Cuomo eyes return of Merrill bonuses New York Attorney General Andrew Cuomo may demand the return of $4bn in bonuses paid by Merrill Lynch just before it was acquired by Bank of America, reports Bloomberg. Cuomo is also trying to determine what BofA chief executive Ken Lewis knew about the accelerated bonuses and about Merrill's surprise $15bn Q4 net loss. Lewis fired Merrill's CEO John Thain this month after BofA was forced to ask for more federal aid amid Merrill's losses. Lex meanwhile defends Ken Lewis and says BofA's purchase of Merrill must be seen "in context". See this article online.
http://ftalphaville.ft.com/blog/2009/01/30/51866/cuomo-eyes-return-of
| Obama attacks 'shameful' bonus binge US president Barack Obama lashed out Thursday at "shameful" Wall Street executives for claiming billions of dollars in bonuses while their stricken institutions asked taxpayers for support. His remarks came in response to a report showing that financial sector employees received $18.4bn in bonuses last year, amid the financial crisis. The figure was down 44% from 2007 but was still the sixth largest pay-out in history, according to the New York state comptroller. Obama indicated that government support would be subject to tougher conditions on pay and perks. See this article online.
http://ftalphaville.ft.com/blog/2009/01/30/51867/obama-attacks-shamef
| Senators bid to regulate hedge funds Two senior US senators introduced legislation on Thursday to impose government oversight of hedge funds, reports the NYT. The legislation by senators Carl Levin (Dem) and Charles Grassley (Rep) was filed as the Obama administration prepared a broader legislative overhaul of the regulatory system, including an effort to more tightly regulate hedge funds. State regulators and a panel created by Congress to oversee the $700bn TARP scheme issued separate but similar regulatory proposals on Thursday, which also seemed to closely mirror many provisions that administration officials say will be part of their plan. See this article online.
http://ftalphaville.ft.com/blog/2009/01/30/51865/senators-bid-to-regu
| Investor fury over Xstrata cash call Xstrata faced an investor backlash on Thursday over plans by the Anglo-Swiss miner to structure a £4.1bn rights issue in a way that favours its top shareholder, the commodity trader Glencore, which holds 35%. Xstrata has launched a heavily discounted two-for-one share offer at £2.10. One key investor said he was so "furious that we refused to underwrite the issue" but noted he was likely to take the new shares. Xstrata shares initially fell more than 10% before closing up 3.6% at 645.50p. To cover its portion of the issue, Glencore is selling its Prodeco coal mines in Colombia to Xstrata under a complex arrangement which involves a buy-back option. More FT analysis here. See this article online.
http://ftalphaville.ft.com/blog/2009/01/30/51864/investor-fury-over-x
| Lex: Xstrata 'wins both ways' Posted at 05:45 by Gwen Robinson Xstrata is beating most others in this year's charge for the capital trough, notes Lex. The Angl0-Swiss miner's two-for-one rights issue, at a 40% discount to the theoretical ex-rights price, establishes a benchmark that other miners, such as Rio Tinto, may follow. But this one is a" strange animal". Deeply discounted issues are often seen as a sign of distress. Not the case here. Nor is this just to fund acquisitions. Rather, it is a mix of the two – with a dollop of precautionary capital-raising thrown in. In its deal with Glencore, Xstrata wins either way. Most important, though: investors seem to like it. See this article online.
http://ftalphaville.ft.com/blog/2009/01/30/51863/lex-xstrata-wins-bot
| Kuwaiti bank repays Madoff losses The National Bank of Kuwait has fully reimbursed all its clients who lost money in the alleged $50bn Ponzi scheme run by New York broker Bernard Madoff, banking sources said. NBK paid about $50m to some 20 individuals who invested in Madoff feeder funds through its Swiss bank in December, one NBK executive said. The clients received the principal they initially put into the funds and the gains, said by authorities to be fictitious, that they thought they had made. The NBK move puts pressure on other banks and fund managers whose clients lost money in Madoff's alleged fraud. See this article online.
http://ftalphaville.ft.com/blog/2009/01/30/51862/kuwaiti-bank-repays-
| Ford to draw $10bn from credit lines Ford Motor revealed Thursday it is drawing down $10.1bn from its credit lines from its banks amid "concerns about the instability of the capital markets". Ford also reported a record $14.6bn full-year loss, but insisted the move to tap "revolving" credit facilities was not driven by urgent cash needs. Ford said it had notified banks of its plans on Thursday, and that the money – raised as part of a $23.4bn financing package in late 2006 – would reach its account on Feb 3. The carmaker suffered a Q4 loss of $5.9bn as vehicle sales reached their lowest level since the 1980s, but said it still had no plans to access federal emergency aid. See this article online.
http://ftalphaville.ft.com/blog/2009/01/30/51861/ford-to-draw-10bn-fr
| Merrill execs burned by Madoff While most Wall Street firms have managed to avoid big losses over the alleged $50bn Ponzi scheme run by Bernard Madoff, prominent former top executives at Merrill Lynch have been hit, reports the WSJ. Former Merrill chief executives Daniel Tully and David Komansky, along with former Merrill investment-banking chief Barry Friedberg, personally invested in hedge funds with Madoff exposure run by former Merrill brokerage chief John "Launny" Steffens, say people familiar with the matter. The Merrill executives are the highest-level Wall Street victims of the scandal to surface until now. See this article online.
http://ftalphaville.ft.com/blog/2009/01/30/51860/merrill-execs-burned
| Agencies give GE breathing space The two top credit rating firms appear willing to give General Electric every opportunity to justify its triple A ratings, long after debt investors, equity analysts and even GE's own executives have started to brace themselves for a downgrade. S&P, which has rated GE as triple A since 1956, and Moody's, which has given the same rating since at least 1967, issued reports this week arguing that GE would struggle to fulfil their criteria for keeping the grade. GE also reported quarterly results last week that raised new doubts about GE Capital, its finance arm, and its ability to meet profit targets. However, neither agency has moved to downgrade the group's debt. See this article online.
http://ftalphaville.ft.com/blog/2009/01/30/51859/agencies-give-ge-bre
| Henderson nears deal to buy New Star Henderson, the fund manager, is on the verge of sealing a deal to buy New Star, the troubled asset management group founded in 2000 by John Duffield, for £115m for a mix of shares and cash. The acquisition will follow the completion of the debt-for-equity swap agreed last month between New Star and its lenders. Henderson is expected to announce Friday it will pay about 2p a share, or £5m, in cash for New Star's equity and a further £110m in a mix of cash and shares to the group's banks, led by HBOS. Henderson, which has about £50bn of assets and net cash of £160m, is expected to take on about half of New Star's 310 staff, including star fund managers such as Richard Pease. See this article online.
http://ftalphaville.ft.com/blog/2009/01/30/51858/henderson-nears-deal
| Gala Coral hits at credit insurer Gala Coral, the private equity-owned UK gambling group, has accused Euler Hermes, one of the world's largest credit insurers, of "appalling behaviour" in withdrawing cover against unpaid bills to Gala Coral's suppliers. Drinks and packaging suppliers to the gambling group were denied cover on the grounds that insurers were worried about the future of companies backed by private equity, say people close to Permira, Candover and Cinven, Gala Coral's owners. But people close to Euler Hermes say the withdrawal of cover was linked to Gala Coral's debt problems and refusal to supply information. See this article online.
http://ftalphaville.ft.com/blog/2009/01/30/51857/gala-coral-hits-at-c
| Seoul brings exchange under state control South Korea's government on Thursday brought the country's stock exchange under state control, a move that could derail Seoul's ambitions of becoming a regional financial hub and spark a legal battle with the bourse. Financial authorities last year declared the Korea Exchange (KRX) an illegal monopoly and said regulators should supervise its accounts and management. But this could not come into force until the finance ministry's ruling on Thursday. Although South Korea insists its moves fall short of nationalisation, KRX has lambasted state intervention as a retrograde step that will scare off investors. See this article online.
http://ftalphaville.ft.com/blog/2009/01/30/51856/seoul-brings-exchang
| LSE trading revenues fall 13% The London Stock Exchange on Thursday forecast "very difficult and uncertain" market conditions this year after a torrid final three months of 2008 led to a 13% fall in trading revenues. However, it reported a better-than-expected 4% rise in group revenue to £171m, largely because of a jump in revenues generated by its post-trade business related to a rise in margin and reserve fund deposits, and the strength of the euro. See this article online.
http://ftalphaville.ft.com/blog/2009/01/30/51855/lse-trading-revenues
| Shell's Q4 profits tumble Royal Dutch Shell suffered a sharp decline in Q4 profits on falling oil prices, but still recorded the largest annual profit for a European company. It also plans to maintain its capital spending this year - one of the world's largest - at close to last year's level, despite the weaker outlook for oil and gas demand. Total capital spending soared by 40% last year to more than $38bn, offset by about $6bn of asset sales. Q4 net earnings were $4.8bn, down 28% yoy from Q4 2007. It took four years for crude oil to get from $35 a barrel to $147, then just four months to get back again, notes Lex. But Shell's Q4 figures set an "encouraging marker" for the oil majors. Read more on FT Alphaville. See this article online.
http://ftalphaville.ft.com/blog/2009/01/30/51854/shells-q4-profits-tu
| Kodak cuts up to 4,500 jobs Eastman Kodak on Thursday blamed the global recession and slowdown in consumer spending as it reported a Q4 net loss of $137m against a year-earlier profit of $215m, and said it would cut 3,500 to 4,500 jobs as it restructures. The news sent shares in the US camera equipment company down 26% to $5.19 in afternoon trading in New York. Kodak will take charges of $250m to $300m this year for the restructuring, cutting up to 18% of its workforce. See this article online.
http://ftalphaville.ft.com/blog/2009/01/30/51853/kodak-cuts-up-to-450
| Trichet warns on capital hoarding Jean-Claude Trichet gave a stark warning to financial markets on Thursday to stop putting pressure on banks to hold more capital, insisting that such ideas were exacerbating the global recession. The president of the ECB said the view that banks should hoard funds provided non-financial companies with incentives to postpone investment. His comments, made in Davos, came as top bankers and policymakers warned Thursday that the wave of bank bail-outs in Europe and the US could usher in a new era of financial protectionism that could deepen the global economic slump. See this article online.
http://ftalphaville.ft.com/blog/2009/01/30/51852/trichet-warns-on-cap
| Overnight markets: Risk appetite fades Asian stocks fell for the first time in four days, led by banks and technology companies, as a record slump in Japanese factory production and lower profit forecasts renewed concern of a deepening global slowdown. US and European equity markets retreated overnight and the dollar and Japanese yen rallied as the recent tentative improvement in investor risk appetite showed signs of fading. Asian markets (Fri - HK open)
05:25am GMT
Nikkei down 305.38 (-3.7%) to 7,945.86
Topix down 28.99 (-3.54%) 789.48
Hang Seng (Fri): down 62.76 (-0.48%) at 13,091.65 US markets (Thurs)
DJIA down 226.44 (-2.7%) at 8,149.01
Nasdaq down 50.50 (-3.24%) at 1,507.84
S&P500 down 28.95 (-3.31%) at 845.14 European markets (Thurs)
FTSE100 down 105.09 (-2.45%) at 4,190.11
Eurofirst 300 down 14.33 (-1.77%) at 796.49 Currencies
05:15 GMT
€/$ 1.2891 (1.3114)
$/¥ 89.22 (89.88)
£/$ 1.4213 (1.4201) Commodities
05:20 GMT
Brent Crude (Mar09) up $0.05 at $45.45
Light Crude (Mar09) up $0.11 at $41.55
100 Oz Gold (Feb09) down $1.10 at $904.00
Copper (Mar09) down $35.00 at $3,220.00 10-year government bond yields (%)
US 2.83 (2.69)
UK 3.68 (3.64)
Germany 3.27 (3.24)
Japan 1.28 (1.27) Sources: FT, Reuters See this article online.
http://ftalphaville.ft.com/blog/2009/01/30/51851/overnight-markets-ri
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