JPMorgan earns $2.1bn on record sales JPMorgan Chase on Thursday reported a 10% fall in net income to $2.1bn in the 2008 first quarter, beating analysts' expectations. The results were driven by record quarterly profits of $1.6bn in the investment banking unit, boosted by strong performance in trading businesses. The bank took $10bn in charges in its mortgage and credit card portfolios and increased provisions for loan losses in consumer and commercial banking. JPMorgan's shares were 2% higher at $33.22 in the New York afternoon. See this article online.
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Dimon criticises government aid Jamie Dimon, chief executive of JPMorgan Chase, on Thursday said the bank wanted to be free of government intervention and could repay $25bn in federal aid without raising new capital. Speaking after JPMorgan reported strong Q1 results driven by record investment banking profits, Dimon said that being a recipient of public funds was "a scarlet letter" that had brought banks unwanted political and regulatory constraints. See this article online.
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GM plans offer for bondholders General Motors is planning a formal offer to all bondholders by April 27 to exchange their $27.5bn in claims for equity, reports Bloomberg. Ahead of a June 1 deadline for a US-backed bankruptcy, the carmaker was told this week by the White House's auto task force to try to restructure its debt out of court. GM plans to announce the offer within 11 days to give investors a month to decide. The FT, meanwhile, reports that GM is also seeking provision for its parts suppliers. See this article online.
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FSA accused by whistleblower The UK's FSA securities watchdog has been accused of "apathy and complacency" in its regulation of building societies during the boom by a former supervisor-turned- whistleblower. Vince Cable, Treasury spokesman for the Liberal Democrats, has asked FSA chairman Lord Turner to investigate what he called a "scathing indictment" of regulatory failure after the former FSA supervisor contacted him days before Moody's cut ratings on nine building societies on Wednesday. See this article online.
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ZFS buys AIG auto unit for $1.9bn Zurich Financial Services on Thursday confirmed speculation about its US expansion plans with the $1.9bn acquisition of AIG's Personal Auto Group. The deal marks the largest disposal by the US insurer since last year's government rescue and significantly extends ZFS in the personal lines insurance market. The sale will help AIG repay $100bn in US federal aid. See this article online.
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Lloyds, RBS to offer loans as bonuses Lloyds Banking Group and Royal Bank of Scotland are set to offer loans to staff who have seen bonus payments deferred for up to three years. RBS and Lloyds are now paying some staff bonuses in subordinated debt – in the form of bonds rather than shares – over three years following public controversy over bonuses paid by banks that received government bailouts. The 2008 bonuses are payable in three tranches starting next year. See this article online.
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General Growth files for Chapter 11 General Growth Properties, the second-biggest US shopping mall owner, filed for bankruptcy on Thursday amid the collapse in commercial property prices. The Chicago-based company owns more than 200 US malls, making it one of the largest real estate bankruptcies ever. With $27bn in net debt, General Growth last month failed to renegotiate new terms with bondholders for $2.25bn of debt. It said that 158 regional shopping centres it owns have also filed for bankruptcy. See this article online.
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Google's growth spurt ends Google's revenues in the first quarter of this year fell below the preceding quarter for the first time in the company's history as the global recession brought an end to its unprecedented 11-year growth spurt. "No company is recession proof, Google is feeling the impact," said Eric Schmidt, CEO, although he noted that Google was still performing well at a difficult time. Google also announced a redesign of YouTube that it said would enhance the video site's appeal to professional studios. See this article online.
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First loss for French finance house Caisse des Dépôts et Consignations, France's state-owned finance house, on Thursday unveiled its first loss since it was founded in 1816. CDC recorded a 2008 net loss of €1.47bn ($1.9bn) after making provisions of €3bn on its assets; €2bn of the writedowns related to Dexia, the Franco-Belgian bank that CDC helped rescue last year, and in Eiffage, the construction group in which it built a 20% stake to counter a takeover attempt by Sacyr of Spain. See this article online.
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CDS blamed in bankruptcy filings Credit default swaps are being blamed for playing a role in two bankruptcy filings this week. Bankers and lawyers are concerned that some lenders to troubled companies such as newsprint producer AbitibiBowater - which filed for bankruptcy protection on Thursday - and mall owner General Growth Properties, which also filed for protection this week, stand to benefit from a default as they also hold default swaps, entitling them to payments in such events. See this article online.
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Barclays upbeat as it woos investors Barclays stepped up efforts to persuade investors that the UK bank is in robust health, saying it has benefited from the financial industry's strong start to the year. In an interview with Bloomberg, president Bob Diamond expressed optimism for the industry as well as for Barclays' prospects. The shares rose on the comments, adding to gains in the past week following its deal to sell its iShares ETF unit to CVC Capital Partners for $4.4bn. See this article online.
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Rosetta Stone rises 40% in IPO Rosetta Stone, the language software provider, on Thursday staged the strongest US stock market debut in a year when its shares surged nearly 40% on listing. Together with Bridgepoint, the online college, which also floated successfully this week with an 8.5% increase in its shares, the IPOs have boosted hopes for a revival in equity capital raising. Rosetta Stone began trading on the NYSE at $25 on Thursday, well above its IPO price of $18. See this article online.
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SocGen sees Asian M&A wave Société Générale plans to expand its investment banking business in Asia, creating new posts for 25 investment bankers and about 15 M&A specialists in the hope of a wave of acquisitions of European, African and Middle East businesses and natural resources by Asian companies and governments, Thierry Aulagnon, head of SocGen's clients and investment banking division, told the FT. See this article online.
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Locating Stanford billions to 'take years' It will take at least five years to locate funds lost by investors in the alleged $8bn "Ponzi" scheme run by Texan billionaire Sir Allen Stanford, warned court-appointed liquidators of the offshore bank at the heart of the purported scheme. Antigua-based Stanford International Bank had hundreds of millions of dollars of assets in its name, compared with about $7.2bn owed to depositors, said Nigel Hamilton-Smith, a client partner at UK-based Vantis Business Recovery Services. See this article online.
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Deutsche Börse to launch platform Deutsche Börse on Thursday raised the stakes in the battle for dominance of European share-trading with plans for a new, pan-European equities trading platform allowing investors to trade blue-chip equities across the region.The new platform, Xetra International Market, will use Eurex Clearing in Frankfurt, the Börse's clearing unit. See this article online.
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Icahn, Kerkorian in Vegas showdown Two of the best-known US investors are preparing to face off in a high-stakes game that could reshape the face of Las Vegas, reports the WSJ. Activist investor Carl Icahn is pushing troubled casino operator MGM Mirage to restructure in bankruptcy court, a gambit which pits him against Kirk Kerkorian, MGM Mirage's largest owner. Icahn and private equity fund Oaktree separately have acquired hundreds of millions of dollars in MGM Mirage debt in recent months. See this article online.
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Overnight Markets: Up Asian stocks advanced on Friday, led by banks and automakers, as better-than-expected earnings from JPMorgan and falling US jobless claims lifted confidence that the global recession is easing. Futures on the S&P 500 lost 0.3% after the gauge gained 1.5% on Thursday afternoon. Asian markets (Fri)
03:00 BST
Nikkei up 194.29 (2.22%) at 8,949.95
Topix up 12.60 (1.5%) at 844.64
Hang Seng up 240.94 (1.55%) at 15,823.93 US markets (Thurs)
S&P500 up 13.24 (1.55%) at 865.30
DJIA up 95.81 (1.19%) at 8,125.43
Nasdaq up 2.68 (43.64%) at 1,670.44 European markets (Thurs)
FTSE100 up 84.58 (2.13%) at 4,052.98
Eurofirst 300 up 13.81 (1.75%) at 802.02 Currencies
04:10 BST
€/$ 1.3204 ( 1.3204)
$/¥ 99.08 (99.08)
£/$ 1.4991 (1.4991) Commodities
01:05 BST
Brent Crude (ICE) down $0.15 at $52.91
Light Crude (Nymex) down $0.23 at $49.75
100 Oz Gold (Comex) down $3.80 at $876.00
Copper (Comex) down $1.00 at $215.95 10-year government bond yields (%)
02:50 BST
US 2.83 (2.78)
UK 3.23 ( 3.26)
Germany 3.15 ( 3.18)
Japan 1.45 (1.46) Sources: FT, Bloomberg See this article online.
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