No major impact seen from ARS buy backs

The repurchase of some $35 billion in ARS is not expected to have a material financial impact, banks say.
AUG 18, 2008
By  Bloomberg
The announced repurchase of some $35 billion in auction rate securities by major Wall Street firms is not expected to have a material effect on most of the companies. Citigroup Inc. and Merrill Lynch & Co. Inc., both of New York, UBS AG of Zurich, Switzerland, and Wachovia Corp. of Charlotte, N.C., have all said their announced buybacks will not create major financial strains. “Wachovia does not currently expect that the purchase of ARS ... will have a material effect on capital, liquidity or overall financial results,” the bank said in announcing its settlement with regulators last Friday. Citigroup said in a statement that the capital effect of bringing an estimated $7.3 billion onto its balance sheet “is expected to be de minimis.” In its second-quarter financial report, released this month, UBS said its $8.3 billion buyback will create an “immaterial increase in risk-weighted assets” on its balance sheet, although the firm will be taking on other risks with its buyback. Citigroup, Wachovia and UBS are taking pretax charges to cover estimated market losses and other costs related to repurchasing ARS. Merrill has not yet announced any charge-offs.

Latest News

Married retirees could be in for an $18,100 Social Security cut by 2032, CRFB says
Married retirees could be in for an $18,100 Social Security cut by 2032, CRFB says

A new analysis finds long-running fiscal woes coupled with impacts from the One Big Beautiful Bill Act stand to erode the major pillar for retirement income planning.

SEC bars New Jersey advisor after $9.9M fraud against Gold Star families
SEC bars New Jersey advisor after $9.9M fraud against Gold Star families

Caz Craffy, whom the Department of Justice hit with a 12-year prison term last year for defrauding grieving military families, has been officially exiled from the securities agency.

Navigating the great wealth transfer: Are advisors ready for both waves?
Navigating the great wealth transfer: Are advisors ready for both waves?

After years or decades spent building deep relationships with clients, experienced advisors' attention and intention must turn toward their spouses, children, and future generations.

UBS Financial loses another investor lawsuit involving Tesla stock
UBS Financial loses another investor lawsuit involving Tesla stock

The customer’s UBS financial advisor allegedly mishandled an options strategy called a collar, according to the client’s attorney.

Trump's one big beautiful bill reshapes charitable giving for donors and advisors
Trump's one big beautiful bill reshapes charitable giving for donors and advisors

An expansion to a 2017 TCJA provision, a permanent increase to the standard deduction, and additional incentives for non-itemizers add new twists to the donate-or-wait decision.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.