Santander makes offer to Madoff victims Santander, the Spanish bank whose clients lost €2.33bn in the alleged fraud by US broker Bernard Madoff, on Tuesday became the first institution to offer to repay the victims in an attempt to stave off lawsuits. Santander said it would pay back 100% of investments in the Optimal Strategic US Equity fund, which was wholly invested with Madoff, to individual private banking clients but not to institutional investors. The clients would have to agree not to sue. See this article online.
http://ftalphaville.ft.com/blog/2009/01/28/51761/santander-offer-for-
| Citi forced to cancel jet order The US financial sector's new political masters on Tuesday forced Citigroup to scrap the purchase of a $50m executive jet that was seen as a misuse of money at a time when the bank is reliant on public support. Only a day earlier, Citi had insisted it would complete the acquisition of the aircraft. But it backed down after officials acting for Tim Geithner, the new Treasury secretary, criticised the move. Geithner's action came as he launched an effort to change perceptions of the government's Tarp bailout scheme, unveiling rules to provide more detail on decisions over how much capital to inject into each bank under the Tarp. See this article online.
http://ftalphaville.ft.com/blog/2009/01/28/51760/citi-forced-to-cance
| Thain called to testify on Merrill bonuses John Thain was issued a subpoena on Tuesday to testify about Merrill Lynch's decision to accelerate the payment of nearly $4bn in employee bonuses last month – just days before the closing of its sale to Bank of America. Merrill paid the bonuses even as its Q4 losses were mounting to $15bn and BofA was seeking additional funds under the government's Tarp bail-out scheme to close the deal. The subpoena, issued by Andrew Cuomo, New York attorney-general, takes the dispute between Thain, the former Merrill chief executive who was ousted from BofA last week, and BofA to a fresh level. Cuomo also issued a subpoena to J. Steele Alphin, BofA's chief administrative officer, who is said to have discussed the bonus payments with Thain. See this article online.
http://ftalphaville.ft.com/blog/2009/01/28/51759/thain-called-to-test
| Nomura considers asset sales Nomura admitted Tuesday it is considering selling off businesses to raise capital after the Japanese bank suffered a record quarterly loss as it struggled to digest its acquisition of parts of Lehman Brothers . Nomura posted a Y349.2bn ($3.9bn) loss for the quarter to Dec 31 (its fourth consecutive quarterly loss, against a Y21.8bn Q4 profit a year ago), hit by huge trading losses and its troubled foray into global markets. On top of Y60bn in costs related to the Lehman deal, it suffered losses of Y43bn on its exposure to Icelandic banks and Y32bn from the alleged fraud by fund manager Bernard Madoff. It also took a Y62.3bn writedown on its 15% stake in Fortress, the US hedge fund. In Lex's view, it only gets nastier from here. See this article online.
http://ftalphaville.ft.com/blog/2009/01/28/51758/nomura-considers-ass
| Mizuho eyes Citi Japan units Mizuho Financial Group, Japan's second-largest bank, said it may consider buying Citigroup's local brokerage and asset-management units, reports Bloomberg. Yasuhiro Sato, who will become CEO of Mizuho's corporate banking unit on April 1, said on Tuesday the deal was "worth considering". Citi's Nikko Cordial brokerage has a strong distribution network, and Nikko Asset Management is likely to attract many bidders, he said. Acquiring the units would help Mizuho tap more of the almost Y1,500 trillion ($17,000bn) in Japanese household assets. Citi, which received $45bn of US rescue funds, said Jan 16 that the Japanese units are among assets it may sell. See this article online.
http://ftalphaville.ft.com/blog/2009/01/28/51757/mizuho-eyes-citi-jap
| 3i faces creditor coup at VNU Britain's oldest private equity group is facing a possible creditor takeover at VNU Business Media Europe, the Dutch group it bought at the peak of the buyout boom, reports The Times. 3i, which will present its interim management statement Wednesday, bought the B2B publisher for €320m in late 2006, but VNU is believed to be close to breaking its banking covenants. Negotiations with banks are continuing but 3i will have to put fresh money into VNU or allow creditors to take it in a debt-for-equity swap, a source close to 3i conceded. The VNU negotiations highlight a dilemma for 3i, which analysts say must either raise fresh money with a rights issue or sell some of its portfolio companies to raise money to invest. See this article online.
http://ftalphaville.ft.com/blog/2009/01/28/51756/3i-faces-creditor-co
| Germany set for record deficit Germany is set to record its largest post-war deficit this year, Angela Merkel, chancellor, said Tuesday after an emergency meeting of her cabinet approved the government's €50bn fiscal stimulus and amended the 2009 federal budget. The admission comes amid mounting concern in Germany about the rapid deterioration of public finances in the wake of the fiscal package. Attacks by opposition parties and fears over the state of the public finances have fuelled government concern that its political room for manoeuvre could be running out, just as it ponders a fresh round of assistance for the embattled financial sector. See this article online.
http://ftalphaville.ft.com/blog/2009/01/28/51755/germany-set-for-reco
| US house prices stay in freefall Home prices in big US cities fell at a record 18.2% in the year to November as the stricken housing market showed no signs of bottoming out. The drop followed an 18% annual decline in October, itself a record, according to the closely watched Case-Shiller index released Tuesday. At the same time, US consumer confidence fell to a new low in January, falling to 37.7 from 38.6 the prior month. November was the 28th consecutive month that the index, published by S&P, declined. Of the 20 large cities tracked, 11 showed record drops in the value of single-family homes. Like banks refusing to write down bad loans, homeowners may be hoping that prices soon recover, says Lex, noting "they would do better not to wait". See this article online.
http://ftalphaville.ft.com/blog/2009/01/28/51754/us-house-prices-stay
| Canada to unveil stimulus package Canada's minority Conservative government was set to unveil a sweeping stimulus package of tax cuts and new spending initiatives late Tuesday, pushing the federal budget into deficit for the first time since 1996. Officials said Monday the measures would be "targeted" and "avoid a return to permanent deficits". The stimulus package, which forms part of the annual budget, will include an extra C$7bn in infrastructure spending and require that a newly created infrastructure fund must be spent within two years. See this article online.
http://ftalphaville.ft.com/blog/2009/01/28/51753/canada-to-unveil-sti
| Tokyo in rescue plan for companies The Japanese government stepped up its efforts to combat the credit crisis on Tuesday by setting aside Y1,500bn ($16.9bn) in public funds to encourage banks to buy shares in cash-strapped companies. The plan, which triggered a jump of nearly 5% in the Nikkei share average, comes as Japan's banks report huge losses on their corporate shareholdings and after the Bank of Japan's warning last week that the country faced at least two years of economic contraction and deflation. Details have yet to be hammered out but the plan foresees banks buying newly issued preferred and common securities. Toshihiro Nikai, the economy minister, said the government would cover 50%-80% of losses incurred in such capital injections. See this article online.
http://ftalphaville.ft.com/blog/2009/01/28/51752/tokyo-in-rescue-plan
| Dow reverses dividend pledge Dow Chemical on Tuesday said it was considering breaking one of the longest streaks in US corporate history of consistent dividends by making its first cut since 1912. In a reversal of its pledge not to cut its $1.6bn-a-year dividend, Dow said it was prepared to consider reducing the pay-out to help pay for the $15bn takeover of US rival Rohm & Haas. The news came as it emerged that Saudi Aramco, the kingdom's national oil group, was one of the companies talking to Dow about a joint venture for its plastics business. See this article online.
http://ftalphaville.ft.com/blog/2009/01/28/51751/dow-reverses-dividen
| Moody's could cut GE rating Moody's Investors Service said Tuesday it was reviewing General Electric's triple-A credit ratings, which could lead to a downgrade, and its shares fell as much as 5% in extended trade, reports Reuters. The move raises the risk that GE, which has a hefty finance business, could lose the long-term top rating that has been a cornerstone of its GE Capital finance business. A rating downgrade could make it more difficult and costly for GE to borrow money. On Monday, S&P - which has already warned it could cut GE's triple-A rating - said its view would not be affected by disappointing Q4 results but warned that GE Capital was likely to have increasing difficulty meeting earnings targets. See this article online.
http://ftalphaville.ft.com/blog/2009/01/28/51750/moodys-could-cut-ge-
| Iceland's Straumur ponders UK switch Straumur-Burdaras, Iceland's largest remaining listed bank, is considering shifting its stock exchange listing and legal domicile to London in a move to distance itself from Iceland's financial crisis that led to nationalisation of the country's three largest banks last autumn, said William Fall, its chief executive. One likely way would be through a reverse merger with a UK broker or shell company. Last October, Straumur purchased the name and some assets of Teathers, a UK brokerage owned by nationalised Icelandic rival Landsbanki. It is also considering listing in Sweden if a more appropriate partner emerges there. See this article online.
http://ftalphaville.ft.com/blog/2009/01/28/51749/icelands-straumur-po
| RBS 'rebuffed' investor calls The directors of Royal Bank of Scotland rebuffed demands from its biggest investors for its chairman and chief executive to quit after an emergency £12bn fundraising last year, the head of UK's biggest investment group told MPs on Tuesday. Peter Chambers, chief executive of Legal & General Investment Management, criticised the bank's board in testimony to the Commons treasury select committee. Chambers said LGIM, one of the top three investors in RBS, had demanded in May that Sir Tom McKillop and Sir Fred Goodwin, chairman and chief executive, should leave. Shareholders have been blamed for failing to restrain banks, with Lord Myners, the City minister, this month urging them to be more active. See this article online.
http://ftalphaville.ft.com/blog/2009/01/28/51748/rbs-rebuffed-investo
| Friends to demerge F&C holding Trevor Matthews, chief executive of UK life assurer Friends Provident, said there were no "substantial" talks on selling Friends' majority holding in asset manager F&C and Friends would press ahead with demerging the stake. Some observers interpreted the comments as Matthews trying to put pressure on the management of F&C to pay up if they wanted to buy the business, as has been mooted. Matthews insisted this was not the case. The comments came as Friends' sales of life and pensions policies fell 11% last year to £1bn, better than the 19% fall forecast by analysts. UK life and pensions sales fell 27%. See this article online.
http://ftalphaville.ft.com/blog/2009/01/28/51747/friends-to-demerge-f
| Corning cuts 3,500 jobs Corning, the US glassmaker, on Tuesday said it would cut 3,500 jobs, or 13% of its workforce, as its fourth- quarter profits plunged on slumping demand for television and computer monitors. Net income declined 65% to $249m yoy, falling below analysts' expectations. Sales at the company were off by an annual 30% in the fourth quarter, falling to $1.1bn. The job cuts will include 1,500 salaried employees and 1,400 temporary workers worldwide. Corning has 51 plants. See this article online.
http://ftalphaville.ft.com/blog/2009/01/28/51746/corning-cuts-3500-jo
| Vulture funds home in on UK Vulture funds believe British companies will offer the best investment opportunity in Europe this year, as the UK faces a sharper slowdown than its neighbours, a survey has found. A poll of 100 such funds, conducted by Debtwire, an FT Group news service, found they did not expect European corporate debt restructurings to peak until the end of this year. Vulture funds – largely made up of European and US hedge funds, banks' prop trading desks and private equity investors – are expected to become increasingly active this year. Their interest in the UK is driven in part by its bankruptcy regime, which is friendlier to creditors than many European countries, as well as expectations of a high number of distressed companies. See this article online.
http://ftalphaville.ft.com/blog/2009/01/28/51745/vulture-funds-home-i
| US arrests fund manager Nadel Florida hedge fund manager Arthur Nadel, who went missing two weeks ago, turned himself in on Tuesday and was ordered held on securities and wire fraud charges until a bail hearing on Friday, reports Reuters. Nadel fled after a partner in his firm told him that following the arrest of accused swindler Bernard Madoff in December, the funds should hire an independent accountant to audit the books, an FBI agent said in a court filing. See this article online.
http://ftalphaville.ft.com/blog/2009/01/28/51744/us-arrests-fund-mana
| Overnight markets: Mixed Asian stocks mostly retreated from Tuesday's surge, led down by Japan, after companies from Nomura to Fuji Fire & Marine Insurance said earnings are suffering amid the global recession. Chinese markets remained closed for the lunar new year holiday. Earlier, Wall Street managed a cautious advance on Tuesday but European equity markets struggled to build on Monday's strong gains as investors digested mixed economic and earnings data.
Asian markets (Wed - HK closed until Jan 29)
05:20am GMT
Nikkei up 27.31 (0.34%) to 8,088.34
Topix down 2.61 (-0.32%) 802.88
Hang Seng (Fri): down 79.39 (-0.63%) at 12,578.60 US markets (Tues)
DJIA up 58.70 (0.72%) at 8,174.73
Nasdaq up 15.44 (1.04%) at 1,504.90
S&P500 up 9.14 (1.09%) at 845.71 European markets (Tues)
FTSE100 down 14.60 (-0.35%) at 4,194.41
Eurofirst 300 up 0.98 (0.12%) at 785.64 Currencies
05:23 GMT
€/$ 1.3236 (1.3227)
$/¥ 89.14 (89.41)
£/$ 1.4268 (1.34057) Commodities
05:26 GMT
Brent Crude (Mar09) up $0.77 at $44.50
Light Crude (Mar09) up $0.70 at $42.28
100 Oz Gold (Feb09) down $4.80 at $894.70
Copper (Mar09) down 5.00 at $3,305.00 10-year government bond yields (%)
US 2.54 (2.64)
UK 3.66 (3.69)
Germany 3.25 (3.35)
Japan 1.25 (1.26) Sources: FT, Reuters See this article online.
http://ftalphaville.ft.com/blog/2009/01/28/51735/overnight-markets-mi
| |
No comments:
Post a Comment