UBS held talks with Morgan Stanley UBS signalled its willingness to take drastic steps to overhaul its business in talks late last year with Morgan Stanley over the sale of its US brokerage unit, reports the FT. The discussions over UBS Financial Services – acquired in 2000 in the $11.8bn purchase of PaineWebber – were preliminary and unlikely to be rekindled, said people close to the situation. Since the UBS talks, Morgan Stanley has moved to boost its retail business by paying Citigroup $2.7bn for a majority stake in a joint venture of their brokerage businesses - and, reports Bloomberg, could step up co-operation with Japanese bank MUFG. But the earlier talks raise further questions over UBS's strategy. See this article online.
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| MUFG, Morgan Stanley, 'could' merge units Mitsubishi UFJ Financial Group, Japan's biggest bank, may seek to merge some of its overseas businesses with Morgan Stanley after buying a stake in the Wall Street firm last year, reports Bloomberg. Tatsuo Tanaka, deputy president of MUFG's main banking unit, said the bank was "not ruling out that possibility" and would also consider new joint ventures with Morgan Stanley in markets outside Japan. MUFG became the US bank's largest investor in October, taking a stake worth $9bn, and also spent $3.6bn last year to make San Francisco-based UnionBanCal a fully owned unit. It will consider additional investments in the US and other overseas markets because of limited growth at home, Tanaka said. See this article online.
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| Morgan Stanley to axe 1,800 staff Morgan Stanley is set to cut up to 1,800 jobs, or about 4% of its global workforce, reflecting sharply lower activity in areas ranging from capital markets to M&A. The latest cuts would bring the total job losses at the bank in the past 18 months to about 11,000, or nearly a quarter of its total staff at the start of the crisis, according to Bloomberg. The redundancies will be spread across Morgan Stanley's range of businesses and regions, but would not affect its wealth management unit, said people close to the situation, with cuts likely to fall more heavily on the bank's back-office and support functions. See this article online.
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| Downgrade hits Barclays' shares Barclays' share price fell and the cost of insuring its debt against default rose on Monday after Moody's cut the bank's credit ratings and raised the prospect of heavy future losses on complex debt securities. The downgrade abruptly ended a strong rally in Barclays' shares, which doubled in value last week after its chairman and chief executive published an open letter to shareholders reassuring them about the bank's 2008 results. In lowering Barclays' credit rating by two notches to Aa3 from Aa1, Moody's warned that continued market turmoil could lead to "significant further writedowns on the bank's credit market exposures". See this article online.
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| Rio investors welcome Chinalco talks Investors in Rio Tinto signalled relief on Monday after the heavily-indebted Anglo-Australian mining group confirmed it was in talks with Chinalco, the Chinese state-owned aluminium producer, about a cash injection. Rio's London-listed shares rose 5% against a falling mining sector, as analysts concluded that a deal with Chinalco would rule out the need for a rights issue from Rio. The group has pledged to cut its $37bn debt burden by $10bn by the end of this year. However, says FT Alphaville, a big question is how the Australian government responds to the latest Chinese attempt to tighten its grip on a local resources company. See this article online.
http://ftalphaville.ft.com/blog/2009/02/03/51960/rio-investors-welcom
| Ping An threatens Fortis deal Ping An, the Chinese insurer, on Monday threatened to vote against the proposed sale to BNP Paribas of Fortis's Belgian banking operations, potentially jeopardising the deal. A Belgian court ordered the vote, set for Feb 11, after activist shareholders argued that Fortis failed to consult them in the hastily negotiated deals to rescue Fortis last October. The deals led to the nationalisation of Fortis's Dutch assets and the BNP deal. Last week, the Belgian government, BNP and Fortis agreed changes to make the deal more attractive to Fortis's shareholders. But the Chinese insurer sent questions to the Belgian government and said it would vote against the transaction if it did not receive a reply within the week. See this article online.
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| Qantas shares in trading halt Qantas, the Australian airline, had its shares placed in a trading hold on Tuesday ahead of a "material announcement in relation to capital management initiatives". Amid speculation about an equity issue, the company's board is understood to be meeting later Tuesday to consider new capital management plans. It comes as a growing number of Australian companies issue shares to pay down debt and bolster their balance sheets. Qantas was forced to alert the public of the new capital management plans after it was queried by the Australian Stock Exchange following a fall in its share price from A$2.49 on Friday to A$2.29 in early Tuesday trading. See this article online.
http://ftalphaville.ft.com/blog/2009/02/03/51957/qantas-shares-in-tra
| Iberia dispels doubts over BA deal The head of Iberia's largest shareholder sought Monday to dispel doubts about the Spanish flag-carrier's proposed merger with British Airways, saying an agreement between the two was "close". However, Miguel Blesa, chairman of savings bank Caja Madrid, which has a 23% stake in Iberia, said the final share split in the merged company remained unresolved as "Iberia is now worth more". Blesa is deputy chairman of the Spanish airline. Shares in Iberia climbed more than 3% to €1.87 on the news. The company's valuation, which has been hovering higher than BA's for more than a week, has become an issue in the merger negotiations, which the two airlines disclosed last July. See this article online.
http://ftalphaville.ft.com/blog/2009/02/03/51956/iberia-dispels-doubt
| BoJ to buy shares from banks The Bank of Japan will resume a program of buying corporate shares held by financial institutions to shore up their capital, reports Bloomberg. The central bank will buy Y,1,000bn ($11.1bn) in shares through April 2010 and will hold them until March 2012 at the earliest, it said after a policy board meeting in Tokyo on Tuesday. The bank said it resumed the purchases "to support financial institutions' future endeavors to reduce market risk associated with stockholdings. See this article online.
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| European issues could raise €300bn Funds raised in European equity issues could reach as much as €300bn ($386bn) in 2009 as companies attempt to shore up their balance sheets, say bankers and analysts. The sharp increase in issues so far this year is likely to accelerate, with funds raised in 2009 expected to reach their highest level since 2001. Goldman Sachs predicts that, outside of financials, companies will try to raise €100bn to €300bn in 2009. Industries making cash calls are likely to include real estate, construction, utilities, and metals and mining. Goldman estimated that net debt to equity for European companies was 54%, compared with an average of 48% since 1988. The scale of the potential cash calls has raised concerns about the market's capacity to absorb all the new equity issued. See this article online.
http://ftalphaville.ft.com/blog/2009/02/03/51955/european-issues-coul
| FSA was 'warned' on Kaupthing The UK's Financial Services Authority was warned in 2005 not to give the go-ahead for the Icelandic bank Kaupthing's acquisition of Singer & Friedlander, the British merchant bank, by its then chief executive, reports The Times. Tony Shearer, who ran Singer & Friedlander Group until November 2005, will tell the Treasury Select Committee on Wednesday that he and other executives at the UK-based bank told the FSA that Kaupthing's management were "not fit and proper" to control a UK bank. In what will raise fresh questions over the robustness of bank regulation, Shearer will claim that "the FSA rushed through the approval of the change of control". See this article online.
http://ftalphaville.ft.com/blog/2009/02/03/51951/fsa-was-warned-on-ka
| Satyam prompts takeover rule change India plans to ease takeover rules for "abnormal cases" in a move that could ease the sale of Satyam Computer Services, embroiled in India's biggest corporate scandal. The India's Securities and Exchange Board said Monday it would set new guidelines and amend existing rules requiring an investor who has acquired 15% of a company to make an open offer for an extra 20% at a six-month average share price. The rule changes would make Satyam more attractive to an acquirer. See this article online.
http://ftalphaville.ft.com/blog/2009/02/03/51954/satyam-prompts-takeo
| PCCW shares suspended Trading in PCCW shares was on Monday suspended on the eve of a shareholder vote on a buy-out offer from the Hong Kong telecom group's two largest shareholders. The company, controlled by Richard Li, attributed the suspension to "speculative press reports" which could "potentially be price sensitive". David Webb, a Hong Kong shareholder activist, on Sunday said he had reported an alleged "vote-rigging plan" to the territory's regulator and anti-corruption agency. Pacific Century Regional Developments, Li's Singapore holding group, and China Unicom have offered share-holders HK$4.50 a share in a HK$17bn ($2.2bn) privatisation offer. See this article online.
http://ftalphaville.ft.com/blog/2009/02/03/51953/pccw-shares-suspende
| Lloyds to announce new directors The first UK government-endorsed additions to the board of the newly created Lloyds Banking Group are expected to be announced in the coming days, with a brief to convince shareholders that their appointments will not hamper the company's position as a commercial bank. Tony Watson, former chief executive of Hermes Pension Management, and Tim Ryan, chairman of the Securities Industry and Financial Markets Association, are expected to join the board of the bank created out of the state-sanctioned merger of LloydsTSB and HBOS. See this article online.
http://ftalphaville.ft.com/blog/2009/02/03/51950/lloyds-to-announce-n
| Macy's set to cut 7,000 jobs Macy's, the largest US department store chain, is planning to cut 7,000 jobs as it presses ahead with a reorganisation of its business, even as it warned that comparable store sales could fall in 2009 by 6% to 8%. The retailer forecast that earnings for 2009 would be less than half its projection for its current fiscal year and also said it will slash its dividend. Moody's said it was putting Macy's investment grade Baa3 debt rating under review and warned that with its high debt load, the company's earnings level made it unlikely that Macy's could "maintain credit metrics appropriate for an investment grade company". Macy's also said it was launching a tender to buy back $950m of debt due this year, in a move to end speculation about its ability to meet its short-term debt obligations. See this article online.
http://ftalphaville.ft.com/blog/2009/02/03/51952/macys-set-to-cut-700
| James Murdoch joins Glaxo board GlaxoSmithKline, the UK pharmaceutical group, has appointed the high-profile media executive James Murdoch as a non-executive director, as part of a broader boardroom shake-up. Murdoch, who is chairman and chief executive of News Corp Europe and Asia, will join the main board and GSK's corporate responsibility committee. The appointment introduces a younger generation of working executives to the GSK board. Murdoch and Andrew Witty, GSK's chief executive appointed early last year, already know each other. See this article online.
http://ftalphaville.ft.com/blog/2009/02/03/51949/james-murdoch-joins-
| Overnight markets: Up Asian stocks rose Tuesday for the first time in three days, led by bank and technology shares, as Japan and Australia stepped up efforts to revive economic growth and memory-chip prices surged. Futures on the S&P 500 Index gained 0.7%. The gauge dropped 0.1% on Monday after US official figures showed that consumer spending slumped for a sixth straight month. Asian markets (Tues)
04:25am GMT
Nikkei up 79.03 (1.00%) to 7,953.01
Topix up 5.78 (0.74%) 783.63
Hang Seng: up 87.99 (0.68%) at 12,949.48 US markets (Mon)
DJIA down 64.03 (-0.8%) at 7,936.83
Nasdaq up 18.01 (1.22%) at 1,494.43
S&P500 down 0.44 (-0.05%) at 825.44 European markets (Mon)
FTSE100 down 71.86 (-1.73%) at 4,077.78
Eurofirst 300 down 19.48 (-2.44%) at 777.28 Currencies
04:23 GMT
€/$ 1.2876 (1.2714)
$/¥ 89.65 (89.60)
£/$ 1.4227 (1.4378) Commodities
04:20 GMT
Brent Crude (Mar09) up $0.75 at $44.57
Light Crude (Mar09) down $0.47 at $40.55
100 Oz Gold (Feb09) down $7.00 at $900.20
Copper (Mar09) down $25.00 at $3,240.00 10-year government bond yields (%)
US 2.75 (2.81)
UK 3.69 (3.70)
Germany 3.26 (3.30)
Japan 1.29 (1.30) Sources: FT, Reuters See this article online.
http://ftalphaville.ft.com/blog/2009/02/03/51948/overnight-markets-up
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