Posts from Wednesday Jun 16 2010

The FSA will cease to exist in its current form

Selected highlights from UK chancellor George Osborne’s Mansion House speech:

First, regulation: Read more

BP’s dividend decision

Payments axed for the rest of the year.

Other breaking news: independent claims fund to be administered by Ken Feinberg, head of the 9/11 compensation fund, BP to make initial payments of $3 and $2bn, fund not a cap on BP liabilities, capex to be cut, targeting divestments of $10bn over next 12-months. Read more

BP agrees to create escrow fund

Under growing pressure, BP on Wednesday agreed to President Barack Obama’s call to place about $20bn in escrow to pay claims resulting from the Gulf of Mexico oil spill, the FT reports.

Get full in-depth coverage of the spill, from both an oil and political perspective, here. Check out the Energy Source blog here and catch up with FT alphaville’s number crunching here.

As the execs turn themselves in, BP turns itself over…

To accompany President Obama ‘having words’ with BP chairman Carl-Henric Svanberg and chief executive Tony Hayward, here are some more facts and figures on the oil firm: Read more

The high-frequency flack

Now here’s an interesting development in regulatory capture, uh, the growing diversity of industry and regulatory links in US securities. Flash via Reuters:

RTRS-FORMER SEC STAFFER OVERDAHL TO BE SPOKESMAN OF FUTURES INDUSTRY ASSOC’S NEW HIGH FREQUENCY TRADERS LOBBY GROUP-SOURCES Read more

Hong Kong flat sale collapse knocks Henderson

Hong Kong can no longer boast of having the world’s most expensive apartment after the collapse of a $57m flat sale, in a sign that the territory’s property market is cooling. The prospective buyer of the penthouse at 39 Conduit Road in the heart of the city, also failed to complete five other purchases in the building, according to Henderson Land, which developed the property. The company said a total 20 transactions had been cancelled, a huge embarrassment for Lee Shau-kee, Henderson’s high-profile chairman, the FT reports.

Vietnam’s gold habit weighs on the dong

Per dollar of income, the Vietnamese consume more gold on average than anyone else on earth: in 2009, more than twice as much as Indians, 10 times as much as Chinese and 44 times as much as Americans, according to World Gold Council data. According to an FT analysis, this heavy habit is creating concerns in the corridors of power by contributing to the country’s chronic trade deficit, as most gold is imported. This in turn adds to pressure on the dong, Vietnam’s currency.

Fannie, Freddie to delist shares

Fannie Mae and Freddie Mac, the US mortgage finance giants that have been hit by souring home loans, will delist their shares from the New York Stock Exchange for failing to meet minimum price guidelines, the FT reports. The companies’ stock will instead trade as OTC pink sheets. See FT Alphaville: ‘A penny for Fannie and Freddie’

Faysal to buy RBS Pakistan

Royal Bank of Scotland has agreed to sell its Pakistan unit to privately held Faysal Bank for €41m after its earlier failure to sell the business. The sale of a 99.4% stake in RBS Pakistan is part of a wider asset- divestment push by majority UK state-owned RBS, the FT reports. The RBS Pakistan deal is subject to regulatory approval but a central bank official said it would most likely be “a formality”.

GPG eyes UK listing for Coats

Coats, one of the UK’s oldest names in textiles, is set for a London stock market return within two years as part of a corporate restructuring by its owner Guinness Peat Group, the activist investment company. GPG, quoted in London and New Zealand, took Coats private in 2003 after making a £414m takeover offer for the thread manufacturer, the FT reports.

Spain to reveal bank ‘stress tests’

Spain’s central bank plans to publish the results of “stress tests” on the country’s financial institutions in the next few days, to address doubts among international investors about Spain’s banking system, the FT reports, saying the move is a challenge to banking regulators elsewhere in Europe. See also FT Alphaville on the meaning of the Spanish proverb, Cuando el rio suena, lleva agua…

Vickers to review UK banks

Sir John Vickers, former head of the UK’s Office of Fair Trading and a consumer champion, has been appointed to lead a sweeping review that could decide the future of the UK’s biggest banks. George Osborne, chancellor, said Sir John’s independent banking commission would look at issues including the future “size, scale and function” of the banking sector, the FT reports.

Nokia warns on handset profits

Nokia warned that its second-quarter financial results could miss previous guidance in another sign of pressure on the world’s largest mobile phonemaker. The Finnish group said tough competition at the high end of the market and a shift in product mix towards lower-margin products were among the factors behind the lower estimates, the FT reports.

France to raise taxes

The French government on Wednesday unveiled plans to raise the retirement age from 60 to 62 and increase taxes on business and the wealthy to address the shortfall in the country’s pay-as-you-go pension system. The overhaul, which includes annual tax increases worth €3.7bn from 2011, is intended to return the pension system to balance by 2018, the FT reports

BP has nothing to fear…

…But fear itself. Contrast this:

RTRS-FITCH RATINGS SAYS BP’S CDS MOVE OVER DONE Read more

Some Anglo Irish candour

Anglo Irish’s CFO Maarten van Eden has been testifying before a parliamentary committee hearing in Dublin on Wednesday.

Among his comments, Bloomberg reports he admitted the bank faced “horrendous” losses on loans it was transferring to the government’s so-called bad bank, NAMARead more

An initial double-dip indicator

Wells Capital Management wants everyone to forget Payroll Friday.

The number to focus on as an indicator for the shape of the US recovery, Wells’ chief investment strategist Jim Paulsen says, is not the monthly payroll figure, but initial unemployment insurance claims, reported every Thursday. Last week, they fell by 3,000 to a seasonally-adjusted 456,000Read more

Forget oil, shale gas just gets sexier

As BP’s oil leak disaster adds to concerns about growing regulatory and safety risks of oil, coal and other conventional energy sources, shale gas is burnishing its reputation as the sexy new energy play.

While the complex process of extracting gas from shale rock has drawn criticism about its environmental impact, the magnitude of BP’s Gulf of Mexico oil disaster might overshadow those concerns. Read more

Markets Live transcript 16 Jun 2010

Live markets commentary from FT.com 

Risk on, but why?

Send for the rally monkey? The FTSE 100 is on course for a sixth straight session of gains, while the S&P 500 closed above its 200-day for the first time in a nearly a month.

 Read more

Lehman creditors set for faster pay-outs

Thousands of creditors of Lehman Brothers’ collapsed European arm will be offered speedier cash pay-outs in exchange for accepting lower values on their claims, in an attempt to shave years off the process. The FT reports that PwC, the professional services firm, will unveil plans on Wednesday to use a standard procedure to value the claims of as many as 6,300 unsecured creditors of Lehman’s European estate.

Hong Kong flat sale collapse knocks Henderson

Hong Kong can no longer boast of having the world’s most expensive apartment after the collapse of a $57m flat sale, the FT reports. The price slide is seen as a sign that the territory’s property market is cooling. The prospective buyer of the penthouse at 39 Conduit Road in the heart of the city, also failed to complete five other purchases in the building, according to Henderson Land, which developed the property. The company said a total 20 transactions had been cancelled.

Equity rally enters seventh day despite euro wobble

Global stocks delivered their seventh consecutive day of gains as the rally predicated on last week’s sturdy Asian economic data trundled on, the FT reports. The FTSE All-World equity index was up 0.2 per cent, and many industrial commodities were higher as traders continued to negotiate concerns about any negative impact from the eurozone debt crisis and placed their bets on global growth. A 2.4 per cent advance on Wall Street overnight to a near four-week high helped fuel the optimism.

Obama vows BP will pay for spill

President Barack Obama on Tuesday night issued an urgent call for the US to lessen its reliance on oil and move towards cleaner energy, urging Congress to act to reduce the chances of a catastrophe like the Gulf of Mexico oil spill ever happening again, the FT reports. Outlining a plan to restore the Gulf areas devastated by the BP oil spill and vowing to make the British oil company pay for it, Mr Obama used his first televised address from the Oval Office, traditionally reserved for times of crisis, to renew his campaign pledge to promote clean sources of energy.

Spain: ‘If the river is noisy it’s because it has water’

Another day, another Spanish bailout rumour. But as FT Alphaville reports, Wednesday’s chitter chatter — originating from a report in Spanish newspaper El Economista — has already been dismissed by the EU Commission. Read more

Who’s not trading with BP?

Tuesday’s six-notch rating downgrade of BP by Fitch to BBB, appears to have spooked some of the firm’s oil trading counterparties, reports FT Alphaville. According to Reuters, Bank of America Merrill Lynch supposedly told traders to stop entering any new oil trades with BP that extend beyond June 2011. Read more

Any scenario possible for Spanish bank funding, says JPM

Analysts at JP Morgan have just published a 100-page Spanish banking extravaganza. The note centers on this number:€64bn, reports FT Alphaville. That’s JP Morgan’s estimate for how much Span’s domestic banks need to roll over in market funding this year. It roughly equates to 46 per cent of their total market funding. In 2009 it was 41 per cent, or €48bn. Read more

The ECB’s dwindling sterilisation

The European Central Bank is not shy about highlighting its sterilisation efforts.

Having announced it would start buying government bonds back in May, it did not take long for the ECB to publicise its sterilisation process. This was not quantitative easing, the ECB said, since the Bank planned to drain liquidity by issuing one-week fixed-term deposits (FTDs). Read more

Eternal sunshine of the securitisation mind

It’s conference time!

The 2010 Global ABS meet is currently taking place at the Hilton Metropole, just across from the Marks & Spencer on Edgware Road in London. This is rather a fall from grace, as pre-2009, the conference was held at slightly more exotic locales, like the Palais de Festivals in Cannes, or Barcelona.* Read more

Further reading

Elsewhere on Wednesday,

- Why the BP flow rates are increasingRead more