Toxic debts could reach $4 trillion, IMF to warn Toxic debts racked up by banks and insurers could spiral to $4,000bn (£2,700bn), the Times reported, citing new forecasts from the International Monetary Fund due to be published on April 21. The IMF said in January that it expected the deterioration in US-originated assets to reach $2,200bn by the end of next year, but the Times understands it to be looking at raising that to $3,100bn in its next assessment of the global economy. In addition, it is likely to boost that total by $900 billion for toxic assets originated in Europe and Asia. See this article online.
http://ftalphaville.ft.com/blog/2009/04/07/54529/toxic-debts-could-re
| ECB dismisses euro short cuts in east Europe The European Central Bank yesterday dismissed proposals for European Union states in eastern Europe to scrap their currencies and introduce the euro, without formally joining the eurozone. The ECB was responding to the publication in the FT of plans by the International Monetary Fund for the area as part of a regional anti-crisis strategy. Officials and commentators in the EU's new member states were divided. Some suggested that while the idea might not be suitable for states with floating exchange rates, such as Poland and the Czech Republic, it might be right for smaller countries with fixed exchange rates, notably the Baltic states. But Lex argues it is hard to see what lasting benefits any such euroisation might have. See this article online.
http://ftalphaville.ft.com/blog/2009/04/07/54522/ecb-dismisses-euro-s
| Fed in foreign currency swap agreements The Federal Reserve has lined up almost $300bn worth of euros, yen, pounds and Swiss francs to lend to US-based banks to meet foreign currency needs, the FT reported. The US central bank reached currency swap agreements with the ECB, the Bank of Japan, Bank of England and Swiss National Bank for access to up to €80bn ($107bn), Y10,000bn ($100bn), £30bn ($45bn) and SFr40bn ($35bn). "This could be an early indication that global funding problems are not just dollar specific," George Goncalves, a strategist at Morgan Stanley, said. "It is a pre-emptive move by the Fed and will help US banks with non-dollar assets secure funding, if that is required." See this article online.
http://ftalphaville.ft.com/blog/2009/04/07/54530/fed-in-foreign-curre
| UK manufacturing data offer no respite The manufacturing sector suffered an even worse first quarter than the sharp decline at the end of last year, data released on Tuesday suggest, in a reminder that signs of the recession easing remain tentative. Manufacturers have seen conditions deteriorate in almost every area of business so far this year from the fourth quarter of 2008, when the financial panic was at its height, the FT said, citing the British Chamber of Commerce's quarterly survey of 6,500 businesses. Manufacturers contacted by the BCC said new orders and sales were at the worst level since records began in 1989, threatening to undermine Britain's hope for a swift recovery from recession. See this article online.
http://ftalphaville.ft.com/blog/2009/04/07/54524/manufacturing-data-o
| FSA steps up scrutiny in 'get scary' drive Finance companies and executives face tougher regulatory vetting in one of the first signs of the City watchdog's efforts to become more intimidating, lawyers say. The Financial Services Authority is delving deeper into the pasts of those it supervises in what solicitors see as a crackdown that could lead to more companies and individuals being excluded from the market, the FT reported. The action comes with the FSA under heavy pressure to counter accusations that it failed to regulate financial institutions and their bosses sufficiently rigorously before the credit crisis hit. See this article online.
http://ftalphaville.ft.com/blog/2009/04/07/54526/fsa-steps-up-scrutin
| Employers introduce pay freezes, headcount culls to cut costs Between a fifth and a quarter of wage settlements in the first few months of this year have involved pay freezes as hard-pressed employers have sought to curb costs during the recession. Pay surveys by the Labour Research Department and Incomes Data Services reveal a widening gap between businesses that can afford to pay more and those that are struggling, the FT said. A separate report by the Hay Group consultancy revealed about 37 per cent of the UK companies surveyed were cutting headcount last month, nearly double the share in November. UK companies also reported much smaller average base salary increases of 1 per cent compared with 2.8 per cent worldwide, Hay Group found. See this article online.
http://ftalphaville.ft.com/blog/2009/04/07/54525/employers-introduce-
| Stronger banks poach senior staff from rivals One of the biggest banker poaching exercises seen in Europe for years is under way as those banks that have survived the credit crisis better than their rivals hire senior talent., the FT reported. Since the September collapse of Lehman Brothers, banks such as Deutsche Bank, Credit Suisse and Rothschild have hired managing directors in Europe across debt and equity capital markets and mergers and acquisitions. These banks are making strategic strikes, luring star bankers who would have been expensive during boom times, or picking up whole teams that will bring business with them. See this article online.
http://ftalphaville.ft.com/blog/2009/04/07/54523/stronger-banks-poach
| Tchenguiz pub group defaults on loan Globe Pub Company, the struggling operator owned by Robert Tchenguiz, is facing an uncertain future after the company defaulted on a £257m asset-backed loan. The default comes after the company, which owns more than 400 pubs, failed to remedy a breach of its banking covenants last month. As a result, bondholders can now seek the appointment of an administrative receiver to run the business. Should that happen, Mr Tchenguiz could face the risk of losing control of the business and see his investment wiped out, the FT said. See this article online.
http://ftalphaville.ft.com/blog/2009/04/07/54520/tchenguiz-pub-group-
| Investors braced for new wave of rights issues after HSBC success Investors are braced for a wave of new capital raisings, following the completion of HSBC's giant £12.5bn rights issue, the FT reported. The success of the offering, the biggest ever seen in the UK, frees underwriting capacity among banks and institutional investors, including some of the UK's largest fund managers, which had promised to mop up any unwanted HSBC shares. Some banks expect more than $40bn (£27bn) to be raised by UK companies by the end of the year, including a possible rights issue from Rio Tinto, the mining group that has plans to raise $19.5bn from Chinalco, China's state-owned mining company. See this article online.
http://ftalphaville.ft.com/blog/2009/04/07/54521/investors-braced-for
| SEC to consider proposals to restrict short selling US securities regulators will consider about four proposals to restrict short selling, including the restoration of the "uptick rule," SEC chief Mary Schapiro said on Monday. Other proposals on the table include a so-called "bid test" and a "circuit breaker." Reuters, citing a a source familiar with the matter, said the SEC bid test proposal would only allow shorting at a price above the highest available bid. The SEC also is crafting two circuit breaker proposals, one of which would temporarily halt short sales of a stock if the stock has already fallen by a certain percentage, Reuters said. See this article online.
http://ftalphaville.ft.com/blog/2009/04/07/54528/sec-to-consider-prop
| Art prices fall 35% as collectors cash in Art prices plunged during the first quarter of the year as cash-strapped collectors looked to unload works by postwar masters that had earlier boomed in price along with the stock market. The Mei Moses index, set for release on Tuesday, shows art prices fell 35 per cent in the first quarter. The decline accelerated as people who lost money in the financial crisis, including victims of the Madoff fraud, put up works for sale, often at a loss, the FT reported. See this article online.
http://ftalphaville.ft.com/blog/2009/04/07/54527/art-prices-fall-35-a
| Merkin 'duped' his investors, Cuomo claims Andrew Cuomo, the New York attorney-general, on Monday filed civil fraud charges against the hedge fund manager Ezra Merkin, alleging he secretly channelled more than $2.4bn to Bernard Madoff's Ponzi scheme in exchange for lucrative fees, the FT reported. Mr Cuomo accused Mr Merkin, a leading figure in the New York charity community and former chairman of financing company GMAC, of steering money from charities, universities and non-profit organisations to Mr Madoff without their permission and reaping about $470m in fees for his three funds. See this article online.
http://ftalphaville.ft.com/blog/2009/04/07/54519/merkin-duped-his-inv
| Overnight markets: Mostly negative Asian equity markets were mixed Tuesday, largely in line with downward trend set by the US and Europe. Japan's Nikkei nudged 0.3 per cent higher in late morning trading , but both financial and technology stocks in the index were under pressure. Tech stocks were hurt by the stalled talks between IBM and Sun Microsystems, while CLSA analyst Mike Mayo's bearish note on the US financial sector weighed on banks. Traders' nerves were further rattled by reports that the International Monetary Fund would suggest toxic debts incurred by global banks and insurers could reach $4,000bn. Asian markets (Tue)
04:05 BST
Nikkei up 26.52 (0.3%) at 8,884.45
Topix up 4.49 (0.5%) at 835.46
Hang Seng down 189.59 (-1.26%) at 14,808.45 US markets (Mon)
S&P500 down 7.02 (-0.83%) at 835.48
DJIA down 41.74 (-0.52%) at 7,975.85
Nasdaq down 15.16(-0.93%) at 1,606.71 European markets (Mon)
FTSE100 down 36.13 (-0.9%) at 3,993.54
Eurofirst 300 down 5.51 (-0.71%) at 766.09 Currencies
03:50 BST
€/$ 1.3360 (1.3446)
$/¥ 100.64 (99.78)
£/$ 1.468 ( 1.493) Commodities
04:00 BST
Brent Crude (ICE) down $0.09 at $52.15
Light Crude (Nymex) down $0.01 at $51.04
100 Oz Gold (Comex) up $5.10 at $877.90
Copper (Comex) up $1.80 at $197.70 10-year government bond yields (%)
04:05 BST
US 2.90 (2.90)
UK 3.45 ( 3.40)
Germany 3.23 (3.25)
Japan 1.46 (1.44) Sources: FT, Bloomberg See this article online.
http://ftalphaville.ft.com/blog/2009/04/07/54518/overnight-markets-mo
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