Goldman Sachs agrees $3.15bn mortgage settlement

BY  Richard Summerfield

Goldman Sachs has agreed to settle its biggest financial crisis bill to date, agreeing a $1.2bn settlement with the Federal Housing Finance Agency (FHFA).

Under the terms of the deal, the bank has arranged to buy back $3.15bn in mortgage bonds from Fannie Mae and Freddie Mac, paying around $1bn to Fannie and $2.15bn to Freddie respectively. The move will bring about an end a lawsuit filed in 2011 by the FHFA in which the agency alleged that Goldman misled the two mortgage finance groups regarding the sale of over $11.1bn in mortgage-backed securities between 2005 and 2007. Although Goldman agreed to the settlement, the bank has continued to deny any allegations of wrongdoing; the bank’s settlement deal did not contain any admission of wrongdoing on Goldman’s behalf. The FHFA, which valued the settlement at $1.2bn, said the deal "effectively makes Fannie Mae and Freddie Mac whole on their investments in the securities at issue".

Goldman’s settlement is the latest in a string of deals related to the financial crisis, and is the largest legal penalty that the bank has paid in its 140-year history. The deal easily eclipsed the $550m settlement that the firm agreed in 2010 to conclude a complaint from the Securities and Exchange Commission regarding the bank’s handling of a complex mortgage-linked deal. The settlement with the FHFA comes shortly after Bank of America Corp agreed a separate mortgage deal with the Justice Department and a number of other government offices which totalled around $16.65bn. “We are pleased to have resolved these matters," said Gregory Palm, Goldman's general counsel, in a statement.

By reaching a settlement with the FHFA in August, Goldman has avoided the ignominy of a trial on 29 September. The trial would have been in relation to a pair of lawsuits that the FHFA filed against Goldman in 2011. The agency filed the suits hoping to recover damages from a number of financial institutions behind some $200bn in mortgage bonds bought by Fannie and Freddie that later experienced difficulty. The FHFA has concluded all but three of the 18 lawsuits it filed; to date the agency has recovered approximately $17.3bn from a cadre of banks including Bank of America Corp, Deutsche Bank AG and Morgan Stanley.

The Department of Justice will continue to investigate Goldman’s marketing of mortgage-backed securities. The FHFA is continuing to press ahead with its litigation against three other banks: HSBC Holdings Plc, Nomura Holdings Inc and Royal Bank of Scotland Group Plc.

News: http://www.bloomberg.com/news/2014-08-22/goldman-to-buy-mortgage-debt-for-3-15-billion-to-end-fhfa-probe.html

Working in South Africa

Following abuse of previous corporate immigration rules in South Africa, the government has recently implemented a program of reform. However, despite the changes, the situation remains tense.

FW speaks with Angelika Yakovchuk at WerthSchröderInc Attorneys about developments in corporate immigration in South Africa.

10Questions: Corporate immigration in South Africa

Mexico’s immigration reform

In recent years, the Mexican approach to corporate immigration has been drastically altered by the implementation of the 2012 Immigration Reform Act.

FW speaks with Juan Carlos Aguilar Noble at Fragomen Mexico, S. de R.L. de C.V., about developments in corporate immigration in Mexico.

10Questions: Corporate immigration in Mexico

Deal completion fails to match M&A appetite

BY Mark Williams

The world’s largest companies are expected to maintain a healthy appetite for M&A over the next six months, according to KPMG’s M&A Predictor, released in August 2014.

Price-to-earnings ratios have climbed 16 percent during the last year. At the same time, corporates are continuing to pay down debt and have an increasing amount of cash with which to fund deals. Although these factors create a fertile environment for dealmaking, appetite and increasing capacity are yet to result in the expected level of deal completions, says KPMG.

Despite the increase in announced deals through Q1 2014, which signals the return of a strong appetite for M&A, deal completions remains static, and the value of these deals continues to fall. Part of this is due to political interference in the deal market, evidenced by the proposed Pfizer deal in the UK and the GE deal in France.

That said, KPMG believes the overall the picture is a positive one. “Appetite remains strong, capacity is going up and we are starting to see an increasing number of deals being announced,” says Tom Franks, KPMG’s Global Head of Corporate Finance. “There is a danger, though, that domestic protectionism, certainly in markets like the UK, France and Canada, could damage the recovery. Furthermore, whilst increasing political instability in North America, the Middle East and Ukraine has not yet appeared to impact sentiment it remains a very real threat,” he added.

Report: KPMG M&A Predictor August 2014

Entertainment firms eye growth in improved economy

BY Matt Atkins

The media and entertainment (M&E) industry is ready to take the spotlight, according to a new EY report, as executives shake off their fears for the economy and shift from cost cutting to growth.

EY surveyed 50 large global M&E companies for the 'It's Showtime! Digital drives the agenda, data delivers the insights' report, which showed that only 26 percent of senior executives surveyed were concerned that economic uncertainty would impact growth, compared to 62 percent in 2012. The survey spanned industry sectors including filmed entertainment; broadcast and cable networks; music and radio; advertising; internet and interactive media; and publishing and information services.

The report showed that firms are well positioned to grow their companies through capitalising on digital opportunities and investments in technology, digital talent and infrastructure, as well as acquisitions and other deals. The average deal value during the first half of 2014 was US$939m, compared with US$220m in 2013 and US$157m in 2012, with cable operators driving the rise.

"The CFOs told us in no uncertain terms that the economy is no longer an obstacle and now is the time for media and entertainment companies to invest in growth and focus on building their businesses," said John Nendick, Global Media & Entertainment Leader at EY. "The industry is now poised to deliver on the promises it has been making the past several years but has been unable to achieve because of the economy. The CFOs recognise the recession is over and it's showtime."

Though the outlook has improved, the M&E industry still faces challenges. According to EY, the greatest tests for M&E firms going forward are technology and platform disintermediation, an inability to persuade consumers to pay a fair price for content and regulatory uncertainty.

Report: It's Showtime! Digital drives the agenda, data delivers the insights