February, 2009
Compromise reached on US stimulus
US congressional leaders reached agreement on a compromise $789bn stimulus deal on Wednesday as Treasury secretary Tim Geithner hit back at criticism that his separate US financial rescue plan lacks specifics.
US bank fears over stability plan
Washington’s “financial stability plan” unveiled Tuesday has fuelled some of the most volatile trading in recent history for US regional bank stocks. Investors’ hopes for the plan, which drove up regional bank stocks last week,
Congress castigates top bankers
US banking chiefs on Wednesday yielded to demands by angry members of Congress and agreed to suspend mortgage foreclosures for at least three weeks to give the US government time to finalise its financial rescue plans.
FSA had HBOS risk fears in 2002
The UK’s FSA watchdog raised concerns about the risk management of HBOS as early as 2002, the FSA revealed Wednesday amid an uproar over the resignation of the bank’s former CEO as deputy chairman of the regulator.
China to stick with US bonds
China will continue to buy US Treasury bonds, even though it has misgivings about US finances and knows the dollar will depreciate, because it remains the “only option” amid financial turmoil, a senior Chinese banking regulator said Wednesday.
Cuomo hits Merrill bonuses
Nearly 700 Merrill Lynch executives had cash bonuses of more than $1m each for last year, New York’s attorney-general disclosed Wednesday. Andrew Cuomo said Merrill’s decision to bring forward nearly $4bn of pay-outs raised “serious and disturbing questions” and detailed some findings of his investigation into the payouts in a letter to the House financial services committee on Wednesday.
Daniels waives £2.3m Lloyds bonus
Eric Daniels, chief executive of Lloyds Banking Group, on Wednesday agreed to waive his £2.3m bonus as he testified to MPs alongside other bank chiefs. Daniels is paid a basic salary of £960,000. The decision to forgo his 2008 bonus comes despite Lloyds report of a profit in 2008 excluding losses incurred from its recent takeover of HBOS.
Beijing backs BoC for AIG unit
Bank of China has emerged as Beijing’s preferred choice as a potential bidder for the coveted Asian life assurance unit of AIG, which analysts estimate is worth about $20bn. The mainland lender is currently weighing up the merits of joining the auction for assets owned by the stricken US insurer.
Fortis shareholders reject BNP deal
The future of group Fortis was thrown into doubt on Wednesday when shareholders voted against selling parts of the Belgo-Dutch financial group to BNP Paribas, and against nationalising the group in the Netherlands.
Sirius XM turns to Liberty Media
Sirius XM Radio is seeking an investment from Liberty Media, in a last-ditch effort to fend off an unsolicited takeover approach from satellite entrepreneur Charles Ergen, reports the WSJ. The talks set the stage for a battle between the leading US satellite-TV providers – Liberty-controlled DirectTV Group and Ergen’s Dish Network – for control of the sole US satellite-radio operator.
Moody’s downgrades BA
British Airways has had its investment grade credit rating removed by Moody’s due to its rapidly worsening financial performance. The agency said the rating also remained under review for a further possible downgrade.
William Hill may join rights issue rush
William Hill, the bookmaker, is understood to be considering raising £200m to £500m of new equity as part of a £1.2bn refinancing, reports The Times. The group is considering tapping existing shareholders through a rights issue.
Credit Suisse losses widen to SFr8bn
Credit Suisse attempted Wednesday to justify heavier-than-expected losses for 2008, saying it was paying the price for taking early action to scale down investment banking and revalue troubled credits.
Madoff’s wife accused of funds transfer
Bernard Madoff’s wife Ruth pulled $15.5m out of a Massachusetts brokerage that funnelled clients to her husband in the weeks before his Dec 11 arrest, according to wire transfer receipts filed by the state’s securities regulators.
Overnight markets: Mixed
US stocks saw modest gains Wednesday but Asian stocks fell Thursday for a fourth consecutive day, led by financial and consumer-related companies, on concern that US measures to alleviate the financial crisis will be inadequate.
FSA – new statement on HBOS
Yet another statement from the FSA – this time with quite a bit more detail of the FSA/KPMG investigation into the allegations raised by Paul Moore – the former HBOS head of risk.
_________
Buried bail-outs
Yesterday was a pretty good day to bury news, amid the hoo-ha surrounding Treasury Secretary Tim Geithner’s much-anticipated ‘financial stability’ plan.
So it’s only now we’re coming to this little snippet (HT Deus ex Machiatto).
Sharia-compliant derivatives – a contradiction in terms?
Reuters is running an interesting story on Islamic banks’ struggles to develop hedging tools to cope with market volatility.
Not all Islamic scholars believe the use of derivatives is permitted by Sharia law – which leaves more conservative institutions with “few instruments to guard against wild swings in currency and interest rate movements,”
KPMG to FSA: Yours!
Earlier the FSA passed the Paul Moore whistle-blowing buck over to KPMG. And now, KPMG are passing it back.
Statement below just received from the firm:
KPMG can confirm that in 2005 it investigated allegations made by Paul Moore to HBOS and the Financial Services Authority regarding certain aspects of the internal risk function at the bank.
Marking to Markowitz
Harry Markowitz – nobel laureate and father of Modern Portfolio Theory – has outlined a proposal for remedying the current financial crisis – a chief cause of which, he says, is a lack of transparency (H/T to Rolfe Winkler).
Coming up, worst year on record for dividends
The chart below – from UBS – shows the estimated and actual percentage of FTSE companies cutting dividends since 1995.
It’s not exactly a surprise, of course, but the forecast for 2009 is still shocking.
FSA: s’ok, KPMG said HBOS was fine
Shame on KPMG.
Statement from the FSA, emphasis ours:
The Financial Services Authority (FSA) can confirm that specific allegations made by Paul Moore in December 2004 regarding the regulatory risk function at HBOS were fully investigated by KPMG,
Sir James Crosby’s full statement
In the light of recent media coverage I have decided to issue a short statement.
Just over three years ago I resigned my position as CEO of HBOS.
Towards the end of my time as CEO of HBOS, as part of a wider restructuring of group functions the Risk Function was elevated to report direct to the CEO.
Lunch Wrap
On FT Alphaville Wednesday morning,
- Blood at the FSA, Crosby resigns.
- QE UK, the BOE inflation report.
- HBOS: The Moore Memo.
- A friend in need in Ireland.
- Hang all the bankers, and other news.
CDS report: Credit markets muted; CS posts SFr 8.22bn loss
Trading activity in European credit markets began on a quiet note again on Wednesday, with little news to excite apart from Credit Suisse’s announcement of a larger than forecast loss of SFr8.22bn (€5.5bn),
QE UK, US-style
The Bank of England’s quarterly inflation report is out today.
In addition to some dire inflation and GDP forecasts, there are also some distinctly US-style quantitative/qualitative easing things going on.
Blood at the FSA
Moore’s revenge.
11.32 RTRS: EX-HBOS CEO JAMES CROSBY SAYS RESIGNING FROM THE FSA BOARD WITH IMMEDIATE EFFECT
11.33 RTRS: EX-HBOS CEO JAMES CROSBY SAYS ACCUSATIONS BY FORMER HBOS RISK MANAGER HAD NO MERIT
11.36 RTRS:
Markets live transcript 11 Feb 2009
Markets live chat transcript for the chat ending at 12:23 on 11 Feb 2009. Participants in this chat were: Paul Murphy, FT (PM) Neil Hume, FT (NH)
PM:
Hello there
PM:
This ML from AV
Trial of the Pyx
Since the twelfth century, the coinage of the realm has been assayed in an arcane ritual known as the Trial of the Pyx.
Every February for the past 800-odd years, a delegation from the Royal Mint, under armed guard,
Hang all bankers, and other news
No one quite gets to the kernel of the news like a British tabloid. Here’s a selection of British front pages on Wednesday, courtesy of Sky.com’s picture gallery:
_____________
Oh,