Stock markets tumble on bank fears Stock markets around the world fell to their lowest levels of the economic crisis on Monday as dividend cuts and further news of financial secto weakness shook investor confidence. A sharp sell-off in London pushed the FTSE 100 index to its lowest in 14 years in dollar terms. On Wall Street, the S&P500 dropped 4.7% to its lowest since late 1996, bringing its losses for the year to 22.4%. The slump followed steep falls in Asian stocks, and came amid the disclosure of AIG's $61.7bn Q4 loss, HSBC's giant capital-raising and a slew of corporate dividend cuts. Bloomberg adds that stocks continued to slide in Asia on Tuesday. See this article online.
http://ftalphaville.ft.com/blog/2009/03/03/53128/stock-markets-tumble
| AIG hit by record $61.7bn shortfall AIG on Monday revealed the depth of its financial plight with a $61.7bn quarterly loss – the largest in US corporate history – and large writedowns in commercial real estate. The insurer's total net loss for 2008 came to nearly $100bn. The Q4 results came as AIG confirmed it would give the US government a large stake in its two largest divisions as part of a $30bn-plus rescue package that could lead to the group's break-up. Edward Liddy, chief executive, said the new rescue package – its third in five months – was the best chance of keeping some businesses alive and repaying taxpayers. See this article online.
http://ftalphaville.ft.com/blog/2009/03/03/53127/aig-hit-by-record-61
| BofA chief admits Merrill aid 'mistake' Bank of America's request for $20bn of US federal funds to prop up its acquisition of Merrill Lynch was a "tactical mistake" that made the bank look as weak as Citigroup, Ken Lewis, BofA's chief executive told the FT on Monday. In his first mention of plans to leave the company, Lewis said he would stay at the bank until it paid back the $45bn it received from the US Treasury, possibly within two to three years. However, he said caution had led him to take more aid than "necessary" to absorb Merrill's $15bn Q4 loss. See video interview here. See this article online.
http://ftalphaville.ft.com/blog/2009/03/03/53126/bofa-chief-admits-me
| HSBC unit 'destroyed' $10bn HSBC's consumer finance division will require further capital injections for several years, the bank admitted Monday, as it revealed the business had destroyed about $10bn in shareholder value since it was bought six years ago. HSBC said it would withdraw from the US consumer loan market, closing 800 branches of HSBC Finance Corp, bought in 2003 for $15bn in stock. As HSBC launched a £12.5bn rights issue and slashed its dividend, Michael Geoghegan, chief executive, said the bank regretted the investment. While HSBC reported pre-tax profits of $9.3bn for 2008 – despite writing off $10.5bn in goodwill on its US consumer finance operations – profits were less than half those of 2007. See this article online.
http://ftalphaville.ft.com/blog/2009/03/03/53125/hsbc-unit-destroyed-
| HSBC triggers heavy falls London shares suffered their heaviest falls of the year on Monday, taking the FTSE 100 index to a six-year low, after HSBC disappointed the market with weaker than expected earnings, a £12.5bn rights issue and a dividend cut, and after another $30bn in rescue financing for AIG from the US government. In Asia on Tuesday, adds Bloomberg, HSBC plunged 18% in HK morning trading to HK$46.60 - the most in more than two decades. See this article online.
http://ftalphaville.ft.com/blog/2009/03/03/53124/hsbc-triggers-heavy-
| Terra Firma writes off half of EMI buy Terra Firma, the buy-out house run by financier Guy Hands, has written off half its €2.6bn (£2.3bn) investment in EMI, the music group. EMI accounted for the majority of a €1.37bn impairment charge in Terra Firma's annual review, issued Monday, and contributed to a writedown of 45.5% on Terra Firma's entire portfolio. The impairment shows that Hands has accepted there is little chance of recovering all his €2.6bn equity investment in EMI, among the most high-profile deals of the recent credit bubble. See this article online.
http://ftalphaville.ft.com/blog/2009/03/03/53123/terra-firma-writes-o
| RBS chairman gets £1.5m share options Sir Philip Hampton, chairman of RBS, the majority state-owned UK bank, has been awarded £1.5m of share options, on top of a £750,000 salary, it emerged on Monday. The news comes shortly after the row over disclosures that Sir Fred Goodwin, RBS's former chief executive, is receiving a £693,000 annual pension. RBS has also ignited controversy for paying staff bonuses of up to £950m for 2008 despite its £20bn-plus taxpayer bail-out. Sir Philip has been awarded options over about 5.1m shares at 29p each vesting in three years. See this article online.
http://ftalphaville.ft.com/blog/2009/03/03/53122/rbs-chairman-gets-15
| Macquarie reassures on capital strength Macquarie Group shares tumbled for the 10th straight day on Monday, forcing Australia's largest investment bank to issue a second market statement in two trading days saying it had no plans to go to the market for capital. As its share price fell a further 7% to A$15.75, the lowest since late 1998, Macquarie said it was taking steps to reduce the massive discount to net assets of its network of satellite funds. It also said it expected to receive "a return of capital from the listed funds over the next six months". See this article online.
http://ftalphaville.ft.com/blog/2009/03/03/53121/macquarie-reassures-
| BCE to buy The Source from Circuit City BCE, Canada's largest telecoms company, said Monday it would buy The Source, a national electronics retailer owned by Circuit City, more than doubling the number of retail locations that are either owned by BCE or have exclusive licences to sell its services. BCE, the owner of Bell Canada, will pay significantly less than the roughly C$335m ($259m) Circuit City paid when it bought The Source in March 2004, BCE said. See this article online.
http://ftalphaville.ft.com/blog/2009/03/03/53120/bce-to-buy-the-sourc
| Investors protest Xstrata coal deal Shareholders in Xstrata approved the Anglo-Swiss miner's £4.1bn rights issue on Monday, but cast a sizeable protest vote against its $2bn acquisition of Colombian coal assets from Glencore, its biggest shareholder. X-strata got the go-ahead to issue two new shares for every existing share at a discounted price of 210p each, with more than 95% of votes cast backing three resolutions related to the rights issue. Xstrata will use the proceeds to repair its balance sheet, cutting its debt burden from $16.3bn to $12.7bn. See this article online.
http://ftalphaville.ft.com/blog/2009/03/03/53119/investors-protest-xs
| UK's Wolseley nears £1bn rights issue Wolseley, the struggling UK builders' merchant, is planning to launch a long-awaited £1bn rights issue as soon as the end of the week in an attempt to dig its way out from under its £3bn debt pile. The company is also expected to announce significant writedowns at Stock, the loss-making retail division heavily exposed to the stagnant US housing market. The move follows a series of rights issues from UK companies, including HSBC's £12bn fund-raising plan on Monday. See this article online.
http://ftalphaville.ft.com/blog/2009/03/03/53118/uks-wolseley-nears-1
| Persimmon agrees debt terms Persimmon, one of Britain's biggest housebuilders, has renegotiated the terms of its existing debt and acquired new banking facilities as the sector struggles to cope with the falling property market. Persimmon, which releases full-year results on Tuesday, said it had agreed on new terms with its banking partners and private note holders, bringing its total credit facilities to slightly more than £1bn. See this article online.
http://ftalphaville.ft.com/blog/2009/03/03/53117/persimmon-agrees-deb
| Eurozone banks rush to bonds Eurozone banks have sharply increased their holdings of government debt in a sign of the deteriorating economic climate. Bank holdings of eurozone government bonds rose by €115bn ($144.9bn) between Nov 1 and Jan 31 - the biggest three-month rise since September 1997 - to stand at €1,299bn, according to ECB data. In January alone, holdings jumped by €58bn, meaning that banks bought 75% of the total €77bn of eurozone government bonds issued in January. See this article online.
http://ftalphaville.ft.com/blog/2009/03/03/53116/eurozone-banks-rush-
| Overnight markets: Rout Asian stocks slumped for a second day, extending a global rout, as a HSBCfund raising and another bailout for AIG worsened investor confidence in the global economy. Futures on the S&P500 added 1% after the gauge tumbled 4.7% on Monday to its lowest close since October 1996. Asian markets (Tues)
04:35am GMT
Nikkei down 25.89 (-0.49%) to 7,244.26
Topix down 7.79 (-1.06%) 726.80
Hang Seng down 182.71 (-1.48%) at 12,134.75 US markets (Mon)
DJIA down 2919.64 (-4.24%) at 6,763.29
Nasdaq down 54.99 (-3.99%) at 1,322.85
S&P500 down 34.27 (-4.66%) at 700.82 European markets (Mon)
FTSE100 down 204.26 (-5.33%) at 3,625.83
Eurofirst 300 down 37.09 (-5.16%) at 682.31 Currencies
04:32 GMT
€/$ 1.2615 (1.2559)
$/¥ 97.48 (97.64)
£/$ 1.4073 (1.4212) Commodities (updated)
04:30 GMT
Brent Crude (Apr09) up $0.27 at $42.48
Light Crude (Apr09) up $0.44 at $40.59
100 Oz Gold (Apr09) down $14.30 at $925.70
Copper (3M 24hr) up $35.00 at $3,415.00 10-year government bond yields (%)
US 2.92 (2.99)
UK 3.55 (3.61)
Germany 3.04 (3.12)
Japan 1.28 (1.28) Sources: FT, Reuters See this article online.
http://ftalphaville.ft.com/blog/2009/03/03/53115/overnight-markets-ro
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