...the main headlines..........
Markets in Asia buck rising trend
Stocks in Asia fell, even after a strong trading day in the US on Friday. The Standard & Poor’s 500 Index rose 2.69 per cent in New York on hopes that economic stimulus plans would be successful. In Asia, however, stocks fell, as capital-raising plans pushed down the shares of financial companies. The regional MSCI Asia Pacific Index lost 0.1 per cent, with Japan’s Nikkei 225 faring even worse, dropping one per cent. Nomura Holdings fell 14 per cent in Tokyo after it talked about selling shares to raise fresh funds. In London the FTSE 100 Index fell 0.70 per cent at the open.
Bank bonus controversy escalates
Alistair Darling made a commitment on Sunday to impose pay restraints on the banking industry but stopped short of banning “hundreds of millions of pounds” of bonuses this year, reported the Financial Times. The chancellor admitted that Royal Bank of Scotland would be free to pay out the bonuses it has planned this year, but did announce future curbs and a review of the sector by Sir David Walker, a former “City watchdog”. His comments came as John Prescott waded into the row by calling for a “public campaign” against the RBS pay-out on Facebook.
Barclays sees profits drop to £6.1bn
Barclays Bank, which has so far resisted government bail-out funds, made pre-tax profits of £6.1bn in 2008, against £7.1bn the year before, reported the Daily Telegraph. The bank brought forward the announcement to assure investors, who were worried that it was “sitting on large toxic assets”; in fact it said writedowns for 2009 were expected to be “lower” than those made last year. While profits at Barclays’ investment banking arm fell by almost half, profits rose seven per cent at its high street banking operation and Barclaycard earnings jumped 31 per cent.
US delay to rescue plan
US Treasury Secretary Timothy Geithner announced delays to the Obama recovery-plan as administrators discussed plans for the country’s toxic debt, reported Bloomberg.com. While some parts of the plan - initially due today, but now delayed until tomorrow - have been “settled”, others are still being debated. A new set of taxpayer-funded injections into banks has been agreed, while the government is still mulling what to do with illiquid, or “toxic” assets, which could be housed in a “bad bank”, in co-operation with private investors.
Ireland to announce new bail-out
The Irish government is to unveil a new €7bn rescue for two of its biggest banks, Allied Irish and Bank of Ireland, reported the Independent. In the new deal each bank will receive €3.5bn in preference shares with an eight per cent interest rate attached. The plan also gives the government the option to buy 25 per cent of the banks’ ordinary shares in five years’ time, giving them an “additional incentive” to pay back as much debt as they can in the meantime. The country’s third-biggest bank – Anglo Irish - has already been nationalised.
Russian central bank condemned
Russia is set to enter a “long and deep recession” this year unless its government abandons attempts to shore up its currency, said the Guardian. Economists are warning that the attempts to support the rouble will be “futile” and ratings agency Fitch has downgraded its sovereign credit rating to BBB and talked of “further cuts”. The government has already spent a third of its foreign currency reserves on defending its unit and if the “botched” attempts continue it is likely to hasten its move to a “junk” rating.
...in brief..................
US auto firms may be bankrupted and CAA faces funding crisis
General Motors and Chrysler may have to be “forced into bankruptcy” by the US government to guarantee payment of the $17.4bn in bail-out loans, said Bloomberg.com. The carmakers claim that this course of action would “destroy them”, but currently other creditors outrank the US taxpayer…………
Rio Tinto’s Chairman-elect Jim Leng has quit “less than a month” after he was named as the replacement for Paul Skinner, reported the Daily Telegraph. Rio shares leapt 7.6 per cent on the news amid speculation that it might be about to sell a stake to Chinalco…………
“Ousted boardroom bosses” at HBOS may have walked away with combined payouts of up to £4.5m after the state rescue, reported the Guardian. None of the HBOS executives were offered a position on the board of the new Lloyds Banking Group, but most are thought to have received payments…………
News company ITN is looking for new investors as signs grow that its biggest-shareholder, ITV, is willing to reduce or even sell its stake, said the Times. ITN wants to “grow internationally”, with “little hope” for commercial growth in the United Kingdom…………
Steven Spielberg is set to announce a six-year, 30-film distribution deal with Walt Disney, reported the Financial Times. The agreement “could be unveiled by Monday” and would combine Hollywood’s most successful director with its most efficient “distribution machine”…………
The Civil Aviation Authority is facing a “growing funding crisis” after Barclays Bank turned down its request for an increase in its overdraft, reported the Independent. The CAA is faced with a “growing mountain of debt” after the XL Leisure collapse and is now thought likely to ask for state aid…………
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