Archive for June 7th, 2009

Barclays In Fund Management Talks

Sunday, June 7th, 2009
Barclays In Fund Management Talks

Barclays in fund management talks
Barclays has said that it is in talks with “a number of parties” about the sale of its Barclays Global Investors (BGI) fund management business.Blackrock, a US money management firm, are among those interested, Barclays said, adding talks were continuing. Earlier this year, Barclays got rid of a crucial part of BGI’s business when it sold iShares, to CVC Capital Partners for 4.4bn (2.7bn). But it can scrap the deal, if it gets a better offer before 18 June. If this was to happen, it would pay a 175m break-fee to CVC. Ishares is a unit of BGI, which specializes in exchange-traded funds. Barclays did not comment on media reports that New York-based BlackRock’s bid would value BGI at about 13bn – and that it would pay the UK bank in a mixture of cash and shares. Unlike Lloyds Banking Group and RBS, Barclays has shunned government help, instead choosing to raise money privately, to help it weather the financial crisis.
Source:BBC

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Shenzhen Mayor Faces Graft Probe

Sunday, June 7th, 2009
Shenzhen Mayor Faces Graft Probe

Shenzhen mayor faces graft probe
The mayor of China’s southern boom town of Shenzhen, Xu Zongheng, is being questioned as part of a corruption investigation, state media has said.He is the latest official to be caught up in an investigation into Wong Kwong-yu, founder of China’s biggest electrical retailer, Gome Appliances. Mr Xu was being questioned for “severe violations”, the Xinhua news agency said in a short statement. Chinese corruption investigations may also be part of political in-fighting. “It must have something to do with economic irregularities… but it could also have something to do with a power struggle,” an unnamed government source was quoted as saying by the South China Morning Post. Mr Wong, once ranked as China’s richest man, has been under investigation for financial irregularities since last year. Two senior police officials responsible for investigating financial crimes have also been caught up in the scandal. Mr Xu has been put under shuanggui, which is a form of detention imposed on party officials, according to the Post.
Source:BBC

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George Soros Says Chinas Financial Clout Is Growing

Sunday, June 7th, 2009

SHANGHAI (Reuters) — Financier George Soros said on Sunday that China’s global influence is set to grow faster than most people expect, with its isolation from the global financial system and a heavy state role in banking aiding a relatively swift economic recovery.He reiterated his cautious views regarding the surge in global stock markets, although he said it may have further to go given liquidity in the markets and that many investors are still sitting on the sidelines.”In many ways, Chinese banking has benefited from being isolated from the rest of the world and is in better shape than the international banking system,” he told an audience at Shanghai’s Fudan University.China’s extensive capital controls have helped to shield its financial institutions from the worst of the global financial crisis.0:00
/3:06Soros comes clean on coal”The influence of the state is also greater. So when the government says ‘lend’, banks lend,” Soros added. “This puts China in a better position to recover from the recession and that is in fact what has happened.”New loans by Chinese banks surged to record levels in the first quarter, spurring optimism over recovery prospects for the world’s third-largest economy.”China is going to be a positive force in the world and the market, and as a consequence, its power and influence are likely to grow. Personally, I believe it’s going to grow faster than most people currently expect,” Soros said.He acknowledged that some doubts remain over China’s economic recovery, however, noting data such as a continued fall in electricity consumption.He also noted that China’s aggressive 4 trillion yuan (586 billion) economic stimulus program, announced last year, had bolstered the economy.”If that program proves inadequate, it is in a position to apply additional stimulus. China is also in a position to foster a revival of its exports by extending credit and investing abroad,” he said.He reiterated his view that because China’s economy is only one-quarter the size of the U.S. economy, it cannot replace the American consumer as the motor of the global economy, so global growth will be slower than in the past.He sounded a more upbeat note for China’s asset markets than for global markets overall, where he remained wary.”I’m pretty cautious. Even though I’ve said prices are cheap, I’m not so optimistic as to put all my money into stocks or assets because I think that the outlook is fairly uncertain.”I do, however, think that the Chinese economy is a promising economy. I think here it is more a matter of finding the right assets rather than saying that I’m not interested in investing.”Asked if the recent climb in global stock markets was a bear market rally, he said: “It may have further to go because there is a lot of liquidity, a lot of investors are on the sidelines. If the market keeps on going up, more of them may decide to join in. You never know how far the rally goes.”"But I certainly don’t think we are at the beginning of a big bull market worldwide.”

Source:CNN

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Nationwide Online Banking Glitch

Sunday, June 7th, 2009
Nationwide Online Banking Glitch

Nationwide online banking glitch
Customers of Nationwide, the UK’s biggest building society, have been unable to access their online accounts after a glitch hit the system.Nationwide said the problem, which was being investigated, had affected the system for most of Sunday, and followed routine maintenance work. “We are very sorry for the inconvenience caused to customers,” a Nationwide spokesman said. “We hope to have the service up and running as soon as possible.” The firm said it had called in extra staff to try to deal with the problem. “At this stage we do not know what has caused the problem, which is preventing access to internet banking.” The problem started after routine maintenance finished at 0300 BST on Sunday. Earlier in the day there was sporadic access to the system, before the system failed completely. Nationwide has more than one million users of its online banking service out of a total of 15 million members.
Source:BBC

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Pension Funds Ask Supreme Court To Delay Chrysler Deal

Sunday, June 7th, 2009

WASHINGTON (Reuters) — Indiana pension funds asked the U.S. Supreme Court late Saturday to immediately delay the sale of bankrupt automaker Chrysler LLC to a group led by Italian carmaker Fiat SpA while they challenge the deal.The request, which moves the legal battle to the highest court in the United States, was filed after a U.S. appeals court in New York approved Chrysler’s sale to a group led by Fiat, a union-aligned trust and the U.S. and Canadian governments.The Chrysler ruling could set a precedent for the case of General Motors Corp (GM, Fortune 500) , which is using a similar quick sale strategy in its bankruptcy in New York.The appeals court late Friday stayed the closing of the sale until Monday afternoon, giving the pension funds time over the weekend to ask the Supreme Court to block the sale while they appeal.The pension funds, which hold about 42 million of Chrysler’s 6.9 billion in secured loans, have argued the sale unlawfully rewarded unsecured creditors such as the union ahead of secured lenders and that Chrysler was pursuing an illegal reorganization plan through a sham sale.”The need for the court to review the profound issues presented by Chrysler’s novel bankruptcy sale far outweighs the cost of delaying” a sale, lawyers for the pension funds and the Indiana attorney general said in seeking an immediate stay.The three state pension and construction funds also argued the U.S. government, which kept Chrysler afloat with emergency loans before the automaker’s bankruptcy and financed its Chapter 11 filing, overstepped its authority by using bailout funds Congress intended for banks.”The public is watching and needs to see that, particularly, when the system is under stress, the rule of law will be honored and an independent judiciary will properly scrutinize the actions of the massively powerful executive branch,” the lawyers said.0:00
/4:21Fiat’s big Chrysler challenge”The issues presented by this case are of immediate and enduring national significance,” they said.Without a stay from the Supreme Court, the sale will close on Monday, the lawyers said.A federal bankruptcy judge in New York and the three-judge panel of the appeals court rejected the funds’ arguments in approving the sale.Attorneys for Chrysler, the U.S. government and Fiat all have argued the sale should be allowed to go forward. Fiat can walk away from the deal if it does not close by June 15.The request to stay the deal was filed with Supreme Court Justice Ruth Bader Ginsburg, who has responsibility for such emergency matters from the New York-based appeals court.Ginsburg could act on her own or could refer the matter to the full court. A stay from the full court would require the votes of five of the nine Supreme Court members.

Source:CNN

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The Week Ahead On Wall Street Stocks Look To Keep Rallying

Sunday, June 7th, 2009

NEW YORK: Stocks have been on the best three-month tear since 1982 — and there’s little in the week ahead to interrupt the flow.But as the typically sluggish summer months on Wall Street take hold, momentum is bound to slow. “The move up is going to be slower and we’re going to have periods of sideways movement,” said Gary Webb, CEO at Webb Financial Group. “But slow and steady is good because it’s more sustainable.”The week ahead brings readings on the deficit, jobless claims, retail sales and consumer sentiment. Monday is also the deadline for “stress tested” banks that need to raise more capital to explain just how they plan to do it. But lately, all news has been good news, or at least neutral news. Investors took in stride the bankruptcy filing of General Motors last week. They also welcomed a May jobs report Friday that showed employers cut 345,000 jobs from their payrolls, versus forecasts for 520,000 jobs. The rationale was that the number was shy of forecasts and suggests the pace of job losses is slowing.Indications that the intensity of the recession is abating have boosted stock prices and consumer sentiment for three months. Since hitting a more than 12-year low on March 9, the Dow has risen more than 32%, its best 13-week run since Nov. 1982, according to Dow Jones.Over the summer months stocks will churn in response to different news events, but the trend should remain up, if only because the government has put so much money into the financial system, said Will Hepburn, chief investment officer at Hepburn Capital Management.”Hopefully that money will build us a stronger foundation, so that when this sugar high gives out, we have something to stand on,” he said.0:00
/5:03Don’t cheer fewer job lossesAutos: The automakers will continue to make news next week, although so far the bankruptcy filings of both General Motors (GMGMQ) and Chrysler have not had much of an impact on stock market sentiment. Chrysler is expected to exit bankruptcy Monday afternoon following an appeals court ruling late Friday that set aside an Indiana pension fund’s objections. The ruling lets Chrysler sell a majority of its assets to a new company to be called the Chrysler Group. The new company will be owned mostly by a United Auto Workers union trust, Italian automaker Fiat and the U.S. government. The Senate Banking Committee will hold a hearing on auto industry restructuring Wednesday afternoon. GM’s bankruptcy means its being kicked out of the Dow Jones industrial average, come Monday. It will be replaced by Cisco Systems (CSCO, Fortune 500). Also leaving the Dow: Citigroup (C, Fortune 500), which will be replaced by insurer Travelers (TRV, Fortune 500).On the docketMonday: The 10 banks that were told to raise additional funds as a result of the government’s “stress tests” must submit detailed plans Monday. Already, the banks have managed to raise a substantial portion of the collective 75 billion, with Bank of America (BAC, Fortune 500) and Morgan Stanley (MS, Fortune 500) among the banks that have already met or exceeded the requirements.Tuesday: The government’s April wholesale inventories report is due in the morning. Inventories likely fell 1% after falling 1.6% in the previous month.In Washington, the Joint Economic Committee will further examine the bank bailout program, the House Financial Services Committee is holding a hearing about regulating derivatives and the Senate Energy Committee will discuss energy legislation.Wednesday: A slew of economic reports are due out throughout the day, highlighted by the Federal Reserve’s “beige book” reading on economic activity in the afternoon.In the morning, the Census Bureau will release the April trade balance, with the deficit expected to have widened to 28.7 billion from 27.6 billion in March.The weekly crude oil inventories report from the Energy Information Administration is also due in the morning, while the May Treasury budget is due in the afternoon.Thursday: May retail sales are expected to have risen 0.3% after falling 0.4% in April. Retail sales, excluding volatile auto sales, are expected to have risen 0.2% after falling 0.5% in the previous month.April business inventories, from the Census Bureau, are expected to have fallen 1% after falling 1% in March. The weekly jobless claims report is also on tap from the Labor Department, along with the May foreclosure report from industry tracker RealtyTrac. Friday: May import and export prices are due from the Labor Department and the June consumer sentiment index is due from the University of Michigan. The G8 finance ministers are meeting in Rome Friday and Saturday. Treasury Secretary Timothy Geithner is expected to speak Friday.

Source:CNN

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ProgrammesFrom Our Own CorrespondentMotor City In Mourning For GM

Sunday, June 7th, 2009
ProgrammesFrom Our Own CorrespondentMotor City In Mourning For GM

‘Motor City’ in mourning for GM
As General Motors files for bankruptcy protection this week, becoming the biggest industrial casualty in US history, Greg Wood assesses the impact on Detroit, home to the US car industry.
Detroit is a flat, sprawling, monster of a city. You seem to fly over it for an age before you actually land at the airport. On the ground, it is a low-rise landscape, with one exception. The Renaissance Centre – no irony intended in the name – houses the headquarters of General Motors. It stands, a cluster of glass cylinders like giant salt and pepper pots, on the banks of the Detroit River across the water from Canada which here, confusingly, is to the south. The Renaissance Centre, which also housed my hotel, felt like a mausoleum. Wishful thinkingAs I unpacked in my hotel room on the 45th floor, I could look straight across into the offices of General Motors and spy down on hundreds of those individual cubicles where the corporate planners had sat, desperately trying to come up with some big idea to save the company.
I wandered down to the lobby, a confusing labyrinth of concrete walkways leading to an area like a car showroom, where the latest shiny GM models were displayed on stands. They bore famous names such as Pontiac – soon to disappear for good. But these cars were not for sale. They were just for show. Banners proclaimed General Motors’ 100 year history and the proud motto: “We’ve only just started.” Talk about wishful thinking. Outside, children were playing in the fountains beside a new terrace of grass and trees, leading down to the water’s edge. The late afternoon sun was hot on my back. Detroit felt almost benevolent. It is not like this in the winter, when a vicious, sub-zero wind howls in from Lake Huron to the north, numbing your face within seconds. Signs of decayBut despite the neat corporate landscaping, you only have to walk a few minutes from the city centre to find desolation – entire blocks where the buildings have been razed to the ground, gutted factories closed down and left to rot, graffiti-covered warehouses with broken windows and rubbish blowing in the streets.
Detroit is pock-marked with the signs of decay. It has been on the slide for decades. In 1967, dozens of people died here during five days of race riots sparked by a police raid on an after-hours drinking club. The riots accelerated the flight of people – mainly white – to the suburbs. Detroit’s population fell by a quarter of a million in the two decades up to 1970. By that time the motor industry was already beginning to run into trouble. Japanese carmakers were taking more of the market, the oil price surged and General Motors made concessions to its workers that would later cripple the company. But for much of the 20th Century, General Motors defined the American way of doing business. Beyond repair
In the words of Alfred P Sloan, its chief executive in the 1920s, it aimed to make “a car for every purse and purpose”, from the affordable Chevrolet to that pinnacle of luxury, the Cadillac, named after the Frenchman who founded Detroit. In the boom years of the post-war era its president declared: “What’s good for our country is good for General Motors, and vice versa.” Not any more. US taxpayers are now bailing out General Motors for 50bn (31.2bn). Most Americans see government support as a necessary evil. But it does not mean they are happy about it. There are some happy people in Detroit though. The fans of the local ice hockey team, the Red Wings, were celebrating a second victory in the best of seven series to decide the Stanley Cup, the championship of the sport. Their hardened skaters were getting the better of the more flamboyant Pittsburgh Penguins. Cruelly, I punctured their euphoria by asking them about the bankruptcy of General Motors. The fans all had personal or family connections to the car plants. “It’s the end of an era,” said one.
I noticed that look of sadness and resignation which I have also seen in the eyes of redundant Nottinghamshire miners and laid-off Tyneside shipbuilders – the realisation that the thing which identified and bound their community together had been broken beyond repair. “What is the point of Detroit,” I thought, “without the motor industry?” Maybe they will turn some of the car plants into casinos. That is what I had seen in another part of America’s blue-collar heartland – Bethlehem, Pennsylvania – where the vast steel works shut down in the 1990s. Part of it is now a pleasure dome built on the ruins of industry. That evening we went to a restaurant near the city centre. It was pleasant enough. But apart from a few people at the bar, we were the only customers. Across the street was a boarded-up cinema – the name “Fine Arts” still hanging, crookedly, above the door. Deserted office blocks. A closed up church. The odd car. Few pedestrians. The familiar Detroit landscape where the human beings seem to have faded from the picture. I sighed and turned to my soup. How to listen to: From our own CorrespondentRadio 4: Saturdays, 1130. Second weekly edition on Thursdays, 1100 (some weeks only) World Service: See programme schedules Download the
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Source:BBC

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Hornby In Talks On Top Boots Job

Sunday, June 7th, 2009
Hornby In Talks On Top Boots Job

Hornby in talks on top Boots job
The UK High Street’s biggest chemist chain, Alliance Boots, is in talks with former HBOS boss Andy Hornby as it seeks to appoint a new chief executive.Mr Hornby, in charge of HBOS at the time of the bank’s near-collapse last autumn, is among several candidates for the post. Before moving to HBOS he spent time in senior posts at supermarket giant Asda. Boots and Alliance Unichem merged in 2006 to form Alliance Boots, later taken over by private equity firm KKR. Alliance Boots is Europe’s largest wholesale and retail player in the pharmaceutical industry and employs 115,000 people. It is currently run by the Italian billionaire Stefano Pessina, who holds the post of executive chairman. BBC business correspondent Joe Lynam said an announcement on the chief executive role should be made within two weeks, but may be brought forward. In May Boots reported a pre-tax profit of 13m for the year to 31 March, with its UK sales boosted by its No7 cosmetics range. Mr Hornby is a non-executive director of Home Retail Group, which owns Argos and Homebase. He led led HBOS up to the end of 2008 when the company posted banking losses of 11bn – before being swallowed up by rivals Lloyds TSB. Mr Hornby had been the youngest-ever boss of a main British bank when he became HBOS chief executive three years ago.
Source:BBC

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PoliticsSugar Im Not Joining Government

Sunday, June 7th, 2009
PoliticsSugar Im Not Joining Government

Sugar: I’m not joining government
Sir Alan Sugar has told the BBC he is not joining the government, despite accepting a job from Gordon Brown as “enterprise tsar” in the reshuffle.The Apprentice star told the BBC: “I wouldn’t join the government, I don’t see this as a political thing.” He said he was simply acting as an adviser and wanted to help small businesses and entrepreneurs. Sir Alan told BBC One’s Andrew Marr Show that his new post would not affect his role in The Apprentice. The Daily Telegraph reports that the BBC is consider whether Sir Alan can continue appearing in the show. But Sir Alan said he had checked with the BBC before accepting the role to ascertain that it would not jeopardise his position on the show. Asked whether he would continue in the “enterprise tsar” role under a Conservative government, Sir Alan – who said he had known Mr Brown for years – said: “As far as I’m concerned this is politically neutral. All I want to do is try and help business and entrepreneurs.” On the Tory leader he said: “I have never met Mr Cameron and I don’t know anything about him.”
Source:BBC

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Court Asked To Stop Chrysler Sale

Sunday, June 7th, 2009
Court Asked To Stop Chrysler Sale

Court asked to stop Chrysler sale
Pension funds opposed to Chrysler’s sale to Fiat have asked the US Supreme Court to block the deal immediately.Three Indiana state pension and construction funds filed papers at the court on Sunday calling for the sale to be halted so they can pursue an appeal. It comes after a US appeals court approved Chrysler’s sale to a group led by Fiat, a union-aligned trust and the US and Canadian governments. Chrysler entered bankruptcy protection in April after falling vehicle sales. US carmakers have suffered from a massive slump in sales during the recession. Fund assetsThe US government has backed its sale to the Fiat-led consortium, which would see it emerge from bankruptcy. Fiat would control 20% of Chrysler, while 68% would be owned by a union trust, and the two governments would share 12%. However, the pension funds, which hold about 42m (26.3m) of Chrysler’s 6.9bn in secured loans, are opposed to the sale. They say it inverts usual bankruptcy practice and unlawfully rewards unsecured creditors, such as the union, ahead of secured lenders. ‘Critical issues’The emergency legal request from the Indiana State Police Pension Fund, the Indiana Teacher’s Retirement Fund and the state’s Major Moves Construction Fund goes before Justice Ruth Bader Ginsburg. It calls for a block on the sale until 1600 local time in New York (2100 BST) on Monday. The judge can act on her own or refer the matter to the full court, when a vote from five of the nine Supreme Court members would be needed to put the Chrysler sale on hold. The legal filings call on the court to “decide critical, nationally significant legal issues relating to management of the economy by the United States government”. If the sale is put on hold by the court, the Indiana funds would then pursue a full appeal. If the deal is not completed by 15 June then Fiat, which is not paying anything for its 20% stake, has the option of pulling out.
Source:BBC

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