DealBook: Greenberg Still in the Ring | New York Fed Official to Leave | Maltese, and E.U., Citizenship for a Mere $1.3 Million | China Rethinks Banks' Safety Net

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Friday, May 1, 2015
TODAY'S TOP HEADLINES

M & A Bright House Said to be in Cable Takeover Talks

INVESTMENT BANKING Lloyds Banking Group Profit Slides 19% on TSB Sale

PRIVATE EQUITY Chinese Consortium to Buy OmniVision for $1.9 Billion

HEDGE FUNDS Deutsche Bank Said to Replace Global Head of Prime Finance

OFFERINGS McGraw-Hill Education Said to be Planning I.P.O.

VENTURE CAPITAL Warby Parker Valued at $1.2 Billion After Funding Round

For the latest updates, go to NYTimes.com/DealBook
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By DEALBOOK

GREENBERG STILL IN THE RING In 2005, Maurice R. Greenberg was forced to resign from American International Group under the shadow of an accounting scandal, which he is still battling in court as he gets ready to turn 90 on Monday. And Mr. Greenberg is also the driving force behind a four-year-old lawsuit claiming the federal government unconstitutionally seized A.I.G.'s assets during the financial crisis. "Few people would choose to spend their golden years surrounded by lawyers, facing subpoenas and hostile cross-examination. Yet, if anything, Mr. Greenberg seems to have been energized," James B. Stewart writes in his Common Sense column.

Mr. Stewart recounts Mr. Greenberg's activities in the 10 years since he resigned from A.I.G. at age 80: He helped build the privately held C. V. Starr & Company into a global insurance company with over 3,000 employees, and he is the director of the Starr Foundation, which has bestowed over $2.2 billion in grants to New York charities alone. Mr. Stewart decided to pay the former A.I.G. chief executive a visit to learn the secret of his longevity. Mr. Greenberg credited his health to good genes, plus he exercises regularly and gets adequate sleep. But what carries him through the prolonged legal battles is his desire to set the record straight, Mr. Stewart writes. "I've always believed that if you do something wrong, you should admit it," he told Mr. Stewart. "But if not, you fight for what you believe in."

"Age doesn't matter to me," he said. "No one is invincible, and I might not wake up tomorrow. But I don't think about that. I'm doing what I want to do, and that's what's important."

NEW YORK FED OFFICIAL TO LEAVE Sarah J. Dahlgren, the head of bank supervision at the Federal Reserve Bank of New York, will depart at the end of the year, Peter Eavis reports in DealBook. She will remain in her position until Oct. 1, and for the final three months, she will assume the role of adviser to William C. Dudley, the president of the New York Fed. The New York Fed gave no reason for Ms. Dahlgren's resignation and did not name a successor.

Ms. Dahlgren, 51, who has been at the New York Fed since 1990, had been promoted in recent years as part of the Fed's efforts to strengthen its supervision. Her departure comes at an uncomfortable time for Mr. Dudley, Mr. Eavis writes. The New York Fed came under heavy scrutiny after traders at JPMorgan Chase ran up huge losses in 2012 in what became known as the London Whale scandal. Last fall, Carmen M. Segarra, a former New York Fed examiner, accused the regulator of being overly deferential toward Goldman Sachs, providing tape recordings of New York Fed meetings that were featured in a report by ProPublica, an investigative news organization, and "This American Life," a radio show.

MALTESE, AND E.U., CITIZENSHIP FOR A MERE $1.3 MILLION Vacationers have long flocked to Malta for its sunny skies and a shimmering blue sea, but for some of the world's wealthiest, the Mediterranean island nation's biggest attraction is a local passport, Jenny Anderson writes in DealBook. A little over a year ago, Malta, which is part of the European Union, began offering citizenship to those willing to pay 1.2 million euros, about $1.3 million, and meet due diligence standards and residency requirements.

Malta is known as a friendly place to do business, boasting low corporate taxes and light regulation, but the government's plan to sell Maltese citizenship immediately drew criticism from local lawmakers. "We do not want to form part of a law which prostitutes Malta's identity and its citizenship," Mario de Marco, a vocal member of the opposition, said during the debate.

Lawmakers also objected to what they saw as lax residency requirements. Applicants must show they have rented a property in Malta for 12 months, but they do not necessarily have to spend any time there. Russians rent high-end villas, then stay in five-star hotels when they visit, and one American financier said he planned to live in Switzerland but occasionally vacation in Malta. "It is questionable how the residency requirement is being applied," said Tonio Fenech, a member of Malta's Parliament.

ON THE AGENDA John C. Williams, president of the Federal Reserve Bank of San Francisco, will speak about monetary policy at Chapman University in California at 3:10 p.m. E.D.T. Loretta Mester, president of the Cleveland Fed, will speak about consumer credit in Philadelphia at 8:30 a.m. Today's corporate earnings reports include Berkshire Hathaway, Chevron, Charter Communications, CVS, Duke Energy and Moody's. The Institute for Supply Management's national factory index for April is out at 10 a.m., as is data on construction spending for March. A House Financial Services subcommittee will hold a hearing on oversight of the Financial Industry Regulatory Authority at 9:15 a.m. BNP Paribas, the largest French bank, is scheduled to face formal sentencing for having processed dollar transactions on behalf of countries including Sudan and Iran, in violation of sanctions imposed by Washington.

CHINA RETHINKS BANKS' SAFETY NET On Friday, China introduced a deposit insurance system for banks, not to increase the public's faith in the country's financial institutions, but rather the opposite, Neil Gough writes in DealBook. Since China started opening its economy in the late 1970s, Beijing has played the role of the ultimate guarantor, bailing out failed banks that were reckless with their lending to state-run companies, which have been known for making wasteful investments. But now the government is trying to shake citizens' long-held belief that the government will always step in to save failed banks, which in turn would force banks to consider risk when making loans. "In short, China is trying to introduce risk into the system," Mr. Gough writes.

Deposit insurance is just China's first step to discourage risky lending; the government also plans to remove the caps on interest rates that banks pay on those deposits. "Combined, these two measures will force Chinese banks to reorient their thinking and take into account market dynamics," Mr. Gough writes. Without the implicit backing of the government, banks will have to pay more attention to the creditworthiness of borrowers, and they will also have to compete for customer deposits by paying higher interest rates. China's leaders hope that consumers, with extra money in their accounts, will increase their spending; Beijing sees consumer demand as a main driver of the country's future economic growth.

MERGERS & ACQUISITIONS »

Bright House Said to be in Cable Takeover Talks Time Warner Cable and Charter Communications have both contacted Bright House Networks to discuss buying the company, The Wall Street Journal reports, citing people familiar with the talks.

Monsanto Said to Approach Syngenta Again Monsanto has approached a Swiss agrochemicals company, Syngenta, about a takeover, almost a year after a previous attempt failed, Bloomberg News reports, citing people familiar with the matter.

Pfizer Said to be Sobi's Suitor Pfizer was the company that approached Swedish Orphan Biovitrum, also known as Sobi, with a preliminary offer, Reuters reports, citing people with knowledge of the situation.

Salesforce's Slow Growth May Prompt Hunt for a Buyer Oracle and Microsoft want to increase cloud capacity, making them possible suitors, writes Robert Cyran of Reuters Breakingviews.

INVESTMENT BANKING »

Lloyds Banking Group Profit Slides 19% on TSB Sale The British lender took a pretax charge of $1.15 billion in the first quarter related to its sale of TSB Banking Group, which it spun off last year.

Lazard Names New Heads of Financial Advisory and M.&A. Alexander F. Stern has been named as the chief of the financial advisory business, and Matthieu Pigasse will serve as global head of mergers and acquisitions.
For the latest updates, go to NYTimes.com/DealBook
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PRIVATE EQUITY »

Chinese Consortium to Buy OmniVision for $1.9 Billion OmniVision Technologies, which is based in California, said it agreed to be acquired for about $1.9 billion by a group of private equity investors based in China, The Wall Street Journal reports.

HEDGE FUNDS »

Deutsche Bank Said to Replace Global Head of Prime Finance Dixit Joshi, who heads equities for Deutsche Bank in the Asia-Pacific region, will replace Barry Bausano as the bank's global head of prime finance, a hedge fund financing unit, The Wall Street Journal reports, citing people familiar with the firm.

I.P.O./OFFERINGS »

McGraw-Hill Education Said to be Planning I.P.O. McGraw-Hill Education is planning an initial public offering as early as the fourth quarter of this year, potentially valuing the textbook company at around $5 billion, including debt, Reuters reports, citing four people familiar with the matter.

VENTURE CAPITAL »

Warby Parker Valued at $1.2 Billion After Funding Round Warby Parker, the online eyeglass retailer, is valued at $1.2 billion after a $100 million round of funding led by T. Rowe Price, The Wall Street Journal reports.

The Gigafactory, a $5 billion plant being built near Reno, Nev., by Tesla, the maker of electric vehicles, will produce lithium-ion battery systems designed to be used by utilities and homeowners.

With New Factory, Tesla Ventures Into Solar Power Storage for Home and Business Tesla Motors says it is making a foray into the challenge of how to use the sun's energy when it isn't shining, with a fleet of battery systems for homeowners, businesses and utilities.

Advertisers say Twitter has not shown that it can target or track some ads as well as they want.

Social Media Punished as Results Fall Short The performances of Twitter, LinkedIn and Yelp illustrate the way investors are questioning whether social media companies can keep their growth rates vigorous enough to justify their valuations.

Judge Allows Venture Capitalist to Sue Accuser Joe Lonsdale, a Silicon Valley investor, was allowed by a federal judge to pursue his defamation claims against a former Stanford University student who accuses him of sexually abusing her over a yearlong relationship, Bloomberg reports.