Companies cut 76,000 jobs in a day Corporate bellwethers in the US and Europe slashed more than 76,000 jobs from their payrolls on Monday. US corporate groups such as Caterpillar, General Motors, Sprint Nextel, Texas Instruments, and Home Depot led the retreat, citing factors such as the domestic recession coupled with tough export markets. Pfizer, the drugs group, added to the tally saying jobs would be lost in its takeover of Wyeth, while IBM slashed more than 2,800 jobs last week. Large European companies such as Philips, financial group ING and the Anglo-Dutch steelmaker Corus, owned by India's Tata Group, also unveiled plans to axe staff. In many cases, the cutbacks accompanied disappointing quarterly results or bleak outlooks for 2009. See this article online.
http://ftalphaville.ft.com/blog/2009/01/27/51700/companies-cut-76000-
| Job cuts – the details Caterpillar, the world's largest maker of construction equipment, said it would cut 20,000 jobs as it reported an annual fall of more than 32% in Q4 profits - a month after slashing executive salaries and jobs at large plants. Sprint Nextel, the US mobile-phone operator, said it will cut 8,000 jobs, or 14% of its workforce, while DIY retailer Home Depot is cutting 7,000 jobs and freezing salaries. Pfizer said 19,500 jobs would go after its takeover of US rival Wyeth, while carmaker GM announced 2,000 job losses at two plants in Michigan and chipmaker Texas Instruments said it would cut 3,400 positions. IBM meanwhile cut 2,800 jobs last week. In Europe, ING said it would axe 7,000 of its 130,000 global staff and Philips 6,000 jobs while Corus, Britain's largest steelmaker, announced cuts of 3,500 from its global workforce of 41,000, with more than 2,000 jobs to go in the UK where it employs 20,000. See this article online.
http://ftalphaville.ft.com/blog/2009/01/27/51686/job-cuts-the-details
| Paulson & Co reaps £270m shorting RBS Paulson & Co, one of the world's biggest hedge funds, has made a profit of at least £270m betting on a fall in the share price of Royal Bank of Scotland over the past four months. The New York-based fund, run by billionaire John Paulson, covered its "short" position in RBS on Friday, according to a regulatory filing, dropping below the 0.25% disclosure limit. The scale of the profit is likely to renew the debate over short selling, which recently led the UK's FSA to ban additional shorting of banks for months. The issue is likely to feature in UK parliament on Tuesday when hedge funds testify to the Treasury select committee about the ban. See this article online.
http://ftalphaville.ft.com/blog/2009/01/27/51699/paulson-co-reaps-270
| Thain admits $1.2m office refit 'mistake' John Thain on Monday said that spending $1.2m to redecorate his office last year was "a mistake", but rejected suggestions he was solely responsible for speeding up bonus payments to Merrill Lynch staff ahead of its sale to Bank of America. In his first comments since being ousted from the combined group last week, Thain also argued that Merrill had been "completely transparent" with BofA over the disclosure of a $15bn loss in the fourth quarter. In a memo to Merrill's staff (click here), Thain said he would reimburse the $1.2m spent on refurbishing his New York office suite. The memo and a subsequent CNBC interview are part of Thain's attempts to defend his reputation and hit back at his former masters at BofA, in particular Lewis. See this article online.
http://ftalphaville.ft.com/blog/2009/01/27/51698/thain-admits-12m-off
| Barclays warns of £8bn writedown Barclays on Monday sought to reassure shareholders after last week's steep falls in its share price but warned of a big credit writedown. In an open letter to investors, Marcus Agius, chairman, and John Varley, chief executive, insisted the bank was "well-funded" and "profitable", and that annual results would be brought forward by a week to Feb 9 to show investors how a total of £8bn of credit market writedowns had been absorbed by "record income levels", they noted. Barclays' shares, which halved last week, rebounded by nearly 70% on the news. True, says Lex, the stock is still off 44% this year. Whether this marks a turning point in the bank's strained relations with the market will only be clearer with the full-year results. See this article online.
http://ftalphaville.ft.com/blog/2009/01/27/51697/barclays-warns-of-8b
| Investors to cut stakes in China banks Sales of Chinese bank shares by overseas investors are expected to accelerate this year as western financial institutions divest stakes to help bolster balance sheets. Over the past few weeks, UBS and RBS have sold their holdings in Bank of China, raising a combined $3.2bn, while Bank of America raised $2.8bn by selling a chunk of its stake in China Construction Bank. Sale of the stakes, acquired in 2005 and 2006, come as Bejing tries to support domestic banks amid the economic slowdown. The next wave could come late April when lock-ins expire on stakes in Industrial & Commercial Bank of China. Goldman Sachs's 5% ICBC stake could fetch more than $7bn. Temasek, Allianz and HSBC also own lucrative stakes in Chinese banks. See this article online.
http://ftalphaville.ft.com/blog/2009/01/27/51696/investors-to-cut-sta
| Pfizer seals $68bn Wyeth purchase Pfizer on Monday unveiled a $68bn takeover of Wyeth, reasserting its flagging position as the world's largest pharmaceuticals group and paving the way for a fresh bout of consolidation across the sector. The acquisition – to be paid for with equal amounts of cash, equity and debt – creates a group with $71bn in sales and plans to save $4bn in annual operating costs by cutting 15% of its combined workforce. Pfizer earolier reported a 4% fall in Q4 sales to $12.4bn and a 90% drop in net income to $266m after a $2.3bn settlement with the US district attorney of Massachusetts over the marketing of painkiller Bextra. See this article online.
http://ftalphaville.ft.com/blog/2009/01/27/51695/pfizer-seals-68bn-wy
| Fannie, Freddie could request $51bn Fannie Mae and Freddie Mac could tap the government for up to $51bn in coming weeks, exceeding some Wall Street estimates, so they can continue to operate as the largest US residential mortgage providers, reports Reuters. The storm of rising delinquencies and falling securities values that led to the government's seizure of the companies in September accelerated in the last quarter, requiring Fannie and Freddie to seek more of the stop-gap measures organised by the US Treasury and their regulator. Analysts predicted more capital needs from Treasury through 2009. See this article online.
http://ftalphaville.ft.com/blog/2009/01/27/51694/fannie-freddie-to-re
| Amex net profit plunges 79% American Express said its customers reduced spending by 10% in the fourth quarter, sending its quarterly net income down 79% in what the credit-card company's chief executive called the harshest operating environment "in decades", reports the WSJ. Still, AmEx remained profitable for the last three months of the year, unlike many of its big rivals in the financial-services industry. AmEx reported Q4 net income of $172m compared with $831m a year earlier, and noted rising delinquencies and write-offs. In an unexpected development, AmEx set aside $1.4bn to cover credit losses, down from $1.5bn a year earlier. See this article online.
http://ftalphaville.ft.com/blog/2009/01/27/51693/amex-net-profit-plun
| BNP Paribas sees €1.4bn Q4 loss BNP Paribas said it would make a pre-tax loss of €1.4bn in the last three months of 2008 but would report a net profit of €3bn for the whole year. Shares in France's biggest bank closed 17% higher at €25 on relief that the result, though below expectations of a €4bn ($5.2bn) pre-tax profit, would not be worse and that the bank had again ruled out a rights issue. Instead, BNP will strengthen its balance sheet by issuing €5.1bn of preference shares to the French government. It is the first to opt for the prefs, which are more expensive than the government alternative of subordinated loans. See this article online.
http://ftalphaville.ft.com/blog/2009/01/27/51692/bnp-paribas-sees-e14
| Rohm & Haas sues Dow Chemical Dow Chemical's planned $15bn takeover of Rohm and Haas, its US rival, was in jeopardy after the group said Monday it lacked funds to close the deal, triggering an immediate lawsuit from its target. Rohm and Haas, a large speciality chemicals producer, asked a Delaware court to enforce the transaction at the original price of $78 per share. In the lawsuit, the company accused Andrew Liveris, Dow's chief executive, of "improperly" asking the Federal Trade Commission, the US antitrust regulator, to delay its clearance of the deal in order to buy more time. Dow rejected the allegation and said the discussions were "completely consistent" with its duty to gain approval for the deal. The FTC cleared the takeover on Friday, forcing Dow to complete the deal, which also includes $3.7bn of Rohm and Haas's debt, within two business days. See this article online.
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| Cattles gives up on banking licence Cattles, the troubled UK subprime lender, on Monday abandoned plans to gain a deposit-taking licence as it became clear that its application to the FSA watchdog would be unsuccessful. The shares, already weakened by the group's difficulties, fell nearly 38% to 11½p in early trading. The lender, which targets borrowers rejected by high street banks, said it would focus its efforts on renegotiating its £635m of bank facilities which fall due in the summer and insisted it continued to trade profitably amid strong demand for its loans. See this article online.
http://ftalphaville.ft.com/blog/2009/01/27/51690/cattles-gives-up-on-
| Citi to proceed with private jet order Citigroup, which has received $45bn in US federal aid, is going through with plans to buy a $50m jet, but a US senator called the deal absurd and wants the Obama administration to block it, reports Reuters. The bank signed a contract several years ago to buy a Dassault Falcon 7X and plans to accept delivery later this year. Citi said in a statement that refusing delivery now would result in millions of dollars of penalties. The bank also said it is selling existing aircraft, the proceeds of which will more than pay for the new plane. The New York Post, which reported Monday that Citi intended to proceed with the new plane, said the group was also selling two jets estimated to be worth $27m each. See this article online.
http://ftalphaville.ft.com/blog/2009/01/27/51689/citi-to-proceed-with
| Greenberg recruits ex-AIG executives Maurice "Hank" Greenberg's CV Starr said Monday it had formed a joint venture with a Bermuda insurer that is ramping up its business after recruiting some of AIG's top talent, reports Reuters. The venture will reunite Greenberg, who ran AIG for 38 years, with executives who once worked under him. CV Starr, an investment and insurance company run by Greenberg, and Ironshore Inc formed Iron-Starr Excess Agency, the companies said. The venture will be based in Bermuda and offer excess financial and commercial lines insurance and reinsurance products through insurers based in the US, Bermuda and elsewhere. See this article online.
http://ftalphaville.ft.com/blog/2009/01/27/51688/greenberg-recruits-e
| Fuld 'sold' mansion to wife for $100 In Categories: People Posted at 05:27 by Gwen Robinson The controversial former chief executive of Lehman Brothers transferred ownership of a $14m Florida mansion to his wife for $100 in a possible attempt to move assets beyond the reach of infuriated investors of the collapsed bank, reports The Times. Dick Fuld, who led the 158-year-old investment bank to its demise last September, sold the beach-front house to his wife, Kathleen, for $100 on Nov 10, according to Marin County real estate records. The couple had previously jointly owned the Jupiter Island property, which was valued at $13.75m when they bought it in March 2004. See this article online.
http://ftalphaville.ft.com/blog/2009/01/27/51687/fuld-sold-mansion-to
| Overnight markets: Up Asian stocks rallied from a seven- week low on Tuesday (although Hong Kong, China and Taiwan remained closed for the lunar new year), led by banks and mining companies, as borrowing costs declined and US and Australian data provided some good news amid deepening gloom over massive corporate job cuts and global recession fears.
Asian markets (Tues - HK closed until Jan 29)
05:12am GMT
Nikkei up 387.84 (5.05%) to 8,069.98
Topix up 37.12 (4.83%) 805.40
Hang Seng (Fri): down 79.39 (-0.63%) at 12,578.60 US markets (Mon)
DJIA up 38.47 (0.48%) at 8,116.03
Nasdaq up 12.17 (0.82%) at 1,489.46
S&P500 up 4.62 (0.56%) at 836.57 European markets (Mon)
FTSE100 up 156.54 (3.86%) at 4,209.01
Eurofirst 300 up 24.12 (3.17%) at 784.66 Currencies
05:14 GMT
€/$ 1.3227 (1.2934)
$/¥ 89.41 (89.24)
£/$ 1.4057 (1.3653) Commodities
05:17 GMT
Brent Crude (Mar09) up $0.44 at $47.40
Light Crude (Mar09) up $0.65 at $46.38
100 Oz Gold (Feb09) down $5.20 at $903.60
Copper (Mar09) up 50.00 at $3,565.00 10-year government bond yields (%)
US 2.64 (2.61)
UK 3.69 (3.69)
Germany 3.35 (3.25)
Japan 1.26 (1.22) Sources: FT, Reuters See this article online.
http://ftalphaville.ft.com/blog/2009/01/27/51674/overnight-markets-up
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