credit-suisse

European Stocks Climb on China Exports Report U.S. Futures Little Changed

June 9, 2010

By Adria Cimino June 9 (Bloomberg) — European stocks rallied as Reuters reported that China’s exports surged, boosting confidence that the global economy can withstand the effects of the sovereign debt crisis. U.S. futures gained and Asian shares pared losses. STMicroelectronics NV, Europe’s biggest chipmaker, rose 2.8 percent after Texas Instruments Inc., the second-largest U.S. semiconductor maker, increased its forecast. Inditex SA, the world’s biggest clothing retailer, gained 5.4 percent after profit beat analysts’ estimates. Eurasian Natural Resources Corp. led mining shares higher as metals prices rose in London. The Stoxx Europe 600 Index rallied 1 percent to 242.46 at 8:41 a.m. in London, snapping three days of losses. The gauge has slumped 11 percent from this year’s high on April 15 on concern some European nations will struggle to fund their deficits. The decline has left the measure trading at about 14 times the reported earnings of its companies, near the lowest level in 17 months, according to Bloomberg data. “The principal motor for growth remains China,” said Guillaume Chaloin , a fund manager at Meeschaert Asset Management in Paris, which oversees $2.4 billion in assets. “The data today is an additional positive element for the stock market. Investors are waiting for the Beige Book.” China’s Economy China’s exports grew about 50 percent from a year earlier and new loans were 630 billion yuan ($92 billion), Reuters reported today, citing three unidentified people who said a government official unveiled the figures at an investor conference today. The statistics bureau declined to comment. The median estimate of 32 economists surveyed by Bloomberg News was for 600 billion yuan of new loans and a 32 percent increase in overseas shipments. Reuters also reported consumer prices rose 3.1 percent in May, citing the same unidentified people. Economists forecast a 3 percent gain in consumer prices. The Federal Reserve will release its Beige Book, a summary of commentary on economic conditions, later today. U.S. stocks rose yesterday, pushing the Standard & Poor’s 500 Index up 1.1 percent after it swung between gains and losses at least 13 times, as a rally in commodity markets boosted oil and metals producers and overshadowed losses in semiconductor companies. Futures on the S&P 500 gained 0.2 percent today, while the MSCI Asia Pacific Index fell 0.5 percent, paring losses of as much as 1.2 percent. Little Confidence Global investors have little confidence in Europe’s efforts to contain its debt crisis or in European Central Bank President Jean-Claude Trichet , with 73 percent calling a default by Greece likely. Only 23 percent say they expect the region’s almost $1 trillion rescue package to both keep the European monetary union together and prevent a debt default by a government, according to a quarterly poll of investors and analysts who are Bloomberg subscribers. Risks to the global economic outlook have “risen significantly” and policy makers have limited room to provide support to growth, International Monetary Fund Deputy Managing Director Naoyuki Shinohara said in a speech in Singapore today. U.K. Chancellor of the Exchequer George Osborne pledged a “fundamental assessment” of the role of the state and said he will adopt the model used by Canada in the 1990s to slash Britain’s record budget deficit. STMicroelectronics rose 2.8 percent to 6.67 euros. The stock was rated “buy” in new coverage at Jefferies Group Inc. ASML Holding NV, Europe’s largest maker of semiconductor equipment, gained 1.6 percent to 23.32 euros. Texas Instruments Texas Instruments said sales and profit will be at the upper end of earlier targets , buoyed by demand for industrial machinery. Second-quarter profit will be 60 cents to 64 cents on sales of at least $3.45 billion, the company said. That compares with April predictions of 56 cents to 64 cents a share on revenue of at least $3.31 billion. Inditex rallied 5.4 percent to 46.25 euros. The company said its first-quarter profit rose 64 percent to 301 million euros ($359 million). The average estimate of six analysts was 246 million euros, according to data compiled by Bloomberg. ENRC increased 2.4 percent to 986 pence. Vedanta Resources Plc gained 1.6 percent to 2,123 pence. Copper, lead and nickel were among metals rising in London. Outokumpu Oyj jumped 3.1 percent to 12.57 euros. The company said it will invest 104 million euros to increase capability and capacity of stainless steel quarto plate production in Degerfors, Sweden. Cie. de Saint-Gobain SA climbed 2.3 percent to 30.14 euros. The stock was raised to “outperform” from “neutral” at Credit Suisse, which said that Europe’s biggest supplier of building materials was “ideally placed to benefit from a cyclical economic recovery in Europe and the U.S.” Holcim, Wienerberger Holcim Ltd. , the world’s second-largest cement maker advanced 1.5 percent to 72.3 Swiss francs. Wienerberger AG, the world’s biggest brick maker, gained 2.4 percent to 10.82 euros. The stocks were raised to “neutral” from “underperform,” as Credit Suisse upgraded the European building materials industry to “overweight” from “market weight.” Remy Cointreau SA fell 3.3 percent to 41.57 euros. France’s second-largest liquor company said 2009-10 net income was 86.3 million euros. That compares with an average analyst estimate of 87.8 million euros. BP Plc retreated 2.1 percent to 400.25 pence. The oil company said it collected 7,850 barrels of oil from its leaking well in the Gulf of Mexico from midnight to noon yesterday. Misys Plc soared 22 percent to 273.3 pence. The company agreed to sell its majority stake in the Allscripts health-care information business for about $1.3 billion, facilitating an all-stock merger between the unit and Eclipsys Corp. To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net .

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Jobless Wait Record 34.4 Weeks for Work in Sign Faster U.S. Growth Needed

June 4, 2010

By Shobhana Chandra June 4 (Bloomberg) — Unemployed Americans are facing the longest wait on record to find work, a sign faster economic growth is needed to reduce the jobless rate from close to a 26- year high. The average duration of unemployment jumped to 34.4 weeks in May from 33 weeks the prior month and 16.5 weeks in December 2007, when the recession began, a Labor Department report showed today in Washington. The number of unemployed has almost doubled to 15 million since the start of worst slump since the 1930s. “We need faster growth, because without it, we won’t get the jobs,” said Henry Mo , an economist at Credit Suisse in New York. “We are working in that direction, but it’ll take a very long time to resolve the long-term unemployment problem. The Federal Reserve acknowledges that the labor market will take time to fully recover.” Private payrolls rose by 41,000 in May, today’s Labor Department report showed, trailing the 180,000 gain forecast by economists. Including government workers, employment rose by 431,000, boosted by a jump in hiring of temporary census workers. The jobless rate fell to 9.7 percent from 9.9 percent as Americans discouraged by the lack of available jobs dropped out of the labor force. “If that level of private job creation continues, it will not make a substantial dent in the unemployment rate,” Federal Reserve Bank of Atlanta President Dennis Lockhart told reporters today after a speech in Braselton, Georgia. “It is my view we will make progress on unemployment. Perhaps by the end of 2011, we will be below 9 percent.” Jobs Lost The economy would need to grow at an annual rate of 3.5 percent for three years to recoup the 8 million jobs that have been lost since the recession began, according to Credit Suisse’s Mo. The economy expanded at a 3 percent annual pace the first quarter, less than originally estimated. The number of Americans who were out of work for 27 weeks or more rose to 6.76 million in May from 6.72 million in April, today’s report showed. The group reached a record 46 percent of all jobless workers. “This is a very stubborn job market, and competition is stiff,” Labor Secretary Hilda Solis said in a conference call with reporters today. “It’s the very skilled, very trained worker that’s going to get that job.” Long-term unemployment may not show a marked improvement until next year, given the pace of private hiring, said Heidi Shierholz , an economist at the Washington-based Economic Policy Institute. ‘Huge’ Backlog “The hiring just isn’t out there to put the huge backlog of people back to work,” Shierholz said. More jobless benefits, retraining and job-creation programs are needed to reduce unemployment. Increasing spending on such programs may not be easy with the Federal budget deficit forecast at $1.6 trillion in the fiscal year that started Oct. 1. “There’s a clear divide between what’s appropriate economically and what’s possible politically,” she said. “The economic case for the government doing more is absolutely clear, but politically, it seems doing anything sizeable is difficult.” To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net

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RBS Securities Said to Hire Credit Suisse’s Achoa for Debt Capital Markets

June 1, 2010

By Drew Benson June 1 (Bloomberg) — Charles Achoa is joining RBS Securities Inc. as head of Latin America debt capital markets after 13 years at Credit Suisse Group AG, according to a person familiar with the situation. Brazilian-born Achoa is slated to start with the unit of Royal Bank of Scotland Group Plc, Britain’s biggest government- owned bank, in August, and he will be based in Stamford, Connecticut, said the person, who declined to be identified because Achoa hasn’t started his new job. RBS Securities spokesman Michael Geller declined to comment. Credit Suisse spokeswoman Karen Laureano-Rikardsen confirmed that Achoa left the company last month. E-mails and a phone call to Achoa weren’t returned. To contact the reporters on this story: Drew Benson in Buenos Aires at Abenson9@bloomberg.net

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Emerging-Market Equities Advance on Earnings, Paring 9.9% Slump This Month

May 30, 2010

By Shiyin Chen and Saeromi Shin May 31 (Bloomberg) — Emerging-market stocks advanced, trimming the benchmark index’s worst monthly loss since October 2008, on speculation corporate earnings in developing nations will weather Europe’s sovereign-debt crisis. The MSCI Emerging Markets Index rose 0.3 percent to 919.62 as of 10:51 a.m. in Singapore, adding to a three-day, 7.2 percent rally. The measure has dropped 9.9 percent in May. South Korea’s won was set for its biggest monthly drop since February 2009, leading losses among developing-nation currencies, while the cost of insuring Asia-Pacific bonds from non-payment rose after Fitch Ratings stripped Spain of its AAA credit rating. Spain, which has the euro region’s third-largest budget deficit, was cut to AA+ on May 28 at Fitch Ratings, a signal that the European debt crisis may worsen. Still, European Central Bank President Jean-Claude Trichet said today that emerging nations have overcome the global recession better than advanced countries and remain “a source of strength” for growth. “There seems to be a high perception that companies in Asian emerging nations are well positioned to benefit from China’s strong consumption growth,” said Chu Moon Sung, a Seoul-based fund manager at Shinhan BNP Paribas Asset Management Co. in Seoul, which manages $26 billion. “We’re witnessing solid economic figures even amid the ongoing concern over Europe’s sovereign debt crisis.” Telekom Malaysia Bhd. and Genting Bhd. advanced after the Malaysian companies reported higher earnings, adding to evidence that domestic consumption may continue to boost corporate profits. Cheil Worldwide Inc. jumped 5 percent in Seoul after Credit Suisse Group AG upgraded the equities, citing its “strong” operations and the correction in the shares. Debt Crisis The European debt crisis weighed more heavily on emerging- nation currencies, which retreated on concern investors will avoid riskier assets. Developing-nation stock funds posted net outflows of $2.4 billion in the week ended May 26, Morgan Stanley said in a May 28 report, citing data from EPFR Global. South Korea’s won slid 0.5 percent to 1,200.65 per dollar. Bank of Korea Governor Kim Choong Soo proposed that central banks set up a permanent arrangement for foreign currency swaps to help address the type of funding shortages that emerged during the global financial crisis. “If Spain downgrades there’s going to be concern about who’s downgraded next,” said Gerrard Katz , head of foreign- exchange trading at Standard Chartered Plc in Hong Kong. “Interbank lending is quite tight, which is one of the reasons they are asking for those swap agreements. You could take that as kind of a negative outlook on sentiment.” Indonesia’s rupiah dropped 0.3 percent to 9,193 per dollar. The nation’s benchmark Jakarta Composite index climbed 1.9 percent. To contact the reporter on this story: Shiyin Chen in Singapore at schen37@bloomberg.net

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Credit Suisse, UBS, Barclays May Provide Refuge From Europe’s Debt Storm

May 28, 2010

By Elena Logutenkova and Aaron Kirchfeld May 28 (Bloomberg) — Investment banks, shunned by investors during the last credit crisis, may be best placed among Europe’s financial firms to weather the region’s sovereign debt woes. Credit Suisse Group AG and UBS AG of Zurich, along with London-based Barclays Plc, are among banks preferred by analysts at Morgan Stanley, JPMorgan Chase & Co., Sanford C. Bernstein and Keefe Bruyette & Woods Ltd. The three banks, based outside the euro region, are likely to face less risk from the sovereign debt and sputtering economies of southern Europe than commercial banking rivals, while benefiting from currency and debt market swings. And, following the last financial crisis, they’ve been forced to build up capital and cash buffers and scale back risk, said Kian Abouhossein at JPMorgan. “Investment banks should be doing well in the current environment,” said London-based Abouhossein, who has an “overweight” rating on UBS and Credit Suisse. “Sovereign risk positions are well managed at the investment banks. There is more bond portfolio exposure within commercial banks.” Investors have battered the shares of European banks, driving the 52-company Bloomberg Europe Banks and Financial Services Index down 13 percent since Standard & Poor’s cut its rating on Greek debt to junk and lowered Portugal’s rating on April 27. The European Union’s $1 trillion pledge to prop up Greece and other debt-ridden states failed to dispel doubts about the region’s finances. The euro fell to a four-year low on May 17. Higher Risk Banks in Greece, Portugal and Spain are perceived as higher-risk investments as efforts to cut budget deficits threaten to choke off an economic recovery. That may lead to a slowdown in lending, higher delinquencies and an increase in loan provisions, analysts said. Greece’s largest banks reported a slump in first-quarter profit this week after loan losses jumped. The cost of insuring against default by European banks has risen. Credit default swaps on UBS, Credit Suisse, Barclays and Frankfurt-based Deutsche Bank AG rose an average of 84 basis points since the beginning of the year. By comparison, contracts on Banco Espirito Santo SA, Portugal’s biggest bank by market value, rose 395 basis points; swaps on Alpha Bank, Greece’s No. 3 lender, advanced 334 basis points; and contracts on Spain’s Banco Bilbao Vizcaya Argentaria SA jumped by 140 basis points, according to CMA DataVision. A basis point is a hundredth of a percentage point. Tapping Global Growth “If a consequence of current volatility is more onerous fiscal cutbacks that dampen economic growth, then it would play to investment banks versus commercial banks,” said Matthew Clark , an analyst at KBW in London. “If your business is globally diversified and flexible, it means you’re better able to tap into global growth, be it in Asia or the U.S., than if you lend to indebted, saturated markets.” Economic stagnation may keep interest rates lower for longer, leading to shrinking profitability at banks that focus on lending to private and corporate clients. Low rates may also drive more money into securities markets, helping investment banks, Morgan Stanley analysts led by Huw van Steenis said in a note this month. To be sure, a credit crunch like the one that followed the bankruptcy of Lehman Brothers Holdings Inc. in September 2008 would leave no banks unscathed, the analysts said. The securities in question this time are bonds sold by EU governments, rather than the debt backed by U.S. subprime mortgages that led to $57 billion of writedowns at UBS during the last crisis, the worst losses for any bank in Europe. Funding Tremors Banks are feeling tremors in the funding market again. The rate they charge each other for three-month loans in dollars rose this week to 0.538 percent, the highest level since July 6, though still a fraction of the 4.82 percent reached in October 2008. Spanish banks increased longer-term borrowing from the European Central Bank last month to the most in 1 1/2 years, according to data compiled by the Bank of Spain. U.S. fund managers are trimming their holdings of commercial paper issued by European banks, driving up rates and forcing companies to borrow for shorter terms, according to Federal Reserve data. BBVA, Spain’s second-biggest bank, has been unable to renew about $1 billion of commercial paper this month, the Wall Street Journal reported May 26. A BBVA spokesman, who declined to be identified in line with company policy, wouldn’t comment. The Swiss banks, in particular, may be better prepared for a crisis this time after the regulator tightened capital and liquidity requirements and the companies put an increased emphasis on earnings brought by client business, rather than from trading for their own account, analysts said. Higher Capital Ratios UBS, Credit Suisse and Barclays rank in the top five among a group of 50 European banks in the increase in their Tier 1 capital ratios since the end of 2007, data compiled by Bloomberg show. “There’s certainly been more change of business model at investment banks,” said Simon Maughan , an analyst at MF Global in London. “Most of the European investment banks have less inventory than previously. They’ve adapted to the new world order: more client flow, less position taking.” Europe’s banks had $433.56 billion at risk in Greece and Portugal at the end of 2009, according to figures from the Bank for International Settlements in Basel, Switzerland. That compares with more than $530 billion in losses and writedowns the region’s financial firms suffered in the credit crisis. Taking Cover Credit Suisse and UBS didn’t have outstanding cross-border debt from Greece or Portugal in excess of 0.75 percent of total assets at the end of 2009, according to company filings. Deutsche Bank said yesterday it had about 500 million euros ($619 million) in Greek sovereign bonds and loans and “negative” risk in Portugal. Barclays didn’t have foreign holdings to any European country in excess of 1 percent of assets, according to its annual filing. Investment banking shares haven’t done much better than the bank index in the past month: UBS fell 11 percent, Credit Suisse 13 percent and Barclays 17 percent. By contrast, Italy’s Unione di Banche Italiane ScpA and Spain’s Banco Popular Espanol SA each dropped 27 percent on concern the Greek debt crisis will spread. “In this environment we doubt that any banking stock has potential to outperform the market,” Bernstein’s Dirk Hoffmann- Becking said in a note to clients on May 26. “That said, we believe investors are best served to take temporary cover in the investment banks.” To contact the reporters on this story: Elena Logutenkova in Zurich at elogutenkova@bloomberg.net

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Healthscope’s Private-Equity Suitors Raise Takeover Offer to $1.5 Billion

May 19, 2010

By Angus Whitley May 20 (Bloomberg) — Healthscope Ltd.’s private-equity suitors raised their buyout offer by 4.5 percent to A$1.82 billion ($1.5 billion) to try to win support from the directors of Australia’s second-largest hospital owner. The A$5.75 per-share offer is being considered by the board, Healthscope said in a statement today. The bidders were given the chance to revise their May 14 bid after a “careful review” of the proposal, Healthscope said. TPG Inc. and Carlyle Group are said to be bidding for Healthscope, the Australian newspaper reported on May 14, without saying where it got the information. Healthscope shareholders should “take no action,” the company said in its statement. “A further announcement in regard to this matter will be made in due course.” One in 17 Australian babies is born at a Healthscope hospital, according to the company’s 2009 annual report. Healthscope runs the Gribbles pathology chain in Australia, New Zealand, Malaysia, Singapore and Mauritius. It owns or operates 43 hospitals in Australia. Healthscope closed at A$5.18 yesterday in Sydney. Macquarie Group Ltd. and Credit Suisse Group AG are said to be advising the group, the Age reported. To contact the reporter on this story: Angus Whitley in Melbourne at awhitley1@bloomberg.net .

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Cloherty Is Said to Join RBC as U.S. Rate Strategists Play Musical Chairs

May 18, 2010

By Daniel Kruger and Cordell Eddings May 18 (Bloomberg) — The game of musical chairs between strategists in the U.S. government bond market is heating up. Michael Cloherty , the former head of U.S. interest-rate research at Bank of America Corp. who was hired by Societe General in March, is joining Royal Bank of Canada as head of U.S. fixed-income rates strategy, according to people familiar with the situation. Cloherty, who left Societe Generale before his official start date, is taking the position vacated at RBC Capital Markets by Ira Jersey , who left to rejoin Credit Suisse Group AG after working at RBC Capital Markets for 16 months. “The old days of the loyalty attached to a company, given the basic restructuring of the investment banking market, are over,” said David Jones , 71, who worked at Aubrey G. Lanston & Co., one of the original primary dealers, for 30 years, rising to vice chairman. “Companies let go of so many people that it broke virtually all loyalty ties. There’s been a complete breakdown.” The number of primary dealers, which underwrite the U.S. government’s debt and trade directly with the Federal Reserve Bank of New York, has increased to 18 firms from a low of 16 last year as issuance rises. Sales of Treasuries are projected to reach $2.43 trillion in 2010, according to a survey of 10 of the primary dealers. In February, Nomura Holdings Inc. hired George Goncalves as head of U.S. rates strategy after he spent about eight months at Cantor Fitzgerald & Co., where he joined from Morgan Stanley. Nomura, which became a primary dealer in July, also hired Stanley Sun from Bank of America in April, and Aaron Kohli , who left Royal Bank of Scotland Group Plc last month. Credit Suisse Cloherty and Jersey worked at Credit Suisse under Dominic Konstam , who left the firm in March to become director for fixed-income research in New York at Deutsche Bank AG. Carl Lantz has taken over for Konstam as head of interest-rate strategy at Credit Suisse. RBC Capital Markets spokeswoman Kait Conetta and Cloherty couldn’t be reached for comment. Societe Generale spokesman, James Galvin declined to comment. BNP Paribas SA hired Kevin Walter to head the primary dealer’s Treasury trading desk, according to a person familiar with the situation. Walter, who joins from Deutsche Bank AG, replaces Jeffry Feigenwinter , who is going to Morgan Stanley. Walter couldn’t be reached for comment. Megan Stinson, a spokeswoman for BNP Paribas, said the firm had no comment. Jennifer Sala , a Morgan Stanley spokeswoman in New York, confirmed that Feigenwinter was joining the primary dealer. To contact the reporters on this story: Cordell Eddings in New York at ceddings@bloomberg.net ; Daniel Kruger in New York at dkruger1@bloomberg.net

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Euro’s Drop Accelerates to Lowest Level in Four Years on Austerity Concern

May 18, 2010

By Oliver Biggadike and Ben Levisohn May 18 (Bloomberg) — The euro touched its lowest level in four years against the dollar on concern nations with the highest deficits will struggle to meet the European Union’s austerity requirements. The euro’s drop accelerated as speculation increased that European financial institutions are worse than anticipated after Germany said it will ban naked short-selling and naked credit- default swaps of euro-area government bonds and the Bank of Italy allowed lenders to exclude losses on government bonds. Sweden’s krona, South Africa’s rand, Australia’s dollar and Norway’s krone were the only major currencies to fall versus the euro as a slide in stocks and commodities damped demand for riskier assets. “Things may be a lot worse than they appear,” said Lane Newman , director of foreign exchange at ING Groep NV in New York. “The market for the most part doesn’t need reasons to be negative. There’s been a broad change in what the market has been doing, catalyzed by fact that the Europeans have been unable to comfort international investors. Until the situation is settled, the market will be a seller of all things that can be classified as risk.” The euro fell as much as 1.9 percent to $1.2162, the lowest level since April 17, 2006, before trading at $1.2208 at 3:15 p.m. in New York. It fell 1.6 percent to 112.79 yen, the lowest level since May 6, from 114.77. The dollar traded at 92.44 yen from 92.59. Germany’s BaFin financial-services regulator said that it will introduce a temporary ban on naked short-selling and naked credit-default swaps of euro-area government bonds starting at midnight. The ban will also apply to naked short-selling in shares of 10 banks and insurers including Allianz SE and Deutsche Bank AG, BaFin said today in an e-mailed statement. ‘More Fiscal Space’ “It’s being taken as a sign they have to do something to protect their markets,” said Amelia Bourdeau , a UBS AG currency strategist in Stamford, Connecticut. “The naked short ban on bonds and stocks seemed to be a catalyst.” The Bank of Italy said in a statement today that Italian banks are allowed to opt for new rules aiming at “neutralizing” the effect of capital losses and capital gains on regulatory capital from holding European government bonds. The euro gained earlier as EU Economic and Monetary Affairs Commissioner Olli Rehn said only countries such as Greece, Portugal and Spain that have high deficits would have to make additional deficit cuts. Budgets in countries with “more fiscal space” would be untouched to preserve growth, he said. “Countries with no or little fiscal space will need to frontload or accelerate measures,” Rehn said in Brussels after a two-day meeting of European finance ministers. “Others that have more fiscal space should maintain their less-restrictive fiscal stances for the sake of growth in Europe as a whole.” ‘Unstoppable’ Fall Another euro-region financial rescue package may be “inevitable” and the euro’s “unstoppable” fall could send it to parity with the U.S. dollar, former Bank of England policy maker David G. Blanchflower said today in an interview on Bloomberg Television. Blanchflower is a contributor to Bloomberg News. Euro area policy makers unveiled last week an unprecedented loan package of nearly $1 trillion and a program of bond purchases to prevent defaults by countries including Greece, Spain and Portugal. Spain announced on May 14 the biggest budget cuts in at least 30 years and Portugal followed a day later, pledging to slash wages and raise taxes. Italy said May 16 it may make an extraordinary reduction in spending, and France is scheduled to submit spending plans this week. ‘Deeper Crisis’ The euro may fall to $1.16 during the next three months as the sovereign-debt crisis forces the European Central Bank to keep borrowing costs low, according to Credit Suisse Group AG. The last time the euro traded at that level was in November 2003, according to Bloomberg data. Credit Suisse previously forecast that the 16-nation currency would trade at $1.29. “The euro is now a low-yielding currency suffering a deeper crisis of confidence than we expected, with little near- term outlook for support from interest-rate policy,” Credit Suisse strategists including Ray Farris in London and Daniel Katzive in New York wrote in a note to clients. “We think that euro-dollar will need to trade to obviously cheap levels to generate sustained buying interest in the near term.” Europe’s currency dropped 8.9 percent this year against its developed-world counterparts, according to Bloomberg Correlation Weighted Indices. Norway’s krone fell as much as 2.5 percent to 6.3703 per dollar and South Africa’s rand fell 1.1 percent to 12.3880 yen as a decline in oil and commodities encouraged investors to decrease carry trades, in which they buy higher-yielding assets with cash borrowed in nations with low interest rates. The benchmark interest rate of 0.1 percent in Japan has made the yen popular for funding such transactions. Norway is the world’s sixth largest oil exporter. Gold and platinum account for almost a quarter of South Africa’s export earnings. To contact the reporters on this story: Oliver Biggadike in New York at obiggadike@bloomberg.net ; Ben Levisohn in New York at blevisohn@bloomberg.net .

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Yuan Forwards Weaken as China May Delay Appreciation on Europe Debt Crisis

May 17, 2010

By Patricia Lui May 17 (Bloomberg) — Yuan forwards dropped the most in a week on speculation China will delay appreciation of its currency as Europe’s debt crisis threatens to damp global demand. Non-deliverable contracts on the currency fell for the first time in four days even as Singapore and France joined the U.S. in calling for an end to the yuan’s 22-month peg against the dollar. Benchmark stock indexes fell across Asia and most of the region’s emerging-market currencies weakened. “China has room to appreciate its currency,” said Dong Tao , a Hong Kong-based economist at Credit Suisse Group AG. “But at the same time, China is also concerned about the chaos in Europe. This may result in some delay to the process of allowing a yuan appreciation.” The yuan’s 12-month non-deliverable forwards fell 0.5 percent to 6.6988 per dollar as of 11:04 a.m. in Hong Kong, reflecting bets the currency will advance 1.9 percent from the spot rate of 6.8281, according to data compiled by Bloomberg. The contracts last week strengthened 0.6 percent, the most this year, amid speculation the second U.S.-China Strategic and Economic Dialogue in Beijing on May 24-25 will act as a catalyst for the peg to be relaxed. “It is in China’s interest that they move to let their exchange rate start to gradually reflect market forces,” U.S. Treasury Secretary Timothy F. Geithner said in an interview on Bloomberg Television on May 15. “I’m confident they’re going to do that.” Global Pressure A revaluation of the yuan would improve economic conditions in China, finance ministers from France and Singapore said in separate interviews with CNN over the weekend. Christine Lagarde of France it is in China’s “own self-interest to re- appreciate.” Singapore’s Tharman Shanmugaratnam said it would be “sensible” to gradually appreciate the yuan to contain inflation and raise the standard of living in China. “What Geithner or Singapore says about the yuan doesn’t matter to China,” Tao of Credit Suisse said. “The last thing policy makers in China will want is to be perceived by the domestic audience as being pressured to strengthen the currency, which could hurt local exporters.” Geithner, who last month delayed a report that may have branded China a currency manipulator, will attend the dialogue in Beijing. Premier Wen Jiabao has pegged the exchange rate against the dollar at about 6.83 since July 2008 to help exporters cope with a global recession. The U.S. and European economies have since returned to growth, and China’s exports rose 30.5 percent from a year earlier in April, a fifth straight gain. Inflation Risk “We look for 3 to 5 percent appreciation in the yuan by year-end, all to take place in the second half of the year,” Credit Suisse’s Tao said. China will allow its currency to strengthen by June 30 to curb inflation, while avoiding a one-time jump in value that might hurt exports, a Bloomberg survey of analysts last month showed. Consumer prices rose 2.8 percent in April, the most in 18 months, and property values climbed at a record pace, the government reported on May 11. Inter-bank money-market rates rose after the government failed to draw enough bids at a May 14 treasury bill sale for the second time in a month on speculation banks, having had their reserve ratios raised three times this year, were favoring the higher returns offered by longer-dated securities. The seven-day repurchase rate, which measures interbank funding availability, rose nine basis points to a two-month high of 1.79 percent in Beijing, according to prices by China Interbank Trade system. The finance ministry on May 14 sold 17.4 billion yuan ($2.5 billion) of the 20 billion yuan of 273-day securities on offer at an average yield of 1.72 percent, compared with 1.54 percent at the previous sale, according to data compiled by Bloomberg. For Related News and Information: Top currency news: TOP FRX News on China’s currency: TNI CHINA FRX BN Stories on China economy: TNI CHINA ECO BN

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Andrew Cumo Investigating Whether Banks Duped Rating Agencies

May 12, 2010

NEW YORK — The New York attorney general has launched an investigation into eight banks to determine whether they misled ratings agencies about mortgage securities, according to a person familiar with the investigation. Attorney General Andrew Cuomo is trying to figure out if banks provided the agencies with false information in order to get better ratings on the risky securities, said the person, who spoke on condition of anonymity because the investigation has not been made public. Cuomo’s office is investigating Goldman Sachs Group Inc., Morgan Stanley, UBS AG, Citigroup Inc., Credit Suisse, Deutsche Bank, Credit Agricole and Merrill Lynch, which is now part of Bank of America Corp. Spokesmen from the banks were immediately available to comment. During the housing boom, Wall Street banks often packaged pools of risky subprime mortgages together. The securities were then typically given top-notch ratings and investors purchased them, in part, because of their high ratings. The ratings, given out by Standard & Poor’s, Moody’s Investors Service and Fitch Ratings, are used as a guide for investors to judge how risky an investment might be. As the housing market collapsed and more customers fell behind on repaying their mortgages, the securities began to fail. The securities have been widely blamed for exacerbating the credit crisis and costing investors and the banks themselves billions of dollars in losses. The ratings agencies have come under fire for having given such high ratings to securities that soured. The attorney general’s probe comes as federal regulators are investigating whether some of the banks misled investors when marketing and selling the securities and other investments that were tied to mortgages. The Securities and Exchange Commission charged Goldman Sachs with fraud over its packaging of mortgage securities. Goldman is facing a separate criminal investigation into the same securities. Goldman has denied the charges and plans to defend itself. Earlier this week it was reported that federal prosecutors are investigating whether Morgan Stanley misled investors about its role in a pair of $200 million derivatives whose performance was tied to mortgage-backed securities. The increased scrutiny over how banks managed, packaged and portrayed mortgage securities and derivatives comes as Congress discusses a major overhaul of financial regulations. Politicians have said an overhaul would add more transparency to investments and trading.

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Andrew Cumo Investigating Whether Banks Duped Rating Agencies

May 12, 2010

NEW YORK — The New York attorney general has launched an investigation into eight banks to determine whether they misled ratings agencies about mortgage securities, according to a person familiar with the investigation. Attorney General Andrew Cuomo is trying to figure out if banks provided the agencies with false information in order to get better ratings on the risky securities, said the person, who spoke on condition of anonymity because the investigation has not been made public. Cuomo’s office is investigating Goldman Sachs Group Inc., Morgan Stanley, UBS AG, Citigroup Inc., Credit Suisse, Deutsche Bank, Credit Agricole and Merrill Lynch, which is now part of Bank of America Corp. Spokesmen from the banks were immediately available to comment. During the housing boom, Wall Street banks often packaged pools of risky subprime mortgages together. The securities were then typically given top-notch ratings and investors purchased them, in part, because of their high ratings. The ratings, given out by Standard & Poor’s, Moody’s Investors Service and Fitch Ratings, are used as a guide for investors to judge how risky an investment might be. As the housing market collapsed and more customers fell behind on repaying their mortgages, the securities began to fail. The securities have been widely blamed for exacerbating the credit crisis and costing investors and the banks themselves billions of dollars in losses. The ratings agencies have come under fire for having given such high ratings to securities that soured. The attorney general’s probe comes as federal regulators are investigating whether some of the banks misled investors when marketing and selling the securities and other investments that were tied to mortgages. The Securities and Exchange Commission charged Goldman Sachs with fraud over its packaging of mortgage securities. Goldman is facing a separate criminal investigation into the same securities. Goldman has denied the charges and plans to defend itself. Earlier this week it was reported that federal prosecutors are investigating whether Morgan Stanley misled investors about its role in a pair of $200 million derivatives whose performance was tied to mortgage-backed securities. The increased scrutiny over how banks managed, packaged and portrayed mortgage securities and derivatives comes as Congress discusses a major overhaul of financial regulations. Politicians have said an overhaul would add more transparency to investments and trading.

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Telefonica Makes $7.3 Billion Unsolicited Bid for Control of Brazil’s Vivo

May 11, 2010

By Crayton Harrison     May 11 (Bloomberg) — Telefonica SA , Europe’s second-largest phone company, made an unsolicited bid to buy out its Portuguese partner in a venture that controls Vivo Participacoes SA, Brazil’s top wireless carrier, for 5.7 billion euros ($7.3 billion).     The offer, rebuffed by Portugal Telecom SGPS SA, values Vivo Participacoes at about 140 percent higher than its market capitalization. Portugal Telecom’s board unanimously rejected the bid because the Brazilian carrier is core to its strategy, the Lisbon-based phone company said on its website.     The bid fueled speculation the two will battle for control of the leading carrier in South America’s biggest mobile-phone market, where the number of subscribers is projected to grow 11 percent this year. The offer builds on Telefonica’s strategy of countering slowing growth in Europe through acquisitions in Latin America, where the company has spent more than $50 billion since the 1990s. “It’s the only shot Portugal Telecom has at long-term growth,” said Peter Lyons , an analyst at Oscar Gruss & Son Inc. in New York. “If Telefonica does come back with another offer, it’s going to have to be something with shock value to create a rift between the shareholders and the management.” Telefonica fell as much as 3.7 percent to 16.06 euros on a dividend-adjusted basis, and traded at 16.18 euros as of 9:04 a.m. in Madrid. Portugal Telecom soared 17 percent to 8.30 euros in Lisbon. 32 Times Earnings An offer of 8 billion euros might be enough to persuade Portugal Telecom’s investors to push for a sale, said Lyons, who advises holding on to Vivo shares. Telefonica could also seek other acquisitions in Brazil’s mobile market such as TIM Participacoes SA, the third-largest wireless carrier behind Vivo and America Movil SAB, Lyons said. A spokesman for Vivo in Sao Paulo, who asked not to be named because of internal policy, declined to comment. The offer, expiring on June 6, values Vivo at almost 32 times projected earnings for 2010, according to Credit Suisse Group AG analyst Andrew Campbell . That’s in line with multiples at which shares of Latin American telecommunications companies trade, according to data compiled by Bloomberg. Spain’s Telefonica offered to buy half of Brasilcel NV , the unlisted joint venture with Portugal Telecom that owns about 60 percent of Vivo. The Brazilian carrier had 30 percent of the nation’s 179 million wireless subscriptions at the end of March, according to Anatel, the country’s phone regulator. Carlos Slim Telefonica said if Portugal Telecom accepted its offer, it would also buy outstanding common shares of Vivo for 600 million euros. That would value those shares at about 86 reais ($49) a share, or double their closing price of 43.50 reais in Sao Paulo trading yesterday, according to estimates at Credit Suisse. Vivo’s preferred shares , which are not included in Telefonica’s offer for outstanding shares and have limited voting rights, rose 5.6 percent to 45.50 reais yesterday. Telefonica’s offer follows America Movil’s $24.5 billion plan, announced in January, to take over Telmex Internacional SAB to combine its wireless and land-line operations in Brazil. America Movil and Telmex Internacional are both controlled by billionaire Carlos Slim. Portugal Telecom has counted on Brazil to spur revenue as growth in Europe has slowed and competition increased at home. The company’s Brazilian sales increased 4.1 percent to 3.23 billion euros last year, while revenue from Portugal declined 1.9 percent. Telefonica lost out to France’s Vivendi SA in a takeover battle last year for land-line phone company GVT (Holding) SA. The Madrid-based company controls Telecomunicacoes de Sao Paulo SA, which offers home-phone and Internet service in the state of Sao Paulo. Combining the operations of that company with Vivo could save 3 billion euros a year in costs, Credit Suisse analyst Andrew Campbell said last month in a note to clients. Brazil’s wireless market will expand 11 percent to 193 million subscribers this year, down from 15 percent growth in 2009, according to a Banco Santander SA research note last month. To contact the reporter on this story: Crayton Harrison in Mexico City at tharrison5@bloomberg.net

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Telefonica Makes $7.3 Billion Hostile Bid for Portugal Telecom Vivo Stake

May 10, 2010

By Crayton Harrison     May 11 (Bloomberg) — Telefonica SA , Europe’s second-largest phone company, made an unsolicited bid to buy out its Portuguese partner for 5.7 billion euros ($7.3 billion) in a venture that controls Vivo Participacoes SA, Brazil’s top wireless carrier.     The offer, rebuffed by Portugal Telecom SGPS SA, values Vivo Participacoes at about 140 percent higher than its market capitalization. Portugal Telecom’s board unanimously rejected the bid because the Brazilian carrier is core to its strategy, the Lisbon-based phone company said on its website.     The bid fueled speculation the two will battle for control of the leading carrier in South America’s biggest mobile-phone market, where the number of subscribers is projected to grow 11 percent this year. The offer builds on Telefonica’s strategy of countering slowing growth in Europe through acquisitions in Latin America, where the company has spent more than $50 billion since the 1990s. “It’s the only shot Portugal Telecom has at long-term growth,” said Peter Lyons , an analyst at Oscar Gruss & Son Inc. in New York. “If Telefonica does come back with another offer, it’s going to have to be something with shock value to create a rift between the shareholders and the management.” An offer of 8 billion euros might be enough to persuade Portugal Telecom’s investors to push for a sale, said Lyons, who advises holding on to Vivo shares. Telefonica could also seek other acquisitions in Brazil’s mobile market such as TIM Participacoes SA, the third-largest wireless carrier behind Vivo and America Movil SAB, Lyons said. 32 Times Earnings A spokesman for Vivo in Sao Paulo, who asked not to be named because of internal policy, declined to comment. The offer, expiring on June 6, values Vivo at almost 32 times projected earnings for 2010, according to Credit Suisse Group AG analyst Andrew Campbell . That’s in line with multiples at which shares of Latin American telecommunications companies trade, according to data compiled by Bloomberg. Spain’s Telefonica offered to buy half of Brasilcel NV , the unlisted joint venture with Portugal Telecom that owns about 60 percent of Vivo. The Brazilian carrier had 30 percent of the nation’s 179 million wireless subscriptions at the end of March, according to Anatel, the country’s phone regulator. Telefonica said if Portugal Telecom accepted its offer, it would also buy outstanding common shares of Vivo for 600 million euros. That would value those shares at about 86 reais ($49) a share, or double their closing price of 43.50 reais in Sao Paulo trading yesterday, according to estimates at Credit Suisse. Carlos Slim Vivo’s preferred shares , which are not included in Telefonica’s offer for outstanding shares and have limited voting rights, rose 5.6 percent to 45.50 reais yesterday. Telefonica’s offer follows America Movil’s $24.5 billion plan, announced in January, to take over Telmex Internacional SAB to combine its wireless and land-line operations in Brazil. America Movil and Telmex Internacional are both controlled by billionaire Carlos Slim. Portugal Telecom has counted on Brazil to spur revenue as growth in Europe has slowed and competition increased at home. The company’s Brazilian sales increased 4.1 percent to 3.23 billion euros last year, while revenue from Portugal declined 1.9 percent. Telefonica lost out to France’s Vivendi SA in a takeover battle last year for land-line phone company GVT (Holding) SA. The Madrid-based company controls Telecomunicacoes de Sao Paulo SA, which offers home-phone and Internet service in the state of Sao Paulo. Combining the operations of that company with Vivo could save 3 billion euros a year in costs, Credit Suisse analyst Andrew Campbell said last month in a note to clients. Brazil’s wireless market will expand 11 percent to 193 million subscribers this year, down from 15 percent growth in 2009, according to a Banco Santander SA research note last month. To contact the reporter on this story: Crayton Harrison in Mexico City at tharrison5@bloomberg.net

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Video: Parker Expects ECB to Buy Government Bonds in Next Week

May 7, 2010

May 7 (Bloomberg) — Bob Parker, a senior adviser at Credit Suisse, talks about the prospect of the European Central Bank buying government bonds to try to prevent contagion from the Greek debt crisis. Speaking with Bloomberg’s Andrea Catherwood in London, Parker also discusses the U.K. election and its impact on financial markets.

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Warburg, Silver Lake to Buy Interactive Data From Pearson for $3.4 Billion

May 4, 2010

By Kristen Schweizer May 4 (Bloomberg) — Warburg Pincus LLC and Silver Lake agreed to buy Pearson Plc ’s Interactive Data Corp., a provider of financial market data and services, for $3.4 billion, in the biggest private-equity deal this year. IDC shareholders will get $33.86 for each share they own, London-based Pearson said in a statement today. Pearson will receive about $2 billion before tax for its 61 percent IDC stake, it said. The price is 32.9 percent more than IDC’s closing share price on Jan. 14, 2010, the last trading day before Pearson said it was seeking alternatives for the unit. “The price is better than expected, which is encouraging and this signals re-entry of private equity into deal flow and the media sector,” said Alex DeGroote , an analyst at Panmure Gordon & Co. in London. The deal had been estimated at about $3.1 billion, he said. Buyouts are picking up after U.S. stocks rose 30 percent the past year and a rally in credit markets fueled lending. Pearson, which owns the Financial Times newspaper and Penguin Books, said it will use proceeds from the IDC sale to expand through bolt-on acquisitions, with a particular focus on technology and education assets. The company gets 65 percent of its revenue from education businesses. “Pearson and Interactive Data have extensive growth opportunities and ambitious expansion plans, and we believe this transaction will give both companies greater focus and opportunity to invest more in their strong market positions,” Pearson Chief Executive Officer Marjorie Scardino said in the statement. Better Than Expected Pearson shares rose as much as 1.7 percent and were trading 1.6 percent lower at 1,034 pence as of 11:14 a.m. in London. Interactive Data, based in Bedford, Massachusetts, fell 1.4 percent to $32.99 a share in New York trading yesterday, valuing the company at $3.1 billion. Pearson’s indication it will buy more assets with the proceeds rather than give money back to shareholders may mean the company has some deals already lined up, DeGroote said. “As a rule of thumb you want to always sell on good news,” he said. “Secondly, you’d want to take your money out now because you don’t know what Pearson will buy and at what price.” Silver Lake and Warburg Pincus will fund the acquisition with equity investments and debt to be provided by Bank of America Merrill Lynch, Barclays Bank Plc, Credit Suisse Group AG, and UBS AG , according to the statement. The transaction is expected to be closed by the end of the third quarter. IDC’s Performance Interactive Data contributed 484 million pounds ($735 million) in revenue and 148 million pounds in operating profit to Pearson last year, the U.K. company said today. After tax and minority interests, IDC’s adjusted earnings were 55 million pounds, or 6.8 pence a share. “This transaction enables Interactive Data’s shareholders to realize substantial value and provides the company with partners who are committed to supporting it global expansion,” said Rona Fairhead , IDC’s chairman. For Related News and Information: Link to Company News: PSON LN CN Top Stories on media and technology: TTOP Pearson comparative returns: PSON LN COMP Pearson financial analysis: PSON LN FA Pearson analyst estimates: PSON LN EEO

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UBS to Hire `Hundreds’ at Securities Unit as Profit Hits Three-Year High

May 4, 2010

By Elena Logutenkova May 4 (Bloomberg) — UBS AG , Switzerland’s biggest bank, plans to hire “a handful of hundreds” of people in coming quarters to expand the investment bank after the unit boosted earnings to the highest level in almost three years. “We still want to increase our sales and distribution force, both in fixed income and to a lesser degree in equities,” Chief Financial Officer John Cryan said in a Bloomberg TV interview today. In corporate finance, the bank plans to “selectively hire into certain key sectors.” UBS hired a net 150 people at the investment bank in the first quarter and may add similar numbers for “another couple of quarters,” Cryan said. Credit Suisse Group AG , its largest Swiss competitor, said in March it plans to hire about 130 sales people for the securities business this year. UBS reported earlier today a jump in debt trading revenue after rebuilding the unit and hiring more than 350 people in the past year. Net income swung to 2.2 billion Swiss francs ($2 billion) in the first quarter from a loss of 1.98 billion francs a year earlier. The Zurich-based bank may be at a disadvantage to international competitors in its hiring efforts from the Swiss government’s proposal to levy corporate tax on bankers’ pay that exceeds 2 million francs, Cryan said. “Walking the tightrope between meeting the market price for the right people to manage the affairs of the bank and regulatory requirements and impositions on us from governments is a difficult task,” he said. “And it’s one that we’d feel more comfortable doing if there were a general rule rather than one that applied in different territories.” The bank plans to book a charge of about 300 million francs in the second quarter after the U.K. introduced a one-time 50 percent tax on bonuses of more than 25,000 pounds ($37,910), to be paid by the banks. To contact the reporters on this story: Elena Logutenkova in Zurich at elogutenkova@bloomberg.net

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UBS to Hire `Hundreds’ at Securities Unit as Profit Hits Three-Year High

May 4, 2010

By Elena Logutenkova May 4 (Bloomberg) — UBS AG , Switzerland’s biggest bank, plans to hire “a handful of hundreds” of people in coming quarters to expand the investment bank after the unit boosted earnings to the highest level in almost three years. “We still want to increase our sales and distribution force, both in fixed income and to a lesser degree in equities,” Chief Financial Officer John Cryan said in a Bloomberg TV interview today. In corporate finance, the bank plans to “selectively hire into certain key sectors.” UBS hired a net 150 people at the investment bank in the first quarter and may add similar numbers for “another couple of quarters,” Cryan said. Credit Suisse Group AG , its largest Swiss competitor, said in March it plans to hire about 130 sales people for the securities business this year. UBS reported earlier today a jump in debt trading revenue after rebuilding the unit and hiring more than 350 people in the past year. Net income swung to 2.2 billion Swiss francs ($2 billion) in the first quarter from a loss of 1.98 billion francs a year earlier. The Zurich-based bank may be at a disadvantage to international competitors in its hiring efforts from the Swiss government’s proposal to levy corporate tax on bankers’ pay that exceeds 2 million francs, Cryan said. “Walking the tightrope between meeting the market price for the right people to manage the affairs of the bank and regulatory requirements and impositions on us from governments is a difficult task,” he said. “And it’s one that we’d feel more comfortable doing if there were a general rule rather than one that applied in different territories.” The bank plans to book a charge of about 300 million francs in the second quarter after the U.K. introduced a one-time 50 percent tax on bonuses of more than 25,000 pounds ($37,910), to be paid by the banks. To contact the reporters on this story: Elena Logutenkova in Zurich at elogutenkova@bloomberg.net

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Help-Wanted Ads on Internet Jump to Highest Level Since 2008 as U.S. Mends

May 3, 2010

By Timothy R. Homan May 3 (Bloomberg) — The number of jobs advertised on the Internet in April jumped to the highest level since November 2008, a sign the labor market is on the mend. There were 4.15 million help-wanted ads posted online, up 222,700, or 5.7 percent, from 3.93 million in March, according to figures from the Conference Board, a New York-based private research group. All four regions of the U.S. and all 22 industry categories registered gains last month. Companies are boosting staff to meet rising demand as consumers and businesses spend more. Economists surveyed by Bloomberg News anticipate the government’s report May 7 will show payrolls increased again last month in part due to temporary hiring by the federal government to conduct the 2010 census, and the unemployment rate held at 9.7 percent. “Employers are looking to restock labor as the economic recovery broadens out,” Jonathan Basile , an economist at Credit Suisse in New York, said today in a note to clients after the report. “This isn’t just a temporary Census workers story.” The gain in ads last month was led by the South, with Texas and Georgia showing the biggest increases in demand for workers in the region. New York had the biggest advance among all states by adding 23,600 ads, while Florida was the only state with a month-over-month decrease. Management positions showed the biggest jump in openings among industries, followed by workers in computer and mathematical science, the report showed. To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

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Asian Stocks Decline on Slumping Chip Prices, CSL Downgrade; Elpida Drops

April 26, 2010

By Jonathan Burgos April 27 (Bloomberg) — Asian stocks declined, led by technology and health-care companies, as memory-chip prices fell and Credit Suisse Group AG downgraded blood-products maker CSL Ltd. Elpida Memory Inc. , Japan’s biggest maker of computer memory, dropped 2.4 percent in Tokyo as memory-chip prices declined to a five-week low. CSL , the world’s second-biggest maker of treatments made from blood, slipped 4.6 percent in Sydney. PetroChina Co., China’s largest oil producer, lost 1.6 percent in Shanghai on lower oil prices. The MSCI Asia Pacific Index lost 0.4 percent to 126.74 as of 11:19 a.m. in Tokyo, with three stocks falling for each one that rose. The gauge rose 1.6 percent yesterday, its biggest gain since March 17. Stocks in the index trade at 16.1 times estimated earnings, compared with 15.2 times for the Standard & Poor’s 500 Index, according to data compiled by Bloomberg. “Valuations are still expensive,” said Michiya Tomita, a Hong Kong-based fund manager for Mitsubishi UFJ Management Co., which holds $65 billion in assets. “We need to see more earnings improvement.” China’s Shanghai Composite Index slumped 1.4 percent on concern government measures to cool the property market will curb demand for raw materials and damp consumer spending. Hong Kong’s Hang Seng Index dropped 1.1 percent. Japan’s Nikkei 225 Stock Average declined 0.4 percent, while Australia’s S&P/ASX 200 Index increased 0.2 percent. New Zealand’s NZX 50 Index lost 0.3 percent. Futures on the S&P 500 were little changed today. The index fell 0.4 percent yesterday in New York as concern that proposed legislation will hurt banks overshadowed improving earnings at Caterpillar Inc. and Whirlpool Corp. After markets closed, U.S. Senate Republicans blocked Democrats from advancing their plan to overhaul Wall Street regulation. Japan’s Elpida lost 2.4 percent to 2,022 yen, while Hynix Semiconductor Inc. slumped 3 percent to 27,650 won in Seoul. The spot price for the benchmark dynamic random access memory chip sank 0.7 percent yesterday to the lowest level since March 22, according to Dramexchange Technology Inc. CSL fell 4.6 percent to A$32.38 after Credit Suisse cut the stock to “neutral” from “outperform,” citing the impact from U.S. health-care reforms. CSL tumbled 7.3 percent on April 23 when it last traded, after larger rival Baxter International Inc. cut its 2010 earnings forecast. Oil producers fell after crude prices in New York lost 0.4 percent to $83.85 in after-hours trading, extending yesterday’s 1.1 percent drop. PetroChina lost 1.6 percent to 12.01 yuan in Shanghai, while Inpex Corp. , Japan’s largest oil explorer, sank 1.9 percent to 686,000 yen. To contact the reporter for this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net

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Deutsche Bank May Struggle to Reach Earnings Targets Amid New Regulation

April 26, 2010

By Aaron Kirchfeld April 26 (Bloomberg) — Deutsche Bank AG Chief Executive Officer Josef Ackermann is struggling to convince investors he will meet his pledge to double pretax profit by 2011, and planned banking regulations may make his task even harder. Germany’s largest bank is likely to reach 7.6 billion euros ($10.1 billion) in pretax profit next year, based on the median estimate of 20 analysts surveyed by Bloomberg. That would fall short of Deutsche Bank’s December forecast that pretax profit from its operating units will rise to 10 billion euros from 5 billion euros in 2009. Calls for stricter regulation have gained momentum since the U.S. Securities and Exchange Commission announced a fraud suit tied to collateralized debt obligations against Goldman Sachs Group Inc. on April 16. New rules may cut Deutsche Bank’s earnings by more than at rivals UBS AG and Credit Suisse Group AG because of a greater dependence on fixed-income trading and larger assets, according to estimates from Citigroup Inc. “Regulation is the sword of Damocles hanging over Deutsche Bank’s head,” said Olaf Kayser , an analyst at Landesbank Baden- Wuerttemberg in Mainz, Germany, who has a “buy” rating on the stock. “New rules such as on over-the-counter derivatives, proprietary trading and capital requirements could have a huge impact on revenue and margins.” Deutsche Bank spokesman Michael Golden declined to comment. CEO Ackermann, who has been at the forefront of the banking industry calling for the gradual implementation of tighter regulation, said on March 24 that he’s optimistic the bank can meet regulatory requirements and reiterated the 2011 targets. Tighter Regulation Governments have pushed for more oversight of derivatives, curbs on riskier activities such as proprietary trading and higher capital requirements to avoid a repeat of the credit crisis. New rules and a planned levy to finance bank rescues may cut Deutsche Bank’s net income by 13 percent, Citigroup analyst Kinner Lakhani wrote in a report on April 20. That compares with an estimated 9 percent at Credit Suisse and 6 percent at UBS. Concern the SEC’s suit against Goldman Sachs may lead to further probes of CDOs and stricter rules for banks sent Deutsche Bank shares to a two-day decline of almost 10 percent on April 16 and April 19. Goldman Sachs denies any wrongdoing. As many as 20 banks arranged $418 billion of CDOs in 2007, when the U.S. housing market began to collapse, UBS analysts said, citing data that ranked Deutsche Bank third. The firm was No. 11 in a Credit Suisse “litigation risk” list after offering $5.25 billion of CDOs from 2005 to 2008, similar to the one that drew the suit against Goldman Sachs. Deutsche Bank wasn’t on the list for 2007 only, according to Credit Suisse. Basel Committee The Basel Committee on Banking Supervision, which sets minimum standards for banks in 27 countries and territories, in December proposed lenders increase the number and quality of capital buffers, boost liquidity reserves and adhere to stricter leverage ratios. The group asked banks to quantify the effect the proposals will have on them by the end of April and will formulate final rules by the end of 2010. Deutsche Bank, in an April 16 response to the proposals, said increases in capital and liquidity requirements would require banks to “vastly increase common equity in an extremely short period,” which may have a “significant impact” on lending, businesses, economic growth and employment. When the firm releases first-quarter 2010 results on April 27, investors will be looking for clues if Ackermann is keeping his pledge to boost revenue faster than costs. Deutsche Bank may report pretax profit of 2.02 billion euros for the period, buoyed by fixed-income sales, after Bank of America Corp. , JPMorgan Chase & Co. and Goldman Sachs posted record revenue from debt trading, according to eight analysts’ estimates. ‘Important Step’ “In order for Deutsche Bank to show progress, it needs to show lower cost growth than revenue growth,” Patrick Lemmens , who helps manage about $13 billion including Deutsche Bank shares at Robeco Group in Amsterdam, said by phone April 21. “First-quarter numbers will be an important step to reaching the 2011 targets.” Deutsche Bank advanced 1.7 percent to 54.68 euros as of 12:59 p.m. in Frankfurt, bringing the company’s market value to about 34 billion euros. The shares have risen 11 percent this year, compared with a 2.6 percent gain in the 52-member Bloomberg Europe Banks and Financial Services Index. Ackermann aims to lower the bank’s cost-income ratio, a gauge of expenses as a proportion of revenue, to 65 by the end of next year, which would be the lowest level in at least eight years. The company seeks to save 1 billion euros in so-called infrastructure costs, with steps including creating a single information-technology platform and moving technology and services business to cheaper locations. ‘Blue-Sky Scenario’ Deutsche Bank also plans to boost earnings at its investment bank and expand in Asia. The 2011 pretax profit forecast assumes no financial crisis or significant writedowns, stable economic growth and asset values, a widening fee pool and market-share gains. “This is a blue-sky scenario,” said LBBW’s Kayser. “A strong first quarter may close the gap between expectations and the target, but it’ll remain short of 10 billion euros.” The global markets trading unit, led by Anshu Jain , will continue to generate the largest share of earnings through 2011, according to Deutsche Bank’s forecast. The overall investment bank, which includes the corporate finance unit led by Michael Cohrs , aims for 6.3 billion euros in 2011 pretax profit. Return on Equity Deutsche Bank’s return on equity, a gauge of profitability, at the investment bank may decline to 11.7 percent in 2011 from previous estimate of 18.5 percent because of regulatory changes, according to an investor note on April 20 from JPMorgan analyst Kian Abouhossein in London. Ackermann seeks to reduce dependence on investment banking by making acquisitions for wealth management, commercial banking and retail banking. Deutsche Bank completed the purchase of Sal. Oppenheim Group, Germany’s biggest independent private bank, and parts of ABN Amro Bank NV’s commercial banking activities in the Netherlands this year. It also bought a stake in retail lender Deutsche Postbank AG and has an option to raise the holding. To contact the reporters on this story: Aaron Kirchfeld in Frankfurt at akirchfeld@bloomberg.net

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Charles River Said to Agree to Buy WuXi PharmaTech for About $1.6 Billion

April 25, 2010

By Zachary Mider and Cathy Chan April 26 (Bloomberg) — Charles River Laboratories International Inc. agreed to buy Chinese drug-research company WuXi PharmaTech (Cayman) Inc. for about $1.6 billion, said two people with knowledge of the matter. Charles River will pay $21.25 a share for WuXi, split between $11.25 in cash and $10 in stock, the people said, declining to be identified because the information is private. An announcement may come today, they said. Amy Cianciaruso, a spokeswoman for Wilmington, Massachusetts-based Charles River, declined to comment and officials at WuXi didn’t immediately respond to calls from Bloomberg News. The Wall Street Journal reported the acquisition earlier, citing an unidentified person. JPMorgan Chase & Co. and Credit Suisse Group are the advisers for Charles River and WuXi, the people said. WuXi will own less than 30 percent of Charles River after the acquisition, they said. To contact the reporters on this story: Cathy Chan in Hong Kong at Kchan14@bloomberg.net ; kcrowley1@bloomberg.net ; Zachary Mider in New York at zmider1@bloomberg.net .

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Credit Suisse’s George Boutros Leaves to Join Quattrone at Qatalyst Group

April 21, 2010

By Michael J. Moore April 21 (Bloomberg) — George Boutros agreed to join investment bank Qatalyst Group, leaving Credit Suisse Group AG after 12 years to work at the firm run by Frank Quattrone , his former boss. Boutros will join Qatalyst as a senior partner and senior director, subject to regulatory approvals, San Francisco-based Qatalyst said today in a statement. Boutros is chairman of Credit Suisse’s technology and health-care groups and vice chairman of its corporate and investment banking department. Boutros, 49, worked with Quattrone, 54, at Morgan Stanley before leaving with him for Deutsche Bank AG in 1996. He moved again with Quattrone in 1998. Quattrone, who managed more Internet share sales in the 1990s than anyone, left Credit Suisse First Boston under pressure in 2003. “I am thrilled to be reunited with George, who was among my closest partners for more than 10 years at Morgan Stanley, Deutsche Bank and Credit Suisse,” Quattrone, chief executive officer of Qatalyst, said in the statement. “He is one of the most experienced advisers in the technology industry, and has participated in many of the most significant and industry defining transactions of the last twenty years.” Boutros has advised on more than 300 transactions, including Sun Microsystems Inc.’s sale to Oracle Corp. , Google Inc.’s purchase of Youtube, and Pixar’s sale to Walt Disney Co. , according to the statement. In 2003, the National Association of Securities Dealers filed a complaint accusing Quattrone of giving out IPO shares to favored executives to win investment banking business. A month later, federal prosecutors charged him with obstructing justice. He was convicted in the obstruction case in 2004 and sentenced to 18 months in prison. Two years later, he won his appeal, authorities dropped both cases and he avoided jail. He started Qatalyst in March 2008. In January 2002, Credit Suisse First Boston agreed to pay $100 million to settle charges by the NASD and the Securities and Exchange Commission that the firm had forced clients to pay inflated commissions in return for shares of IPOs, most of which were technology stocks. To contact the reporter on this story: Michael J. Moore in New York at mmoore55@bloomberg.net .

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Video: Farris Says Uncertainty Over Greek Aid Hurting Euro: Video

April 16, 2010

April 16 (Bloomberg) — Ray Farris, head of foreign-exchange research at Credit Suisse Group AG, talks with Bloomberg’s Andrea Catherwood about the impact of Greece’s fiscal situation on the euro and the outlook for emerging-market currencies. (Source: Bloomberg)

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South Korea Sells 9% of Woori for $1 Billion as Lee Reduces State Assets

April 8, 2010

By Saeromi Shin and Seonjin Cha April 9 (Bloomberg) — Korea Deposit Insurance Corp. sold 9 percent of Woori Finance Holdings Co. , the nation’s third- biggest financial firm by market value, for 1.16 trillion won ($1 billion), according to four people with knowledge of the transaction. The state-run agency received orders for 72.54 million Woori shares at 16,000 won apiece, equal to yesterday’s closing price on the Korea Exchange, said the people, who declined to be identified before an official announcement. Korea Deposit is reducing its majority stake in Woori as President Lee Myung Bak seeks to privatize some government-owned assets. The latest sale cuts its holding to 57 percent after four stake sales that have raised a combined 5 trillion won after the state injected funds into the company following the Asian financial crisis in 1997-98. “It seems like the sale was successful, given the price and high number of shares,” said Hwang Seok Kyu , analyst at Kyobo Securities Co. in Seoul with a “buy” rating on Woori. “The government’s strong desire to privatize the company and brighter business outlook should spur the stock price.” The shares jumped 7.2 percent, the most since Nov. 30, to 17,150 won at 9:11 a.m. in Seoul, compared with the benchmark Kospi index’s 0.6 percent gain. Credit Suisse Group AG, Daewoo Securities Co., Samsung Securities Co., and UBS AG arranged the latest sale, according to Korea Deposit. Officials at Korea Deposit, Woori Finance and the banks weren’t available for comment today. The company turned to a profit of 156.8 billion won in the fourth quarter, compared with a loss of 664.8 billion won a year earlier, as a revival in the economy helped to curb bad loans. To contact the reporters on this story: Saeromi Shin in Seoul at sshin15@bloomberg.net . Seonjin Cha in Seoul at scha2@bloomberg.net

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Credit Suisse expected higher commodity prices over the short term

April 7, 2010

Credit Suisse expected higher commodity prices over the short term

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Euro, Greek Bonds Drop on Rescue Concern; U.S. Stocks Fluctuate

April 6, 2010

By Michael P. Regan and Jeff Kearns April 6 (Bloomberg) — The euro weakened and Greek bonds plunged as the 10-year yield premium to German debt widened to the most since the euro’s introduction a decade ago, reaching about 4 percentage points, on concern the European Union’s rescue plan for the nation may unravel. U.S. stocks fluctuated. The euro dropped against all 16 most-traded peers at 12:40 p.m. in New York, while the U.K. currency declined against 11. Greek 10-year bond yields climbed above 7 percent for the first time in 10 weeks before retreating back below. Australia’s dollar advanced after the central bank raised its target rate for overnight borrowing. The Standard & Poor’s 500 Index swung between gains and losses as advances in financial shares helped wipe out an early slump. The euro slid after Market News International said Greece may want to bypass International Monetary Fund involvement in a rescue. Greek bonds trimmed losses as the nation’s Finance Minister George Papaconstantinou said the government has not tried to modify the terms of the package to exclude the IMF. “At times you get a bit of worry that the Greece situation may derail the global recovery,” said E. William Stone , who oversees $102 billion as chief investment strategist at PNC Wealth Management in Philadelphia. “We’ve had such good news across the spectrum that you’re bound to get something that’ll take the punch bowl away.” The euro lost 1.4 percent against the yen and 0.8 percent compared with the dollar after Market News cited unidentified officials as saying Greece may seek a rescue package that doesn’t involve the IMF. Greek Aid Finance Minister Papaconstantinou said in an e-mailed statement that the EU aid plan is “important” for Greece and Europe, and the nation has not sought to activate the aid plan. “There has never been any move on the part of our country to change the conditions of the recent agreement of the European Council on the support mechanism,” Papaconstantinou said in the e-mailed statement today. Greek bonds fell for a third day, with the yield on the two-year note rising 1 percentage point to 6.11 percent. Credit- default swaps on Greek debt rose 37 basis points to 383, the highest level since Feb. 25, according to CMA DataVision prices. Yields on 10-year German bunds increased 0.06 percentage points to 3.15 percent, compared with 7 percent for comparable Greek debt. The 10-year Greek yield had climbed to as high as 7.2 percent, sending the yield premium over German debt to the widest since 1998, before paring gains after Papaconstantinou’s statement. Germany is Europe’s biggest economy, and a wider yield gap indicates a higher perception of risk for Greece. Australian, Canadian Dollars The Australian dollar strengthened 1.3 percent versus the euro and 0.4 percent against the U.S. dollar after central bank Governor Glenn Stevens increased the overnight cash rate target to 4.25 percent from 4 percent. The Canadian dollar traded at parity with the U.S. currency for the first time since July 2008 before paring gains to trade just below $1. The pound weakened 0.4 percent versus the dollar, and the yield on the 10-year gilt climbed 9 basis points to 4 percent on concern the election, which U.K. Prime Minister Gordon Brown announced today will be held May 6, won’t produce a clear winner. Treasuries rose for the first time in four days as the 10- year note yield’s increase to above 4 percent yesterday lured buyers the Greece situation stoked demand for safety. The 10- year Treasury yield fell 3 basis points to 3.96 percent. U.S. Equities Fluctuate U.S. equities fluctuated after a year-long rally drove the S&P 500 to an 18-month high, pushing the benchmark gauge to the most expensive level this year at about 19 times reported operating earnings of its companies. Figures yesterday showed growth in U.S. service industries and home sales, adding to evidence the economy is strengthening after the government last week reported the biggest monthly jobs growth in three years. SunTrust Banks Inc. rallied 3 percent after Credit Suisse Group AG analysts said the lender may be a takeover target, while Regions Financial Corp. jumped 5 percent as Credit Suisse lifted its share-price estimate. European stocks gained, pushing the Stoxx Europe 600 Index to the highest since September 2008, as the biggest rise in U.S. jobs in three years and growth in services and home sales indicated the global economy is strengthening. European markets were closed for holidays on April 2 and April 5, when the U.S. data was released. The MSCI Asia Pacific Index rose 0.3 percent, climbing for a fourth day. The MSCI Emerging Markets advanced for an 8th day, the longest streak since October 2009. Kazakhstan’s KASE Stock Index and Ukraine’s PFTS Index rose at least 1.7 percent. Copper for delivery in three months slipped 0.6 percent to $3.611 a pound in New York, retreating from a 20-month high. Oil was little changed near its highest level in 17 months before a report forecast to show U.S. crude inventories increased last week while gasoline supplies fell. Crude for May delivery was at $86.63 a barrel, up 1 cent on the New York Mercantile Exchange. To contact the reporters responsible for this story: Michael P. Regan in New York at mregan12@bloomberg.net ; Jeff Kearns in New York at jkearns3@bloomberg.net .

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Euro, Greek Bonds Drop on Concern Rescue Faltering; U.S. Stocks Fluctuate

April 6, 2010

By Michael P. Regan and Jeff Kearns April 6 (Bloomberg) — The euro weakened and Greek bonds plunged as the 10-year yield premium to German debt widened to the most since the euro’s introduction a decade ago, reaching about 4 percentage points, on concern the European Union’s rescue plan for the nation may unravel. U.S. stocks fluctuated. The euro dropped against all 16 most-traded peers at 12:40 p.m. in New York, while the U.K. currency declined against 11. Greek 10-year bond yields climbed above 7 percent for the first time in 10 weeks before retreating back below. Australia’s dollar advanced after the central bank raised its target rate for overnight borrowing. The Standard & Poor’s 500 Index swung between gains and losses as advances in financial shares helped wipe out an early slump. The euro slid after Market News International said Greece may want to bypass International Monetary Fund involvement in a rescue. Greek bonds trimmed losses as the nation’s Finance Minister George Papaconstantinou said the government has not tried to modify the terms of the package to exclude the IMF. “At times you get a bit of worry that the Greece situation may derail the global recovery,” said E. William Stone , who oversees $102 billion as chief investment strategist at PNC Wealth Management in Philadelphia. “We’ve had such good news across the spectrum that you’re bound to get something that’ll take the punch bowl away.” The euro lost 1.4 percent against the yen and 0.8 percent compared with the dollar after Market News cited unidentified officials as saying Greece may seek a rescue package that doesn’t involve the IMF. Greek Aid Finance Minister Papaconstantinou said in an e-mailed statement that the EU aid plan is “important” for Greece and Europe, and the nation has not sought to activate the aid plan. “There has never been any move on the part of our country to change the conditions of the recent agreement of the European Council on the support mechanism,” Papaconstantinou said in the e-mailed statement today. Greek bonds fell for a third day, with the yield on the two-year note rising 1 percentage point to 6.11 percent. Credit- default swaps on Greek debt rose 37 basis points to 383, the highest level since Feb. 25, according to CMA DataVision prices. Yields on 10-year German bunds increased 0.06 percentage points to 3.15 percent, compared with 7 percent for comparable Greek debt. The 10-year Greek yield had climbed to as high as 7.2 percent, sending the yield premium over German debt to the widest since 1998, before paring gains after Papaconstantinou’s statement. Germany is Europe’s biggest economy, and a wider yield gap indicates a higher perception of risk for Greece. Australian, Canadian Dollars The Australian dollar strengthened 1.3 percent versus the euro and 0.4 percent against the U.S. dollar after central bank Governor Glenn Stevens increased the overnight cash rate target to 4.25 percent from 4 percent. The Canadian dollar traded at parity with the U.S. currency for the first time since July 2008 before paring gains to trade just below $1. The pound weakened 0.4 percent versus the dollar, and the yield on the 10-year gilt climbed 9 basis points to 4 percent on concern the election, which U.K. Prime Minister Gordon Brown announced today will be held May 6, won’t produce a clear winner. Treasuries rose for the first time in four days as the 10- year note yield’s increase to above 4 percent yesterday lured buyers the Greece situation stoked demand for safety. The 10- year Treasury yield fell 3 basis points to 3.96 percent. U.S. Equities Fluctuate U.S. equities fluctuated after a year-long rally drove the S&P 500 to an 18-month high, pushing the benchmark gauge to the most expensive level this year at about 19 times reported operating earnings of its companies. Figures yesterday showed growth in U.S. service industries and home sales, adding to evidence the economy is strengthening after the government last week reported the biggest monthly jobs growth in three years. SunTrust Banks Inc. rallied 3 percent after Credit Suisse Group AG analysts said the lender may be a takeover target, while Regions Financial Corp. jumped 5 percent as Credit Suisse lifted its share-price estimate. European stocks gained, pushing the Stoxx Europe 600 Index to the highest since September 2008, as the biggest rise in U.S. jobs in three years and growth in services and home sales indicated the global economy is strengthening. European markets were closed for holidays on April 2 and April 5, when the U.S. data was released. The MSCI Asia Pacific Index rose 0.3 percent, climbing for a fourth day. The MSCI Emerging Markets advanced for an 8th day, the longest streak since October 2009. Kazakhstan’s KASE Stock Index and Ukraine’s PFTS Index rose at least 1.7 percent. Copper for delivery in three months slipped 0.6 percent to $3.611 a pound in New York, retreating from a 20-month high. Oil was little changed near its highest level in 17 months before a report forecast to show U.S. crude inventories increased last week while gasoline supplies fell. Crude for May delivery was at $86.63 a barrel, up 1 cent on the New York Mercantile Exchange. To contact the reporters responsible for this story: Michael P. Regan in New York at mregan12@bloomberg.net ; Jeff Kearns in New York at jkearns3@bloomberg.net .

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Video: Strategist Desbarres Discusses RBA, Australian Dollar: Video

April 5, 2010

April 6 (Bloomberg) — Olivier Desbarres, a currency strategist with Credit Suisse Group AG, talks with Bloomberg’s Haslinda Amin about the Reserve Bank of Australia’s monetary policy. Desbarres, speaking from Singapore, also discusses Australia’s economy and currency. (This is an excerpt of the full interview. Source: Bloomberg)

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Goldman Sachs, Morgan Stanley Oppose Lehman’s Plans for Asset Management

April 5, 2010

By Linda Sandler April 5 (Bloomberg) — Goldman Sachs Group Inc., Morgan Stanley, Credit Suisse Group AG and other banks objected to Lehman Brothers Holdings Inc.’s plan to build its real estate unit into an asset-management business. The banks said the planned business would be “a reorganization plan for debtors’ employees and management separate, apart, and ahead of the reorganization plan for creditors,” according to a court filing today. To contact the reporter on this story: Linda Sandler in New York at lsandler@bloomberg.net

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Gruebel Rebuilds Fixed-Income Unit, Boosting Revenue

March 30, 2010

By Jacqueline Simmons March 30 (Bloomberg) — Oswald Gruebel , who parlayed bond expertise into the top jobs at Switzerland’s biggest banks, is rebuilding UBS AG ’s fixed-income business, which reaped about $2.3 billion of revenue this quarter, people familiar with the matter said. UBS may have revenue of almost $1 billion from credit alone, said the people, who declined to be identified because the figures haven’t been publicly released. Gruebel, 66, a former Eurobond trader who also ran Credit Suisse Group AG, hired about 350 people at the fixed-income unit, which includes emerging markets and foreign exchange, in the past year. “The new hires and position-taking in the first quarter delivered fixed-income revenue ahead of targets,” said Simon Maughan , an analyst at MF Global Securities who rates UBS “buy.” “That’s two ticks in the box for Gruebel.” The performance marks a reversal of fortune for the bank’s debt unit, which was responsible for most of the more than $57 billion in writedowns and losses during the credit crisis. Gruebel, who became chief executive officer at UBS in February 2009, named Rajeev Misra , 48, and Dimitri Psyllidis , 43, co- heads of the fixed-income division in January. UBS said in a statement today that $2.3 billion is “slightly higher” than its current estimate for the period. The bank rose 49 centimes, or 3 percent, to 17.09 Swiss francs, the most since March 5. The stock has advanced 6.5 percent in 2010. Possible ‘Adjustments’ In its statement, UBS said that “because the quarter has not ended and results to date are subject to possible fair value adjustments, including those relating to own credit,” the estimate of about $2.3 billion “may not be reliable.” UBS will publish first-quarter results on May 4. Banks are profiting from trading and selling debt as credit markets recover to levels not seen since 2007. Goldman Sachs Group Inc. ’s fixed-income, currencies and commodities unit will probably report revenue of $6.8 billion for the first quarter, up from $4 billion in the fourth quarter and $6.6 billion in the first quarter of 2009, according to a note from Richard Staite , an analyst at Atlantic Equities. He rates New York-based Goldman Sachs “overweight.” Gruebel’s Rise Gruebel, a war orphan raised by his grandparents in East Germany, worked at Zurich-based Credit Suisse for 37 years. He moved to West Germany when he was 10 to live with relatives and got into banking after school as a trainee at Deutsche Bank AG . At Credit Suisse, Gruebel, who has no university education, rose through the ranks from the bank’s Eurobond trading desk. In the three years after he took over as sole CEO in 2004, Gruebel doubled Credit Suisse’s profit and share price . It was under his watch in 2006 that the bank started cutting its holdings of U.S. subprime mortgage bonds, while UBS was still buying them. At UBS, Gruebel picked new management for the investment bank and starting weekly calls with top risk officers. He sold UBS’s Brazil unit and raised 3.8 billion francs ($3.6 billion) from investors to boost capital. A recovery at the investment bank, which includes equities and investment banking as well as fixed income, helped the bank report its first profit in more than a year last month. Asia Hires UBS’s hires so far this year include Thomas Siegmund , formerly of Nomura Holdings Inc. , and Shahryar Mahbub , previously at New York-based Citigroup Inc., to co-head fixed- income Asia, people close to the bank said. UBS also hired Edward Hubner and two other credit traders from Deutsche Bank AG in New York, according to the people. The fixed-income unit is composed of three businesses: credit, emerging markets and “macro,” including foreign exchange, money market and interest-rate sales and trading. A turnaround at the debt unit will be “central” to the bank’s goal of reaching an annual pretax profit of 15 billion francs in three to five years, UBS said in November. Carsten Kengeter , 42, gave up his role as co-head of fixed income in January to focus on his position as co-chief of UBS’s investment bank. Alexander Wilmot-Sitwell , 49, leads the investment bank with Kengeter. Misra, who left Deutsche Bank in June 2008, joined UBS last year as global head of credit at its investment bank. Psyllidis, formerly of Merrill Lynch, joined the Swiss bank last year to head foreign exchange and rates trading globally. UBS aims to generate about 40 percent of the investment bank’s total revenue from fixed income in three-to-five years, or at least 8 billion francs annually. That would return fixed- income revenue to the levels achieved before the credit crisis led to record losses at the bank. UBS aims to reach an annual pretax profit of 6 billion francs at the investment bank over the next three to five years, after losses since 2007. To contact the reporters responsible for this story: Jacqueline Simmons in Paris at jackiem@bloomberg.net .

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Swiss bank Credit Suisse goes strongly to India

March 30, 2010

Swiss bank Credit Suisse goes strongly to India

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Chipmaker NXP Planning IPO

March 27, 2010

NEW YORK/AMSTERDAM (Reuters) – Dutch semiconductor company NXP [NXP.UL], owned by private equity firms, including KKR and Silver Lake, is planning an initial public offering (IPO), a source familiar with the matter said. A potential IPO, earlier reported by Bloomberg, could raise about $1 billion, the source said. A number of banks would handle the sale, Bloomberg reported — Morgan Stanley ( MS.N ), Barclays Plc ( BARC.L ), Credit Suisse Group AG ( CSGN.VX ), Deutsche Bank AG ( DBKGn.DE ) and Goldman Sachs Group Inc ( GS.N ). NXP was spun off from Koninklijke Philips Electronics NV ( PHG.AS ) in 2006 in a leveraged buyout. A consortium of private equity investors, including Silver Lake and Kohlberg Kravis Roberts & Co ( KKR.AS ) bought a majority of the company. The banks and private equity firms either declined comment, or could not be reached. NXP and Philips declined to comment. Philips said in January its remaining 19.8 percent stake in NXP had a value of 207 million euros as of December 2009, implying a valuation for the whole company of more than one billion euros. KKR has already written down its stake in NXP substantially, saying in December that the fair value of its investment was $75 million on a cost of $250 million. NXP’s Chief Executive Rick Clemmer told Reuters earlier this year he expected sales to be flat to slightly higher during the first quarter, but was waiting for more clarity about the market in the second half. Private equity firms buy companies with the aim of exiting them a few years later, either through a sale or an initial public offering. During the financial crisis, leaving investments was very difficult, but the markets have opened up recently, allowing some firms to exit. (Reporting by Megan Davies and Jui Chakravorty in New York and Greg Roumeliotis and Harro Ten Wolde in Amsterdam; editing by Mike Peacock)

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Goldman Sachs Is Lured to Warsaw by $10 Billion of Government Asset Sales

March 26, 2010

By Marta Waldoch and Pawel Kozlowski March 26 (Bloomberg) — New York. London. Warsaw? The Polish capital is luring international investment banks, including Goldman Sachs Group Inc. , the world’s most profitable, as the government prepares record share offerings this year. Goldman, based in New York, is seeking to open a branch office in Warsaw, spokeswoman Monika Schaller said yesterday. Credit Suisse Group AG of Zurich announced in January a plan to open a brokerage this year after shuttering its Warsaw stock- dealing business in 2003. “The government has a very ambitious plan to make Warsaw a financial hub for the region and expects foreign banks to establish a local presence,” Marek Gul , who heads Credit Suisse’s business in Warsaw, said in an interview. “Investment banks that aren’t yet here want to get in.” The main lure is advisory work for the Polish government, which plans to sell stakes this year in its energy, insurance, chemical and phone companies to raise $10 billion to finance the widening budget deficit. The growing economy , the only one in the European Union to avoid a recession, and the Warsaw Stock Exchange , where the total value of listed companies has tripled since 2003, are also attractive, bankers said. “It’s no wonder foreign banks are coming to Poland,” said Kazimierz Szpak , who helps manage the equivalent of $1.6 billion at KBC TFI SA, a Warsaw-based mutual fund. “The Treasury is selling stakes, boosting the free float of many stocks, and generally, turnover is on the rise. This has been noticed.” Poland’s main WIG20 Index of stocks climbed 0.5 percent to 2,506.91 at 10:26 a.m. in Warsaw, extending this year’s gain to 4.9 percent. The measure surged 33 percent in 2009. Lower Fees Credit Suisse, Goldman Sachs and New York-based JPMorgan Chase & Co. are among international banks vying with local firms for underwriting and advisory work even though fees in Poland are typically lower than those in western Europe and the U.S. The government agreed to pay 0.8 percent to bookrunners including Credit Suisse , Citigroup Inc. and UniCredit SpA this year on the sale of a 16 percent stake in Enea, the nation’s third-biggest power utility, according to a statement. The banks can also earn a 0.3 percent bonus. That compares with average fees of 3.8 percent on equity offerings in the U.S. this year, data compiled by Bloomberg show. Deutsche Bank AG , UniCredit and Bank of America Merrill Lynch charged a combined 0.5 percent in fees for managing a 5.13 billion zloty ($1.76 billion) rights offering of PKO SA , Poland’s largest bank, in October, according to a regulatory filing. In Europe, fees for rights offers ranged from about 2 percent to as high as 3.25 percent for HSBC Holdings Plc’s $18.3 billion sale in March. Poland’s government is urging banks to set up shop in Warsaw if they want business from the state. ‘Commitment to Market’ “When picking banks to advise us on privatization deals, we consider their commitment to the market,” said Maciej Wewior , a spokesman for the Treasury Ministry. The government plans this year to sell an additional 10 percent of PGE SA , the country’s biggest power producer. PZU SA, the state-owned insurer, may sell 5 billion zloty of shares in an IPO next month, and the government also plans to sell more than 25 percent in utility Tauron Polska Energia SA in the first half of the year. The Warsaw bourse may also go public after the state dropped plans to sell the market operator to a competitor last year, according to the government. JPMorgan, which has offices in Warsaw and Moscow, was hired last month to lead the sale of the government’s 32 percent stake in Mennica Polska SA, the sole supplier of coins to the country’s central bank. JPMorgan intends to take part in most of the tenders for managing asset sales, including PGE, said Cezary Stypulkowski , head of operations in central Europe. ‘Privatization Pipeline’ “Our ambition is to be present in the new privatization pipeline in Poland,” Stypulkowski said in an interview in Warsaw last month. “It is imperative to have a strong presence here.” Goldman Sachs filed an application with the U.K. Financial Services Authority on March 24 to open a branch in Warsaw, its eighth in Europe, the Middle East and Africa, Anna Krajewska, a spokeswoman for the company at NBS Public Relations in the Polish capital, said by phone. “The strength and size of the economy is what makes the market attractive,” Schaller, a spokeswoman for Goldman Sachs in Frankfurt, said by phone yesterday. She declined to say how many employees the bank plans to have in Warsaw. Credit Suisse has an empty trading floor in the center of the Polish capital and plans to fill it by June, said Gul, who also declined to elaborate on the bank’s hiring plan. Raiffeisen International Bank Holding AG , the Austrian lender that operates in 17 former communist countries in eastern Europe, also plans to reopen a brokerage, Marcin Jedlinski, a spokesman at the Austrian bank in Warsaw, said by phone today. Warsaw Stock Exchange Pension funds, created in 1999, and mutual funds are among the biggest investors on the Warsaw Stock Exchange, together managing 275 billion zloty of assets in February, according to data from the financial regulator and the Mutual Funds’ Chamber. The total value of listed companies on the Warsaw Stock Exchange tripled to $153 billion since 2003, according to the bourse’s data. The market’s average daily turnover jumped more than four-fold to around 1.4 billion zloty in the period. Warsaw hosted 1.59 billion euros ($2.2 billion) of IPOs last year, placing it third in Europe behind NYSE Euronext and the London Stock Exchange as the government sped up its asset sale program, according to PricewaterhouseCoopers LLP statistics cited on the Warsaw bourse’s Web site. “We’re seeing more and more large offerings and local financial institutions have become big enough that it’s worth doing stock-broking business for them alone,” said Gul at Credit Suisse. To contact the reporter on this story: Marta Waldoch in Warsaw on mwaldoch@bloomberg.net ; Pawel Kozlowski in Warsaw pkozlowski@bloomberg.net

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Credit Suisse Plans to Hire 130 Salespeople at Investment Bank This Year

March 23, 2010

By Warren Giles and Gavin Finch March 23 (Bloomberg) — Credit Suisse Group AG , Switzerland’s biggest bank by market value, plans to hire more than 130 sales people at its investment bank this year. The unit plans more than 30 new sales hires in foreign exchange, with 20 in leveraged finance, 40 at its rates business and a similar number in emerging markets, David Mathers , chief operating officer of the investment bank, told a conference organized by Morgan Stanley in London today. “There is still significant upside potential in many of our businesses,” he said. Credit Suisse returned to profitability in 2009, after cutting 7,420 posts across the whole bank since the start of the financial crisis, according to data compiled by Bloomberg. Chief Executive Officer Brady Dougan said last month that the Zurich- based bank had a “strong start” to this year. Rival UBS AG , which had its third annual loss in 2009, plans to hire more investment banking staff in the Asia-Pacific region, the Singapore Straits Times reported yesterday, citing Chief Executive Officer Oswald Gruebel . Banco Santander SA , Spain’s biggest lender, announced plans in December to hire 200 people at a division that includes investment banking. Credit Suisse’s investment banking division reported pretax profit of 1.03 billion francs ($970 million) in the fourth quarter, missing analysts’ median estimate of 1.25 billion francs. Mathers expects merger and acquisition deals to increase in 2010. “As long as financing conditions remain favorable, we’re confident that will translate into higher deal activity this year,” said Mathers, adding that the bank is ranked second globally for announced merger and acquisition deals. “It’s clear we’re sustaining the momentum we achieved last year.” To contact the reporter on this story: Warren Giles in Geneva at wgiles@bloomberg.net

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Greenhill Recruits Four Managing Directors To Launch Real Estate Placement Advisory Effort

March 22, 2010

Wright will join the Firm as Managing Directors. The four individuals have been the senior members of the Real Estate Private Fund Group at Credit Suisse, and will focus on building a real estate placement advisory business at Greenhill. This new

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Argentine Bonds Jump After Economy Minister Says SEC Approved Swap Offer

March 22, 2010

By Drew Benson March 22 (Bloomberg) — Argentine dollar bonds climbed to a two-month high after Finance Secretary Hernan Lorenzino said the government has received approval from the U.S. Securities and Exchange Commission to offer creditors an exchange for $20 billion in defaulted debt. The government plans to send the terms of the offer to the SEC today and expects to open the exchange in about two weeks, Lorenzino said in a telephone interview from Cancun, Mexico. A settlement with the investors who kept their bonds out of a 2005 restructuring would pave the way for Argentina to access international capital markets for the first time since it defaulted on $95 billion of debt in 2001. “The process is moving forward,” Lorenzino said. Argentina will open the offer when it gets approval from European regulators and the SEC authorizes the terms, he said. The yield on Argentina’s 7 percent bonds due in 2015 tumbled 42 basis points, or 0.42 percentage point, to 11.45 percent at 9:09 a.m. in New York, according to JPMorgan Chase & Co. The bond prices rose 1.5 cents to 85.50 cents on the dollar, the highest since Jan. 5. The government is in need of money to fund a widening budget deficit that RBS Securities Inc. projects will double this year to 1.2 percent of gross domestic product from 0.6 percent in 2009. Spending is growing at annual rate of about 30 percent as President Cristina Fernandez de Kirchner seeks to bolster her popularity ahead of elections in 2011, RBS economist Boris Segura wrote in a March 17 report from Stamford, Connecticut. 30 Cents Argentina faces borrowing requirements of $12.5 billion this year, about $6 billion of which has not yet been lined up, according to Credit Suisse Group AG. Borrowing requirements totaled $13.5 billion last year. The president’s husband and predecessor, Nestor Kirchner , offered creditors about 30 cents on the dollar in the 2005 exchange. He vowed at the time to not renegotiate with those who rejected the offer. Argentine dollar bonds have returned 1.8 percent this year, after gaining 133 percent in 2009, on speculation the government would reach an agreement with creditors and return to overseas debt markets, according to JPMorgan’s benchmark emerging-market index. To contact the reporters on this story: Drew Benson in Buenos Aires at abenson9@bloomberg.net ;

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Video: Chan Sees Macau Gaming Stocks Gaining on Revenue Growth: Video

March 18, 2010

March 19 (Bloomberg) — Gabriel Chan, an analyst at Credit Suisse Group AG in Hong Kong, talks with Bloomberg’s Haslinda Amin about the outlook for Macau gaming stocks. (Source: Bloomberg)

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McLaren Aims 200 MPH Supercar at Ferrari Owners Seeking Something Faster

March 18, 2010

By Steven Rothwell March 18 (Bloomberg) — McLaren Group said its 200-mile- per-hour MP4 supercar will be pitched to owners of Ferraris, Lamborghinis and other luxury marques seeking to add an even faster model to their fleet. McLaren aims to capture about 4 percent of the luxury two- seater car market, equal to about 4,000 sales a year, with the 600 horsepower MP4-12C that begins production next year. “The typical customer will have a number of cars,” Antony Sheriff , managing director of the McLaren Automotive unit, said in an interview. “We expect they’ll have a Ferrari, a Bentley, a Porsche, an Aston Martin or a Lamborghini — even a Rolls Royce — and will say, ‘You know what, I’d really also like one of those in my garage.’” McLaren, owner of the most successful Formula One team after Ferrari, is returning to the luxury road-car market even as sales struggle after the global slump. The MP4 will sell for 150,000 pounds to 175,000 pounds ($230,000 to $267,000), McLaren said, less than the F1 model that was the world’s costliest car in the 1990s and remained the fastest until the Bugatti Veyron debuted in 2005. The MP4 will be in the same supercar segment as the Ferrari F430 and the Lamborghini Gallardo, McLaren said. The 240-mph (386-kilometer-per-hour) F1, which ceased production in 1998, sold for 540,000 pounds. “This is not a short-term venture where we decided a year ago ‘now is the right time, let’s rush it to market,’” Sheriff said at McLaren’s headquarters in Woking, southwest of London. “We fully expect to be selling this car over many peaks and through many recessions.” Exclusivity Potential customers will have to wait about a year to get their hands on the MP4, with production capped at 1,000 in the first 12 months to establish the model’s exclusivity, Sheriff said at a briefing attended by reigning Formula One World Champion Jenson Button and his predecessor, Lewis Hamilton . The new model should be profitable within four or five years, helping Chairman Ron Dennis ’s efforts to boost commercial revenue in order to ensure the survival of the racing team. McLaren also plans to sell a 48 percent stake in the automotive unit to raise funds and has hired Credit Suisse and HSBC Holdings in the Middle East to seek investors, Dennis said at the briefing. Daimler AG , whose Mercedes-Benz unit owns 40 percent of McLaren Group, won’t be purchasing stock and McLaren is gradually buying back the existing holding, the company said. To contact the reporter on this story: Steven Rothwell in Woking at srothwell@bloomberg.net

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Video: Credit Suisse’s Keating Doubts Greek Debt Contagion Risk

March 12, 2010

March 12 (Bloomberg) — Giles Keating, global head of research at Credit Suisse Group, talks with Bloomberg’s Rishaad Salamat about the risk of the Greek debt crisis spreading to other euro-zone members.

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AIG Said to Discuss $35 Billion Sale of Hong Kong Unit to Prudential Plc

February 28, 2010

By Kevin Crowley and Howard Mustoe Feb. 28 (Bloomberg) — Prudential Plc , the U.K.’s largest insurer, is in negotiations to buy American International Group Inc. ’s Hong Kong-based life unit for more than $30 billion, according to a person familiar with the situation. Prudential would not be forced to sell any of its existing businesses to fund a purchase of American International Assurance Co., said the person, who declined to be identified because the talks are private. Chief Executive Tidjane Thiam has spoken with AIG’s board in recent days, the person said. Thiam wants to raise the proportion of sales the company gets from Asia to 80 percent by 2015 from 50 percent now, he said in a Feb. 17 interview. Prudential operates in 13 Asian nations and is seeking to offset slower growth in the U.K. market. A sale of AIA would be a change of course for AIG, which has been planning an initial public offering for the unit to help repay its $182.3 billion bailout by the U.S. government. “Strategically it’s probably the right move, it puts them into a different league,” said Justin Urquhart Stewart , who oversees about $3.3 billion as director of 7 Investment Management in London, including Prudential shares. “Until we see what the figures are like, then you’d have to question their ability to afford and fund it.” London-based Prudential has a market value of 15.3 billion pounds ($23.3 billion). The stock has more than doubled in the past year. The shares rose 2.3 percent to 602.5 pence in London trading on Feb. 26. The company has an A+ credit rating with a negative outlook at Standard & Poor’s and an A2 rating with a negative outlook at Moody’s Investors Service Share Sale “Prudential has a very strong capital position , but an acquisition of this size would probably need equity financing to support it,” said Antonello Aquino , a senior credit analyst at Moody’s Investors Service, who follows European insurers. A 15 billion-pound share sale to fund the purchase would be fully underwritten by a group of banks led by Credit Suisse Group AG, HSBC Holdings Plc and JPMorgan Chase & Co., Sky News reporter Mark Kleinman wrote on his blog today. Sky News first reported on the negotiations yesterday. Lloyds Banking Group Plc completed the U.K.’s biggest rights issue in December, raising 13.5 billion pounds. Credit Suisse, HSBC, JPMorgan and Lazard Ltd. are advising Prudential on the acquisition, Sky said. Prudential would pay mainly in cash with a small amount of stock, though the terms of the deal are still being worked out, the Wall Street Journal said today, citing one person familiar with the transaction. More Bidders? Prudential spokesman Ed Brewster declined to comment as did AIG spokesman Mark Herr . Credit Suisse, Lazard and JP Morgan also declined to comment. A spokesman for HSBC didn’t respond to an e-mail seeking comment, and a spokeswoman for AIA in Hong Kong didn’t respond to a voicemail left on her mobile phone outside regular office hours. Prudential’s offer may tempt other insurers to bid for the AIG unit, especially if AIG were prepared to lower its asking price, said Eamonn Flanagan , a Liverpool-based analyst at Shore Capital Group Plc who has a “buy” rating on the stock. “In the various territories in the Far East and Asia, AIG and the Pru have been number one and two,” he said. “They can justify a higher price through synergy gains.” AIA, which has operated in Asia for more than 90 years, has 20,000 employees and 250,000 agents in markets spanning China to Australia, AIG said in a May statement. It sells life, accident and health insurance policies and private retirement planning and wealth management services. The unit has more than 20 million customers and more than $60 billion of assets. AIA IPO Earlier this month, AIG, which is selling assets to repay the U.S. government, hired about seven additional banks to help manage an initial public offering for AIA in Hong Kong, according to five people familiar with the decision. Credit Suisse, CCB International, Goldman Sachs Group Inc. and UBS AG were among banks due to work with the original sale managers, Deutsche Bank AG and Morgan Stanley, said the people, who declined to be identified before a public announcement. This is the second time Prudential has pursued AIA. One year ago, the New York-based AIG, once the world’s largest insurer, was forced to shelve talks with potential corporate buyers of AIA because bids were too low, people familiar with the matter said at the time. AIA had attracted interest from Manulife Financial Corp., Prudential and Temasek Holdings Pte, with all seeking to buy a stake, according to people familiar with the matter, speaking in May 2009. The unit had an embedded value of about $20 billion, a person familiar with the valuation said one year ago. Embedded value estimates a company’s net worth excluding new business. If AIG proceeds with an IPO of AIA, it hopes to value the unit at $30 billion to $40 billion and get proceeds of about $15 billion, the WSJ reported today. Prudential Plc has no relation to Newark, New Jersey-based Prudential Financial Inc. and operates in the U.S. through its Jackson National Life Insurance Co. unit. To contact the reporter on this story: Kevin Crowley in London at kcrowley1@bloomberg.net Howard Mustoe in London at hmustoe@bloomberg.net

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Prudential Plc Said to Be in Talks for $30 Billion AIG Asian Unit Purchase

February 28, 2010

By Kevin Crowley and Howard Mustoe Feb. 28 (Bloomberg) — Prudential Plc , the U.K.’s largest insurer, is in negotiations to buy American International Group Inc. ’s Hong Kong-based life unit for more than $30 billion, according to a person familiar with the situation. Prudential would not be forced to sell any of its existing businesses to fund a purchase of American International Assurance Co., said the person, who declined to be identified because the talks are private. Chief Executive Tidjane Thiam has spoken with AIG’s board in recent days, the person said. Thiam wants to raise the proportion of sales the company gets from Asia to 80 percent by 2015 from 50 percent now, he said in a Feb. 17 interview. Prudential operates in 13 Asian nations and is seeking to offset slower growth in the U.K. market. A sale of AIA would be a change of course for AIG, which has been planning an initial public offering for the unit to help repay its $182.3 billion bailout by the U.S. government. “Strategically it’s probably the right move, it puts them into a different league,” said Justin Urquhart Stewart , who oversees about $3.3 billion as director of 7 Investment Management in London, including Prudential shares. “Until we see what the figures are like, then you’d have to question their ability to afford and fund it.” London-based Prudential has a market value of 15.3 billion pounds ($23.3 billion). The stock has more than doubled in the past year. The shares rose 2.3 percent to 602.5 pence in London trading on Feb. 26. The company has an A+ credit rating with a negative outlook at Standard & Poor’s and an A2 rating with a negative outlook at Moody’s Investors Service Share Sale “Prudential has a very strong capital position , but an acquisition of this size would probably need equity financing to support it,” said Antonello Aquino , a senior credit analyst at Moody’s Investors Service, who follows European insurers. A 15 billion-pound share sale to fund the purchase would be fully underwritten by a group of banks led by Credit Suisse Group AG, HSBC Holdings Plc and JPMorgan Chase & Co., Sky News reporter Mark Kleinman wrote on his blog today. Sky News first reported on the negotiations yesterday. Lloyds Banking Group Plc completed the U.K.’s biggest rights issue in December, raising 13.5 billion pounds. Credit Suisse, HSBC, JPMorgan and Lazard Ltd. are advising Prudential on the acquisition, Sky said. Prudential would pay mainly in cash with a small amount of stock, though the terms of the deal are still being worked out, the Wall Street Journal said today, citing one person familiar with the transaction. More Bidders? Prudential spokesman Ed Brewster declined to comment as did AIG spokesman Mark Herr . Credit Suisse, Lazard and JP Morgan also declined to comment. A spokesman for HSBC didn’t respond to an e-mail seeking comment, and a spokeswoman for AIA in Hong Kong didn’t respond to a voicemail left on her mobile phone outside regular office hours. Prudential’s offer may tempt other insurers to bid for the AIG unit, especially if AIG were prepared to lower its asking price, said Eamonn Flanagan , a Liverpool-based analyst at Shore Capital Group Plc who has a “buy” rating on the stock. “In the various territories in the Far East and Asia, AIG and the Pru have been number one and two,” he said. “They can justify a higher price through synergy gains.” AIA, which has operated in Asia for more than 90 years, has 20,000 employees and 250,000 agents in markets spanning China to Australia, AIG said in a May statement. It sells life, accident and health insurance policies and private retirement planning and wealth management services. The unit has more than 20 million customers and more than $60 billion of assets. AIA IPO Earlier this month, AIG, which is selling assets to repay the U.S. government, hired about seven additional banks to help manage an initial public offering for AIA in Hong Kong, according to five people familiar with the decision. Credit Suisse, CCB International, Goldman Sachs Group Inc. and UBS AG were among banks due to work with the original sale managers, Deutsche Bank AG and Morgan Stanley, said the people, who declined to be identified before a public announcement. This is the second time Prudential has pursued AIA. One year ago, the New York-based AIG, once the world’s largest insurer, was forced to shelve talks with potential corporate buyers of AIA because bids were too low, people familiar with the matter said at the time. AIA had attracted interest from Manulife Financial Corp., Prudential and Temasek Holdings Pte, with all seeking to buy a stake, according to people familiar with the matter, speaking in May 2009. The unit had an embedded value of about $20 billion, a person familiar with the valuation said one year ago. Embedded value estimates a company’s net worth excluding new business. If AIG proceeds with an IPO of AIA, it hopes to value the unit at $30 billion to $40 billion and get proceeds of about $15 billion, the WSJ reported today. Prudential Plc has no relation to Newark, New Jersey-based Prudential Financial Inc. and operates in the U.S. through its Jackson National Life Insurance Co. unit. To contact the reporter on this story: Kevin Crowley in London at kcrowley1@bloomberg.net Howard Mustoe in London at hmustoe@bloomberg.net

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Prudential Plc in Talks on $25 Billion AIG Asia Unit Purchase, Sky Reports

February 27, 2010

By Howard Mustoe Feb. 27 (Bloomberg) — Prudential Plc , the U.K.’s largest insurer, is in talks to buy the Asian operations of American International Group Inc. in a transaction that would be valued at about $25 billion, Sky News said, citing unidentified people. A proposal to buy American International Assurance Co. will be put to AIG’s board by Prudential’s Chief Executive Officer Tidjane Thiam in New York today, Sky said, citing one unidentified person close to the talks. Prudential would seek to fund the acquisition with the sale of about 15 billion pounds ($23 billion) in new stock, Sky reporter Mark Kleinman wrote on his blog. The London-based company might also sell off parts of its U.K. business, though that wouldn’t be necessary to fund the AIA deal, Kleinman said. Credit Suisse Group AG, HSBC Holdings Plc, JPMorgan Chase & Co. and Lazard Ltd. are advising Prudential, Sky said. Prudential Group Communications Director Stephen Whitehead declined to comment to Bloomberg News today, as did AIG spokesman Mark Herr . London-based JPMorgan spokesman David Wells declined to comment too. Spokespeople for Credit Suisse and Lazard said they couldn’t immediately comment. A spokesman for HSBC didn’t immediately respond to an e- mail seeking comment, and a spokeswoman for AIA in Hong Kong didn’t immediately respond to a voicemail left on her mobile phones outside regular office hours. Earlier this month, AIG, the insurer selling assets to repay its $182.3 billion bailout by the U.S. government, hired about seven additional banks to help manage an initial public offering for AIA in Hong Kong, according to five people familiar with the decision. AIA IPO Credit Suisse, CCB International, Goldman Sachs Group Inc. and UBS AG were among banks due to work with the original sale managers, Deutsche Bank AG and Morgan Stanley, said the people, who declined to be identified before a public announcement. One year ago, the New York-based AIG, once the world’s largest insurer, was forced to shelve talks with potential corporate buyers of AIA because bids were too low, people familiar with the matter said at the time. AIA had attracted interest from Manulife Financial Corp., Prudential and Temasek Holdings Pte, with all seeking to buy a stake, according to people familiar with the matter, speaking in May 2009. The unit had an embedded value of about $20 billion, a person familiar with the valuation said one year ago. Embedded value estimates a company’s net worth excluding new business. Prudential has a market value of 15.3 billion pounds. The stock has more than doubled in the past year. The shares rose 2.3 percent yesterday in London trading to 602.5 pence. To contact the reporter on this story: Howard Mustoe in London at hmustoe@bloomberg.net

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Japan Consumer Prices Fall 1.3%, Adding to Pressure to Tackle Deflation

February 25, 2010

By Mayumi Otsuma (Corrects number of months prices fell in first paragraph.) Feb. 26 (Bloomberg) — Japan’s consumer prices fell for an 11th month in January, putting renewed pressure on policy makers to eradicate deflation that hampers the recovery. Prices excluding fresh food slid 1.3 percent from a year earlier, the same pace as December, the statistics bureau said today in Tokyo. The figure matched the median estimate of 29 economists surveyed by Bloomberg News. Bank of Japan Deputy Governor Hirohide Yamaguchi said this week that prices may not be improving as quickly as he had expected. Finance Minister Naoto Kan has urged the central bank to do more to beat deflation as the government’s ability to spur the economy is constrained by the world’s largest debt . “Prices won’t stop falling until the recovery spreads to households,” Hiroshi Watanabe , a senior economist at Daiwa Institute of Research, said before the report was published. “Japan’s deflation will continue through fiscal 2012,” beyond the BOJ’s projections, he said. The yen traded at 89.27 per dollar at 8:36 a.m. in Tokyo from 89.22 before the report. 　 Unemployment and falling wages are discouraging spending by households and prompting companies to make discounts. Daiei Inc. this month cut prices of clothing and household goods as much as 30 percent, including women’s suits and desks for children, to spur sales before Japan’s school year starts in April. Costlier Oil Price declines have eased since peaking at 2.4 percent last August, largely because of costlier crude oil. Excluding energy and food, prices slumped 1.2 percent in January from a year earlier, matching the previous month’s decline as the sharpest since records began in 1971. Yamaguchi said this week that the moderation of price declines “seems to have been somewhat slower” given improvements in the economy. He said the central bank is “always prepared to implement appropriate measures at an appropriate timing.” Kan repeated this week that he wants the central bank to work with the government to beat deflation and “do what it can.” The bank unveiled a 10 trillion yen ($112 billion) lending program for commercial banks in December after the yen surged to a 14-year high against the dollar and politicians including Kan urged action. BOJ Action “It’s highly probable that the BOJ will act to ease monetary policy further should financial markets turn volatile suddenly,” said Kenro Kawano , a debt strategist at Credit Suisse Group AG in Tokyo. Bank of Japan policy makers forecast last month that core prices will decline 0.5 percent in the year ending March 2011 and 0.2 percent in the following 12 months. They haven’t made forecasts beyond then. Exports and production, which have fueled Japan’s rebound, are “bound to slow down” and the economy’s momentum will temporarily decrease, Yamaguchi said on Feb. 24. Tokyo core consumer prices dropped 1.8 percent in February from a year earlier, today’s report showed. Figures for the capital city are released a month earlier than nationwide data, making them a harbinger of price trends. “Downward pressure on prices will persist” as supply continues to outstrip demand, said Yoshiki Shinke , a senior economist at Daiichi Life Research Institute in Tokyo. To contact the reporter on this story: Mayumi Otsuma in Tokyo at motsuma@bloomberg.net

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Iron Ore Derivative Traders Bet on `Tipping Point’ in $200 Billion Market

February 24, 2010

By Firat Kayakiran and Thomas Biesheuvel Feb. 24 (Bloomberg) — Sitting at his desk on ICAP Plc’s dealing floor in London, iron ore broker Andy Strickland is plotting how to get business 5,000 miles away in China. He handles so-called swaps for iron ore , allowing buyers and sellers to fix prices months in advance for single cargoes of the raw material that’s essential in steelmaking. Strickland says he aims to expand his two-man team to eight, the same size as the nearby coal desk whose brokers are busy shouting into their telephones, and handle more deals as steelmakers increasingly favor buying individual iron ore consignments instead of relying on fixed-price supply agreements. “The potential is huge,” Strickland says. “You just need a catalyst for it to reach that critical mass.” The prize for the growing band of brokers and traders handling the derivatives is the possibility that iron ore will evolve into a market rivaling the liquidity and volume of other commodities. The iron ore market is worth about $200 billion a year, second only to crude oil, according to Credit Suisse Group AG. The swap market may grow 10-fold to 360 million metric tons annually over the next two years, says Phillip Killicoat , an iron-ore dealer at the bank in London. Such an expansion would be a vindication for the pioneers in a market that only began in May 2008. Ray Key , global head of metal trading at Deutsche Bank AG and Kamal Naqvi , Credit Suisse’s global head of investor sales, began offering swaps at the instigation of BHP Billiton Ltd., the world’s largest mining company, which was dissatisfied with the way iron ore is priced. Incredible Size “Iron ore struck us as one of the last of the true commodity markets that did not have any financial presence,” says Key, who likens iron ore trading to where oil trading was in the 1980s. “Its size is just incredible.” The proportion of iron ore sold on contracts pegged to an annual price benchmark will shrink to 40 percent in five years, from 70 percent now, as accords expire and aren’t renewed, according to Killicoat. Melbourne-based BHP reduced the proportion of its Western Australian ore priced using the benchmark to 54 percent in the second half, from 68 percent in January through June. The benchmark traditionally takes effect from April 1. Asian steelmakers pushed for price cuts in 2009, the first in seven years, after the biggest slump in demand for their product since World War II. The three largest iron ore producers — Brazil’s Vale SA, London-based Rio Tinto Group and BHP — and Japanese and South Korean steelmakers agreed to a 33 percent reduction. Growing Volatility That wasn’t enough for Chinese customers. Price talks with the world’s biggest steelmaking nation ended in deadlock and a benchmark wasn’t officially recognized, helping to opening the market to spot cargoes. “I don’t think anyone could foretell just how dire the negotiations would become,” says Key, 37, who joined Deutsche in 2007 after five years as global head of precious metal at Morgan Stanley. Growing price volatility also helped stoke demand for spot iron ore cargoes and swaps. “The benchmark system is untenable in the long term,” says Strickland at ICAP , the world’s largest broker of transaction between banks. “Market sentiment changes on a monthly basis.” Some steelmakers aren’t welcoming the trend. Customers of Japanese steelmakers wouldn’t want more frequent change in raw- material costs, Shoji Muneoka , Nippon Steel Corp.’s president and the Japan Iron and Steel Federation’s chairman, said at a JISF conference last month. ‘More Players’ Nor has Rio matched BHP’s increase in spot sales. It sold most ore priced on a benchmark in the second half of 2009, after selling about half as spot in the first half. “Markets are dynamic, markets are moving toward a position of shorter terms,” Chief Executive Officer Tom Albanese said on a conference call when Rio posted its full-year earnings on Feb. 11. “A lot of that’s associated with more players that are involved in the market.” For the benchmark to survive, “it will need to evolve. And again if it does not evolve it will not survive,” he said. Four employees of London-based Rio, including Stern Hu , an Australian who previously led its Chinese iron ore unit, were detained in July in China. The country said Feb. 10 they were indicted for “infringing” trade secrets and accepting bribes. Market Freeze Swap trading started with volumes of about 250,000 tons a month, Credit Suisse’s Killicoat says. It grew to about 3 million tons by September 2008, the month Lehman Brothers Holdings Inc. was declared bankrupt amid the worsening global financial crisis, at which point the market froze. Volumes have since recovered, he says. “The tipping point will come as benchmark pricing becomes less rigid and more physical material is sold on a spot and index basis,” Killicoat says. BHP has done just that, cutting the proportion of ore sold in the second half using the annual price. It sold the rest by other means, including spot sales, CEO Marius Kloppers said in a Feb. 10 conference call. Illtud Harri, a London-based spokesman for BHP, declined to say how much was sold on spot. The swap market allows ore producers to lock in volumes and prices as they see fit, rather than being tied to a benchmark that may not reflect current demand, said Simon Overy , who works on the iron ore team with Strickland at ICAP. The derivative enables steelmakers to hedge their main raw material, he said. ICAP declined to give the value of the trade its iron ore team is handling. ‘Explosive’ Activity Iron ore demand is rising as steelmakers restart blast furnaces and customers rebuild inventories . In China, spot prices have gained 49 percent in the past 12 months. “Price activity in the iron ore spot market has been explosive during the early weeks of 2010,” Citigroup Inc. commodity analyst Alan Heap wrote in a Feb. 2 report. Credit Suisse raised its forecast for the 2010 iron ore benchmark price, saying Feb. 4 it will rebound 50 percent to $86 a ton. Chinese steelmakers have started contract price talks with foreign suppliers, Luo Bingsheng , vice chairman of the China Iron & Steel Association said Feb. 9. ICAP’s Strickland says that to get more people to use swaps, their “traditional” view of the market needs to change. “Currently there is still resistance from producers that prevents the launch of a liquid spot market in iron ore,” he says. “The challenge is to change people’s mindsets.” To contact the reporter on this story: Firat Kayakiran in Istanbul at fkayakiran@bloomberg.net Thomas Biesheuvel in London tbiesheuvel@bloomberg.net ;

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Video: Parker Says Credit Suisse Taking on More Risk in Stocks

February 22, 2010

Feb. 22 (Bloomberg) — Bob Parker, a senior adviser at Credit Suisse, talks with Bloomberg’s Rishaad Salamat in London about the bank’s investment strategy for equities and Bank of Japan monetary policy.

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Video: Parker Says Credit Suisse Taking on More Risk in Stocks

February 22, 2010

Feb. 22 (Bloomberg) — Bob Parker, a senior adviser at Credit Suisse, talks with Bloomberg’s Rishaad Salamat in London about the bank’s investment strategy for equities and Bank of Japan monetary policy.

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Kuwaiti Stocks Gain on Credit Suisse Upgrade, Report of Zain Deal Progress

February 21, 2010

By Dana El Baltaji Feb. 21 (Bloomberg) — Kuwait benchmark index advanced for a second day as Credit Suisse Group AG raised the country’s shares and Al-Rai reported Zain may sign a letter of intent for the sale of most of its African assets by the end of this week. Zain, the country’s biggest phone company, rose to the highest since October. Al-Rai didn’t say where it got the information. Kuwait Cement Co., the nation’s largest cement maker, climbed 4.2 percent. The Kuwait Stock Exchange Index increased 0.3 percent to 7,418.9, bringing the gain for the month to 5.6 percent. Credit Suisse on Feb. 19 lifted Kuwait’s stocks to “neutral” from “underweight,” citing the government’s spending plan for economic development, and “undemanding” valuations and lower borrowing costs. The country plans to increase spending by about 34 percent in the fiscal year starting April 1, according to a copy of the draft budget sent to parliament earlier this month. The “increase in government spending was taken extremely positively,” said Paul Cooper , managing director of Sarasin- Alpen & Partners Ltd. The market has also benefited from Bharti Airtel Ltd’s bid for Zain’s African assets, which was “substantially higher than the market expected.” Valuations The 218 companies in Kuwaiti’s benchmark index trade at an average estimated earnings of 9.4 times, according to data compiled by Bloomberg. That compares with 12.3 for the shares in the Bloomberg GCC 200 Index . Kuwait’s central bank on Feb. 8 cut its one-week and one-month repurchase rates by a quarter percentage point, a day after reducing its benchmark interest rate to boost economic growth. Zain advanced 1.6 percent to 1,300 fils, the highest close since Oct. 25. The company and Bharti said Feb. 15 they entered into exclusive talks under which the Indian company would buy the African assets for $10.7 billion. Sunil Mittal , the billionaire chairman of Bharti, said last week the price India’s largest mobile-phone company is offering is “not over the top.” Kuwait Cement closed at 740 fils. Saudi’s Tadawul All Share Index added 0.1 percent at 1:59 p.m. in Riyadh. Qatar and Bahrain’s measures advanced 0.5 percent each and Oman’s MSM30 Index rose less than 0.1 percent. In the United Arab Emirates, the ADX General Index fell 0.4 percent and Dubai’s gauge declined 0.1 percent. To contact the reporter on this story: Dana El Baltaji in Dubai delbaltaji@bloomberg.net

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