Posts from Friday Apr 29 2011

EU probing CDS market for collusion — full statement [updated]

Friday’s stunning announcement from the EU Commission below:

The European Commission has opened two antitrust investigations concerning the Credit Default Swaps market. CDS are financial instruments meant to protect investors in the event a company or State they have invested in default on their payments. They are also used as speculative tools. In the first case, the Commission will examine whether 16 investment banks and Markit, the leading provider of financial information in the CDS market, have colluded and/or may hold and abuse a dominant position in order to control the financial information on CDS. If proven such behaviour would be a violation of EU antitrust rules. In the second case, the Commission opened proceedings against 9 of the banks and ICE Clear Europe, the leading clearing house for CDS. Here, the Commission will investigate in particular whether the preferential tariffs granted by ICE to the 9 banks have the effect of locking them in the ICE system to the detriment of competitors. Read more

We have to mention the royal wedding

The wedding on Friday of Prince William, second in line to the British throne, and Kate Middleton is set to hog the global media spotlight as thousands of journalists, broadcasters and support staff converge on London for an event expected to be watched by some 2bn people, reports the FT. International news organisations have sent scores of workers to cover the event, with CNN alone deploying 50 journalists. The Foreign Press Association estimated that as many as 3,000 journalists would cover the wedding for non-UK media outlets. Christopher Wyld, FPA director described the event as a “combination of the best reality television, the best soap opera and there is real history on top of that.” More than 100 foreign photographers have applied for accreditation outside Westminster Abbey, where the marriage will take place, and along the route between the abbey and Buckingham Palace. TV and radio broadcasters have built 48 studios for the event. But, says the FT in a separate report, the largest audience will be online. See also the FT’s Philip Stephens on ‘confessions of a lapsed republican”.

Deutsche Bank beats expectations

Deutsche Bank said it expects to gain more this year than anticipated from buying Deutsche Postbank last year, suggesting it will achieve profit targets after beating analysts’ expectations with first-quarter earnings, reports the FT. Germany’s largest bank by assets outperformed many peers in its core investment banking businesses while reaping the benefits of domestic expansion into retail banking and wealth management. Deutsche earned net income of €2.1bn ($3.1bn) in the first quarter. Pre-tax profits from operating businesses were €3.5bn, with a record quarterly contribution from retail banking and asset management. The bank has a target of €10bn of annual pre-tax profits this year from operating businesses. Lex however warns that until CEO Josef Ackermann “delivers capital certainy, Deutsche’s shareprice looks set to hug 0.8 times book value”.

Overnight markets: Down

Asian stocks and crude oil fell for the first time in three days on Friday, while the won weakened after US economic growth and South Korea’s industrial production missed economists’ forecasts, reports Bloomberg. Many markets were closed for the Easter holidays and a public holiday in Japan. China’s renminbi strengthened, breaking through 6.5 per dollar for the first time since 1993.

The MSCI Asia Pacific excluding Japan Index sank 0.7% as of noon in Singapore. S&P500 Index futures were little changed. Oil declined 0.3 %, gold retreated from a record high and silver slipped, paring its biggest monthly jump since 1987. Read more

Russia’s Yandex files for IPO

Yandex, Russia’s number-one search engine, has announced it will list shares on Nasdaq in New York, reviving plans of a long-anticipated initial public offering, reports the FT’s BeyondBrics. The flotation follows the $1bn-plus listing in London late last year of internet giant Mail.ru, and will test investor interest in Russian internet companies, one of the world’s fastest growing internet markets. Yandex has not revealed how much it is planning to raise or what size valuation it is targeting, although a person with knowledge of the offering said it was estimated at $1bn in order to determine the registration fee. DealBook cites analysts saying Yandex is likely to see “high demand”.

Trafalgar to liquidate Catalyst fund

Trafalgar Asset Management – the prominent UK hedge fund run by outspoken investor Lee Robinson – is liquidating its flagship fund, reports the FT. The $450m Trafalgar Catalyst Fund is being wound down as a result of “material” investor redemption requests,. An investor in the fund expressed concern about the apparent intention of Robinson – who personally manages the fund and co-manages the firm alongside partner Theo Phanos – to establish a new venture separate from Trafalgar.  Trafalgar is among a handful of London hedge funds in which Goldman Sachs owns a significant stake through its Petershill vehicle – managed by Jonathan Sorrell, son of the WPP chief executive, Sir Martin Sorrell. The liquidation of Catalyst is likely to affect the value of Goldman’s stake.

Jimmy Choo eyes $1bn HK float

Jimmy Choo and its private equity owner TowerBrook Capital are considering a £650m ($1.07bn) initial public offering of the luxury shoe group, in a move that could intensify competition in the auction for the company, reports the FT. Three bidders are vying for control of Jimmy Choo – private equity group TPG Capital; Jones, the US retailer, and a consortium of Investcorp and Labelux, the private luxury goods group that owns Bally. Second-round bids are due in mid-May. It is understood that bids on the table are above £500m. But Jimmy Choo and TowerBrook are now considering an IPO after a proposal by HSBC. It is likely any listing would take place in Hong Kong, fast emerging as the public market of choice for luxury labels.

BGC Partners buys Newmark

BGC Partners, the US brokerage, announced on Thursday the purchase for an undisclosed price of Newmark, the real estate advisory firm that operates as Newmark Knight Frank in the US, reports DealBook. BGC’s chief executive and chairman, Howard Lutnick said the deal marked the start of BGC’s push into commercial real estate. Lutnick is also chief executive of the brokerage firm Cantor Fitzgerald, BGC Partners’ controlling shareholder. Newmark has a close partnership with London-based Knight Frank, although the firms are independent of each other. Shares of BGC rose about 2% in afternoon trading on Thursday.

Nasdaq/ICE may go hostile for NYSE

Nasdaq OMX and IntercontinentalExchange are set to go hostile in their bid for NYSE Euronext after shareholders raised pressure on the NYSE parent for a better deal, reports Reuters. Nasdaq and ICE are expected to soon take their $11.1bn bid directly to NYSE’s shareholders through a tender offer. The move is seen as the next logical step for Nasdaq and ICE after being rebuffed twice by NYSE, which favours its existing $10.1bn deal with Germany’s Deutsche Boerse. A direct appeal to shareholders through a tender offer would intensify pressure on NYSE. Earlier, the FT reported that Deutsche Börse executives for the first time publicly backed statements by Duncan Niederauer, NYSE chief executive, that at least €100m of extra synergies can be extracted from their planned merger. That will quiet speculation the two sides had not previously agreed on what cuts to make. Meanwhile, says DealJournal, Niederauer “has some serious sweet-talking to do”.

Panasonic to slash jobs

Panasonic Corp, Japan’s biggest home appliance maker and the world’s largest maker of plasma televisions, plans to cut nearly 5% of its full-time workforce over the next two years as it steps up efforts to restructure its businesses, reports the FT. The company, which reported its first profit in three years on Thursday, said it planned to cut its regular workforce to 350,000 by March 2013 from 366,937. The statement followed a report in Japan’s Nikkei newspaper that Panasonic was set to cut more than 12% of its workforce, or 40,000 jobs. Analysts said the figure incuded the elimination of part-time jobs that were not counted as regular ones. The move follows the company’s Y664.8bn purchase in 2010 of remaining stakes in Sanyo Electric and Panasonic Electric Works, in which it owned 50% and 51% respectively.

Total agrees $1.4bn stake in SunPower

Total, the French oil and gas group, has agreed to take a majority stake in SunPower, the California solar power company, for about $1.4bn, in one of the largest-ever single investments by an oil company in renewable energy, reports the FT. Total plans to buy up to 60% of SunPower’s A and B shares at a price of $23.25, a 46% premium to the A shares’ closing price on Wednesday. SunPower is the second-largest US solar panel supplier. By taking a majority stake but maintaining SunPower’s independence, Total hopes to use its financial strength and global reach while preserving SunPower’s culture and entrepreneurial tradition.

RIM plunges on profit warning

Shares in Research in Motion, the Canadian manufacturer of the BlackBerry, plunged as much as 11% in after-hours trading after the company issued a surprise profit warning due to growing competition from Apple and Google as well as delays in the launch of an updated generation of smartphones, reports the FT. RIM said on Thursday it had cut sales and profit forecasts for the current quarter due to slowing demand for its ageing smartphones, which are losing ground to the iPhone and other touchscreen- based handsets. RIM said it expected profits this quarter of $1.30-$1.37 a share, down sharply from last month’s forecast of $1.47-$1.55. The NYT says that RIM’s previously robust financial performance is ‘not looking so solid.