UK readies fresh bank bail-out plan Britain's beleaguered banks were on Sunday night preparing to accept a new bail-out as the government finalised a plan designed to end uncertainty about future losses and boost credit flows, reports the FT. Alistair Darling, chancellor, met bank executives to outline the scheme, which will see the government insure banks against potential losses on risky loans in return for commitments to increase lending. Amid fears of a backlash against further public funds for banks, ministers are expected to express anger at banks' reluctance to increase lending despite the government's £400bn bail-out in October. Among measures, the government is expected to announce it is converting £5bn of preference shares issued by RBS into ordinary shares, increasing the state's shareholding from about 58% to 68%. More analysis here. See this article online.
http://ftalphaville.ft.com/blog/2009/01/19/51304/uk-readies-fresh-ban
| RBS to report UK's biggest loss Royal Bank of Scotland is on Monday expected to announce a £20bn full-year loss - the biggest loss in British corporate history -as the state-controlled lender unveils further damage resulting from the credit crunch. RBS executives were on Sunday finalising the trading statement. In announcing its loss, which exceeds the £15bn deficit reported by Vodafone in 2006, RBS is expected to report a loss of £7bn-£8bn on large additional writedowns on complex debt securities in the final few months of 2008. It is also taking a £15bn hit to goodwill from past acquisitions, most notably its share of ABN Amro, the Dutch lender it acquired as part of a €71bn (£63bn) hostile break-up bid in 2007. See this article online.
http://ftalphaville.ft.com/blog/2009/01/19/51303/rbs-to-report-uks-bi
| Obama puts priority on bank lending President-elect Barack Obama will demand that banks receiving public support boost lending, advisers said Sunday, as they promised to put a priority on restoring credit flows. Among other key advisers, Larry Summers, incoming director of the National Economic Council, said that banks receiving federal aid would be "expected to lend above their baseline levels". The $825bn fiscal stimulus before Congress was just "one phase" of Obama's economic programme and would be accompanied by a financial reconstruction plan and housing policies, he added. The remarks came amid heightened speculation that Obama could announce plans to create an "aggregator bank" to take on toxic assets clogging up the banking system within days of taking office on Tuesday. See this article online.
http://ftalphaville.ft.com/blog/2009/01/19/51302/obama-puts-priority-
| Citi denies reports of Japanese brokerage sale Citigroup on Monday said it is "committed" to its Japanese brokerage unit Nikko Cordial Securities, rebuffing that the division is up for sale as Citi splits in two to rebuild capital, reports Bloomberg. Citi said it "remains committed to maximizing the value of Nikko Cordial over the next few years," and said it plans to keep Nikko Cordial, acquired a year ago, for at least another 12 months, said insiders. Japanese financial stocks have plunged since Citi completed the Nikko Cordial deal for about Y1.6 trillion ($18bn), slashing the price the US bank would get in a sale. Mitsubishi UFG Japan's largest lender, denied a report that it was seeking to buy Nikko Cordial. See this article online.
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| BBVA calls for single bank regulator Francisco González, chairman of Spanish bank BBVA, has called for a single European financial regulator to manage the risks of cross-border banking and criticised greedy executives for focusing on their bonuses rather than the long-term future of their institutions. González – whose bank has climbed into the world's top 10 by market cap during the crisis – said in an FT.com video interview that global banks and global markets required global regulation. While impossible for now, single regulators and supervisors were ultimately needed in the US and in Europe, and "probably should be very close to or even inside the European Central Bank," he said. See this article online.
http://ftalphaville.ft.com/blog/2009/01/19/51300/bbva-calls-for-singl
| Wedgwood family plans 'all or nothing' bid A consortium led by Thomas R. Wedgwood, a direct descendant of the 18th-century industrialist who founded the ceramics maker, is mounting an "all or nothing" bid to buy back the family company, reports The Times. The proposed deal, expected to be tendered early this week and understood to be backed by financing from the Middle East, could spell the end of Wedgwood's 22-year merger with Waterford Crystal. The bid, under which members of the founding family would run Waterford Wedgwood as an independent, high-end brand, is designed to scupper a series of other offers that have been made for all or part of Waterford Wedgwood, the debt-laden group put into administration this month. Other bids may emerge this week for the Waterford part of the business. See this article online.
http://ftalphaville.ft.com/blog/2009/01/19/51299/wedgwood-family-plan
| Alibaba plans global expansion Alibaba, the world's largest online platform for trade between businesses, is moving to take advantage of the global financial crisis as an opportunity to transform itself from a China-focused e-commerce provider into a global web marketplace, according to Jack Ma, its founder and chairman. As part of its drive for geographical diversification, Alibaba is moving its European headquarters from Geneva to London this month, as it sees the UK as one of the most promising markets for picking up suppliers. See this article online.
http://ftalphaville.ft.com/blog/2009/01/19/51298/alibaba-plans-global
| Slim to raise NYT stake Carlos Slim Helú, the Mexican billionaire, is near a deal to invest about $250m in The New York Times Company as it struggles with finances, reports the NYT. The company's board is expected to meet Monday to approve the deal and an announcement could be made as early as Tuesday. If it proceeds, the deal would come amid efforts by the Times Company to raise money amid flagging advertising sales and obligations to pay back hundreds of millions of dollars of debt over the next two years. The company has put its stake in the Boston Red Sox up for sale and said last year it would borrow as much as $225m against its new headquarters in Manhattan. Slim already owns 6.4% of Times Company. See this article online.
http://ftalphaville.ft.com/blog/2009/01/19/51297/slim-to-raise-nyt-st
| CVC to buy stake in Royal Mail Private equity group CVC Capital Partners is drawing up plans to buy a stake in Royal Mail, reports the Daily Telegraph. CVC's interest is at an early stage and the firm is believed to be worried about the reputational risk of any deal because the part-privatisation of Royal Mail is so politically sensitive. The move to sell a minority stake in Royal Mail, led by Lord Mandelson, the Business Secretary, has drawn criticism and any deal with a buyout firm, which are treated with suspicion by many trade unions and Labour MPs, is likely to exacerbate their anger. CVC bought a 22% stake in Post Danmark from the Danish state in 2005 and went onto buy half the Belgian postal service and last year announced a merger with Posten, the Swedish post office. See this article online.
http://ftalphaville.ft.com/blog/2009/01/19/51296/cvc-to-buy-stake-in-
| Satyam to appoint investment banks The new, government-appointed board of fraud-hit Satyam Computer Services is looking to appoint up to three investment banks to find a possible buyer for the Indian outsourcer, reports Reuters, citing the Economic Times of India. Goldman Sachs, JPMorgan and Deutsche Bank were under consideration and a final decision is likely this week, the newspaper said. Satyam, India's No. 4 software services exporter, has been battling for survival since Ramalinga Raju resigned as chairman earlier this month, revealing profits had been falsified for years and that $1bn of cash on the books did not exist. On Sunday, a court ordered the former chairman, managing director and chief financial officer of Satyam to be taken into police custody for four days. See this article online.
http://ftalphaville.ft.com/blog/2009/01/19/51295/satyam-to-appoint-in
| Fidelity to rank independent researchers Independent research firms will come under pressure in coming months as the agreement requiring Wall Street companies to offer third-party research expires. As the end of the regulatory settlement nears, Fidelity, the largest retail broker, has highlighted weaker researchers by giving its 12m retail brokerage clients a ranking of which researchers are most accurate. Independent researchers became popular after the 2003 regulatory settlement over Wall Street analysts' conflicts of interest, which required 10 investment banks to offer independent research to their clients as well as the banks' own. The settlement expires on July 26, and executives from several Wall Street banks said it was unlikely they would continue to offer independent research beyond July. See this article online.
http://ftalphaville.ft.com/blog/2009/01/19/51294/fidelity-to-rank-ind
| Samurai bond market revives Japan's samurai bond market is poised to revive after a virtual shut-down since the September collapse of Lehman Brothers, as credit markets show signs of stabilising thanks partly to government guarantees on bond issues. The first bonds to be issued since September are likely to be from Australian banks Westpac and ANZ, bankers said. Although the timing is unclear, at least one issue could happen as soon as the end of January. The government-guaranteed format under which the bonds are issued make them attractive to investors searching for higher yields than Japanese government bonds with minimum risk. See this article online.
http://ftalphaville.ft.com/blog/2009/01/19/51293/samurai-bond-market-
| European companies in record bond sales European companies have sold record volumes of bonds so far this year, capitalising on renewed investor demand as corporations seek to refinance debt. Non-financial European companies sold $15.2bn of bonds last week, one of the largest weeks ever for bond issuance, according to data provider Dealogic. Companies have been turning to the bond markets to refinance debt as bank lending has become constrained. Capital-intensive sectors such as utilities, telecoms and carmakers have been the most active issuers in early 2009, with Gaz de France, Daimler and Deutsche Telekom among the largest European issuers. US groups such as Staples, the stationery retailer, and printing company RR Donnelley have also been selling bonds. See this article online.
http://ftalphaville.ft.com/blog/2009/01/19/51292/european-companies-i
| Investors shun mega-buy-out groups Investors are turning hostile to "mega-buy-out" groups as many of their heavily leveraged, multi-billion-dollar takeovers of large companies are hit by the financial crisis, according to research to be published Monday. More than half of investors plan to cut their investment in the biggest buy-out houses in 2009, according to a survey of 150 limited partners, including insurers and pension funds, by the private equity advisory boutique Almeida Capital. Large buy-outs ranked bottom of 12 types of private equity, with less than a fifth of investors considering them an attractive investment this year. The shift in sentiment has already forced some of the biggest buy-out groups – including Carlyle, KKR , Madison Dearborn and Blackstone – to scale back fundraising targets for this year. See this article online.
http://ftalphaville.ft.com/blog/2009/01/19/51291/investors-shun-mega-
| Oil traders shift from WTI Oil traders are quietly pricing some of their deals away from the West Texas Intermediate contract, traditionally the world's most important oil benchmark, as it is being distorted by record inventories at its landlocked delivery point. The move is a setback for the benchmark that since the launch of the Nymex WTI futures in the early 1980s has dominated physical and financial oil markets. The surge in oil inventories in Cushing, Oklahoma, where WTI is delivered into America's pipeline system, has depressed its value not only against other global benchmarks, such as Brent, but also against other domestic US crudes. An analyst at the International Energy Agency in Paris, said there was "anecdotal evidence" of traders moving away from WTI and "doing deals based on other US oil benchmarks". See this article online.
http://ftalphaville.ft.com/blog/2009/01/19/51290/oil-traders-shift-fr
| Deripaska returns as Rusal CEO Oleg Deripaska, the Russian billionaire, is to return as chief executive of Rusal, one of the world's biggest aluminium producers, after being re-elected by the board, the company said Sunday. Deripaska, Rusal's majority shareholder, returns to the more direct hands-on role comes as the company battles to survive the global credit crisis and plummeting revenues due to the drop in commodity prices. It is seeking to restructure $14bn of debt it owes to foreign and Russian banks. The move also comes amid talk of reviving plans for a three-way merger between Rusal, Norilsk Nickel, the world's biggest nickel miner, and Metalloinvest, the steel and iron ore group, to create a metals and mining giant on a par with BHP Billiton. See this article online.
http://ftalphaville.ft.com/blog/2009/01/19/51289/deripaska-returns-as
| Overnight markets: Optimistic Asian stocks advanced on Monday, led by commodity and finance companies, amid optimism that efforts by various governments to end the credit crisis will bolster corporate earnings. US markets are closed Monday for a holiday. Asian markets (Mon)
05:25am GMT
Nikkei up 25.45 (0.31%) to 8,255.60
Topix up 1.12 (0.14%) 819.01
Hang Seng down 9.81 (-0.07%) at 13,245.70 US markets (Fri)
DJIA up 68.73 (0.84%) at 8,281.22
Nasdaq up 17.49 (1.16%) at 1,529.33
S&P500 up 6.38 (0.76%) at 850.12 European markets (Fri)
FTSE100 up 25.95 (0.63%) at 4,147.06
Eurofirst 300 up 7.58 (0.95%) at 803.90 Currencies
05:20 GMT
€/$ 1.3343 (1.3214)
$/¥ 90.82 (90.48)
£/$ 1.4845 (1.4768) Commodities
05:22 GMT
Brent Crude (Mar09) down $0.25 at $46.32
Light Crude (Feb09) down $0.29 at $36.22
100 Oz Gold (Feb09) down $2.70 at $837.20
Copper (Mar09) up 75.00 at $3,435 10-year government bond yields (%)
US 2.34 (2.25)
UK 3.30 (3.13)
Germany 2.92 (2.88)
Japan 1.24 (1.22) Sources: FT, Reuters See this article online.
http://ftalphaville.ft.com/blog/2009/01/19/51288/overnight-markets-op
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