US prepared to oust bank chiefs US Treasury Secretary Tim Geithner warned on Sunday that the US government would consider ousting board members at American banks as a condition for giving the institutions "exceptional" assistance in the future. The Treasury secretary said the Obama administration would be prepared to force out senior management to protect US taxpayers, and ensure accountability, as a condition for providing money to help banks restructure. See this article online.
http://ftalphaville.ft.com/blog/2009/04/06/54471/us-prepared-to-oust-
| Pensions body seeks change to payments Employers will have to pay more into the Pension Protection Fund during good economic times to offset lower payments in a recession, under changes to the scheme set to be looked at by the body that provides the official safety net for pension schemes, the FT reported. Alan Rubenstein, new chief executive of the PPF, said "counter-cyclical" insurance premiums could provide a break for businesses, adding that the fund was sympathetic to complaints from employers about the rising costs of pensions. The PPF was created to protect pension promises made by employers that later become insolvent, leaving behind an underfunded scheme. See this article online.
http://ftalphaville.ft.com/blog/2009/04/06/54472/pensions-body-seeks-
| IMF urges eastern EU to adopt euro Crisis-hit European Union states in central and eastern Europe should consider scrapping their currencies in favour of the euro even without formally joining the eurozone, according to the International Monetary Fund. The eurozone could relax its entry rules so countries could join as quasi-members, without European Central Bank board seats, the FT reported, citing a previously-confidential IMF report compiled last month. See this article online.
http://ftalphaville.ft.com/blog/2009/04/06/54473/imf-urges-eastern-eu
| UK is urged to print money The government will have to print money to finance public spending, moving quantitative easing to a new level, the manager of one of London's biggest hedge funds told the FT. Mike Platt, co-founder and chief executive of BlueCrest, Europe's fifth-largest hedge fund, had been predicting quantitative easing in the UK for six months before it was adopted by the Bank of England last month. But the bond trader said the government, facing plunging tax revenues, now had little choice but to move to "heavy" quantitative easing, printing money to buy new gilts to support public spending. "The easiest way for the system to be saved is to print money," he said. "It is the only policy option left." See this article online.
http://ftalphaville.ft.com/blog/2009/04/06/54474/uk-is-urged-to-print
| Rio eyes $10bn rights issue option Rio Tinto is ready to proceed with a rights issue of about $10bn if its agreed $19.5bn fundraising plan with Chinese mining group Chinalco falls through, the FT reported. Rio remains committed to the Chinalco deal, but that could be blocked by regulators or vetoed by shareholders. Plans for the rights issue – to be underwritten by JPMorgan Cazenove and Credit Suisse – were drawn up earlier this year in a plan codenamed Project Glasgow. The rights issue was one of two options to help Rio repay nearly $20bn of debt in the next two years. The miner decided to proceed with the second option – a complex deal with Chinalco which includes a $7.2bn convertible bond and $12.3bn of asset sales. See this article online.
http://ftalphaville.ft.com/blog/2009/04/06/54475/rio-eyes-10bn-rights
| Darling set to admit forecast error Alistair Darling on Sunday prepared to acknowledge the biggest forecasting error made by a British chancellor, warning there was unlikely to be a resurgence in the economy this year. Mr Darling is expected to use his April 22 Budget to admit the recession is much worse than he forecast, predicting the economy will shrink by at least 3 per cent in 2009 and that the deficit will top 10 per cent of national income, the FT said. This amounts to the most drastic revision of a chancellor's Budget debt forecasts in modern history, laying bare a rapid deterioration in public finances that will usher in an era of fiscal austerity. See this article online.
http://ftalphaville.ft.com/blog/2009/04/06/54476/darling-set-to-admit
| RBS needs five years to get over ABN fallout Royal Bank of Scotland will take at least three to five years to recover after the disastrous acquisition of ABN Amro assets that were instrumental in damaging its balance sheet, chief executive Stephen Hester said at the bank's annual meeting on Friday. Mr Hester said insufficient risk controls, a short-term profit focus and misguided strategy were among a series of problems that, combined with the ABN deal, saw the once-great Scottish bank fail, the Telegraph reported. At the same meeting, chairman Philip Hampton declared, "we should bring to an end the public flogging and focus on the good and enduring people and businesses of RBS and allow them to earn our way back to success." See this article online.
http://ftalphaville.ft.com/blog/2009/04/06/54481/rbs-needs-five-years
| Investors snap up 97% of record £12.5bn HSBC issue HSBC has received overwhelming support for its record-breaking £12.5bn ($18.5bn) rights issue, with investors subscribing for almost 97 per cent of the stock on offer. The offering is the biggest in the UK, eclipsing RBS's £12bn issue last year, and underlined the perceived strength of the UK's largest bank compared with the problems that have weakened its rivals, the FT reported. See this article online.
http://ftalphaville.ft.com/blog/2009/04/06/54480/investors-snap-up-97
| IBM and Sun deal talks stall IBM's talks over a deal to acquire Sun Microsystems, a rival computer maker, have run into significant obstacles and the companies are no longer expected to produce an agreement by Monday, the FT reported, citing people close to the talks. IBM and Sun, its smaller rival, have been in merger talks for several weeks over a deal that, in its most recent form, would have valued Sun at $6bn, or about $9.50 per share. But talks appeared to break down, at least temporarily, over the weekend. One person close to the matter said the talks and relationship between the parties remained "fluid". See this article online.
http://ftalphaville.ft.com/blog/2009/04/06/54478/ibm-and-sun-deal-tal
| Trading for clients lifts bank revenues Big banks that have been battered by the credit crisis are set to report a benefit from the turmoil: robust first-quarter revenues from the old-fashioned business of trading for clients in the capital markets. The resurgence, which will be seen when banks report first-quarter results this month, results from the declining number of participants in the markets and still elevated levels of fear among investors, the FT said. See this article online.
http://ftalphaville.ft.com/blog/2009/04/06/54479/trading-for-clients-
| City bankers made to pay for financial crisis London bankers have emerged as the "poor relations" of the financial world with the end of the bonus bonanza and the fall out from global financial crisis, the Telegraph reported. Bankers' average pay and bonus packages have been slashed by 62 per cent over the past year to leave them the lowest paid in the major financial centres for the first time. Wall Street is back in pole position with New York bankers picking up 40 per cent more than their London counterparts, although sterling's 25 per cent devaluation has made a big impact on the differential. The findings stem from a survey by Napier Scott Search of 4,000 international bankers. See this article online.
http://ftalphaville.ft.com/blog/2009/04/06/54477/city-bankers-made-to
| Overnight markets: Onward and upward Asian markets moved higher for a fourth consecutive session on Monday and the yen fell to a five-month low against the dollar and the euro as traders in the region speculated the worst of the crisis might be over. Comments by US Federal Reserve Chairman Ben Bernanke on April 3 that policy measures were having the "intended effect" on global credit markets helped set the tone. By the 11am break in Tokyo, the Nikkei 225 had risen 2.3 per cent - wiping out its losses for the year - while the MSCI index of regional stocks outside Japan had rallied 1.4 per cent. The Hang Seng index hit an intra-day high of 15,147.1, an increase of more than 4 per cent.
Asian markets (Mon)
04:00 BST
Nikkei up 200.10 (2.3%) at 8,949.94
Topix up 12.49 (1.5%) at 843.84
Hang Seng 586.28 (3.9%) at 15131.97. US markets (Fri)
S&P500 up 8.12 (0.97%) at 842.50
DJIA up 39.51 (0.5%) at 8,017.59
Nasdaq up 19.24 (1.20%) at 1,621.87 European markets (Fri)
FTSE100 down 95.30 (-2.31%) at 4,029.67
Eurofirst 300 down 9.88 (-1.26%) at 771.60 Currencies
04:10 BST
€/$ 1.3446 (1.3560)
$/¥ 99.78 (100.79)
£/$ 1.493 (1.473) Commodities
04:15 BST
Brent Crude (ICE) up $0.51 at $53.98
Light Crude (Nymex) up $0.79 at $53.30
100 Oz Gold (Comex) down $17.80 at $879.50
Copper (Comex) down $1.10 at $198.95 10-year government bond yields (%)
04:18 BST
US 2.90 (2.75)
UK 3.40 (3.37)
Germany 3.25 (3.17)
Japan 1.44 (1.42) Sources: FT, Bloomberg See this article online.
http://ftalphaville.ft.com/blog/2009/04/06/54470/overnight-markets-on
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