US charges Stanford with 'massive' fraud Sir Allen Stanford, the billionaire Texan and cricket bankroller, was charged by US securities regulators on Tuesday over a "massive" investment fraud through his Antigua-based offshore bank. The SEC alleged that Stanford International Bank, based in St John's, Antigua, and one of several companies run by Sir Allen, sold about $8bn in "certificates of deposits'', promising "improbable and unsubstantiated high interest rates". One SEC official said the alleged fraud was one "of shocking magnitude that has spread its tentacles throughout the world". See 'Stanford series' on FT Alphaville. See this article online.
http://ftalphaville.ft.com/blog/2009/02/18/52604/us-charges-stanford-
| RBS to pay £950m in bonuses Royal Bank of Scotland, which is 70% UK government-owned, will pay staff bonuses worth up to £950m for 2008, despite its £20bn taxpayer bail-out, under a government-approved deal that on Tuesday intensified the furore over rewards to bankers. UK chancellor Alistair Darling said the "absolute legal minimum" was being paid in cash bonuses. The £175m cash bonus is more than 90% less than the previous year, RBS said. The bank is also paying about £160m to non-managerial staff. But insiders suggested the cash payment could be dwarfed by "deferred awards" to what RBS on Tuesday termed staff "essential to the bank's recovery". See this article online.
http://ftalphaville.ft.com/blog/2009/02/18/52603/rbs-to-pay-950m-in-b
| Eastern Europe fuels rush for safety Fears of banking turmoil in eastern Europe on Tuesday triggered warnings that European financial institutions exposed to the region could provoke a stampede into the dollar and US bonds. The turmoil was prompted by a report from Moody's (see separate report) which warned that west European banks with east European subsidiaries were at risk of downgrades. S&P later issued a similar caution. The euro fell 1.5% to a two-month low against the dollar, and dropped sharply against the pound and the yen, while the Polish zloty hit a five-year low against the euro. See this article online.
http://ftalphaville.ft.com/blog/2009/02/18/52602/eastern-europe-fuels
| US automakers to seek $21.6bn in funds General Motors and Chrysler presented long-awaited restructuring plans on Tuesday, but said they would need up to $21.6bn more in federal funds between them to carry them out. The two Detroit carmakers made the plea as part of tougher new downsizing plans in submissions to the government required as a condition of the $17.4bn of emergency bridge loans they received in December. Their request for more funds reflects lowered assumptions about global demand for cars and credit market conditions, just as the Obama administration prepares to implement its $787bn stimulus bill. See this article online.
http://ftalphaville.ft.com/blog/2009/02/18/52601/us-automakers-to-see
| Greenspan backs bank nationalisation The US government some banks to fix the financial system and restore credit flows, former Fed chairman Alan Greenspan told the FT. Temporary nationalisation could be the least bad option left for policymakers, he said Tuesday, noting it would allow the government to "transfer toxic assets to a bad bank without the problem of how to price them." His remarks capped a frenetic day in which US policymakers appeared to be moving towards accepting some form of bank nationalisation. See this article online.
http://ftalphaville.ft.com/blog/2009/02/18/52600/greenspan-backs-bank
| L&G reassures on capital strength Legal & General on Tuesday sought to reassure investors over its capital position, saying it would double the reserves it sets aside for defaults on corporate bonds to £1.2bn. The statement came as the UK insurance and investment group reported a 45% decline in its capital surplus in final quarter of the year. But L&G management denied the company would have to launch a rights issue to shore up its capital base, and indicated that there would not be a dividend cut. The shares initially rose more than 10% but ended just 0.2% higher at 44½p after a 30% fall in the previous five days. See this article online.
http://ftalphaville.ft.com/blog/2009/02/18/52599/lg-reassures-on-capi
| Barclays shuts Equifirst Barclays Capital has closed Equifirst, its US mortgage lending business, because of "market conditions" less than two years after buying it. The move is embarrassing for Barclays, which bought the business from Alabama-based Regions Financial in a belated effort to break into the US mortgage market. It also marks the latest failure in a series of bank misadventures with acquisitions of high-risk mortgage lenders, including by Deutsche Bank, Merrill Lynch and Wachovia, now owned by Wells Fargo. Equifirst will honour its outstanding commitments, Barclays said. See this article online.
http://ftalphaville.ft.com/blog/2009/02/18/52598/barclays-shuts-equif
| Candover to hand back part of fund Candover is preparing to hand back much of the €3bn (£2.7bn) it raised from investors for its latest buy-out fund, in a humbling blow to one of the UK's biggest private equity groups. The move, announced Tuesday, could also see Candover launch a rights issue and renegotiate its bank debts, mirroring similar decisions by other buyout groups including Permira in the UK and TPG in the US, which have also handed back unused capital to investors. See this article online.
http://ftalphaville.ft.com/blog/2009/02/18/52597/candover-to-hand-bac
| Madoff victims emerge at Safra Customers of the Safra Group, which includes one of Brazil's biggest banks and has substantial private banking operations in the US and Europe, have emerged as victims of the Bernard Madoff scandal. Banco Safra of São Paulo for several years is understood to have marketed a fund called Zeus Partners, one of many "feeder" funds that channelled money to Bernard Madoff Securities, Madoff's New York brokerage firm, from investors around the world, although Safra Group denies any involvement with Bernard Madoff Securities. The fund invested at least $300m on behalf of Safra's customers, say people familiar with the matter. See this article online.
http://ftalphaville.ft.com/blog/2009/02/18/52596/madoff-victims-emerg
| Ross eyes US toxic assets fund Billionaire investor Wilbur Ross said Tuesday he would invest in the US government's private-public investment fund designed to help mop up banks' troubled assets, provided that low-cost funding, as well as guarantees in sharing investment losses, are involved, reports Reuters. Ross, who made his fortune buying distressed companies, said he was willing to share profits with the government but said due diligence is a major issue. See this article online.
http://ftalphaville.ft.com/blog/2009/02/18/52595/ross-eyes-us-toxic-a
| Steel Partners scraps Sapporo offer Steel Partners underlined the waning interest of activist shareholders in Japan as it withdrew its offer to raise its stake in Sapporo Holdings, the beer company with which it has been in confrontation with for more than two years. The US hedge fund said it was withdrawing its proposal to increase its stake in Sapporo from 18.6% to 33.3% at Y875 a share, which would have cost it Y50.7bn ($550m). The shares closed down nearly 10% at Y381. Steel's decision comes as it battles some investors over plans announced in January to convert its flagship fund into a publicly listed vehicle. See this article online.
http://ftalphaville.ft.com/blog/2009/02/18/52594/steel-partners-scrap
| Pensions before dividends, UK regulator UK companies will not be allowed to cut cash contributions to underfunded pension schemes if they are still paying dividends to shareholders, the UK Pensions Regulator will announce Wednesday. The regulator will signal it is prepared to stretch out payment periods for companies to restore pension schemes, thereby reducing the size of annual contributions for companies struggling under the burden of retirement costs. See this article online.
http://ftalphaville.ft.com/blog/2009/02/18/52593/pensions-before-divi
| Reed Elsevier in $2bn loan deal Reed Elsevier has concluded a deal with its lenders to extend a $2bn (£1.4bn) credit facility for two years. The multi-currency deal was agreed by a syndicate of 19 lending banks including Barclays, RBS, UBS, Bank of America, BNP Paribas, Citigroup and HSBC. The scientific and business information publisher, which announces full-year results Wednesday, will see its existing $3bn facility, which ends in May 2010, replaced by a two-year, $2bn facility on maturity.
The current $3bn facility will be cut to $2.5bn. See this article online.
http://ftalphaville.ft.com/blog/2009/02/18/52592/reed-elsevier-in-2bn
| Foreign money pours into US Foreign investors continued pouring money into the US in December, amid growing demand for its financial assets despite the deepening economic downturn. The latest monthly Treasury International Capital (Tic) data show that foreign purchases of US securities rose to $74bn in December, up from $61.3bn the month before. Inflows for purchases of long-term securities were $34.8bn, compared with outflows of $25.6bn in November, while sales of long-term Treasury debt rebounded, with foreigners buying $15bn after selling off $25.8bn the month before. See this article online.
http://ftalphaville.ft.com/blog/2009/02/18/52591/foreign-money-pours-
| Goldman co-COO Winkelried to retire In Categories: People Posted at 05:13 by Gwen Robinson Gary Cohn emerged as the clear number two at Goldman Sachs on Tuesday following the retirement of his fellow president and co-chief operating officer Jon Winkelried. Winkelried's departure leaves Cohn, 48, as the sole chief operating officer and president. It also marks the highest level departure from Goldman since Lloyd Blankfein, 54, became chief executive three years ago. The retirement of Winkelried, 49, was voluntary, say insiders. His duties are expected to be taken over by Cohn, who heads Goldman's trading operations. See this article online.
http://ftalphaville.ft.com/blog/2009/02/18/52590/goldman-co-coo-winke
| Overnight Markets: Slide Posted at 05:11 by Gwen Robinson Asian stocks on Wednesday dropped for a third day, driving Japan's Topix index toward the lowest close in 25 years, as the deepening global recession hurts corporate earnings and demand for commodities. Futures on the S&P500 Index rose 0.3% after the gauge slumped 4.6% on Tuesday as President Barack Obama signed a $787bn stimulus bill into law. Asian markets (Wed)
05:05am GMT
Nikkei down 115.59 (-1.51%) to 7,529.92
Topix down 7.72 (-1.02%) 748.81
Hang Seng down 202.16 (-1.56%) at 12,743.24 US markets (Tues)
DJIA down 297.81 (-3.79%) at 7,552.60
Nasdaq down 63.70 (-4.15%) at 1,470.66
S&P500 down 37.67 (-4.56%) at 789.17 European markets (Tues)
FTSE100 down 100.62 (-2.43) at 4,034.13
Eurofirst 300 down 19.87 (-2.53%) at 765.43 Currencies
05:10 GMT
€/$ 1.2587 (1.2650)
$/¥ 92.34 (91.52)
£/$ 1.4232 (1.4222) Commodities (updated)
05:08 GMT
Brent Crude (Apr09) down $0.43 at $40.60
Light Crude (Mar09) down $0.13 at $34.80
100 Oz Gold (Feb09) up $5.40 at $972.90
Copper (Mar09) up $15.00 at $3,210.00 10-year government bond yields (%)
US 2.65 (2.81)
UK 3.40 (3.48)
Germany 2.98 (3.04)
Japan 1.26 (1.26) Sources: FT, Reuters See this article online.
http://ftalphaville.ft.com/blog/2009/02/18/52589/overnight-markets-sl
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