AIG agrees to break itself up AIG will on Monday announce a radical plan to break itself up as a global insurance conglomerate by ceding control of its two largest divisions to the US government in exchange for a $30bn-plus lifeline. It is the third time in five months that AIG has been bailed out by the authorities. Coming just after the third government rescue of Citigroup, the AIG decision could fuel mounting public anger. The latest plan, approved by AIG's board Sunday, spells the end of any hopes the company could survive as a standalone insurance group. See this article online.
http://ftalphaville.ft.com/blog/2009/03/02/53068/aig-agrees-to-break-
| HSBC scales back US lending HSBC is scaling back its US consumer finance operations as the bank launches a £12bn-plus rights issue. The bank is set to announce on Monday it will further shrink HSBC Finance Corp, its US-based credit card and mortgage lender, and is also expected to write off much of the goodwill on its balance sheet associated with the business, bought for $14bn in 2003. The capital-raising, which was being finalised on Sunday, is aimed at raising $16bn-$18bn through a deeply discounted issue of new shares. HSBC will also slash its Q4 dividend from 39 cents in 2007 to about eight cents. See this article online.
http://ftalphaville.ft.com/blog/2009/03/02/53067/hsbc-scales-back-us-
| Worst year for Buffett's Berkshire Warren Buffett has conceded that his holding company, Berkshire Hathaway, turned in its worst performance on record last year. In his annual letter to Berkshire shareholders, Buffett recounted how frozen credit markets dovetailed with tumbling home and stock prices to produce "a paralysing fear that engulfed the country". Buffett said Berkshire would maintain its "Gibraltar-like" financial strength and make new acquisitions to bolster earnings. For 2008, net income dropped 59% in 2008 to $4.99bn, plunging 96% in the fourth quarter to $117m. Read Buffett's letter here. See this article online.
http://ftalphaville.ft.com/blog/2009/03/02/53066/worst-year-for-buffe
| Abu Dhabi reviews Citi investment Abu Dhabi is assessing its $7.5bn investment in Citigroup as the bank's problems deepen amid talk of possible nationalisation, reports Reuters. The Abu Dhabi Investment Authority invested $7.5bn last year in Citi through convertible bonds that pay 11% in interest, but must start converting the bonds into 235.6m Citi shares from March next year. ADIA's returns as a bondholder have been unaffected by Citi's troubles, but the dramatic fall in Citi's share price has eroded the conversion value of the mandatory convertible bonds. See this article online.
http://ftalphaville.ft.com/blog/2009/03/02/53065/abu-dhabi-reviews-ci
| UBS to raise pay amid bonus cuts UBS is increasing the base salary of senior investment bankers after reducing many bonuses sharply and to align overall compensation more closely with other financial services jobs, reports the NYT. The move comes as the Swiss bank seeks new ways to compensate its investment bankers and is part of a bigger overhaul of UBS's compensation system, said people briefed on the matter. See this article online.
http://ftalphaville.ft.com/blog/2009/03/02/53064/ubs-to-raise-pay-ami
| TPG in bankruptcy aid clash TPG is stirring controversy on Wall Street by offering to provide bankruptcy financing for a company that it owns, a strategy that could put it in the ironic position of being paid before some other creditors. If successful, TPG might be able to recover some of its investment in Aleris, a maker of aluminium products it acquired in 2006. But the proposal raises questions about the implications it could have for buy-out firms in other deals that are going bust. See this article online.
http://ftalphaville.ft.com/blog/2009/03/02/53063/tpg-in-bankruptcy-ai
| Banks cash in on state-backed bonds The world's biggest have earned more than $900m in fees in less than four months by selling government-guaranteed bank debt to investors. JPMorgan earned almost $130m from selling 51 bonds, while Bank of America/Merrill Lynch has netted $105m in fees from 34 issues since October, according to Thomson Reuters and Freeman & Co. UK banks such as Barclays, Lloyds and HBOS led the way, followed by other European banks and financial agencies. Bond issues under these government-guarantee programmes have now reached a total of $367bn – 15% of total global debt issuance. See this article online.
http://ftalphaville.ft.com/blog/2009/03/02/53062/banks-cash-in-on-sta
| UK's £10bn loan suffers delays The UK government's flagship £10bn business lending guarantee scheme, due to commence Monday, is weeks behind schedule. The delay will fuel business and union concerns about the pace of government measures to combat the recession. The scheme is designed to support up to £20bn of existing short-term bank lending to mid-sized companies and requires state aid clearance from Brussels. Although it was unveiled Jan 14, however, it was only submitted last week to the European Commission for approval. See this article online.
http://ftalphaville.ft.com/blog/2009/03/02/53061/uks-10bn-loan-suffer
| UK to lose 140,000 jobs: EEF About 140,000 jobs will be lost in British manufacturing this year, according to the EEF industry group, which has raised its forecast by more than half, reports The Times. The warning comes amid evidence of a dramatic collapse in UK business confidence, with more job losses and business failures due to be announced this week. The EEF manufacturers' organisation raised its prediction on job losses after the worst figures on record from a survey of members. See this article online.
http://ftalphaville.ft.com/blog/2009/03/02/53060/uk-to-lose-140000-jo
| Swiss-US talks focus on bank secrecy Switzerland's justice minister will on Monday meet her US counterpart in a crucial week in UBS's efforts to fight demands from US authorities for more names of rich American clients with undeclared accounts. The meeting comes amid belated efforts by Bern to counter the impact of the US legal onslaught against bank secrecy after UBS last month agreed a $780m deal with the US Justice department to settle criminal charges about its private banking activities. See this article online.
http://ftalphaville.ft.com/blog/2009/03/02/53059/swiss-us-talks-focus
| Hedge funds slash borrowing Hedge funds cut their borrowing to almost nothing in the wake of the collapse of Lehman Brothers, according to the UK's FSA. Data compiled by the financial services watchdog show leverage fell to just 1.15 times hedge fund net assets in October, down from almost twice a year earlier. The survey also found that hedge funds had their highest level of "dry powder", or ability to borrow, since the research started in 2005. But prime brokers, the bankers who service hedge funds, say borrowing has fallen even further since the survey was carried out, and many hedge funds now have more assets than debt, or less than one times leverage. See this article online.
http://ftalphaville.ft.com/blog/2009/03/02/53058/hedge-funds-slash-bo
| TowerBrook to acquire French company TowerBrook Capital Partners, a UK-based private equity group, will this week announce plans to take over Autodistribution Group, the French car parts supplier, in a restructuring deal to slash its debts in return for a €110m ($139m) cash injection. The deal, designed to save the company's 6,500 jobs, would be France's first attempt at a "pre-pack", or pre-packaged administration, via its new procédure de sauvegarde, which is similar to US Chapter 11 protection. See this article online.
http://ftalphaville.ft.com/blog/2009/03/02/53057/towerbrook-to-acquir
| Deutsche Bank loses key bankers Two bankers who led Deutsche Bank's successful distressed debt trading businesses have resigned, highlighting how banks are losing key people in profitable businesses. Martin Dent, 43, and Julian Nichols, 36, were respectively global and European heads of the bank's distressed products group. Together they built up a team widely seen as a leading force in distressed debt trading and investing. The pair are now on leave but are expected to return to the industry at some point to set up their own distressed debt business. See this article online.
http://ftalphaville.ft.com/blog/2009/03/02/53056/deutsche-bank-loses-
| Weekend catch-up In case you missed these stories:
- Blackstone reveals $827m quarterly loss
Blackstone on Friday revealed a Q4 loss of $827m, reflecting extensive markdowns in the value of its private equity and real estate investments, and told investors it would not pay a dividend for the quarter. - GE cuts dividend
General Electric cut its quarterly dividend for the first time since 1938, in a reversal of the group's repeated defence of the pay-out.
- Top Stanford lieutenant appears in court
Laura Pendergest-Holt, Stanford Financial Group's chief investment officer, appeared in court in Houston on Friday to face obstruction of justice charges in the first criminal case spawned by the alleged $8bn fraud in Sir Allen Stanford's business empire. See this article online.
http://ftalphaville.ft.com/blog/2009/03/02/53055/weekend-catch-up-26
| Overnight markets: Down Asian stocks slid on Monday, dragging the Nikkei 225 down the most in five weeks, and US futures fell as declines in Japanese wages and South Korean exports fanned concerns about deepening global recession. Futures on the S&P500 dropped 1.4% after the gauge fell 2.4% on Friday to a 12-year low after news that the US economy shrank in the quarter to December by the most since 1982.
Asian markets (Mon)
04:22am GMT
Nikkei down 119.15 (-1.66%) to 7,062.93
Topix down 13.63 (-0.98%) 732.43
Hang Seng down 472.81 (-3.69%) at 12,338.76 US markets (Fri)
DJIA down 119.15 (-1.66%) at 7,062.93
Nasdaq down 13.63 (-0.98%) at 1,377.84
S&P500 down 17.74 (-2.36%) at 735.09 European markets (Fri)
FTSE100 down 85.55 (-2.18%) at 3,830.09
Eurofirst 300 down 13.07 (-1.78%) at 719.40 Currencies
04:18 GMT
€/$ 1.2559 (1.2725)
$/¥ 97.64 (97.56)
£/$ 1.4212 (1.4282) Commodities (updated)
04:20 GMT
Brent Crude (Apr09) down $0.93 at $45.42
Light Crude (Apr09) down $1.01 at $43.75
100 Oz Gold (Apr09) up $8.50 at $951.00
Copper (3M 24hr) down $60.00 at $3,365.00 10-year government bond yields (%)
US 2.99 (2.98)
UK 3.61 (3.63)
Germany 3.12 (3.13)
Japan 1.28 (1.28) Sources: FT, Reuters See this article online.
http://ftalphaville.ft.com/blog/2009/03/02/53054/overnight-markets-do
| |
No comments:
Post a Comment