a Catholic
university with an undergraduate enrollment of 8,000, brings in
84 percent more men’s basketball revenue than three-time
tournament champion University of Connecticut, with about half
the expenses.

“Flyers fans have really always been there for this
team,” Wabler said in a telephone interview. “In a lot of
ways, with this year’s success they are being rewarded for their
longstanding support.”

Dayton had advanced to the round of 16 with upsets of
sixth-seeded Ohio State and No. 3 Syracuse, earning
congratulations on Twitter from US President Barack Obama.
After the second win, university president Dan Curran crowd-surfed through a mob celebrating in Dayton, and fans gathered
the following morning at 3:30 am to welcome the team bus when
it returned to campus.

Basketball Revenue

Dayton’s basketball team generated $11.3 million in revenue
in fiscal 2013, against $3.9 million in expenses, according to
the documents on the Equity in Athletics Data Analysis website.
The program has returned $2.72 in revenue for every dollar it
spent on men’s basketball over the past five years, trailing
only Ohio State, Arizona, North Carolina and Louisville in
college basketball’s top division.

Andrew Zimbalist, a sports economist who wrote the book
“Unpaid Professionals: Commercialism and Conflict in Big-Time
College Sports,” said Dayton’s location in the central US —
what Wabler called “basketball country” — as well as
marketing and avid fans boost revenue. He also said the school’s
lack of top-division football may help.

“It concentrates attention and energy on basketball,”
Zimbalist said in a telephone interview.

The Dayton basketball team accounted for about half of the
athletic department’s $23 million revenue in fiscal 2013. The
football team, which competes in the Football Championship
Subdivision, brought in $197,346 in revenue against $1 million
in expenses. The department as a whole broke even.

Fan Support

Flyers coach Archie Miller, who this week received a
contract extension through 2019, said after the team’s victory
against Syracuse that the support of the Dayton athletic
department and its fans matched the country’s most prominent

“If you’re a player at our place, you experience the same
stuff that you can experience at a Syracuse in terms of the way
they’re cared about and treated,” said Miller, 35.

Dayton requires a donation to the basketball program from
anyone buying one of the roughly 6,000 season tickets in the
lower portion of University of Dayton Arena. The donations
amount to $3.3 million in annual revenue, according to Wabler.
Combine that with the roughly $3.5 million the program receives
from ticket sales, and fans getting in the door account for more
than half the program’s revenue total.

“The real key for us is that there’s such a demand for
arena seating that it gave us that opportunity,” Wabler said.

Corporate Sponsorships

The program also receives more than $2 million in annual
corporate sponsorships at the 13,455-seat arena, according to
Wabler. The school owns the arena, which includes eight suites
and lounges.

Defending NCAA champion Louisville, which faces Kentucky
tonight, had $42.4 million in revenue in 2013, $16.4 million
more than the next closest program. A majority of that revenue
comes from ticket sales at the KFC Yum! Center and donations
which, like Dayton, includes requirements tied to its 71 suites
and premium seating.

“So Dayton’s $11 million in revenue is certainly healthy,
but it doesn’t make them an outlier in terms of the best
basketball schools in the country,” said Zimbalist, who
cautioned that the education department’s data doesn’t have a
standard accounting system.

Dayton, which plays in the Atlantic 10 Conference, has
reached the NCAA tournament final once, in 1967, when it lost to
UCLA. The team last reached the round of eight in 1984.

Traveling Fans

Outside of Dayton, Flyers fans have a reputation among
invitational tournaments as a passionate group that follows the
team to away games. Dayton played in the Maui Invitational last
November, and will travel to the Puerto Rico Tip-Off next

“The Dayton fans were out in full force, dressed in red
and blue, they had painted faces and oversized photo faces of
players and coach Miller, and that may be the first time we’ve
ever seen that in Maui,” said Tom Valdiserri, executive vice
president at KemperLesnik, which manages the Maui Invitational.
“If you had to describe their fans I would use words like
classy, passionate, proud and enthusiastic.”

They’ve shown the passion digitally as well. According to
data gathered by social media analytics company Simply Measured
Inc., the Flyers have 59,788 mentions on Twitter since the
brackets were announced, 72 percent more than the next closest
tournament team (Kentucky at 34,715).

Dayton’s arena has hosted the NCAA tournament’s four-game
opening round for each of the past four years. The athletic
department rents the venue to the NCAA and receives about
$100,000 annually for it, according to athletics spokesman Doug
Hauschild. That total is not counted in the school’s basketball

Refurbished Facilities

That’s just one example of how the basketball fans are
helping other parts of the Dayton program. Wabler said that
since the mid-1990s, all of the athletic department’s
competition and practice facilities are either new or completely
renovated — a total cost of more than $35 million funded by
donors and basketball success.

Dayton at 75/1 had the longest title odds of the final 16
tournament teams, according to Wabler said four more
Flyers wins, culminating in a national championship in
Arlington, Texas, on April 7, would probably mean more financial
stability for years to come.

“For men’s basketball and the rest of our programs,” he

Men’s Basketball Finances For Round of 16 Teams (From US
Department of Education website, fiscal year ended June 2013)

Program Basketball Expenses Basketball Revenue
Dayton $3.98 million $11.30 million
Florida $8.22 million $13.39 million
UCLA $12.72 million $12.37 million
Virginia $6.56 million $7.66 million
Arizona $7.81 million $24.94 million
Wisconsin $6.52 million $19.23 million
Kentucky $13.67 million $23.20 million
Louisville $15.65 million $42.40 million
UConn $7.29 million $6.15 million
Tennessee $4.86 million $13.32 million
Michigan $6.49 million $14.80 million
Iowa State $5.29 million $8.61 million
San Diego St. $5.61 million $6.50 million
Baylor $7.25 million $7.49 million
Michigan St. $9.45 million $18.50 million
Stanford $4.36 million $5.41 million
Total $125.75 million $235.26 million

To contact the reporter on this story:
Eben Novy-Williams in New York at

To contact the editors responsible for this story:
Michael Sillup at
Rob Gloster




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BlackBerry restructuring shows early signs of recovery in Q4 results, but …

The Canadian phone makerreported on Fridaya fiscal fourth quarterloss of $423 millionwith an earnings loss of 8 centsa share, down from 22 centsprofiton the year-ago quarter.Revenue stood at $976 million,down from $2.68 billion a year ago(statement).

Wall Street was expecting BlackBerry to post a loss of 55 cents a share on $1.11 billion in revenue.

In total, 3.4 million BlackBerry smartphones were sold during the quarter, which helped reduce the companys inventory by 30 percent– but two-thirds of all phones sold were older BlackBerry 7 devices.

While BlackBerrys results beat expectations, the company burned through $500 million in cash, and generated less than $1 billion in overall revenue for the end of the December holiday period.

Gross margin was 43 percent, up from 34 percent in the prior quarter.

BlackBerrys chief executive John Chen said in prepared remarks:

I am very pleased with our progress and execution in fiscal Q4 against the strategy we laid out three months ago. We have significantly streamlined operations, allowing us to reach our expense reduction target one quarter ahead of schedule. BlackBerry is on sounder financial footing today with a path to returning to growth and profitability.

Based on the revenue breakdown, the companys new bread and butter are services, which take up 56 percent of revenue, compared to hardware, which makes up just 37 percent.

Looking ahead to the fiscal first quarter of 2014, BlackBerry expects its keep its cash position strong, and aims to break even on cash flow by the end of fiscal 2015.

Shares in BlackBerry ($BBRY) were up more than 7 percent in pre-market trading on the Nasdaq.


Pay Day Loans


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New Study Finds Payday Loans Are Cheaper

OKLAHOMA CITY, Okla., Feb. 25, 2014 /PRNewswire-iReach/ — High fees, higher interest rates, scams: these are probably the first few words to come to mind when you hear the term payday loans. The truth is much to the contrary. In fact, a new study by The Federal Reserve Bank of New York found that payday loans are actually cheaper. Covered by Community Financial Services Association of America, the report cites several areas where payday loans prove to be cheaper when compared to competing programs.

Among others, the report highlighted that median price was $27 per overdraft, whereas deferred deposit credit is priced with a typical fee of around $15 per $100. Further, 98 percent of OD providers charge a flat fee per overdraft regardless of the size or length of the loan. This is in sharp contrast to the practical strategies followed by payday loan lenders. Further, deferred deposit is cheaper than overdraft credit for small overdrafts.

This a completely different perspective from the long-bred reputation that the payday loan industry is subject to in general. As such, these insights are a different but more practical view of what has been widely published until recently.

The report debunks some prevailing myths about the cost-effectiveness of payday loans. Although criticized for higher prices, overall when you compare the prices dollar to dollar, payday loans tend to demonstrate distinct advantages, at least on a smaller scale.

Payday loans are not the cost drivers they are made out to be. Used correctly and for the right purpose, cash advance loan and payday loan programs can prove to be much more economical, convenient, and efficient. We have lenders that provide valuable service and save borrowers a lot of money. Furthermore, the overall application process is seamless and regardless of credit, explains Johnny Gordon, founder of, a free consumer site that allows borrowers to comparison shop multiple payday loan programs.

In addition to the cost competitiveness, these short term personal loan programs often come without the formalities associated with a full-blown credit check. In comparison, overdraft and other similar programs require extensive credit checks and comprehensive income documentation. The timeframe for approval and processing also tends to be much longer when compared to pay day loans, adds Gordon. in a one-of-a-kind marketplace for comparison shopping short term payday loans. Hundreds of lenders, a wide range of programs, lower interest rates, and a dedicated and passionate staff of customer service professionals are just a few of the many reasons for choosing Gordons company over the competition. The company has been around for nearly two decades and has enabled tens of thousands of borrowers (all credit types, including bad credit) to shop and apply for extremely competitive cash advance and payday loan programs.

Media Contact: Johnny Gordon, Payday Loans Organization Ltd, (818) 533-1996,

News distributed by PR Newswire iReach:

SOURCE Payday Loans Organization Ltd



Credit Ratings


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Dagong chief says credit ratings need ‘Chinese wisdom’

The man behind Beijing-based credit ratings agency Dagong says Chinese wisdom will help it take on mighty Western names that failed by not predicting the global financial crisis.

I think if you look at the entire picture of the international credit ratings sector, a lot of credit rating agencies have been influenced by the way of thinking of the Western ratings agencies, said the firms chairman Guan Jianzhong.

So this is something that we need to change, he told AFP after making a presentation to Chinese and foreign media outlining the firms Guiding Principles of Credit Rating, in which he said Dagong wants to offer the world Chinese wisdom on ratings.

However, while Guan is quick to promote his agencys superiority, he has had to bat away accusations it is anti-Western while pandering to Beijing and overlooking serious problems in Chinas economy.

Dagong — founded 20 years ago — remains far less prominent than its long-established Western competitors, though it has begun making a splash in international media.

It hit the headlines in August 2011 when it cut its main rating for US sovereign debt from A+ to A, with a negative outlook, after a standoff over Washingtons debt ceiling that led to fears of a potentially globally destabilising US default.

Standard amp; Poors of the US also slapped Washington with a credit downgrade that month, reducing it one notch to AA+ and denying it a coveted AAA rating for the first time.

Dagong — which can be translated as akin to great fairness — struck again in October, whittling the US sovereign credit rating to A- after another debt deadlock saw a two-week government shutdown.

Dagongs downgrades have come under suspicion as reflecting official concerns of Chinas government, the largest foreign holder of US Treasury debt that makes up part of the worlds biggest foreign exchange reserves.

But it has sought to take advantage of global anger with the so-called big three agencies — Samp;P, Moodys and Fitch — which were widely criticised for having given their highest ratings to the debt instruments whose failure helped spark the global financial crisis in 2008.

Guan presses the theme. The Western rating system is a failure, he said in his presentation. If we follow this Western way on credit ratings we will end up nowhere.

Western agencies only focused on the possibility of default, he said. The core theory of the Western ratings system is wrong. It cannot explain reality. In its methodology its chaos.

For our principle we take the probability of wealth creation as the basis for credit ratings. We take into consideration the maximum debt of a debtor and we also consider the outstanding debts of the debtor.

– Extension of the government? –

Nonetheless the reliability of Chinese economic statistics and the true situation of private and state-owned enterprises have been a source of concern for analysts for years.

Investors have questioned Chinese auditing standards, and scandals have erupted over the accounts of some foreign-listed Chinese companies.

Dagong also has to fight suspicions that it has a political agenda.

It has maintained Chinas foreign currency rating at AAA — its highest grade — and local currency at AA+, with a stable outlook, even as a debt audit by Beijing found local government liabilities had ballooned to almost $3 trillion by last June.

Guan acknowledges that he has been a member of Chinas ruling Communist Party since the age of 18, but said he has no links with the countrys top officials.

I can tell you for sure and with responsibility that personally I have no connection with the government and even the senior leadership of the Chinese Communist Party, he told AFP.

But his Guiding Principles of Credit Rating were put out in a booklet by the publishing company of the Peoples Daily newspaper, the party mouthpiece, using the red print and typeface typical of official publications.

Guan added that Dagong was wholly private-owned and that its goal of becoming a globally influential ratings agency means that it must be independent, impartial and objective.

This is very important for a credit rating agency to earn its credibility, he said.

Christopher Balding, who teaches economics at Peking Universitys HSBC Business School in Shenzhen, describes Dagongs ratings methodology as being on very safe ground, although the occasional use of terminology such as dialectical materialism can appear off the rails.

The real perception challenge, he said, was if Dagong was seen as too aggressively anti-Western and anti-Washington, despite the very real problems it and others have pointed out regarding the state of US government finances.

If they continue to play up this anti-Western, anti-US, pounding this into the ground, theyre going to essentially, from a marketing standpoint, be aligning themselves much closer at being seen as an extension of the government, whether they want to or not, Balding said.

But Guan suggested that Chinas economic rise and growing influence meant it should have a commensurate voice in ratings.

China is a big country sending out lots of capital, he said.

We should depend on our own credit rating institutions that are capable to do the work. We cannot simply think that Western credit rating institutions are always the best.



Secured Financing


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Mall Of America Secures Financing For Expansion

BLOOMINGTON, Minn. (WCCO/AP) The Mall of America, one of the largest malls in the continent, says it will break ground in a couple of weeks to start making the mall a whole lot bigger. The mall has secured financing for a $300 million expansion.

The mega mall, with more than 400 stores, plans to break ground this month on a project that includes a luxury hotel, office tower and additional retail and food space.

Mall spokesman Dan Jasper says the addition could be finished by August of 2015.

The Shakopee Mdewakanton Sioux Community earlier announced that they were in talks with the mall about partnering on the 330-room hotel included in the project. The tribe or mall representatives arent commenting on whether the Shakopee are a financial partner.

Its the second big hotel project anchored at the mall. The first was a $137 million Radisson that opened last March.

The new expansion will be located on the north side of the current mall property.


Credit Ratings


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Country Credit Ratings Decline Slightly, Led by Emerging Markets

Country Credit Ratings Decline Slightly, Led by Emerging Markets

Major economies buck overall trend as the US and several European countries gain and China holds steady.

By Harvey D. Shapiro

Everyone is watching new Federal Reserve Board Chair Janet Yellen (Photo credit: Drew Angerer/Bloomberg)


Secured Financing


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In Brief: NY judge rules for Chevron

NY judge rules on side of Chevron

NEW YORK — A federal judge on Tuesday blocked US courts from being used to collect a $9 billion Ecuadorean judgment against Chevron for rain forest damage, saying lawyers poisoned an honorable quest with their illegal and wrongful conduct.

Justice is not served by inflicting injustice. The ends do not justify the means, US District Judge Lewis A. Kaplan wrote. The judge said it was a sad outcome to have to rule that the Ecuadorean court judgment was obtained by corrupt means, because it will likely never be known whether there was a case to be made against the San Ramon, Calif.-based oil company.

US wont seek further VW recalls for fuse

DETROIT — US safety regulators wont be pushing for a recall of thousands of Volkswagens that have the same electric fuses as a model that was recalled.

Last year VW recalled about 800,000 Tiguan SUVs worldwide from the 2009 through 2011 model years. A fuse can overheat and cause the outside lights to fail.

The National Highway Traffic Safety Administration says the same fuses are used in several other VW models. But the agency says engine and fuse box temperatures vary by model. Investigators also found that complaint and warranty repair rates for the Tiguan are four times higher than the Jetta sedan.

Mall of America gets financing for expansion

BLOOMINGTON, Minn. — The Mall of America has secured financing for a $300 million expansion.

The mega mall, with more than 400 stores, plans to break ground this month on a project that includes a luxury hotel, office tower and additional retail and food space. Mall spokesman Dan Jasper says the addition could be finished by August of 2015.

Apple CFO to retire; successor named

CUPERTINO, Calif. — Apples longtime Chief Financial Officer Peter Oppenheimer will retire in September, and hell be replaced by the companys corporate controller.

The announcement Tuesday comes one day after Goldman Sachs named Oppenheimer as one of its 13 board members.

Economic battle over Ukraine heats up

KIEV, Ukraine — The battle over Ukraines future is also economic: On Tuesday, Russia cranked up the pressure by ending discounts on its natural gas supplies, while the US and European Union offered quick-fix aid to the beleaguered government.

— from wire reports


Secured Financing


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Fitch Affirms Morgan Stanley Ratings at ‘A/F1’; Outlook Stable

(The following statement was released by the rating agency)
NEW YORK, March 26 (Fitch) Fitch Ratings has affirmed Morgan
Stanleys ratings
including its Issuer Default Ratings (IDRs) at A/F1, support
rating at 1,
support rating floor (SRF) at A and viability rating (VR) at
a-. The Rating
Outlook is Stable. A complete list of rating actions follows at
the end of this
press release.
The rating actions on Morgan Stanley have been taken in
conjunction with a
periodic review of the Global Trading and Universal Banks, which
comprise 12
large and globally active banking groups. Fitchs outlook for
the sector is
stable on balance. Earnings pressure in securities businesses
and continued
conduct and regulatory risks present in the GTUBs are offset by
stronger balance
sheets as capitalisation and liquidity remain sound. Fitch
forecasts stronger
GDP growth in most economies, which should contribute to a more
operating environment, but the operating environment is likely
to remain
challenging in 2014.
Todays rating actions assume that Morgan Stanley will perform
adequately under
the CCAR stress test, though Fitch has no visibility into any
qualitative rejections for Morgan Stanley, or any of the other
29 banks subject
to regulatory stress testing. Although a qualitative rejection
of a capital plan
request under CCAR would be viewed negatively, it is not
expected to have any
rating implications for Morgan Stanley.
Morgan Stanleys Long- and Short-term IDRs, Support Rating (SR),
Support Rating
Floor (SRF) and senior debt ratings reflect Fitchs expectation
that there
remains an extremely high probability of support from the US
(AAA/Outlook Stable) if required, and the Long-term IDR is at
its SRF. This
expectation reflects the USs extremely high ability to
support its banks
especially given its strong financial flexibility, though
propensity is becoming
less certain.
Specific to Morgan Stanley, our view of support likelihood is
based mostly on
its systemic importance in the US, its global
interconnectedness given its
size and operations in global capital markets, growing deposit
base and its
position as a key provider of financial services to the US
In Fitchs view, there is a clear intention to reduce support
for G-SIFIs in the
US, as demonstrated by the Dodd Frank Act (DFA) and progress
regulators have
made on implementing the Orderly Liquidation Authority (OLA).
The FDIC has
proposed its single point of entry (SPOE) strategy and further
initiatives are
demonstrating the US governments progress to eliminate state
support for US
banks going forward, which increases the likelihood of senior
debt losses if its
banks run afoul of solvency assessments. Despite the likely
removal of support
in the US, the Stable Outlook on Morgan Stanleys Long-term
IDR reflects
Fitchs view, that Morgan Stanleys fundamental credit profile
is improving and
that its viability rating is likely to improve over the next one
to two years.
Therefore the upward momentum in the VR offsets the likely
removal of sovereign
support in the US which would result in Morgan Stanleys IDR
and VR being
The SR and SRF are sensitive to progress made in finalizing the
SPOE strategy
and any additional regulatory initiatives that may be imposed on
the G-SIFIs,
including debt thresholds at the holding company. Fitchs
assessment of
continuing support for US G-SIFIs has to some extent relied
upon the
feasibility of OLA implementation rather than its enactment into
law (when DFA
passed). Hurdles that remain include the resolution of how
derivative acceleration/termination provisions are handled and
that there is
sufficient contingent capital at the holding company to
recapitalize without
requiring government assistance.
Fitch expects that the SPOE strategy and regulatory action to
ensure sufficient
contingent capital will be finalized in the near term, but
regardless of its
finalization Fitch believes that sufficient regulatory progress
continues to be
made over the ratings time horizon.
Given the direction of the US governments willingness to
support banks in the
future, Fitch expects that Morgan Stanleys SR will be
downgraded to 5 and the
SRF will be downgraded to No Floor within one to two years,
likely to be some
point in the late 2014 or in 1H15.
It is unlikely that a revision of Morgan Stanleys SRF to No
Floor will lead
to a downgrade of its Long-term IDR despite the fact that Morgan
Stanleys IDR
is at its SRF because Fitch expects that there will be upward
momentum in Morgan
Stanleys Viability Rating over the rating over the next one to
two years.
Therefore, absent a material adverse change in market conditions
or individual
company profile, Morgan Stanleys IDRs are unlikely to change
when the support
rating floor is revised to No Floor.
Morgan Stanleys VR of a- continues to be supported by the
companys solid
liquidity position, improved risk management, and
higher-than-average capital
position. The VR also reflects Morgan Stanleys continued
execution of its
wealth management strategy based on its 100% ownership of Morgan
Stanley Smith
Barney including measured deployment of bank deposits into
investments in lending products, improving margins and
navigation of evolving
regulatory challenges. The upward momentum in the VR reflects
expectation that Morgan Stanley will continue to effectively
execute on its
Wealth Management strategy, further reduce risk weighted assets,
and improve
ROEs to a level at or above its cost of capital. The VR remains
constrained by
wholesale funding risks, challenging industry prospects given
the impact of new
regulations and continued global economic uncertainty.
Overall, Morgan Stanleys performance (excluding legal expenses
and other
one-time items) has improved as it continues to benefit from
improved margins in
the wealth management platform and investment banking revenues,
which partially
offset weaker fixed income and commodities net revenues. Pre-tax
margin for Wealth Management improved to 19% as of Dec. 31, 2013
(excluding a
one-time impairment charge), which is above the companys 2013
margin target of
18%. Fitch believes that if the company can successfully execute
on its strategy
to deploy deposits into loans and securities with higher returns
assuming outsized risks, then it will be able to achieve a
targeted pre-tax
margin of 22% – 25% by 4Q15 .
Morgan Stanleys earnings are becoming more balanced as the
company continues to
expand its wealth management platform. This reduces the
companys comparatively
higher reliance on capital market operations in relationship to
many other
GTUBs, reflecting its focus on the institutional securities
business. The
greater stability derived from its wealth management platform
and the measured
growth of the bank contributes to the positive momentum in
Morgan Stanleys VR.
That said, Morgan Stanleys future earnings will continue to be
less diverse
than other larger universal banks.
Morgan Stanleys capital position is relatively strong and
continues to improve.
Tier 1 common ratio under Basel III is estimated to be
approximately 10.5% at
4Q13 (in line with the average of the US GTUBs). Morgan
Stanley reported that
as of Dec. 31, 2013, the supplementary leverage ratio (SLR) for
the bank
exceeded the 6% threshold, while the holding company SLR was
4.2%, below the 5%
threshold. Fitch continues to believe that Morgan Stanley will
be able to meet
the SLR thresholds prior to the required timeframe.
Liquidity continues to be maintained at conservative levels,
which is viewed as
appropriate given Morgan Stanleys wholesale funding profile.
highly liquid securities and cash was a solid $202 billion or
24% of total
assets as of Dec. 31, 2013. Morgan Stanley estimated that is
Basel III liquidity
coverage ratio remains well in excess of 100%.
Fitch believes that Morgan Stanley is more vulnerable to funding
and rollover
risks than a number of GTUB peers as it is primarily wholesale
funded. To reduce
wholesale funding risk, Morgan Stanley has reduced its reliance
on unsecured
short-term to minimal levels with no reliance on commercial
paper or 2a-7 funds
as of Dec. 31, 2013. Morgan Stanley has a strong governance
policy on secured
funding, including maturity targets and limits set for each tier
of collateral.
Although deposits are increasing at the subsidiary bank, they
remain a
relatively moderate portion of the overall funding mix.
In February 2014, Morgan Stanley settled it pre-crisis
mortgage-backed securities lawsuit for $1.25 billion with the
Federal Home
Housing Finance Agency. The settlement had no ratings impact on
Morgan Stanleys
ratings. Morgan Stanleys pre-tax operating income was modestly
affected by this
Morgan Stanleys viability rating has a higher probability of
being upgraded to
a from a- upon further execution of its Wealth Management
including measured deployment of bank deposits into appropriate
investments in
lending products, and improved returns on equity in excess of
cost of capital.
Successful navigation of evolving regulatory challenges
including the Volcker
Rule and Basel may also contribute to upward rating momentum as
will maintenance
of strong capital and liquidity levels.
Downward pressure on the VR could be driven by Morgan Stanleys
inability to
execute on its Wealth Management strategy, resulting in
sustained operating
weakness or returns on equity substantially below its cost of
Additional potential negative drivers could include an inability
to successfully
navigate evolving regulatory requirements such as the Volcker
Rule or Basel,
material losses, a significant increase in leverage and risk
weighted assets,
reduced capital ratios, deterioration in liquidity levels or
outsized fines,
settlements or other charges.
Subordinated debt and other hybrid capital issued by Morgan
Stanley and by
various issuing vehicles are all notched down from Morgan
Stanleys VR in
accordance with Fitchs assessment of each instruments
nonperformance and relative loss severity risk profiles.
Subordinated debt and
other hybrid capital ratings are primarily sensitive to any
change in the VRs of
Morgan Stanley.
Morgan Stanleys uninsured deposit ratings are rated one notch
higher than the
companys IDR and senior unsecured debt because US uninsured
deposits benefit
from depositor preference. US depositor preference gives
deposit liabilities
superior recovery prospects in the event of default. However,
Morgan Stanleys
uninsured deposits outside of the US do not benefit from
rating uplift because
they do not typically benefit from the US depositor preference
unless the
deposit is expressly payable at an office of the bank in the
United States.
Since Fitch cannot determine which foreign branch deposits may
be dually
payable, they do not get the rating uplift.
The ratings of long and short-term deposits issued by Morgan
Stanley and its
subsidiaries are primarily sensitive to any change in Morgan
Stanleys IDR.
Morgan Stanleys IDRs are equalized with those of its operating
companies and
banks, reflecting its role as the bank holding company, which is
mandated in the
US to act as a source of strength for its bank subsidiaries,
as well as the
use of the holding company to fund subsidiary operations.
The IDRs of Morgan Stanleys major rated operating subsidiaries
are equalized
with Morgan Stanleys IDR reflecting Fitchs view that these
entities are core
to Morgan Stanleys business strategy and financial profile.
Morgan Stanley is a leading global bank with three business
institutional securities, global wealth management, and asset
management. In
September 2008, Morgan Stanley converted to a bank holding
company (BHC)
regulated by the Federal Reserve. Morgan Stanley is currently
the sixth largest
bank by assets in the US and designated as a G-SIFI by the
Financial Stability
The following ratings were affirmed:
Morgan Stanley
–Long-term IDR at A with a Stable Outlook;
–Long-term senior debt at A;
–Short-term IDR at F1;
–Short-term debt at F1;
–Commercial paper at F1;
–Market linked securities at Aemr;
–VR at a-;
–Subordinated debt at BBB+;
–Preferred stock BB;
–Support at 1;
–Support floor at A.
Morgan Stanley Bank NA
–Long-term IDR at A with a Stable Outlook;
–Long-term Deposits at A+;
–Short-term IDR at F1;
–Short-term deposits at F1;
–Support at 1.
Morgan Stanley Australia Finance Ltd
–Long-term IDR at A with a Stable Outlook;
–Long-term senior debt at A;
–Short-term IDR at F1;
–Short-term debt at F1.
Morgan Stanley Canada Ltd
–Short-term IDR at F1;
–Short-term debt at F1;
–Commercial paper at F1.
Morgan Stanley International Finance SA
–Short-term debt at F1.
Bank Morgan Stanley AG
–Long-term IDR at A with a Stable Outlook;
–Short-term IDR at F1;
–Support at 1.
Morgan Stanley Secured Financing
–Long-term senior debt at A;
–Short-term debt at F1.
Morgan Stanley Capital Trust III-VIII
–Preferred stock at BB+.
Fitch will hold a teleconference to discuss sovereign support
for banks and give
an update on rating paths on Friday, March 28 at 15:00 GMT.
Callers must register in advance using the link below and are
requested to dial
in early:

Primary Analyst
Tara Kriss
Senior Director
Fitch Ratings, Inc., One State Street Plaza, New York, NY 10001
Secondary Analyst
Ilya Ivashkov, CFA
Senior Director
Committee Chairperson
Gordon Scott
Managing Director
+ 44 20 3530 1075
Media Relations: Brian Bertsch, New York, Tel: +1 212-908-0549,
Additional information is available at
In addition to the source(s) of information identified in
Fitchs Master
Criteria, these actions were additionally informed by
information provided by
the companies.
Applicable Criteria and Related Research:
–Global Financial Institutions Rating Criteria (Jan. 31,
–Securities Firms Criteria (Jan. 31, 2014) ;
–Assessing and Rating Bank Subordinated and Hybrid Securities
(Jan. 31, 2014);
–Rating FI Subsidiaries and Holding Companies (Aug. 10,
–The Evolving Dynamics of Support for Banks (Sept. 11, 2013);
–Bank Support: Likely Rating Paths (Sept. 11, 2013);
–Sovereign Support for Banks: Update On Position Outlined In
3Q13 (Dec.
–2014 Outlook: US Securities Firms (Nov. 21, 2013);
–2014 Outlook: US Banks (Nov. 21, 2013);
–Global Trading and Universal Banks – Periodic Review (Dec.
12, 2013);
–Fitch Fundamentals Index – US; Index Trend Analysis 4Q13
(Jan. 15, 2014);
–US Banking Quarterly Comment: 4Q13 (Earnings Continue to
Tick Up, but
Challenges Remain) (Jan. 27, 2014);
–US Banking Capital Market Update: 4Q13 (Weak FICC Results
Limit Overall
Revenue Growth) (Jan. 28, 2014).
Applicable Criteria and Related Research:
Global Financial Institutions Rating Criteria
Securities Firms Criteria
Assessing and Rating Bank Subordinated and Hybrid Securities
Rating FI Subsidiaries and Holding Companies
The Evolving Dynamics of Support for Banks
Bank Support: Likely Rating Paths
Sovereign Support For Banks: Update on Position Outlined in 3Q13
2014 Outlook: US Securities Firms (Capital and Liquidity
Challenging Market Conditions)
2014 Outlook: US Banks
Global Trading and Universal Banks – Periodic Review
Fitch Fundamentals Index – US; Index Trend Analysis 3Q13
US Banking Quarterly Comment: 4Q13 (Earnings Continue to Tick
Up, but
Challenges Remain)
US Banking Capital Market Update: 4Q13 (Weak FICC Results
Limit Overall
Revenue Growth)
Additional Disclosure
Solicitation Status




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BlackBerry’s revenue plummets 64%

To say that BlackBerry has hit a rough patch would be an understatement: they just suffered a 64% decrease in revenue, which is now clocked in at $976 million.

The once mighty Canadian tech-manufacturer has reported $423 million in losses for Q4 2014, which translates to an 80 cents drop per share.

The biggest factor for BlackBerrys poor market performance is the lack of significant BlackBerry 10 adoption from new users.

In order for the company to stay afloat, they will employ a new management team and implement a lot of cost cuts, so expect jobs to start being slashed throughout the corporation. To bring in revenue, BlackBerry will make government and corporate clients their focus, while also honing in on emerging markets with their low-end offerings.

BlackBerry CEO John Chen predicts that the company will be profitable in 2016, and for cash flow to be positive within the next four quarters.

They were able to sell 3.4 million smartphones during the last quarter, but less than a third of these units ran OS 10.

The company is also looking to other methods of generating revenue outside of hardware sales. BBM enjoys a user base of 85 million people, and Chen has revealed some plans of making some money off of them: through sticker sales and sponsored posts.

On the hardware side, BlackBerry is primed to release the Q20, and the Z3. The Z3 is a low-end offering thatll debut in Indonesia. The Q20, or “BlackBerry Classic” is a successor to the Q10, which is aimed at the corporate user.

Its tough to have a positive outlook for BlackBerry. Years ago, the company enjoyed unrivaled market dominance, and then they devolved into a purely corporate solution. However, even that cant be said of them anymore, with iOS and Android devices becoming more and more prominent in the workplace, there are fewer places where BlackBerries are relevant anymore.



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