BofA had role in Merrill bonuses Bank of America played a role in Merrill Lynch's controversial decision to pay $4bn in bonuses in December just as mounting losses were threatening to derail BofA's takeover of Merrill. BofA has said that the payment of $4bn in bonuses, in a quarter in which Merrill racked up $15bn in losses, was sanctioned by John Thain, Merrill's chief executive. Ken Lewis, BofA's embattled CEO, ousted Thain on Thursday, a day after the FT reported news of the bonus payments. BofA told the FT last week it was notified of Thain's decision to pay bonuses in December instead of January, adding that Merrill was independent until the deal closed Jan 1. Full FT analysis of Thain's downfall here. See this article online.
http://ftalphaville.ft.com/blog/2009/01/26/51627/bofa-had-role-in-mer
| Pfizer nears $67bn deal for Wyeth Pfizer was nearing agreement Sunday night on a deal to buy rival drug maker Wyeth for about $67bn in a move that would reshape the global drug industry. Pfizer will pay the equivalent of $50.19 per share for Wyeth – comprising $33 in cash and 0.985 of a share of Pfizer stock for each Wyeth share. The two companies spent Sunday hammering out the exchange ratio and other details, including who would fill remaining seats on the combined board. Pfizer expects to raise $25bn to help fund the deal and has lined up commitments from Bank of America/Merrill Lynch, JPMorgan and Goldman Sachs and is in talks to bring others in. See this article online.
http://ftalphaville.ft.com/blog/2009/01/26/51626/pfizer-nears-67bn-de
| French banks plan joint functions French banks Crédit Agricole and Société Générale plan to announce Monday an agreement to combine large parts of their asset-management operations, reports the WSJ. The banks aim to create a joint venture with about €700bn ($909bn) in assets under management, a move that would help them cut costs. Crédit Agricole, France's second-largest bank by market value after BNP Paribas, will hold a 70% interest in the new venture. SocGen, the third largest, will own the rest, said people close to the deal. See this article online.
http://ftalphaville.ft.com/blog/2009/01/26/51625/french-banks-plan-jo
| US tax probe of UBS widens UBS is under legal pressure as US prosecutors expand their investigation into whether the Swiss bank helped tens of thousands of Americans avoid paying taxes, reports the WSJ. Investigators believe the number of US clients that UBS helped to avoid taxes could be much higher than the earlier estimate of about 17,000, are are now looking into whether other parts of UBS besides the wealth- management unit were involved in helping clients avoid US taxes. The bank is in talks with the Justice Department to avert a possible felony indictment by admitting to criminal conduct and paying a penalty in the range of $1.2bn. See this article online.
http://ftalphaville.ft.com/blog/2009/01/26/51624/us-tax-probe-of-ubs-
| UBS bonuses could inflame debate A package of more than £1bn in bonuses for staff at UBS, the Swiss bank, is expected next month and threatens to reignite the debate over excessive compensation for bankers, reports The Times. UBS is to pay out around SFr2 billion (£1.3bn) in bonuses next month, despite heading for a SFr8bn Q4 loss, the biggest quarterly deficit ever sustained by a Swiss company. The bonus payments were agreed last week by Finma, the new Swiss financial regulator, whose consent UBS is obliged to seek after it was bailed out by the Swiss government last autumn. Marcel Rohner, chief executive, and Peter Kurer, chairman, have agreed to forgo their bonuses for 2008, but the bank's 77,000 employees will receive performance-related payments in next month's wage packet. See this article online.
http://ftalphaville.ft.com/blog/2009/01/26/51623/ubs-bonuses-could-in
| Barclays tries to reassure investors Barclays may report its 2008 results earlier than planned, as the bank seeks to quell investor concerns that further losses will force it to turn to the UK government for help, reports the WSJ. Barclays's share price has fallen sharply in recent weeks even as the government announced new financial-bailout measures aimed at reviving lending and curbing further bank losses. Barclays shares fell nearly 14% on Friday and 90% from a year earlier, amid worries that the government may need to take the further step of nationalising some of the country's major banks. See this article online.
http://ftalphaville.ft.com/blog/2009/01/26/51622/barclays-tries-to-re
| US car parts sector seeks $10bn bail-out The autoparts supply sector, hit by the sharp drop in US car production, is to request at least $10bn of federal bail-out funds from the Tarp scheme. Industry representatives plan to formally request access to Tarp funds soon, according to the Original Equipment Suppliers Association, which represents parts suppliers. Separately, Larry Summers, head of the White House National Economic Council, said the new administration would use the second half of the $700bn bail-out funds to tackle the financial crisis. His comments came after Nancy Pelosi, the Democratic speaker of the House, suggested that Congress might have to provide more money for Tarp. See this article online.
http://ftalphaville.ft.com/blog/2009/01/26/51621/us-car-parts-sector-
| France to aid Airbus The French government is to provide €5bn in credit guarantees to help Airbus sell aircraft to customers that are struggling to secure finance for their purchases because of the credit crunch. Paris will channel the money to the aerospace group via French banks, which will receive a further €5bn ($6.5bn) in state guarantees from the body set up last year to back up to €320bn in new bank debt, a government official confirmed Sunday night. EADS, the aircraft maker's Franco-German parent company, in which the French state has 15% stake, insisted last week it would not be a "substitute for the banks" in helping customers. See this article online.
http://ftalphaville.ft.com/blog/2009/01/26/51620/france-to-aid-airbus
| Schaeffler and Continental in aid talks Schaeffler and Continental are in talks with two regional governments about a possible state bail-out, as the German car parts makers struggle under a combined debt of €22bn ($29bn). The governments of Lower Saxony and Bavaria are in talks with Conti and Schaeffler over state aid packages, although it is unclear whether the talks wll lead to state guarantees, an equity injection, or no help at all. Schaeffler, based in Bavaria, is saddled with more than €10bn debt after its €12.1bn takeover of Conti, which closed earlier this month. See this article online.
http://ftalphaville.ft.com/blog/2009/01/26/51619/schaeffler-and-conti
| Corus and GKN to slash jobs Corus, Britain's largest steelmaker, will this week announce cuts of 3,500 jobs from its global workforce of 41,000, with more than 2,000 jobs to go in the UK where it employs 20,000. The announcement, which could come Monday, follows a 30% drop in orders as a result of the collapse in construction and falling car sales which fell by almost half in December compared with the previous year. The group, owned by Tata Steel of India, has already taken short-term steps to cope with the fall in demand including mothballing some plants and cutting work hours. GKN, the parts maker, meanwhile, which will issue a trading statement on Wednesday that is expected to reveal the loss of several thousand jobs. See this article online.
http://ftalphaville.ft.com/blog/2009/01/26/51618/corus-and-gkn-to-sla
| PwC staff detained in Satyam probe Indian police have detained two PwC auditors in their first move against the professional services firm over the scandal afflicting Satyam Computer Services. Police said the pair were detained for interrogation over the scandal, in which B. Ramalinga Raju, former chairman of Satyam, confessed to fixing the accounts for several years. Price Waterhouse was the auditor of India's fourth largest outsourcing firm by revenue. The arrests mark a widening of the fraud probe beyond the immediate family and former executives of Satyam. Investigators said the two auditors would be held in judicial custody until Feb 6. See this article online.
http://ftalphaville.ft.com/blog/2009/01/26/51617/pwc-staff-detained-i
| S&P cites liquidation risks US companies face a greater risk of liquidation because sources of finance that would allow them to reorganise under the US bankruptcy code are drying up in the financial crisis, S&P has warned. In the US, companies on the verge of insolvency can restructure themselves under a Chapter 11 bankruptcy protection process, sometimes taking years. But the credit crunch has severely limited the availability of so-called 'debtor in possession' financing that is vital to give them this second chance. With previous big providers of DIP financing, such as GE Capital, shying away from the market, companies may have to rely on their existing lenders, the rating agency said. See this article online.
http://ftalphaville.ft.com/blog/2009/01/26/51616/sp-cites-liquidation
| Eurozone warned on quantitative easing Unconventional emergency measures to boost the eurozone economy could prove difficult for the ECB to implement, a member of its governing council has warned, highlighting the institution's nervousness about following such steps in the US and UK. A programme of "quantitative easing" – the creation of money to buy assets – would be "much more complicated in the eurozone context than some people might believe", Yves Mersch, Luxembourg's central bank governor, told the FT, reflecting reluctance among ECB policymakers to cut rates much below the current 2%, while the Fed and Bank of England have aggressively cut policy rates to near-zero. See this article online.
http://ftalphaville.ft.com/blog/2009/01/26/51615/eurozone-warned-on-q
| Focus DIY chief blasts insurers Focus DIY, the UK home improvement retail chain, has called for a government investigation after the company's credit insurers withdrew almost all cover for its suppliers. Less than 5% of the stock Focus buys is now insured, down from about one-third in September. The company, owned by US private equity group Cerberus, said it had persuaded its 300 or so suppliers to stick to the standard 67-day payment terms, rather than demand up-front payment. Bill Grimsey, chief executive of the 200-store chain, said he had met a dozen suppliers in the past fortnight to discuss the issue. See this article online.
http://ftalphaville.ft.com/blog/2009/01/26/51614/focus-diy-chief-blas
| Citi sells $12bn in state-backed bonds Citigroup on Friday moved to bolster its strained balance sheet by selling $12bn of government-guaranteed bonds, the largest issuance since the US authorities agreed to backstop financial companies' short-term debt in November. The move – the second time Citi has tapped the government-backed facility – comes as the group tries to get back on a firmer footing after recording more than $50bn in credit-related losses since the start of the crisis. See this article online.
http://ftalphaville.ft.com/blog/2009/01/26/51613/citi-sells-12bn-in-s
| Goldman takes fizz out of Davos In Categories: People Posted at 05:27 by Gwen Robinson In a nod to the new mood of sobriety, Goldman Sachs has quietly cancelled its glittering annual party at the World Economic Forum in Davos and has sharply reduced its delegation to the event, which starts Wednesday. Other conspicuous cancellations include John Thain, who was due to host a high-profile breakfast meeting on Friday– until he was ousted from his post at Merrill Lynch on Thursday. Lehman Brothers, which used to send a formidable delegation to the ski resort, has also disappeared. Vikram Pandit, the embattled CEO of Citigroup, has withdrawn this year. So has Howard Stringer, the CEO of Sony. But Jamie Dimon, head of JPMorgan, is hosting a party in Davos's iconic "Piano Bar, while Barclays is throwing a dinner in a mountain-top restaurant. And curiously, overall attendance numbers are actually up this year. See this article online.
http://ftalphaville.ft.com/blog/2009/01/26/51612/goldman-takes-fizz-o
| Overnight markets: Thin start Asian stocks rose on Monday, led by shipping and mining companies after cargo rates and metals prices advanced, outweighing drops by contractors on earnings concerns. Markets in Australia, South Korea, Malaysia, Indonesia and India are closed Monday for holidays, while Hong Kong will be shut until Jan 29 and China and Taiwan will be closed all week for the lunar new year. Asian markets (Mon - HK closed)
05:15am GMT
Nikkei up 18.09 (0.23%) to 7,763.34
Topix up 1.92 (0.25%) 775.47
Hang Seng (Fri): down 79.39 (-0.63%) at 12,578.60 US markets (Fri)
DJIA down 45.24 (-0.56%) at 8,077.56
Nasdaq up 11.80 (0.81%) at 1,477.29
S&P500 up 4.45 (0.54%) at 831.95 European markets (Fri)
FTSE100 up 0.24 (0.01%) at 4,052.47
Eurofirst 300 down 2.25 (-0.29%) at 760.54 Currencies
05:20 GMT
€/$ 1.2934 (1.2940)
$/¥ 89.24 (89.61)
£/$ 1.3653 (1.3772) Commodities
05:22 GMT
Brent Crude (Mar09) down $0.73 at $47.64
Light Crude (Mar09) down $0.77 at $45.70
100 Oz Gold (Feb09) down $4.10 at $891.70
Copper (Mar09) down 40.00 at $3,250.00 10-year government bond yields (%)
US 2.61 (2.58)
UK 3.69 (3.50)
Germany 3.25 (3.09)
Japan 1.22 (1.24) Sources: FT, Reuters See this article online.
http://ftalphaville.ft.com/blog/2009/01/26/51611/overnight-markets-th
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