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ICBC to Slow Lending, Capital Adequacy `Sound’, Chief Executive Yang Says

by on March 7, 2010

By Bloomberg News March 7 (Bloomberg) — Industrial & Commercial Bank of China Ltd. , the world’s largest lender by market value, said it has no fund-raising plan at the moment even as it boosted lending by 24 percent last year. ICBC’s capital adequacy ratio is “sound” and the highest among rivals, and pressure on capital raising is “not big,” President Yang Kaisheng said at a press conference in Beijing today. China’s banks doled out a combined 9.59 trillion yuan ($1.4 trillion) in new loans last year, helping the government engineer a turnaround in the world’s third- largest economy . The credit binge drained lenders’ capital and sparked concerns about asset bubbles, a higher number of bad loans and increased inflation pressure. China’s publicly-traded banks have already raised about 131 billion yuan from bond and share sales since the second half of last year to replenish capital drained by loan growth, and they have announced plans to raise a further 127 billion yuan, according to Bloomberg data. Beijing-based ICBC’s capital adequacy ratio , a measure of the bank’s financial strength, fell to 12.60 percent at the end of third quarter, from 13.06 percent at the end of 2008. The nation’s policy makers aim to avert asset bubbles and restrain inflation by limiting new credit at 7.5 trillion yuan this year. China’s growth accelerated to 10.7 percent in the fourth quarter, the fastest pace since 2007, and property prices climbed the most in 21 months. Boost Financing ICBC said it will boost financing to projects already under construction and to small-and-medium sized firms and cut loans to new projects that are not government-backed and if they’re energy-intensive or polluting. Loans would also be reduced to sectors with overcapacity, Yang said. Loans by the bank this year will be less than in 2009, Yang said. ICBC’s new loans advanced to 1.03 trillion yuan last year, Yang said. After a government bailout five years ago, ICBC is now the world’s biggest bank by value. The lender has more than doubled profit during the past three years and has more than 16,000 outlets nationwide and 112 branches outside China, and 190 million personal customers — equivalent to the populations of Russia and Canada combined. ICBC on March 4 submitted a tender offer to buy all shares in Thailand’s ACL Bank Pcl in a deal that would give ICBC a foothold in the southeastern Asian nation after acquisitions in Indonesia, Macau, South Africa and Canada since 2007. The bank aims to triple the share of profit coming from abroad to 10 percent. ICBC will be “active and prudent” with overseas expansion this year, Yang said. For Related News and Information: Top financial stories: FTOP Stories on China Banks: TNI CHINA BNK Banking industry debt and equity monitor: BANK Relative value comparison: 1398 HK RVC

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ICBC to Slow Lending, Capital Adequacy `Sound’, Chief Executive Yang Says

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Opportunity Investment Fund I, LLC Announces a Tender Offer for 100,000 Shares of Common Stock of Piedmont Office Realty Trust, Inc. at $4.60 Per…

by on November 16, 2009

NEWPORT BEACH, Calif., Nov. 16, 2009 (GLOBE NEWSWIRE) — Opportunity Investment Fund I, LLC, a Delaware limited liability company, today announced the launch of a tender offer whereby it seeks to acquire 100,000 shares of common stock (“Shares”) of Piedmont Office Realty Trust, Inc., a Maryland corporation (the “Corporation”), at a purchase price equal to $4.60 per Share (the “Offer Price”), less the amount of any dividends declared or made with respect to the Shares between November 16, 2009 and December 18, 2009 or such other date to which this offer may be extended (the “Expiration Date”), in cash, without interest, upon the terms and subject to the conditions set forth in a Offer to Purchase and a related Letter of Transmittal, as each may be supplemented or amended from time to time (which together constitute the “Offer” and the “Tender Offer Documents”).

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Opportunity Investment Fund I, LLC Announces a Tender Offer for 100,000 Shares of Common Stock of Piedmont Office Realty Trust, Inc. at $4.60 Per…

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CIT Said to Consider Financing From Citigroup, Barclays as Deadline Nears

September 30, 2009

By Pierre Paulden and Kristen Haunss Sept. 30 (Bloomberg) — Citigroup Inc. and Barclays Capital are offering to provide financing to CIT Group Inc., the commercial lender that’s struggling to avert bankruptcy, according to people familiar with the situation. The 101-year-old company’s bondholders are also seeking to provide about $2 billion in loans as a restructuring deadline approaches tomorrow, said the people, who declined to be identified because the negotiations are private. New York-based CIT may choose other options, the people said. CIT said in July it may seek court protection from creditors after Chief Executive Officer Jeffrey Peek failed to win a second government bailout and had to turn to bondholders for $3 billion in rescue financing. The company said in an Aug. 17 regulatory filing that it has to come up with a plan “acceptable” to the majority of a bondholder steering committee that provided it with the emergency cash by Oct. 1. “Some sort of secured financing is a likely component of the company’s restructuring plan, launched in conjunction with a debt exchange,” Brian Charles , a debt analyst at brokerage firm RW Pressprich & Co. in New York, said in a telephone interview. CIT needs to raise $5 billion to $6 billion in financing to be able to make loans, he said. Bonds Rally CIT’s $750 million of 4.25 percent notes due in February climbed 2.5 cents yesterday to 77 cents on the dollar, and have gained 14 cents since the end of August, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The company’s shares rose 53 cents, or 32 percent, to $2.20 in New York Stock Exchange composite trading. Citigroup, Barclays Capital and CIT spokesmen in New York declined to comment. About $9.14 billion of CIT loans and bonds mature through 2010, including $1.15 billion of debt securities by the end of this year, data compiled by Bloomberg show. The restructuring plan for CIT, which had a net loss of $1.62 billion in the second quarter, may include selling business lines or assets, debt-for-equity-swaps and offers to extend debt maturities, CIT said in the Aug. 17 filing. The company may be able to create $6 billion to $9 billion of capital by exchanging $30 billion of unsecured notes through debt swaps, Charles at Pressprich wrote in a Sept. 9 report. CIT bonds rose last week on speculation the lender was in talks with Citigroup and Bank of America Corp. to refinance a $3 billion loan with an $8 billion to $10 billion secured-loan facility, New York-based fixed-income research firm CreditSights Inc. said in a Sept. 27 report. Fed Approval Needed CreditSights said it couldn’t confirm the validity of the speculation and that the Federal Reserve would need to approve any transaction. Danielle Robinson , a spokeswoman for Charlotte, North Carolina-based Bank of America, declined to comment. While the financing would get management “out from under the thumb of the steering committee,” the extra debt doesn’t reduce the risk of an exchange offer or prepackaged bankruptcy, CreditSights analyst Adam Steer said. “The company is going to need to raise equity to appease the regulators and ultimately re-establish its business,” he said in an interview. Bank of America and Citigroup arranged CIT’s five-year, $2.1 billion bank line that needs to be repaid in April 2010, according to Bloomberg data. Barclays, the documentation agent for that loan, was the administration agent on CIT’s $3 billion rescue financing in July. Stock Decline CIT, whose stock has fallen 52 percent this year through yesterday, turned to its bondholders after failing to gain access to the Federal Deposit Insurance Corp.’s program to guarantee debt sales. Newport Beach, California-based Pacific Investment Management Co., Centerbridge Partners LP in New York, Los Angeles-based Oaktree Capital Management LLC, Boston-based hedge fund Baupost Group LLC, Capital Research & Management Co. of Los Angeles, and Silver Point Capital LP in Greenwich, Connecticut, made up the group that initially provided the $3 billion in emergency funding and are part of the steering committee. Under terms of the rescue loan, CIT had to complete a tender offer to exchange $1 billion of floating-rate notes that matured in August. Holders of 59.8 percent of the notes tendered the debt after CIT raised its offer 5 cents to 87.5 cents on the dollar. Bondholders that provided the rescue financing agreed to tender their holdings. To contact the reporters on this story: Pierre Paulden in New York at ppaulden@bloomberg.net ; Kristen Haunss in New York at khaunss@bloomberg.net .

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CIT Posts Ninth Straight Quarterly Loss as Reserves for Bad Loans Triple

August 18, 2009

By Linda Shen and Dakin Campbell Aug. 18 (Bloomberg) — CIT Group Inc. , the commercial lender seeking to avoid bankruptcy, had a ninth straight quarterly loss as reserves for bad loans more than tripled. The net loss narrowed to $1.62 billion, or $4.30 a share, in the second quarter from $2.07 billion, or $7.88, in the same period a year earlier, New York-based CIT said yesterday in a regulatory filing. Nine analysts surveyed by Bloomberg estimated a per-share loss of $1.53. CIT Chief Executive Officer Jeffrey Peek is negotiating with bondholders and considering asset sales to stave off a bankruptcy filing. The lender, which provides financing to almost a million small- and mid-sized businesses, has lost more than $5 billion in the past nine quarters as bad debts soared and the company was cut off from the commercial-paper market, its traditional source of funding. “I don’t think there’s any good news to come in terms of credit quality,” said Sameer Gokhale , an analyst with KBW Inc. in an interview before the earnings were released. Provisions for loan losses in the quarter rose to $588.5 million, more than triple the $152.2 million in the year-ago period. Net charge-offs rose to 2.81 percent, up from 2.41 percent in the first quarter, the company said. The 101-year-old commercial lender said losses drove down the ratio of total capital to risk-weighted assets, a measure of financial strength, to “slightly below” the 13 percent required by regulators. Failure to meet regulatory capital requirements may lead the Federal Reserve or the Federal Deposit Insurance Corp. to take control, according to the filing. CIT fell 5 cents, or 3.6 percent, to $1.36 at 4:15 p.m. in composite trading on the New York Stock Exchange, and rose to $1.39 following release of the results after the close of regular U.S. trading. The shares are down 70 percent this year. FDIC Access CIT became a bank holding company in December to access $2.33 billion from the U.S. bailout program. In July, CIT was denied access to the FDIC’s program to issue government-backed securities. CIT has been unable to sell corporate bonds in more than a year, and sought a rescue from bondholders after failing to win additional government assistance. The lender has $8 billion in funding needs through June of next year, and will be forced to raise it through asset sales or an extension of its maturing debt, according to yesterday’s filing. The company secured a $3 billion loan last month from bondholders led by Pacific Investment Management Co. and Centerbridge Partners LP, and began a tender offer. CIT had drawn down the full loan amount by Aug. 4, the firm said. Bondholder Participation CIT on Aug. 3 lowered the bar for bondholder participation to 58 percent from 90 percent. The lender yesterday said that as of the expiration, 59.81 percent of total notes outstanding were tendered and not withdrawn, “in excess of the minimum condition.” CIT earlier this month raised the tender price of the notes to 87.5 cents on the dollar from 82.5. With the goal met, CIT may start debt-for-equity exchanges, according to a person familiar with the matter. If the offer had failed, CIT’s rescue financing from bondholders wouldn’t have allowed the $3 billion loan to be used to pay the debt, and the lender may have been forced to file for bankruptcy, CIT said in a regulatory filing . There was a risk under the old tender minimum CIT might not have reached the 90 percent needed, and “that could have necessitated a bankruptcy in the near term,” Gokhale said. “This amendment seems to have allowed them to stave off a bankruptcy in the near term.” CIT this month suspended dividends on some series of preferred stock to save about $50 million a quarter, spokesman Curt Ritter said. The lender also adopted a “tax benefits preservation” plan to protect assets that could be lost in the event of a major change in ownership. The company is also operating under a written agreement with the Federal Reserve requiring it to submit proposals on how it will maintain adequate capital and improve risk management. To contact the reporter on this story: Linda Shen in New York at lshen21@bloomberg.net ; Dakin Campbell in San Francisco at dcampbell27@bloomberg.net

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