NEW YORK  - Big banks have shared some happy news: a windfall from their stakes in markets-technology company Tradeweb. They diverged, however, in where they put the money and how much they said about it in their second-quarter earnings. It’s a prime example of the irritating detective work required of mega-bank shareholders.

Nine financial institutions bought stakes in Tradeweb Markets back in 2008, and partly cashed in when the company completed its initial public offering in April. The trading-venue operator is now controlled by Refinitiv, a joint venture between Blackstone and Breakingviews parent Thomson Reuters. Its value has increased dramatically, from $1.2 billion at the time of their investments to $11 billion today.

It seems like the kind of outcome worth trumpeting, but that has not exactly been the case. Citigroup spelled out a $355 million gain in its earnings statement. Others gave details only later on calls with analysts. Goldman Sachs disclosed its related returns. JPMorgan noted a gain but didn’t say how much. Morgan Stanley and Bank of America revealed a figure but didn’t name Tradeweb, even when the analysts did.

Moreover, the combined $1.4 billion tally is shrouded in accounting mist. For Goldman and Morgan Stanley, Tradeweb was called an equity investment. For others it was tucked into trading or markets revenue. From the outside, the net result is the same, and in the end pretty small. At Goldman, the $375 million represented less than 4% of quarterly revenue.

Investors are accustomed to the sleuthing. In 2017, several banks absorbed nine-digit losses from loans linked to Steinhoff. Some named the South African retailer; others didn’t. Such discretion can be to avoid namechecking a client, or because they need permission to do so. Goldman recorded an impaired loan. At others like JPMorgan and Bank of America, Steinhoff created trading losses, credit charge-offs or both.

Quirky accounting is in any case a feature at banks. They steer investors to look at returns on “tangible” equity and “managed” revenue, for example, which are higher than returns on regular equity or standard reported revenue. Complex business models leave lots of room for different approaches. At least they sometimes muffle the good news along with the bad.

CONTEXT NEWS

- Several large banks reported gains from their investments in Tradeweb Markets, an operator of electronic marketplaces for fixed-income trading that listed on the stock market in April.

- Tradeweb’s majority owner is Refinitiv, the financial data company owned by Blackstone and Thomson Reuters, the parent company of Reuters Breakingviews.

- Morgan Stanley on July 18 noted a $176 million gain from an investment in its call with analysts, but did not name the company.

- JPMorgan told analysts on July 16 that it booked a gain on Tradeweb but did not disclose the amount. Bank of America disclosed to analysts its $200 million gain. Both logged the sum under markets revenue, but neither specifically mentioned Tradeweb in their quarterly filings.

- Citigroup said on July 15 that it had generated a $355 million profit on its investment, booked as fixed-income markets revenue. Goldman Sachs said during a call with analysts on July 16 that it made $375 million on its stake, recorded as an equity investment.

- Other investors in Tradeweb include Barclays, Deutsche Bank, Royal Bank of Scotland, UBS and Credit Suisse.

  (Editing by Jeffrey Goldfarb and Amanda Gomez)

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