US rescue plan buoys bank shares US bank stocks regained ground on Wednesday as the US Treasury finally revealed details of a rescue plan that could lead to partial nationalisation of some of the biggest US banks. Under the plan, banks will have six months to raise enough private capital to continue lending through a severe recession – or be forced to take a form of government capital which would convert into ordinary shares. The White House hinted that the plan might allow for spending beyond the $350m left in the TARP bailout scheme. See this article online.
http://ftalphaville.ft.com/blog/2009/02/26/52944/us-rescue-plan-buoys
| AIG considers three-way break-up AIG and the US authorities are in advanced talks over a radical restructuring to split the stricken insurer into at least three state-controlled divisions. Under the plan, described by one insider as a "controlled break-up", the government would swap its 80% holding in AIG for large stakes in at least three units – AIG's Asian operations, its international life and its US personal lines business. In return, the government would relax the terms, or even cancel, a large part of its $60bn five-year loan to AIG and convert $40bn-worth of preferred stock into shares. See this article online.
http://ftalphaville.ft.com/blog/2009/02/26/52943/aig-considers-three-
| State to insure RBS assets Royal Bank of Scotland was preparing to inject £300bn-plus worth of loans and other credit assets into a government-backed insurance scheme on Wednesday night in an effort to stabilise the state-controlled bank while saving it from full nationalisation. Under the plan, due to be announced Thursday, Lloyds Banking Group is expected to insure up to £250bn worth in a similar deal that could be announced when it reports results on Friday. See this article online.
http://ftalphaville.ft.com/blog/2009/02/26/52942/state-to-insure-rbs-
| Pension for RBS ex-chief raises questions Sir Fred Goodwin, the former chief executive of RBS, was awarded a £16m pension pot by the bank when he left last year, double the amount previously reported, it emerged Wednesday night. The pension, which was approved by the government, allows Sir Fred to draw £650,000 a year and undermines the government's claims that executives of failed banks would not be rewarded when they left. RBS on Wednesday night said it was taking further legal advice on Sir Fred's contractual arrangements. See this article online.
http://ftalphaville.ft.com/blog/2009/02/26/52941/pension-for-rbs-ex-c
| UK to see 'regulation revolution' A "revolution" in financial regulation was promised by the head of the UK's Financial Services Authority on Wednesday as he outlined tougher rules for banks and hedge funds. Lord Turner, chairman of the City watchdog, told a parliamentary committee that the light-touch approach of his predecessors had been "mistaken" and pledged to quell the "animal sprits" of bankers. Measures would include requiring banks to hold up to three times as much capital against their trading assets, and applying tests of whether senior bankers were "fit and proper" for their jobs, he said. See this article online.
http://ftalphaville.ft.com/blog/2009/02/26/52940/uk-to-see-regulation
| BofA chief to be grilled on bonuses Ken Lewis, Bank of America chief executive, will testify on Thursday before New York state prosecutors, who will question him on what he knew about $3.6bn in bonuses paid at Merrill Lynch in December, just before BofA's Jan 1 acquisition of Merrill. Reuters meanwhile reports that BofA is looking to sell First Republic Bank, a private bank purchased by Merrill for $1.8bn in late 2007 and, according to the WSJ, Goldman Sachs and Morgan Stanley are among possible buyers. See this article online.
http://ftalphaville.ft.com/blog/2009/02/26/52939/bofa-chief-to-be-gri
| Luxembourg attacks UBS onMadoff Luxembourg's financial regulator has accused UBS of "serious failure" over its custodianship of a $1.4bn fund that funnelled money into Bernard Madoff's alleged $50bn "Ponzi" scheme. The regulator, CSSF, ordered UBS to pay compensation, citing "serious failure of its surveillance role as a depositary bank" and gave the Swiss bank's local arm three months to pay compensation and improve procedures and structures. See this article online.
http://ftalphaville.ft.com/blog/2009/02/26/52938/luxembourg-attacks-u
| Brussels warns on bank schemes European governments are being warned to closely monitor the total cost of toxic asset schemes and concentrate measures on "a limited number of banks of systemic importance", if resources are scarce. The European Commission on Wednesday issued guidelines for such schemes - aimed, in particular, at ensuring the schemes do not breach the EU's state aid rules. Under the guidelines, such schemes should be open for no more than six months after being launched and the bank/banks concerned should be asked to contribute to the loss or risk coverage later. See this article online.
http://ftalphaville.ft.com/blog/2009/02/26/52937/brussels-warns-on-ba
| Ambac sees $2.3bn quarterly loss Ambac Financial, the second largest US bond insurer, on Wednesday revealed a $2.3bn Q4 loss as it took further charges on exposure to troubled mortgages. The group, which last year lost its triple A credit ratings after big losses on mortgage-linked securities, has seen most of the value of its equity wiped out. Its shares fell below $1 on Wednesday – down from above $12 a year ago. Ambac is in the process of creating a new bond insurer focused exclusively on the municipal debt markets. See this article online.
http://ftalphaville.ft.com/blog/2009/02/26/52936/ambac-sees-23bn-quar
| NXP to overhaul $6bn secured debt NXP, the Dutch semiconductor maker founded by Philips, is understood to be planning to restructure its $6bn debt. The company, which has about $5.7bn of high-yield bonds, making it Europe's biggest issuer of junk bonds, could announce a proposal on Thursday to swap its lower-ranking, unsecured bonds for new secured bonds. S&P recently warned that NXP, whose bonds are trading at about 20% of face value, was at risk of default this year. See this article online.
http://ftalphaville.ft.com/blog/2009/02/26/52935/nxp-to-overhaul-6bn-
| Santander revives Cepsa stake talks Santander has revived talks to sell its 32% stake in oil group Cepsa in what could lead to the divestment of the Spanish bank's last remaining equity holding of importance. The bank, the eurozone's biggest by market cap, told Spain's securities regulator on Wednesday that it was "in negotiations" over its holding in Cepsa, in which Total, the French oil major, controls nearly 49%, but no agreement had been reached. See this article online.
http://ftalphaville.ft.com/blog/2009/02/26/52934/santander-revives-ce
| RBS to end F1 sponsorship Royal Bank of Scotland signalled the beginning of the end of its long association with sport when it announced the demise of its flagship sponsorship of the Williams Formula One racing team and said it would halve sponsorship budgets by the end of next year. RBS will end its relationship with Williams when its current contract, thought to be worth £12m a year to the F1 team, expires after the 2010 season. RBS, now 70% state-owned, is slashing total sponsorship by 25% this year. See this article online.
http://ftalphaville.ft.com/blog/2009/02/26/52933/rbs-to-end-f1-sponso
| Germany snubs joint euro bond Prospects for a joint European bond suffered a further setback on Wednesday when Carl Heinz Daube, head of the agency responsible for issuing German debt, rejected the idea, saying the EU was not ready for such a bond. Speculation has mounted in the past week over plans for a joint bond to help eurozone states, such as Greece and Ireland, which have seen borrowing costs spiral. George Soros, the billionaire financier, has backed the plan but Peer Steinbrück, German finance minister, has also opposed it. See this article online.
http://ftalphaville.ft.com/blog/2009/02/26/52932/germany-snubs-joint-
| Ex-UBS bankers set up boutique firm In Categories: People Posted at 04:39 by Gwen Robinson John Costas, the former head of UBS's investment bank, is setting up a financial services firm in New York, becoming the latest top banker to strike out on his own. Costas and former colleagues Michael Hutchins and Matthew Johnson will launch a full-service boutique in the second quarter with about 40-50 employees, working as a broker-dealer and securities trader for institutional clients. They might also become a bank holding company, offer advisory services and make bets with their own capital. See this article online.
http://ftalphaville.ft.com/blog/2009/02/26/52931/ex-ubs-bankers-set-u
| Overnight markets: Mixed Asian stocks were mixed on Thursday, as about the same number of stocks advanced as declined on the MSCI Asia Pacific Index. Futures on the S&P 500 Index gained 0.3% after the gauge slid 1.1% on Wednesday as figures showed that purchases of previously owned homes dropped an annual 5.3%, the fewest since 1997. Economists had estimated resales would rise.
Asian markets (Thurs)
04:30am GMT
Nikkei up 78.01 (1.05%) to 7,539.23
Topix up 3.70 (0.49%) 749.25
Hang Seng down 106.92 (-0.82%) at 12,898.16 US markets (Wed)
DJIA down 80.05 (-1.09%) at 7,270.89
Nasdaq down 16.40 (-1.14%) at 1,425.43
S&P500 down 8.24 (-1.07%) at 764.90 European markets (Wed)
FTSE100 up 32.54 (0.85%) at 3,848.98
Eurofirst 300 down 3.23 (-0.45%) at 716.15 Currencies
04:20 GMT
€/$ 1.2741 (1.2849)
$/¥ 97.91 (96.90)
£/$ 1.4262 (1.4536) Commodities (updated)
04:15 GMT
Brent Crude (Apr09) up $0.26 at $44.55
Light Crude (Apr09) up $0.18 at $42.68
100 Oz Gold (Apr09) down $12.70 at $953.50
Copper (3M 24hr) up $45.00 at $3,435.00 10-year government bond yields (%)
US 2.91 (2.80)
UK 3.47 (3.41)
Germany 3.01 (2.99)
Japan 1.27 (1.29) Sources: FT, Reuters See this article online.
http://ftalphaville.ft.com/blog/2009/02/26/52930/overnight-markets-mi
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