RBS taps UK Treasury for £25.5bn Royal Bank of Scotland struck a landmark deal on Thursday that will see the government inject up to £25.5bn and insure £325bn of its assets. The deal – which came as RBS reported a net loss of £24.1bn for 2008, the biggest annual loss in UK history – could be the first of a series by big UK banks that could massively increase taxpayers' exposure to potential losses on loans and credit assets. See FT Alphaville on "crunching RBS". See this article online.
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Lloyds next for Treasury scheme Lloyds Banking Group, which has absorbed HBOS, is on Friday expected to reveal when it reports full-year results that the UK government is insuring up to £250bn of the bank's assets. Barclays is also understood to have sounded out the government about participating in the asset protection scheme. The bank submitted three loan portfolios with a total value of less than £10bn to the Treasury for an assessment three weeks ago, but has not received a response. However Alistair Darling, the chancellor, hinted to MP that he expected Barclays to join the scheme. See this article online.
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RBS to sell Asian banking assets RBS plans to sell its Asian retail and banking assets as part of its restructuring plans to scale back its operations in Asia, where its presence greatly expanded after the acquisition of ABN Amro. The bank had signalled its retreat from the region last month with the sale of its $2.4bn stake in Bank of China. But Stephen Hester, RBS chief executive, went further on Thursday by announcing the sale of its Asian retail and commercial banking operations. It has hired Morgan Stanley to lead the divestment. See this article online.
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Goodwin stands firm on RBS pension Sir Fred Goodwin's pension arrangements were at the centre of an escalating dispute on Thursday night as the former chief executive of RBS traded allegations over the terms of his departure with Lord Myners, the City minister. The two men publicly exchanged terse letters after it emerged that Sir Fred, who was forced from RBS last October without a payoff, is now collecting a £693,000-a-year pension. Prime minister Gordon Brown earlier said he would explore legal options to try to claw some of the pension back. In Lombard's view, for Sir Fred to rely on the letter of this contract is "a flagrant breach of its spirit and an error of judgement". See this article online.
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Obama forecasts $1,750bn deficit President Barack Obama on Thursday unveiled the most expansive blueprint for federal government involvement in the US economy in more than a generation in a 10-year budget outline that showed this year's deficit quadrupling to $1,750bn. The document, which lays out ambitious plans to create universal health insurance and adopt an economy-wide carbon permit trading system by 2012, was heavily panned by Republicans. See the full document here. See this article online.
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BofA subpoenaed for bonus list The New York Attorney General's office has subpoenaed Bank of America to submit a list of employees who got bonuses and the amounts they received, reports Reuters. The attorney general is "severely disappointed" in BofA's decision not to turn over information on bonuses and has served the bank with a subpoena to obtain the information, said a special assistant to attorney general Andrew Cuomo. See this article online.
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US bank failures pressure FDIC The list of "problem" US banks grew by almost 50% in the fourth quarter, the Federal Deposit Insurance Corporation said on Thursday, fanning fears that further bank failures could put the agency's deposit insurance fund under severe pressure. Sheila Bair, FDIC chairman, suggested more failures were likely despite government support for the industry and warned that proposed increases to the premiums that banks pay for deposit insurance may fall short of the insurance fund's needs. The FDIC's board will meet Friday to approve an increase in premiums. See this article online.
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Fannie to draw further $15bn Fannie Mae said on Thursday it would draw more than $15bn of assistance from the US Treasury after a sixth consecutive quarterly loss – $25.2bn in the fourth quarter – drove its net worth below zero. The mortgage financier, which predicted further losses, said in a filing that its Q4 net loss forced it to request its first instalment from a $200bn federal lifeline established for Fannie and rival Freddie Mac. See this article online.
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GM future doubtful after $31bn loss GM underlined its dire financial condition on Thursday as it reported an unexpectedly heavy cash drain in the final quarter of 2008 and warned that Deloitte, its auditor, might question its viability as a going concern.GM, now dependent on federal aid for survival, reported a Q4 loss of $9.6bn, bringing the 2008 loss to $30.9bn and its total losses over the past four years to $86.6bn. GM also disclosed that its pension fund, one of the biggest in the US, has swung in the past year from a $20bn surplus to a $12.4bn deficit. See this article online.
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European banks to receive €24.5bn loan A group of multilateral lenders are preparing a loan package of up to €24.5bn to help central and eastern Europe's battered banking systems weather the financial crisis. The World Bank, the EBRD and the European Investment Bank will announce the package on Friday in London. The move follows widespread financial turmoil across the region, as the western European institutions that own large parts of eastern Europe's banking sector pull back capital to their home bases. See this article online.
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Iceland to restructure $3.6bn of debt Iceland's new government is working on a plan to restructure billions of dollars of its bonds held by foreign investors in efforts to restore confidence in its shattered economy. Foreign investors own up to ISK400bn ($3.6bn) in krona-denominated bonds which the central bank fears could be dumped once capital controls imposed during its banking crisis are removed. See this article online.
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Dresdner sees €3bn Q4 loss The extent of problems at Dresdner Bank became clear on Thursday as it pulled former parent Allianz into a worse-than-expected loss in 2008, its first in six years. Europe's biggest insurer sold Dresdner to Commerzbank in a deal last month but not before writedowns linked to the sale dragged Allianz to a €2.4bn ($3.1bn) net loss. Commerzbank CEO Martin Blessing largely blamed Dresdner's losses, which amounted to €6.4bn last year, on its wayward investment bank, Dresdner Kleinwort. See this article online.
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Dexia in further writedowns Further impairments of its US loans portfolio drove worse-than-expected losses at Dexia, the Franco-Belgian bank that was one of the first banks to receive a government bail-out. Dexia, which lends to local governments, is foregoing dividends for 2008 as it unveiled a net loss of €3.3bn, against profits of €2.5bn last year . In exchange for a €6.4bn lifeline, the bank agreed to reduce its risk profile and cut costs. See this article online.
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Natixis sees more losses Natixis, the French investment bank, announced a third straight quarter of losses on Thursday, as its two biggest shareholders - Banque Populaire and Caisse d'Epargne - finalised their merger under pressure from the French government. The bank's Q4 net losses of €1.62bn ($2bn) exceeded analysts' expectations and brought the deficit for the year to €2.8bn. Natixis also put aside €375m in loan provisions for client funds invested with Bernard Madoff, the US financier charged with securities fraud. See this article online.
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Warning on Stanford in 2003 A whistleblower contacted US regulators more than five years ago with allegations that Sir Allen Stanford's businesses were involved in an "illegal Ponzi scheme", the FT has learnt, raising new questions about why authorities waited until last week to shut down the alleged $8bn fraud. The revelation marks another blow to US securities regulators, which have been fiercely criticised since missing the alleged $50bn Ponzi scheme perpetrated by New York broker Bernard Madoff. See this article online.
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Grübel takes over as UBS chief In Categories: People Posted at 04:42 by Gwen Robinson UBS on Thursday turned to the veteran former boss of its arch-rival, Credit Suisse, to take over as chief executive amid massive losses and fears for the group's private banking business. The move to appoint Oswald Grübel, 65, comes as UBS seeks to regain credibility after massive writedowns and censure in a US tax evasion probe. Grübel, who replaces Marcel Rohner, said he had not envisaged coming out of retirement after leaving Credit Suisse in May 2007 but had been persuaded by the UBS board last month. See this article online.
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Overnight markets: Asia up, US down Asian stocks rose Friday, helping the regional benchmark index pare the worst start to a year since 1990. Futures on the S&P 500 Index rose 0.2% after the gauge fell 1.6% following President Barack Obama's first budget to Congress on Thursday, which seeks standby authority for as much as $750bn in new aid to the financial industry while planning for a health-care system overhaul. Asian markets (Fri)
04:35am GMT
Nikkei up 100.23 (1.34%) to 7,558.16
Topix up 12.04 (1.62%) 754.57
Hang Seng up 14.49 (0.11%) at 12,909.43 US markets (Thurs)
DJIA down 88.81 (-1.22%) at 7,182.08
Nasdaq down 33.96 (-2.38%) at 1,391.47
S&P500 down 12.07 (-1.58%) at 752.83 European markets (Thurs)
FTSE100 up 66.66 (1.73%) at 3,915.64
Eurofirst 300 up 16.32 (2.28%) at 716.15 Currencies
04:30 GMT
€/$ 1.2725 (1.2741)
$/¥ 97.56 (97.91)
£/$ 1.4282 (1.4262) Commodities (updated)
04:28 GMT
Brent Crude (Apr09) down $0.26 at $46.25
Light Crude (Apr09) down $0.60 at $44.62
100 Oz Gold (Apr09) down $2.80 at $939.80
Copper (3M 24hr) down $70.00 at $3,430.00 10-year government bond yields (%)
US 2.98 (2.91)
UK 3.63 (3.47)
Germany 3.13 (3.01)
Japan 1.28 (1.27) Sources: FT, Reuters See this article online.
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