BofA eyes CCB stake sale Bank of America is considering the sale of an $8bn stake in a top Chinese bank within days, reports the FT. BofA, which is undergoing a crucial US government "stress test" and received government pledges of $25bn in support in October, can divest about a third of its 16.7% stake in China Construction Bank on Thursday when a lock-in period expires. The possibility comes amid BofA's talks with US officials over how much new capital it will be required to raise. CCB shares fell nearly 2% in HK on Wednesday to HK$4.69 on the reports, adds Bloomberg. See this article online.
http://ftalphaville.ft.com/blog/2009/05/06/55502/bofa-eyes-ccb-stake-
| Tests highlight BofA's need US regulators have determined that Bank of America has the greatest need for new capital among the 19 biggest US banks that underwent stress tests – possibly about $31bn, reports Bloomberg. Citigroup's shortfall is more limited as the group already plans to convert government preferred shares to common stock, while JPMorgan Chase doesn't need a deeper reserve against losses. The banks may outline their capital strategies after test results are published on Thursday. See this article online.
http://ftalphaville.ft.com/blog/2009/05/06/55501/tests-highlight-bofa
| UK funds Malaysian deal for LDV The UK government on Tuesday night agreed a £5m bail-out of LDV, the stricken Midlands vanmaker, in a controversial move that marks a symbolic shift in Labour's recession-time industrial policy. Ministers stressed that the four-week taxpayer-funded loan, designed to secure a rescue deal by Malaysian vehicles business Weststar, was a "one-off" that did not set a precedent for more hand-outs to LDV or other ailing companies. See this article online.
http://ftalphaville.ft.com/blog/2009/05/06/55500/uk-funds-malaysian-d
| Fed directors' bank stakes under fire Corporate governance practices at the 12 regional Federal Reserve banks faced criticism this week after the WSJ reported on Monday how Stephen Friedman, chairman of the Federal Reserve Bank of New York and a Goldman Sachs director, was granted a waiver that allowed him to hold Goldman shares even after Goldman became a Fed-regulated bank holding company in September. The report fuelled calls to overhaul policies on Fed directors who are board members of banks and own shares of bank-holding companies. See this article online.
http://ftalphaville.ft.com/blog/2009/05/06/55499/fed-directors-bank-s
| US to impose Tarp payback rules US regulators plan to impose tough conditions on banks that want to repay bail-out funds, requiring proof that they can issue debt without government insurance. They may also be required to demonstrate ability to raise equity capital from private investors The new requirements could deter some banks from trying to repay funds early. Banks have issued more than $300bn of debt insured by the Federal Deposit Insurance Corporation. See this article online.
http://ftalphaville.ft.com/blog/2009/05/06/55498/us-to-impose-tarp-pa
| Bernanke sees early signs of stability Demand in the US "may be stabilising" Ben Bernanke said on Tuesday, in cautiously optimistic remarks that suggest the recession is likely to end this year. In a congressional testimony, the Fed chairman highlighted a recent recovery in consumer spending and said there were "signs of bottoming" in the housing market. He spoke as main money market rates fell to record lows, reflecting recovering confidence among bankers. See this article online.
http://ftalphaville.ft.com/blog/2009/05/06/55497/bernanke-sees-early-
| SEC opens new front on insider trading The US SEC brought its first-ever case alleging insider trading in credit-default swaps, reports the WSJ. The case hinges on the 2006 buyout of Dutch media company VNU. The SEC alleges that Jon-Paul Rorech, a salesman for Deutsche Bank, passed confidential information about VNU to Renato Negrin, a former trader for Millennium Partners hedge fund. Negrin allegedly used the information to earn a $1.2m profit on CDS tied to the value of VNU's debt, while Rorech in return allegedly gained some of the trader's sales business. See this article online.
http://ftalphaville.ft.com/blog/2009/05/06/55496/sec-opens-new-front-
| Fund chiefs charged with fraud Executives of the $63bn US money market fund whose implosion last September helped deepen the global financial crisis were charged with fraud on Tuesday by the SEC. Bruce Bent Sr, who founded the Primary Reserve fund in 1970, and his son Bruce Bent II were accused by the SEC of hiding or failing to provide key facts to investors and trustees in the two days after Lehman Brothers sought bankruptcy protection on Sept 15. The fund owned $785m in Lehman debt that became worthless as a result of the bankruptcy. See this article online.
http://ftalphaville.ft.com/blog/2009/05/06/55495/fund-chiefs-charged-
| UBS cuts into wealth arm UBS's core Swiss and international wealth management businesses will bear the brunt of job losses aimed at saving SFr4bn ($3.5bn) a year. Some 4,000 jobs will go in the wealth management and Swiss bank division, the group's biggest unit, and 2,500 in wealth management for the Americas. Combined, the cuts will account for about 65% of the bank's 10,000 planned job losses. The details came as UBS confirmed a Q1 loss of SFr1.98bn, in line with estimates last month. See this article online.
http://ftalphaville.ft.com/blog/2009/05/06/55494/ubs-cuts-into-wealth
| StanChart sees record Q1 profit Standard Chartered said on Tuesday it was in "very good shape" as the emerging markets bank reported record levels of income and profit in the first quarter. In a trading update, the bank singled out a strong performance from its wholesale banking arm as the main reason for its buoyant start to 2009. The update, which exceeded some analysts' expectations, mirrors recent and unexpectedly positive Q1 results from banks elsewhere. See this article online.
http://ftalphaville.ft.com/blog/2009/05/06/55493/stanchart-sees-recor
| France pushes EU on hedge fund rules France pressed its EU partners on Tuesday to impose tougher rules than planned on hedge funds, despite Swedish warnings that even the tightest regulation would be no guarantee against further financial turmoil. Christine Lagarde, France's finance minister, said EU governments should insist on much tougher rules for hedge funds and other investment vehicles than those proposed last week by the European Commission. See this article online.
http://ftalphaville.ft.com/blog/2009/05/06/55491/france-pushes-eu-on-
| RBS finance director to step down Guy Whittaker, finance director of Royal Bank of Scotland, will leave his job, clearing the bank's board of one of the last executives responsible for the ill-fated takeover of ABN Amro, its Dutch rival. Whittaker, who joined RBS in February 2006, is one of only two executive directors to have stayed on the bank's board since Sir Fred Goodwin quit as chief executive in October. The other is Gordon Pell, deputy chief executive. See separate FT report on the progress of Stephen Hester, RBS chief executive. See this article online.
http://ftalphaville.ft.com/blog/2009/05/06/55492/rbs-finance-director
| AIG reveals extra $454m in bonuses Embattled US insurer AIG paid some $454m in previously undisclosed performance bonuses to employees for 2008, the company said in answers to questions from a US lawmaker that were released on Tuesday, reports Reuters.
The payments are in addition to a $120m corporate bonus pool for holding company staff and executives at subsidiary companies. AIG was criticised for paying some $165m in retention bonuses after gaining $180bn in US bailout aid. See this article online.
http://ftalphaville.ft.com/blog/2009/05/06/55490/aig-reveals-extra-45
| Overnight markets: Stress Asian stocks and US index futures fell on Wednesday amid concerns about the results of US stress tests on the 19 biggest US banks and reports that Bank of America had the greatest need for new capital. S&P500 Index futures slid 1% after the gauge lost 0.4% on Tuesday. Asian markets (Wed - Japan closed)
03:00 BST
Nikkei (Fri) up 149.11 (1.69%) at 8,977.37
Topix (Fri) up 9.06 (1.08%) at 846.85
Hang Seng (Wed) down 101.96 (-0.62%) at 16,328.12 US markets (Tues)
S&P500 down 3.44 (-0.38%) at 903.80
DJIA down 16.09 (-0.19%) at 8,410.65
Nasdaq down 9.44 (-0.54%) at 1,754.12 European markets (Tues)
FTSE100 up 2.21 (93.72%) at 4,336.94
Eurofirst 300 up 4.11 (0.49%) at 846.81 Currencies
03:10 BST
€/$ 1.3249 ( 1.3387)
$/¥ 98.15 (98.77)
£/$ 1.5008 (1.5001) Commodities
03:05 BST
Brent Crude (ICE) down $0.12 at $54.00
Light Crude (Nymex) down $0.18 at $53.66
100 Oz Gold (Comex) down $4.30 at $900.00
Copper (Comex) up $2.05 at $210.50 10-year government bond yields (%)
03:50 BST
US 3.17 (3.15)
UK 3.55 ( 3.55)
Germany 3.21 ( 3.25)
Japan 1.40 (1.40) Sources: FT, Bloomberg See this article online.
http://ftalphaville.ft.com/blog/2009/05/06/55481/overnight-markets-st
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