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Senate Said to Weigh Setting Up $50 Billion Fund to Wind Down Failed Firms

by on March 9, 2010

By Phil Mattingly and Rebecca Christie March 10 (Bloomberg) — Senate negotiators are closing in on a deal to create a $50 billion trust fund from fees on large U.S. financial firms that likely will include Goldman Sachs Group Inc. and Citigroup Inc. and be used to wind down failing institutions, said a Senate aide and two people familiar with the talks. Senator Mark Warner , a Virginia Democrat, and Senator Bob Corker , a Tennessee Republican, are near agreement to create a mechanism that will dissolve companies in an orderly way without using taxpayer funds, according to two Senate aides who declined to be identified yesterday because the talks are private. Treasury Secretary Timothy Geithner met Warner and Corker yesterday to discuss the overhaul negotiations without reaching a deal, said a person familiar with the meeting. An agreement on the powers to shut large institutions would remove one of several roadblocks that have stalled Senate negotiations on the overhaul legislation. A final agreement hasn’t yet been reached on the resolution powers, or on the broader measure, the aides said. The House in December passed legislation that created a larger, $150 billion fund, to avoid taxpayer bailouts, such as the rescue of American International Group Inc. in 2008. The measure would give the government power to prop up non-bank firms, the authority regulators said they lacked when Lehman Brothers Holdings Inc. filed for bankruptcy in 2008. The Federal Deposit Insurance Corp. would get primary responsibility for managing the shutdown of a systemically risky firm on the verge of failure, the people said. Fed, Treasury Role The Senate compromise would give the Federal Reserve the power to decide which firms would pay into a trust fund that would be held and managed by the Treasury Department, according to a person familiar with the matter. Banks deemed to be a systemic risk would pay into the fund, and the firms could earn interest, the person said. The trust would be structured to avoid altering a company’s earnings or capital levels, the person said. Should a systemic firm fail, Treasury would transfer cash from the $50 billion fund to the resolution authority to cover any costs to shut the firm. The FDIC then could assess the banking industry for any losses incurred by the trust fund, the person said. The committee also is considering a proposal that would require regulators to consult with a bankruptcy court before acting against a failing firm, according to people familiar with the matter. If the court approved, Treasury would appoint the FDIC as the receiver. Geithner Proposal Geithner last year proposed assessing a wind-down fee on financial firms after an institution failed. Geithner, in testimony to the House Financial Services Committee, said on Oct. 29 that paying in advance would create “moral hazard” by signaling to companies cash was available in the event of a failure. House Democrats said the banking industry should be forced to pre-pay for any failures. House Republicans have objected to any prepaid fund, saying it would create a “permanent bailout authority.” FDIC Chairman Sheila Bair has backed a prepaid fund so that shareholders and creditors bear any losses, not taxpayers. Senate negotiators, led by Banking Chairman Christopher J. Dodd , a Connecticut Democrat, and Corker have been in negotiations for the past three weeks that Dodd said are tedious and fragile. “I can tell you very candidly, it’s very delicate and this thing could trip easily,” Dodd told reporters yesterday. To contact the reporter on this story: Phil Mattingly in Washington at pmattingly@bloomberg.net .

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Senate Said to Weigh Setting Up $50 Billion Fund to Wind Down Failed Firms

Prudential Plc Said in Talks to Buy AIG Asian Life Unit for $30 Billion

by on 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 “If they buy AIA, Prudential will become an absolute dominant force in those big, big markets,” said Eamonn Flanagan , a Liverpool-based analyst at Shore Capital Group Plc who has a “buy” rating on the stock. “The strategic sense is terrific.” 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. Fully Underwritten 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. 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. 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, Flanagan said, especially if AIG were prepared to lower its asking price. Prudential may be best placed to make a higher offer because of cost savings it could make, he said. AIA IPO “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.” 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. 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. 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 in Talks to Buy AIG Asian Life Unit for $30 Billion

JPMorgan Said to Lure Back Tavrovsky as Banks Vie for Russia Specialists

February 19, 2010

By Jason Corcoran Feb. 19 (Bloomberg) — JPMorgan Chase & Co. plans to hire Yan Tavrovsky from Morgan Stanley to run its investment business in Moscow as competition for bankers intensifies in Russia, according to three people familiar with the matter. Tavrovsky will return to the second-biggest U.S. bank after a five-year absence, said the people, who declined to be identified because the hiring hasn’t been made public yet. He will replace Natalia Tsukanova , who left in May to work as an adviser to the Kremlin, the people said. Both banks declined to comment and Tavrovsky didn’t return calls seeking comment. Tavrovsky was head of investment banking for Russia and the Commonwealth of Independent States at Morgan Stanley. JPMorgan helped manage oil producer OAO Rosneft’s initial public offering in 2006, the nation’s largest at more than $10 billion, and a year later helped organize OAO Sberbank’s $8.8 billion equity offering. International banks including JPMorgan and Goldman Sachs Group Inc. are hiring Russian specialists to help them compete with domestic rivals Renaissance Capital and Troika Dialog as the local economy recovers from its worst contraction on record. Goldman last month hired Tav Morgan, a former deputy chief executive officer of OAO Norilsk Nickel, Russia’s biggest mining company, to improve its commodities-related business in the former Soviet Union. To contact the reporter on this story: Jason Corcoran at Jcorcoran13@bloomberg.net

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Twitter Hires Pixar Executive Rowghani as Company’s First Finance Chief

February 11, 2010

By Ryan Flinn Feb. 11 (Bloomberg) — Twitter Inc., the No. 3 social- networking site in the U.S., hired Ali Rowghani as its first chief financial officer, bolstering the company’s executive ranks as it seeks new sources of revenue. Rowghani, who is finance chief and senior vice president of strategic planning at Walt Disney Co.’s Pixar animation unit, will start at Twitter in March, the San Francisco-based company said yesterday in a statement. “Ali will be an important member of a growing team focused on creating value for our users and capturing the financial opportunities that result from it,” Evan Williams , chief executive officer of Twitter, said in the statement. Twitter, founded in 2006, runs a microblogging service that lets users write updates, or tweets, of as many as 140 characters. The company plans to introduce ads this year and is in discussions with potential advertisers, Chief Operating Officer Dick Costolo said last month. Costolo said an initial public offering remains on the distant horizon, as the company focuses this year on catching up “to our valuation.” Twitter, which has raised more than $150 million in venture funding, had a valuation of $1 billion in September, according to a person familiar with the matter. Costolo joined Twitter in September, following a stint at Google Inc. He had served as CEO of FeedBurner, a news-feed service bought by Google in 2007. Rowghani fills out the management team, which also includes Chairman Jack Dorsey and Creative Director Biz Stone . They co- founded the company with Williams. The Iranian-born Rowghani received both his bachelor’s degree and MBA from Stanford University. He joined Pixar in 2001. Twitter ranks behind Facebook Inc. and News Corp. ’s MySpace in U.S. social-networking users, according to ComScore Inc., a research firm in Reston, Virginia. To contact the reporter on this story: Ryan Flinn in San Francisco at rflinn@bloomberg.net

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SEC Said to Examine Airgas Options Trading Before Offer From Air Products

February 10, 2010

By David Scheer and Jeff Kearns Feb. 10 (Bloomberg) — U.S. regulators are examining bullish trading of Airgas Inc . stock options before Air Products & Chemicals Inc . announced a $5.1 billion offer for the distributor of industrial gases, a person familiar with the matter said. The Securities and Exchange Commission is looking at whether people illegally used confidential information about the offer to profit, the person said, declining to be identified because the inquiry isn’t public. Airgas shares surged 40 percent Feb. 5 when the bid by Allentown, Pennsylvania-based Air Products became public. Airgas’s board rejected the offer yesterday, deeming it too low. SEC spokesman John Nester and Air Products spokeswoman Betsy Klebe declined to comment. Airgas spokesman Jay Worley didn’t immediately respond to messages seeking comment. More than 4,500 Airgas call options changed hands a day before the bid, nine times the four-week average, according to data compiled by Bloomberg. Calls, conveying the right to buy stock for a given price by a certain date, usually offer higher returns to traders speculating on takeovers. The SEC polices markets to ensure investors aren’t engaging in insider trading. Airgas, based in Radnor, Pennsylvania, is the largest U.S. distributor of industrial gases. Air Products Chief Executive Officer John McGlade previously said he’s willing to take his offer to shareholders after two prior bids were rejected. Reuters reported the SEC’s inquiry earlier today. To contact the reporters on this story: David Scheer in New York at dscheer@bloomberg.net ; Jeff Kearns in New York at jkearns3@bloomberg.net

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Toyota Halts Lexus, SAI Hybrid Shipments on Same Brake Problems as Prius

February 8, 2010

By Makiko Kitamura and Tetsuya Komatsu Feb. 9 (Bloomberg) — Toyota Motor Corp. stopped shipments of its Lexus HS250h and SAI hybrids from a factory in southern Japan due to possible brake problems with the models, which use the same system as Prius hybrid cars. Shipments from the factory in Kyushu were stopped yesterday to inspect the models, Norifumi Wakikawa , a spokesman at Toyota Motor Kyushu, said by phone today. Toyota, the world’s biggest carmaker, is expected to recall the 2010 version of the Prius in Japan this week to repair a problem with the braking system. Scrutiny of the vehicles may further tarnish Toyota’s reputation after the Toyota City, Japan-based company recalled almost 8 million cars globally to repair separate defects linked to unintended acceleration. Those recalls have yet to include any cars in Japan, where the Prius was last year’s top-selling model. Toyota has been investigating reports that Prius owners driving at low speeds on bumpy or icy roads may experience moments where the car continues to coast for about a second after the brakes are applied because of the anti-lock brake system. The company plans to recall at least 270,000 Priuses in Japan and the U.S., a person familiar with the matter said, declining to be identified as the information isn’t yet public. Japan, U.S. Recalls Ririko Takeuchi , a Toyota spokeswoman in Tokyo, declined to say whether the company will recall the Prius. The carmaker may notify Japan’s Transport Ministry of plans to recall the model as early as today, followed by a similar action in the U.S., Nikkei English News said, without citing anyone. Juergen Stolze , a Toyota spokesman in Cologne, Germany, said yesterday the carmaker will decide by Feb. 10 whether to recall Prius cars in Europe. Toyota rose 1.8 percent to 3,340 yen as of 9:57 a.m. on the Tokyo Stock Exchange. The company has lost about $33 billion in market value since Jan. 21, when it announced a recall of 2.3 million U.S. vehicles for defects linked to unintended acceleration. To contact the reporter on this story: Makiko Kitamura in Tokyo at mkitamura1@bloomberg.net

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Apple Co-Founder Wozniak Says Prius Brake Problems Shouldn’t Deter Buyers

February 8, 2010

By Pavel Alpeyev and Jeffrey Taylor Feb. 8 (Bloomberg) — Toyota Motor Corp. ’s trouble with the braking system of its Prius hybrid model shouldn’t deter buyers even though “it’s kind of scary,” Apple Inc. co-founder Steve Wozniak said. Wozniak, 59, last week said his 2010 Toyota Prius can unintentionally accelerate to as much as 97 miles (156 kilometers) per hour when he uses cruise control to increase his speed. Toyota will recall the 2010 model in Japan this week to repair the brake fault, two people familiar with the matter said. “All these problems should get fixed, but they shouldn’t stop people from buying the Prius,” Wozniak said in a telephone interview today. “There are bugs in every product.” The world’s largest automaker plans to recall at least 270,000 units of the gasoline-electric hatchback in Japan and the U.S. to repair braking systems, one person said, declining to be identified as the information isn’t yet public. Ririko Takeuchi , a spokeswoman for Toyota in Tokyo, said the company hasn’t decided yet whether to conduct a recall. While in cruise control, flicking the lever on the side of the steering wheel doesn’t always increase the speed of his car in increments as intended, Wozniak said last week. Instead, the vehicle would sometimes continue accelerating until the footbrake is used, he said at the time. The Japanese carmaker, based in Toyota City, has recalled at least 7.8 million vehicles on five continents, including the 2004-2009 Prius, to repair defects that have been linked to unintended acceleration. Wozniak’s 2010 Prius, which has a steering wheel-mounted dynamic radar cruise control, hasn’t been recalled by the company. “It sounds kind of scary,” Wozniak, who owns four Priuses, said of the brake-system problem. He said he’ll likely take his 2010 Prius in to have it checked, “but not right away.” Any deaths related to Toyotas under recall are not statistically significant, he said. Toyota fell 1.1 percent to close at 3,280 yen on the Tokyo Stock Exchange, in line with a 1.1 percent retreat by the benchmark Nikkei 225 Stock Average. To contact the reporter on this story: Pavel Alpeyev in Tokyo at palpeyev@bloomberg.net ; Jeffrey Taylor at Jtaylor48@bloomberg.net

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Virgin Money May Name Former Lloyds CEO Pitman as Chairman Amid Expansion

January 27, 2010

By Andrew MacAskill Jan. 27 (Bloomberg) — Virgin Money Holdings U.K. Ltd., Richard Branson’s financial-services division, is in talks with former Lloyds TSB Chief Executive Officer Brian Pitman about taking the post of chairman, a person familiar with the matter said. Pitman, 78, who advised Branson on his bid for Northern Rock Plc , may be named to the post as early as this week, said the person, who declined to be identified because the talks are private. Pitman was credited by analysts with transforming Lloyds TSB into Britain’s most profitable lender before his departure in 2001. Virgin today completed its acquisition of Church House Trust Plc, which will give the firm a banking license. Branson , chairman of Virgin Group Ltd., is one of several people planning to create lenders in the U.K. after the credit crunch led to a series of bank rescues including Royal Bank of Scotland Group Plc , and the departure of some overseas-based lenders. Chancellor of the Exchequer Alistair Darling said he wanted “new people” in the industry. A spokesman for Virgin Money declined to comment. An answer machine message left at Pitman’s office was not immediately returned. The Financial Times reported the news of Pitman’s possible appointment earlier. Both Branson and Pitman have received knighthoods from Queen Elizabeth. Pitman is also a senior adviser to the Financial Services Authority and to Morgan Stanley International . For Related News and Information: More banking news: NI BNK More merger and acquisition news: NI MNA

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Sun’s Schwartz, McNealy Said to Be Planning to Leave After Oracle Buyout

January 26, 2010

By Connie Guglielmo and Rochelle Garner Jan. 26 (Bloomberg) — Sun Microsystems Inc. ’s top executives, including Chief Executive Officer Jonathan Schwartz and Chairman Scott McNealy , will leave after the $7.4 billion buyout by Oracle Corp., people familiar with the matter said. Schwartz, McNealy, Chief Financial Officer Mike Lehman and other members of the executive team won’t be offered positions at Oracle, said the people, who declined to be identified because the plans aren’t public. The executives won’t resign because they would forfeit severance packages that are triggered by the sale, one person said. Oracle, which has made about 60 acquisitions since January 2005, hasn’t retained the CEOs of large companies it has bought. Those include the $10.3 billion takeover of PeopleSoft Inc., the $5.85 billion acquisition of Siebel Systems Inc. and the $8.5 billion purchase of BEA Systems Inc. Schwartz was set to receive $12 million as part of his severance package, McNealy would get $9.53 million, and Lehman is due $4.03 million, Sun said in a June 8 regulatory filing . Those sums didn’t include performance-based restricted stock, which Santa Clara, California-based Sun said it wasn’t able to value at the time. Schwartz, 44, took over the CEO job from co-founder McNealy in April 2006, a time when Sun was trying to recover from five years of losses. Schwartz and McNealy, 55, didn’t respond to e-mails seeking comment. Deborah Hellinger , a spokeswoman for Oracle, also didn’t respond to an e-mail. Hardware Push Sun, the fourth-biggest maker of server computers, is Oracle’s first purchase outside of the software market. Earlier this month, a Sun executive sent an e-mail to the company’s employees saying that Oracle will “rely heavily” on Sun’s workforce. Last week, Schwartz wrote a memo urging employees moving to Oracle to help the company expand. He told workers who may not be given jobs at Oracle that “Sun is a great brand on your resume.” Sun had almost 27,600 employees in September. Oracle CEO Larry Ellison is scheduled to host an event tomorrow at the company’s headquarters in Redwood City, California, to lay out plans to integrate Sun’s products. The purchase received European Union approval last week, which was among the last hurdles before the transaction is completed. The planned departure of Sun’s executives was reported yesterday by the All Things Digital blog. Sun rose 1 cent to $9.49 at 4 p.m. New York time in Nasdaq Stock Market trading. Oracle declined 15 cents to $23.88. To contact the reporters on this story: Connie Guglielmo in San Francisco at cguglielmo1@bloomberg.net ; Rochelle Garner in San Francisco at rgarner4@bloomberg.net

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Korea Development Bank Said to Consider Siam City Bid to Grow in Thailand

January 17, 2010

By Bomi Lim Jan. 18 (Bloomberg) — Korea Development Bank , South Korea’s largest state-owned lender, is considering bidding for a stake in Siam City Bank Pcl of Thailand, a person familiar with the matter said. Korea Development Bank Chief Executive Officer Min Euoo Sung is in Thailand for meetings with relevant officials, the person said, declining to be identified because the talks are preliminary. Local newspaper Chosun Ilbo earlier reported the company’s interest in Thailand’s seventh-biggest lender. Min, also chairman of parent KDB Financial Group Inc., said in a Nov. 16 interview he plans to buy at least two lenders in Asia this year, without naming potential targets or countries. The executive has said he wants to acquire commercial banks to build KDB’s deposits before an initial public offering scheduled for next year. Siam City Bank was nationalized in February 1998 after it missed a series of deadlines to meet capital standards. The lender’s fourth-quarter profit probably rose 64 percent from a year earlier to 1.05 billion baht ($32 million), according to analysts surveyed by Bloomberg. Thailand’s central bank plans to complete the sale of its 47.6 percent stake in Siam City Bank by the end of March. The central bank is seeking about $1 billion for the holding, people with knowledge of the matter said in November. Siam City Bank President Chaiwat Utaiwan wasn’t immediately available. A spokesperson at the Financial Institutions Development Fund, which owns the stake on behalf of the central bank, declined to comment. To contact the reporter on this story: Bomi Lim in Seoul at blim30@bloomberg.net

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Video: Google May Have Tried to Get Support Over Cyber Attack: Video

January 15, 2010

Jan. 15 (Bloomberg) — Google Inc. approached other companies to seek their help drawing attention to a cyber attack from China last month and was frustrated by their reluctance to come forward, according to a person familiar with the matter. Bloomberg’s Cris Valerio reports. (Source: Bloomberg)

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GIC-Invested Stuyvesant Town Said to Face Foreclosure After Missed Payment

January 12, 2010

By David M. Levitt Jan. 13 (Bloomberg) — Stuyvesant Town and Peter Cooper Village debt holders demanded payment from Tishman Speyer Properties LP and BlackRock Inc. within 10 days, a step toward foreclosing for New York’s largest apartment complex, said two people familiar with the matter. A group led by Winthrop Realty Trust which holds about $300 million in senior mezzanine debt said in a letter it intends to pursue “rights and remedies” including a foreclosure sale, according to the correspondence. The parties could act within 90 to 180 days, said the people. “The sharks are circling in the waters,” said New York City Councilman Daniel Garodnick , a Peter Cooper Village resident as well as its council representative. “This is a point of great concern.” Tishman Speyer and Blackrock missed a $16.1 million payment on the apartments last week. Their plans to cover the debt by raising rents were thwarted Oct. 22 when the state’s highest court ruled in favor of tenants who claimed some increases were illegal. Tishman Speyer and BlackRock paid $5.4 billion for Stuyvesant Town and Peter Cooper’s 11,200 apartments in 2006. In October, Fitch Ratings valued the property at $1.8 billion. New York City Housing Preservation and Development Commissioner Rafael Cestero said Jan. 8 that the city’s “overriding concern” was to keep rents within reach of “the hardworking middle-class families of New York.” Local officials must make good on that pledge, Garodnick said. The city should consider providing tax-exempt financing or other assistance, he said. Urging Action “We cannot simply let this opportunity slip away,” Garodnick said. Bud Perrone , a spokesman for New York-based Tishman Speyer, declined to comment yesterday. Tishman Speyer and BlackRock, also based in New York, each invested $112.5 million in Stuyvesant Town out of total equity financing of $1.9 billion. They took out a $3 billion mortgage from Wachovia Bank and $1.4 billion of mezzanine debt. The mortgage was packaged with other commercial properties loans and sold as securities. The biggest holders are Fannie Mae and Freddie Mac, the U.S. government-owned home-loan finance companies. Other investors include the Government of Singapore Investment Corp., manager of more than $100 billion of the city- state’s foreign reserves. GIC reported losses from its investment yesterday. General reserves of $190 million on Stuyvesant Town and Peter Cooper are depleted. A debt service reserve of $400 million, which Tishman Speyer had used for payments, dwindled to $5.64 million as of December, according to credit-rating company Realpoint LP. Contents of the letter about a possible foreclosure were reported yesterday by the REIT Newshound. To contact the reporter on this story: David M. Levitt in New York at dlevitt@bloomberg.net

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Bank of America’s Curl, Once Candidate for Top Job, Said to Face Demotion

January 12, 2010

By David Mildenberg Jan. 12 (Bloomberg) — Bank of America Corp. ’s Gregory Curl , a candidate for chief executive officer last year before Brian Moynihan won the job, may lose his current title as new managers are put in place, said people familiar with the matter. Curl, 61, may lose the title of chief risk officer when Moynihan assembles his leadership team for the Charlotte, North Carolina-based bank, said the people, who requested anonymity because the moves haven’t been announced. Curl didn’t return a telephone call for comment. Moynihan, who won the CEO job in December, may announce a management team within two weeks, including his own replacement as head of consumer banking, a person familiar with the matter said. Moynihan moved into that slot last August after heading the wealth-management and investment-banking businesses. “Selecting the retail-banking head is extremely important because that’s what has traditionally been Bank of America’s growth engine,” said Kenneth Thomas , an independent bank consultant in Miami. “Staying with an inside candidate would show Moynihan’s confidence in the company and its existing strategies. The Wall Street Journal reported earlier that Curl may lose his title. Moynihan, 50, said in a Jan. 4 interview that Bank of America must improve the performance of its businesses rather than expand through acquisitions. Curl’s main work since joining the company in 1996 has involved advising CEOs Kenneth D. Lewis and Hugh McColl Jr. on strategy and acquisition. Lewis, who retired at the end of December after leading the bank since 2001, pushed for Curl to succeed him, said a person familiar with the matter. Curl became chief risk officer last June, replacing Amy Brinkley after federal regulators urged the bank to review risk management and overhaul its board. With defaults on home loans and credit cards building, the bank is expected by analysts to report its third loss in the past five quarters when it announces fourth-quarter results on Jan. 20. The loss may be 52 cents a share, the average estimate of 17 analysts surveyed by Bloomberg. Curl lives in Charlotte, while Moynihan resides in suburban Boston. To contact the reporter on this story: David Mildenberg in Charlotte at dmildenberg@bloomberg.net

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SABMiller Said to Have Pulled Out of Bidding for Beer Division of Femsa

January 10, 2010

By Beth Mellor Jan. 11 (Bloomberg) — SABMiller Plc , the world’s second- largest brewer, pulled out of bidding for the beer division of Fomento Economico Mexicano SAB , or Femsa, according to a person with knowledge of the talks. Heineken NV is close to an agreement to buy Femsa’s beer operations for about $8 billion, the Wall Street Journal reported yesterday, citing people familiar with the matter. SABMiller dropped out of the bidding in December after it wasn’t prepared to match Heineken’s offer, said the person, who declined to be identified because the talks are private. The acquisition of Femsa’s beer unit would give Heineken a greater presence in Mexico, one of the world’s most profitable beer markets, and the deal may be announced as soon as this week, the Journal said. Heineken distributes Femsa brands including Dos Equis in the U.S., and the Mexican brewer has said it’s in talks with “several parties” about the beer division. Amsterdam-based Heineken and SABMiller were considering either a merger or joint venture with Femsa’s beer division, three people familiar with the matter said in October. A Heineken spokeswoman declined to comment, and a Femsa spokeswoman had no immediate comment. To contact the reporter on this story: Beth Mellor in London at bmellor@bloomberg.net

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Japan Airlines’ Largest Banks Said to Agree to Bankruptcy Plan for Carrier

January 9, 2010

By Finbarr Flynn and Chris Cooper Jan. 9 (Bloomberg) — Japan Airlines Corp. ’s largest banks are set to agree to a bankruptcy of Asia’s largest carrier, said four sources familiar with the matter. Mitsubishi UFJ Financial Group Inc. , Sumitomo Mitsui Financial Group Inc. and Mizuho Financial Group Inc. are prepared to go along with a proposed court-led reconstruction, said three people who declined to be identified because the matter is private. The state-owned Development Bank of Japan already agreed to the bankruptcy, a person said earlier. Japan Air is seeking new investors and loan write-offs as it restructures after posting three losses in four years. The government will hold talks on JAL’s future as soon as Jan. 12, Transport Minister Seiji Maehara told reporters yesterday in Tokyo after meeting with Prime Minister Yukio Hatoyama . Mizuho spokeswoman Masako Shiono , Mitsubishi UFJ spokesman Takashi Takeuchi and JAL spokeswoman Sze Hunn Yap declined to comment. Sumitomo Mitsui spokeswoman Chika Togawa wasn’t immediately available for comment and calls to the media relations office of the Ministry of Finance, which oversees Development Bank, went unanswered outside regular office hours To contact the reporters on this story: Finbarr Flynn in Tokyo at fflynn3@bloomberg.net ; Chris Cooper in Tokyo at ccooper1@bloomberg.net

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Diamond Castle’s Schloss Said to Be in Talks to Join New York Pension Fund

January 7, 2010

By Cristina Alesci Jan. 7 (Bloomberg) — Lawrence Schloss , the chairman of Diamond Castle Holdings LLC, is in talks to take a job advising New York City’s $96.4 billion pension funds and leave the buyout firm he founded in 2004, according to two people familiar with the matter. In his new role, Schloss would work with the five boards that make investment decisions for funds covering civil service employees, teachers, firefighters, police officers and school administrators, said the people, who declined to be identified because the information hasn’t been disclosed. John Liu , a Democrat, was sworn into the Office of the New York City Comptroller this month, replacing William Thompson , who held the post since 2002. Liu, 42, vowed to avoid “aggressive esoteric financial instruments,” cut waste from the city’s budget and examine millions in no-bid contracts. Schloss, 55, didn’t return calls seeking comment. Sharon Lee, a spokeswoman for Liu, declined to comment. The city had about 42 percent of its retirement fund assets in U.S. stocks, 30 percent in bonds, and 8 percent in private equity and real estate as of Sept. 30, according to its Web site. Schloss will help manage a retirement system whose organizational structure is different from other public pension funds. Unlike the California Public Employees’ Retirement System or the New York State’s Common Fund, the city comptroller’s Bureau of Asset Management serves as investment adviser to five boards, each with its own investment philosophies. The boards are comprised of elected and appointed officials and union representatives. Schloss was the global head of CSFB Private Equity, a $32 billion alternative asset investment business, prior to founding Diamond Castle in 2004, according to the Diamond Castle Web site . Prior to the acquisition of DLJ by CSFB, he was chairman of DLJ Merchant Banking Partners from 1995, the Web site said. Schloss’s move was reported earlier by peHub, a private- equity Web site. To contact the reporter on this story: Cristina Alesci in New York at Calesci2@bloomberg.net ;

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Goldman Said to Plan to Convert Sumitomo Mitsui Shares as Bank Mulls Sale

January 5, 2010

By Takahiko Hyuga and Finbarr Flynn Jan. 6 (Bloomberg) — Goldman Sachs Group Inc. plans to convert 100 billion yen ($1.09 billion) of preferred shares in Sumitomo Mitsui Financial Group Inc. into common stock as early as April, a person familiar with the matter said. Goldman Sachs, the world’s most profitable securities firm, may convert its 33,400 preferred shares in the fiscal year starting April 1, the person said, declining to be identified. Separately, Sumitomo Mitsui, Japan’s second-largest bank by market value, plans to sell 800 billion yen of shares, people with knowledge of the matter said yesterday. Sumitomo Mitsui President Teisuke Kitayama is under pressure to boost capital that trails the average among global rivals, according to Standard & Poor’s. Kitayama said last month he doesn’t want to be “slow off the block” in following larger competitor Mitsubishi UFJ Financial Group Inc. to sell shares. The Nikkei English News earlier reported that Sumitomo Mitsui asked Goldman Sachs to convert its preferred shares into common stock, without saying where it got the information. Goldman Sachs’s Tokyo-based spokeswoman Hiroko Matsumoto declined to comment. Kyosuke Hattori , a spokesman for Sumitomo Mitsui, said no decision has been made about asking Goldman Sachs to convert its preferred shares. The New York-based firm bought 150.3 billion yen of preferred shares in Sumitomo Mitsui in 2003 to help bolster the bank’s capital, eroded by losses on stockholdings and bad loans. Goldman Sachs converted a third of the securities into common stock in April 2008. Sumitomo Mitsui shares closed at 2,653 yen yesterday, down from 8,950 yen on April 30, 2008. The stock climbed 4 percent today as of 11 a.m. in Tokyo trading. To contact the reporters on this story: Takahiko Hyuga in Tokyo at thyuga@bloomberg.net

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Sumitomo Mitsui Said to Plan $8.7 Billion Share Sale to Replenish Capital

January 4, 2010

By Brett Miller Jan. 5 (Bloomberg) — Sumitomo Mitsui Financial Group Inc., Japan’s second-largest bank by market value, may announce plans as early as this week to raise about 800 billion yen ($8.7 billion) in a share sale, two people familar with the matter said.

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Aiful Credit-Default Swaps to Be Paid Out After Lender Delays Repayments

December 30, 2009

By Abigail Moses and Yusuke Miyazawa Dec. 30 (Bloomberg) — Credit-default swaps insuring about $1.3 billion of Aiful Corp.’s debt will be paid out after Japan’s third biggest consumer lender delayed loan repayments, the International Swaps & Derivatives Association said. Aiful triggered a so-called restructuring event when it agreed to extend the maturity of loans to avoid bankruptcy, ISDA’s Japan Determinations Committee ruled today. The Kyoto- based company said last week it would delay payments on 280 billion yen ($3 billion) of debt until Sept. 30 next year. The committee’s ruling ends a dispute that threatened to undermine confidence in Japan’s default swaps market. It previously rejected three requests to determine a credit event occurred, citing a lack of publicly available information on which to make a judgment, even though Tokyo-based Aozora Bank Ltd. said it hadn’t been paid by Aiful. “This is significant in Japan’s credit-default swaps history,” said Junichi Shimizu , an analyst at Deutsche Bank AG in Tokyo. “It will be a precedent.” Aiful faced possible failure after Goldman Sachs Group Inc. this month demanded that its 3.7 billion yen in loans be repaid. The company offered to settle the borrowing at a discount to win the New York-based lender’s support for its restructuring proposal, two people familiar with the matter said on Dec. 11. First Auction It’s the first time swaps on a Japanese company will be settled at auction and may set a model for future events. Japan Airlines Corp . plunged to a record in Tokyo trading today on speculation the company may seek bankruptcy protection. Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a company fail to meet its debt commitments. A total 2,780 contracts were outstanding on Aiful debt as of Dec. 25, making it the second-most insured Japanese borrower after the government, according to Depository Trust & Clearing Corp. in New York, which runs a central registry that captures most trading. Run by founder and Chief Executive Officer Yoshitaka Fukuda , Aiful hasn’t sold bonds in public markets since March 2007 and reported a record first-half loss of 282.3 billion yen in November. It struggled with debt after a crackdown by authorities on excessive interest rates made Japan’s consumer lenders liable to pay billions of dollars of refunds. Aiful said Dec. 24 it will have repaid 76 billion yen by June 10, 2014. It also said 2,095 employees will retire by Feb. 28, helping reduce annual staff costs by 13 billion yen, and that it took a one-time charge of 5.8 billion yen for the cuts. To contact the reporter on this story: Abigail Moses in London at Amoses5@bloomberg.net ; Yusuke Miyazawa in Tokyo at ymiyazawa3@bloomberg.net

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Pali’s Anthony Said to Take About 10 Traders With Him to BGC Partners Job

December 24, 2009

By Jeff Kearns and Josh Fineman Dec. 24 (Bloomberg) — Richard Anthony resigned as head of global derivatives at brokerage Pali Capital Inc. to join BGC Partners Inc. , taking about 10 traders with him, according to people familiar with the matter. Anthony left last week, according to Pali spokesman Russell Sherman . He was replaced at New York-based Pali by Tim Strazzini , previously the firm’s head of U.S. equity strategic sales, according to a company statement. Robert Hubbell , a spokesman for New York-based BGC, confirmed that Anthony joined the firm, which matches trades between banks. U.S. options trading volume has more than quadrupled since 2002 as investors seek to protect against stock declines and amplify returns, according to Chicago-based Options Clearing Corp., which clears all trades on the nation’s seven options exchanges. Last month, 265 million options on stocks, indexes and exchange-traded funds changed hands, according to OCC data. “BGC hires for specific reasons, and if that team can add profitability they’ll go after them,” said Richard Repetto , an analyst with Sandler O’Neill & Partners LP in New York. “The interdealer broker industry is a highly competitive one.” Dana Murphy-Chutorian , Michael Purves , Paul Schulman , William Barr , Sean McHugh , Anthony Pendas , David Peebler , Elizabeth Kent and Ross McMeekin left Pali along with Anthony, according to people familiar with the matter. Data compiled by the Financial Industry Regulatory Authority shows all nine left Pali and joined BGC this month. Lawsuit in London BGC rival Tullett Prebon Plc, the second-largest interdealer broker by market value, is suing its competitor in London seeking cash compensation and a court order stopping BGC from poaching its staff. London-based Tullett last month also sued BGC in New Jersey alleging racketeering and seeking at least $1 billion in damages for hiring away 164 brokers in Hong Kong, Singapore, Tokyo, London and the U.S. Interdealer brokers act as a go-between for banks that trade bonds, stocks, currencies, energy and derivatives. They typically handle more trades between banks. BGC shares were unchanged at $4.38 as of 11:17 a.m. in New York. They have climbed 59 percent this year, almost quadruple the return for the Standard & Poor’s 500 Financials Index. To contact the reporters on this story: Jeff Kearns in New York at jkearns3@bloomberg.net ; Josh Fineman in New York at jfineman@bloomberg.net .

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Ford Said to See Volvo Sale as Likely to China’s Geely, May Get $2 Billion

December 22, 2009

By Keith Naughton, Ola Kinnander and Cathy Chan Dec. 23 (Bloomberg) — Ford Motor Co. , seeking to unload its unprofitable Volvo unit, will announce today that talks with Zhejiang Geely Holding Group Co. have progressed to the point where a sale is likely, a person familiar with the matter said. Ford, which named China’s Geely its “preferred bidder” for Volvo on Oct. 28, also will lay out an estimated timeline for completing the sale in a statement to be issued today, said the person, who asked not to be identified because the details aren’t public yet. John Gardiner , a Ford of Europe spokesman, didn’t immediately respond to a request for comment. Volvo was put on the block a year ago as Ford finishes shedding overseas luxury brands to focus on its namesake division. Geely is offering about $2 billion, less than one- third what Dearborn, Michigan-based Ford paid for the Swedish unit a decade ago, people familiar with the bid have said. Ford has been making progress to resolve sale issues such as protection of intellectual property, a person familiar with the talks has said. Geely, China’s second-largest private automaker, hopes to gain insights into Western vehicle development and manufacturing through Volvo, people familiar with the negotiations have said. “Ford has integrated Volvo into their platforms and a lot of technology, like safety technology,” said John Wolkonowicz , an analyst at IHS Global Insight of Lexington, Massachusetts. “Why prop up China with your technology when you know they’re going to become a major competitor someday?” Geely is seeking Chinese government support for the Volvo acquisition, two people familiar with the discussions have said. The company has hired German-based Roland Berger Strategy Consultants for advice on restructuring, the people said. Geely Automobile Holding Ltd. is the listed unit of Li Shufu’s Geely Group. Zhejiang Geely, owned 90 percent by Li and 10 percent by his son, is the ultimate holding company for the group. Yuan Xiaolin , a spokesman for the holding company, wasn’t immediately available to comment. To contact the reporters on this story: Keith Naughton in Southfield, Michigan, at Knaughton3@bloomberg.net ; Ola Kinnander in Stockholm at okinnander@bloomberg.net ; Cathy Chan in Hong Kong at kchan14@bloomberg.net

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Rusal’s Initial Share Sale Said to Be Approved by Hong Kong Stock Exchange

December 18, 2009

By Bei Hu and Yuriy Humber Dec. 18 (Bloomberg) — United Co. Rusal’s application for an initial public offering on Hong Kong’s stock exchange received conditional approval from the bourse, said two people familiar with the matter. Moscow-based Rusal plans to start gauging demand for the sale on Jan. 4, the people said, declining to be identified because no announcement has been made. The IPO also needs approval from the Securities and Futures Commission , one of the people said. The SFC has proposed to limit the sale to institutional investors, people with knowledge of the matter said today. Rusal, controlled by billionaire Oleg Deripaska , had its plan to become the first Russian company to go public in Hong Kong delayed this month when the Hong Kong bourse sought more information on the company’s debt restructuring. “The exchange regards the issue as a high-risk investment, but they are under pressure to allow the listing to go ahead,” said Eric Kraus , head of strategy at Otkritie Financial Co. in Moscow. Lorraine Chan , a spokeswoman for the exchange, declined to comment. Rusal plans to sell 10 percent of its shares to help repay debt. Earlier this month, it signed a $17 billion accord with creditors in Russia’s largest corporate debt restructuring, paving the way for the Hong Kong IPO. The exchange’s listing committee withheld approval for Rusal’s application at a meeting on Nov. 26 and asked the company for more information, including about its debt restructuring. In a Dec. 7 review, the exchange failed to approve Rusal’s bid and asked the company to explain how it would repay a $4.5 billion loan from Russian state-owned lender Vnesheconombank. The IPO would make Rusal the first Russian company listed on the Hong Kong stock exchange, which is wooing international companies amid growing regional competition. To contact the reporters on this story: Bei Hu in Hong Kong at bhu5@bloomberg.net ; Yuriy Humber in Moscow at yhumber@bloomberg.net .

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Rusal Said to Face Proposal to Limit Hong Kong Share Sale to Institutions

December 17, 2009

By Bei Hu, Cathy Chan and Yuriy Humber Dec. 18 (Bloomberg) — United Co. Rusal, the world’s largest aluminum producer, may have to exclude individual investors from its planned initial public offering in Hong Kong, three people familiar with the matter said. Hong Kong’s Securities and Futures Commission proposed limiting the sale to institutions, the people said, declining to be identified. The regulator is discussing the matter with Rusal and no conclusion has been reached, they said. The SFC is seeking to limit risks to individual investors, after Rusal’s IPO was delayed as the Hong Kong bourse sought more information about the company’s debt restructuring, the people said. Rusal, controlled by billionaire Oleg Deripaska , aims to become the first Russian company to go public in Hong Kong, which has tried to lure overseas firms to its exchange. “The exchange regards the issue as a high-risk investment, but they are under pressure to allow the listing to go ahead,” said Eric Kraus , head of strategy at Otkritie Financial Co. in Moscow. Moscow-based Rusal, which plans to sell a 10 percent stake to help repay debt, completed the restructuring of $17 billion of borrowings this month. The Hong Kong bourse’s listing committee asked Rusal for more information on a $4.5 billion loan from state development bank Vnesheconombank, people with knowledge of the matter said this month. Russian state-controlled lender OAO Sberbank agreed to refinance the loan unless Vnesheconombank rolls it over, the Financial Times reported yesterday, citing people it didn’t identify. The Wall Street Journal reported the talks about excluding retail investors from the IPO earlier, citing unidentified people. Rusal spokesman Vera Kurochkina declined to comment, as did spokespeople for the Hong Kong Stock Exchange and the SFC. Vnesheconombank spokeswoman Yekaterina Karasina declined to comment and Sberbank spokesman Alexander Baziyan said he couldn’t immediately comment. To contact the reporters on this story: Bei Hu in Hong Kong at bhu5@bloomberg.net ; Yuriy Humber in Moscow at yhumber@bloomberg.net

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Bank of America Names Brian Moynihan as Chief Executive, Replacing Lewis

December 16, 2009

By David Mildenberg Dec. 16 (Bloomberg) — Bank of America Corp., the biggest U.S. lender, promoted Brian Moynihan to chief executive officer, a person familiar with the matter said. Moynihan, the 50-year-old head of the consumer banking unit, will be in charge of repairing the company after the tumultuous takeover of Merrill Lynch & Co. pushed Kenneth D. Lewis into early retirement. Lewis, 62, said Sept. 30 he’d step down by the end of this year. Bank of America’s new boss must stanch defaults on consumer loans tied to the recession, which led to two losses in the past four quarters. He must also integrate Merrill Lynch and smooth relations with regulators after they clashed with Lewis over the purchase. The bank paid back $45 billion to the U.S. Troubled Asset Relief Program on Dec. 9. Moynihan takes charge of the biggest U.S. lender by assets and deposits, the No. 1 home lender and the largest issuer of debit cards. He’ll also oversee underwriting, trading and retail brokerage operations of New York-based Merrill Lynch. The bank counts 53 million consumer and small-business customers in 150 countries at 6,000 offices, and the company’s stock is a component of the Dow Jones Industrial Average . To contact the reporters on this story: David Mildenberg in Charlotte at dmildenberg@bloomberg.net .

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Playboy Shares Fall as Iconix Brand Said to Be Breaking Off Takeover Talks

December 16, 2009

By Lauren Coleman-Lochner and Serena Saitto Dec. 16 (Bloomberg) — Playboy Enterprises Inc. , owner of the namesake men’s magazine, fell in New York Stock Exchange trading on concern that talks about a sale to Iconix Brand Group Inc. are collapsing. Iconix is breaking off discussions after the New York-based company determined it would be too complicated to divest, shut down or find partners for Playboy units it didn’t want to operate, said two people familiar with the matter. The situation is still fluid and may be resolved soon, another person said. A sale of Playboy would mean an exit for founder and majority shareholder Hugh Hefner , 83, after his daughter Christie Hefner stepped down as chief executive officer of the unprofitable company in January. Iconix could have licensed the Playboy brand to manufacturers and retailers, and expanded beyond its apparel lines, which include London Fog and Danskin. “From a recognition standpoint, it’s clearly one of the world’s best,” said Gabe Fried , founder of Streambank LLC, a Needham, Massachusetts-based brand-consulting firm, in reference to the Playboy brand. Martha Lindeman , a spokeswoman for Chicago-based Playboy , declined to comment. Tara Levy, a spokeswoman for Iconix, wasn’t immediately available to comment. Playboy fell 51 cents, or 13 percent, to $3.33 at 11:19 a.m. in New York Stock Exchange composite trading after dropping as much as 18 percent, the biggest intraday decline since Nov. 17. The stock had gained 78 percent this year before today. Iconix, led by Chairman and CEO Neil Cole , added 12 cents to $12.10 on the Nasdaq Stock Market and had risen 22 percent through yesterday. Hugh Hefner Under Hugh Hefner, Playboy magazine garnered a following for its fiction, with authors including Vladimir Nabokov , as well as its photos of nude women. Hefner first published Playboy in 1953 with photos of Marilyn Monroe . Christie Hefner , 57, resigned as chairman and CEO after running the company since 1988. Scott Flanders , the former CEO of Freedom Communications Inc., took over in June. In the third quarter, Playboy’s net loss narrowed to $1.1 million, or 3 cents a share, from $6.2 million, or 19 cents, a year earlier, according to a Nov. 5 statement. Revenue fell 20 percent to $56 million. To contact the reporters on this story: Lauren Coleman-Lochner in New York at llochner@bloomberg.net ; Serena Saitto in New York at ssaitto@bloomberg.net .

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U.S. May Remove Rule That Allows Comcast to Withhold Telecasts From Rivals

December 15, 2009

By Todd Shields and Molly Peterson Dec. 15 (Bloomberg) — U.S. regulators may change a rule that has let Comcast Corp. withhold telecasts of Philadelphia professional sports teams from satellite competitors DirecTV Group Inc. and Dish Network Corp., a person familiar with the matter said. Federal Communications Commission staff will send a recommendation tomorrow to the agency’s five members to revise the rule, said a commission official, who asked not to be identified because the matter hasn’t been made public. Disputes over sports programming have also flared between cable companies, which own regional sports networks that control coverage rights, and telephone providers, which increasingly offer television service. The FCC in March rejected AT&T Inc.’s bid to force Cox Communications Inc. to sell it rights to air San Diego Padres baseball games. AT&T dropped a 2007 complaint against Cablevision Systems Corp. after the New York-based cable-TV provider agreed to let AT&T air New York Knicks basketball games and other sports programs in Connecticut. Verizon withdrew a similar complaint against Cablevision in 2006 after the companies reached an agreement. Comcast, the largest U.S. cable-television operator, agreed this month to form a $37 billion joint venture combining General Electric Co.’s NBC Universal with its own media assets, strengthening a push into programming. It will ask U.S. regulators to approve the deal. To contact the reporters on this story: Todd Shields in Washington at tshields3@bloomberg.net ; Molly Peterson in Washington at mpeterson9@bloomberg.net

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Bank of America Leans Toward Insider as CEO After Kelly Drops Out of Race

December 15, 2009

By David Mildenberg and Sree Vidya Bhaktavatsalam Dec. 15 (Bloomberg) — Bank of America Corp. is more likely to promote someone from its own ranks to be chief executive officer after the leading outside candidate withdrew, according to a person familiar with the matter. No other outsider is actively engaged in talks with the company now that Bank of New York Mellon Corp. CEO Robert Kelly has dropped out, said the person, who declined to be identified because the search is confidential. Bank of America’s board hasn’t made a decision about the next CEO, the person said. The six-person committee leading the search to replace Kenneth D. Lewis may now turn to Chief Risk Officer Gregory Curl , 61, or Brian Moynihan , 50, who heads consumer banking. Lewis plans to leave at the end of the year. “There is a strong sentiment on Wall Street that any internal candidate isn’t going to be the person to take the rust off the reputation of Bank of America,” David Dietze , president and chief investment strategist at Point View Financial Services in Summit, New Jersey, said in an interview. His company owns an undisclosed number of the bank’s shares. Kelly told his employees yesterday for a second time he won’t leave his job, according to a memo obtained by Bloomberg. Kelly was in talks last week with Bank of America’s board after the largest U.S. lender repaid a $45 billion taxpayer bailout, people familiar with the matter said. Kelly, 55, had told the operating committee of BNY Mellon last month that he was “not interested” in the Bank of America position. Pay and Title Kelly had sought $20 million in pay and the title of chairman as well as CEO, the Wall Street Journal reported today, citing people familiar with the matter. Bank of America investors voted to split the duties of chairman and CEO in April. Scott Silvestri , a spokesman at Charlotte, North Carolina- based Bank of America, declined comment. “After talking with them, I firmly concluded that my place is here,” Kelly, who is chairman and CEO of BNY Mellon, wrote to his employees. Since the board started the CEO search in October at least four people have rebuffed approaches, including Citigroup Inc. director Michael O’Neill ; former JPMorgan Chase & Co. investment-banking co-head William Winters ; U.S. Bancorp CEO Richard Davis ; and Eugene McQuade , a former Freddie Mac president who now oversees Citigroup’s largest banking heads subsidiary, according to people familiar with the matter. “A lot of outsiders wanted to break up BofA, which I think is one of the better solutions, but I think the board wanted to keep it intact,” Paul Miller , an analyst at FBR Capital Markets Inc., said in a Bloomberg TV interview. Compensation was the main issue separating Bank of America’s board and Kelly, the person said. “Mr. Kelly was very flexible on compensation — in fact it was at the bottom of his list — but the more important drivers of his decision were the strategic opportunities for growth at BNY Mellon,” spokesman Kevin Heine said in an e-mail. Kelly declined to discuss his interest in Bank of America during an interview yesterday with Bloomberg TV after meeting with President Barack Obama over bank lending. Lewis, 62, also attended the meeting at the White House. Lewis said in September he would step down at the end of this year. Bank of America declined 24 cents, or 1.5 percent, to $15.39 at 10:18 a.m. in New York Stock Exchange composite trading. The shares have gained 9.2 percent this year. To contact the reporter on this story: Sree Vidya Bhaktavatsalam in Boston at sbhaktavatsa@bloomberg.net ; David Mildenberg in Charlotte at dmildenberg@bloomberg.net .

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Spyker Stands as Last Bidder for Saab, General Motors Chief Whitacre Says

December 15, 2009

By Katie Merx Dec. 15 (Bloomberg) — General Motors Co., which will decide the future of its Saab unit by the end of this month, is in talks with one bidder, Spyker Cars NV , Chief Executive Officer Ed Whitacre said. “I have a sense it’s possible,” Whitacre said today of a Saab sale to Spyker. GM’s board will close Saab, based in Trollhaettan in southwest Sweden, if it doesn’t have a deal by Dec. 31, the CEO told reporters at a roundtable in Detroit. Spyker, the Dutch maker of $235,000 sports cars, emerged as the frontrunner to buy Saab after talks with GM over the weekend in Zurich, people familiar with the matter have said. GM has separately reached a deal to sell some technologies for Saab’s 9-3 and 9-5 models to Beijing Automotive Industry Holding Co. , the automakers said yesterday. The Detroit carmaker is selling or winding down Saab after Koenigsegg Group AB backed out of a purchase agreement last month. Other bidders that have expressed interest in Saab since Koenigsegg’s pullout include Merbanco Inc., a Wyoming-based investor, and billionaire Ira Rennert’s Renco Group Inc., people familiar have said. A sale of Saab will also depend on Sweden’s guarantee and the European Union’s approval for a 400 million-euro ($582 million) loan from the European Investment Bank, people have said. To contact the reporter on this story: Katie Merx in Detroit at kmerx@bloomberg.net

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BNY Mellon’s Kelly Not Leaving to Become Bank of America Chief, Memo Shows

December 14, 2009

By Sree Vidya Bhaktavatsalam Dec. 14 (Bloomberg) — Bank of New York Mellon Corp.’s Robert Kelly told employees that he’s “not leaving” to take the job of chief executive officer of Bank of America Corp. “After talking with them, I firmly concluded that my place is here,” Kelly, who is chairman and CEO of BNY Mellon, wrote in a note to employees, a copy of which was obtained by Bloomberg News. Kelly was in talks last week with Bank of America’s board after the largest U.S. lender repaid a $45 billion taxpayer bailout, people familiar with the matter said. Kelly had told the operating committee of BNY Mellon last month that he was “not interested” in the Bank of America position. “I was approached by another bank as part of their CEO search process, Kelly wrote in today’s memo. “It’s not an opportunity that I sought,” he wrote. To contact the reporter on this story: Sree Vidya Bhaktavatsalam in Boston at sbhaktavatsa@bloomberg.net .

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Citigroup to Repay $20 Billion of Government Bailout

December 14, 2009

By Bradley Keoun Dec. 14 (Bloomberg) — Citigroup Inc. reached an accord with the Treasury Department and regulators to repay $20 billion of the bailout it received from U.S. taxpayers. The lender will sell $20.5 billion of capital and debt, the New York-based bank said in a statement today. The bank will sell $17 billion of common stock, with an over-allotment option of $2.55 billion, and $3.5 billion of tangible equity units. The U.S. Treasury will concurrently sell as much as $5 billion of common stock it holds. The bank said it will also substitute “substantial common stock” for cash compensation. Chief Executive Officer Vikram Pandit has pressed for an exit from the Troubled Asset Relief Program to avoid being the only large bank left on “exceptional assistance,” a Treasury designation reserved for companies including American International Group Inc. and General Motors Corp. that are surviving on taxpayer aid. Bank of America Corp. exited last week after paying back $45 billion of bailout funds. “We planned to exit TARP only when we were convinced that it was prudent to do so,’’ Pandit said in today’s statement. “By any measure of financial strength, Citi is among the strongest banks in the industry.” Citigroup fell to $3.88 in European trading today, down 1.8 percent from its $3.95 close in New York on Dec. 11. The stock has tumbled 41 percent this year, valuing the lender at about $90 billion. Pay Limits In October , Pandit said he was “focused on repaying TARP as soon as possible” in cooperation with regulators. Pandit pushed to accelerate the talks after Bank of America’s plan was announced, people familiar with the matter said last week. Pandit, 52, had indicated he’s seeking to repay the exceptional assistance partly on concern the government imposed pay limits might make Citigroup vulnerable to employee poaching by unfettered Wall Street rivals, according to people familiar with the matter. Citigroup, which took $45 billion of TARP funds last year, converted about $25 billion in September into common stock, equivalent to a 34 percent stake. The government is winding down the bailout programs it arranged as financial markets convulsed late last year. Treasury Secretary Timothy Geithner said in a Dec. 4 interview that most taxpayer money injected into banks through TARP will eventually be recovered. JPMorgan Chase & Co. , Goldman Sachs Group Inc. and Morgan Stanley , all based in New York, repaid bailout funds in June. San Francisco-based Wells Fargo & Co., with $25 billion of TARP money, isn’t subject to pay limits because it never needed a second helping of bailout funds. To contact the reporter on this story: Bradley Keoun in New York at bkeoun@bloomberg.net .

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Citigroup to Repay $20 Billion of TARP Securities, End Agreement With U.S.

December 14, 2009

By Bradley Keoun Dec. 14 (Bloomberg) — Citigroup Inc. is nearing an accord with the Treasury Department and regulators that would let the bank repay its $20 billion of bailout funds and escape government pay limits, people familiar with the matter said. Under the plan, which may be announced as soon as today, the U.S. bank would raise about $20 billion of capital, said three people briefed on the plan, who declined to be identified because the talks are private. A partial offering of the Treasury’s 7.7 billion shares may be coordinated with New York- based Citigroup’s effort to raise capital, the people said. Chief Executive Officer Vikram Pandit is pressing for an exit from the Troubled Asset Relief Program to avoid being the only large bank left on “exceptional assistance,” a Treasury designation reserved for companies including American International Group Inc. and General Motors Co. that are surviving on taxpayer aid. Bank of America Corp. exited last week after paying back $45 billion of bailout funds. “It is important to get back to normal and if they pay back the TARP money they aren’t so much under the pressure of public opinion,” said Roger Groebli , Singapore-based head of financial market analysis at LGT Capital Management, which oversees about $75 billion. Citigroup rose to $4.01 in European trading today, up 1.5 percent from its $3.95 close in New York on Dec. 11. The stock has tumbled 41 percent this year, valuing the lender at about $90 billion. Treasury, FDIC Citigroup also plans an early termination of guarantees from the Treasury, Federal Deposit Insurance Corp. and the Federal Reserve on $301 billion of the bank’s riskiest securities, mortgages, auto loans, commercial real estate and other assets, the people said. Citigroup paid $7 billion in advance for the guarantees , which last five to 10 years, depending on the type of underlying assets. The matter remains under discussion, the people said, adding that the terms or timing could still change. In October , Pandit, said he was “focused on repaying TARP as soon as possible” in cooperation with regulators. Pandit pushed to accelerate the talks after Bank of America’s plan was announced, people familiar with the matter said last week. Pandit, 52, has indicated he’s seeking to repay the exceptional assistance partly on concern the government-imposed pay limits might make Citigroup vulnerable to employee poaching by unfettered Wall Street rivals, according to people familiar with the matter. Citigroup spokesman Jon Diat declined to comment. A Treasury spokesman, Andrew Williams , declined to comment. Williams said last week, “We continue to believe that banks and our financial system are better off with private capital instead of government capital.” Wind Down Citigroup, which took $45 billion of TARP funds last year, converted about $25 billion in September into common stock, equivalent to a 34 percent stake. Some details of Citigroup’s plan were reported earlier by the Wall Street Journal. The government is trying to wind down bailout programs extended as financial markets convulsed late last year. Treasury Secretary Timothy Geithner said in a Dec. 4 interview that most taxpayer money injected into banks through TARP will eventually be recovered. JPMorgan Chase & Co. , Goldman Sachs Group Inc. and Morgan Stanley , all based in New York, repaid bailout funds in June. San Francisco-based Wells Fargo & Co., with $25 billion of TARP money, isn’t subject to pay limits because it never needed a second helping of bailout funds. To contact the reporter on this story: Bradley Keoun in New York at bkeoun@bloomberg.net .

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Citigroup to Repay $20 Billion of TARP Securities, End Agreement With U.S.

December 14, 2009

By Bradley Keoun Dec. 14 (Bloomberg) — Citigroup Inc. is nearing an accord with the Treasury Department and regulators that would let the bank repay its $20 billion of bailout funds and escape government pay limits, people familiar with the matter said. Under the plan, which may be announced as soon as today, the U.S. bank would raise about $20 billion of capital, said three people briefed on the plan, who declined to be identified because the talks are private. A partial offering of the Treasury’s 7.7 billion shares may be coordinated with New York- based Citigroup’s effort to raise capital, the people said. Chief Executive Officer Vikram Pandit is pressing for an exit from the Troubled Asset Relief Program to avoid being the only large bank left on “exceptional assistance,” a Treasury designation reserved for companies including American International Group Inc. and General Motors Co. that are surviving on taxpayer aid. Bank of America Corp. exited last week after paying back $45 billion of bailout funds. “It is important to get back to normal and if they pay back the TARP money they aren’t so much under the pressure of public opinion,” said Roger Groebli , Singapore-based head of financial market analysis at LGT Capital Management, which oversees about $75 billion. Citigroup rose to $4.01 in European trading today, up 1.5 percent from its $3.95 close in New York on Dec. 11. The stock has tumbled 41 percent this year, valuing the lender at about $90 billion. Treasury, FDIC Citigroup also plans an early termination of guarantees from the Treasury, Federal Deposit Insurance Corp. and the Federal Reserve on $301 billion of the bank’s riskiest securities, mortgages, auto loans, commercial real estate and other assets, the people said. Citigroup paid $7 billion in advance for the guarantees , which last five to 10 years, depending on the type of underlying assets. The matter remains under discussion, the people said, adding that the terms or timing could still change. In October , Pandit, said he was “focused on repaying TARP as soon as possible” in cooperation with regulators. Pandit pushed to accelerate the talks after Bank of America’s plan was announced, people familiar with the matter said last week. Pandit, 52, has indicated he’s seeking to repay the exceptional assistance partly on concern the government-imposed pay limits might make Citigroup vulnerable to employee poaching by unfettered Wall Street rivals, according to people familiar with the matter. Citigroup spokesman Jon Diat declined to comment. A Treasury spokesman, Andrew Williams , declined to comment. Williams said last week, “We continue to believe that banks and our financial system are better off with private capital instead of government capital.” Wind Down Citigroup, which took $45 billion of TARP funds last year, converted about $25 billion in September into common stock, equivalent to a 34 percent stake. Some details of Citigroup’s plan were reported earlier by the Wall Street Journal. The government is trying to wind down bailout programs extended as financial markets convulsed late last year. Treasury Secretary Timothy Geithner said in a Dec. 4 interview that most taxpayer money injected into banks through TARP will eventually be recovered. JPMorgan Chase & Co. , Goldman Sachs Group Inc. and Morgan Stanley , all based in New York, repaid bailout funds in June. San Francisco-based Wells Fargo & Co., with $25 billion of TARP money, isn’t subject to pay limits because it never needed a second helping of bailout funds. To contact the reporter on this story: Bradley Keoun in New York at bkeoun@bloomberg.net .

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Citigroup Said to Near Accord on $20 Billion TARP Payment, U.S. Stake Sale

December 13, 2009

By Bradley Keoun Dec. 14 (Bloomberg) — Citigroup Inc. is nearing an accord with the Treasury Department and regulators that would let the bank repay its $20 billion of bailout funds and escape government pay limits, people familiar with the matter said. Under the plan, which may be announced as soon as today, the U.S. bank would raise about $20 billion of capital, said three people briefed on the plan, who declined to be identified because the talks are private. A partial offering of the Treasury’s 7.7 billion shares may be coordinated with New York- based Citigroup’s effort to raise capital, the people said. Chief Executive Officer Vikram Pandit is pressing for an exit from the Troubled Asset Relief Program to avoid being the only large bank left on “exceptional assistance,” a Treasury designation reserved for companies including American International Group Inc. and General Motors Co. that are surviving on taxpayer aid. Bank of America Corp. exited last week after paying back $45 billion of bailout funds. Citigroup also plans an early termination of guarantees from the Treasury, Federal Deposit Insurance Corp. and the Federal Reserve on $301 billion of the bank’s riskiest securities, mortgages, auto loans, commercial real estate and other assets, the people said. Citigroup paid $7 billion in advance for the guarantees , which last five to 10 years, depending on the type of underlying assets. The matter remains under discussion, the people said, adding that the terms or timing could still change. In October , Pandit said he was “focused on repaying TARP as soon as possible” in cooperation with regulators. Pandit pushed to accelerate the talks after Bank of America’s plan was announced, people familiar with the matter said last week. Competitive Concern Pandit wants to repay the exceptional assistance partly out of concern that the government-imposed pay limits might make Citigroup vulnerable to employee poaching by unfettered Wall Street rivals, according to people familiar with the matter. Citigroup spokesman Jon Diat declined to comment. A Treasury spokesman, Andrew Williams , declined to comment. Williams said last week, “We continue to believe that banks and our financial system are better off with private capital instead of government capital.” Citigroup, which took $45 billion of TARP funds last year, converted about $25 billion in September into common stock, equivalent to a 34 percent stake. Some details of Citigroup’s plan were reported earlier by the Wall Street Journal. The government is trying to wind down bailout programs extended as financial markets convulsed late last year. Treasury Secretary Timothy Geithner said in a Dec. 4 interview that most taxpayer money injected into banks through TARP will eventually be recovered. JPMorgan Chase & Co. , Goldman Sachs Group Inc. and Morgan Stanley , all based in New York, repaid bailout funds in June. San Francisco-based Wells Fargo & Co., with $25 billion of TARP money, isn’t subject to pay limits because it never needed a second helping of bailout funds. To contact the reporter on this story: Bradley Keoun in New York at bkeoun@bloomberg.net .

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U.S. Stock-Index Futures Advance; Exxon Mobil, Chevron, Citigroup Climb

December 9, 2009

By Julie Cruz Dec. 9 (Bloomberg) — U.S. stock-index futures advanced, indicating the Standard & Poor’s 500 Index may snap a two-day drop, as a rebound in crude prices lifted oil companies and banks rose. Shares in Asia and Europe declined. Exxon Mobil Corp. and Chevron Corp. gained as crude oil climbed above $73 a barrel. Citigroup Inc., Bank of America Corp. and Wells Fargo & Co. increased as people familiar with the matter said Treasury Secretary Timothy Geithner is seeking to extend the financial-rescue program. Texas Instruments fell after a sales forecast from the second-largest U.S. chipmaker disappointed some investors. Futures on the S&P 500 expiring this month added 0.4 percent to 1,094.10 as of 11:29 a.m. in London. Dow Jones Industrial Average Index futures increased 0.3 percent to 10,300 and Nasdaq-100 Index futures advanced 0.4 percent to 1,775.25. A report today may show inventories at U.S. wholesalers fell 0.5 percent in October, compared with a 0.9 percent decline the previous month, according to economists’ estimates in a Bloomberg survey. The Commerce Department is scheduled to release the data at 10 a.m. Washington time. “U.S. inventories have started to turn around and they will continue to go up in the longer term,” said Tilmann Galler , who oversees about $15 billion at JPMorgan Asset Management in Frankfurt. “Weak economic figures and problems with Greece might keep the market in check.” U.S. stocks dropped for a second day yesterday as a reduction in Greece’s debt rating and a $3.65 billion loss by a Dubai developer added to concern that global credit markets are struggling to recover. Japan’s Economy A report today showed Japan’s economy expanded at less than a third of the pace initially reported in the three months to September as companies slashed spending. Record-low interest rates and about $12 trillion in spending by governments worldwide have spurred a 61 percent rally in the S&P 500 since March 9. The measure is valued at about 22 times its companies’ reported operating earnings, near the highest since 2002, weekly data compiled by Bloomberg show. Exxon, the world’s largest oil company, gained 0.5 percent to $73.31 in Germany. Crude for January delivery increased as much as 72 cents, or 1 percent, to $73.34 a barrel in electronic trading on the New York Mercantile Exchange after an industry report showed U.S. supplies dropped. Chevron, the second-largest U.S. oil company, advanced 0.7 percent to $77.31. Citigroup rose 0.8 percent to $3.94 in Germany, while Bank of America added 0.6 percent to $15.50 and Wells Fargo increased 0.3 percent in early New York trading. TARP Extension Geithner plans to tell Congress that the Obama administration will extend the $700 billion financial-rescue program until next October, according to people familiar with the matter. While the Troubled Asset Relief Program expires on Dec. 31, Geithner can extend it by notifying Congress. A letter notifying Congress of the extension could come as soon as today, said the people, who declined to be identified. Andrew Williams, a Treasury Department spokesman, declined to comment. Texas Instruments fell 0.9 percent to $26.09 in Germany. Sales will be $2.9 billion to $3.02 billion this quarter, compared with a previous forecast of $2.78 billion to $3.02 billion, the company said. Analysts in a Bloomberg survey had forecast $2.93 billion on average. To contact the reporter on this story: Julie Cruz in Frankfurt at jcruz6@bloomberg.net

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U.S. Stock-Index Futures Advance; Exxon Mobil, Chevron, Citigroup Climb

December 9, 2009

By Julie Cruz Dec. 9 (Bloomberg) — U.S. stock-index futures advanced, indicating the Standard & Poor’s 500 Index may snap a two-day drop, as a rebound in crude prices lifted oil companies and banks rose. Shares in Asia and Europe declined. Exxon Mobil Corp. and Chevron Corp. gained as crude oil climbed above $73 a barrel. Citigroup Inc., Bank of America Corp. and Wells Fargo & Co. increased as people familiar with the matter said Treasury Secretary Timothy Geithner is seeking to extend the financial-rescue program. Texas Instruments fell after a sales forecast from the second-largest U.S. chipmaker disappointed some investors. Futures on the S&P 500 expiring this month added 0.4 percent to 1,094.10 as of 11:29 a.m. in London. Dow Jones Industrial Average Index futures increased 0.3 percent to 10,300 and Nasdaq-100 Index futures advanced 0.4 percent to 1,775.25. A report today may show inventories at U.S. wholesalers fell 0.5 percent in October, compared with a 0.9 percent decline the previous month, according to economists’ estimates in a Bloomberg survey. The Commerce Department is scheduled to release the data at 10 a.m. Washington time. “U.S. inventories have started to turn around and they will continue to go up in the longer term,” said Tilmann Galler , who oversees about $15 billion at JPMorgan Asset Management in Frankfurt. “Weak economic figures and problems with Greece might keep the market in check.” U.S. stocks dropped for a second day yesterday as a reduction in Greece’s debt rating and a $3.65 billion loss by a Dubai developer added to concern that global credit markets are struggling to recover. Japan’s Economy A report today showed Japan’s economy expanded at less than a third of the pace initially reported in the three months to September as companies slashed spending. Record-low interest rates and about $12 trillion in spending by governments worldwide have spurred a 61 percent rally in the S&P 500 since March 9. The measure is valued at about 22 times its companies’ reported operating earnings, near the highest since 2002, weekly data compiled by Bloomberg show. Exxon, the world’s largest oil company, gained 0.5 percent to $73.31 in Germany. Crude for January delivery increased as much as 72 cents, or 1 percent, to $73.34 a barrel in electronic trading on the New York Mercantile Exchange after an industry report showed U.S. supplies dropped. Chevron, the second-largest U.S. oil company, advanced 0.7 percent to $77.31. Citigroup rose 0.8 percent to $3.94 in Germany, while Bank of America added 0.6 percent to $15.50 and Wells Fargo increased 0.3 percent in early New York trading. TARP Extension Geithner plans to tell Congress that the Obama administration will extend the $700 billion financial-rescue program until next October, according to people familiar with the matter. While the Troubled Asset Relief Program expires on Dec. 31, Geithner can extend it by notifying Congress. A letter notifying Congress of the extension could come as soon as today, said the people, who declined to be identified. Andrew Williams, a Treasury Department spokesman, declined to comment. Texas Instruments fell 0.9 percent to $26.09 in Germany. Sales will be $2.9 billion to $3.02 billion this quarter, compared with a previous forecast of $2.78 billion to $3.02 billion, the company said. Analysts in a Bloomberg survey had forecast $2.93 billion on average. To contact the reporter on this story: Julie Cruz in Frankfurt at jcruz6@bloomberg.net

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AIG General Counsel Kelly May Quit After Protesting U.S.-Imposed Pay Limit

December 8, 2009

By Hugh Son Dec. 8 (Bloomberg) — Anastasia Kelly , the general counsel of American International Group Inc. who threatened to quit over government-imposed pay limits, may resign as early as this month, said three people familiar with the matter. Kelly, 60, said in a Dec. 1 letter she was prepared to leave AIG by yearend because of impending compensation restrictions, and the insurer hasn’t sought to keep her, said the people, who declined to be identified because an announcement hasn’t been made. Michael Leahy , a lawyer who works at AIG’s New York headquarters, is among candidates being considered to succeed Kelly, said one of the people. Kelly joined AIG in 2006 to help the insurer recover from regulatory probes that led to the retirement of former Chief Executive Officer Maurice “Hank” Greenberg. Kelly, former general counsel at MCI/WorldCom and Fannie Mae, didn’t endear herself to AIG’s current CEO, Robert Benmosche , who took over in August, the people said. Mark Herr , a spokesman for AIG, and Leahy declined to comment. Kelly didn’t immediately return a phone call and e-mail seeking comment. To contact the reporter on this story: Hugh Son in New York at hson1@bloomberg.net .

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Morgan Stanley’s Gorman Said to Have Kelleher, Taubman Run Securities Unit

December 8, 2009

By Christine Harper Dec. 8 (Bloomberg) — Morgan Stanley’s James Gorman , set to be promoted to chief executive officer at year’s end, may unveil management changes including a new role for Chief Financial Officer Colm Kelleher , said a person familiar with the matter. Kelleher, 52, would be co-head of the institutional- securities business with Paul Taubman , the 48-year-old chief of investment banking, according to the person, who declined to be identified because the plans aren’t public. Gorman, the co-president who is taking over the CEO role from John Mack , would be installing his own team of people at the New York-based firm. The Financial Times reported the possible changes earlier today. Morgan Stanley , the second-biggest U.S. securities firm behind Goldman Sachs Group Inc. before both companies converted to banks, combined its retail-brokerage division with Citigroup Inc.’s Smith Barney earlier this year. The deal, hatched by Gorman, sharpens a focus on providing individuals with investment advice. Kelleher, who has worked at Morgan Stanley since 1989, held management positions in fixed income and global capital markets before becoming CFO in 2007. Taubman, who started his career at the firm in 1982, helped make Morgan Stanley the No. 1 adviser on global mergers and acquisitions this year, according to data compiled by Bloomberg. Mark Lake , a spokesman for Morgan Stanley, declined to comment. Kelleher and Taubman didn’t respond to requests for comment. Institutional securities, which includes mergers and acquisitions, underwriting and sales and trading, has lagged behind Goldman Sachs this year. The company is hiring 400 employees for sales and trading. Gorman, 51, is likely to remain president after becoming CEO, according to the person familiar with the matter. Walid Chammah , the 55-year-old co-president with Gorman, is giving up that role and keeping his other position of chairman of Morgan Stanley International in London. To contact the reporter on this story: Christine Harper in New York at charper@bloomberg.net .

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Lone Star Funds targets $1.2bn for distressed securities

December 4, 2009

the Dallas-based investment firm, has raised more than $1.2bn for two funds that will invest in commercial real estate and securities, according to a person familiar with the matter. The firm secured pledges for more than $500m for Lone Star Fund VII and

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Comcast, GE Said to Value Comcast’s Cable-TV Channels at Up to $7 Billion

December 1, 2009

By Kelly Riddell and Rachel Layne Dec. 1 (Bloomberg) — Comcast Corp. and General Electric Co. have valued Comcast’s channels at as much as $7 billion, potentially lowering the amount of cash the cable company would have to pay over time to form a venture with NBC Universal, according to a person familiar with the matter. Comcast, which is in talks to merge its cable channels with GE’s NBC entertainment assets, would probably also contribute about $6 billion in cash to the new company, said the person, who declined to be identified because the talks are private. GE owns 80 percent of NBC Universal and is in talks to buy Vivendi SA’s 20 percent stake. The Comcast assets, which include the Golf Channel and E! Entertainment, are valued by the companies at $6.5 billion to $7 billion, according to two people. Sanford C. Bernstein analyst Craig Moffett had estimated them to be worth about $6 billion. The higher valuation may mean Comcast can pay less up front to GE than originally discussed or receive a greater portion of the joint venture’s cash flow when the deal closes, the person said. Comcast would initially own 51 percent of the new company, gaining control of NBC Universal’s broadcast network, people familiar with the matter have said. The company also would get NBC Universal’s theme parks, movie studio and cable-television channels. Vivendi? Any deal between Comcast and GE is dependent on Vivendi selling its stake. GE and Vivendi agreed on a $5.8 billion valuation for the 20 percent stake in NBC Universal, two people with knowledge of the discussions said yesterday. The Paris- based company can notify GE during an annual window between Nov. 15 and Dec. 10. Comcast and GE value the assets of New York-based NBC Universal at about $30 billion, people familiar with the matter said last month. GE Chief Executive Officer Jeffrey Immelt didn’t provide details on the transaction when asked about it at a conference in Washington today. None of the companies have confirmed the discussions publicly. “I can’t talk too much about it,” said Immelt, 53. “I just think you always have to be thinking about what’s next in every industry you’re in, stay strategically agile, and I’ll leave it at that.” John Demming , a spokesman for Philadelphia-based Comcast, declined to comment, as did Vivendi spokesman Antoine Lefort . Comcast rose 26 cents to $14.92 at 1:54 p.m. New York time in Nasdaq Stock Market trading. GE, based in Fairfield, Connecticut, advanced 7 cents to $16.09. Vivendi climbed 76 cents to 19.95 euros in Paris trading . To contact the reporters on this story: Kelly Riddell in Washington at kriddell1@bloomberg.net ; Rachel Layne in Boston at rlayne@bloomberg.net

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CBOE Board Is Said to Plan Discussion of Selling Stock to Public Next Week

December 1, 2009

By Matthew Leising Dec. 1 (Bloomberg) — Directors of the Chicago Board Options Exchange, the largest U.S. options market, will be presented with a plan to shed its members-only structure and become a public company at a meeting Dec. 10, according to a person familiar with the matter. The meeting follows an agreement by the last major U.S. derivatives exchange that is still privately owned to pay $4.17 million to settle appeals in a three-year-old lawsuit related to its ownership structure. The nine-member executive committee, charged with formulating the company’s demutualization process, will outline its strategy next week to the other 21 board members , said the person, who asked not to be identified because the plan was meant to be private. The Chicago-based options exchange said yesterday that former members of the Chicago Board of Trade who held out after a judge approved a settlement of their suit last year agreed to dismiss their claims. Former CBOT seat holders said they were owed a bigger stake of the CBOE because they created the exchange in 1973. The case kept CBOE Chairman William Brodsky from following other exchanges that have gone public and seen their shares soar. “Settlement of the appeals would eliminate all remaining litigation impediments to demutualization within days or weeks instead of months,” the CBOE said in a statement on its Web site. “While we are quite comfortable that the appeals would not have been successful, we concluded that the settlement is in the best interest of CBOE.” Rising Value CBOE memberships have more than doubled from a three-year low of $1.2 million in March on speculation the 36-year-old U.S. derivatives market will be taken over. A seat last sold for $2.75 million on Nov. 5. The company halted seat sales this morning due to the lawsuit settlement. The Chicago Board of Trade was acquired by the Chicago Mercantile Exchange in 2007, creating CME Group Inc. , the world’s largest futures exchange. The Delaware Chancery Court lawsuit was filed in August 2006. Board of Trade members’ ownership rights were written into the CBOE’s incorporation documents after CBOT members created it in 1973. The CBOT almost tripled to $227.50 by the time it was acquired by the CME from its first-day closing price of $80.30 on Oct. 19, 2005. Nymex Holdings Inc., owner of the world’s largest energy exchange, doubled on its first trading day in 2006. To contact the reporter on this story: Matthew Leising in New York at mleising@bloomberg.net

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Galleon Said to End Singapore Operations at Year-End; Two Firms in Talks

December 1, 2009

By Netty Ismail Dec. 1 (Bloomberg) — Galleon Group LLC, the U.S. hedge- fund firm that’s liquidating after its founder was charged with insider trading, will stop operating in Singapore on Dec. 31, said two people familiar with the matter. At least two firms have been in talks to take on Galleon’s teams both in the U.S. and Singapore, one of the people said, asking not to be identified because the information is private. The teams in Singapore, which had assets of about $500 million before Raj Rajaratnam’s Oct. 16 arrest, also have been approached by other firms focusing on the region, another person said, declining to provide details because of non-disclosure agreements between Galleon and potential investors. Galleon, which managed about $3.7 billion, opened its Asian headquarters in Singapore last year, moving investment professionals from New York and hiring former DBS Group Holdings Ltd. Vice Chairman Frank Wong to help expand in the region. The employees are likely to be sought due to the limited talent pool in Asia’s hedge-fund industry, said Peter Douglas , principal of GFIA Pte, a Singapore-based hedge-fund consulting firm. “There’s a great deal of startup activity in the Asian hedge-fund industry, and all indications are that substantial global capital is poised to flow back to the sector,” he said. “The big constraint, as always, is the supply of skilled and credible people, so front and back office staff with experience within a major global hedge fund, located in Asia with Asian experience, are likely to be in strong demand.” Renee Soto , a spokeswoman for Galleon in New York, and David Lau , hired last year as a senior portfolio manager and partner to oversee the Singapore office, declined to comment. Liquidation Galleon has about 20 employees, including traders and analysts, in Singapore. Galleon’s funds, which will be wound down by the end of the year, are selling more illiquid investments now, one of the people said. The firm’s macro and Asian long-short equity funds are managed out of Singapore. Rajaratnam is one of 20 people accused in what prosecutors are calling the largest hedge-fund insider-trading ring ever charged. He is free on $100 million bail and has said he is innocent. Galleon’s Asian unit told the Monetary Authority of Singapore in October that its business in the region was then “not the subject of Securities and Exchange Commission investigations in the U.S.,” a spokeswoman at the Singapore central bank said in an e-mailed statement at the time. “Where we have clear evidence that a financial institution has breached our laws and regulations, we will hold the financial institution to account,” the spokeswoman said Oct. 22. To contact the reporter on this story: Netty Ismail in Singapore nismail3@bloomberg.net .

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Bank of America May Name Stopgap Chief to Allow Board More Time for Search

November 23, 2009

By Bradley Keoun, David Mildenberg and Ian Katz Nov. 23 (Bloomberg) — Bank of America Corp. ’s board may extend its search for a permanent new chief executive officer into 2010 if directors can’t settle on a candidate in the next three days, according to people familiar with the matter. The directors , who met Nov. 20, may be willing to go past their Nov. 26 target and the Dec. 31 retirement of CEO Kenneth D. Lewis if it means getting a better choice, according to a person familiar with the deliberations. At least four external candidates, including Citigroup Inc. director Michael O’Neill , rebuffed approaches. Options include an interim chief or a delay in Lewis’s retirement. Bank of America faces pressure to pick someone in a short period who’s acceptable to regulators and whose pay would be low enough to win approval from Treasury Department paymaster Kenneth Feinberg , the people said. Politics also has influenced the choice at the biggest U.S. bank, the people said. House Oversight Committee Chairman Edolphus Towns said last week Brian Moynihan , one of two internal candidates, may lack the needed leadership. That’s narrowing the field and giving the board “an incredibly tough job,” said Michael Holland , who oversees more than $4 billion as chairman of Holland & Co. in New York. “For people who have choices, it’s hard to figure out why someone would take this job.” The people familiar with the matter spoke before any board meetings this past weekend. They declined to be identified because CEO selection is confidential at the Charlotte, North Carolina-based bank. Decision Nears Bank of America representatives have said the bank was aiming for a decision by the Nov. 26 Thanksgiving holiday, calling it a target rather than a deadline. “The board has been talking to a number of candidates, both internal and external, and expects to have a decision in the very near future,” spokesman Robert Stickler said in a Nov. 20 e-mail. Holland said director Charles K. “Chad” Gifford , a former CEO of FleetBoston Financial Corp., which was bought by Bank of America in 2004 , could step in on an interim basis. Some candidates are reluctant to wade into disagreement between board members and the government over the bank’s future strategy , said Rochdale Securities LLC analyst Richard Bove , citing large shareholders briefed on the matter. “The government and perhaps some of the new directors want the bank cut back in size , while the old core Bank of America people don’t want to do that,” Bove said. Dropping Out O’Neill, a former chief financial officer of predecessor BankAmerica Corp., withdrew from consideration after talking with search-committee members because he felt they didn’t fully grasp how serious regulators are in their demands for change, the people said. O’Neill told the committee members that the company needed to increase the size of its banking operations and shrink its trading business, one person briefed on the talks said. The committee members responded that such a shift would be unproductive because it would abandon the strategy set when Lewis bought Merrill Lynch & Co., the person said. Compensation is another obstacle, because Bank of America’s $45 billion bailout from the Troubled Asset Relief Program puts the CEO under the purview of Feinberg, the paymaster. Lewis agreed in October to forgo any pay for 2009 after being advised to do so by Feinberg. Feinberg’s pay restraints have limited the board’s options, one of the people said. Feinberg’s Role Feinberg probably wouldn’t approve a package big enough to lure PNC Financial Services Group Inc. Senior Vice Chairman William Demchak , who was among 18 candidates on a list provided Nov. 3 by Finger Interests Ltd., a Houston-based investment fund with 1.1 million Bank of America shares. As of August, Demchak owned about 219,000 PNC shares, currently worth about $12 million, data compiled by Bloomberg show. Bank of America may need to buy out stakes in competing lenders owned by candidates like Demchak to prevent a conflict of interest. Some candidates could be eliminated because Feinberg isn’t likely to approve their buyouts on concern that Congress wouldn’t tolerate large payments, according to a person familiar with the process. Getting rid of TARP would eliminate that obstacle as well as unwanted input from regulators, according to a person familiar with the board. Finger Candidates The Fingers helped lead a shareholder revolt that stripped Lewis of his chairman’s title in April. At least four people on the Finger list subsequently said they weren’t interested. They are O’Neill; former JPMorgan Chase & Co. investment-banking co- head William Winters ; U.S. Bancorp CEO Richard Davis ; and Eugene McQuade , a former Freddie Mac president who now oversees Citigroup’s largest banking subsidiary, according to people familiar with the matter. Two executives not on the list, Bank of New York Mellon CEO Robert Kelly and BlackRock Inc. CEO Laurence Fink , have told colleagues and friends they’re not interested. Ex-GMAC LLC CEO Alvaro de Molina , a former Bank of America chief financial officer who also made the list, was never contacted, people said. Charles Scharf , head of retail banking at JPMorgan, was contacted, people familiar with the matter said. Scharf and de Molina declined to comment. Aside from Moynihan, 50, other internal candidates include Chief Risk Officer Gregory Curl , 61. Lewis, 62, favors Curl, one person familiar with the matter said earlier this month. Fed’s Choice Federal Reserve officials, who questioned Lewis’s judgment when he considered backing out of the bank’s $29 billion purchase of Merrill Lynch, are pressing for an outsider because they want more drastic change, a different person said. “B of A would really benefit from a fresh set of eyes and a fresh management approach,” said William Atwood , executive director of the Illinois State Board of Investment, which holds 2 million Bank of America shares . “It would be a bad thing if they’re focusing their attention internally.” Lewis has indicated to associates that he would remain as CEO on an interim basis if asked by the board , according to a person familiar with his thinking. Rochdale’s Bove wrote in a Nov. 20 note that several large investors support the idea. “That would give the board time to get their ducks in a row and they would have more breathing room,” said Marc Oken , a former Bank of America chief financial officer who left in 2005. It also would be a discouraging sign of how poorly the search is going, Atwood said. “If that’s their best option, they’re really not doing very well,” Atwood said. To contact the reporters on this story: Bradley Keoun in New York at bkeoun@bloomberg.net ; David Mildenberg in Charlotte at dmildenberg@bloomberg.net ; Ian Katz in Washington at ikatz2@bloomberg.net

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Bank of America May Name Temporary CEO to Allow Board More Time for Search

November 22, 2009

By Bradley Keoun, David Mildenberg and Ian Katz Nov. 22 (Bloomberg) — Bank of America Corp. ’s board may extend its search for a new, permanent chief executive officer into 2010 if directors can’t settle on a candidate in the next four days, according to people familiar with the matter. The directors , who met Friday, may be willing go past their Nov. 26 target and the Dec. 31 retirement of CEO Kenneth D. Lewis if it means getting a better choice, according to a person familiar with the deliberations. At least four external candidates, including Citigroup Inc. director Michael O’Neill , rebuffed approaches. Options include an interim chief or a delay in Lewis’s retirement. Bank of America faces pressure to pick someone in a short period who’s acceptable to regulators and whose pay would be low enough to win approval from the Treasury Department paymaster, the people said. Politics also has influenced the choice at the biggest U.S. bank, the people said. House Oversight Committee Chairman Edolphus Towns said last week Brian Moynihan , one of two internal candidates, may lack the needed leadership. That’s narrowing the field and giving the board “an incredibly tough job,” said Michael Holland , who oversees more than $4 billion as chairman of Holland & Co. in New York. “For people who have choices, it’s hard to figure out why someone would take this job.” The people familiar with the matter spoke before any board meetings this weekend. They declined to be identified because CEO selection is confidential at the Charlotte, North Carolina- based bank, the biggest in the U.S. Decision Nears Bank of America representatives have said the bank was aiming for a decision by the Nov. 26 Thanksgiving holiday, calling it a target rather than a deadline. “The board has been talking to a number of candidates, both internal and external, and expects to have a decision in the very near future,” spokesman Robert Stickler said in a Nov. 20 e-mail. Holland said director Charles K. “Chad” Gifford , a former CEO of FleetBoston Financial Corp., which was bought by Bank of America in 2004 , could step in on an interim basis. Some candidates are reluctant to wade into disagreement between board members and the government over the bank’s future strategy , said Rochdale Securities LLC analyst Richard Bove , citing large shareholders briefed on the matter. “The government and perhaps some of the new directors want the bank cut back in size , while the old core Bank of America people don’t want to do that,” Bove said. Dropping Out O’Neill, a former chief financial officer of predecessor BankAmerica Corp., withdrew from consideration after talking with search-committee members because he felt they didn’t fully grasp how serious regulators are in their demands for change, the people said. O’Neill told the committee members that the company needed to increase the size of its banking operations and shrink its trading business, one person briefed on the talks said. The committee members responded that such a shift would be unproductive because it would abandon the strategy set when Lewis bought Merrill Lynch & Co., the person said. Compensation is another obstacle, because Bank of America’s $45 billion bailout puts the CEO under the purview of paymaster Kenneth Feinberg . Lewis agreed in October to forgo any pay for 2009 after being advised to do so by Feinberg. Feinberg probably wouldn’t approve a package big enough to lure PNC Financial Services Group Inc. Senior Vice Chairman William Demchak , who was among 18 candidates on a list provided Nov. 3 by Finger Interests Ltd., a Houston-based investment fund with 1.1 million Bank of America shares. As of August, Demchak owned about 219,000 shares, currently worth about $12 million, data compiled by Bloomberg show. Finger Candidates At least four of those on the Finger list subsequently said they weren’t interested. They are O’Neill; former JPMorgan Chase & Co. investment-banking co-head William Winters ; U.S. Bancorp CEO Richard Davis ; and Eugene McQuade , a former Freddie Mac president who now oversees Citigroup’s largest banking subsidiary, according to people familiar with the matter. Two executives not on the list, Bank of New York Mellon CEO Robert Kelly and BlackRock Inc. CEO Laurence Fink , have told colleagues and friends they’re not interested. Ex-GMAC LLC CEO Alvaro de Molina , a former Bank of America chief financial officer who also made the list, was never contacted, people said. Charles Scharf , head of retail banking at JPMorgan, was contacted, people familiar with the matter said. Scharf and de Molina declined to comment. Aside from Moynihan, 50, other internal candidates include Chief Risk Officer Gregory Curl , 61. Lewis, 62, favors Curl, one person familiar with the matter said earlier this month. Outside Candidates Federal Reserve officials, who questioned Lewis’s judgment when he considered backing out of the bank’s $29 billion purchase of Merrill Lynch, are pressing for an outsider because they want more drastic change, a different person said. “B of A would really benefit from a fresh set of eyes and a fresh management approach,” said William Atwood , executive director of the Illinois State Board of Investment, which holds 2 million Bank of America shares . “It would be a bad thing if they’re focusing their attention internally.” Lewis has indicated to associates that he would remain as CEO on an interim basis if asked by the board , according to a person familiar with his thinking. Rochdale’s Bove wrote in a Nov. 20 note that several large investors support the idea. “That would give the board time to get their ducks in a row and they would have more breathing room,” said Marc Oken , a former Bank of America chief financial officer who left in 2005. It also would be a discouraging sign of how poorly the search is going, Atwood said. “If that’s their best option, they’re really not doing very well,” Atwood said. To contact the reporters on this story: Bradley Keoun in New York at bkeoun@bloomberg.net ; David Mildenberg in Charlotte at dmildenberg@bloomberg.net ; Ian Katz in Washington at ikatz2@bloomberg.net

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Bank of America May Name Temporary CEO to Allow Board More Time for Search

November 22, 2009

By Bradley Keoun, David Mildenberg and Ian Katz Nov. 22 (Bloomberg) — Bank of America Corp. ’s board may extend its search for a new, permanent chief executive officer into 2010 if directors can’t settle on a candidate in the next four days, according to people familiar with the matter. The directors , who met Friday, may be willing go past their Nov. 26 target and the Dec. 31 retirement of CEO Kenneth D. Lewis if it means getting a better choice, according to a person familiar with the deliberations. At least four external candidates, including Citigroup Inc. director Michael O’Neill , rebuffed approaches. Options include an interim chief or a delay in Lewis’s retirement. Bank of America faces pressure to pick someone in a short period who’s acceptable to regulators and whose pay would be low enough to win approval from the Treasury Department paymaster, the people said. Politics also has influenced the choice at the biggest U.S. bank, the people said. House Oversight Committee Chairman Edolphus Towns said last week Brian Moynihan , one of two internal candidates, may lack the needed leadership. That’s narrowing the field and giving the board “an incredibly tough job,” said Michael Holland , who oversees more than $4 billion as chairman of Holland & Co. in New York. “For people who have choices, it’s hard to figure out why someone would take this job.” The people familiar with the matter spoke before any board meetings this weekend. They declined to be identified because CEO selection is confidential at the Charlotte, North Carolina- based bank, the biggest in the U.S. Decision Nears Bank of America representatives have said the bank was aiming for a decision by the Nov. 26 Thanksgiving holiday, calling it a target rather than a deadline. “The board has been talking to a number of candidates, both internal and external, and expects to have a decision in the very near future,” spokesman Robert Stickler said in a Nov. 20 e-mail. Holland said director Charles K. “Chad” Gifford , a former CEO of FleetBoston Financial Corp., which was bought by Bank of America in 2004 , could step in on an interim basis. Some candidates are reluctant to wade into disagreement between board members and the government over the bank’s future strategy , said Rochdale Securities LLC analyst Richard Bove , citing large shareholders briefed on the matter. “The government and perhaps some of the new directors want the bank cut back in size , while the old core Bank of America people don’t want to do that,” Bove said. Dropping Out O’Neill, a former chief financial officer of predecessor BankAmerica Corp., withdrew from consideration after talking with search-committee members because he felt they didn’t fully grasp how serious regulators are in their demands for change, the people said. O’Neill told the committee members that the company needed to increase the size of its banking operations and shrink its trading business, one person briefed on the talks said. The committee members responded that such a shift would be unproductive because it would abandon the strategy set when Lewis bought Merrill Lynch & Co., the person said. Compensation is another obstacle, because Bank of America’s $45 billion bailout puts the CEO under the purview of paymaster Kenneth Feinberg . Lewis agreed in October to forgo any pay for 2009 after being advised to do so by Feinberg. Feinberg probably wouldn’t approve a package big enough to lure PNC Financial Services Group Inc. Senior Vice Chairman William Demchak , who was among 18 candidates on a list provided Nov. 3 by Finger Interests Ltd., a Houston-based investment fund with 1.1 million Bank of America shares. As of August, Demchak owned about 219,000 shares, currently worth about $12 million, data compiled by Bloomberg show. Finger Candidates At least four of those on the Finger list subsequently said they weren’t interested. They are O’Neill; former JPMorgan Chase & Co. investment-banking co-head William Winters ; U.S. Bancorp CEO Richard Davis ; and Eugene McQuade , a former Freddie Mac president who now oversees Citigroup’s largest banking subsidiary, according to people familiar with the matter. Two executives not on the list, Bank of New York Mellon CEO Robert Kelly and BlackRock Inc. CEO Laurence Fink , have told colleagues and friends they’re not interested. Ex-GMAC LLC CEO Alvaro de Molina , a former Bank of America chief financial officer who also made the list, was never contacted, people said. Charles Scharf , head of retail banking at JPMorgan, was contacted, people familiar with the matter said. Scharf and de Molina declined to comment. Aside from Moynihan, 50, other internal candidates include Chief Risk Officer Gregory Curl , 61. Lewis, 62, favors Curl, one person familiar with the matter said earlier this month. Outside Candidates Federal Reserve officials, who questioned Lewis’s judgment when he considered backing out of the bank’s $29 billion purchase of Merrill Lynch, are pressing for an outsider because they want more drastic change, a different person said. “B of A would really benefit from a fresh set of eyes and a fresh management approach,” said William Atwood , executive director of the Illinois State Board of Investment, which holds 2 million Bank of America shares . “It would be a bad thing if they’re focusing their attention internally.” Lewis has indicated to associates that he would remain as CEO on an interim basis if asked by the board , according to a person familiar with his thinking. Rochdale’s Bove wrote in a Nov. 20 note that several large investors support the idea. “That would give the board time to get their ducks in a row and they would have more breathing room,” said Marc Oken , a former Bank of America chief financial officer who left in 2005. It also would be a discouraging sign of how poorly the search is going, Atwood said. “If that’s their best option, they’re really not doing very well,” Atwood said. To contact the reporters on this story: Bradley Keoun in New York at bkeoun@bloomberg.net ; David Mildenberg in Charlotte at dmildenberg@bloomberg.net ; Ian Katz in Washington at ikatz2@bloomberg.net

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AMR Says Japan Air Talks at Advanced Stage as Delta Holds Out Incentives

November 19, 2009

By Kiyotaka Matsuda Nov. 19 (Bloomberg) — American Airlines said preparations for an investment in Japan Airlines Corp. are at an advanced stage after Delta Air Lines Inc. announced a package of incentives to lure the Asian carrier into a new alliance. Japan Air, as the airline is known, would face a regulatory risk in leaving American’s Oneworld group and joining Delta’s SkyTeam, Theo Panagiotoulias , American’s Pacific director, told reporters today in Tokyo. Delta and AMR Corp. ’s American, the world’s two biggest airlines, are vying for access to JAL’s routes in its home country and in China, Asia’s largest air-travel market. Atlanta- based Delta unveiled its $1 billion proposal yesterday, while American hasn’t detailed its plan to keep JAL in Oneworld. People familiar with the matter have said American and private-equity firm TPG Inc. may offer as much as 130 billion yen ($1.47 billion) to JAL, which is seeking a government rescue and new investors after losses in three of the last four years. JAL probably will stay in Oneworld, Dow Jones reported, citing Vice President Shuta Saito. The Tokyo-based carrier will make a decision after agreeing on how to restructure itself with Japanese government aid, Dow Jones reported. Sze Hunn Yap , a spokeswoman at Japan Air, declined to confirm or deny Saito’s comment. Charley Wilson , a spokesman for American, declined to comment in order to “respect the JAL restructuring process.” Oneworld’s Response American’s Oneworld partners are preparing their own proposals, which would be offered along with the plan from American and TPG, to help persuade JAL to stay. There is no schedule for making details public, Oneworld Managing Director John McCulloch said today in an interview from Vancouver. “A lot of this is moving around, almost by the day,” he said. Other Oneworld airlines aren’t considering equity investments, and instead would help through strengthened alliances, McCulloch said. Delta fell 18 cents, or 2.3 percent, to $7.58 at 1:30 p.m. in New York Stock Exchange composite trading, while AMR dropped 22 cents, or 3.8 percent, to $5.55. AMR and TPG are both based in Fort Worth, Texas. To contact the reporter on this story: Kiyotaka Matsuda in Tokyo at kmatsuda@bloomberg.net

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Obama Administration Set to Unveil Multi-Agency Attack on Financial Fraud

November 17, 2009

By Justin Blum Nov. 17 (Bloomberg) — The Obama administration plans to announce today an effort by multiple government agencies to combat financial fraud, according to a person familiar with the matter who spoke on condition of anonymity. The Justice Department scheduled a news conference to discuss financial fraud for noon Washington time, according to an advisory sent by e-mail yesterday that didn’t provide details of the announcement. The U.S. economic downtown has caused an increase in economic crimes, including mortgage fraud, white-collar crime and health-care fraud, according to the Justice Department’s inspector general. U.S. Attorney General Eric Holder said in an interview in April that he was working on a plan to step up prosecutions of corporate fraud, mortgage fraud and public corruption with help from state and local law enforcement. “We are putting together an effort to really emphasize this whole need for white-collar prosecutions and investigations,” Holder said at the time. The Justice Department’s advisory said the news conference will include Holder, Treasury Secretary Timothy Geithner , Housing and Urban Development Secretary Shaun Donovan and Robert Khuzami , enforcement director of the Securities and Exchange Commission. Tracy Schmaler , a Justice Department spokeswoman, declined to comment. To contact the reporter on this story: Justin Blum in Washington at jblum4@bloomberg.net

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AIG Chief Benmosche Is Said to Tell Board He May Quit Over U.S. Pay Limits

November 11, 2009

By Hugh Son Nov. 11 (Bloomberg) — American International Group Inc. Chief Executive Officer Robert Benmosche told the insurer’s board of directors that he may quit over government limits on what the company can pay employees, according to a person familiar with the matter. Benmosche made the comments at a board meeting last week, about three months after joining the company, said the person, who declined to be identified because the meeting was private. The CEO’s comments were an expression of frustration, and Benmosche hasn’t acted on his declaration, the person said. The Wall Street Journal previously reported Benmosche’s remarks. Christina Pretto , a spokeswoman for the New York-based insurer declined to comment. To contact the reporter on this story: Hugh Son in New York at hson1@bloomberg.net

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WSJ: AIG CEO Robert Benmosche Ready To Quit Over Pay Constraints

November 10, 2009

NEW YORK — After just three months as head of battered insurer American International Group, Robert Benmosche has threatened to leave his post as he struggles to deal with heavy government oversight and restrictions on what the bailed-out company wants to pay employees, according to a published report. Citing unnamed people familiar with the matter, The Wall Street Journal reported online late Tuesday that Benmosche told AIG’s board he was “done” with the job, although he reportedly is reconsidering his stance in the face of the board’s dismay. According to the people, the former MetLife CEO is frustrated with the constraints of leading a company majority-owned by the government, the paper said. The Journal said Benmosche has complained to AIG’s board about the outcome of the Treasury Department’s pay review which slashed pay for a number of AIG executives by 91 percent from 2008. WSJ : Last week, Mr. Benmosche and other AIG board members met with Mr. Feinberg in New York. During the three-hour meeting, board members discussed difficulties of complying with pay policies and retaining talent at the company. Mr. Benmosche’s frustrations “hit a crescendo,” said a person familiar with the matter. “Bob feels he is in an impossible situation,” the person added. When the credit crisis hit last year, the U.S. government rescued AIG from the brink of collapse with a loan bailout package worth up to $182.5 billion in exchange for an 80 percent stake in the insurer. It is one of seven big companies the Treasury Department ordered to cut top executives’ salary and bonuses in half, starting this month. Under the plan, cash salaries for the top 25 highest-paid executives will be limited in most cases to $500,000 and, in most cases, perks will be capped at $25,000. For the already struggling companies, the plan has introduced concerns about so-called brain drain, as the executives targeted by “pay czar” Kenneth Feinberg rank among the most talented and productive at their companies. Benmosche took over from Edward Liddy in August, making him AIG’s third CEO in less than a year. Under a package approved by Feinberg over the summer, the AIG CEO will get compensation of about $10.5 million. Benmosche will take home just $3 million per year in cash. The rest of the CEO’s pay package is divided between stock options ($4 million) and a performance bonus ($3.5 million). Benmosche spent his first couple of weeks on the job telecommuting from his villa on the Adriatic Sea as he oversaw wine production at his vineyard. The New York Daily News : Wearing flip-flops, khaki shorts and a green polo shirt, the new chief executive of bailed-out insurer American International Group Inc. says he’s getting a lot of work done from his massive villa overlooking the Adriatic. “People criticize me for being on vacation. I actually started work a week before I was actually supposed to.” In Septbember, The AIG board reportedly refused Benmosche’s request to use a company-owned jet for private use, saying use for the plane for purposes other than company business would require an exemption from the U.S. Treasury. Benmosche has criticized New York Attorney General Andrew Cuomo as being “incredibly wrong” for drawing attention to $165 million in retention bonuses given to AIG employees. Bloomberg : “What he did is so unbelievably wrong,” Benmosche said during the Aug. 11 remarks, according to a record obtained by Bloomberg. “He doesn’t deserve to be in government, and he surely shouldn’t be the attorney general of the state of New York. What he did is criminal. You don’t create lynch mobs to go out to people’s homes and do the things he did.” The New York-based company last week said it was profitable for the second straight quarter as its core insurance operations continue to stabilize, and reported that the amount of its government financial assistance dropped by 4 percent during the period. Its results got a lift from the increasing value of investments it still holds that soured last year and helped drive it to the brink of collapse. But Benmosche has warned that earnings will remain choppy as the company executes its restructuring plan. AIG is spinning off two major life insurance businesses – American International Assurance Co., or AIA, and American Life Insurance Co., also known as ALICO – as it looks to repay the government.

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SAC Said to Tell Investors an Internal Review Found No Suspicious Trading

November 10, 2009

By Katherine Burton and Saijel Kishan Nov. 10 (Bloomberg) — SAC Capital Advisors LLC, the hedge- fund firm run by Steven Cohen , reviewed its buying and selling of stocks cited in the Galleon Group LLC insider-trading cases and found nothing suspicious, according to one of its investors. SAC, which oversees $14 billion, also told the investor that neither it nor any employees had received subpoenas related to the cases. Clients have contacted the Stamford, Connecticut- based firm since prosecutors said last week that a former SAC portfolio manager agreed to plead guilty and cooperate with their probes, said the investor, who asked not to be identified because the information is private. “SAC has a built and maintained AAA-grade infrastructure, including compliance,” said Ron Geffner , a lawyer at New York- based Sadis & Goldberg LLP, whose clients include hedge funds. Geffner, who isn’t representing SAC, said it was understandable that the firm would review the trading. The former employee, Richard Choo-Beng Lee , worked at SAC from 1999 to 2004, according to the information filed by prosecutors that details the charges against him. He left to join New York-based Stratix Asset Management LLC, founded by former SAC traders Ian Goodman and Richard Grodin . Investigators are expected to examine trading at SAC, the Wall Street Journal reported Nov. 7, citing people familiar with the matter. Jonathan Gasthalter , a spokesman for SAC, declined to comment. In return for helping the government, Lee won’t be further prosecuted for any insider trading he may have committed at SAC or Stratix, according to his Oct. 8 plea agreement. The deal also covers his time at Spherix Capital LLC, the San Jose, California-based firm he co-founded in 2007 with Ali Far after Stratix closed. He sought a job at SAC this year after shutting Spherix in March, a person familiar with the matter said. Quadrum Subpoena Far, 47, is also cooperating after pleading guilty. He’s a former portfolio manager at Galleon. Neither Grodin nor Goodman has been accused of wrongdoing. The firm Grodin started after Stratix, Quadrum Capital Management LLC, has been subpoenaed. A subpoena is a request for information and doesn’t imply wrongdoing. Twenty people have been charged in the insider-trading case since the Oct. 16 arrest of Raj Rajaratnam , founder of New York- based Galleon. The government has said the defendants netted $53 million in illegal trades going back as far as 2006 and covering about a dozen stocks. Stocks cited by prosecutors include Advanced Micro Devices Inc., Google Inc., Intel Corp., International Business Machines Corp. and Hilton Hotels Corp. To contact the reporters on this story: Katherine Burton in New York at kburton@bloomberg.net ; Saijel Kishan in New York at skishan@bloomberg.net

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Dimon’s Dad Quits Merrill to Work for Son’s Brokerage, Brings Along Team

November 6, 2009

By Elizabeth Hester Nov. 6 (Bloomberg) — If Jamie Dimon ever needs fatherly advice, he can turn to his newest employee: Dad. Theodore “Ted” Dimon , the father of JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon , quit Bank of America’s Merrill Lynch unit today to join his son’s firm, according to a person familiar with the matter. JPMorgan spokesman Darin Oduyoye confirmed the decision. The elder Dimon and his five-member stockbroking team will join Bear Stearns Private Client Services, a unit acquired by his son in the March 2008 takeover of the failed investment bank. Ted Dimon will report to Michael Lee, who heads the unit’s New York office. Jamie Dimon said Oct. 27 that his New York-based bank planned to have as many as 1,000 of the “top, top, top” brokers adding to its current staff of 365. The unit had 324 brokers at the end of 2008, company documents show. “I love the retail broker business because my dad is a broker and my grandfather was a broker and it was the first job I ever had,” Jamie Dimon, 53, said at a Securities Industry and Financial Markets Association meeting Oct. 27. “So if you are really, really good, call JPMorgan. We’d be happy to hire you.” To contact the reporter on this story: Elizabeth Hester in New York at ehester@bloomberg.net .

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