GM names Opel strategy chief new Chevrolet Europe boss

Wednesday, June 26th, 2013 | Finance News

By Christiaan Hetzner and Ben Klayman

FRANKFURT/WARREN, Michigan (Reuters) - General Motors Co has named Opel's strategy chief to run the European operations of GM's two global brands, Chevrolet and Cadillac.

GM hopes that bringing Thomas Sedran to Chevrolet, starting next month, will help boost sales of the U.S. brand while differentiating its European strategy from Opel's.

He succeeds Chevy Europe head Susan Docherty, who never managed to increase sales of GM's budget brand in Europe during her 18-month stint. She will be leaving GM in September.

GM Chief Executive Dan Akerson told reporters on Wednesday that the Detroit company needed a "fresh perspective" for the Chevy brand in Europe, including a reassessment of how Chevy and Opel fit together in terms of price, vehicle content and where the brands are sold.

"He understands the channel conflicts we've inevitably had between Opel and Chevrolet," Akerson said of Sedran.

"We've done a pretty good positioning between Opel and Chevrolet in Russia, but we haven't done it as well as I would have hoped in Western Europe, so we have to take a fresh look," he said at GM's technical center outside Detroit.

Akerson reiterated that GM stands behind the money-losing Opel unit. "We have a long journey to carry forward, but I would say that Opel is doing better. We've made a statement that we're not giving up on Opel."

GM, which almost sold Opel in 2009, has lost money in Europe for 13 consecutive years, but plans to return to break-even level by mid-decade.

Sedran, a former auto industry consultant for AlixPartners who joined Opel in April last year, served as interim CEO for the loss-making European brand from last July until the arrival of Karl-Thomas Neumann in March.

Sedran said Chevrolet had one of the youngest model ranges after launching 15 new or upgraded models in the past three years including the Trax subcompact SUV, while Cadillac expected to attract new customers with cars such as the sporty ATS, which competes against the BMW 3 Series .

Chevy, which imports cars to Europe almost exclusively from GM's South Korean unit, has lost ground to low-cost rivals Hyundai Motor Co and Kia Motors Corp .

While Chevrolet's market share in Europe dropped to 1.1 percent during the first five months of this year from the average 1.3 percent when Docherty took over at the start of 2012, Korean budget brands Hyundai and Kia grew theirs by roughly half a percentage point each, to 3.5 percent and 2.7 percent, respectively.

Cadillac sold fewer than 500 cars in western and central Europe last year out of the roughly 196,000 Cadillacs sold worldwide.

Separately, Opel said Tina Mueller, who recently ran Henkel's Beauty Care cosmetics division for Western Europe, will become chief marketing officer from August 1.

(Reporting by Christiaan Hetzner in Frankfurt and Ben Klayman in Warren, Mich.; editing by Ruth Pitchford and Matthew Lewis)

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Morgan Stanley won’t meet bond-trade goal this quarter: analyst

Wednesday, June 26th, 2013 | Finance News

By Lauren Tara LaCapra

NEW YORK (Reuters) - Morgan Stanley is expected to report bond-trading revenue below the target the Wall Street bank set after its disappointing first-quarter results, an analyst said on Wednesday.

Morgan Stanley will report $1.25 billion in fixed income, currency and commodities (FICC) trading revenue for the second quarter, below the target of $1.5 billion to $2.5 billion the bank recently outlined as necessary to meet its cost of capital, said Richard Staite, an analyst with Atlantic Securities.

The bank has been providing more details about its bond-trading ambitions after disappointing first-quarter FICC revenue caused its shares to drop more than 5 percent on April 18.

Its stock recovered within days, after bank executives told investors, analysts and reporters that the quarter's $1.5 billion in bond-trading revenue was the minimum needed to meet cost of capital, represented by a 10 percent return on equity.

Morgan Stanley has been changing its bond-trading strategy for years, and performance has been rocky. The bank is now in the process of reducing risk-weighted assets by $190 billion - with another $53 billion left to go before the end of 2016 - in response to more stringent capital rules.

As a result, Morgan Stanley no longer has aspirations to have a bond-trading business as large as peers such as JPMorgan Chase & Co and Goldman Sachs Group Inc .

But bank officials argue that shrinking the business will allow it to be profitable. At a conference earlier this month, Chief Executive James Gorman detailed plans to double or triple returns in some areas.

"We fully recognize we are not where we want to be with fixed income and commodities," Gorman said. "On the other hand, we think we've made more progress than perhaps has been understood. But this is a multiyear transformation of a very complex business."

Morgan Stanley shares are up 31 percent this year, making it one of the best performing large bank stocks of 2013. But Staite's report may raise doubts. The analyst estimates Morgan Stanley's return on tangible common equity will be just 6.1 percent in the second quarter.

He said Morgan Stanley "is overvalued, given our view that profitability will remain disappointing."

A Morgan Stanley spokesman declined to comment on the analyst's report but pointed to Gorman's comments earlier this month.

(Reporting by Lauren Tara LaCapra; Editing by John Wallace)

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IRS official won’t testify in contracting probe

Wednesday, June 26th, 2013 | Finance News

WASHINGTON (AP) — An Internal Revenue Service official is refusing to testify before a House committee examining his relationship with the CEO of computer services company that has as much as $500 million in contracts with the IRS.

Gregory Roseman said at a committee hearing Wednesday that he was advised by his lawyer to invoke his constitutional right against self-incrimination.

The committee is investigating government contracts secured by Strong Castle Inc., including whether a friendship between Roseman and company CEO Braulio Castillo was a factor in the company's ability to secure such large contracts with the IRS.

Castillo told the committee he doesn't know why Roseman invoked his 5th Amendment right. Castillo says his company has done nothing wrong or illegal.

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