Sterling nears parity with euro The pound dropped to within 5p of parity with the euro on Thursday as it fell to a fresh record low against the single currency for the ninth successive day. Sterling sank to 95.5p against the euro amid speculation the Bank of England will follow the Fed and cut rates to virtually zero. The speed of sterling's fall has accelerated after it fell last week by 1.25% on a trade-weighted basis; this week it fell 4% in just 3 days. See this article online and view or leave comments.
http://ftalphaville.ft.com/blog/2008/12/19/50624/sterling-nears-parit
| Bush weighs 'orderly bankruptcy' for automakers The White House said Thursday it was considering an "orderly" bankruptcy for stricken US automakers GM and Chrysler. A Bush spokesman said the president and Treasury Secretary Hank Paulson were considering the step as part of an overall rescue package for the two carmakers, which have said they need an emergency $15bn to continue operations until end-March, and were "very close" to a decision. The two options were tapping the Treasury's TARP scheme for the funds, and "one of these bankruptcies", the spokesman said. See this article online and view or leave comments.
http://ftalphaville.ft.com/blog/2008/12/19/50623/bush-weighs-orderly-
| Japan to buy bank-held stocks Japan's government will buy as much as Y20 trillion ($223bn) of shares held by banks to boost their capital and support a sagging stock market, reports Bloomberg. The amount is part of a stimulus package totalling Y75 trillion that also includes Y10 trillion for capital injections into banks, the Cabinet Office said. The buyback plan is subject to approval by Japan's parliament. See this article online and view or leave comments.
http://ftalphaville.ft.com/blog/2008/12/19/50622/japan-to-buy-bank-he
| Deutsche Bank faces bond-buyer strike Deutsche Bank is facing the prospect of a buyers' strike against its own debt, and even debt it tries to sell on behalf of others, as big institutional investors protested the bank's decision Wednesday not to repay a €1bn ($1.42bn) bond as expected in January. The move has raised fears about Deutsche's capital strength and also the prospect that other banks will also refuse to redeem their own extendable so-called hybrid-capital bonds. See this article online and view or leave comments.
http://ftalphaville.ft.com/blog/2008/12/19/50621/deutsche-bank-faces-
| Credit Suisse ties pay to illiquid assets Posted at 04:37 by Gwen Robinson Credit Suisse is to give its top bankers shares in a new $5bn fund of illiquid assets in a bold move designed to link pay to the long-term performance of credit markets and limit the bank's exposure to the securities. The Swiss bank is also considering allowing investors to buy stakes in the same portfolio of leveraged loans and mortgage securities. The assets had been marked down, to an average of 65% of their original value, making it likely they would appreciate in value as credit markets thaw in coming years. But the new structure could face opposition, especially from bankers not involved in mortgages and leveraged loans. See this article online and view or leave comments.
http://ftalphaville.ft.com/blog/2008/12/19/50620/credit-suisse-ties-p
| Banks lent billions to Madoff 'feeder funds' Big banks from the UK, France and Japan helped investors treble or quadruple their bets on Bernard Madoff by lending billions of dollars to "feeder" funds, which placed their money with the alleged fraudster. HSBC, RBS, Nomura and BNP Paribas lent the money without spotting a fraud, in at least one case without due diligence teams visiting Madoff's brokerage, which actually held the assets. See this article online and view or leave comments.
http://ftalphaville.ft.com/blog/2008/12/19/50619/banks-lent-billions-
| Accounting firms drawn into Madoff scandal Top accounting firms were hoodwinked by Bernard Madoff's alleged $50bn fraud as well as several top banks and some of the world's biggest hedge fund investors, according to lists of service providers to Madoff-linked funds. PwC, KPMG and Ernst & Young, three of the "big four" accountants, and an arm of BDO International, the fifth largest, were all auditors of the feeder funds which channelled money into accounts at Madoff's New York brokerage. See this article online and view or leave comments.
http://ftalphaville.ft.com/blog/2008/12/19/50618/accounting-firms-dra
| BofA shelves plan to cut CCB stake Bank of America has shelved a $3bn sale of China Construction Bank stock following objections from Beijing, igniting fears that some overseas investors could struggle to offload their lucrative holdings in China's banks. BofA, which holds a 19.3% stake in CCB, last week hired UBS to help sell a chunk of HK-listed shares to reduce its CCB holding to below 17%. But hours before it was to be unveiled Monday, the share sale was pulled after a phone call between Ken Lewis, BofA chairman and CEO, and Guo Shuqing, his CCB counterpart. Dealmakers believe Beijing objected to the timing of the sale, the first such attempted divestment by a foreign investor following the expiry of a lock-in period. See this article online and view or leave comments.
http://ftalphaville.ft.com/blog/2008/12/19/50617/bofa-shelves-plan-to
| S&P lowers GE debt rating outlook S&P lowered its outlook on General Electric's debt ratings to "negative" on Thursday, a move that could cost the conglomerate its pristine credit grade if profit from its GE Capital finance arm falls more than expected. S&P's action comes two days after GE executives sought to reassure investors the company would outperform its peers amidst the global economic downturn. While S&P affirmed GE's ratings, the agency said there was at least a one-in-three chance it would cut GE's grade from triple-A within the next two years. GE's shares plunged 8% on Thursday following the announcement. See this article online and view or leave comments.
http://ftalphaville.ft.com/blog/2008/12/19/50616/sp-lowers-ge-debt-ra
| Hedge fund failures at record level A record number of hedge funds were liquidated in the third quarter, as the business faces the worst crisis in its history, deepened by the involvement of funds of hedge funds, one of the biggest groups of investors in hedge funds, in the alleged $50bn fraud by Bernard Madoff. Analysis by Hedge Fund Research, the data provider, showed that 344 funds closed during the quarter, exceeding the previous quarterly record of 267, set in Q4 2006. A total of 693 funds had liquidated this year to the end of the third quarter, representing about 7% of the industry and an increase of 70% on the first three quarters of last year. See this article online and view or leave comments.
http://ftalphaville.ft.com/blog/2008/12/19/50615/hedge-fund-failures-
| BNP shares hit by Fortis limbo BNP Paribas has called off a shareholder meeting scheduled for Friday to approve funding for a key part of the €14.5bn deal to acquire the Belgian arm of Fortis, reviving speculation that the proposed tie-up may fall apart. The deal is in limbo after a surprise ruling last week by the Brussels Court of Appeal to suspend the sale, after shareholders protested against the carve-up of Fortis, in which its Dutch business was nationalised and the Belgian units sold to BNP. BNP said Thursday it stood by its statement that the court decision did not call into question its interest in acquiring Fortis. See this article online and view or leave comments.
http://ftalphaville.ft.com/blog/2008/12/19/50614/bnp-shares-hit-by-fo
| Trump eyes rescue for gaming company Donald Trump is considering whether to rescue his ailing gaming group by taking it private. The real estate mogul and television personality owns 24% of Trump Entertainment Resorts, which is struggling to meet its debt obligations and has missed a $53m interest payment. The group, which operates three properties in Atlantic City, is saddled with $1.7bn of debt, of which about $1.2bn is bond debt. It could be forced to file for bankruptcy protection if it fails to make the interest payment within a 30-day grace period, which expires at the end of the month. See this article online and view or leave comments.
http://ftalphaville.ft.com/blog/2008/12/19/50612/trump-eyes-rescue-fo
| BA, Qantas clashed on two key issues British Airways and Australia's Qantas on Thursday abandoned their ambitious plan to create a £4bn global carrier, as it emerged they had been unable to agree on the share exchange ratio each airline would command in a dual-listed structure, and on the location of a corporate HQ. In Lex's view, BA should go for regional consolidation – ie, a revival of merger talks with Iberia, which could deliver synergies of £400m a year, twice that available from a Qantas deal. More FT analysis here. See this article online and view or leave comments.
http://ftalphaville.ft.com/blog/2008/12/19/50611/ba-qantas-clashed-on
| SVG shares dive after £200m raising Shares in SVG Capital suffered the biggest drop in their 12 years of London trading Thursday after the quoted private equity investor revealed a range of funding changes to shore up its finances. SVG, the largest investor in funds run by Permira, the private equity group, is raising about £200m from investors at 100p a share. It has cut its commitments to invest with Permira by nearly £800m, to £343.8m, renegotiated covenants with its lenders and taken a 40% provision against its investments. See this article online and view or leave comments.
http://ftalphaville.ft.com/blog/2008/12/19/50610/svg-shares-dive-afte
| Five charged in Lehman insider case A former Lehman Brothers executive has been charged in an insider trading scheme that prosecutors say used information obtained from his wife, a partner of PR firm Brunswick. Matthew Devlin, an ex-Lehman sales representative - now with Barclays Wealth - pleaded guilty to charges of conspiracy to commit insider trading and securities fraud. He was one of five, including another Lehman broker, named in a federal criminal complaint on Thursday. They and four others were also named in a related civil complaint filed by the SEC. Devlin's wife, Nina, was not charged in either case See this article online and view or leave comments.
http://ftalphaville.ft.com/blog/2008/12/19/50609/five-charged-in-lehm
| Banker to head British Land In Categories: People Posted at 04:05 by Gwen Robinson British Land has chosen another banker to lead it through the property slump with the appointment of Chris Grigg, former head of UK business banking at Barclays, as its chief executive. Grigg, a former Goldman Sachs banker and chief executive of Barclays Commercial, will replace Stephen Hester, who left in November to run the government-controlled RBS. Shares in British Land rose 29½p to 565p Thursday. See this article online and view or leave comments.
http://ftalphaville.ft.com/blog/2008/12/19/50608/banker-to-head-briti
| Parmalat ex-chief gets 10 years Calisto Tanzi, former chief executive of Parmalat, which collapsed five years ago in a massive fraud dubbed "Europe's Enron", was sentenced Thursday to 10 years in prison by a Milan court. After a trial lasting more than three years, Tanzi, 70, was found guilty of falsifying accounts, market-rigging and misleading investors and regulators while at the helm of the Italian dairy group, which collapsed with debts of €14bn ($20bn). See this article online and view or leave comments.
http://ftalphaville.ft.com/blog/2008/12/19/50607/parmalat-ex-chief-ge
| Overnight markets: Commodities-led retreat Asian stocks slumped on Friday, following US stocks down. Raw materials producers fell as the deepening global recession drove crude oil below $36 a barrel and metal prices to the lowest in more than four years. US stocks were led down by General Electric which sparked a sharp afternoon sell-off on Thursday as S&P's negative credit rating outlook led investors to question which other companies could be vulnerable.
Asian markets (Fri)
03:47am GMT
Nikkei down 17.79 (-0.21%) to 8,649.44
Topix up 2.33 (+0.29%) to 841.12
Hang Seng down 270.69 (-1.75%) at 15,227.12 US markets (Thurs)
DJIA down 219.35 (-2.49%) at 8,604.99
Nasdaq down 26.94 (1.71%) at 1,552.37
S&P500 down 19.14 (-2.12%) at 885.28 European markets (Thurs)
FTSE100 up 6.47 (+0.15%) at 4,330.65
Eurofirst 300 down 1.41 (+0.17%) at 827.12 Currencies
03:45GMT
€/$ 1.4273 (1.4436)
$/¥ 89.14 (87.69)
£/$ 1.5144 (1.5544) Commodities
03:40 GMT
Brent Crude (Feb09) up $0.34 at $43.70
Light Crude (Feb09) up $0.58 at $42.25
100 Oz Gold (Feb09) down $10.60 at 850.00
3M 24HR Copper up $40.00 at $2,910 10-year government bond yields (%)
US 2.08 (2.18)
UK 3.17 (3.2)
Germany 2.96 (3.00)
Japan 1.29 (1.28) Sources: FT, Reuters See this article online and view or leave comments.
http://ftalphaville.ft.com/blog/2008/12/19/50606/overnight-markets-co
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