July, 2009
Snap news
Breaking pre-market news on Monday,
- Resolution welcomes Friends Provident statement, to meet today — statement.
- UK house prices rise 0.6 per cent in July — Rightmove House Price Index.
- Sweden’s SEB bank Q2 operating profit falls to SEK 618m — Swedish Wire.
Tories pledge to scrap the FSA
An incoming Conservative government would rip up Britain’s tripartite system of financial regulation and transfer powers to the Bank of England to avoid a repeat of the banking crisis. George Osborne,
Mudd to replace Edens at Fortress
Investment group Fortress is expected to approve the appointment of Daniel Mudd, the former chief executive of Fannie Mae, as chief executive. Mr Mudd will replace Wes Edens as the company, with $27bn under management,
KKR to merge US business with Amsterdam listing
Kohlberg Kravis Roberts will on Monday publish details of its plan to list on the Amsterdam stock exchange after the independent directors of its Dutch-listed fund approved a merger with the US private equity group.
Harvard and Yale scupper Nordwind ambitions
The Harvard and Yale university endowments are among a group of investors that has blocked a deal agreed by a German buy-out fund, highlighting how the balance of power in the private equity industry is shifting back to investors.
Porsche/VW deal close
Porsche’s controlling families will agree on Thursday to accept an offer by Volkswagen to buy its sports car business Porsche AG for roughly ¢8bn, Der Spiegel reported on Saturday. The rival Porsche and Piech clans,
Rio’s Chinese arrests said to be related to price talks
China’s arrest of Rio Tinto Group’s Stern Hu is related to a criminal probe into iron-ore price talks, not espionage, and the case may result in a decision to charge the mining executive, Bloomberg reported.
Iceland refreshes its banking system
Iceland is set to announce a €1.5bn recapitalisation of its banking sector and unveil a deal to hand control of two of the country’s healthy new banks to foreign creditors. The steps mark an important milestone in efforts to rebuild Iceland’s shattered banks and reintegrate the north Atlantic island nation into the international financial system.
US bail-out money claimed to boost lending
Most US banks claim that government bail-out money has allowed them to write new loans to customers, while a minority has used it to buy rivals, according to a new report by Neil Barofsky, the special inspector-general for the troubled asset relief programme.
EM brands tipped for the top
The world’s next Coca-Cola or Starbucks is most likely to emerge from Asia, the Middle East or South America according to research prepared for the FT by Wolff Olins, the consultants behind the London 2012 Olympics logo.
The Weekender
On FT Alphaville this week,
- Calamari Capital – Goldman generally gets it in the neck
- Repeatedly
- Notwithstanding support from Ms Meredith
- Go, figure
- No pixel trail for Mr Paulson
- Sick CIT
- Silver Lake swooping for Tandberg? (Yes,
The problem with economics
Of all the economic bubbles that have been pricked, few have burst more spectacularly than the reputation of economics itself.
So says the Economist in its exploration of what went wrong with the dismal science and its practitioners, whose pronouncements – in the wake of the ongoing economic crisis – “are viewed with more scepticism than before”.
Citi subprime snapshot
Citi is surprisingly transparent about its accounting for mortgage holdings and investments in its recent Q2 results.
Of particular interest in the tables below, is the rather remarkable turn around in subprime exposures — which have turned from a $2.3bn mark-to-market loss in Q1 2009 to a $613m gain in the most recent quarter.
Citi reports Q2 net income of $4.3bn, EPS $0.49
Analysts had expected revenue of $21.5bn.
Some highlights from the statement:
NEW YORK–(BUSINESS WIRE)–Citigroup Inc. (NYSE: C) today reported net income for the second quarter of 2009 of $4.3 billion,
Lunch Wrap
On FT Alphaville Friday morning,
- D-Day in Latvia.
- A different take on CIT and CDOs.
- How risky is Goldman?
- So, what’s email?
- Britain’s mediocre prospects and the story of Markit in Pink picks.
BofA reports Q2 net income of $3.2bn, EPS $0.33
Analysts had expected an EPS of 32 cents before exceptionals.
From the release:
CHARLOTTE, N.C., July 17 /PRNewswire/ — Bank of America Corporation today reported second-quarter 2009 net income of $3.2 billion.
General Electric net earnings fall 47% in the second quater
General Electric earnings fell 47 per cent in the second quarter to $2.9bn, a number that was mostly in line with market expectations.
Here are the highlights from the statement:
2Q ’09 Highlights (Continuing Operations attributable to GE)
• Earnings per share (EPS) of $.26,
Markets live transcript 17 Jul 2009
Markets live chat transcript for the chat ending at 12:05 on 17 Jul 2009. Participants in this chat were: Neil Hume, FT (NH) Paul Murphy, FT (PM) NH:Good morning and welcome to Shambles Live
How risky is Goldman?
John Kemp over at Reuters has published some sober – and much needed – analysis on the amount of risk Goldman is taking on its trading books.
The back story here is that Tuesday’s figures showed Goldman’s net value at risk (VAR) in the second quarter averaged $245m,
A different take on CDOs and CIT
News that CIT’s potential bankruptcy could impact a number of synthetic CDOs — in Europe in particular — hit the wires earlier this week:
NEW YORK, July 14 (Reuters) – Standard & Poor’s said on Tuesday that 1,881 synthetic collateralized debt obligations are exposed to CIT Group (CIT.N:
What’s email?
Five hours of questioning. Five hours of grilling really.
And what was the most enlightening snippet of crisis-related information Henry Paulson, former US Treasury Secretary, revealed to some very hostile US House of Representatives?
The fact that he never used email while in office.
D-day in Latvia (updated)
Latvia watchers will be awaiting the end of the IMF’s mission to Baltic country on Friday with trepidation.
We already know the talks have been difficult. And while Latvia technically can survive without receiving the second tranche of IMF aid being discussed,
Further reading
Elsewhere on Friday,
- Nouriel Roubini vs the media.
- Matt Taibbi on Goldman earnings.
- On plummeting commercial paper.
- “A Wall Street-like bubble has engulfed the world’s favourite red wine.”
Pink picks
Comment, analysis and other offerings from Friday’s FT,
David Pitt-Watson: Investors need to behave more like owners
The senior adviser to Deloitte,says that as any good lawyer will tell you, there are some things you can enforce by law:
Snap news
Breaking pre-market news on Friday,
- British Airways to raise £600m via convertible debt issue and renegotiated pension-related bank guarantees, announces Q1 loss — statement.
- Swedbank reports worse-than-expected loss of SEK1.85bn on Baltic provisions – Reuters.
Anger at ‘Sarbox syndrome’ in the UK
Leading bankers in London hit out at government-backed recommendations to rein in executive power and make public the details of top bankers’ salaries, saying the proposals were overly bureaucratic and populist.
Dimon slams “fast and furious” regulatory reform
Jamie Dimon, chief executive of JPMorgan Chase, on Thursday hit out at strict rules on US credit cards, saying they would cost the bank’s lossmaking card unit up to $700m next year. His comments came after JPMorgan underlined its status as one of the winners from the crisis,
Two titans amid the ruins of Wall Street
A new order is emerging on Wall Street – one in which just a couple of victors are starting to tower over the handful of financial titans that used to dominate the industry, the New York Times reports. On Thursday,