JP Morgan top Q4 2008 overall corp bond underwriter

Mon Dec 29, 2008 9:15am EST

 Dec 29 (Reuters) - Thomson Reuters Fixed Income Data/EJV on
Monday released the following table of the top Q4 2008 U.S.
underwriters of overall corporate bonds. The table includes
investment grade and high-yield corporate bonds issued in the
U.S.:
Q4 2008 OVERALL CORP BONDS BOOKRUNNERS

                            Volume      # of       PERCENT
Rank  Bookrunner           (in U.S. dlrs)  Issues   MARKET
SHARE
1    JP Morgan            11,090,575,235     52         16
2    Citi                  8,473,003,012     37         12
3    Bank of America       8,100,783,065     39         12
4    Goldman Sachs & Co    7,042,578,851     28         10
5    Barclays Bank Plc     5,631,656,595     23          8
6    Deutsche Bank         5,559,925,419     27          8
7    Morgan Stanley        5,113,027,407     25          7
8    Credit Suisse         4,209,511,863     19          6
9    Royal Bank Scotland   3,712,571,149     23          5
10    Merrill Lynch & Co    2,955,455,550      6          4
11    UBS AG                2,340,484,357     13          3
12    HSBC Banking Group    1,731,948,050      6          2
13    Mizuho Financial Group  865,709,917      6          1
14    Bank of Nova Scotia     730,288,702     10          1
15    Wachovia Securities     657,584,083      4          1
--------------------------------------------------------------
2008 OVERALL CORP BONDS BOOKRUNNERS
1    JP Morgan            98,725,154,312    354         15
2    Citi                 91,547,661,218    275         14
3    Bank of America      77,380,833,903    279         12
4    Barclays Bank Plc    66,935,422,627    241         10
5    Morgan Stanley       53,335,271,862    177          8
6    Goldman Sachs & Co   51,698,832,232    174          8
7    Merrill Lynch & Co   48,429,984,400    146          7
8    Credit Suisse        34,608,419,704    127          5
9    Deutsche Bank        31,707,974,400    137          5
10    Wachovia Securities  26,817,469,492    103          4
11    UBS AG               21,189,728,381    101          3
12    Royal Bank Scotland  20,627,149,607    109          3
13    HSBC Banking Group   12,669,599,337     50          2
14    BNP Paribas           8,348,022,085     43          1
15    RBC Capital Markets   2,035,962,841     16          0
------------------------------------------------------------------------------
Source: Thomson Reuters Fixed Income Data/EJV
League tables are compiled from Thomson Reuters comprehensive
fixed income database, EJV. Bond criteria for the tables are
established and published in cooperation with bond
underwriters. Sovereign and emerging market high-yield bonds
are excluded from the tables. All underlying data are made
available to bond underwriters to ensure market transparency.
For more information regarding criteria and data contributions,
please contact Maria Dikeos at 646 223-6820 or Aimee Webster at
646 223-6816. For access to Thomson Reuters fixed income data,
please contact your Thomson Reuters representative or visit us
here.

Banks' exposure to Lehman emerges

The financial impact of the demise of Lehman Brothers is emerging as firms worldwide state their degree of exposure to the bankrupt firm.

Three Chinese banks have some $297.4m (£166.1m) in Lehman Brothers bonds, state media and local reports said.

Swiss Life said it had exposure of $20m Swiss francs (£9.9m) and Swiss Re had exposure of 50m Swiss francs.

German bank KfW transferred 300m euros (£237m) to Lehman after it collapsed on Monday, local media reported.

However, a spokesperson for KfW said the transfer had been done in error.

"There was an erroneous swap payment on Monday... for reasons for which are being investigated internally", the company told the Frankfurter Allgemeine Zeitung newspaper.

Lehman Brothers collapsed after seeing billions of dollars of losses in the US mortgage market.

UK deal

Of China's exposure, Industrial & Commercial Bank said it owns Lehman bonds worth $151.8m, according to the Xinhua agency, while Bank of China has $75.6m in bonds and China Merchants Bank had $70m in Lehman bonds.

Meanwhile, UBS said on Tuesday that its exposure to Lehman Brothers was less than $300m.

But Japanese firms' total Lehman exposure was far greater at 440bn yen (£2.3bn), according to an earlier Kyodo news report.

Bank of Japan governor Masaaki Shirakawa that while Lehman's collapse would harm Japanese firms, those hit had enough funds to cover losses.

"I am not concerned that the recent events will destabilise the financial system in Japan," he said.

The news comes as UK bank Barclays has acquired certain core assets of Lehman Brothers for $1.75bn.

Barclays bought Lehman's North American investment banking and trading unit for $250m, and paid $1.5bn for its New York headquarters and two data centres.

The administrators, PricewaterhouseCoopers, said it had a keen interest in developments with Lehman Brothers in the US.

The administrator said that all UK employees at Lehman still attending work will be paid by the end of the month.

Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/7621609.stm

Published: 2008/09/17 17:51:54 GMT

Morgan Stanley tries to restore 'sanity' to market

Reporting its results a day early, the investment bank handily beats earnings forecasts but the stock still fell after hours.

By David Ellis, CNNMoney.com staff writer

Last Updated: September 16, 2008: 6:33 PM EDT

NEW YORK (CNNMoney.com) -- Morgan Stanley offered up some much-needed good news late Tuesday, reporting better-than-expected quarterly results a day in advance.

The nation's No. 2 investment bank posted a net profit of $1.43 billion, or $1.32 per share, during the third quarter ending in August, down almost 8% from a year ago.

The numbers, however, were much better than forecasted - analysts were anticipating a profit of just $869 million, or 77 cents a share, according to Thomson Reuters.

The company also reported sales of $8 billion in the quarter, a slight increase from the same period last year, but much higher than the $6.3 billion in revenue that Wall Street was expecting.

Morgan Stanley (MS, Fortune 500) shares, which finished 11% lower in regular trading Tuesday, fell another 3% after-hours.

Colm Kelleher, Morgan Stanley's chief financial officer, said the firm felt compelled to report a day early given some of the developments and rumors that have swirled around the financial services industry in recent days.

The New York City-based firm was originally scheduled to report its results before Wednesday's market open.

"It is very important to get some sanity back into the market," Kelleher said in a conference call with analysts.

Just a day earlier, fellow investment bank Lehman Brothers (LEH, Fortune 500) filed for bankruptcy Monday, marking the biggest ever in U.S. corporate history.

Merrill Lynch (MER, Fortune 500), a Wall Street icon itself, announced plans to be acquired for some $50 billion by Bank of America (BAC, Fortune 500), after enduring billions of dollars in losses as a result of ambitious bets on the U.S. mortgage market.

There have also been increasing fears about the health of the insurance giant American International Group (AIG, Fortune 500), which is scrambling to raise much needed cash.

Stocks finished higher in what turned out to another dramatic day on Wall Street, even though the Federal Reserve decided to keep its key short-term rate steady Tuesday afternoon. The market had been expecting a rate cut in light of the credit crisis facing the financial sector.

A closer look at the numbers

John Mack, Morgan Stanley's chairman and CEO, attributed Tuesday's results to strong performances across a number of the company's key divisions, including its commodities and foreign exchange businesses.

Just a quarter ago, the company saw its second-quarter profits plunge 57% due to lower investment banking and sales and trading activity.

The company's institutional securities division, which comprises the bulk of its business, managed to minimize the pain this quarter in those businesses as sales rose 19% to $5.9 billion.

Revenues in Morgan Stanley's other two core businesses - global wealth management and asset management - were down from a year ago.

The past three months have been difficult for securities firms. In addition to exposure to toxic mortgage-related assets, they have had to endure wild swings in the equity markets and a virtual halt in investment banking activity.

Goldman Sachs (GS, Fortune 500) confirmed that Tuesday morning when it reported its third-quarter results. The leading investment bank's profits fell 70% from a year ago -- but still managed to beat expectations.

Kelleher offered a tempered outlook of the company's prospects, saying that the remainder of the year will remain challenging.

He also defended the firm's investment bank structure, saying that the company did not plan to buy or merge with a commercial bank. Goldman Sachs' CFO made similar comments earlier Tuesday.

"We believe in the diverse business model of the investment bank and its ability to adapt to different environments," said Kelleher. "Depository institutions do not better enable us to execute our business and may bring with them their own set of complications."

First Published: September 16, 2008: 4:37 PM EDT

Goldman Sachs reports big profit plunge

Earnings sink 70% but beat analyst projections. Stock falls, but CEO insists that firm is 'well positioned.'

By David Ellis, CNNMoney.com staff writer

Last Updated: September 16, 2008: 10:49 AM EDT

NEW YORK (CNNMoney.com) -- Goldman Sachs reported a sharp decline in profits Tuesday that beat Wall Street's forecasts. But revenues missed analysts' estimates and the stock plunged in early trading.

The New York City-based investment bank said its profits fell 70% to $845 million, or $1.81 a share, during the third quarter ending in August. Just a year ago, the company reported a profit of from $2.85 billion, or $6.13 a share.

Wall Street was expecting a profit of $1.71 a share.

Net revenue tumbled more than 50% to $6.04 billion from $12.3 billion during the same period last year, missing projections of $6.2 billion.

Isabel Schauerte, an analyst with Celent, a Boston-based financial research and consulting firm noted the latest results from Goldman damage the firm's "aura of invulnerability."

"For the time being, the crisis of confidence weighs on the firm's earnings power and may potentially narrow its access to funding," Schauerte wrote in a research note.

With investment banking activity at a virtual standstill and financial markets in disarray, few were expecting a banner quarter for Goldman.

After declining 12% Monday -- one of the company's worst drops of the year as the Dow fell more than 500 points --Goldman (GS, Fortune 500) shares continued to decline Tuesday, falling 6% in late morning trading.

Investors were watching Goldman's results carefully in light of the rapidly changing financial landscape.

Fellow investment bank Lehman Brothers (LEH, Fortune 500) filed for bankruptcy Monday, marking the biggest ever in U.S. corporate history.

Merrill Lynch (MER, Fortune 500), a Wall Street icon known for its famous bull logo, also announced plans to be acquired for some $50 billion by Bank of America (BAC, Fortune 500), after enduring billions of dollars in losses as a result of ambitious bets on the U.S. mortgage market.

Goldman rival Morgan Stanley (MS, Fortune 500) is slated to report its quarterly results Wednesday.

Lloyd Blankfein, Goldman Sachs' chairman and CEO, described the quarter as challenging, blaming Tuesday's results on a decrease in client activity and declining asset valuations.

"Despite the deteriorating market conditions, the focus of our people and strength and breadth of our client franchise produced a solid performance in a tough environment," Blankfein said in a statement.

He added that the company remains "well-positioned to meet the needs of our clients and identify and act on the right market opportunities."

Investment banking, a cornerstone of the Goldman's business, was one of the hardest hit divisions of the company. Revenues in the division plunged 40% as advisory and underwriting activity stalled during the quarter.

But it was Goldman's trading and principal investment division, which includes the company's equity, fixed income, currency and commodities businesses, that suffered the most. Revenues fell by two thirds during the quarter to $2.7 billion.

Analysts warned ahead of Tuesday's earnings announcement that the division could see signs of strain since Goldman Sachs ties more of its business to the stock market than any of its peers.

Bucking the trend was the company's asset management and securities business, which reported a 4% increase in revenue during the quarter.

Despite this quarter's woes, Goldman continues to remain relatively well capitalized. The company said its Tier 1 capital ratio - a widely used measure of a bank's ability to absorb losses - stood at 11.6%, up from 10.8% in the previous quarter.

A Tier 1 capital ratio of above 8% is generally considered a good sign for financial institutions.

First Published: September 16, 2008: 8:37 AM EDT

Lehman Bros files for bankruptcy

The fourth-largest investment bank in the US, Lehman Brothers, says it will file for bankruptcy protection, amid a growing global financial crisis.

Lehman had incurred losses of billions of dollars in the US mortgage market.

The move threatens to deal a further blow to the global financial system, as banks unwind their deals with Lehman.

Merrill Lynch, also stung by the credit crunch, has agreed to be taken over by Bank of America in a dramatic weekend of events for Wall Street.

The chance that Lehman Brothers could collapse increased sharply after the strongest potential buyers pulled out at the weekend.

Greg Wood, the BBC's North America business correspondent, said that police had cordoned off the bank's headquarters in New York and staff were leaving with cardboard boxes as onlookers gathered to watch the bank's demise.

Lehman suffers nearly $4 billion loss

Wall Street firm reveals major restructuring: spin-off of commercial real estate assets and plan to sell stake in investment management division.

By David Ellis, CNNMoney.com staff writer

Last Updated: September 10, 2008: 9:09 AM EDT

NEW YORK (CNNMoney.com) -- Lehman Brothers suffered one of its worst quarterly losses in the company's history, reporting a loss of nearly $4 billion Wednesday, and announced a series of drastic steps aimed at reviving the beleaguered firm.

The firm said it would spin-off part of its commercial real estate assets, sell a majority stake of its investment management division and slash its annual dividend.

Following a wild market session Tuesday in which shares plunged 45% to their lowest levels in nearly a decade, Lehman (LEH, Fortune 500) announced a $3.9 billion fiscal third-quarter loss, or $5.92 a share Wednesday morning. It was Lehman's biggest quarterly loss since the firm went public in 1994, exceeding a $2.8 billion loss announced in June.

"This is an extraordinary time for our industry, and one of the toughest periods in the firm's history," Lehman Chairman and CEO Richard Fuld Jr. said in a statement.

In last year's third quarter, Lehman reported a profit of $870 million, or $1.54 a share.

Analysts were expecting the firm to report a $1.99 billion loss, or $3.35 a share, according to Thomson Reuters. The company had originally planned to release its results on Sept. 18.

Shares of Lehman gained nearly 12% in pre-market trading following the announcement.

The company's stock has plunged nearly 88% so far this year due to concerns about its ability to raise much needed capital.

A keystone of Lehman's restructuring plan included a drastic reduction in both its commercial and residential real estate holdings. Lehman said it would spin off the majority of the company's commercial real estate assets into a new separate public company dubbed Real Estate Investments Global.

The company trimmed its residential real estate holdings by nearly a half. Part of that included the planned sale of about $4 billion worth of U.K. residential real estate. Lehman said it was working with asset manager BlackRock (BLK, Fortune 500) on the sale and expected it to be completed in the coming weeks.

Lehman also announced its intention to sell a majority interest in its investment management division, which includes the profitable money manager Neuberger Berman. The firm is in advanced discussions with a number of potential partners for its investment management division and said it expected to announce details of the deal "in due course."

Also, in an effort to save $450 million, Lehman said it planned to reduce its annual dividend to 5 cents per share from 68 cents.

"The strategic initiatives we have announced today reflect our determination to fundamentally reposition Lehman Brothers by dramatically reducing balance sheet risk, reinforcing our focus on our client-facing businesses and returning the Firm to profitability," Fuld said.

Lehman shares plummeted just a day earlier following a report by Dow Jones that indicated talks between Lehman and Korea Development Bank had ended. It had been widely speculated in recent weeks that the state-run KDB was interested in buying a stake in Lehman.

The stock fell even further Tuesday after credit ratings agency Standard & Poor's said it was placing Lehman on its CreditWatch list with negative implications, suggesting that S&P may cut its rating on Lehman's debt.

S&P analysts Scott Sprinzen and Tanya Azarchs wrote in a research note that they were concerned by "heightened uncertainty about Lehman's ability to raise additional capital, based on the precipitous decline in its share price in recent days."

Investors fear a Bear Stearns repeat

The fate of Lehman Brothers has been the subject of much market discussion in recent months following the near collapse of Bear Stearns, which was subsequently sold to JPMorgan Chase (JPM, Fortune 500) at a fire sale price.

Analysts have also been busy slashing third-quarter earnings estimates for Lehman, as well as Goldman Sachs (GS, Fortune 500) and Morgan Stanley (MS, Fortune 500), due to sluggish investment banking activity and weakness in stock markets around the globe.

But Lehman's problems have proven acute than its crosstown rivals. Hit hard by bad investments in the U.S. mortgage market, the investment bank has suffered billions of dollars in writedowns and has been forced to raise billion of dollars in capital.

In June, following the company's first loss, Lehman announced plans to raise $6 billion in capital by selling stock.

At that time, investors were not only questioning the company's accounting but speculating that Lehman may have to sell part or even all of itself to another financial firm.

Speculation about a break-up of Lehman persisted in the months that followed, as analysts bet that the company would shed its profitable Neuberger Berman money management unit to raise cash.

Other large global financial institutions have also been said to be eyeing an investment in the U.S. firm, including Tokyo Mitsubishi Bank as well as a group of investors led by the British bank HSBC (HBC), according to recent news reports.

Lehman chief Fuld has faced increasing pressure to take action amid all the uncertainty about the firm's future. So far this year, there have been a handful of casualties in Lehman's top executive ranks.

In June, CFO Erin Callan and Chief Operating Officer Joseph Gregory were replaced. Callan eventually left Lehman for a job at Credit Suisse while Gregory remained at Lehman in a different position.

First Published: September 10, 2008: 7:59 AM EDT

Commerzbank buys Dresdner Bank for 9.8b euros

Posted: 01 September 2008 0224 hrs

FRANKFURT: German insurance giant Allianz said on Sunday it would sell the nation's third largest private bank, Dresdner Bank, to number two Commerzbank for 9.8 billion euros (14.4 billion dollars) in a major step towards consolidation of the sector.

The cash and share deal included the creation of a trust worth nearly one billion euros to cover risks from risky Dresdner assets, and would leave Allianz with a share of around 30 percent in Commerzbank, a statement said.

It is to take place in two stages and be completed "no later than the end of 2009," pending approval by regulatory authorities, it added.

In the first stage, Commerzbank is to get 60.2 percent of Dresdner in exchange for its own shares which would represent 18.4 percent of its equity, once a capital increase is carried out.

Commerzbank is also to pay Allianz 2.5 billion euros in cash, and transfer its Cominvest fund, which is valued at 700 million euros, to Allianz.

Dresdner would be merged with Commerzbank in the second stage, with the latter acquiring all outstanding shares in exchange for its own stock worth about 3.2 billion euros.

The new German bank would have total assets of around 1.1 trillion euros but still trail far behind number one Deutsche Bank, with 1.99 trillion euros.

Savings of up to five billion euros were expected as a result of the tie-up, which reports have said could see the elimination of some 9,000 jobs.

The deal creates a banking heavyweight better able to compete with Deutsche Bank, but threatens workers especially in Dresdner's troubled investment banking unit.

Allianz, the biggest European insurance group, paid around 24 billion euros for Dresdner seven years ago in a gamble it could make a bigger profit from combined insurance and banking activities.

The state-owned China Development Bank (CDB) had also been considered a front runner, and is said to have offered more money for Dresdner, along with the prospect of fewer job losses.

Political considerations may have scuttled CDB's chances however, since the mood in Germany at present is one of wariness regarding foreign investors, especially when it comes to what are considered strategic interests.

Dresdner's sale to Commerzbank, meanwhile, allows the latter to strengthen its relationships with Germany's successful "Mittlestand" industrial companies.

Allianz will in turn become "the largest shareholder by far and a strong partner of the new bank," the statement said.

Observers said Dresdner's investment banking division, which has suffered successive quarterly losses following the meltdown of the US market for high-risk, or sub-prime, mortgages a year ago, could see heavy job cuts in London and Frankfurt.

The Sunday Times newspaper said more than 1,000 jobs could be cut in the British capital.

Union sources claimed a Commerzbank-Dresdner Bank combination would lead to the loss of up to 9,000 posts.

But the head of Dresdner's works committee, Hans-Georg Binder, told the mass market Bild am Sonntag newspaper that he estimated 4,000 jobs would go, and that some would be at Commerzbank.

The new bank would have 1,200 branches in Germany, 11 million private customers and more than 100,000 corporate and institutional clients, Allianz said.

It was estimated to have staff of around 67,000.

The deal marks a significant step in the unfolding consolidation of Germany's banking sector, although numerous local public savings banks and co-operative banks will still play a leading role. - AFP/de

Lehman looking at cutting some 1,200 jobs: source

Thu Aug 28, 2008 10:09pm EDT

By Dan Wilchins

NEW YORK (Reuters) - Lehman Brothers Holdings Inc is looking at cutting some 1,200 jobs in its latest round of cost cutting, a person familiar with the matter said, as weak financial markets spur layoffs across Wall Street.

The job cuts would amount to roughly 5 percent of the work force of the fourth-largest U.S. investment bank, which has already announced three other rounds of cuts totaling about 4,000 positions this year.

The precise number of staff to be laid off in this most recent round is still being determined, the person familiar with the matter said. Lehman declined to comment.

Wall Street firms are broadly reeling from the credit crunch and Lehman is no exception. It is looking for buyers for some $40 billion of commercial mortgages and property on its balance sheet.

Investors fear that write-downs of its commercial and residential mortgage assets could be large enough to dramatically reduce the company's net worth, which stood at about $26.3 billion at the end of May.

Over the next 10 days, Lehman may announce a series of steps to boost capital, cut costs and reduce bad assets, wrote Richard Bove, an analyst at Ladenburg Thalmann, in a note to clients. If Lehman does not take these steps, an outsider could buy and restructure the bank in a hostile takeover, he added.

Lehman's shares rose $1.09, or 7.4 percent to close at $15.87 on Thursday. Even with those gains, the company's shares trade at less than half their book value, even as many of its competitors trade at a premium.

Many of Lehman's strongest businesses, ranging from fixed income underwriting to advising on mergers, have been much weaker this year compared with last year.

Given the potentially large write-downs, some of Lehman's critics have charged the company is undercapitalized. The bank has raised roughly $12 billion of capital this year through common equity, preferred stock and convertible securities offerings.

Lehman is looking at raising additional capital by selling a stake in its asset management business, sources have said.

Lehman had about 26,200 employees at the end of May.

(Reporting by Dan Wilchins; Editing by Braden Reddall and Andre Grenon)

UBS to cut bonus payments

ZURICH - UBS plans to cut first half bonus payments to its employees by 4 billion Swiss francs (S$5.14 billion), Swiss newspaper Sonntag CH reported on Sunday without disclosing its sources.

For 2007, the bank had paid in total 12 billion Swiss francs in bonuses despite substantial writedowns and a capital hike caused by the subprime crisis.

A spokesman for the Swiss bank declined to comment on the report but said that bonus payments will 'certainly be lower'.

The cutbacks will mainly affect UBS' investment banking and asset management staff, the newspaper said.

In total UBS reduced staff costs by 5 billion Swiss francs during the first half, as the troubled Swiss bank cuts its headcount by 5,500.

The decision does not come as a surprise in the wake of the investment banking unit's 23.5 billion Swiss franc loss, the newspaper said.

UBS had announced earlier this month that it will separate its loss-making investment bank from its prized wealth management arm, resulting also in a new bonus system.

According to the bank's new plans, bonus payments will no longer be calculated based on the group's overall results but individual segments' performances. -- REUTERS

Merrill Lynch freezes hiring for rest of year: report

Last update: 4:42 p.m. EDT Aug. 14, 2008

By Wallace Witkowski

SAN FRANCISCO (MarketWatch) -- Merrill Lynch & Co. (MER) will institute a hiring freeze for the remainder of 2008, Bloomberg reported late Thursday, citing an internal company memo. The freeze extends to previously budgeted posts and replacement hires, according to Bloomberg. The freeze, however, does not apply to retail brokers, who make up just over a quarter of Merrill's 60,000-person workforce, the news agency said.

Barclays may write down 1.5 billion pounds more, says Goldman

Thu Aug 14, 2008 7:24am EDT

(Reuters) - Barclays Plc (BARC.L: Quote, Profile, Research, Stock Buzz) may need to write down 1.5 billion pounds more over the next 18 months, analysts at Goldman Sachs said adding the British bank has little room to absorb further material losses without the dividend potentially being cut or paid in shares.

Another brokerage, Cazenove, downgraded Barclays to "in-line" from "outperform," citing share price outperformance, and said though the bank had performed well given the disruption in financial markets, it still faces a weak economic outlook and lower balance-sheet gearing.

Goldman Sachs also said it remained concerned about the bank's capital position.

Barclays' interim results were disappointing as the weak underlying performance, excluding Barclays Capital revenue, were only saved by a strong performance on costs, Goldman Sachs said.

Last week, Barclays reported a 33 percent drop in first-half profits after taking a 2 billion pound writedown on the value of risky assets, and said challenging market conditions are likely to last through 2009.

On Barclays' credit market exposures, there is the potential for up to 4.6 billion pounds of further write-downs, Goldman added.

It raised its price target on the stock to 340 pence from 320, and reiterated its "sell" rating.

Cazenove, however, said the British bank's first-half results were less pronounced than at many competitors, and write-downs taken by Barclays were broadly consistent with the range of figures disclosed by rivals.

Barclays was the best performing major European bank in the third quarter, with a share-price rise of 21 percent, Cazenove said.

"It (the shares) now trades at a premium to peers and, with no specific catalyst in view, we expect a period of share price consolidation," it said.

Shares of Barclays were trading down 2 percent at 345 pence by 1033 GMT.

(Reporting by Neha Singh in Bangalore; Editing by Vinu Pilakkott)

UBS rips up one-bank model as rich clients flee

Tue Aug 12, 2008 4:39am EDT

By John O'Donnell and Sam Cage

ZURICH (Reuters) - Swiss bank UBS will separate its wealth management business from investment banking, a move that could herald a spin-off or sale of the business that made it Europe's top casualty of the markets crisis.

The embattled Swiss group unveiled plans on Tuesday to split wealth management from investment banking and asset management as the world's biggest banker to the rich hemorrhaged clients and admitted there were problems with its one-bank model.

It said there had been net new money outflows of almost 44 billion Swiss francs ($41 billion) in the second quarter -- compared with inflows of 34 billion francs a year earlier -- and it racked up a further $5 billion in writedowns on investments. This took its total bill from the markets crisis to $42 billion.

Investors welcomed the reorganization and hoped the worst might now behind the bank, and its shares rose 1 percent to 23.46 francs by 0832 GMT, compared to a weaker European banking sector.

Landsbanki Kepler analyst Dirk Becker said he though the worst of the crisis was over.

"As we believe there will be no further loss-making quarter, considering that the tainted assets have been drastically reduced, there should also be no danger of a further capital increase," he said.

UBS's latest writedown shows it is among banks still unearthing credit market problems, joining U.S. rivals Citigroup

and Merrill Lynch in taking more big hits in the quarter.

They remain the three hardest hit banks and investors are still worried about more subprime exposure.

A year into the credit crisis, banks have lost over $400 billion on assets tarnished by the U.S. subprime housing crisis, but some banks, including Credit Suisse and Royal Bank of Scotland, have indicated they are through the worst.

CLIENTS INCREASINGLY NERVOUS

Many of the UBS's customers -- who prize low-profile stability -- have grown increasingly nervous as bad news from UBS continues to make headlines.

It announced a bigger-than-expected loss of 358 million francs in the second quarter and the departure of its finance chief, Marco Suter, an ally of former chairman Marcel Ospel, who was toppled in the crisis.

Management, which has been engaged in a review of the business, signalled for the first time on Tuesday that it could ditch the investment bank that landed it in trouble although it said there were no plans now to do so.

"It might be that we keep or divest or enter into joint ventures or collaboration," Chairman Peter Kurer told journalists, commenting on the business strategy. "For the time being, there are no plans to divest."

His remarks signify a major change for the bank, which has long stood by its strategy of running asset management, banking for the rich and investment banking together.

UBS has come under continued pressure from investor Olivant, however, to hive off investment banking and the news comes as UBS racked up further writedowns on battered investments and more losses.

UBS's admission that the universal bank model is broken comes just a week after rivals Societe Generale, HSBC and Barclays all defended the model, which has been badly bruised during the credit crunch.

WORST CRISIS

The global markets turmoil has plunged UBS into the worst crisis in its history. As demand for risky mortgages and other debt dried up, the bank has been forced to write down billions of dollars in the value of its investments.

As well as fighting calls for the group's break-up, UBS has also had to defend its conduct throughout the crisis.

UBS said on Tuesday it did not expect to see any improvement in negative economic and financial market trends in the second half of the year and said it would continue to cut jobs.

Last week, it agreed to buy back almost $19 billion of bonds after New York State and others sued it for steering clients towards auction-rate securities - debt which became impossible to sell after the market froze. UBS said this would cost it $900 million.

UBS was expected to post a second-quarter loss of $260 million, according to a Reuters poll conducted before the news of the debt securities buyback.

UBS is also under fire from U.S. congressional investigators, who say the Swiss bank helped U.S. clients dodge taxes.

But UBS's difficulties do not end there. It faces tough new rules later this year from the Swiss banking watchdog that will force it to hoard considerably more capital, putting a brake on capital-intensive investment banking.

The avalanche of problems has smothered the Swiss bank's stock. UBS's share price has tumbled by almost two thirds since the start of the year -- twice that of European peers. (Additional reporting by Albert Schmieder and Steve Slater in London; Editing by Hans Peters)

JPMorgan loses $1.5 billion since July

Tue Aug 12, 2008 2:06am EDT

(Reuters) - JPMorgan Chase & Co (JPM.N: Quote, Profile, Research, Stock Buzz) incurred losses of about $1.5 billion for the quarter to date, as it continued to be hurt by wider credit spreads, lower levels of liquidity, as well as the disruption in the credit and mortgage markets, the U.S. investment bank said in a regulatory filing.

The third-largest U.S. bank said trading conditions have "substantially deteriorated" in the third quarter compared with those of the second, and spreads on mortgage-backed securities and loans have "sharply widened."

In addition, if the firm's own credit spreads tighten, the change in the fair value of certain trading liabilities would also negatively affect trading results, the company said.

JPMorgan held $16.3 billion of legacy leveraged loans and unfunded commitments as of June 30, the filing showed.

"Leveraged loans and unfunded commitments are difficult to hedge effectively, and if market conditions further deteriorate, additional markdowns may be necessary on this asset class," JPMorgan said.

As of June 30, the company also held an aggregate $19.5 billion of prime and Alt-A mortgage exposure, $1.9 billion of subprime mortgage exposure, and $11.6 billion of commercial mortgage-backed securities (CMBS) exposure, the filing showed.

"These mortgage exposures could be adversely affected by worsening market conditions, further deterioration in the housing market and market activity reflecting distressed sellers," the company said.

Last month, JPMorgan Chase posted a smaller-than-expected drop in earnings on resilient stock and bond underwriting revenue, but cautioned that the mortgage market and the economy were getting worse.

In the Aug 11 filing, the company said it also expects continued deterioration in credit trends for its consumer portfolios, and that this will likely require additions to the consumer loan loss allowance during the rest of 2008.

Quarterly net charge-offs in the home equity portfolio could continue to increase for the rest of 2008, the company said.

Prime and subprime mortgage net charge-offs were likely to continue to rise "significantly" in the second half of 2008, with deterioration expected to continue into 2009, JPMorgan said. Shares of the company closed at $41.89 Monday on the New York Stock Exchange.

(Reporting by Tenzin Pema in Bangalore; Editing by Hans Peters)

Wachovia boosts loss to $9.11 bln, cuts more jobs

Mon Aug 11, 2008 7:02pm EDT

By Jonathan Stempel

NEW YORK (Reuters) - Wachovia Corp increased its previously reported second-quarter loss to $9.11 billion to cover costs to settle a probe of auction-rate securities sales, and said it will cut more jobs as the housing market deteriorates.

The fourth-largest U.S. bank is now reporting a loss of $4.31 per share, up from the $8.86 billion, or $4.20 a share, it reported on July 22, according to its quarterly report filed on Monday with the U.S. Securities and Exchange Commission.

Wachovia also now plans to cut 6,950 jobs, 600 more than it had disclosed, with the additional cuts coming from mortgage operations, spokeswoman Christy Phillips-Brown said. The cuts affect about 5.8 percent of Wachovia's 120,000-person workforce. Wachovia also is also eliminating 4,400 open positions.

Separately, Wachovia said the SEC may recommend civil charges against its main banking unit in connection with municipal derivatives transactions. It also said various state attorneys general have issued subpoenas over that matter. The bank said it was cooperating with the probes. Bank of America Corp reported receiving its own subpoenas last week.

The quarter marks the second in a row when Charlotte, North Carolina-based Wachovia revised results to increase the size of its reported loss. Wachovia increased its first-quarter loss to $708 million from an original $393 million because of a write-down tied to life insurance policies.

Auction-rate debt has interest rates that reset through periodic auctions, typically held every seven, 28 or 35 days. Once thought safe, much of the market has been frozen since brokerages in February stopped supporting the debt.

Wachovia said it added $500 million to legal reserves to cover a possible settlement. It is in talks with regulators to resolve matters related to auction-rate debt, after regulatory settlements last week by Citigroup Inc and UBS AG. Missouri is leading the multi-state probe. Wachovia's brokerage unit, Wachovia Securities, is based in St. Louis.

The bank has been among the lenders hardest hit by the U.S. housing crisis, following its $24.2 billion purchase of California mortgage specialist Golden West Financial Corp in October 2006, just as the mortgage market was peaking.

Wachovia expects $525 million to $650 million of restructuring costs for the job cuts.

Chief Executive Robert Steel, a former U.S. Treasury Department official, is trying to cut $2 billion of expenses by the end of 2009.

The bank decided last week to close its mortgage lending offices in 16 U.S. states where it has no retail branches, and in three other states where it has few branches, spokesman Don Vecchiarello said.

Wachovia still has mortgage lending offices in 18 U.S. states, and offers home loan services by phone, Internet and direct mail, he said.

Shares of Wachovia closed on Monday up 28 cents at $18.21 on the New York Stock Exchange. They have fallen 52 percent since the beginning of the year.

(Editing by Leslie Gevirtz and Carol Bishopric)

RBS slumps to loss after $1.35 billion writedown

Fri Aug 8, 2008 3:51am EDT

By Steve Slater and Clara Ferreira-Marques

LONDON (Reuters) - Royal Bank of Scotland fell to a first-half loss of 691 million pounds ($1.35 billion), one of the biggest losses in UK corporate history but not as bad as expected, after taking a 5.9 billion writedown on the value of risky assets.

RBS, Britain's second-biggest bank, said the loss was "a chastening experience" but it was on track to rebuild capital and sales of assets was going as planned.

Fred Goodwin, RBS chief executive, said on Friday the bank was talking to "a number" of potential buyers for its insurance arm, which is valued at 5-6 billion pounds, but he is not reliant on a sale to reach higher capital targets.

By 3:30 a.m. EDT RBS shares were up 2.4 percent at 238 pence, one of the top performing UK stocks, which analysts attributed to a better than expected capital position and resilient underlying results.

The bank swung to the loss from a 5.1 billion pound profit a year ago after being hit by the writedowns on credit products, in line with previous guidance but partially offset by an 812 million pound reduction in the value of debt it carried.

It had been expected to report a 1.2 billion pound loss, based on the average of five analysts' forecasts.

Goodwin said difficult conditions in financial markets "look set to be compounded by a deteriorating economic outlook".

The bank said bad debts on mortgages and other loans jumped 58 percent in the six months to 1.5 billion pounds.

HARD HIT

RBS has had a troubled year and in June it was forced to raise 12 billion pounds in the biggest ever rights issue, to repair a balance sheet stretched by last year's purchase of parts of ABN AMRO and the writedowns.

Asked if he was the right person to lead the bank after some calls for him and his chairman to step down, Goodwin said: "I'm very focused on what we're doing here. We're focused on doing what's right ... to steer the business through a difficult time."

RBS has written down over 8 billion pounds and has been one of the hardest hit banks, but it is not alone.

A year into the credit crunch, banks have written down over $400 billion of assets tarnished by the U.S. subprime housing crisis, forcing them to raise billions from their own shareholders and outside investors.

RBS said its core tier 1 capital ratio was 5.7 percent at the end of June and will be above 6 percent by the end of the year, even if it does not sell its insurance arm.

"Insurance is for sale, we would like to conclude a sale and we believe our disposal process is on track," Goodwin said. "But if we don't get the value we are looking for we are not going to sell and we are fairly confident of meeting our capital targets."

RBS said its underlying profit fell 3 percent to 5.1 billion pounds.

(Editing by David Cowell)

Barclays profit slumps by a third

Barclays has reported a 33% drop in pre-tax profits for the first half of 2008 - as it reported more writedowns linked to the credit crunch.

The bank made £2.75bn profit - down from £4.1bn - a decline it described as "acutely disappointing".

It wrote off £1.1bn from exposure to US sub-prime mortgages and other credit market problems.

Barclays recently raised £4.5bn from investors to increase the strength of its balance sheet.

The bulk of shares were sold to major overseas and institutional investors, led by Qatar, China and Singapore.

Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/7546544.stm

Published: 2008/08/07 06:35:01 GMT

BNP profits hit by write-downs

French bank BNP Paribas has seen its second quarter profit fall by 34% as a result of write-downs related to the global credit crunch.

The firm said net income for the three months to the end of June dropped to 1.5bn euros ($2.3bn; £1.2bn), from 2.3bn euros a year earlier.

Profits at its investment banking arm more than halved to 523m euros after it took an asset write-down of 542m euros.

The bank has not been as badly affected by the credit problems as its peers.

Despite the continued problems in the financial markets, BNP Paribas chief executive Baudouin Prot said that the bank was well capitalised and would not need to tap its shareholders for extra cash.

The results come after its smaller rival Societe Generale reported a second-quarter profit fall of 63% to 644m euros.

Societe General in profit slump

French bank Societe Generale has reported a 63% fall in second quarter profits after the credit crunch hit its investment banking arm.

Net profits fell to 644m euros ($1bn; £510m) from 1.744bn a year before.

Many banks have seen profits hit hard as financial markets have deteriorated and defaults have risen.

On top of suffering from the credit crisis, Societe Generale was hit by a rogue trader scandal last year that it said had cost it 4.9bn euros.

While Societe Generale has blamed trader Jerome Kerviel for the 4.9bn-euro loss as an "isolated" incident, there have been criticisms over a lack of internal oversight at the bank.

Societe Generale said its corporate and investment banking arm made a 186m-euro loss in the quarter, down from a profit of 721m euros in the same period a year earlier.

The profit fall at the French bank comes a day after HSBC, Europe's largest bank, reported a 28% fall in half-year profits and warned that financial conditions were at their most difficult "for several decades".

Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/7542252.stm

Published: 2008/08/05 06:59:10 GMT

Warning as HSBC profits fall 28%

HSBC has warned that conditions in financial markets are at their toughest "for decades" after suffering a 28% fall in half-year profits.

Europe's largest bank saw profits drop by $3.9bn to $10.2bn (£5.2bn) in the first six months of the year, as its North American arm made a $2.8bn loss.

The firm announced $3.7bn in fresh credit writedowns.

HSBC has been among the banks worst hit by the credit crunch, whose financial toll has run into the many billions.

It has already announced writedowns in the value of its assets - linked to the slump in the US housing market - of more than $15bn.

US exposure

Despite the steep fall in profits, HSBC said its performance had been "resilient" given the prevailing market turbulence.

HSBC saw profits rise in Europe, Asia-Pacific and Latin America in the first six months, but problems in the US weighed heavily on its balance sheet.

Of Europe's top banks, HSBC has among the heaviest exposure to the troubled US housing and credit markets.

Its credit writedowns so far this year have now risen to $10bn, compared with $6.3bn in the same period last year.

'Unsustainable'

Unlike many other British banks, HSBC has not been forced to ask its shareholders for extra cash to bolster its balance sheet.

However, the firm said it had not been "immune" from the liquidity and credit crisis afflicting the global banking sector.

It said the outlook for the banking sector remained "highly challenging" and said changes in bank lending practices and financial regulation were needed.

"It is clear that growth models in our industry based on high and increasing leverage will no longer be sustainable," said chairman Stephen Green.

"It is also clear that complexity in financial services and the recent consequences of failed risk management need to be addressed.

"Ultimately the real economy will recover from the crisis although it may get worse before it gets better. Financial markets will not, and should not, return to the status quo ante."

Fortis profit halves in turbulent second quarter

Mon Aug 4, 2008 4:33am EDT

By Reed Stevenson and Gilbert Kreijger

AMSTERDAM (Reuters) - Fortis (FOR.BR: Quote, Profile, Research, Stock Buzz), the Belgian-Dutch financial group, said writedowns helped cause a halving in second-quarter net profit, and said shoring up a weakened balance sheet was its "top priority".

Fortis (FOR.AS: Quote, Profile, Research, Stock Buzz), which has replaced top management and pledged better communication with investors after surprising them with an emergency solvency plan, reported on Monday net profit of 830 million euros ($1.3 billion) for the quarter, compared with 1.6 billion a year earlier.

Shares in Fortis fell 2.5 percent in Brussels to 9.08 euros, while the DJ Stoxx Banking Index was down 1.1 percent.

"We should be aware that the credit crisis is not behind us yet," Chief Executive Herman Verwilst said, adding that strengthening the financial group's capital base was the "top priority of senior management today."

Writedowns related to credit market turmoil totaled 362 million euros, Fortis said, adding that its structured credit portfolio stood at 41.7 billion euros at the end of June, down 1.6 billion from the end of the first quarter. Capital gains helped to shore up quarterly earnings.

Analysts polled by Reuters had, on average, expected a second-quarter net profit of 754 million euros.

Reflecting uncertainty over the degree of writedowns, analysts' forecasts ranged widely between 524 million and 1.06 billion.

Rabo Securities analyst Cor Kluis said profit, adjusted for capital gains and other charges, came in lower than expected, but the "rest of the bank earnings quality was good due to in line net interest income, commission income and expenses."

FULL TRANSPARENCY

Fortis's latest woes began in late June, when it announced a plan to sell shares and suspend its interim dividend to strengthen its finances. Chief Executive Jean-Paul Votron was replaced by his deputy, Verwilst, and Fortis began searching for a long-term successor.

Fortis said it had a core Tier 1 capital adequacy ratio of 7.4 percent at the end of the quarter.

Chief Financial Officer Lars Machenil said the ratio would remain above the bank's target level of 6 percent at the end of 2009 as it integrates businesses from ABN AMRO and raises capital for its part in the three-bank, 70-billion-euro buyout of ABN.

Last Friday Fortis announced a further shake-up of top management, with Machenil replacing former CFO Gilbert Mittler. The group also said it would hold shareholder meetings in the second half of August to communicate its plans and strategy.

"I consider it crucial to strengthen the communication with our stakeholders and will update the market in full transparency on progress made," Verwilst said.

Fortis shares have fallen 62 percent in the past year, compared with a 40 percent drop in the banking index. Fortis is trading at 5.4 times projected 2008 earnings, among the lowest in the sector. European banks are trading at an average price-earnings multiple of 8.2.

(Additional reporting by Darren Ennis in Brussels; Editing by David Holmes and Quentin Webb)

Deutsche Bank credit rating cut to AA- at Standard & Poor's

Last update: 8:07 a.m. EDT Aug. 1, 2008

By Simon Kennedy

LONDON (MarketWatch) -- Rating agency Standard & Poor's said Friday it has downgraded its long-term counterparty credit rating on Deutsche Bank (DE:514000 58.67, -0.83, -1.4%) to AA- from AA with a negative outlook. S&P said the cut followed Deutsche Bank's announcement of further write-downs and impairment charges totalling 2.3 billion euros ($3.6 billion) in the second quarter. "The downgrade reflects that we no longer consider Deutsche Bank's performance to be materially stronger than that of the leading peers in the currently difficult operating environment," S&P said.

Deutsche writes down 2.7bn euros

Deutsche Bank has written down another $3.6bn (£1.8bn) between April and June, taking its bill from the credit crunch to more than $11bn.

Unlike many of its global rivals, Deutsche Bank did still manage to make a profit in the quarter.

Pre-tax profits came in at 642m euros (£506m), well down on the 2.7bn euros it made in the same period last year.

Almost half of the write-downs came from investments in debt backed by residential mortgages.

Exposure to monoline insurers, which insure bonds, as well as poor investments in commercial property, made up much of the rest of the write-downs.

"We remain cautious for the remainder of 2008," said chief executive Josef Ackermann.

Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/1/hi/business/7534487.stm

Published: 2008/07/31 06:55:56 GMT

Merrill Lynch posts loss of US$4.89b, sheds assets

NEW YORK - Wall Street investment giant Merrill Lynch on Thursday announced a quarterly net loss of US$4.89 billion, driven by hefty write-downs from its bets on the US real estate market.

Merrill, which has been roiled by its exposure to the US sub-prime mortgage crisis, also said it would shore up its capital with the sale of some assets.

It announced the sale of its 20 per cent stake in financial news and data group Bloomberg for US$4.43 billion.

Merrill said it 'is also in negotiations' to sell a controlling interest in Financial Data Services for at least US$3.5 billion.

Merrill was forced to write down over US$9 billion in soured investments, largely linked to bets on US mortgage investments that have been hit by a horrific housing slump after years of sizzling growth.

'Our core franchise continues to perform well despite the extremely challenging market environment,' said John Thain, chairman and chief executive who took the reins in December at the storied Wall Street firm pummelled by massive credit losses linked to the US housing downturn.

'Against this backdrop, we increased our excess liquidity pool to a record level of US$92 billion and significantly reduced our exposures in key asset classes. Importantly, with the transactions we announced today, we are bolstering our capital base and continue to move forward on our risk management and strategic growth initiatives.'

As part of its reorganisation, Merrill indicated that some 4,200 jobs had been cut so far this year, a bit more than the 4,000 anticipated. The cuts required a charge of US$445 million.

The loss for Merrill amounted to US$4.97 per share, far more than the consensus forecast of a loss of US$1.91 a share.

Standard & Poor's maintained its ratings on Merrill Lynch with a 'negative' outlook, suggesting most of the worst for the investment firm has been disclosed.

The write-offs 'were greater than we had previously anticipated, pointing up the severe pressures that continue to weigh on the mortgage markets,' said S&P analyst Scott Sprinzen.

'However, with Merrill Lynch having been downgraded on June 2 ... we believe there is sufficient leeway in the current rating to sustain this disappointment, albeit that leeway is now diminished.'

The rating 'takes account of the likelihood of further weak financial performance during the next few quarters, with potential additional write-downs overshadowing underlying operating results,' S&P said. -- AFP

UBS, Credit Suisse may have to put aside more capital

(GENEVA) Swiss banks UBS and Credit Suisse would have to set aside 70 billion Swiss francs (S$93.1 billion) more in company capital as Switzerland's banking watchdog moves to prevent a repeat of the sub-prime crisis, a Swiss newspaper reported yesterday.

Sonntag quoted parliamentarian Hans Kaufmann saying that the Federal Banking Commission would require additional provisions of '40 billion francs for UBS and 30 billion francs for Credit Suisse'.

Banking commission spokesman Alain Bichsel confirmed that a sum had been proposed and that the banks have until the end of summer to put forward their positions. 'We will issue the definitive provision in autumn,' he told the newspaper.

Both banks have been hard-hit by the US sub-prime mortgage crisis, with UBS writing down over US$37 billion in assets and Credit Suisse with around 10 billion Swiss francs in writedowns since the onset of the crisis.

Philipp Hildebrand, who is vice-chairman of the Swiss central bank's governing board, said last month that a higher capital requirement was needed.

He also suggested the introduction of a so-called leverage ratio which would put a limit on leverage to stop banks from overleveraging their assets.

Meanwhile, another newspaper Sonntagszeitung said yesterday that the commission had sent its proposed new regulations to the banks last week.

But Credit Suisse has already warned against these new measures. Bank spokesman Alex Biscaro told Sonntagszeitung that 'measures must be targeted at the actual problems'. -- AFP

J.P. Morgan reportedly to complete European jobs cuts in Q3

Last update: 2:39 a.m. EDT July 4, 2008

By Sarah Turner

LONDON (MarketWatch) -- J.P. Morgan is expected to cut up to 10% of its European investment banking staff by the end of the third quarter, the Financial Times reported on Friday. Staff reductions have been taking place in mergers and acquisitions and equity and debt capital markets businesses, especially at vice-president level, the paper reported, citing people familiar with the process. The jobs cuts started several months ago, the paper said.

Citi sees more UBS writedowns

(ZURICH) UBS may post US$6.9 billion of additional writedowns and seek to raise more capital, Citigroup Inc said yesterday after UBS chairman, Peter Kurer told Swiss newspaper Finanz & Wirtschaft on Wednesday that the Swiss bank will not need more funds.

The Zurich-based company, which wrote down US$38 billion over the past three quarters, still carries US$83 billion of 'risk exposures that are likely to require further markdowns', London-based Citigroup analyst Jeremy Sigee said in a note yesterday.

Mr Sigee, who rates UBS a 'hold' with a 'high risk' caveat, estimates that the company may post a loss of 4.5 billion Swiss francs (S$6 billion), and announce writedowns of as much as seven billion francs when it reports earnings on Aug 12.

He blamed a slump in financial markets for asset price declines, and said that UBS may need to raise more capital, either from asset sales or from shareholders.

Banks and securities firms have turned to investors for US$322 billion to replenish reserves after US$403 billion of writedowns and credit losses, tied to the collapse of the US sub-prime mortgage market. UBS trails only Citigroup in credit losses and capital raising after turning to investors for US$29.5 billion since the credit crisis started a year ago.

Speculation that financial firms would need more funds helped drive an index of European banking shares down 8.3 per cent in the previous five days. UBS has fallen 56 per cent this year. -- Bloomberg

Merrill may write down billions more: analysts

Merrill may write down billions more: analysts

Exposure to collaterized debt and bond insurers may weigh on first quarter

By Alistair Barr, MarketWatch

Last update: 2:30 p.m. EDT March 27, 2008

SAN FRANCISCO (MarketWatch) -- Merrill Lynch & Co. may record $4.5 billion to $6 billion in write-downs from exposure to mortgage-related securities and troubled bond insurers during the first quarter, analysts said Thursday.

Bernstein Research analyst Brad Hintz expects the brokerage firm to take a $4.5 billion write-down, but noted that there's downside risk to this estimate. He forecast first-quarter earnings of $1.30 a share, down from a previous forecast of $1.60 a share.

Meredith Whitney, an analyst at Oppenheimer & Co., reckons that Merrill will announce $6 billion in write-downs. Her previous estimate was $2 billion. She is now predicting a first-quarter loss of $3 a share vs. a prior estimate of a 45 cents a share profit.

The firm (MER) was one of the largest underwriters of complex mortgage-related securities known as collateralized debt obligations, or CDOs, and built up considerable exposure to these vehicles.

"The critical component in determining the size of the total write-down Merrill takes this quarter will be where the firm values its CDO positions," she wrote in a note.

Merrill also hedged some of its mortgage exposures by buying guarantees from bond insurers. However, some of these guarantees have dropped in value as some bond insurers lost their AAA ratings on concern about their own mortgage losses.

"The firm will likely need to take further valuation reserves for its financial-guarantor counterparty exposures," Hintz said.

Excluding investment banking and troubled areas of fixed income -- such as mortgage-backed securities, CDOs and leveraged lending -- Merrill's other businesses have been solid in the face of the credit crunch, according to the analyst.

"Government and sovereign-trading books, investment-grade corporate debt trading and the Merrill foreign-currency desks are expected to perform very well. Merrill's equity sales and trading business should report strong results as market volatility and trading volumes were strong this quarter," she wrote.

Shares of Merrill traded down nearly 6% at $41.80 in afternoon action.

Deutsche Bank warns over profits

Deutsche Bank warns over profits

Deutsche Bank has warned that continuing global credit turmoil and possible further bad debt write downs may see it miss its 2008 profit target.

The lender said that if "exceptionally difficult" trading conditions continue, it may fail to meet its aim of 8.4bn euros ($13bn; £6.5bn) in net profits.

The trading update by Germany's biggest bank sent its shares down 1.6% in early Wednesday trading in Frankfurt.

Last month, it reported a 48% fall in profit for the last quarter of 2007.

It gave no new figures for its projected 2008 profits.

'Adversely impact'

Deutsche Bank said its corporate and investment banking units were being most directly affected by the continuing financial market turbulence.

"Compensating for these negative effects on our profitability through performance in our other businesses may not be feasible, particularly if assumptions for continuing, albeit slower, economic growth in 2008 are not correct and less favourable economic conditions prevail," it said.

"These circumstances would likely adversely affect our ability to achieve our pre-tax profitability objective."

In October of last year, Deutsche Bank revealed a 2.2bn euro exposure to US sub-prime debt.

Bank of America may face $6.5 bln loan loss: analyst

Sun Mar 23, 2008 4:06pm EDT

By Jonathan Stempel

NEW YORK (Reuters) - Bank of America Corp (BAC.N: Quote, Profile, Research), the largest U.S. retail bank, may set aside a record $6.5 billion in the first quarter to cover possible future loan losses, including in its mortgage and home equity portfolios, according to a banking analyst.

Richard Bove of Punk Ziegel & Co also slashed his earnings forecasts for the bank through 2010, though he still expects a first-quarter profit.

He said actual losses in the portfolios should be "somewhat less" than the amount he expects set aside, suggesting the bank would be conservative in its forecast of future credit trends.

"I do not foresee the economy plunging to a level that will substantiate this reserve build," wrote Bove, who has a "buy" rating on the bank, in a report dated March 24. "It is my impression that the management has made a decision to try to take, upfront, the potential losses that it believes may be nascent."

Bove cut his profit per share forecast to $2.98 from $3.81 for 2008, to $3.96 from $4.30 for 2009, and to $4.78 from $4.93 for 2010. He sees first-quarter profit of 37 cents per share.

Bank of America was not immediately available for comment.

In January, Chief Executive Kenneth Lewis said he expected full-year profit would top $4 per share. He predicted credit costs would rise by more than 20 percent, largely in consumer portfolios, but that such an increase would be manageable.

The Charlotte, North Carolina-based bank set aside $3.31 billion for credit losses in the fourth quarter, and $8.39 billion for all of 2007, up 67 percent from a year earlier.

Bank of America agreed in January to buy Countrywide Financial Corp (CFC.N: Quote, Profile, Research), the largest U.S. mortgage lender, in a transaction now valued at about $4.4 billion.

The all-stock transaction values Countrywide at $7.63 per share, which is 32 percent above Countrywide's Thursday closing price of $5.78. The gap reflects some investors' expectations that Bank of America might at least try to renegotiate the merger terms because the housing market has weakened.

Bank of America shares closed Thursday at $41.86 on the New York Stock Exchange. They rose 17 percent last week, a strong week for bank stocks, and are up a little more than 1 percent this year.

(Editing by Richard Chang)

Anger boils over as Bear Stearns execs meet their new boss

Anger boils over as Bear Stearns execs meet their new boss

Many of Bear's 14,000 employees will lose their jobs

(NEW YORK) James Dimon tramped through the rain on Wednesday evening and strode into the headquarters of Bear Stearns, the embattled investment bank he hopes to buy for a mere US$2 a share.

More than 400 Bear executives - seething, fearful and to their dismay, far poorer than they were a week ago - were waiting for him.

Only days after his controversial deal for the beleaguered investment bank stunned Wall Street, Mr Dimon, the chairman and chief executive of JPMorgan Chase, made an appearance at Bear Stearns, hoping to win over executives who have vowed to fight his offer. Mr Dimon left many of them as angry and resentful as he found them.

'I don't think Bear did anything to deserve this,' Mr Dimon said. 'I feel terrible sometimes when people think we took advantage. I don't think we could possibly know what you all are feeling, but I hope that you give JPMorgan a chance.'

Over the next 45 minutes, Mr Dimon made it clear that he hoped to retain the best employees at Bear but also made it plain that many of Bear's 14,000 employees will lose their jobs as a result of the deal, struck at the urging of the Federal Reserve and the Treasury Department. JPMorgan executives plan to cull one Bear employee after another, while keeping the best performers, as they move to integrate the two firms.

A few of the executives whom Mr Dimon faced on Wednesday, all of whom own Bear shares, pledged to fight the deal in hopes of luring a better offer from a rival bank, a prospect that, for now, seems distant. Even so, Joseph Lewis, the largest shareholder of Bear, said in a securities filing on Wednesday that he would take 'whatever action' necessary to protect his stake, including seeking out another suitor.

'In this room are people who have built this firm and lost a lot, our fortunes,' one Bear executive said to Mr Dimon with anger in his voice. 'What will you do to make us whole?' The packed room of senior managing directors applauded.

Mr Dimon responded gingerly. 'You're acting like it's our fault, and it's not. If you stay, we will make you happy.'

But the Bear employee was not satisfied. 'I think it's galling you come into our house and you call this a 'merger',' the Bear executive went on.

This time, Mr Dimon was silent.

But Mr Dimon, ruddy- faced and sharply dressed in a light blue tie and white shirt, told the executives that those of them who stay might receive at least 25 per cent of the value of their recent Bear stock awards in the form of JPMorgan shares. Those who stay until the deal closes will receive a one-time cash payment. Mr Dimon urged them not to blame Bear's management, the government or JPMorgan for their circumstances.

Alan D Schwartz, Bear's chief executive, looking pale, summed it up. 'We here are a collective victim of violence,' he said, his voice cracking. 'It's natural to be angry, and you're not sure who to be angry at. But we have to put it behind us.'

But there was a grudging acceptance of their fate, and a number of Bear executives urged colleagues to accept Mr Dimon's offer.

'I've been here for more than 20 years,' one said. 'This deal cost me big time. But if there wasn't a deal, we'd be toast.'

Since the deal was reached on Sunday night, JPMorgan executives have tried to characterise the situation at Bear as business as usual.

It is, however, anything but. Inside Bear, it is already clear that the new bosses have arrived.

On Wednesday, as Mr Dimon made his way across the street under March skies as dreary as the mood inside Bear, a JPMorgan security guard stood watch at Bear's entrance. JPMorgan executives have appropriated offices for private meetings and begun placing calls from the desks of Bear executives.

JPMorgan bankers are already calling most of shots on Bear's trading floor. Some Bear executives remained in charge of the risks that the traders were taking.

Bear traders are shellshocked. In the past days, there have been several instances when Bear traders and businessmen have lashed out at the JPMorgan executives, creating awkward moments.

On Monday, JPMorgan held conference calls with executives in various areas of Bear Stearns.

Then on Tuesday, Mr Dimon kicked off a call with Bear's brokers at 1 pm, telling them how his grandfather and father were brokers and that he was confident that the merged firm would be a formidable force on Wall Street.

'I have broker's blood in my veins,' one Bear employee recalls Mr Dimon saying, adding that many of the brokers seemed inspired by what they heard. -- NYT

Citigroup plans more securities job cuts

Thu Mar 20, 2008 8:24am EDT

NEW YORK (Reuters) - Citigroup Inc, the largest U.S. bank, plans further job cuts in its securities operations in a bid to cut costs after subprime mortgage and credit problems led to a record quarterly loss.

Any job losses would be on top of 4,200 cuts companywide announced in January by Chief Executive Vikram Pandit, and 17,000 announced last April by predecessor Charles Prince. Citigroup has said it ended 2007 with 375,000 employees.

"Each year we identify the bottom 5 percent of performers in the institutional clients group, and some number of these people leave the firm," spokesman Adam Castellani said on Thursday. "This year, we will have a larger number of reductions as we continue to strengthen the business and lower our expense base."

The institutional clients group includes investment banking and trading operations, as well as alternative investments, which offers hedge fund and private equity services.

According to the New York Times, citing people close to the situation, Citigroup plans to lay off 2,000 investment bankers and traders before the end of March. Most cuts will be in New York and London, though other markets in Europe and Asia will be affected, the newspaper said. Traders are more at risk given market conditions, the newspaper said.

The bank declined to confirm the report. Published reports have said Citigroup might cut tens of thousands of jobs. Pandit has been reviewing the bank's businesses worldwide to explore ways to boost profitability and efficiency.

In the fourth quarter, New York-based Citigroup suffered a $9.83 billion loss, hurt by $18.1 billion of write-downs largely tied to subprime mortgages and related securities.

Speaking on a January 15 conference call discussing results, Chief Financial Officer Gary Crittenden called the 4,200 job cuts a "first installment" in what would likely be "a continual stream of efforts that we are making to reduce headcounts in nonproductive areas" and invest in stronger businesses.

Citigroup shares closed Wednesday at $20.41 on the New York Stock Exchange. They closed one year ago at $50.64.

(Reporting by Jonathan Stempel, editing by Gerald E. McCormick)

Deutsche Bank was in running to buy Bear, report says

Deutsche Bank was in running to buy Bear, report says

By Steve Goldstein

Last update: 8:02 a.m. EDT March 20, 2008

LONDON (MarketWatch) -- Deutsche Bank (DB) was in the running to buy Bear Stearns (BSC) as late as Saturday, according to a report from the German daily Handelsblatt. J.P. Morgan Chase (JPM) agreed to buy Bear for $2 a share in a controversial deal.

Credit Suisse warns expects no Q1 profit

Thu Mar 20, 2008 2:58am EDT

ZURICH (Reuters) - Credit Suisse (CSGN.VX: Quote, Profile, Research) said it was unlikely to post a profit in the first quarter of 2008 due to big debt writedowns and difficult markets, but the shock writedowns it revealed in February were not as bad as first thought.

The bank said in a statement on Thursday that it was profitable through to the end of February but that market conditions were difficult in March.

"In light of the difficult market conditions in March, at this time, Credit Suisse believes it is unlikely to be profitable in the first quarter," the bank said in a statement.

The bank reduced its previously announced estimate for writedowns related to asset-backed securities by 200 million Swiss francs to 2.86 billion francs.

In February, the bank shocked markets by writing down $2.85 billion in asset-backed investments and suspending some traders after finding pricing errors on its books.

The bank had previously said it expected to post a profit for the first quarter and estimated that the writedowns would wipe $1 billion off its net income, after taking into account tax credits and cancelling some staff bonuses.

Credit Suisse said it would post a writedown of 1.18 billion francs against its 2007 accounts -- which translated into a hit of 789 million francs net of tax -- and of 1.68 billion francs against its first quarter 2008 accounts as a result of the new valuations.

The writedowns are the latest in a string of shocks from global banks, including huge new subprime-related exposures at rival UBS (UBSN.VX: Quote, Profile, Research) and the emergency takeover of U.S. investment bank Bear Stearns (BSC.N: Quote, Profile, Research) by rival J.P. Morgan

(JPM.N: Quote, Profile, Research).

Credit Suisse had previously reported subprime-linked writedowns of 2 billion Swiss francs in 2007.

(Reporting by Thomas Atkins, editing by Will Waterman)

UBS tumbles 14%, steepest in 9 years, on job cut reports

UBS tumbles 14%, steepest in 9 years, on job cut reports

(ZURICH) UBS fell the most in more than nine years in Swiss trading after reports that the bank may cut as many as 8,000 jobs, propose a new capital increase and sell businesses.

UBS fell 4.02 francs, or 14 per cent, to 24.42 francs by 134 pm in Zurich. If the shares close at this price, it would be the biggest drop since Sept 30, 1998.

Credit default swaps on UBS jumped 25 basis points to 235, according to Deutsche Bank.

UBS, Europe's biggest bank, plans to cut 5 per cent to 10 per cent of jobs across its different units and may also propose a capital increase at its shareholders' meeting in April, according to a report in SonntagsZeitung, which cited unidentified managers present at the company's top executives' meeting in Berlin last week.

UBS on March 14 denied a CNBC report that it may seek to sell its Paine Webber US brokerage unit to raise money.

'If the bank were contemplating a disposal this suggests a new level of desperation for UBS at raising capital,' Peter Thorne, a London-based analyst at Helvea, said in a report.

'Coming at the same time as the collapse of Bear Stearns and concerns about the financial system in general, and banks with suspect balance sheets in particular, we expect continued pressure on the UBS share price.'

Bear Stearns had to sell itself to JPMorgan Chase for US$240 million, about 90 per cent less than its value last week, after clients, alarmed by speculation about a cash shortage, withdrew US$17 billion in two days.

The Paine Webber division 'is not up for sale', UBS spokesman Mark Arena said on Friday. Axel Langer, another spokesman for the bank, said on Sunday that the Berlin meeting occurred and that job cuts may take place, though there are 'no concrete plans' to eliminate positions.

He declined to comment on whether a capital increase was discussed in Berlin or is under discussion.

Tobias Lux, a spokesman for the Swiss Federal Banking Commission, said the regulator is monitoring the liquidity situation at Swiss banks.

'The stable liquidity situation of the two big banks hasn't changed,' he said, referring to UBS and Credit Suisse Group.

UBS raised 13 billion Swiss francs (S$18.2 billion) from investors in Singapore and the Middle East to shore up capital eroded by US$19 billion in writedowns on debt assets and loans last year.

The bank may mark down assets by 15 billion Swiss francs in the first quarter, 'wiping out 2008 profits', analysts at Keefe, Bruyette & Woods Ltd wrote in a note to clients on March 11\. \-- Bloomberg

Citi to cut 185 jobs in home mortgage division: report

Citi to cut 185 jobs in home mortgage division: report

By Sue Chang

Last update: 4:14 p.m. EDT March 17, 2008

SAN FRANCISCO (MarketWatch) -- Citigroup Inc. (C) will lay off 185 employees in its home mortgage division, the Associated Press reported Monday, citing a CitiMortgage spokesman. The layoffs were triggered by difficulties in selling home equity products, according to the news agency. However, the company is not exiting the home equity business but will focus more on supporting existing Citibank, corporate and Smith Barney customers.

JPMorgan Chase has said it is to acquire ailing US bank Bear Stearns for $2 a share.

JPMorgan to acquire Bear Stearns

JPMorgan Chase has said it is to acquire ailing US bank Bear Stearns for $2 a share.

The deal values Wall Street's fifth largest investment bank at about $236m.

The bank has been at the centre of the US mortgage debt crisis. Its shares fell 46% to $30 after emergency funding for it was announced on Friday.

The news comes as the Federal Reserve cut its lending rate to banks to 3.25% from 3.50%, and created a new lending facility for big investment banks.

Under the deal, the Federal Reserve will fund up to $30 billion of Bear Stearns's less liquid assets.

Withdrawn funds

Friday's news of emergency funding for the bank raised fears that one of the biggest names on Wall Street was on the verge of collapse.

JPMorgan Chase was to provide the money to Bear Stearns for 28 days with the Federal Reserve of New York's backing.

Bear Stearns's problems stem from the global credit crunch and the worry is that other lenders may also have major funding problems, analysts said.

Recently, speculation had intensified that the bank was struggling to fund its daily business.

BBC business editor Robert Peston said Bear Stearns was taken to the brink of insolvency last week by a sudden collapse in confidence on the part of its hedge fund clients.

As a result, these clients rushed to withdraw their assets.

'Other banks'

The credit crunch was caused because banks became less willing to lend to each other after they suffered large losses on investments linked to the US housing market, and the sub-prime sector in particular.

MAIN SUB-PRIME LOSSES SO FAR Citigroup: $18bn Merrill Lynch: $14.1bn UBS: $13.5bn Morgan Stanley $9.4bn HSBC: $3.4bn Bear Stearns: $3.2bn Deutsche Bank: $3.2bn Bank of America: $3bn Barclays: $2.6bn Royal Bank of Scotland: $2.6bn Freddie Mac: $2bn JP Morgan Chase: $3.2bn Credit Suisse: $1bn Wachovia: $1.1bn IKB: $2.6bn Paribas: $197m Source: Company reports

Sub-prime lenders focus on clients with poor or non-existent credit histories, and a record number of borrowers have defaulted on loans.

The subsequent freezing-up of the credit markets created problems for a number of companies which relied on borrowing money to fund their business.

In the UK, Northern Rock ran into trouble when its line of relatively cheap credit dried up.

At the end of last year, Bear Stearns reported that it had made its first ever quarterly loss after buying investments linked to the US mortgage market.

It was one of the first to admit it had problems linked to sub-prime mortgages, after two of its hedge funds had to be bailed out.

Robert Peston said that last week's move by JPMorgan and the Fed of New York was essentially a central bank bailout, and described the crisis as "America's Northern Rock".