Citigroup’s Third U.S. Rescue May Not Be Its Last

Yesterday, the Treasury, as well as other preferred stockholders including the Government of Singapore Investment Corp. and Saudi Prince Alwaleed bin Talal, gave up their dividends and agreed to take common stock at $3.25 a share.

Vikram Pandit, 52, Citigroup’s chief executive officer, told investors yesterday that increasing tangible common equity to as much as $81 billion from $29.7 billion should “take the confidence issues off the table,” regarding the company’s ability to absorb losses. Still, Citigroup, which lost $27.7 billion in 2008, is expected to lose $1.24 billion in the first six months of 2009, according to the average of analysts’ estimates

Yesterday’s action didn’t furnish the New York-based bank with new money, although it cuts expenses by eliminating dividends on preferred stock. Instead, it converted preferred shares into common equity, which absorbs the first hit in the event of further losses, at an above-market-value price of $3.25. The stock, which has fallen 78 percent since the beginning of the year, closed in New York trading yesterday at $1.50, its lowest since November 1990.

Rohner, 44, is leaving after UBS admitted it made “mistakes” by helping clients evade U.S. taxes between 2000 and 2007. UBS has denied allegations in

DETROIT (Reuters) - General Motors Corp posted a loss of nearly $31 billion for 2008 and said its auditors were likely to cast doubt on its viability as it seeks an expanded federal bailout to stay afloat.

Revenue plunged by more than a third to $30.8 billion. GM burned through more than $5 billion in the fourth quarter and ended the year with $14 billion in cash, including the first $4 billion in loans it received from the U.S. Treasury.

UBS Hires Former Credit Suisse Chief Gruebel as CEO

Feb. 26 (Bloomberg) -- UBS AG hired Oswald Gruebel to replace Marcel Rohner as chief executive officer, tapping the veteran banker who turned around Credit Suisse Group AG, to restore investor confidence eroded by record losses and a U.S. tax scandal.

The 65-year-old Gruebel takes over immediately from Rohner, who headed the unit accused of helping Americans evade taxes before becoming CEO 18 months ago, Switzerland’s biggest bank said today. UBS shares soared as much as 16 percent after the appointment of Gruebel, who returned Credit Suisse to profitability in 2003 and has been retired for two years.

Rohner, 44, is leaving after UBS admitted it made “mistakes” by helping clients evade U.S. taxes between 2000 and 2007. UBS has denied allegations in some Swiss newspapers that Rohner knew of structures aimed at defrauding the U.S. Rohner informed UBS in early January of his intention to step down, the company said.

“We are on the road to recovery,” Rohner said in a memo to employees. “I am convinced that with a fresh perspective, Oswald J. Gruebel will soon revive trust and restore confidence. This is what the bank needs now.”

A former bond trader, Gruebel doubled profit at Credit Suisse between 2004 and 2006 before retiring in 2007. He sold the Winterthur Insurance Co. unit, ending a failed expansion into insurance by his predecessor, and implemented a “One Bank” strategy similar to UBS’s, to lift earnings by making the three main divisions share clients and expenses.

U.S. Wants UBS to Break Swiss Law By Naming Clients, Bank Says

Feb. 21 (Bloomberg) -- U.S. efforts to force UBS AG, Switzerland’s largest bank, to disclose the names of 52,000 American customers would require the bank to violate Swiss sovereignty and criminal law, bank lawyers said.

Saab Seeks Protection From Creditors as GM Pulls Out

Feb. 20 (Bloomberg) -- Saab Automobile sought protection from creditors after parent General Motors Corp. said it will cut ties with the Swedish carmaker following two decades of losses.

Saab, based in Trollhaettan, will split from GM and pool resources in Sweden, Saab Chief Executive Officer Jan Aake Jonsson said at a press conference today. The reorganization, slated to take three months, will place Saab under court supervision with the aim of creating an independent business. GM first invested in the Swedish automaker in 1990.

Saab’s future remains in doubt, after GM said on Feb. 18 it wants to cut the unit loose by 2010, with financial aid from the Swedish government. Sweden has ruled out taking over Saab, saying taxpayers shouldn’t support the unprofitable company. Saab lost about 3 billion kronor ($341 million) in 2008 and will have a similar deficit this year, it said in court documents.

2008 Bank Results .... lots of Blood

1) UBS
Group net loss attributable to UBS shareholders of CHF 19,697 million for full-year 2008, due primarily to losses on risk positions in the Investment Bank.

2) BNP
French banking giant BNP Paribas said Thursday it sustained 1.366-billion-euro (1.7-billion-dollar) fourth quarter loss and a 61.5 percent slide in annual net earnings last year. The results -- which come amid uncertainty over BNP's bid to take over the Belgian assets of Fortis bank -- were in line with expectations, with much of the setback coming in the fourth quarter as the financial crisis bit. Full-year 2008 profit fell to 3.0 billion euros from a record 7.8 billion in 2007.

3)Citi
Citigroup, Inc. (C) reported a net loss of $8.29 billion for the fourth quarter of fiscal 2008 and said it will realign its businesses into two, Citicorp and Citi Holdings, for future profitable growth. The bank also said that it has reached an agreement with the U.S. Government on the loss sharing program.

Citi reported fiscal 2008 net loss of $18.72 billion, or $3.88 per share, compared with a profit of $3.62 billion, or $0.72 per share a year ago. Full-year revenues fell 33% to $52.79 billion from $78.5 billion in fiscal 2007.

4) OCBC
OCBC Bank has posted a worse-than-expected 30 per cent decline in fourth quarter net earnings. Net profit for the three months ended December came in at S$301 million, down from S$428 million a year earlier. The drop was due to lower contributions from its insurance arm and higher provisions for bad debt amid the economic downturn. The bank's full-year net profit was down 16 per cent at S$1.7 billion.

5) DBS
DBS Group Holdings, Southeast Asia's biggest bank by assets, said Friday that fourth-quarter net profit fell 40 per cent compared with a year earlier as weak financial markets hit income. The one-time items included a S$45-million charge for "restructuring". In November, the bank announced it was cutting 900 staff to trim costs during the global credit crisis. DBS also took a S$47-million impairment charge for its investment in TMB Bank of Thailand, but gained S$4 million from the sale of Hong Kong properties.
Full-year net profit, including one-time items, was S$1.93 billion, down 15 per cent from the previous year on total income of S$6.03 billion, two per cent less than a year ago.

6) JPM Chase
For the 4th quarter the bank made $702m net income, down substantially from the $3bn made during the corresponding period in 2007. Earnings per share in Q4 fell from $0.86 to $0.07. Across the whole year the bank made $5.6bn net income, or $1.37 per share, which marked a drop of 64% from 2007’s figures. CEO Jamie Dimon has described the Q4 results as very disappointing and largely due to difficulties in investment banking.

7) CS
Credit Suisse Group AG, Switzerland's second-biggest bank, reported a record fourth-quarter loss of 6.02 billion francs ($5.2 billion). For 2008, the deficit totaled 8.2 billion francs. As well as write-downs, the company's investment-banking arm lost money on hedging positions that it said failed to work amid the turmoil that swept financial markets in the final three months of 2008.

8) DB
Deutsche Bank AG confirmed Thursday that a hefty €4.8 billion ($6.1 billion) net loss in the fourth quarter resulted in a shortfall for the full year. It expects global economic weakness to continue posing "significant challenges." Frankfurt-based Deutsche Bank — Germany's largest — said its fourth-quarter net loss compared with a net profit of €1 billion in the fourth quarter of 2007 and was largely because of big trading losses. It also led to a net loss of €3.9 billion for 2008.

9) Soc Gen
FRENCH banking giant Societe Generale on Wednesday reported a net profit for both the fourth quarter of 2008 and the full year despite the devastating financial crisis that has plagued so many lenders elsewhere. The bank said net earnings in the final three months of the year came to 87 million euros (S$168 million), even against the backdrop of the spectacular collapse of US investment bank Lehman Brothers. For 2008 as a whole, Societe Generale said net profit came to 2.0 billion euros compared with 947 million in 2007 when it absorbed a 4.9-billion-euro loss it attributed to unauthorised actions by one of its traders, Jerome Kerviel.

10) GoldmanSachs
New York: Goldman Sachs Group Inc reported its first quarterly loss since going public nine years ago as plunging stock, debt and real estate markets caught up with a Wall Street leader that had sidestepped the worst financial crisis in decades. Goldman posted a net loss of $2.12 billion, or $4.97 a share, for the fourth quarter ended Nov. 28, capping a year that tarnished its Midas touch reputation.
Net earnings for the year decreased 80% to $2.32 billion, from net earnings of $11.6 billion in a year ago period.

CDS Clearing house

Feb. 19 (Bloomberg) -- U.S., U.K., and European regulators are in talks to jointly regulate the $28 trillion credit-default swap market, the Federal Reserve said today.

Regulators including the Fed, U.K.’s Financial Services Authority, German Federal Financial Services Authority and European Central Bank met today to discuss a possible information sharing agreement, the Fed said in a statement on its Web site. The goal would be to apply consistent standards to the market and provide support across jurisdictions, the Fed said.

Dealers are under pressure to process credit-default swaps trades through a clearinghouse in the U.S. or Europe after last year’s failure of Lehman Brothers Holdings Inc., which was among the largest traders of the contracts. Earlier today, nine banks and brokers including Deutsche Bank AG, JPMorgan Chase & Co. and Barclays Plc committed to start using one or more clearinghouses within the 27-nation European region by the end of July.

“Central clearing of CDS is particularly urgent to restore market confidence,” European Union Financial Services Commissioner Charlie McCreevy said. “Given the size of derivatives markets I am looking whether other measures might be necessary to make sure they are adequately supervised and do not pose unnecessary risks to financial markets.”

Prices and Positions

Clearinghouses, capitalized by their members, add stability to markets by pooling the collateral of traders to share the risk of default. The practice also gives regulators access to prices and positions.

RBS - Bonus in the Bin

Feb 17: U.K. to Cut RBS Bonus 90% to End ‘Reward for Failure’

The U.K. government will cut bonuses at Royal Bank of Scotland Group Plc by more than 90 percent and eliminate them for many executives in a bid to end “rewards for failure.”

Executives responsible for the bank’s record 28 billion pound ($40 billion) 2008 losses will receive no bonuses, a Treasury spokesman said. Britain’s biggest government-owned bank said it will impose a pay freeze for directors and executives, and all other pay rises will be below the rate of inflation.

Merrill Lynch Gave $1 Million Each to 700 of Its Staff

WSJ Feb 12 2009

"Merrill Lynch & Co. 'secretly' moved up the date it awarded bonuses for 2008 and richly rewarded its executives despite billions of dollars in losses, giving bonuses of $1 million or more apiece to nearly 700 employees, New York Attorney General Andrew Cuomo said.

Credit Suisse Reports SF6.02 Billion Loss on Trading

Feb. 11 (Bloomberg) -- Credit Suisse Group AG, Switzerland’s second-biggest bank, reported a record fourth-quarter loss after the worst financial crisis since the Great Depression battered trading results.

The net loss amounted to 6.02 billion francs ($5.2 billion), the Zurich-based bank said today, exceeding the 4.2 billion-franc estimate of analysts surveyed by Bloomberg. For 2008, the deficit totaled 8.2 billion francs.

Singapore's Temasek loses $39 billion in 8 months

IHT February 10, 2009

Singapore state investment company Temasek lost about $39 billion, or 31 percent of its holdings, in eight months last year as big bets in the financial sector went sour.

Temasek Holdings' portfolio of investments fell to 127 billion Singapore dollars ($85 billion) as of November 30 from SG$185 billion on March 31.

The fund made a number of missteps under Ho, including a $5 billion investment in brokerage Merrill Lynch in late 2007. Merrill's shares fell 78 percent in 2008 amid the global financial turmoil and the storied Wall Street firm was ultimately bought by Bank of America Corp. on Jan. 1 in a lifesaving deal.

Temasek also has large stakes in other financial companies such as Standard Chartered Plc, DBS Group Holdings Ltd. and Barclays Plc.

UBS loss biggest in Swiss corporate history

ZURICH (Reuters) Feb 10 - UBS posted the biggest annual corporate loss in Swiss history and said it would cut a further 2,000 investment banking jobs as it looks to rebuild its damaged wealth management brand and overcome the credit crisis.

On Tuesday, it reported a bigger-than-expected 8.1 billion Swiss franc ($7 billion) net loss in the fourth quarter and an annual loss of 19.7 billion francs, the biggest ever by a Swiss company and above predictions for 18.7 billion francs.

The quarterly loss came on the back of a hefty 8.8 billion Swiss franc trading loss, as well as charges it made for selling billions in toxic assets to the Swiss National Bank when it was rescued by the state in October.

UBS aims to shrink its investment bank to 15,000, bringing the bank's total workforce to around 75,000 -- a size Rohner says would be appropriate for UBS -- by mid-2009 from 77,000 now.