Stock plan for Lehman creditors Creditors of Lehman Brothers would receive stock rather than cash under a plan that could separate its illiquid assets into two companies, which would force them to wait for repayment but potentially boost returns. The plan would allow Lehman to cordon off difficult-to-sell assets, and if adopted, could see the two standalone companies publicly listed within two years, according to Alvarez and Marsal, which is managing Lehman's liquidation. One of the companies would include Lehman's property holdings, valued at $43bn. Other illiquid assets, including private equity and proprietary investments, would go into the second company. See FT.com's in-depth report on Lehmans. See this article online.
http://ftalphaville.ft.com/blog/2009/02/02/51919/stock-plan-for-lehma
| Barclays' credit rating downgraded Moody's on Sunday night downgraded Barclays' credit ratings, saying it expected the UK bank to record "significant further losses" on credit-related writedowns. The agency downgraded Barclays' long-term debt from Aa1 to Aa3, warning of "potentially significant further losses at Barclays as a result of writedowns on credit market exposures as well as an increase in impairments in the UK". Such concerns outweighed Barclays' strong franchise and strong deposit base, it added. The downgrade comes a week after Barclays reassured investors it would make annual profits of £5.3bn. See this article online.
http://ftalphaville.ft.com/blog/2009/02/02/51918/barclays-credit-rati
| ABN eyes buy-back from RBS In Categories: M&A Posted at 05:40 by Gwen Robinson ABN Amro, the nationalised Dutch bank, has held exploratory talks with Royal Bank of Scotland on buying back some of its former businesses as the Dutch government tries to recreate a viable third large Dutch bank. Wouter Bos, Dutch finance minister, told the FT there had been contact between RBS and ABN, although he added, the idea was not to recreate ABN Amro as it was before its purchase and break-up by an RBS-led consortium in 2007 . RBS, which is expected to report full-year losses this month of £28bn, is conducting a strategic review of operations to determine what can be sold. See this article online.
http://ftalphaville.ft.com/blog/2009/02/02/51917/abn-eyes-buy-back-fr
| Clarion bids for Wedgwood Clarion Capital, a US-based buyout group, has made a bid for Waterford Wedgwood, the troubled Irish glassware and crockery group placed in administration last month, reports The Times. The group, which is being advised by John Foley, the former Waterford Crystal chief executive, put forward a "substantial" bid on Saturday night, officials said Sunday. The news came as workers at the factory in Waterford prepared for a third night of protests after Deloitte, the administrator, said the plant would close until a buyer could be found, with the loss of 480 jobs. See this article online.
http://ftalphaville.ft.com/blog/2009/02/02/51916/clarion-bids-for-wed
| Rio talks asset sales with Chinalco Rio Tinto, the Anglo-Australian mining group, has stepped up talks with Chinese state-owned aluminium producer Chinalco over potential asset sales and a purchase of shares that could help it avoid a rights issue, reports the FT. Rio, which was forced to admit last week it had not ruled out a rights issue, has pledged to cut its $37bn debt burden by $10bn by end-2009 through asset sales and other steps. Chinalco, which owns 12% of Rio's UK-listed shares and 9% of the whole group, said last year it wanted to raise its stake. The Times, meanwhile, says the Australian government has imposed a limit of 11% on Chinalco's ownership of Rio. See this article online.
http://ftalphaville.ft.com/blog/2009/02/02/51915/rio-talks-asset-sale
| Icap and banks eye LCH bid A consortium of investment banks and inter-dealer broker Icap are in discussions about bidding for LCH.Clearnet, Europe's largest clearer, in a move aimed at breaking up a deal that would see the UK-based clearer sold to a US clearing group, Depository Trust & Clearing Corporation. LCH.Clearnet in October signed a non-binding agreement to merge with DTCC to create the world's largest clearer. LCH.Clearnet shareholders would receive a total of up to €739m, or €10 a share, most to be funded through LCH.Clearnet's revenue. But the consortium is planning to offer a premium to that price. LCH.Clearnet is set this week to start clearing for SmartPool, a new "dark pool" for European equities trading launched by NYSE Euronext. See this article online.
http://ftalphaville.ft.com/blog/2009/02/02/51914/icap-and-banks-eye-l
| Beijing pumps $30bn into rural bank The Chinese government has decided to inject Rmb200bn ($30bn) into Agricultural Bank of China, the last of the largest state-owned banks to be restructured in preparation for a listing. Premier Wen Jiabao confirmed in an FT interview that the final decision had been taken to put money into the bank, a mainstay of China's rural economy. Officials said Sunday the recapitalisation of the bank would happen "soon". The amount is much higher than the $20bn the bank was expected to receive and marks the final stages of a near decade-long overhaul of China's banking sector. See this article online.
http://ftalphaville.ft.com/blog/2009/02/02/51913/beijing-pumps-30bn-i
| AIG in talks on US 'backstop' plan AIG is in discussions with the government about Washington backstopping some of its troubled assets and is considering selling units through IPOs, reports the WSJ. Paula Reynolds, an AIG vice chairman who is overseeing the restructuring of the troubled insurer, said the group was now "looking at a broader array of recapitalisation options." AIG was rescued by the government in September with a bailout package that now totals $150bn. Backstopping of assets would be similar to government guarantees on troubled assets owned by Citigroup and Bank of America. See this article online.
http://ftalphaville.ft.com/blog/2009/02/02/51912/aig-in-talks-on-us-b
| Berlin, Flowers clash over HRE The German government is at loggerheads with investor Christopher Flowers about the rescue of stricken lender Hypo Real Estate, in which a group led by his US buyout firm holds 24.9%, the single largest stake. Officials said JC Flowers was proving "un-cooperative" about Berlin's wish to take control of HRE via a 75% stake, a prelude to injecting capital and restructuring the bank. JC Flowers sources said the firm had not been approached about such plans. But government officials said talks had been led by Germany's new Soffin bank bail-out fund. Berlin needs Flowers' approval because he effectively holds a one-quarter blocking minority at any shareholders' meeting. See this article online.
http://ftalphaville.ft.com/blog/2009/02/02/51911/berlin-flowers-clash
| GSK to cut around 6,000 jobs GlaxoSmithKline, Britain's biggest pharmaceuticals will announce it is cutting close to 6,000 jobs when it posts full-year results this week, reports the Sunday Telegraph. GSK is finalising plans which will see in the region of 6,000 global positions axed of a total 100,000 staff. Glaxo's UK rival, AstraZeneca, said last Thursday will cut 15,000 staff by 2013 - 6,000 more than initially thought, while industry leader Pfizer has acquired US rival Wyeth for $68bn as it seeks a different route of consolidation. The FT gives more background on GSK's struggles. See this article online.
http://ftalphaville.ft.com/blog/2009/02/02/51910/gsk-to-cut-around-60
| Roche 'confident' on Genentech bid Swiss drugmaker Roche is confident it will succeed in its bid for US biotech group Genentech, after launching a surprise hostile bid for Genentech on Friday at a price below its initial rejected offer, Roche's chairman was quoted as saying, reports Reuters. "I am very confident that we will be successful in taking 100% of Genentech," Franz Humer told Swiss newspaper Basler Zeitung. Roche is now making a public tender offer at $86.50 per share in cash for the 44% of Genentech it does not already own, valuing the deal at $42bn and replacing its initial $44bn bid. See this article online.
http://ftalphaville.ft.com/blog/2009/02/02/51909/roche-confident-on-g
| Sanofi to hit the acquisition trail Sanofi-Aventis, the French pharmaceuticals company, is gearing up for acquisitions to expand and diversify operations under its new chief executive. In the wake of Pfizer's $68bn takeover of Wyeth last week, Sanofi-Aventis has held talks with bankers about possible deals. In a presentation to staff last Friday ahead of his first public statement of full-year results next week, Chris Viehbacher, Sanofi-Aventis's chief executive, indicated he was interested in acquisitions to both expand and diversify its range of businesses. See this article online.
http://ftalphaville.ft.com/blog/2009/02/02/51908/sanofi-to-hit-the-ac
| ECB to lay out 'bad bank' rules The ECB is drawing up guidelines for European governments that are considering "bad banks" to house lenders' toxic assets, while Germany is moving closer to approving legislation that would help its banks set up individual bad banks, reports the WSJ. The ECB is also working on guidelines for governments that plan to guarantee toxic assets remaining on banks' books, and hopes the guidelines can help prevent 'one-upmanship' across the 27-nation EU. Both sets of guidelines are being drawn up together with the EU's executive arm, the European Commission. See this article online.
http://ftalphaville.ft.com/blog/2009/02/02/51907/ecb-to-lay-out-bad-b
| Obama to first unveil Tarp rules The Obama administration is expected to first unveil rules for banks receiving US government help, including clarifications on lending and restrictions on executive compensation, and then its plan to bolster the US banking industry about a week later reports Reuters. The Tarp rules are expected as early as this week. President Barack Obama's finance team is working on the second stage of a $700bn financial services rescue package, enacted last year. The FT meanwhile reports that senior Republican senators led by Mitch McConnell on Sunday urged major changes including additional tax cuts to the $884bn stimulus package proposed by the Obama administration. See this article online.
http://ftalphaville.ft.com/blog/2009/02/02/51906/obama-to-first-unvei
| Overnight Markets: Gloomy start Asian stocks fell on Monday, led by financial and technology companies, as shrinking factory output in Australia and declining corporate profits fuelled concerns about a deepening global recession. Futures on the S&P 500 Index added 0.3% after sliding 2.3% on Friday, capping a fourth weekly drop, as a government report showed the US economy shrank at the fastest pace in 26 years. Asian markets (Mon)
05:12am GMT
Nikkei down 182.33 (-2.28%) to 7,811.72
Topix down 19.89 (-2.50%) 774.14
Hang Seng : down 365.23 (-2.75%) at 12,912.98 US markets (Fri)
DJIA down 148.15 (-1.82%) at 8,000.86
Nasdaq down 31.42 (-2.08%) at 1,476.42
S&P500 down 19.26 (-2.28%) at 825.88 European markets (Fri)
FTSE100 down 40.47 (-0.97%) at 4,149.64
Eurofirst 300 up 0.27 (0.03%) at 796.76 Currencies
05:15 GMT
€/$ 1.2714 (1.2891)
$/¥ 89.60 (89.22)
£/$ 1.4378 (1.4213) Commodities
05:17 GMT
Brent Crude (Mar09) up $0.18 at $46.06
Light Crude (Mar09) down $0.06 at $41.62
100 Oz Gold (Feb09) down $13.10 at $915.30
Copper (Mar09) down $75.00 at $3,135.00 10-year government bond yields (%)
US 2.81 (2.83)
UK 3.70 (3.68)
Germany 3.30 (3.27)
Japan 1.30 (1.28) Sources: FT, Reuters See this article online.
http://ftalphaville.ft.com/blog/2009/02/02/51905/overnight-markets-gl
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