Financial stocks were having a strong session Monday despite a stark
profit warning at Citigroup ( C). The New York banking behemoth estimates that third-quarter income plunged roughly 60% year over year, with "dislocations in the mortgage-backed securities and credit markets and deterioration in the consumer credit environment" ultimately pulling down its pretax securities and banking revenue by around $3.3 billion. Still, Citi shares added 1.8% to $47.50 in support of both the NYSE Financial Sector Index and the KBW Bank Index, which were soaring 1.5% and 2%, respectively. Similarly, UBS ( UBS) gained 3.4% to $55.08 even though the Swiss bank predicted a pretax loss of between some $513.3 million and $684.8 million for the third quarter, mainly from investment-bank writedowns and losses at its fixed-income, rates and currencies business. The investment bank's CEO, Huw Jenkins, will step down, and UBS chief Marcel Rohner will take the reins "for the foreseeable future." At the same time, CFO Clive Standish will retire and be replaced by Executive Vice Chairman Marco Suter. Additionally, UBS will cut about 1,500 jobs. In positive analyst research, Wachovia upped Chicago Mercantile Exchange ( CME) to outperform, saying trading volumes at the futures and commodities exchange should benefit from Federal Reserve rate-cutting. Pennsylvania's SEI Investments ( SEIC), meanwhile, got a Keefe Bruyette upgrade to outperform. CME added $19.99, or 3.4%, to $607.34. SEI traded up 5.1% at $28.66.
Elsewhere, Aspen Insurance ( AHL) added 2.1% on word it will buy back $50 million of its shares on an accelerated basis under a prior repurchase authorization. Shares of the Bermuda-based insurer rose 58 cents to $28.49. And Thomas Weisel Partners ( TWPG) said it will buy investment bank Westwind Partners for $146.7 million in cash and stock. The San Francisco financial firm expects the deal to add 17 cents to 25 cents to its non-GAAP earnings in 2008. Shares gained 3% at $14.95. Among the scant financial losers, Castlepoint Holdings ( CPHL) lost 2.1% following Friday's announcement it had issued $30 million in subordinated debentures. Shares of the Bermuda-based insurer were off 24 cents to $11.26.