By David Mildenberg and Josh Fineman
Oct. 5 (Bloomberg) -- Citigroup Inc. said a New York state court judge granted an order extending the bank's ``exclusivity agreement'' with Wachovia Corp., after Wells Fargo & Co. announced a competing bid for the North Carolina lender Friday.
New York State Supreme Court Judge Charles Ramos issued the emergency injunction last night, protracting Citigroup's agreement to negotiate the acquisition of parts of Charlotte- North Carolina based Wachovia ``until further order of the court,'' Citigroup said in an e-mailed statement. That accord was set to expire tomorrow. The two banks are required to appear before Ramos on Oct. 10, according to the statement.
Hobbled by $61 billion of losses stemming for the collapse of the mortgage market and ensuing credit contraction, Citigroup is in the midst of a takeover battle with Wells Fargo for control of Wachovia. A spokeswoman for Wells Fargo didn't immediately reply to requests for comment after Citigroup announced the court order.
``Wachovia believes its agreement with Wells Fargo is proper, valid and is in the best interest of shareholders, employees and the American taxpayers,'' said Christy Phillips Brown, a Wachovia spokeswoman. ``Under that agreement, Citigroup is always free to make a superior offer to Wachovia.''
Citigroup was seeking $60 billion in damages from Wells Fargo in connection with the proposed deal, the New York Times reported, citing a person briefed on the situation. Citigroup fell as much as 21 percent Friday in New York trading after Wells Fargo, the biggest U.S. bank on the West Coast, agreed to buy all of Wachovia for $15.1 billion. The bid trumped Citigroup's government-backed offer of $2.16 billion for Wachovia's banking operations.
Kovacevich, Pandit
``The taxpayer doesn't pay a penny'' for the Wells Fargo deal, Wells Chairman Richard Kovacevich, 64, said Friday in an interview. His company's bid is superior to Citigroup's also because it's a higher price and the combining banks ``share similar cultures and values.''
Vikram Pandit, Citigroup's chief executive officer, is counting on the Wachovia purchase to help rebuild after three quarters of losses totaling more than $17 billion. The bank's market value has dropped 38 percent this year to about $100 billion, leaving it below Wells Fargo. If Wells Fargo winds up with Wachovia, it would creep up on its New York rival with deposits of $787 billion, compared with Citigroup's $826 billion.
Pandit insisted Citigroup will prevail, citing the exclusive agreement signed by Wachovia. Kovacevich told investors during a conference call the deal with Wachovia is ``solid.''
Citigroup dropped 18 percent to $18.35 Friday in New York Stock Exchange composite trading, after having its biggest share decline in about 20 years. Wachovia rose 59 percent to $6.21. Wells Fargo declined 1.7 percent to $34.56.
Citi's Claim
Citigroup demanded Wells Fargo abandon the takeover. Buying Wachovia would give Citigroup the third-biggest U.S. bank network and cement its status as the nation's largest lender by assets.
``Any such agreement between Wachovia and Wells Fargo is illegal,'' Pandit, 51, said in the e-mail Friday. ``We continue to vigorously pursue Citigroup's interest and rights in completing this transaction.''
Citigroup may increase its offer, said a person with knowledge of the deliberations.
``I'm still not convinced that Citigroup can force this sale to happen,'' said Elizabeth Nowicki, a professor at Tulane University Law School in New Orleans and a former M&A lawyer at Sullivan & Cromwell. ``Citigroup may be facing the chance to get themselves a small settlement, and that's a nice shot in the arm for a company that's struggling.''
Regulators
The Federal Deposit Insurance Corp., helped broker Citigroup's purchase when Wachovia's health faltered. Chairman Sheila Bair said until a review of Wells Fargo's offer is completed, the agency will stand behind the Citigroup deal.
``We wanted to make clear that until things are settled with what's going on with this Wells bid, that the Citi deal was still there,'' Bair said Friday in an interview on Bloomberg Television's ``Political Capital with Al Hunt.'' Bair said the FDIC is reviewing the offer, and she told Hunt: ``You shouldn't'' assume the U.S. opposes Wells's offer.
Other bank regulators said they haven't evaluated Wells Fargo's offer.
``We have not yet reviewed the new Wells Fargo proposal and the issues that it raises,'' the Federal Reserve and Office of the Comptroller of the Currency said Friday in a statement. ``The regulators will be working with the parties to achieve an outcome that protects all Wachovia creditors, including depositors, insured and uninsured, and promotes market stability.''
Wells Fargo's Plan
Wells Fargo, run by Chief Executive Officer John Stumpf, had avoided bets on the subprime-mortgage market that contributed to $588 billion in writedowns and credit losses for financial firms worldwide. Wachovia in 2006 purchased Oakland, California-based Golden West Financial Corp. for $24 billion, acquiring a portfolio of option-adjustable rate mortgages that helped lead to $9.6 billion in losses this year.
Wells Fargo, in bidding for Wachovia, deviates from a strategy of seeking smaller acquisitions with less risk to fill gaps in its branch network. After the combination, the bank would have $1.42 trillion in assets, which may rank third in the U.S. depending on what other bank mergers are completed. It would have 10,761 branches in 39 states.
``Citi's purchase was too cheap for the assets and operations involved,'' said Jason Pride, research director at Haverford Trust Co. in Haverford, Pennsylvania. ``It's an excellent strategic deal for Wells Fargo given the geography of the branch network.''
To contact the reporters on this story: David Mildenberg in Charlotte at dmildenberg@bloomberg.net; Josh Fineman in New York at jfineman@bloomberg.net.
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Sunday, October 5, 2008
Jordan's Economy, New Jobs Are Top Priority, King Abdullah Says
By Massoud A. Derhally
Oct. 5 (Bloomberg) -- Jordan's economy and job creation are a top priority, King Abdullah said in a speech inaugurating the second session of the country's 15th parliament today.
``The economy still tops our priorities, especially its social dimension, due to the economic challenges that resulted from international rising prices,'' the monarch said. ``At the top of national priorities there stands, in the medium range, economic reform and the completion of a strong national economy that reflects positively on Jordanians' standard of living.''
Jordan, one of the smallest economies in the Middle East, imports more than 90 percent of its oil and relies on foreign investment and grants. Rising property prices and investments from oil-exporting Persian Gulf countries boosted Jordan's finance, insurance and real-estate industries by 8.5 percent.
The kingdom bordering Israel and the Palestinian territories received 294.8 million dinars ($416 million) in foreign grants in the first seven months of the year, a 280 percent jump from the same period last year, helping to finance three-quarters of the budget deficit.
``Achieving the economic prosperity we seek requires the immediate application of measures to guarantee financial stability and enhance the investment environment.'' Abdullah said. ``Among these measures is controlling inflation, activating banking policies that guarantee the safety of banking institutions and their reputations and elevating the monitoring tools of depositors and guaranteeing clients' rights.''
Higher Salaries
The king said the government needs to link salaries to inflation and ordered it to raise salaries starting next year. He also said the minimum wage will be raised.
Inflation accelerated to 19.8 percent in August, the highest since 1990, as food and commodity prices soared after the government removed fuel subsidies this year, causing diesel and kerosene prices to nearly double in the first six months.
Unemployment fell to 12 percent in the third quarter from 12.5 percent in the previous quarter and 14.3 percent a year earlier.
Abdullah said the government will implement a social security net that guarantees financial aid to those who need it, and it will also seek to expand health care, in cooperation with private industry.
The monarch said he directed the government to take the ``necessary steps to promote and attract investment'' from Persian Gulf countries.
Foreign direct investment in Jordan may increase as much as 27 percent this year to 3 billion dinars as the country benefits from the Middle East's booming oil wealth, Jordan Investment Board Chief Executive Officer Maen Nsour said on March 3.
Investment in the country, which has no natural resources, advanced to 2.2 billion dinars last year from 1.8 billion dinars in 2006 as investors gained from incentives such as tax exemptions, according to the Jordan Investment Board.
About half of last year's investment was by Gulf states in telecommunications, construction, tourism and health care.
To contact the reporter on this story: Massoud A. Derhally in Amman, Jordan, at mderhally@bloomberg.net
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Oct. 5 (Bloomberg) -- Jordan's economy and job creation are a top priority, King Abdullah said in a speech inaugurating the second session of the country's 15th parliament today.
``The economy still tops our priorities, especially its social dimension, due to the economic challenges that resulted from international rising prices,'' the monarch said. ``At the top of national priorities there stands, in the medium range, economic reform and the completion of a strong national economy that reflects positively on Jordanians' standard of living.''
Jordan, one of the smallest economies in the Middle East, imports more than 90 percent of its oil and relies on foreign investment and grants. Rising property prices and investments from oil-exporting Persian Gulf countries boosted Jordan's finance, insurance and real-estate industries by 8.5 percent.
The kingdom bordering Israel and the Palestinian territories received 294.8 million dinars ($416 million) in foreign grants in the first seven months of the year, a 280 percent jump from the same period last year, helping to finance three-quarters of the budget deficit.
``Achieving the economic prosperity we seek requires the immediate application of measures to guarantee financial stability and enhance the investment environment.'' Abdullah said. ``Among these measures is controlling inflation, activating banking policies that guarantee the safety of banking institutions and their reputations and elevating the monitoring tools of depositors and guaranteeing clients' rights.''
Higher Salaries
The king said the government needs to link salaries to inflation and ordered it to raise salaries starting next year. He also said the minimum wage will be raised.
Inflation accelerated to 19.8 percent in August, the highest since 1990, as food and commodity prices soared after the government removed fuel subsidies this year, causing diesel and kerosene prices to nearly double in the first six months.
Unemployment fell to 12 percent in the third quarter from 12.5 percent in the previous quarter and 14.3 percent a year earlier.
Abdullah said the government will implement a social security net that guarantees financial aid to those who need it, and it will also seek to expand health care, in cooperation with private industry.
The monarch said he directed the government to take the ``necessary steps to promote and attract investment'' from Persian Gulf countries.
Foreign direct investment in Jordan may increase as much as 27 percent this year to 3 billion dinars as the country benefits from the Middle East's booming oil wealth, Jordan Investment Board Chief Executive Officer Maen Nsour said on March 3.
Investment in the country, which has no natural resources, advanced to 2.2 billion dinars last year from 1.8 billion dinars in 2006 as investors gained from incentives such as tax exemptions, according to the Jordan Investment Board.
About half of last year's investment was by Gulf states in telecommunications, construction, tourism and health care.
To contact the reporter on this story: Massoud A. Derhally in Amman, Jordan, at mderhally@bloomberg.net
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Dubai Residential Prices May Stay Flat Through 2010
By Matthew Brown and Arif Sharif
Oct. 5 (Bloomberg) -- Home prices in Dubai, the second- biggest of the seven sheikhdoms that make up the United Arab Emirates, are likely to remain flat until 2010 after five years of steep gains, Colliers CRE Plc said.
About 140,000 new homes will be completed in Dubai by the end of 2010, adding to the existing stock of about 300,000 units, Colliers said in a report released in Dubai today. Home prices average $5,420 per square meter, or $504 per square foot, in Dubai, compared with $6,500 a square meter in neighboring Abu Dhabi, the report said.
``We've not seen a drop-off in demand, but there has been a slowdown in value appreciation,'' Ian Albert, Colliers regional director, told reporters in Dubai. ``As we sit here today there is insufficient supply in property across the Middle East and North Africa, in residential, office, leisure and retail.''
Dubai is aiming to become a regional financial center and is spending billions of dollars on finance and tourism projects to diversify its economy. Property values in the U.A.E., the second-biggest Arab economy, have quadrupled over the last five years, investment bank Al Mal Capital PSC said in a report March 9. Dubai's residential property prices rose 40 percent from a year earlier, slowing from an annual 41 percent in May, Al Mal said Aug. 14.
Emaar Declines
Emaar Properties PJSC, the Middle East's biggest publicly traded real-estate company, lost the most since 2000 on concerns that the U.S. bank bailout won't be enough to stop the global credit crisis reaching Dubai. It fell as much as 13.4 percent to 6.67 dirhams, the biggest one-day drop since March 2000, according to data compiled by Bloomberg.
The biggest threat facing the Dubai property market is liquidity, Albert said. The departure of speculators from the market may also lead to prices falling, he said.
``We are concerned about developer bias toward the high- end residential segment, when demand for housing from the middle-income segment is most acute,'' Colliers said in the report, titled `MENA Real Estate Overview.'
To contact the reporter on this story: Matthew Brown in Dubai at mbrown42@bloomberg.netArif Sharif in Dubai at asharif2@bloomberg.net
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Oct. 5 (Bloomberg) -- Home prices in Dubai, the second- biggest of the seven sheikhdoms that make up the United Arab Emirates, are likely to remain flat until 2010 after five years of steep gains, Colliers CRE Plc said.
About 140,000 new homes will be completed in Dubai by the end of 2010, adding to the existing stock of about 300,000 units, Colliers said in a report released in Dubai today. Home prices average $5,420 per square meter, or $504 per square foot, in Dubai, compared with $6,500 a square meter in neighboring Abu Dhabi, the report said.
``We've not seen a drop-off in demand, but there has been a slowdown in value appreciation,'' Ian Albert, Colliers regional director, told reporters in Dubai. ``As we sit here today there is insufficient supply in property across the Middle East and North Africa, in residential, office, leisure and retail.''
Dubai is aiming to become a regional financial center and is spending billions of dollars on finance and tourism projects to diversify its economy. Property values in the U.A.E., the second-biggest Arab economy, have quadrupled over the last five years, investment bank Al Mal Capital PSC said in a report March 9. Dubai's residential property prices rose 40 percent from a year earlier, slowing from an annual 41 percent in May, Al Mal said Aug. 14.
Emaar Declines
Emaar Properties PJSC, the Middle East's biggest publicly traded real-estate company, lost the most since 2000 on concerns that the U.S. bank bailout won't be enough to stop the global credit crisis reaching Dubai. It fell as much as 13.4 percent to 6.67 dirhams, the biggest one-day drop since March 2000, according to data compiled by Bloomberg.
The biggest threat facing the Dubai property market is liquidity, Albert said. The departure of speculators from the market may also lead to prices falling, he said.
``We are concerned about developer bias toward the high- end residential segment, when demand for housing from the middle-income segment is most acute,'' Colliers said in the report, titled `MENA Real Estate Overview.'
To contact the reporter on this story: Matthew Brown in Dubai at mbrown42@bloomberg.netArif Sharif in Dubai at asharif2@bloomberg.net
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Emaar Declines Most Since 2000 on Bailout Concerns
By Matthew Brown and Ayesha Daya
Oct. 5 (Bloomberg) -- Emaar Properties PJSC, the Middle East's biggest publicly traded real-estate company, lost the most since 2000 on concerns that the U.S. bank bailout won't be enough to stop the global credit crisis reaching Dubai.
Emaar fell as much as 13.9 percent to 6.67 dirhams in Dubai, the biggest one-day drop since March 2000, according to Bloomberg data. It traded at 6.84 dirhams at 1:30 p.m. local time.
``Emaar lacks any catalyst to trigger an upward move this year,'' Ahmed Badr, research analyst at Credit Suisse Group AG, said in a telephone interview from Dubai today. ``We can see healthy earnings only next year when Emaar projects such as Burj Dubai and Saudi ventures contribute to its profit.''
Credit Suisse has a ``neutral'' recommendation on the stock with a 12-month target of 9.25 dirhams. Emaar said yesterday it plans to build a 27 billion riyal ($7.2 billion) project in Saudi Arabia with Al-Shoala Group of Establishment.
Property stocks fell across the U.A.E. today. Aldar Properties PJSC, Abu Dhabi's largest property developer, declined 9.9 percent to 7.18 dirhams. Deyaar Development PJSC, a Dubai-based real-estate developer, declined 5 percent to 1.53 dirhams after it announced a 56 percent rise in third-quarter profit today.
Sorouh, an Abu Dhabi-based property developer, declined 10 percent to 6.12 dirhams. Union Properties, a Dubai-based developer, fell 7.7 percent.
``The U.S. market sold off after the bailout bill was passed on Friday so people are thinking that it's not going to be the savior they originally thought,'' Robert Mckinnon, managing director at Al Mal Capital PSC, said in a telephone interview from Dubai. ``Trading on real estate stocks is driven by concerns about liquidity at the moment.''
Home prices in Dubai, the second-biggest of the seven sheikhdoms that make up the United Arab Emirates, are likely to remain flat until 2010 after five years of steep gains, Colliers CRE Plc said today.
To contact the reporters on this story: Matthew Brown in Dubai at mbrown42@bloomberg.net; Ayesha Daya in Dubai adaya1@bloomberg.net
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Oct. 5 (Bloomberg) -- Emaar Properties PJSC, the Middle East's biggest publicly traded real-estate company, lost the most since 2000 on concerns that the U.S. bank bailout won't be enough to stop the global credit crisis reaching Dubai.
Emaar fell as much as 13.9 percent to 6.67 dirhams in Dubai, the biggest one-day drop since March 2000, according to Bloomberg data. It traded at 6.84 dirhams at 1:30 p.m. local time.
``Emaar lacks any catalyst to trigger an upward move this year,'' Ahmed Badr, research analyst at Credit Suisse Group AG, said in a telephone interview from Dubai today. ``We can see healthy earnings only next year when Emaar projects such as Burj Dubai and Saudi ventures contribute to its profit.''
Credit Suisse has a ``neutral'' recommendation on the stock with a 12-month target of 9.25 dirhams. Emaar said yesterday it plans to build a 27 billion riyal ($7.2 billion) project in Saudi Arabia with Al-Shoala Group of Establishment.
Property stocks fell across the U.A.E. today. Aldar Properties PJSC, Abu Dhabi's largest property developer, declined 9.9 percent to 7.18 dirhams. Deyaar Development PJSC, a Dubai-based real-estate developer, declined 5 percent to 1.53 dirhams after it announced a 56 percent rise in third-quarter profit today.
Sorouh, an Abu Dhabi-based property developer, declined 10 percent to 6.12 dirhams. Union Properties, a Dubai-based developer, fell 7.7 percent.
``The U.S. market sold off after the bailout bill was passed on Friday so people are thinking that it's not going to be the savior they originally thought,'' Robert Mckinnon, managing director at Al Mal Capital PSC, said in a telephone interview from Dubai. ``Trading on real estate stocks is driven by concerns about liquidity at the moment.''
Home prices in Dubai, the second-biggest of the seven sheikhdoms that make up the United Arab Emirates, are likely to remain flat until 2010 after five years of steep gains, Colliers CRE Plc said today.
To contact the reporters on this story: Matthew Brown in Dubai at mbrown42@bloomberg.net; Ayesha Daya in Dubai adaya1@bloomberg.net
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Amlak Finance Third-Quarter Profit Nearly Triples on Mortgages
By Arif Sharif
Oct. 5 (Bloomberg) -- Amlak Finance PJSC's third-quarter profit almost tripled on higher Islamic property financing and investments by the United Arab Emirates' biggest mortgage lender by market value.
Net income rose to 175 million dirhams ($48 million) in the period ended Sept. 30 from 67 million dirhams a year earlier. Bloomberg calculated the results by subtracting published six- month data from nine-month figures provided by Amlak today. Assets more than doubled to 15.8 billion dirhams, the Dubai- based company said today in an e-mailed statement.
``The real-estate market in the U.A.E. continues to witness tremendous growth,'' Chairman Nasser Bin Hassan Al-Shaikh said in the statement. Full-year profit will at least double, he said. Amlak, which yesterday said it had begun exploratory talks to merge with Tamweel PJSC, earned 302.9 million dirhams in 2007.
Surging economic growth in the U.A.E., the second-biggest Arab economy, is boosting demand for homes and mortgages. The U.A.E.'s mortgage market will expand 10-fold by 2012 and be valued at about $44 billion, EFG-Hermes Holding SAE, Egypt's biggest publicly traded investment bank, said in December.
Amlak's Islamic home loan portfolio in Egypt has grown to 315 million Egyptian pounds ($58 million) since it began operations in October last year. The company also received regulatory approval to increase equity at Amlak Finance Jordan to 63 million Jordanian dinars ($89 million) from 55 million, it said.
Nine-month profit rose to 444 million dirhams from 173 million dirhams a year earlier, Amlak said today.
To contact the reporter on this story: Arif Sharif in Dubai at asharif2@bloomberg.net
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Oct. 5 (Bloomberg) -- Amlak Finance PJSC's third-quarter profit almost tripled on higher Islamic property financing and investments by the United Arab Emirates' biggest mortgage lender by market value.
Net income rose to 175 million dirhams ($48 million) in the period ended Sept. 30 from 67 million dirhams a year earlier. Bloomberg calculated the results by subtracting published six- month data from nine-month figures provided by Amlak today. Assets more than doubled to 15.8 billion dirhams, the Dubai- based company said today in an e-mailed statement.
``The real-estate market in the U.A.E. continues to witness tremendous growth,'' Chairman Nasser Bin Hassan Al-Shaikh said in the statement. Full-year profit will at least double, he said. Amlak, which yesterday said it had begun exploratory talks to merge with Tamweel PJSC, earned 302.9 million dirhams in 2007.
Surging economic growth in the U.A.E., the second-biggest Arab economy, is boosting demand for homes and mortgages. The U.A.E.'s mortgage market will expand 10-fold by 2012 and be valued at about $44 billion, EFG-Hermes Holding SAE, Egypt's biggest publicly traded investment bank, said in December.
Amlak's Islamic home loan portfolio in Egypt has grown to 315 million Egyptian pounds ($58 million) since it began operations in October last year. The company also received regulatory approval to increase equity at Amlak Finance Jordan to 63 million Jordanian dinars ($89 million) from 55 million, it said.
Nine-month profit rose to 444 million dirhams from 173 million dirhams a year earlier, Amlak said today.
To contact the reporter on this story: Arif Sharif in Dubai at asharif2@bloomberg.net
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Dana, Crescent Start Gas Production in Iraq Kurdistan
By Arif Sharif and Ayesha Daya
Oct. 5 (Bloomberg) -- Dana Gas PJSC, a United Arab Emirates-based oil and natural gas producer, started natural-gas production with partner Crescent Petroleum in Iraq's Kurdish region.
Dana and Crescent, which began processing gas and transporting it through a pipeline yesterday, are equal partners in the $650 million project, the company said in an e-mailed statement yesterday.
Gas production will increase to 300 million cubic feet a day in the first half of next year from the current 75 million cubic feet. The gas will be used to power new electricity plants near Erbil and Sulaimaniya, providing 1,250 megawatts for more than 4 million people, according to the statement.
Crescent owns 20.4 percent of Dana Gas, and both companies are headed by Iraqi born Hamid Jafar.
To contact the reporter on this story: Arif Sharif in Dubai at asharif2@bloomberg.netAyesha Daya in Dubai adaya1@bloomberg.net
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Oct. 5 (Bloomberg) -- Dana Gas PJSC, a United Arab Emirates-based oil and natural gas producer, started natural-gas production with partner Crescent Petroleum in Iraq's Kurdish region.
Dana and Crescent, which began processing gas and transporting it through a pipeline yesterday, are equal partners in the $650 million project, the company said in an e-mailed statement yesterday.
Gas production will increase to 300 million cubic feet a day in the first half of next year from the current 75 million cubic feet. The gas will be used to power new electricity plants near Erbil and Sulaimaniya, providing 1,250 megawatts for more than 4 million people, according to the statement.
Crescent owns 20.4 percent of Dana Gas, and both companies are headed by Iraqi born Hamid Jafar.
To contact the reporter on this story: Arif Sharif in Dubai at asharif2@bloomberg.netAyesha Daya in Dubai adaya1@bloomberg.net
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Deyaar Development Third-Quarter Net Rises on Sales
By Matthew Brown
Oct. 5 (Bloomberg) -- Deyaar Development PJSC, the Dubai- based real estate company whose former chief executive officer is being investigated for fraud, said third-quarter profit rose 56 percent as it sold more properties.
Net income increased to 311.9 million dirhams ($84.9 million), or 0.213 fils per share, from 200.2 million dirhams, or 0.137 fils, a year earlier, Deyaar said today in a statement posted on the Dubai bourse Web site.
Deyaar's shares have fallen 31 percent in the last six months after the arrest of former chief executive Zack Shahin. He will stand trial this month on charges of embezzlement, six months after being detained, Shahin's lawyer Ali Shamsi told Bloomberg on Sept. 28.
``Results for the third quarter have again exceeded expectations,'' Deyaar Chairman Nasser Bin Hassan Al-Shaikh said in the statement. The company is ``well poised'' to deliver increased earnings, he said.
Revenue surged almost five-fold to 1.01 billion dirhams from 214.9 million dirhams a year earlier.
Deyaar is a unit of Dubai Islamic Bank, the largest bank in the United Arab Emirates complying with Muslim banking rules. Deyaar, Dubai Islamic and Islamic mortgage company Tamweel PJSC all have former senior employees under investigation by the Dubai government for corruption.
To contact the reporters on this story: Matthew Brown in Dubai at mbrown42@bloomberg.net
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Oct. 5 (Bloomberg) -- Deyaar Development PJSC, the Dubai- based real estate company whose former chief executive officer is being investigated for fraud, said third-quarter profit rose 56 percent as it sold more properties.
Net income increased to 311.9 million dirhams ($84.9 million), or 0.213 fils per share, from 200.2 million dirhams, or 0.137 fils, a year earlier, Deyaar said today in a statement posted on the Dubai bourse Web site.
Deyaar's shares have fallen 31 percent in the last six months after the arrest of former chief executive Zack Shahin. He will stand trial this month on charges of embezzlement, six months after being detained, Shahin's lawyer Ali Shamsi told Bloomberg on Sept. 28.
``Results for the third quarter have again exceeded expectations,'' Deyaar Chairman Nasser Bin Hassan Al-Shaikh said in the statement. The company is ``well poised'' to deliver increased earnings, he said.
Revenue surged almost five-fold to 1.01 billion dirhams from 214.9 million dirhams a year earlier.
Deyaar is a unit of Dubai Islamic Bank, the largest bank in the United Arab Emirates complying with Muslim banking rules. Deyaar, Dubai Islamic and Islamic mortgage company Tamweel PJSC all have former senior employees under investigation by the Dubai government for corruption.
To contact the reporters on this story: Matthew Brown in Dubai at mbrown42@bloomberg.net
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U.A.E. Shares Fell Most Since March 2006, Led by Emaar, Aldar
By Arif Sharif and Ayesha Daya
Oct. 5 (Bloomberg) -- Persian Gulf shares fell, with the Dubai index falling the most in more than 2 years, on concerns a slowing U.S. economy will hurt growth in the Middle East.
Emaar Properties PJSC, the region's biggest publicly traded real-estate developer, led today's losers after the markets opened following the three-day Eid al-Fitr holiday. Aldar Properties, the largest developer in Abu Dhabi, fell 9.2 percent to 7.24 dirhams, and Deyaar Development PJSC fell after reporting a 56 percent rise in third-quarter profit.
``The global cues are playing a role, the bad numbers in the U.S., the lack of confidence among investors in the capital markets and whether the U.S. bail-out will be sufficient,'' P. Krishna Murthy, who heads the financial services division of the Al Rostamani Group, said in an interview from Dubai.
The Dubai Financial Market General Index retreated 6.9 percent, its biggest drop since March 14, 2006, to 3844.27. The Abu Dhabi Securities Exchange General Index lost 4.7 percent.
Emaar fell 12.3 percent to 6.8 dirhams after it said it plans to build a 27 billion riyal ($7.2 billion) real-estate project in Saudi Arabia with the Al-Shoala Group of Establishment. Deyaar fell 5.6 percent to 1.52 dirhams after saying third-quarter profit rose to 311.9 million dirhams.
``There are a lot of rumors out there that there's going to be some consolidation in the real-estate market,'' Robert Mckinnon, managing director of equity research at Al Mal Capital PSC, said in a telephone interview from Dubai today. ``Investors want to see how things play out.''
The Kuwait Stock Exchange Index fell 3.6 percent, Oman's Muscat Securities Market 30 Index lost 2.8 percent and the Bahrain All Share Index fell 0.4 percent. The Doha Securities Market 20 Index declined 7 percent.
To contact the reporter on this story: Arif Sharif in Dubai at asharif2@bloomberg.net
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Oct. 5 (Bloomberg) -- Persian Gulf shares fell, with the Dubai index falling the most in more than 2 years, on concerns a slowing U.S. economy will hurt growth in the Middle East.
Emaar Properties PJSC, the region's biggest publicly traded real-estate developer, led today's losers after the markets opened following the three-day Eid al-Fitr holiday. Aldar Properties, the largest developer in Abu Dhabi, fell 9.2 percent to 7.24 dirhams, and Deyaar Development PJSC fell after reporting a 56 percent rise in third-quarter profit.
``The global cues are playing a role, the bad numbers in the U.S., the lack of confidence among investors in the capital markets and whether the U.S. bail-out will be sufficient,'' P. Krishna Murthy, who heads the financial services division of the Al Rostamani Group, said in an interview from Dubai.
The Dubai Financial Market General Index retreated 6.9 percent, its biggest drop since March 14, 2006, to 3844.27. The Abu Dhabi Securities Exchange General Index lost 4.7 percent.
Emaar fell 12.3 percent to 6.8 dirhams after it said it plans to build a 27 billion riyal ($7.2 billion) real-estate project in Saudi Arabia with the Al-Shoala Group of Establishment. Deyaar fell 5.6 percent to 1.52 dirhams after saying third-quarter profit rose to 311.9 million dirhams.
``There are a lot of rumors out there that there's going to be some consolidation in the real-estate market,'' Robert Mckinnon, managing director of equity research at Al Mal Capital PSC, said in a telephone interview from Dubai today. ``Investors want to see how things play out.''
The Kuwait Stock Exchange Index fell 3.6 percent, Oman's Muscat Securities Market 30 Index lost 2.8 percent and the Bahrain All Share Index fell 0.4 percent. The Doha Securities Market 20 Index declined 7 percent.
To contact the reporter on this story: Arif Sharif in Dubai at asharif2@bloomberg.net
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Dubai International Financial Centre to Buy Dubai Real Estate
By Matthew Brown
Oct. 5 (Bloomberg) -- DIFC Investments, a unit of Dubai International Financial Centre that owns stakes in firms including Deutsche Bank AG, said it will start a fund to invest in real estate in Dubai and the United Arab Emirates.
``The steady growth of the real-estate sector in recent years and the great future prospects provide us with an excellent opportunity to diversify our portfolio,'' Omar bin Suleiman, governor of the DIFC, said in an e-mailed statement received yesterday.
The Dubai state-owned Emirates Business 24/7 newspaper reported today that the DIFC real-estate fund will amount to ``multi-billions.''
To contact the reporters on this story: Matthew Brown in Dubai at mbrown42@bloomberg.net
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Oct. 5 (Bloomberg) -- DIFC Investments, a unit of Dubai International Financial Centre that owns stakes in firms including Deutsche Bank AG, said it will start a fund to invest in real estate in Dubai and the United Arab Emirates.
``The steady growth of the real-estate sector in recent years and the great future prospects provide us with an excellent opportunity to diversify our portfolio,'' Omar bin Suleiman, governor of the DIFC, said in an e-mailed statement received yesterday.
The Dubai state-owned Emirates Business 24/7 newspaper reported today that the DIFC real-estate fund will amount to ``multi-billions.''
To contact the reporters on this story: Matthew Brown in Dubai at mbrown42@bloomberg.net
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Japan May Link Faster Narita Line to Tokyo Station, Nikkei Says
By Chris Cooper
Oct. 5 (Bloomberg) -- Japan may extend a new rail link to cut travel time between Tokyo's business district and Narita airport to less than 30 minutes to improve the city's international competitiveness, the Nikkei newspaper said.
The government is considering an extension to add a stop at Tokyo station to the high-speed rail network under construction to link Narita and Haneda airports in less than an hour, Nikkei reported, without saying where it got the information.
A transport ministry committee will convene next year to decide details of the plan, which may cost more than 300 billion yen ($2.8 billion), the paper said.
Work under way on service operated by Keisei Electric Railway Co. will cut travel between Narita and Nippori, north of Tokyo's downtown, to 36 minutes from 51 minutes, according to the Web site of Narita Rapid Railway Access Co.
To contact the reporters on this story: Chris Cooper in Tokyo at ccooper1@bloomberg.net
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Oct. 5 (Bloomberg) -- Japan may extend a new rail link to cut travel time between Tokyo's business district and Narita airport to less than 30 minutes to improve the city's international competitiveness, the Nikkei newspaper said.
The government is considering an extension to add a stop at Tokyo station to the high-speed rail network under construction to link Narita and Haneda airports in less than an hour, Nikkei reported, without saying where it got the information.
A transport ministry committee will convene next year to decide details of the plan, which may cost more than 300 billion yen ($2.8 billion), the paper said.
Work under way on service operated by Keisei Electric Railway Co. will cut travel between Narita and Nippori, north of Tokyo's downtown, to 36 minutes from 51 minutes, according to the Web site of Narita Rapid Railway Access Co.
To contact the reporters on this story: Chris Cooper in Tokyo at ccooper1@bloomberg.net
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Finance Chief Says Japan May Pass Additional Stimulus Packages
By Kyoko Shimodoi and Chris Cooper
Oct. 5 (Bloomberg) -- Japan's Finance Minister Shoichi Nakagawa said the government may form additional economic packages in addition to the current stimulus plan being suggested.
``A second, or third, package is possible,'' Nakagawa said today on Fuji Television's Hodo 2001 program.
Liberal Democratic Party officials are urging lawmakers to approve 1.8 trillion yen ($17 billion) of additional spending to help small companies cope with high oil and food prices before parliament is dissolved. Opposition and ruling party lawmakers haven't agreed on a timetable to debate the legislation.
``The political situation is important but to help Japan's economy improve we need to focus on a recovery,'' he said.
Nakagawa hasn't forgotten a promise of balancing the budget by fiscal 2011, he said separately today on Asahi Television's ``Sunday Project''
Former Prime Minister Junichiro Koizumi set a goal in 2006 of balancing the primary budget, which excludes interest payments, so Japan could start to cut debt that the OECD estimates is about 180 percent of the economy.
To contact the reporters on this story: Kyoko Shimodoi in Tokyo at kshimodoi@bloomberg.net; Chris Cooper in Tokyo at ccooper1@bloomberg.net
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Oct. 5 (Bloomberg) -- Japan's Finance Minister Shoichi Nakagawa said the government may form additional economic packages in addition to the current stimulus plan being suggested.
``A second, or third, package is possible,'' Nakagawa said today on Fuji Television's Hodo 2001 program.
Liberal Democratic Party officials are urging lawmakers to approve 1.8 trillion yen ($17 billion) of additional spending to help small companies cope with high oil and food prices before parliament is dissolved. Opposition and ruling party lawmakers haven't agreed on a timetable to debate the legislation.
``The political situation is important but to help Japan's economy improve we need to focus on a recovery,'' he said.
Nakagawa hasn't forgotten a promise of balancing the budget by fiscal 2011, he said separately today on Asahi Television's ``Sunday Project''
Former Prime Minister Junichiro Koizumi set a goal in 2006 of balancing the primary budget, which excludes interest payments, so Japan could start to cut debt that the OECD estimates is about 180 percent of the economy.
To contact the reporters on this story: Kyoko Shimodoi in Tokyo at kshimodoi@bloomberg.net; Chris Cooper in Tokyo at ccooper1@bloomberg.net
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UniCredit to Raise EU5 Billion, Sell Assets, Repubblica Reports
By Steve Scherer
Oct. 5 (Bloomberg) -- UniCredit SpA, Italy's biggest lender, will raise 5 billion euros ($6.9 billion) by issuing its dividend in shares and selling convertible bonds, la Repubblica reported, without saying where it got the information.
UniCredit's board is meeting today in Milan to discuss the plan, under which it would hold onto more than 3 billion euros in cash by issuing the 2008 dividend in stock, the newspaper said. It will sell 2 billion euros of long-term bonds that can be traded in for shares, la Repubblica reported.
The Italian bank will also raise money by selling assets, according to la Repubblica. The sale of its 3.5 percent holding in highway toll operator Atlantia SpA will bring in 300 million euros, while shedding its 4.6 percent stake in Assicurazioni Generali SpA will raise as much as 1.5 billion euros, the newspaper said.
UniCredit will have to call an extraordinary shareholders' meeting by year-end to approve the measures, Repubblica said.
To contact the reporters on this story: Steve Scherer in Rome at scherer@bloomberg.net
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Oct. 5 (Bloomberg) -- UniCredit SpA, Italy's biggest lender, will raise 5 billion euros ($6.9 billion) by issuing its dividend in shares and selling convertible bonds, la Repubblica reported, without saying where it got the information.
UniCredit's board is meeting today in Milan to discuss the plan, under which it would hold onto more than 3 billion euros in cash by issuing the 2008 dividend in stock, the newspaper said. It will sell 2 billion euros of long-term bonds that can be traded in for shares, la Repubblica reported.
The Italian bank will also raise money by selling assets, according to la Repubblica. The sale of its 3.5 percent holding in highway toll operator Atlantia SpA will bring in 300 million euros, while shedding its 4.6 percent stake in Assicurazioni Generali SpA will raise as much as 1.5 billion euros, the newspaper said.
UniCredit will have to call an extraordinary shareholders' meeting by year-end to approve the measures, Repubblica said.
To contact the reporters on this story: Steve Scherer in Rome at scherer@bloomberg.net
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GDF Suez Wants to Boost Stake in Italy's Acea, Il Sole Reports
By Steve Scherer
Oct. 5 (Bloomberg) -- GDF Suez SA, a French utility, is seeking to boost its stake in Rome power and water provider Acea SpA, Il Sole-24 Ore reported, without saying where it got the information.
GDF Chief Executive Officer Gerard Mestrallet met in Rome last week with Mayor Gianni Alemanno to see if the city is prepared to sell part of its 51 percent holding in Acea, Sole said. GDF already owns 8.6 percent of Acea.
French natural gas monopoly GDF and generator Suez completed a merger earlier this year. Acea and the French company are also in the process of rearranging power generation and sales partnerships that they already own together.
To contact the reporters on this story: Steve Scherer in Rome at scherer@bloomberg.net
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Oct. 5 (Bloomberg) -- GDF Suez SA, a French utility, is seeking to boost its stake in Rome power and water provider Acea SpA, Il Sole-24 Ore reported, without saying where it got the information.
GDF Chief Executive Officer Gerard Mestrallet met in Rome last week with Mayor Gianni Alemanno to see if the city is prepared to sell part of its 51 percent holding in Acea, Sole said. GDF already owns 8.6 percent of Acea.
French natural gas monopoly GDF and generator Suez completed a merger earlier this year. Acea and the French company are also in the process of rearranging power generation and sales partnerships that they already own together.
To contact the reporters on this story: Steve Scherer in Rome at scherer@bloomberg.net
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Iceland in Talks, Won't Comment on Reported $14 Billion Bailout
By Tasneem Brogger and Frances Schwartzkopff
Oct. 5 (Bloomberg) -- Iceland's central bank said it's in international talks to stem the financial crisis that forced the bailout of Glitnir Bank hf and a run on the currency.
``There is ongoing dialogue, as there has been for several months, with our colleagues abroad,'' Tryggvi Palsson, director of financial stability at the central bank in Reykjavik, said in a telephone interview today.
Britain's Sunday Telegraph reported today that Icelandic authorities may be about to announce a 10 billion-euro ($14 billion) package of liquidity lifelines from Nordic central banks and repatriated assets from local pension funds. Palsson declined to comment on the report.
The krona plunged 20 percent against the euro in the past month as investors sold the currency on concern the government may be forced to rescue more banks after spending 600 million euros on a 75 percent stake in Glitnir.
Central banks in Denmark, Norway and Sweden agreed in May to enter a swap arrangement with Iceland worth a total of 1.5 billion euros. Sweden has yet to receive an official approach from Iceland to activate that agreement, spokeswoman Britta von Schoultz of Sweden's Riksbank said.
``The swap facility from May is of course still available,'' Schoultz said yesterday. ``There is no addition to that. We are, of course, always in dialogue with the central bank of Iceland, as with other central banks, during these times of turmoil.''
Iceland's government stepped in after Glitnir failed to get short-term funding, triggering downgrades of the country's credit ratings that have exacerbated a slump in the currency.
``I would have thought it was urgent to do something three months ago,'' Beat Siegenthaler, a senior strategist at TD Securities in London, said in a phone interview on Oct. 1. ``It's getting more and more urgent every hour.''
The Telegraph said Iceland plans to announce a rescue package before markets open tomorrow, citing a person it didn't identify.
European Central Bank spokeswoman Regina Schueller and Norway's central bank spokeswoman Siv Meisingseth declined to comment. Danish central bank spokesman Karsten Biltoft was unavailable when contacted by Bloomberg.
To contact the reporters on this story: Tasneem Brogger in Copenhagen at tbrogger@bloomberg.net;
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Oct. 5 (Bloomberg) -- Iceland's central bank said it's in international talks to stem the financial crisis that forced the bailout of Glitnir Bank hf and a run on the currency.
``There is ongoing dialogue, as there has been for several months, with our colleagues abroad,'' Tryggvi Palsson, director of financial stability at the central bank in Reykjavik, said in a telephone interview today.
Britain's Sunday Telegraph reported today that Icelandic authorities may be about to announce a 10 billion-euro ($14 billion) package of liquidity lifelines from Nordic central banks and repatriated assets from local pension funds. Palsson declined to comment on the report.
The krona plunged 20 percent against the euro in the past month as investors sold the currency on concern the government may be forced to rescue more banks after spending 600 million euros on a 75 percent stake in Glitnir.
Central banks in Denmark, Norway and Sweden agreed in May to enter a swap arrangement with Iceland worth a total of 1.5 billion euros. Sweden has yet to receive an official approach from Iceland to activate that agreement, spokeswoman Britta von Schoultz of Sweden's Riksbank said.
``The swap facility from May is of course still available,'' Schoultz said yesterday. ``There is no addition to that. We are, of course, always in dialogue with the central bank of Iceland, as with other central banks, during these times of turmoil.''
Iceland's government stepped in after Glitnir failed to get short-term funding, triggering downgrades of the country's credit ratings that have exacerbated a slump in the currency.
``I would have thought it was urgent to do something three months ago,'' Beat Siegenthaler, a senior strategist at TD Securities in London, said in a phone interview on Oct. 1. ``It's getting more and more urgent every hour.''
The Telegraph said Iceland plans to announce a rescue package before markets open tomorrow, citing a person it didn't identify.
European Central Bank spokeswoman Regina Schueller and Norway's central bank spokeswoman Siv Meisingseth declined to comment. Danish central bank spokesman Karsten Biltoft was unavailable when contacted by Bloomberg.
To contact the reporters on this story: Tasneem Brogger in Copenhagen at tbrogger@bloomberg.net;
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German Government Leads Talks for Hypo Real Estate Bailout
By Hellmuth Tromm
Oct. 5 (Bloomberg) -- The German government led talks to salvage a 35 billion-euro ($49 billion) bailout plan for Hypo Real Estate Holding AG today after the ailing property lender said commercial banks withdrew their support.
``We will see how we can clean up the mess that has been presented to us,'' Finance Ministry spokesman Torsten Albig said in a phone interview in Berlin. ``Everyone involved in this is hopefully aware of their responsibilities.''
The government and the Bundesbank have said that Hypo Real Estate, the nation's second-biggest property lender, is too big to fail. The talks, which will involve private-sector banks, may last into the night, Albig said.
Hypo Real Estate's financing needs exceeded the bailout plan guarantee, Germany's Die Welt reported yesterday, citing unidentified people in the finance industry. It will need 20 billion euros by the end of next week and 50 billion euros by the end of the year, according to the newspaper. As much as 100 billion euros may be needed to shore up the bank's finances by the end of 2009, Die Welt said.
Heiner Herkenhoff, a spokesman for the German BDB banking association, and Hypo Real Estate spokesman Hans Obermeier declined to comment on the figures. Bundesbank spokesman Christian Burckhardt said Bundesbank President Axel Weber is participating as an adviser to the government in the discussions.
Hypo Real Estate's shares have declined 79 percent this year, valuing the company at 1.6 billion euros.
Funding Dries Up
The European Central Bank and the Bundesbank planned to contribute jointly 20 billion euros, and a group of unidentified banks another 15 billion euros. The plan called for Hypo Real Estate to use 42 billion euros in assets, mostly debt owed by government borrowers, as collateral.
The bank sought the lifeline after its Dublin-based Depfa Bank Plc unit, which specializes in government lending and depends on now-closed money markets for funding, failed to get short-term funding amid the credit crunch.
Failure to provide the rescue package ``may have triggered unpredictable consequences for the German financial and economic system similar to those of the collapse of U.S. financial group Lehman Brothers,'' the Bundesbank and BaFin said in a joint letter dated Sept. 29 and addressed to Finance Minister Peer Steinbrueck.
``If we had not acted, the bank's crisis wouldn't have just hurt the financial sector, but its network of business would have hurt the real economy, in Germany and beyond,'' German Finance Minister Peer Steinbrueck said the same day.
J.C. Flowers
Hypo Real Estate, run by Chief Executive Officer Georg Funke since it was spun off from HVB Group in 2003, reported writedowns on collateralized debt obligations on Jan. 15. The company said Aug. 13 that second-quarter pretax profit plunged 95 percent because of further markdowns on debt.
A group led by J.C. Flowers & Co., the buyout firm run by Christopher Flowers, bought a 24 percent stake in Hypo Real Estate for about 1.13 billion euros in June.
Former parent HVB Group is now a unit of UniCredit SpA, Italy's biggest lender, which is holding an extraordinary board meeting today to boost its regulatory capital and settle investors' concern with its finances.
The global financial crisis that prompted Lehman Brothers Holding Inc.'s Sept. 15 bankruptcy filing is weighing on Europe. Belgian authorities are exploring ``all methods'' to keep Fortis in business even after it received an 11.2 billion-euro government bailout on Sept. 28. Belgium and France on Sept. 30 threw Dexia SA a 6.4 billion-euro lifeline.
To contact the reporter on this story: Hellmuth Tromm in Berlin at htromm@bloomberg.net
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Oct. 5 (Bloomberg) -- The German government led talks to salvage a 35 billion-euro ($49 billion) bailout plan for Hypo Real Estate Holding AG today after the ailing property lender said commercial banks withdrew their support.
``We will see how we can clean up the mess that has been presented to us,'' Finance Ministry spokesman Torsten Albig said in a phone interview in Berlin. ``Everyone involved in this is hopefully aware of their responsibilities.''
The government and the Bundesbank have said that Hypo Real Estate, the nation's second-biggest property lender, is too big to fail. The talks, which will involve private-sector banks, may last into the night, Albig said.
Hypo Real Estate's financing needs exceeded the bailout plan guarantee, Germany's Die Welt reported yesterday, citing unidentified people in the finance industry. It will need 20 billion euros by the end of next week and 50 billion euros by the end of the year, according to the newspaper. As much as 100 billion euros may be needed to shore up the bank's finances by the end of 2009, Die Welt said.
Heiner Herkenhoff, a spokesman for the German BDB banking association, and Hypo Real Estate spokesman Hans Obermeier declined to comment on the figures. Bundesbank spokesman Christian Burckhardt said Bundesbank President Axel Weber is participating as an adviser to the government in the discussions.
Hypo Real Estate's shares have declined 79 percent this year, valuing the company at 1.6 billion euros.
Funding Dries Up
The European Central Bank and the Bundesbank planned to contribute jointly 20 billion euros, and a group of unidentified banks another 15 billion euros. The plan called for Hypo Real Estate to use 42 billion euros in assets, mostly debt owed by government borrowers, as collateral.
The bank sought the lifeline after its Dublin-based Depfa Bank Plc unit, which specializes in government lending and depends on now-closed money markets for funding, failed to get short-term funding amid the credit crunch.
Failure to provide the rescue package ``may have triggered unpredictable consequences for the German financial and economic system similar to those of the collapse of U.S. financial group Lehman Brothers,'' the Bundesbank and BaFin said in a joint letter dated Sept. 29 and addressed to Finance Minister Peer Steinbrueck.
``If we had not acted, the bank's crisis wouldn't have just hurt the financial sector, but its network of business would have hurt the real economy, in Germany and beyond,'' German Finance Minister Peer Steinbrueck said the same day.
J.C. Flowers
Hypo Real Estate, run by Chief Executive Officer Georg Funke since it was spun off from HVB Group in 2003, reported writedowns on collateralized debt obligations on Jan. 15. The company said Aug. 13 that second-quarter pretax profit plunged 95 percent because of further markdowns on debt.
A group led by J.C. Flowers & Co., the buyout firm run by Christopher Flowers, bought a 24 percent stake in Hypo Real Estate for about 1.13 billion euros in June.
Former parent HVB Group is now a unit of UniCredit SpA, Italy's biggest lender, which is holding an extraordinary board meeting today to boost its regulatory capital and settle investors' concern with its finances.
The global financial crisis that prompted Lehman Brothers Holding Inc.'s Sept. 15 bankruptcy filing is weighing on Europe. Belgian authorities are exploring ``all methods'' to keep Fortis in business even after it received an 11.2 billion-euro government bailout on Sept. 28. Belgium and France on Sept. 30 threw Dexia SA a 6.4 billion-euro lifeline.
To contact the reporter on this story: Hellmuth Tromm in Berlin at htromm@bloomberg.net
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Citi wins court order in battle for Wachovia
By Dan Wilchins
NEW YORK (Reuters) - Citigroup Inc said it won a court order late on Saturday blocking Wells Fargo & Co. from buying hobbled U.S. bank Wachovia Corp until the court rules otherwise.
Citigroup, which planned to buy Wachovia's banking assets for $2.2 billion, said New York State Supreme Court Justice Charles Ramos granted an injunction extending Wachovia's agreement to negotiate exclusively with Citigroup.
Citigroup and Wells Fargo are battling for control of sixth-largest U.S. bank Wachovia, which has been hit hard by bad mortgages amid turmoil in global credit markets, but has a large network of branches.
Citigroup, the largest U.S. bank, announced on Monday it had agreed to buy Wachovia's banking operations in a deal backed by the U.S. government. That deal did not include a signed merger agreement, but Wachovia did sign an agreement to only negotiate with Citigroup through Monday October 6.
On Friday, however, Wells Fargo said it had signed an agreement to buy the whole of Wachovia, including its asset management unit and retail brokerage, for about $15 billion, roughly seven times more.
Wachovia said early on Sunday morning that it believes its agreement with Wells Fargo is valid and proper, and is best for shareholders, employees and U.S. taxpayers.
"Citigroup is always free to make a superior offer to Wachovia," spokeswoman Christy Phillips-Brown said.
Citigroup said in its statement that it is prepared to continue negotiating with Wachovia, but that Wachovia may not speak to others.
Some lawyers believe that Citigroup could have a real case, noting the exclusivity agreement and the fact that Citigroup provided financial support to Wachovia last week.
"Those are clearly strong facts on Citi's side," said Morton Pierce, chairman of the mergers and acquisition group at law firm Dewey & LeBoeuf, on Friday. Dewey & LeBoeuf is not representing any of the parties in the transaction.
GOVERNMENT HELP
Citigroup, which has sustained about $60 billion of writedowns and losses during the credit crunch, planned to buy Wachovia's banking assets with U.S. help, including partial government guarantees on a $312 billion Wachovia loan book.
The deal is important for Citigroup Chief Executive Vikram Pandit, who is looking to turn around the ailing bank in part by focusing on stable businesses such as consumer banking.
Wells Fargo, the seventh largest U.S. bank by assets, has managed to remain consistently profitable during the credit crunch. Its bid would not require government backing.
Regulators said on Friday they had not looked at the Wells Fargo bid.
Under that bid, for each share of Wachovia, investors would receive 0.1991 of a Wells Fargo share, which is equal to $6.88 a share based on Wells Fargo's closing price on Friday of $34.56.
U.S. banks have been scrambling to build or buy branches, which allow them to raise money from depositors. In a credit crunch, deposit funding can be cheap compared to borrowing in bond markets.
Winning the Wachovia branches would help Citi bolster its relatively weak network of U.S. branches, which number about 1,000 compared with Wachovia's 3,300 and Wells Fargo's 3,400.
Wachovia is the latest casualty of a crisis that has led to shotgun sales of Bear Stearns Cos and Merrill Lynch & Co Inc, the near collapse of American International Group Inc, and the bankruptcies of Lehman Brothers Holdings Inc and Washington Mutual Inc.
(Additional reporting by Elinor Comlay and Jonathan Stempel, editing by Anthony Boadle)
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NEW YORK (Reuters) - Citigroup Inc said it won a court order late on Saturday blocking Wells Fargo & Co. from buying hobbled U.S. bank Wachovia Corp until the court rules otherwise.
Citigroup, which planned to buy Wachovia's banking assets for $2.2 billion, said New York State Supreme Court Justice Charles Ramos granted an injunction extending Wachovia's agreement to negotiate exclusively with Citigroup.
Citigroup and Wells Fargo are battling for control of sixth-largest U.S. bank Wachovia, which has been hit hard by bad mortgages amid turmoil in global credit markets, but has a large network of branches.
Citigroup, the largest U.S. bank, announced on Monday it had agreed to buy Wachovia's banking operations in a deal backed by the U.S. government. That deal did not include a signed merger agreement, but Wachovia did sign an agreement to only negotiate with Citigroup through Monday October 6.
On Friday, however, Wells Fargo said it had signed an agreement to buy the whole of Wachovia, including its asset management unit and retail brokerage, for about $15 billion, roughly seven times more.
Wachovia said early on Sunday morning that it believes its agreement with Wells Fargo is valid and proper, and is best for shareholders, employees and U.S. taxpayers.
"Citigroup is always free to make a superior offer to Wachovia," spokeswoman Christy Phillips-Brown said.
Citigroup said in its statement that it is prepared to continue negotiating with Wachovia, but that Wachovia may not speak to others.
Some lawyers believe that Citigroup could have a real case, noting the exclusivity agreement and the fact that Citigroup provided financial support to Wachovia last week.
"Those are clearly strong facts on Citi's side," said Morton Pierce, chairman of the mergers and acquisition group at law firm Dewey & LeBoeuf, on Friday. Dewey & LeBoeuf is not representing any of the parties in the transaction.
GOVERNMENT HELP
Citigroup, which has sustained about $60 billion of writedowns and losses during the credit crunch, planned to buy Wachovia's banking assets with U.S. help, including partial government guarantees on a $312 billion Wachovia loan book.
The deal is important for Citigroup Chief Executive Vikram Pandit, who is looking to turn around the ailing bank in part by focusing on stable businesses such as consumer banking.
Wells Fargo, the seventh largest U.S. bank by assets, has managed to remain consistently profitable during the credit crunch. Its bid would not require government backing.
Regulators said on Friday they had not looked at the Wells Fargo bid.
Under that bid, for each share of Wachovia, investors would receive 0.1991 of a Wells Fargo share, which is equal to $6.88 a share based on Wells Fargo's closing price on Friday of $34.56.
U.S. banks have been scrambling to build or buy branches, which allow them to raise money from depositors. In a credit crunch, deposit funding can be cheap compared to borrowing in bond markets.
Winning the Wachovia branches would help Citi bolster its relatively weak network of U.S. branches, which number about 1,000 compared with Wachovia's 3,300 and Wells Fargo's 3,400.
Wachovia is the latest casualty of a crisis that has led to shotgun sales of Bear Stearns Cos and Merrill Lynch & Co Inc, the near collapse of American International Group Inc, and the bankruptcies of Lehman Brothers Holdings Inc and Washington Mutual Inc.
(Additional reporting by Elinor Comlay and Jonathan Stempel, editing by Anthony Boadle)
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China to Start Margin Trading for Securities Firms
By Stan James
Oct. 5 (Bloomberg) -- China will soon start margin trading and short selling among securities companies, the China Securities Regulatory Commission said in a statement on its Web site today.
The regulator will allow investors to sell shares that they don't already own to create ``an internal price stability'' within the local markets, the CSRC statement said.
China's plan contrasts with regulators in the U.S., Europe and Australia that have banned short selling to shore up financial shares battered by the global credit squeeze. China's government is betting the changes will boost trading without spurring further declines after state share buybacks helped the CSI 300 Index rebound from a two-year low last month.
China Investment Corp., the nation's $200 billion sovereign wealth fund, bought shares in Industrial & Commercial Bank of China Ltd., Bank of China Ltd. and China Construction Bank Corp., the nation's three largest state-owned banks, last month, after the CSI 300 had fallen 58 percent this year.
To contact the reporter on this story: Stan James in Hong Kong at Sjames2@bloomberg.net
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Oct. 5 (Bloomberg) -- China will soon start margin trading and short selling among securities companies, the China Securities Regulatory Commission said in a statement on its Web site today.
The regulator will allow investors to sell shares that they don't already own to create ``an internal price stability'' within the local markets, the CSRC statement said.
China's plan contrasts with regulators in the U.S., Europe and Australia that have banned short selling to shore up financial shares battered by the global credit squeeze. China's government is betting the changes will boost trading without spurring further declines after state share buybacks helped the CSI 300 Index rebound from a two-year low last month.
China Investment Corp., the nation's $200 billion sovereign wealth fund, bought shares in Industrial & Commercial Bank of China Ltd., Bank of China Ltd. and China Construction Bank Corp., the nation's three largest state-owned banks, last month, after the CSI 300 had fallen 58 percent this year.
To contact the reporter on this story: Stan James in Hong Kong at Sjames2@bloomberg.net
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HSBC's Wong Says Current Crisis `Worse' Than 1997, Singtao Says
By Chia-Peck Wong
Oct. 5 (Bloomberg) -- The impact of the global credit crisis will be more severe than the 1997 Asian financial crisis, Hong Kong-based Singtao Daily cited Peter Wong, executive director at HSBC Holdings Plc's Asia-Pacific unit as saying.
Hong Kong's exports would be affected while sentiment has been hit by declines in the stock market, the daily quoted Wong as telling a radio station. The financial system will take longer to recover than a decade ago, Wong said.
Companies in Hong Kong would have to control costs, though Wong said there haven't been signs of mass lay-offs, Singtao reported. Still, Hong Kong's banking system and mortgage market is healthy, he said.
To contact the reporter on this story: Chia-Peck Wong in Hong Kong at cpwong@bloomberg.net
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Oct. 5 (Bloomberg) -- The impact of the global credit crisis will be more severe than the 1997 Asian financial crisis, Hong Kong-based Singtao Daily cited Peter Wong, executive director at HSBC Holdings Plc's Asia-Pacific unit as saying.
Hong Kong's exports would be affected while sentiment has been hit by declines in the stock market, the daily quoted Wong as telling a radio station. The financial system will take longer to recover than a decade ago, Wong said.
Companies in Hong Kong would have to control costs, though Wong said there haven't been signs of mass lay-offs, Singtao reported. Still, Hong Kong's banking system and mortgage market is healthy, he said.
To contact the reporter on this story: Chia-Peck Wong in Hong Kong at cpwong@bloomberg.net
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Shimao Says It Sold $146 Million China Property in One Week
By Chia-Peck Wong
Oct. 5 (Bloomberg) -- Shimao Property Holdings Ltd., a Chinese developer whose credit rating was cut Oct. 3 on funding concerns, said it signed contracts to sell 1 billion yuan ($146 million) of property during the country's week-long holiday.
The Shanghai-based company, which didn't provide a year ago comparison, said it was now confident of hitting its full year 14 billion yuan sales target.
Property demand in Chinese cities has dropped by as much as half since the government last year raised minimum down payment requirements and increased rates on some mortgages to cool home prices, CSC Securities HK Ltd. analyst Liu Bin said last month. Moody's Investors Service cut Shimao's rating for the second time in less than three months, citing ``weak cash sales.''
Most of the 160,000 square meters of property sold in China's one-week National Day holiday ending today are in second and third tier cities where ``markets are relatively stable,'' Shimao said, mentioning projects in the eastern cities of Suzhou and Xuzhou.
Nanjing, Xi'an and other Chinese cities are giving property buyers subsidies to bolster the real estate market, Hong Kong- based paper Ming Pao Daily reported last week, without saying where it got the information.
A 60 percent drop in the stock market this year and concerns that economic growth in the world's fourth-largest economy is slowing have contributed to the slump in demand.
To contact the reporter on this story: Chia-Peck Wong in Hong Kong at cpwong@bloomberg.net
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Oct. 5 (Bloomberg) -- Shimao Property Holdings Ltd., a Chinese developer whose credit rating was cut Oct. 3 on funding concerns, said it signed contracts to sell 1 billion yuan ($146 million) of property during the country's week-long holiday.
The Shanghai-based company, which didn't provide a year ago comparison, said it was now confident of hitting its full year 14 billion yuan sales target.
Property demand in Chinese cities has dropped by as much as half since the government last year raised minimum down payment requirements and increased rates on some mortgages to cool home prices, CSC Securities HK Ltd. analyst Liu Bin said last month. Moody's Investors Service cut Shimao's rating for the second time in less than three months, citing ``weak cash sales.''
Most of the 160,000 square meters of property sold in China's one-week National Day holiday ending today are in second and third tier cities where ``markets are relatively stable,'' Shimao said, mentioning projects in the eastern cities of Suzhou and Xuzhou.
Nanjing, Xi'an and other Chinese cities are giving property buyers subsidies to bolster the real estate market, Hong Kong- based paper Ming Pao Daily reported last week, without saying where it got the information.
A 60 percent drop in the stock market this year and concerns that economic growth in the world's fourth-largest economy is slowing have contributed to the slump in demand.
To contact the reporter on this story: Chia-Peck Wong in Hong Kong at cpwong@bloomberg.net
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Indonesia Says Global Credit Crisis Is Slowing Growth
By Aloysius Unditu
Oct. 5 (Bloomberg) -- Indonesia's government said the global credit crisis is slowing exports and may affect gross domestic product growth in Southeast Asia's biggest economy.
``The global liquidity squeeze may continue for the next six months to a year,'' Bank Indonesia Governor Boediono said today at a briefing in Jakarta. ``Bank Indonesia and the government are increasing cooperation so we can limit the impact.''
Financial turmoil may force Indonesia to revise its budget estimates for next year, Finance Minister Sri Mulyani Indrawati said. Indonesian officials met today, after U.S. lawmakers earlier approved a $700 billion bank-rescue package, to try to reduce the impact of the crisis and keep it from spreading in the $432 billion Southeast Asian economy.
The government's message is ``we are monitoring the situation and will try to minimize the impact,'' said Sim Moh Siong, a strategist with Citigroup Inc. in Singapore. ``One way to do that is to reduce excessive fluctuation in the rupiah because if the rupiah depreciates it will scare investors away and fuel inflation.''
The rupiah has dropped 2.3 percent in the past three months on speculation overseas investors will stay away from emerging market assets. The benchmark stock index has declined 33 percent this year. Markets have been closed since Sept. 30 for a Muslim holiday and will reopen tomorrow.
Currency Support
The central bank today said it will buy the currency if needed to boost the measure. Bank Indonesia has $58.36 billion of reserves, which are sufficient to meet 4.6 months of imports, Senior Deputy Governor Miranda Goeltom said today in Jakarta.
Indonesia's economic growth unexpectedly accelerated 6.4 percent in the second quarter as rising prices and demand for the nation's coal, palm oil and rubber pushed exports to a record. The government foresees growth slowing to 6.2 percent in 2008 from 6.3 percent a year earlier.
The government expects its budget deficit will narrow to 1.3 percent of GDP this year, from an estimated 1.9 percent, as spending was reduced. That makes it ``less urgent,'' for the state to sell more bonds this year, Sri Mulyani said.
Economic leaders across the world are trying to limit the spread of the fallout from the U.S. A record number of home foreclosures in the U.S. forced Lehman Brothers Holdings Inc., into bankruptcy last month, while Fannie Mae, Freddie Mac and American International Group Inc. were taken over by the government.
European leaders pledged to bail out their own nations' banks while stopping short of a regional rescue effort to deal with the global credit crisis.
To contact the reporter on this story: Aloysius Unditu in Jakarta at aunditu@bloomberg.net.
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Australia's Swan Says U.S. Rescue Not `Magic Bullet'
By Robert Fenner
Oct. 5 (Bloomberg) -- Australian Treasurer Wayne Swan said the $700 billion financial-rescue plan signed by President George W. Bush won't be enough by itself to restore confidence in the world's financial system.
``I don't think there's any magic bullet here,'' Swan told Channel Ten's Meet the Press program today. ``But this package was absolutely essential, absolutely essential to deal with the problem at the core of the U.S. financial system, which is the bad debts in the banking system.''
American lawmakers passed the bailout on Oct. 3, giving the U.S. Treasury the ability to buy mortgage-backed securities and other troubled assets obstructing lending. Swan expects a ``rocky road'' as the global economy adjusts to the package and lending recovers from the credit crunch.
``The bailout is a good first step toward restoring confidence by cleaning up the banks and getting credit markets working,'' said Craig James, a senior economist at Commonwealth Bank of Australia in Sydney. ``Phase one is out of the road now and phase two is the workout process for this bailout; it will take some time.''
Swan declined to comment on what Australia's central bank may do when it meets next week, with all 18 economists surveyed by Bloomberg News expecting the Reserve Bank will cut borrowing costs for a second straight month.
Funding Costs
``In the coming months we should see most of the world's central banks moving to stimulate growth and that is very encouraging,'' said Commonwealth's James.
Rising wholesale funding costs in money markets may make it difficult for Australian banks to pass on in full any reduction to customers, Swan said. The London interbank offered rate, or Libor, that banks charge each other for three-month loans in euros increased to an all time high of 5.33 percent last week, the British Bankers Association said.
``It is absolutely vital at this time that we have a stable banking sector,'' Swan said. ``What the government expects from the banks, is a maximum possible flow-on that is economically responsible and consistent with the stability of our banking system.''
Swan said it's ``too early'' to estimate how a slowdown in the global economy would cut Australian government revenue.
To contact the reporter on this story: Robert Fenner in Melbourne rfenner@bloomberg.net
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Hypo Real Estate Rescue at Risk as Banks Withdraw Their Support
By Hellmuth Tromm
Oct. 5 (Bloomberg) -- Hypo Real Estate Holding AG, the ailing German property lender, said a 35 billion-euro ($49 billion) government-backed bailout plan collapsed as commercial banks withdrew their support.
``The bank is in a very difficult situation,'' Hypo Real Estate spokesman Hans Obermeier said in a telephone interview. ``We hope everyone involved in the discussions is aware of this.''
German authorities brokered the Sept. 28 bailout to avoid economic damage that would have resulted from the failure of the nation's second-biggest property lender. Hypo Real Estate said in a statement late yesterday that ``alternative measures are being investigated.''
Hypo Real Estate's financing needs exceeded the bailout plan guarantee, Germany's Die Welt reported yesterday, citing unnamed people in the finance industry. It will need 20 billion euros by the end of next week and 50 billion euros by the end of the year, according to the newspaper. As much as 100 billion euros may be needed to shore up the bank's finances by the end of 2009, Die Welt said. Obermeier declined to comment.
The European Central Bank and the Bundesbank planned to contribute jointly 20 billion euros, and a group of unidentified banks another 15 billion euros. The plan called for Hypo Real Estate to use 42 billion euros in assets, mostly debt owed by government borrowers, as collateral.
Heiner Herkenhoff, a spokesman for the German BDB banking association, declined via e-mail to comment. Bundesbank spokesman Christian Burckhardt and the German Finance Ministry didn't return calls seeking comment.
Shut Out
The bank sought the lifeline after its Dublin-based Depfa Bank Plc unit, which specializes in government lending and depends on now-closed money markets for funding, failed to get short-term funding amid the credit crunch.
Failure to provide the rescue package ``may have triggered unpredictable consequences for the German financial and economic system similar to those of the collapse of U.S. financial group Lehman Brothers,'' Frankfurt-based Bundesbank and BaFin, Germany's financial regulator, said in a joint letter dated Sept. 29 and addressed to Finance Minister Peer Steinbrueck.
``If we had not acted, the bank's crisis wouldn't have just hurt the financial sector, but its network of business would have hurt the real economy, in Germany and beyond,'' German Finance Minister Peer Steinbrueck said the same day.
Hypo Real Estate, run by Chief Executive Officer Georg Funke since it was spun off from HVB Group in 2003, reported writedowns on collateralized debt obligations on Jan. 15. The company said Aug. 13 that second-quarter pretax profit plunged 95 percent because of further markdowns on debt.
Flowers Investment
A group led by J.C. Flowers & Co., the buyout firm run by Christopher Flowers, bought a 24 percent stake in Hypo Real Estate for about 1.13 billion euros in June.
Former parent HVB Group is now a unit of UniCredit SpA, Italy's biggest lender, which is holding an extraordinary board meeting today to boost its regulatory capital and settle investors' concern with its finances.
The global financial crisis that prompted Lehman Brothers Holding Inc.'s Sept. 15 bankruptcy filing is weighing on Europe. Belgian authorities are exploring ``all methods'' to keep Fortis in business even after it received an 11.2 billion-euro government bailout on Sept. 28. Belgium and France on Sept. 30 threw Dexia SA a 6.4 billion-euro lifeline.
To contact the reporter on this story: Hellmuth Tromm in Berlin at htromm@bloomberg.net
Read more...
Oct. 5 (Bloomberg) -- Hypo Real Estate Holding AG, the ailing German property lender, said a 35 billion-euro ($49 billion) government-backed bailout plan collapsed as commercial banks withdrew their support.
``The bank is in a very difficult situation,'' Hypo Real Estate spokesman Hans Obermeier said in a telephone interview. ``We hope everyone involved in the discussions is aware of this.''
German authorities brokered the Sept. 28 bailout to avoid economic damage that would have resulted from the failure of the nation's second-biggest property lender. Hypo Real Estate said in a statement late yesterday that ``alternative measures are being investigated.''
Hypo Real Estate's financing needs exceeded the bailout plan guarantee, Germany's Die Welt reported yesterday, citing unnamed people in the finance industry. It will need 20 billion euros by the end of next week and 50 billion euros by the end of the year, according to the newspaper. As much as 100 billion euros may be needed to shore up the bank's finances by the end of 2009, Die Welt said. Obermeier declined to comment.
The European Central Bank and the Bundesbank planned to contribute jointly 20 billion euros, and a group of unidentified banks another 15 billion euros. The plan called for Hypo Real Estate to use 42 billion euros in assets, mostly debt owed by government borrowers, as collateral.
Heiner Herkenhoff, a spokesman for the German BDB banking association, declined via e-mail to comment. Bundesbank spokesman Christian Burckhardt and the German Finance Ministry didn't return calls seeking comment.
Shut Out
The bank sought the lifeline after its Dublin-based Depfa Bank Plc unit, which specializes in government lending and depends on now-closed money markets for funding, failed to get short-term funding amid the credit crunch.
Failure to provide the rescue package ``may have triggered unpredictable consequences for the German financial and economic system similar to those of the collapse of U.S. financial group Lehman Brothers,'' Frankfurt-based Bundesbank and BaFin, Germany's financial regulator, said in a joint letter dated Sept. 29 and addressed to Finance Minister Peer Steinbrueck.
``If we had not acted, the bank's crisis wouldn't have just hurt the financial sector, but its network of business would have hurt the real economy, in Germany and beyond,'' German Finance Minister Peer Steinbrueck said the same day.
Hypo Real Estate, run by Chief Executive Officer Georg Funke since it was spun off from HVB Group in 2003, reported writedowns on collateralized debt obligations on Jan. 15. The company said Aug. 13 that second-quarter pretax profit plunged 95 percent because of further markdowns on debt.
Flowers Investment
A group led by J.C. Flowers & Co., the buyout firm run by Christopher Flowers, bought a 24 percent stake in Hypo Real Estate for about 1.13 billion euros in June.
Former parent HVB Group is now a unit of UniCredit SpA, Italy's biggest lender, which is holding an extraordinary board meeting today to boost its regulatory capital and settle investors' concern with its finances.
The global financial crisis that prompted Lehman Brothers Holding Inc.'s Sept. 15 bankruptcy filing is weighing on Europe. Belgian authorities are exploring ``all methods'' to keep Fortis in business even after it received an 11.2 billion-euro government bailout on Sept. 28. Belgium and France on Sept. 30 threw Dexia SA a 6.4 billion-euro lifeline.
To contact the reporter on this story: Hellmuth Tromm in Berlin at htromm@bloomberg.net
Read more...
European Union Leaders Stop Short of Regional Plan on Bailouts
By Sandrine Rastello
Oct. 5 (Bloomberg) -- European leaders pledged to bail out their own nations' banks while stopping short of a regional rescue effort to deal with the global credit crisis.
At a summit in Paris yesterday, leaders of France, Germany, Britain, Italy, Luxembourg, the European Central Bank and the European Commission agreed to ease accounting rules, seek tougher financial regulations and weaken enforcement of competition and budget laws.
``Each government will act according to its own methods and its own means but in a coordinated manner with the other European states,'' French President Nicolas Sarkozy, who called the meeting, told reporters.
The gathering came a day after U.S. lawmakers approved a $700 billion bank-rescue package and as Europe's own initial bailout efforts began to unravel. Germany's Hypo Real Estate Holding AG said a government-backed 35 billion-euro ($49 billion) deal collapsed yesterday when banks withdrew their support. Belgian authorities worked to shore up Fortis after the lender received an 11.2 billion-euro lifeline on Sept. 28.
Europe ``is still a dwarf compared to the U.S.'' in terms of willingness to spend, said Laurence Boone, an economist at Barclays Capital in Paris. The statement on supporting banks ``is not a progress. It's the same as before the summit.''
The failure to forge a consensus approach to shore up banks roiled by soaring borrowing costs reflects the divisions in the 27-nation bloc. Germany criticized a plan floated by French Finance Minister Christine Lagarde to set up a rescue fund. A chorus of opposition greeted Ireland's decision to guarantee its banks' deposits and debts.
`Collective Action'
Hours before the summit, Dominique Strauss-Kahn, managing director of the International Monetary Fund, met Sarkozy to press the need for agreement. ``Collective action is even more necessary in Europe than in the U.S. because Europe is more complex than the U.S.,'' he told reporters. ``Action must be taken quickly and in a concerted manner.''
German Chancellor Angela Merkel's opposition underscored the hurdles to forging a unified front. ``Each country must take its responsibilities at a national level,'' she told a joint press conference after the summit.
The government leaders did agree on policy recommendations for the European Commission and for a global summit they're seeking to deal with the credit crisis.
They said they would seek to harmonize guarantees of deposit levels in the wake of the Irish move. The U.K. bank regulator increased its insurance ceiling to 50,000 pounds ($88,500) per account from 35,000 pounds to stem a flow of funds to Ireland.
`Global Summit'
Their joint statement called for a global summit ``as soon as possible'' to implement ``a real and complete reform of the international financial system.''
Sarkozy said that ``all actors'' must be supervised, including rating firms and hedge funds. Executive-pay systems must also be reviewed, he said.
``We want a new world to come out of this,'' Sarkozy said. ``We want to set up the basis for a capitalism of entrepreneurs, not speculators.''
Anticipating increased spending, declining tax revenue, and government bank takeovers, they called for ``greater flexibility'' in the application of European Union competition and budget rules.
European finance ministers last month pledged to keep their budget deficits below 3 percent of gross domestic product even as the economic slowdown dented tax receipts and boosted welfare payments.
Accounting Rules
The leaders said they want to allow banks to keep some assets valued as if they'd be held until maturity, instead of having to review their value each quarter.
``That's to stop the down-spiral of assets' value,'' Barclays' Boone said. ``That's the closest thing the commission can do to what the Americans do.''
They also said they want to change accounting rules that require banks to review their holdings each quarter and report losses when the values decline, the so-called mark-to-market standard. Banks worldwide have written down $587.7 billion since last year, according to data compiled by Bloomberg.
With their economies headed into recession, European leaders said the European Investment Bank will lend 30 billion euros to support small and medium-size companies that may struggle to find cash.
To contact the reporters on this story: Sandrine Rastello in Paris at srastello@bloomberg.net;
Read more...
Oct. 5 (Bloomberg) -- European leaders pledged to bail out their own nations' banks while stopping short of a regional rescue effort to deal with the global credit crisis.
At a summit in Paris yesterday, leaders of France, Germany, Britain, Italy, Luxembourg, the European Central Bank and the European Commission agreed to ease accounting rules, seek tougher financial regulations and weaken enforcement of competition and budget laws.
``Each government will act according to its own methods and its own means but in a coordinated manner with the other European states,'' French President Nicolas Sarkozy, who called the meeting, told reporters.
The gathering came a day after U.S. lawmakers approved a $700 billion bank-rescue package and as Europe's own initial bailout efforts began to unravel. Germany's Hypo Real Estate Holding AG said a government-backed 35 billion-euro ($49 billion) deal collapsed yesterday when banks withdrew their support. Belgian authorities worked to shore up Fortis after the lender received an 11.2 billion-euro lifeline on Sept. 28.
Europe ``is still a dwarf compared to the U.S.'' in terms of willingness to spend, said Laurence Boone, an economist at Barclays Capital in Paris. The statement on supporting banks ``is not a progress. It's the same as before the summit.''
The failure to forge a consensus approach to shore up banks roiled by soaring borrowing costs reflects the divisions in the 27-nation bloc. Germany criticized a plan floated by French Finance Minister Christine Lagarde to set up a rescue fund. A chorus of opposition greeted Ireland's decision to guarantee its banks' deposits and debts.
`Collective Action'
Hours before the summit, Dominique Strauss-Kahn, managing director of the International Monetary Fund, met Sarkozy to press the need for agreement. ``Collective action is even more necessary in Europe than in the U.S. because Europe is more complex than the U.S.,'' he told reporters. ``Action must be taken quickly and in a concerted manner.''
German Chancellor Angela Merkel's opposition underscored the hurdles to forging a unified front. ``Each country must take its responsibilities at a national level,'' she told a joint press conference after the summit.
The government leaders did agree on policy recommendations for the European Commission and for a global summit they're seeking to deal with the credit crisis.
They said they would seek to harmonize guarantees of deposit levels in the wake of the Irish move. The U.K. bank regulator increased its insurance ceiling to 50,000 pounds ($88,500) per account from 35,000 pounds to stem a flow of funds to Ireland.
`Global Summit'
Their joint statement called for a global summit ``as soon as possible'' to implement ``a real and complete reform of the international financial system.''
Sarkozy said that ``all actors'' must be supervised, including rating firms and hedge funds. Executive-pay systems must also be reviewed, he said.
``We want a new world to come out of this,'' Sarkozy said. ``We want to set up the basis for a capitalism of entrepreneurs, not speculators.''
Anticipating increased spending, declining tax revenue, and government bank takeovers, they called for ``greater flexibility'' in the application of European Union competition and budget rules.
European finance ministers last month pledged to keep their budget deficits below 3 percent of gross domestic product even as the economic slowdown dented tax receipts and boosted welfare payments.
Accounting Rules
The leaders said they want to allow banks to keep some assets valued as if they'd be held until maturity, instead of having to review their value each quarter.
``That's to stop the down-spiral of assets' value,'' Barclays' Boone said. ``That's the closest thing the commission can do to what the Americans do.''
They also said they want to change accounting rules that require banks to review their holdings each quarter and report losses when the values decline, the so-called mark-to-market standard. Banks worldwide have written down $587.7 billion since last year, according to data compiled by Bloomberg.
With their economies headed into recession, European leaders said the European Investment Bank will lend 30 billion euros to support small and medium-size companies that may struggle to find cash.
To contact the reporters on this story: Sandrine Rastello in Paris at srastello@bloomberg.net;
Read more...
Bush Signs Bank Rescue to End `Threat to Economy'
By Christopher Stern and Laura Litvan
Oct. 4 (Bloomberg) -- U.S. President George W. Bush signed a $700 billion financial-market rescue plan into law, calling it a ``decisive action to ease the credit crunch that is now threatening our economy.''
The bipartisan legislation was sent yesterday to Bush after it was approved by the House, reversing its Sept. 29 rejection of the measure, which had sent global stock markets plunging. The bill, approved on Oct. 1 by the Senate with $149 billion in tax breaks to attract House votes, authorizes the government to buy troubled assets from financial institutions reeling from record home foreclosures. It also affirms regulators' power to suspend asset-valuing rules that companies blame for fueling the crisis.
``This was a difficult vote for many members of the House and Senate, but voting for it was the right choice for America's economy and for taxpayers like you,'' Bush said in his weekly radio address today. ``I appreciate their efforts to help stop the crisis in our financial markets from spreading to our entire economy.''
The House approved the measure 263-171 yesterday, four days after rejecting an earlier version by 228 to 205. The bill's defeat caused a 778-point drop in the Dow Jones Industrial Average, prompting dozens of lawmakers to switch their vote on the package, the government's largest step into the markets since Franklin Roosevelt's New Deal.
`Stopping the Panic'
``The issue is stopping the panic,'' said Adam Posen, deputy director of the Peterson Institute for International Economics in Washington. ``The plan's not perfect, but it's certainly better than doing nothing. Now Treasury has to be very aggressive about purchasing a wide range of assets very quickly.''
The Dow Jones Industrial Average fell 1.5 percent to 10,325.38 in New York on concern the bailout won't be enough to unlock credit markets and prevent a recession. The S&P 500 declined 1.4 percent to 1,099.23 and the Nasdaq Composite Index slipped 1.5 percent, to 1,947.39.
House Majority Leader Steny Hoyer, a Maryland Democrat, called the package ``critical to stabilizing our economy.''
Passage of the rescue bill drew praise from financial authorities in Asia, where stocks had earlier posted the sharpest weekly drop in 13 months on concern the bailout may fail to stimulate demand for the region's exports.
Asian Praise
China's central bank said it hopes the rescue will enhance cooperation and coordination with the U.S. and among other countries to stabilize global financial markets.
``All countries should take the responsibility to cooperate, as we share the same interest and goal in facing this crisis,'' the People's Bank of China said in a statement on its Web site.
Japanese Finance Minister Shoichi Nakagawa called the package ``very ambitious'' and ``a plus for financial conditions in the U.S. and globally.''
Bush made more than a dozen phone calls to Republican lawmakers to lobby for the bill. The bill was backed by 172 Democrats and 91 Republicans. Over two-thirds of Democrats voted for the measure while fewer than half of Republicans supported it. On Sept. 29, the 140 Democrats voting for the plan were joined by 65 Republicans.
Stock Market Drop
``The stock-market drop on Monday served as a wake-up call to a lot of people,'' said Representative John Yarmuth, a Kentucky Democrat who announced he was switching his vote in favor of the bailout plan.
House leaders had said they wouldn't set a vote on the revised measure unless they were sure it would pass.
A group of Republicans Oct. 2 tried to offer an alternative that would spend only $250 billion until the end of the year.
Representative Spencer Bachus said that out of ``prudence'' Congress should appropriate only the $50 billion a month the Treasury could distribute this year.
The Democratic-controlled Rules Committee rejected the amendment, saying any changes to the measure would require Senate action, delaying the start of the program. The Senate approved the legislation on Oct. 1.
Republican Opposition
Some Republican lawmakers opposed the measure yesterday, defying Bush and the party's congressional leaders.
``If Congress bails out some firms and sectors, how can it say no to others?'' said Representative Jeb Hensarling of Texas.
Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke proposed last month the largest intervention in financial markets since the Great Depression, in a three-page outline.
They said it was needed to prevent the spread of economic turmoil sparked by a record number of home foreclosures. Among the victims were Lehman Brothers Holdings Inc., which was forced into bankruptcy last month, and Fannie Mae, Freddie Mac and American International Group Inc., which were taken over by the government.
Paulson urged Congress to immediately give him almost unchecked legislative authority to take action. Lawmakers responded by demanding increased oversight, more aid to prevent foreclosures and limits on executive compensation at companies that benefit from the program.
Bush endorsed a compromise, saying it was needed to prevent a painful recession.
Local Governments Hit
Credit-market turmoil is hitting local governments. U.S. states and municipalities have managed to sell about $700 million of tax-exempt bonds this week, less than 15 percent of a typical week's new fixed-rate issues.
California Governor Arnold Schwarzenegger wrote Paulson, saying that his and other states may need emergency federal loans to maintain government operations if the credit crunch continues.
``This credit crisis has the power to grind the U.S. economy to a halt,'' Schwarzenegger wrote in a letter e-mailed to Paulson.
Companies lobbied in support of the rescue measure. Automakers said tougher loan standards partly accounted for a 27 percent plunge in U.S. auto sales last month.
The market for commercial paper, short-term borrowing by businesses, suffered the biggest one-week drop on record, the Federal Reserve said Oct. 2. The amount of commercial paper outstanding fell by $94.9 billion, or 5.6 percent, during the week ended Oct. 1.
Helping Main Street
``This is not a bailout for Wall Street anymore,'' Carolyn McCarthy, a New York Democrat who represents suburbs near New York City, said on the House floor yesterday. ``This is about the small stores on Main Street.''
Still, House lawmakers earlier this week rejected the agreement that congressional leaders reached with the administration, with many saying it was too risky and costly.
The Senate then sweetened the package -- and enlarged the legislation to 450 pages -- by linking the rescue plan to a temporary increase in the limit on federal deposit insurance to $250,000 from $100,000.
The Senate also tied the package to a two-year extension of tax breaks that will save individuals and corporations about $149 billion over the next decade, a move popular among House Republicans. The provisions include $17 billion in credits for the development of solar, wind and other forms of renewable energy.
McCain, Obama
Democrat Barack Obama and Republican John McCain returned from the presidential campaign trail to vote for the plan in the Senate this week.
Obama said he had talked to several lawmakers in an attempt to generate support for the legislation.
``There were a number of members of Congress who had voted no that I talked to,'' Obama said in Glenside, Pennsylvania.
``And I think more than anything what they wanted was some assurance that this $700 billion was not going to a few banks but that in fact, that it is designed to ensure that the credit markets are working for Main Street.''
McCain, in comments in Flagstaff, Arizona, said the bill ``isn't perfect and it's an outrage that it's even necessary.''
``The action Congress took today is a tourniquet,'' he said. ``Further action is needed and it shouldn't take a crisis to get this country to act.''
The bill also affirms the U.S. Securities and Exchange Commission's authority to suspend an accounting rule that bankers and other corporate executives say exacerbates their troubles.
The so-called fair-value standard requires companies to review assets and report losses if their values decline. Lawmakers, the American Bankers Association and companies including American International Group Inc. have urged the SEC to suspend or ease the rule, saying it forces firms to report deeper losses than needed on assets such as subprime mortgages.
Federal Reserve Chairman Ben S. Bernanke, applauding enactment of the rescue plan, said the central bank will keep using ``all of the powers at our disposal'' to ease the credit crisis.
To contact the reporters on this story: Laura Litvan in Washington at litvan@bloomberg.net
Read more...
Oct. 4 (Bloomberg) -- U.S. President George W. Bush signed a $700 billion financial-market rescue plan into law, calling it a ``decisive action to ease the credit crunch that is now threatening our economy.''
The bipartisan legislation was sent yesterday to Bush after it was approved by the House, reversing its Sept. 29 rejection of the measure, which had sent global stock markets plunging. The bill, approved on Oct. 1 by the Senate with $149 billion in tax breaks to attract House votes, authorizes the government to buy troubled assets from financial institutions reeling from record home foreclosures. It also affirms regulators' power to suspend asset-valuing rules that companies blame for fueling the crisis.
``This was a difficult vote for many members of the House and Senate, but voting for it was the right choice for America's economy and for taxpayers like you,'' Bush said in his weekly radio address today. ``I appreciate their efforts to help stop the crisis in our financial markets from spreading to our entire economy.''
The House approved the measure 263-171 yesterday, four days after rejecting an earlier version by 228 to 205. The bill's defeat caused a 778-point drop in the Dow Jones Industrial Average, prompting dozens of lawmakers to switch their vote on the package, the government's largest step into the markets since Franklin Roosevelt's New Deal.
`Stopping the Panic'
``The issue is stopping the panic,'' said Adam Posen, deputy director of the Peterson Institute for International Economics in Washington. ``The plan's not perfect, but it's certainly better than doing nothing. Now Treasury has to be very aggressive about purchasing a wide range of assets very quickly.''
The Dow Jones Industrial Average fell 1.5 percent to 10,325.38 in New York on concern the bailout won't be enough to unlock credit markets and prevent a recession. The S&P 500 declined 1.4 percent to 1,099.23 and the Nasdaq Composite Index slipped 1.5 percent, to 1,947.39.
House Majority Leader Steny Hoyer, a Maryland Democrat, called the package ``critical to stabilizing our economy.''
Passage of the rescue bill drew praise from financial authorities in Asia, where stocks had earlier posted the sharpest weekly drop in 13 months on concern the bailout may fail to stimulate demand for the region's exports.
Asian Praise
China's central bank said it hopes the rescue will enhance cooperation and coordination with the U.S. and among other countries to stabilize global financial markets.
``All countries should take the responsibility to cooperate, as we share the same interest and goal in facing this crisis,'' the People's Bank of China said in a statement on its Web site.
Japanese Finance Minister Shoichi Nakagawa called the package ``very ambitious'' and ``a plus for financial conditions in the U.S. and globally.''
Bush made more than a dozen phone calls to Republican lawmakers to lobby for the bill. The bill was backed by 172 Democrats and 91 Republicans. Over two-thirds of Democrats voted for the measure while fewer than half of Republicans supported it. On Sept. 29, the 140 Democrats voting for the plan were joined by 65 Republicans.
Stock Market Drop
``The stock-market drop on Monday served as a wake-up call to a lot of people,'' said Representative John Yarmuth, a Kentucky Democrat who announced he was switching his vote in favor of the bailout plan.
House leaders had said they wouldn't set a vote on the revised measure unless they were sure it would pass.
A group of Republicans Oct. 2 tried to offer an alternative that would spend only $250 billion until the end of the year.
Representative Spencer Bachus said that out of ``prudence'' Congress should appropriate only the $50 billion a month the Treasury could distribute this year.
The Democratic-controlled Rules Committee rejected the amendment, saying any changes to the measure would require Senate action, delaying the start of the program. The Senate approved the legislation on Oct. 1.
Republican Opposition
Some Republican lawmakers opposed the measure yesterday, defying Bush and the party's congressional leaders.
``If Congress bails out some firms and sectors, how can it say no to others?'' said Representative Jeb Hensarling of Texas.
Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke proposed last month the largest intervention in financial markets since the Great Depression, in a three-page outline.
They said it was needed to prevent the spread of economic turmoil sparked by a record number of home foreclosures. Among the victims were Lehman Brothers Holdings Inc., which was forced into bankruptcy last month, and Fannie Mae, Freddie Mac and American International Group Inc., which were taken over by the government.
Paulson urged Congress to immediately give him almost unchecked legislative authority to take action. Lawmakers responded by demanding increased oversight, more aid to prevent foreclosures and limits on executive compensation at companies that benefit from the program.
Bush endorsed a compromise, saying it was needed to prevent a painful recession.
Local Governments Hit
Credit-market turmoil is hitting local governments. U.S. states and municipalities have managed to sell about $700 million of tax-exempt bonds this week, less than 15 percent of a typical week's new fixed-rate issues.
California Governor Arnold Schwarzenegger wrote Paulson, saying that his and other states may need emergency federal loans to maintain government operations if the credit crunch continues.
``This credit crisis has the power to grind the U.S. economy to a halt,'' Schwarzenegger wrote in a letter e-mailed to Paulson.
Companies lobbied in support of the rescue measure. Automakers said tougher loan standards partly accounted for a 27 percent plunge in U.S. auto sales last month.
The market for commercial paper, short-term borrowing by businesses, suffered the biggest one-week drop on record, the Federal Reserve said Oct. 2. The amount of commercial paper outstanding fell by $94.9 billion, or 5.6 percent, during the week ended Oct. 1.
Helping Main Street
``This is not a bailout for Wall Street anymore,'' Carolyn McCarthy, a New York Democrat who represents suburbs near New York City, said on the House floor yesterday. ``This is about the small stores on Main Street.''
Still, House lawmakers earlier this week rejected the agreement that congressional leaders reached with the administration, with many saying it was too risky and costly.
The Senate then sweetened the package -- and enlarged the legislation to 450 pages -- by linking the rescue plan to a temporary increase in the limit on federal deposit insurance to $250,000 from $100,000.
The Senate also tied the package to a two-year extension of tax breaks that will save individuals and corporations about $149 billion over the next decade, a move popular among House Republicans. The provisions include $17 billion in credits for the development of solar, wind and other forms of renewable energy.
McCain, Obama
Democrat Barack Obama and Republican John McCain returned from the presidential campaign trail to vote for the plan in the Senate this week.
Obama said he had talked to several lawmakers in an attempt to generate support for the legislation.
``There were a number of members of Congress who had voted no that I talked to,'' Obama said in Glenside, Pennsylvania.
``And I think more than anything what they wanted was some assurance that this $700 billion was not going to a few banks but that in fact, that it is designed to ensure that the credit markets are working for Main Street.''
McCain, in comments in Flagstaff, Arizona, said the bill ``isn't perfect and it's an outrage that it's even necessary.''
``The action Congress took today is a tourniquet,'' he said. ``Further action is needed and it shouldn't take a crisis to get this country to act.''
The bill also affirms the U.S. Securities and Exchange Commission's authority to suspend an accounting rule that bankers and other corporate executives say exacerbates their troubles.
The so-called fair-value standard requires companies to review assets and report losses if their values decline. Lawmakers, the American Bankers Association and companies including American International Group Inc. have urged the SEC to suspend or ease the rule, saying it forces firms to report deeper losses than needed on assets such as subprime mortgages.
Federal Reserve Chairman Ben S. Bernanke, applauding enactment of the rescue plan, said the central bank will keep using ``all of the powers at our disposal'' to ease the credit crisis.
To contact the reporters on this story: Laura Litvan in Washington at litvan@bloomberg.net
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Global Business-Jet Deliveries May Hit Record 1,400, Then Drop
By Courtney Dentch
Oct. 4 (Bloomberg) -- Worldwide deliveries of business jets may rise as much as 7.7 percent to a record 1,400 aircraft next year, before slower global growth cuts demand, Honeywell International Inc. said today in its annual industry forecast.
Executive-jet traffic is falling in the U.S. and growing slower in Europe, foreshadowing reduced demand, said TK Kallenbach, Honeywell's vice president of marketing and program management. Output may decline in 2010 and 2011 before new planes and overseas demand rekindle orders in 2012, he said.
Rising corporate profits in recent years and emerging market growth in China and Russia bolstered orders for Textron Inc.'s Cessna and General Dynamics Corp.'s Gulfstream planes, stretching backlogs to more than three years and insulating deliveries due in 2009. Aircraft production lags behind economic trends by about two years, and shipments will slow in 2010 and 2011 as the current financial crisis filters through the system.
``We do see a peak in 2009 in new aircraft deliveries and a downturn in 2010,'' Kallenbach said in an interview. ``As the global economic health gets better, that's when we get the pickup.''
The U.S. is in its deepest financial crisis since the Great Depression, and fuel costs are up 29 percent over last year. Kallenbach said the ``fuel prices were already on people's minds'' in the latest survey, conducted between May and August.
Honeywell Forecast
Morris Township, New Jersey-based Honeywell released the forecast two days ahead of the National Business Aviation Association trade show that starts Oct. 6 in Orlando, Florida. It is the world's largest maker of aircraft controls and supplies engines, navigation and communications systems for planemakers including Gulfstream and Empresa Brasileira de Aeronautica SA.
The forecast, Honeywell's 17th annual, is based on a survey of 1,900 corporate flight departments and tracks order expectations for business jets with a gross take-off weight of less than 50 tons.
The decline in traffic as seen in the U.S. is starting to spread to Europe and may affect Russia as well, said Richard Aboulafia, an analyst with aviation consultancy Teal Group.
``Europe and Russia are in generally the same bad shape as America,'' Aboulafia said in an interview before the forecast was released. ``Not in the Middle East, which helps, but it's just not enough to keep the numbers high.''
17,000 in Decade
Honeywell expects 17,000 new corporate aircraft, valued at $300 billion, to be delivered in the next decade, up from last year's projection for 14,000. The industry is forecast to deliver 1,300 planes this year. The first-half total was 543 business jets valued at $9.8 billion.
About 75 percent of the 1,200 new orders placed in the first half of the year came from outside the U.S., with long-range planes such as Bombardier Inc.'s Challenger outpacing smaller light and very light jets.
Deliveries in the Asia Pacific region are expected to climb as much as 12 percent in the next year, leading the growth. Europe, including Russia, will rise 10 percent, Latin America will gain 6 percent, and the U.S. will grow 4 percent, Kallenbach said.
To contact the reporter on this story: Courtney Dentch in New York at cdentch1@bloomberg.net.
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Oct. 4 (Bloomberg) -- Worldwide deliveries of business jets may rise as much as 7.7 percent to a record 1,400 aircraft next year, before slower global growth cuts demand, Honeywell International Inc. said today in its annual industry forecast.
Executive-jet traffic is falling in the U.S. and growing slower in Europe, foreshadowing reduced demand, said TK Kallenbach, Honeywell's vice president of marketing and program management. Output may decline in 2010 and 2011 before new planes and overseas demand rekindle orders in 2012, he said.
Rising corporate profits in recent years and emerging market growth in China and Russia bolstered orders for Textron Inc.'s Cessna and General Dynamics Corp.'s Gulfstream planes, stretching backlogs to more than three years and insulating deliveries due in 2009. Aircraft production lags behind economic trends by about two years, and shipments will slow in 2010 and 2011 as the current financial crisis filters through the system.
``We do see a peak in 2009 in new aircraft deliveries and a downturn in 2010,'' Kallenbach said in an interview. ``As the global economic health gets better, that's when we get the pickup.''
The U.S. is in its deepest financial crisis since the Great Depression, and fuel costs are up 29 percent over last year. Kallenbach said the ``fuel prices were already on people's minds'' in the latest survey, conducted between May and August.
Honeywell Forecast
Morris Township, New Jersey-based Honeywell released the forecast two days ahead of the National Business Aviation Association trade show that starts Oct. 6 in Orlando, Florida. It is the world's largest maker of aircraft controls and supplies engines, navigation and communications systems for planemakers including Gulfstream and Empresa Brasileira de Aeronautica SA.
The forecast, Honeywell's 17th annual, is based on a survey of 1,900 corporate flight departments and tracks order expectations for business jets with a gross take-off weight of less than 50 tons.
The decline in traffic as seen in the U.S. is starting to spread to Europe and may affect Russia as well, said Richard Aboulafia, an analyst with aviation consultancy Teal Group.
``Europe and Russia are in generally the same bad shape as America,'' Aboulafia said in an interview before the forecast was released. ``Not in the Middle East, which helps, but it's just not enough to keep the numbers high.''
17,000 in Decade
Honeywell expects 17,000 new corporate aircraft, valued at $300 billion, to be delivered in the next decade, up from last year's projection for 14,000. The industry is forecast to deliver 1,300 planes this year. The first-half total was 543 business jets valued at $9.8 billion.
About 75 percent of the 1,200 new orders placed in the first half of the year came from outside the U.S., with long-range planes such as Bombardier Inc.'s Challenger outpacing smaller light and very light jets.
Deliveries in the Asia Pacific region are expected to climb as much as 12 percent in the next year, leading the growth. Europe, including Russia, will rise 10 percent, Latin America will gain 6 percent, and the U.S. will grow 4 percent, Kallenbach said.
To contact the reporter on this story: Courtney Dentch in New York at cdentch1@bloomberg.net.
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Amlak and Tamweel Hold `Exploratory' Talks on Combination
By Ambereen Choudhury
Oct. 4 (Bloomberg) -- Amlak Finance PJSC and Tamweel PJSC, the largest mortgage lenders in the United Arab Emirates, started ``exploratory discussions'' about a possible merger.
The combination would have a balance sheet of more than 27 billion dirhams ($7.35 billion), Amlak Chairman Nasser Bin Hassan Al-Shaikh said in an e-mailed statement today. Major shareholders, including Emaar Properties, Dubai Islamic Bank and Dubai World are ``fully supportive,'' the companies said.
``The markets are expected to experience continued strong growth in the years to come,'' Al-Shaikh said in the statement. ``A powerful market participant will be required to manage this growth both at home and internationally.''
The U.A.E.'s mortgage market will expand 10-fold by 2012 to about $44 billion, Egyptian investment bank EFG-Hermes Holding SAE said last year. Amlak has a market capitalization of 4.95 billion dirhams and Tamweel is valued at 3.8 billion dirhams.
The transaction is subject to regulatory approval and is expected to be completed in early 2009. The Dubai-based companies will hold extraordinary general meetings to seek shareholder approval.
Goldman Sachs Group Inc. is advising on the transaction.
To contact the reporters on this story: Ambereen Choudhury in London at achoudhury@bloomberg.net.
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Oct. 4 (Bloomberg) -- Amlak Finance PJSC and Tamweel PJSC, the largest mortgage lenders in the United Arab Emirates, started ``exploratory discussions'' about a possible merger.
The combination would have a balance sheet of more than 27 billion dirhams ($7.35 billion), Amlak Chairman Nasser Bin Hassan Al-Shaikh said in an e-mailed statement today. Major shareholders, including Emaar Properties, Dubai Islamic Bank and Dubai World are ``fully supportive,'' the companies said.
``The markets are expected to experience continued strong growth in the years to come,'' Al-Shaikh said in the statement. ``A powerful market participant will be required to manage this growth both at home and internationally.''
The U.A.E.'s mortgage market will expand 10-fold by 2012 to about $44 billion, Egyptian investment bank EFG-Hermes Holding SAE said last year. Amlak has a market capitalization of 4.95 billion dirhams and Tamweel is valued at 3.8 billion dirhams.
The transaction is subject to regulatory approval and is expected to be completed in early 2009. The Dubai-based companies will hold extraordinary general meetings to seek shareholder approval.
Goldman Sachs Group Inc. is advising on the transaction.
To contact the reporters on this story: Ambereen Choudhury in London at achoudhury@bloomberg.net.
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EU-Backed Gas Pipeline Needs Iranian Fuel, Minister Nozari Says
By Ladane Nasseri
Oct. 4 (Bloomberg) -- Iran's gas is an unavoidable source for the Nabucco pipeline project, that will supply fuel from the Caspian Sea region to Europe, Oil Minister Gholamhossein Nozari said.
``The Nabucco project can't be carried out without Iran,'' he told reporters at a gas conference in Tehran today. ``Europe will eventually need to turn to Iran.''
The 3,300-kilometer (2,050-mile) pipeline aims to bring gas from the Caspian via Turkey and the Balkans to Western Europe by 2013. The 7.9 billion-euro ($10.9 billion) link is backed by the European Union to reduce energy dependence from Russia.
Such a project needs years to become cost-efficient and Iran is the only country with reserves to supply Europe over an extended period, Nozari said. Iran has the world's second- largest gas reserves.
OMV AG, Austria's biggest energy company, is holding talks with Iran while ``studying the possibility of shipping gas'' from the country to Europe, the company said last month. The Nabucco group includes OMV, Budapest-based Mol Nyrt., Germany's RWE AG, Bulgaria's Bulgargaz EAD, Romania's Transgaz SA and Ankara-based Botas.
Iran also said last month it's seeking to build a $4 billion natural-gas pipeline to the EU that may rival Nabucco. The country is considering the two pipelines as a means for gas exports to Europe, Nozari said today, adding that the so-called Pars Pipeline was given ``priority.''
Iran is targeting a share of the global gas market of between 8 percent and 10 percent, Nozari said, without specifying a date. Iran currently has less than 1 percent of the global gas market.
To contact the reporter on this story: Ladane Nasseri in Tehran at lnasseri@bloomberg.net.
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Oct. 4 (Bloomberg) -- Iran's gas is an unavoidable source for the Nabucco pipeline project, that will supply fuel from the Caspian Sea region to Europe, Oil Minister Gholamhossein Nozari said.
``The Nabucco project can't be carried out without Iran,'' he told reporters at a gas conference in Tehran today. ``Europe will eventually need to turn to Iran.''
The 3,300-kilometer (2,050-mile) pipeline aims to bring gas from the Caspian via Turkey and the Balkans to Western Europe by 2013. The 7.9 billion-euro ($10.9 billion) link is backed by the European Union to reduce energy dependence from Russia.
Such a project needs years to become cost-efficient and Iran is the only country with reserves to supply Europe over an extended period, Nozari said. Iran has the world's second- largest gas reserves.
OMV AG, Austria's biggest energy company, is holding talks with Iran while ``studying the possibility of shipping gas'' from the country to Europe, the company said last month. The Nabucco group includes OMV, Budapest-based Mol Nyrt., Germany's RWE AG, Bulgaria's Bulgargaz EAD, Romania's Transgaz SA and Ankara-based Botas.
Iran also said last month it's seeking to build a $4 billion natural-gas pipeline to the EU that may rival Nabucco. The country is considering the two pipelines as a means for gas exports to Europe, Nozari said today, adding that the so-called Pars Pipeline was given ``priority.''
Iran is targeting a share of the global gas market of between 8 percent and 10 percent, Nozari said, without specifying a date. Iran currently has less than 1 percent of the global gas market.
To contact the reporter on this story: Ladane Nasseri in Tehran at lnasseri@bloomberg.net.
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Correa Threatens to Expel Foreign Oil Companies Over Output
By Stephan Kueffner
Oct. 4 (Bloomberg) -- Ecuadorean President Rafael Correa said he may expel foreign oil producers, including Spain's biggest energy company, Repsol YPF, and Brazil's state-owned Petroleo Brasileiro SA, because of declining production.
The companies, particularly Petrobras, as the Rio de Janeiro-based Brazilian company is known, have dragged their feet in contract negotiations in which Correa wants a greater share of oil income, he said today in his first regular Saturday address after almost two-thirds of voters approved a new constitution he had proposed.
``Don't play with fire,'' he said. ``Invest and recover production or you will leave the country.''
Correa wants the companies to agree to be paid for producing the oil, rather than the current terms under which they share in the revenue up to a set price. The new constitution strengthens the government's role in areas of the economy including transportation and energy.
``Now, more than ever, we have the democratic legitimacy to demand that these companies comply with the country,'' Correa said.
Several companies, including Repsol and Petrobras, in August agreed to start negotiating a switch to the payment model favored by the government within 12 months. Foreign oil companies account for close to half of Ecuador's daily production of close to 500,000 barrels of crude oil.
If Petrobras fails to reach an agreement ``soon,'' Ecuador would take over its fields, Correa said. ``If they take too long I'll nationalize their fields and they'll leave the country.''
Correa has taken a hard line in negotiations with the private sector. In October last year, he imposed a 99 percent windfall tax on oil companies, later reduced to 70 percent. He secured financial concessions from America Movil SA, which holds the biggest share of Ecuador's mobile phone market.
On Sept. 23, he expelled Brazilian construction company Norberto Odebrecht SA and seized its projects in a dispute over a $338 million power plant. A final decision on whether to re-admit Odebrecht will be made this week after it signed a document agreeing to the government's demands, Correa said in today's address.
Ecuador is the smallest member of the Organization of Petroleum Exporting Countries.
To contact the reporter on this story: Stephan Kueffner in Quito at skueffner@bloomberg.net
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Oct. 4 (Bloomberg) -- Ecuadorean President Rafael Correa said he may expel foreign oil producers, including Spain's biggest energy company, Repsol YPF, and Brazil's state-owned Petroleo Brasileiro SA, because of declining production.
The companies, particularly Petrobras, as the Rio de Janeiro-based Brazilian company is known, have dragged their feet in contract negotiations in which Correa wants a greater share of oil income, he said today in his first regular Saturday address after almost two-thirds of voters approved a new constitution he had proposed.
``Don't play with fire,'' he said. ``Invest and recover production or you will leave the country.''
Correa wants the companies to agree to be paid for producing the oil, rather than the current terms under which they share in the revenue up to a set price. The new constitution strengthens the government's role in areas of the economy including transportation and energy.
``Now, more than ever, we have the democratic legitimacy to demand that these companies comply with the country,'' Correa said.
Several companies, including Repsol and Petrobras, in August agreed to start negotiating a switch to the payment model favored by the government within 12 months. Foreign oil companies account for close to half of Ecuador's daily production of close to 500,000 barrels of crude oil.
If Petrobras fails to reach an agreement ``soon,'' Ecuador would take over its fields, Correa said. ``If they take too long I'll nationalize their fields and they'll leave the country.''
Correa has taken a hard line in negotiations with the private sector. In October last year, he imposed a 99 percent windfall tax on oil companies, later reduced to 70 percent. He secured financial concessions from America Movil SA, which holds the biggest share of Ecuador's mobile phone market.
On Sept. 23, he expelled Brazilian construction company Norberto Odebrecht SA and seized its projects in a dispute over a $338 million power plant. A final decision on whether to re-admit Odebrecht will be made this week after it signed a document agreeing to the government's demands, Correa said in today's address.
Ecuador is the smallest member of the Organization of Petroleum Exporting Countries.
To contact the reporter on this story: Stephan Kueffner in Quito at skueffner@bloomberg.net
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GM, Fiat to Cut Vehicle Output in Brazil in October, November
By Heloiza Canassa
Oct. 4 (Bloomberg) -- General Motors Corp. and Fiat Spa's Brazilian units will cut vehicle output in the country in October and November after asking some workers to take vacations early.
GM asked workers at three of its plants in Sao Paulo state to take time off beginning this month, Carlos Augusto Souza, a company's spokesman, said, without giving details. About 1,700 of Fiat's 15,000 workers at a Betim plant will take at least 10 days of vacation, Guilherme Pena, a spokesman for Fiat do Brasil, said in a telephone interview from Sao Paulo.
Automakers are cutting production after four central bank interest rates increases pushed car-loan costs higher and sapped demand. Auto registrations rose 4 percent to 244,800 units in August, the slowest pace in two years, according to Brazil's Automakers Association. That compares to a 33 percent increase in July.
``We are reducing output now to maintain production throughout the year,'' Pena said. ``Nobody estimates sales will plunge.''
Fiat says the decision will lead to a 10 percent decrease in the company's daily production of 3,000 units.
Automakers in Brazil historically shut plants during the year-end holidays, Pena said. Fiat last year maintained about a third of production during holidays.
Fiat, Brazil's largest automaker, has 26 percent of the country's vehicle market, according to the association, known as Anfavea. The company sold 394,400 units through August. GM is the country's third-largest automaker, with a 22 percent market share.
To contact the reporter on this story: Heloiza Canassa in Sao Paulo at hcanassa@bloomberg.net
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Oct. 4 (Bloomberg) -- General Motors Corp. and Fiat Spa's Brazilian units will cut vehicle output in the country in October and November after asking some workers to take vacations early.
GM asked workers at three of its plants in Sao Paulo state to take time off beginning this month, Carlos Augusto Souza, a company's spokesman, said, without giving details. About 1,700 of Fiat's 15,000 workers at a Betim plant will take at least 10 days of vacation, Guilherme Pena, a spokesman for Fiat do Brasil, said in a telephone interview from Sao Paulo.
Automakers are cutting production after four central bank interest rates increases pushed car-loan costs higher and sapped demand. Auto registrations rose 4 percent to 244,800 units in August, the slowest pace in two years, according to Brazil's Automakers Association. That compares to a 33 percent increase in July.
``We are reducing output now to maintain production throughout the year,'' Pena said. ``Nobody estimates sales will plunge.''
Fiat says the decision will lead to a 10 percent decrease in the company's daily production of 3,000 units.
Automakers in Brazil historically shut plants during the year-end holidays, Pena said. Fiat last year maintained about a third of production during holidays.
Fiat, Brazil's largest automaker, has 26 percent of the country's vehicle market, according to the association, known as Anfavea. The company sold 394,400 units through August. GM is the country's third-largest automaker, with a 22 percent market share.
To contact the reporter on this story: Heloiza Canassa in Sao Paulo at hcanassa@bloomberg.net
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Dollar Posts Biggest Gain Versus Euro Ever on Funding Demand
By Daniel Kruger and Ye Xie
Oct. 4 (Bloomberg) -- The dollar posted its biggest advance ever against the euro on a surge in demand for U.S. currency funding amid a worldwide credit crunch.
Demand for the greenback surged this week as financial firms in Germany, the U.K., Belgium and Iceland faced funding pressure as banks hoarded capital, driving short-term lending rates in money markets to all-time highs. Strategists forecast more dollar gains after the U.S. Congress approved and President George W. Bush signed the $700 billion financial bailout.
``Negative sentiment tends to benefit the dollar as U.S. investors bring their money home and global investors try to buy liquid U.S. fixed-income assets,'' said Rebecca Patterson, global head of foreign exchange in New York at J.P. Morgan's Private Bank, a JPMorgan Chase & Co. unit that helps wealthy clients manage assets. ``I would buy dollars on dips.''
The dollar advanced 5.7 percent to $1.3772 per euro, from $1.4614 on Sept. 26, the biggest gain since the 15-nation currency debuted in 1999. It touched $1.3703 yesterday, the strongest in 13 months. The dollar fell 0.7 percent to 105.32 yen, from 106.01. The euro depreciated 6.4 percent to 145.11 yen from 154.94, its biggest all-time weekly slide.
Policy makers have joined counterparts around the world this week to step up efforts to restore normal lending.
The Bank of Canada said this week it will raise the amount of money it's putting in the banking system to deal with strained credit markets to at least C$20 billion ($18.5 billion), from C$8 billion. Brazil moved to free up to 23.5 billion reais ($11.7 billion) by easing requirements on reserves that banks must keep at the central bank.
U.S. Bailout
The U.S. Congress passed a financial-market bailout designed to unlock credit markets, after an initial rejection by the House of Representatives that caused global stocks to plunge. The bill authorizes the government to buy troubled assets from financial institutions reeling from record home foreclosures.
``The bill that just passed is a step in the right direction, though it's clear as the market anticipated this event over the last several days the strains have not completely gone away,'' said Todd Elmer, a currency strategist in New York at Citigroup Inc.
The London interbank offered rate, or Libor, that banks charge each other for three-month loans in dollars increased to 4.33 percent yesterday, the highest since January, the British Bankers' Association said. The Libor-OIS spread, a gauge of cash scarcity among banks, widened to a record.
``Very strong demand for dollars is still evident,'' said Marc Chandler, global head of currency strategy at Brown Brothers Harriman & Co. in New York.
Payrolls Shrink
U.S. payrolls shrank by 159,000 last month, following a revised decline of 73,000 in August, the Labor Department said yesterday in Washington. It's the biggest loss in jobs since 2003. The median forecast of 76 economists surveyed by Bloomberg News was for a reduction of 105,000. The unemployment rate stayed at 6.1 percent.
``It's not doing any good for money markets and liquidity given the real economy is starting to freeze up,'' said Alan Ruskin, head of international currency strategy in North America at RBS Greenwich Capital Markets Inc. in Greenwich, Connecticut. ``The market is short of dollar liquidity.''
European Central Bank President Jean-Claude Trichet said Oct. 2 that policy makers discussed cutting the main refinancing rate. European economies face ``increasing downside risks,'' he said at a press conference following the decision to keep the benchmark at a seven-year high of 4.25 percent.
Euribor Futures
The implied yield on the Euribor futures contract expiring in March fell to 4.10 percent, from 4.77 percent a month ago. The Euribor contract has averaged 44 basis points, or 0.44 percentage point, higher than the ECB's overnight target during the past two years, Bloomberg data show.
Five European banks including Belgium's Dexia SA, the world's biggest lender to local governments, and Fortis, Belgium's largest financial-services firm, accepted government- backed bailouts this week.
Futures on the Chicago Board of Trade showed a 78 percent chance that the Federal Reserve will cut the 2 percent target lending rate for overnight lending between banks by a half- percentage point at its Oct. 29 meeting, with the balance of bets on a reduction of a 0.75 percentage point. Futures showed no chance of lower borrowing costs a month ago.
To contact the reporters on this story: Daniel Kruger in New York at dkruger1@bloomberg.net; Ye Xie in New York at yxie6@bloomberg.net
Read more...
Oct. 4 (Bloomberg) -- The dollar posted its biggest advance ever against the euro on a surge in demand for U.S. currency funding amid a worldwide credit crunch.
Demand for the greenback surged this week as financial firms in Germany, the U.K., Belgium and Iceland faced funding pressure as banks hoarded capital, driving short-term lending rates in money markets to all-time highs. Strategists forecast more dollar gains after the U.S. Congress approved and President George W. Bush signed the $700 billion financial bailout.
``Negative sentiment tends to benefit the dollar as U.S. investors bring their money home and global investors try to buy liquid U.S. fixed-income assets,'' said Rebecca Patterson, global head of foreign exchange in New York at J.P. Morgan's Private Bank, a JPMorgan Chase & Co. unit that helps wealthy clients manage assets. ``I would buy dollars on dips.''
The dollar advanced 5.7 percent to $1.3772 per euro, from $1.4614 on Sept. 26, the biggest gain since the 15-nation currency debuted in 1999. It touched $1.3703 yesterday, the strongest in 13 months. The dollar fell 0.7 percent to 105.32 yen, from 106.01. The euro depreciated 6.4 percent to 145.11 yen from 154.94, its biggest all-time weekly slide.
Policy makers have joined counterparts around the world this week to step up efforts to restore normal lending.
The Bank of Canada said this week it will raise the amount of money it's putting in the banking system to deal with strained credit markets to at least C$20 billion ($18.5 billion), from C$8 billion. Brazil moved to free up to 23.5 billion reais ($11.7 billion) by easing requirements on reserves that banks must keep at the central bank.
U.S. Bailout
The U.S. Congress passed a financial-market bailout designed to unlock credit markets, after an initial rejection by the House of Representatives that caused global stocks to plunge. The bill authorizes the government to buy troubled assets from financial institutions reeling from record home foreclosures.
``The bill that just passed is a step in the right direction, though it's clear as the market anticipated this event over the last several days the strains have not completely gone away,'' said Todd Elmer, a currency strategist in New York at Citigroup Inc.
The London interbank offered rate, or Libor, that banks charge each other for three-month loans in dollars increased to 4.33 percent yesterday, the highest since January, the British Bankers' Association said. The Libor-OIS spread, a gauge of cash scarcity among banks, widened to a record.
``Very strong demand for dollars is still evident,'' said Marc Chandler, global head of currency strategy at Brown Brothers Harriman & Co. in New York.
Payrolls Shrink
U.S. payrolls shrank by 159,000 last month, following a revised decline of 73,000 in August, the Labor Department said yesterday in Washington. It's the biggest loss in jobs since 2003. The median forecast of 76 economists surveyed by Bloomberg News was for a reduction of 105,000. The unemployment rate stayed at 6.1 percent.
``It's not doing any good for money markets and liquidity given the real economy is starting to freeze up,'' said Alan Ruskin, head of international currency strategy in North America at RBS Greenwich Capital Markets Inc. in Greenwich, Connecticut. ``The market is short of dollar liquidity.''
European Central Bank President Jean-Claude Trichet said Oct. 2 that policy makers discussed cutting the main refinancing rate. European economies face ``increasing downside risks,'' he said at a press conference following the decision to keep the benchmark at a seven-year high of 4.25 percent.
Euribor Futures
The implied yield on the Euribor futures contract expiring in March fell to 4.10 percent, from 4.77 percent a month ago. The Euribor contract has averaged 44 basis points, or 0.44 percentage point, higher than the ECB's overnight target during the past two years, Bloomberg data show.
Five European banks including Belgium's Dexia SA, the world's biggest lender to local governments, and Fortis, Belgium's largest financial-services firm, accepted government- backed bailouts this week.
Futures on the Chicago Board of Trade showed a 78 percent chance that the Federal Reserve will cut the 2 percent target lending rate for overnight lending between banks by a half- percentage point at its Oct. 29 meeting, with the balance of bets on a reduction of a 0.75 percentage point. Futures showed no chance of lower borrowing costs a month ago.
To contact the reporters on this story: Daniel Kruger in New York at dkruger1@bloomberg.net; Ye Xie in New York at yxie6@bloomberg.net
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UniCredit Directors to Meet on Capital Increase
By Steve Scherer and Lorenzo Totaro
Oct. 4 (Bloomberg) -- UniCredit SpA, Italy's biggest lender, will hold an extraordinary board meeting tomorrow to discuss a plan to boost its regulatory capital and settle investors' concern with its finances.
The Milan-based bank is considering paying its dividend in shares to hold on to about 3 billion euros ($4.1 billion) in cash and bolster its Core Tier 1 capital ratio, Il Sole-24 Ore and Ansa newswire reported today without citing anyone. Francesca Palermo, an UniCredit spokeswoman, declined to comment on the plan. The meeting will be in the afternoon, Ansa said.
UniCredit shares plummeted 24 percent during the first three days of last week. The stock then recovered some of the losses after Italy's stock-market regulator on Oct. 1 banned short sales of banking and insurance stocks, and Prime Minister Silvio Berlusconi said he ``won't permit speculative attacks'' on banks.
``I heard that Unicredit is planning a capital increase and it is not a reason for concern,'' Berlusconi told reporters today in Paris after a meeting of European leaders. ``It is a further guarantee that there are no dangers for the bank.''
Consob, Italy's market watchdog, may have uncovered a case of short selling of UniCredit shares borrowed and sold on Sept. 30 and not delivered back to the lender as of yesterday's deadline, Ansa reported, without citing anyone. Italy's finance police are investigating the whereabouts of 60 million UniCredit shares valued at about 180 million euros, Ansa said.
Spinoff
On Oct. 1, UniCredit announced it would spin off real- estate assets to boost its core Tier I capital ratio, a measure of financial strength, to a target of 6.2 percent by the end of the year, from 5.7 percent at the end of the second quarter.
UniCredit Chairman Dieter Rampl and Chief Executive Officer Alessandro Profumo are considering sales of other assets, both inside and outside of Italy, Il Sole reported today. Turkish bank Yapi & Kredi Bankasi AS may be one of the units sold, Sole said.
The financial crisis that left New York-based Lehman Brothers Holdings Inc. and Washington Mutual Inc. of Seattle bankrupt is spreading through Europe. Five banks were bailed out this past week by European governments.
UniCredit shares closed at 3.08 euros yesterday, up 9.6 percent from the previous day, though still down 7 percent compared with the previous week's close. The stock has fallen 46 percent since the start of the year, compared with a 35 percent drop in the Bloomberg Banks and Financial Services Index.
To contact the reporters on this story: Steve Scherer in Rome at scherer@bloomberg.net; Lorenzo Totaro in Paris at ltotaro@bloomberg.net
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Belgium Is Exploring `All Methods' for Fortis
By James G. Neuger and Martijn van der Starre
Oct. 4 (Bloomberg) -- Belgium is exploring ``all methods'' to keep Fortis in business after the financial-services company's operations in the Netherlands were taken over by the Dutch government, Finance Minister Didier Reynders said.
``We are continuing to work on all methods to see to it that this group is more and more capable of guaranteeing the depositors,'' Reynders told reporters before a meeting of key Belgian cabinet ministers in Brussels today. He declined to comment on a De Tijd report that Belgium may nationalize Fortis' Belgian activities or broker a sale to one of three or four private bidders.
The Netherlands bought Fortis's Dutch operations yesterday for 16.8 billion euros ($23 billion) after an earlier rescue plan failed. Fortis, Belgium's largest financial-services company, ran short of funds after spending 24.2 billion euros buying ABN Amro Holding NV assets last year just as the U.S. subprime-mortgage market collapsed and credit markets froze.
``It would be irresponsible for the regulator to allow trading in Fortis shares on Monday, since we don't know how much of the liabilities have been transferred to the Dutch government,'' said Patrick Millecam, a managing director at Ghent, Belgium-based Value Square, which manages more than 100 million euros.
Today's meeting of Belgian Prime Minister Yves Leterme and the heads of key cabinet departments was called to discuss the country's 2009 budget. Fortis may also be discussed, Peter Poulussen, a spokesman for Leterme said. Fortis spokesman Wilfried Remans declined to comment when contacted by Bloomberg.
BNP, Societe Generale
Leterme didn't exclude the possibility of the state increasing its 49.9 percent stake in Fortis in a television interview Oct. 3. ``You have to use all means'' to guarantee the savings of all the people in the country, he said.
BNP Paribas SA is one of ``three or four'' possible buyers of the Belgian arm of Fortis, De Tijd said. Societe Generale SA and BNP are the most likely candidates to buy Fortis Bank Belgium, Dutch newspaper De Telegraaf reported today, without citing anyone.
Jonathan Mullen, a spokesman for Paris-based BNP Paribas, and Paris-based Societe Generale spokeswoman Stephanie Carson- Parker both declined to comment.
``We are ready to discuss with others how to arrange things in a definite way and this will be done very soon,'' Luxembourg Prime Minister Jean-Claude Juncker said today after a meeting of European leaders in Paris. His government bought 49 percent of Fortis' Luxembourg unit in the initial bailout.
Luxembourg Options
A purchase of Fortis's Luxembourg units by BNP is ``is one among many options'' that the Luxembourg government is considering, Luxembourg Economy Minister Jeannot Krecke said in an RTL radio interview today.
``We have to find a solid partner'' for the Luxembourg unit, he said. ``We will try to find a solution this weekend.''
The Belgian government currently is the ``main shareholder'' in Fortis Luxembourg, Krecke said.
On Sept. 28, the Netherlands, Belgium and Luxembourg agreed to inject 11.2 billion euros into Fortis by purchasing minority stakes in the banking units in each country. The Dutch government's portion was to have amounted to 4 billion euros. Fortis also planned to sell ABN Amro's private-banking and Dutch retail banking units, neither of which had been integrated.
Dutch Rescue
In a change of plans yesterday, the Netherlands agreed to buy Fortis Bank Nederland Holding NV, Fortis Insurance Netherlands NV and Fortis Corporate Insurance NV, and become owner of the company's holding in ABN Amro. The integration of ABN Amro and Fortis Bank Nederland will continue again, with the potential financial benefit being as much as 1 billion euros a year, De Telegraaf cited Dutch Central Bank Governor Nout Wellink as saying.
``Further steps proved necessary,'' Dutch Prime Minister Jan Peter Balkenende said yesterday. The government took action after clients kept withdrawing money and banks remained reluctant to lend to Fortis, leading to ``increasing liquidity problems'' for the lender, Dutch Finance Minister Wouter Bos said.
Reynders welcomed the nationalization of the Dutch assets of Fortis, saying this ``reinforces the group today.''
``The decisive action by the Dutch government shows that it stands behind the Dutch savers,'' said Nanne Bos, a spokesman for Amsterdam-based ING Groep NV. ING, the biggest Dutch financial-services company, said Sept. 29 it wouldn't bid for ABN Amro's Dutch units because a purchase wouldn't meet the company's ``financial requirements.''
European Bailouts
European governments are stepping in to protect banks as the financial crisis that drove New York-based Lehman Brothers Holdings Inc. and Seattle-based Washington Mutual Inc. into bankruptcy spreads. Ireland's government is guaranteeing banks' deposits and debts for two years, seeking to restore confidence in the country's financial industry.
Also this past week, Belgium and France threw Dexia SA a 6.4 billion-euro lifeline, Britain seized Bradford & Bingley Plc, the U.K.'s biggest lender to landlords.
``I've always said that the Dutch state wouldn't just let go of a `systemic bank' like Fortis,'' Dutch newspaper NRC Handelsblad cited Rabobank Groep NV Chairman Bert Heemskerk as saying today. Heemskerk supports rescue operations such as the ones at Dexia and Fortis, NRC said. ``Only retail banks need to be saved,'' Heemskerk was cited as saying.
Rabobank, the biggest Dutch mortgage lender, is based in the Dutch city of Utrecht.
To contact the reporter on this story: James G. Neuger in Brussels at jneuger@bloomberg.net; Martijn van der Starre in Amsterdam at vanderstarre@bloomberg.net
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