Bailing Out of the Bailout
Some banks think federal funds aren't worth the stigma or the strings. Just months after lining up for a bailout from the government, a growing number of financial firms want to pay the money back.
Louisiana's Iberiabank (IBKC) moved in late February to return $90 million to the government, saying the capital put it at an "unacceptable competitive disadvantage." Iberiabank is doing well on its own: The stock is essentially flat over the past year.
On Mar. 2, Wayzata (Minn.)-based TCF Financial (TCB) announced it would return $361 million to the Treasury Dept. TCF's decision came weeks after politicians pilloried the bank for holding a company-bonding event at a ski resort. "From Congress' point of view, any dollar a bank spends is subject to government review," says TCF Chief Executive William Cooper. "It's another regulatory push on top of all the regulation we have [already]."
Northern Trust (NTRS) got flak for a posh party last month that featured Tiffany party favors and performances by Sheryl Crow and Chicago. Days later the Chicago-based bank decided to give back the government's $1.8 billion.
Citi: No. 1 Dealmaker
There's at least one thing Citigroup's (C) chief executive, Vikram Pandit, can celebrate: the bank's dealmaking record. So far this year, Citi has advised on $158 billion in deals, more than any of its rivals, according to research firm Thomson Reuters (TRI). It counseled drugmaker Wyeth (WYE), which Pfizer (PFE) agreed to buy for $68 billion in January. Citi was among the players when Italy's largest utility, Enel, made a $14.3 billion bid for a stake in Spanish energy company Endesa.
In an ironic twist, Citi is benefiting from the financial crisis. The British government relied on Citi's help when it decided to pump $36 billion into troubled Royal Bank of Scotland (RBS). Citi was also a trusted adviser to PNC Financial Services Group (PNC) when it gobbled up National City this year. Just a week before the PNC deal was initially announced in October, Citi got its first $25 billion in government aid.
Still Some Fat and Happy Dividends
For all the talk of dividend cuts, plenty of companies are still raising their payouts. In the past year, 205 companies in the Standard & Poor's (MHP) 500-stock index have upped their dividends, compared with 88 that have cut or suspended them (chart, right). Among those enriching their rewards: agricultural company Archer Daniels Midland (ADM), pharmaceutical maker Abbott Laboratories (ABT), and insurer Chubb (CB). With stocks at record lows, investors can find some tantalizing yields from reliable payers. Conglomerate 3M (MMM), which recently raised its annual dividend to $2.04, has a dividend yield of 4.7%.