June 6, 2023

Increased Factory Activity May Bolster U.S. Recovery

The Institute for Supply Management said on Thursday that its index of factory activity jumped to 55.4 percent in July from 50.9 percent in June. A reading above 50 percent indicates growth. The I.S.M. is a trade group of purchasing managers.

A gauge of production soared 11.6 points to 65 percent, the highest reading since May 2004. And a measure of hiring at factories rose to its best level in a year — the latest of several encouraging signs ahead of the July employment report, which will be released on Friday.

“The report builds the case for a second-half speedup in U.S. industrial production,” said Jonathan Basile, an economist at Credit Suisse.

Stronger growth at American factories could aid a sluggish economy that has registered tepid growth over the last three quarters. And it could provide crucial support to a job market that has begun to accelerate but has added mostly lower-paying service jobs.

Businesses are placing more orders that are likely to be filled in the next few months. Steady gains in new-home sales and construction are supporting strong growth in industries like wood products, furniture and electrical equipment and appliances. And healthy auto sales are lifting growth in the production of metal parts and components.

Bradley Holcomb, chairman of the institute’s survey committee, said production would probably fall back a bit after its big jump in July. Some of the gain reflects a reduction in backlogged orders, he said.

Still, the big increase in new orders suggests that output growth will remain steady.

The Federal Reserve is likely to take note of the manufacturing gains. It downgraded slightly its assessment of the economy after its policy meeting this week. That led to speculation that the Fed might continue its bond purchases longer than anticipated.

But Fed officials say they are hopeful that growth will pick up in the second half of the year. And if factories continue to strengthen and add more high-paying jobs, the Fed might become convinced that the economy is on the right track. If so, it could reduce the pace of its bond-buying program later this year. The bond purchases have helped keep long-term interest rates low to encourage more borrowing and spending.

The health of the job market is crucial to the Fed’s decision. Other reports this week have been encouraging.

The Labor Department said the number of Americans applying for unemployment benefits fell last week to a five-and-a-half-year low. Applications are a proxy for layoffs. When layoffs decline, it suggests companies are confident in their staffing levels and may add more workers.

Article source: http://www.nytimes.com/2013/08/02/business/economy/increased-factory-activity-may-bolster-recovery.html?partner=rss&emc=rss

European Union Charges 13 Banks and Others With Antitrust Breaches

The European Commission said the group, which included Citigroup, Goldman Sachs and UBS, shut out Deutsche Boerse and the Chicago Mercantile Exchange from the CDS business between 2006 and 2009.

Credit default swaps (CDS) are over-the-counter contracts that allow an investor to bet on whether a company or country will default on its bonds within a fixed period of time. Lack of transparency on such derivatives is a key target of regulators following the 2007-2009 crisis.

The case is one of several opened by the EU antitrust regulator into the financial services since the crisis. Banks and other companies involved could be fined up to 10 percent of their global turnover if found guilty of infringing EU rules.

The European Commission said on Monday it had sent a statement of objections, or charge sheet, which sets out suspected anti-competitive activities, to the companies.

“It would be unacceptable if banks collectively blocked exchanges to protect their revenues from over-the-counter trading of credit derivatives,” EU Competition Commissioner Joaquin Almunia said.

“Over-the-counter trading is not only more expensive for investors than exchange trading, it is also prone to systemic risks.”

The charges followed a two-year investigation. The other banks charged are Bank of America Merrill Lynch, Barclays, Bear Stearns, BNP Paribas, Morgan Stanley, Credit Suisse, Deutsche Bank, HSBC, JP Morgan and RBS.

UBS, Deutsche Bank, JP Morgan, HSBC and Barclays declined to comment, while the other banks and ISDA were not immediately available for comment. Markit had no immediate comment.

Almunia said some of the banks in the CDS case were also involved in separate investigations into suspected rigging of lending benchmarks Euribor and Libor, but he did not identify them.

“We are trying to follow the Article 9 route. We hope we are ready to adopt a decision towards the end of the year,” EU Competition Commissioner Joaquin Almunia told a news briefing, referring to a procedure where companies can get a 10 percent cut in fines in return for admitting wrongdoing.

(Additional reporting by Steve Slate and Laura Noonan, in London, Martin De Sa’Pinto in Zurich, Christian Plumb and Matthias Blamont in Paris, Kathrin Jones in Frankfurt; Editing by Adrian Croft and David Holmes)

Article source: http://www.nytimes.com/reuters/2013/07/01/business/01reuters-eu-banks-cds.html?partner=rss&emc=rss

Housing and Auto Sales Lifted Economy, Fed Says

WASHINGTON (AP) — A strengthening housing recovery and robust auto sales contributed to moderate economic growth across the United States in late February and March, according to a Federal Reserve survey released Wednesday.

Growth was moderate or modest in all of the Fed’s 12 banking districts, and it accelerated in two — New York and Dallas — from January and early February.

The survey suggested that the economy performed better in March than some government data on hiring and consumer spending had indicated. That could mean the economic weakness might have been temporary.

The Fed survey, which is based on anecdotal reports, found that hiring was unchanged or improved slightly compared with the previous report. And it noted that consumer spending — which drives most of the economy — grew modestly. But the report also said higher taxes and a spike in gasoline prices had slowed sales.

By contrast, the Labor Department said earlier this month that job growth slowed sharply in March. And retail sales declined in March by the most in nine months, a separate report said last week.

Dana Saporta, an economist at Credit Suisse, said the survey was “consistent with the larger picture of steady if unspectacular growth.”

“We get caught up in the monthly volatility of the data, and we need to step back,” she said.

Zach Pandl, an economist at Columbia Management, an investment firm, said the rosier tone of the survey was probably a reason that several Fed policy makers recently expressed optimism despite sluggish economic data.

The Fed survey said the recovery in home construction was gaining momentum and creating more construction jobs. It is also increasing factory output of housing-related goods, like lumber.

The report did note some weak spots. Several districts said manufacturers of military-related goods had cut jobs in response to government spending cuts that started taking effect March 1.

Still, it said that overall growth was moderate, an upgrade from the “modest to moderate” pace in the previous two reports.

The Fed report, called the beige book, provides an overview of economic conditions from Feb. 22 through April 5. The information will be discussed along with other economic data during the Fed’s next policy meeting on April 30 and May 1.

At that meeting, most analysts expect the Fed to maintain its low interest rate policies but take no new steps. The Fed is expected to stick with its plan to keep short-term interest rates at record lows at least until unemployment falls to 6.5 percent. And it will most likely continue buying $85 billion a month in Treasury and mortgage bonds to try to keep long-term rates low and encourage borrowing, spending and investing.

Debate has heated up among Fed policy makers about when to start curtailing the bond-buying program, which began last fall. At their last meeting March 19-20, a majority of Fed officials said they favored continuing the bond purchases at least through the middle of this year. But many members indicated that they want to start winding down the program before the end of the year, as long as hiring and the economy continued to improve.

Since that meeting, some government reports had suggested that the economy weakened in March. Employers added only 88,000 jobs in March, a sharp slowdown from average gains of 220,000 in November through February. And consumers cut back on spending at retail stores and restaurants last month, a sign that higher Social Security taxes might have made more Americans cautious about spending.

Article source: http://www.nytimes.com/2013/04/18/business/economy/housing-and-auto-sales-lifted-economy-fed-says.html?partner=rss&emc=rss

DealBook: Ex-Credit Suisse Executive Pleads Guilty to Inflating Value of Mortgage Bonds

Prosecutors say the fraud netted Kareem Serageldin a cash bonus of more than $1.7 million and a stock award of more than $5.2 million.Brendan Mcdermid/ReutersProsecutors say the fraud netted Kareem Serageldin a cash bonus of more than $1.7 million and a stock award of more than $5.2 million.

A former senior trader at Credit Suisse Group pleaded guilty on Friday to charges that he fraudulently inflated the value of mortgage bonds as the housing market collapsed, becoming one of the highest-ranking Wall Street executives to admit to crimes related to the 2008 financial crisis.

Kareem Serageldin, the former Credit Suisse trader, admitted to mismarking their positions to avoid losses in their investment portfolio at the end of 2007. He appeared in Federal District Court in Manhattan a week after being extradited from Britain.

During the court hearing, Mr. Serageldin, 39, said that after discovering that members of his team were fudging the value of its bond portfolio, he made the fateful decision to participate in the fraud rather than put an end to it.

“Why did you do that?” asked Judge Alvin K. Hellerstein.

“To preserve my reputation in the bank at a time when there was great financial turmoil,” he said.

Judge Hellerstein asked Mr. Serageldin numerous questions about his misconduct, at one point suggesting that the bank turned a blind eye to the scheme.

A Credit Suisse spokesman, Jack Grone, referred to an earlier statement from securities regulators commending the bank for immediately reporting the wrongdoing and cooperating with the investigation. Sean P. Casey, a lawyer for Mr. Serageldin at Kobre Kim, declined to comment.

Federal prosecutors first charged Mr. Serageldin, an American citizen living in London, in February 2012, and urged him to return to the United States to face the charges against him. Two of Mr. Serageldin’s underlings, David Higgs and Salmaan Siddiqui, pleaded guilty to participating in the conspiracy and cooperated with the government.

The assets overvalued by the three former Credit Suisse traders were mortgage-backed securities, the complex bonds that caused hundreds of billions of dollars in losses across the banking system and brought global markets to its knees.

The traders inflated the value of the bonds to increase their 2007 year-end bonuses, prosecutors said. Mr. Serageldin secured a cash bonus of more than $1.7 million and a stock award of more than $5.2 million.

“While the real estate market was imploding and the financial crisis emerging, Kareem Serageldin and his co-conspirators concealed significant subprime mortgage-related losses in order to secure multimillion-dollar paydays,” Preet Bharara, the United States attorney in Manhattan, said.

Mr. Serageldin, the former global head of structured credit in Credit Suisse’s investment banking division, pleaded guilty to a single count of conspiracy to falsify books and records. The charge carries a maximum sentence of five years. His sentencing is set for Aug. 2.

Credit Suisse rescinded Mr. Serageldin’s stock award after uncovering the fraud. He agreed to forfeit about $1 million — the approximate after-tax amount of his cash bonus.

The government’s investigation originated in early 2008 when the bank disclosed that it was taking a $2.65 billion write-down after discovering Mr. Serageldin’s team had misstated the value of mortgage securities on their books. Credit Suisse suspended the team and reported them to the authorities.

Article source: http://dealbook.nytimes.com/2013/04/12/ex-credit-suisse-executive-pleads-guilty-to-inflating-value-of-mortgage-bonds/?partner=rss&emc=rss

Judge Rejects Much of Libor Lawsuit Against Banks

Sixteen banks had faced claims totaling billions of dollars in the case, which had been considered their biggest legal threat aside from investigations being pursued by regulators in the United States and Europe into manipulation of the London Interbank Offered Rate, known as Libor. The list of banks includes Bank of America, Citigroup, Credit Suisse, Deutsche Bank, HSBC and JPMorgan Chase.

The banks had been accused by a diverse body of plaintiffs, as varied as bondholders and the City of Baltimore, of conspiring to manipulate Libor, a benchmark at the heart of more than $550 trillion in financial products.

But in the ruling on Friday, Judge Naomi Reice Buchwald of United States District Court in Manhattan, while acknowledging that her decision “might be unexpected,” granted the banks’ motion to dismiss federal antitrust claims and partly dismissed the plaintiffs’ claims of commodities manipulation. She also dismissed racketeering and state-law claims.

Judge Buchwald allowed a portion of the lawsuit to continue: the claims that banks’ purported manipulation of Libor had harmed traders who bet on interest rates. Small shifts in rates can mean sizable gains or losses.

The decision may also make it more likely that banks will have an advantage in potential settlement talks.

Article source: http://www.nytimes.com/2013/03/30/business/global/judge-rejects-much-of-libor-lawsuit-against-banks.html?partner=rss&emc=rss

Some Chinese Seek a Divorce to Avoid Real Estate Tax

And some couples went even further: they filed for divorce.

Divorce filings shot up here and in other big cities across China this past week after rumors spread that one way to avoid the new 20 percent tax on profits from housing sales was to separate from a spouse, at least on paper.

The surge in divorce filings is the latest indication of how volatile an issue real estate has become in China in the past decade and how resistant people are to additional taxes.

Worried that housing prices are spiraling out of control and threatening social stability, the central government regularly rolls out measures aimed at damping demand and weeding out speculators.

Then home buyers, sellers, property developers and even local governments — which are typically heavily dependent on land sales for income — try to find ways to get around the restrictions.

“They always do this,” said Du Jinsong, a property analyst in Hong Kong for Credit Suisse. “When they implement new measures, people are always trying to circumvent the rules.”

China’s housing market has been one of the prime engines of economic growth in the past decade, and recently a sharp upturn in prices has reignited fears about inequality and a housing bubble.

On March 1, just days before the opening of China’s annual legislative session, the powerful State Council, which is led by Prime Minister Wen Jiabao, announced a series of new property measures that analysts say unsettled the housing market.

In its statement, the State Council, or cabinet, said that local governments should strictly enforce an earlier rule that ordered people selling a secondary home to pay a 20 percent tax on the profit.

Almost immediately, housing administration bureaus and real estate trading centers in big cities were flooded with people hoping to sell their apartments before the restrictions took effect. (Most local governments have not yet announced a deadline.)

And in a bizarre twist, marriage registration centers in Shanghai, Nanjing, Wuhan and other big cities were also inundated with couples who admitted they were filing for fake divorces in hopes of avoiding the property tax.

By filing for divorce, many reasoned, a couple with two homes could then claim that each had only one home. That way they could technically avoid having one of the homes classified as a second home, which under the new rules would be subject to the 20 percent capital gains tax if sold. After the divorce and the sale of one of the homes, the couple could file to be remarried.

Here in Shanghai, a registration center in the Zhabei district said it had a record 53 divorce filings on Tuesday, well above normal.

On Friday, at a marriage registration center in the Pudong district, a 33-year-old woman named Frances Tao arrived with her husband. She acknowledged that they were filing for divorce, not to avoid the 20 percent capital gains tax on second homes, but to get around another restriction, which requires home buyers to put down a much higher deposit on a second home than on a primary residence.

Ms. Tao said that by divorcing, one of them would be able to purchase a first home and put down less money and get a better interest rate.

“We don’t have other choices,” Ms. Tao said. “But the government and developers continue to make a lot of money.”

Xu Yan contributed research.

Article source: http://www.nytimes.com/2013/03/09/world/asia/some-chinese-seek-a-divorce-to-avoid-real-estate-tax.html?partner=rss&emc=rss

DealBook: UBS Described as Near Deal With U.S. and Britain on Rate Rigging

Protesters formed a giant fish during a rally last month in Zurich in front of the offices of UBS, center, and Credit Suisse, right.Walter Bieri/KEYSTONE, via Associated PressProtesters formed a giant fish during a rally last month in Zurich in front of the offices of UBS, center, and Credit Suisse, right.

UBS, the Swiss banking giant, is close to reaching settlements with American and British authorities over the manipulation of interest rates, the latest case in a multiyear investigation that has rattled the financial industry and spurred a public outcry for broad reform.

UBS is expected to pay more than $450 million to settle claims that some employees reported false rates to increase the bank’s profit, according to officials briefed on the matter who spoke on the condition of anonymity because the talks were private.

If the bank agrees to the deals with various authorities, the collective penalties would yield the largest total fines to date related to the rate-rigging inquiry and would increase the likelihood that other financial institutions would face stiff penalties. Authorities dealt their first blow in the rate-rigging case in June when the British bank Barclays agreed to a $450 million settlement.

A spokeswoman for UBS declined to comment. The agencies leading the UBS investigation, the Commodity Futures Trading Commission, the Justice Department and Britain’s Financial Services Authority, also declined to comment.

The UBS case will provide a window into systemic problems in the rate-setting process, which affects how consumers and companies borrow money around the world. After reviewing thousands of internal bank e-mails and interviewing dozens of employees, the authorities have uncovered patterns of abuse at the major banks that help set benchmark interest rates.

The sprawling investigation is focused on benchmarks like the London interbank offered rate, or Libor. The rate, a measure of how much banks charge each other for loans, is used to determine the costs of trillions of dollars of mortgages, credit card charges and student loans.

The authorities claim that UBS traders colluded with rival banks to influence rates in an effort to bolster their profits, according to officials briefed on the matter. Some traders at UBS were suspended this year over the matter.

Given the scope of the case, the UBS settlement is expected to heighten calls for a reform of the Libor system. Lawmakers are pushing to change the way banks report rates, providing more transparency to consumers, companies and investors that rely on the benchmark.

The reform movement gained momentum after global authorities secured the settlement with Barclays. Regulators had accused Barclays of reporting false rates, a scandal that prompted the resignation of the chief executive and other top officials at the bank.

Global authorities are now moving forward with civil and criminal cases, setting up the potential for major fines and regulatory sanctions. Some banks are in advanced settlement talks, including UBS and the Royal Bank of Scotland. The Royal Bank said it expected to disclose penalties before the firm’s next earnings release in February. Deutsche Bank said last month that it had set aside money to cover potential fines, although it was too early to predict the size.

American authorities are hoping to complete a deal with UBS by the middle of the month, according to officials briefed on the matter. The officials noted that the discussions could spill into next year. The talks could also break down, in which case the authorities would file a lawsuit against the bank.

It is unclear whether global authorities will act in tandem on the UBS case. The bank and the regulators would prefer to strike a deal together, but the agencies are proceeding at different speeds.

Investigators say the broader Libor case could go on for years.

Canadian, Swiss and Asian authorities as well as the Justice Department, the Commodity Futures Trading Commission and Britain’s Financial Services Authority are investigating the actions of more than a dozen banks. Along with UBS, the futures commission is focused on potential wrongdoing at two American banks, Citigroup and JPMorgan Chase, the officials said. HSBC is also under scrutiny.

Eric T. Schneiderman, New York’s attorney general, has been pressing banks like UBS over financial misconduct.Carolyn Kaster/Associated PressEric T. Schneiderman, New York’s attorney general, has been pressing banks like UBS over financial misconduct.

In addition to the regulatory cases, the Justice Department has identified potential criminal wrongdoing by traders at Barclays and other banks. The banks also face private lawsuits from large investors like local governments, which claim to have suffered losses as a result of interest rate manipulation. The New York attorney general has subpoenaed 16 banks over their role in the scandal, an action that could foreshadow civil lawsuits. Analysts predict the financial industry could face penalties of up to $20 billion.

“The evidence that comes out of any future settlement is likely to be enormously helpful for our claims,” said David E. Kovel, a partner at the law firm Kirby McInerney who is representing clients in a potential class-action suit related to Libor.

For UBS, the Libor case comes at a difficult time.

It has faced a series of legal problems since the financial crisis. In 2009, the bank agreed to pay $780 million to settle accusations by American authorities that it helped wealthy clients avoid taxes.

In 2011, it announced a $2.3 billion loss prompted by a rogue trader, Kweku M. Adoboli, who received a seven-year jail sentence for fraud last month. The firm agreed to pay a $47.5 million penalty to the British authorities in connection with the trading loss.

In the Libor case, UBS has been eager to cooperate. It has already reached a conditional immunity deal with the antitrust arm of the Justice Department, which could protect the bank from criminal prosecution under certain conditions. It is also cooperating with Canadian antitrust authorities by handing over e-mails and other documents implicating other banks.

But it did acknowledge publicly that such deals would not shield the bank from potential penalties from other regulators. The Justice Department’s criminal unit, for instance, could still take action against the bank.

UBS disclosed last year that it was the subject of investigations related to Libor, saying it had received subpoenas from American and Japanese authorities. Swiss and British regulators have joined the UBS investigation, which involves a number of currencies in the Libor system.

The timing of the Libor cases against UBS depends in large part on cooperation among regulators.

The Financial Services Authority in Britain has worked closely with its American counterparts. In total, the British regulator has about 160 people working on its various cases against banks, which are at different stages of development.

As the top watchdog of London’s financial services industry, the British regulator has positioned itself as a conduit for document requests from international regulators regarding Libor, which is set daily by banks in London. The agency also organizes interviews for its American counterparts with London-based bankers involved in the inquiries, according to an official with direct knowledge of the matter.

British regulators had been ready to move against UBS a month after officials announced a settlement with Barclays, the person added. The settlement has been delayed, however, as global authorities have tried to pursue a joint agreement with the bank.

“We’ve been going at the pace of the slowest regulator,” the official said.

Article source: http://dealbook.nytimes.com/2012/12/02/ubs-is-described-as-near-deal-on-rate-rigging/?partner=rss&emc=rss

British Inflation Jumps on Food and Tuition Costs

LONDON — Only just out of recession, Britain’s fragile economic recovery is running into another familiar problem: inflation.

Annual consumer price inflation jumped to 2.7 percent in October from 2.2 percent the previous month, according to official figures released Tuesday, dampening prospects that the Bank of England would move to stimulate the economy in the short term, at least.

The data from the Office for National Statistics reflected increases in university tuition fees and in food prices but did not take into account some of the latest increases in energy bills, which look set to push the headline inflation figure higher in coming months.

Inflation remains an Achilles’ heel of the British economy.

Unlike its neighbors inside the euro, Britain saw its currency fall significantly on world markets after the financial crisis, resulting in imported inflation as the exchange rate pushed up the prices of non-British goods.

Rising commodity prices and increases in the value-added tax, a consumption tax, have also played their part in stoking British inflation, which hit a peak of 5.2 percent in September 2011.

The inflation data complicate the picture for the Bank of England, which has cut interest rates to a record low of 0.5 percent and spent £375 billion, or $593 billion, on purchases of financial assets to try to stimulate growth. Last week the bank decided to keep rates and the asset-buying program, known as quantitative easing, unchanged.

The rise in inflation is likely to strengthen the hand of members of the Bank of England’s Monetary Policy Committee who are resisting more stimulus, according to a note from Steven Bryce, European economics analyst at Credit Suisse.

“Some of the increases in electricity and gas prices introduced in October did not show up in this month’s index,” he wrote. “This means that inflation was above expectations even without this component.” He said the data suggested that, once the increases in electricity and gas prices are included over the next two months, consumer price inflation “could be above 3 percent.”

But Robert Wood, chief U.K. economist at Berenberg Bank in London, said that growth remained a central concern and that the case for further stimulus of the British economy might only be delayed into next year.

Despite the fact that gross domestic product in Britain rose 1 percent from July to September, taking Britain out of recession, Mr. Wood, like many analysts, says that underlying growth is extremely fragile.

“There is a risk that the economy returns to contraction in the fourth quarter,” he said. “We believe that growth remains weak and that the case for policy stimulus will grow next year.”

Inflation is likely to hit 3 percent before falling back, he said, adding that one of the main factors pushing up the latest figures — tuition fees — was the result of government policy and therefore revealed little about the underlying economy.

Andrew Sentance, senior economic adviser to PricewaterhouseCooper and a former member of the Bank of England’s Monetary Policy Committee with a reputation for being hawkish on inflation, said that consumer price increases remained “stubbornly above the 2 percent target.”

Further increases would reinforce the squeeze on British consumers and “add to concerns about the Bank of England’s ability to achieve its price stability objective,” he said in a statement.

“If above-target inflation persists through next year, it will add to the pressure” on the central bank “to raise interest rates sooner rather than later,” Mr. Sentance said.

This article has been revised to reflect the following correction:

Correction: November 13, 2012

A headline on an earlier version of this article misidentified a commodity that was reflected in Britain’s higher inflation numbers. It was food, not fuel. The earlier version also misstated when British inflation hit a recent peak of 5.2 percent. It was September 2011, not “in September.”

Article source: http://www.nytimes.com/2012/11/14/business/global/british-inflation-jumps-on-food-and-tuition-costs.html?partner=rss&emc=rss

DealBook: Heineken Clinches Deal for Asia Pacific Breweries With $4.5 Billion Offer

Jean-Francois van Boxmeer, chief executive of HeinekenMarcel Antonisse/European Pressphoto AgencyJean-Francois van Boxmeer, chief executive of Heineken

Heineken claimed victory in its fight to gain control of Asia Pacific Breweries on Friday, announcing a sweetened deal to buy the rights to the beer maker held by Fraser Neave for about $4.5 billion.

Under the terms of the new agreement, Heineken will pay about $42.28 a share for Fraser Neave’s 39.7 percent stake in Asia Pacific. It will also pay about $130 million for certain other assets held by Fraser Neave.

All told, the new offer is worth nearly 10 percent more than Heineken’s initial offer, which was unveiled on July 20.

Through the agreement, which is still pending shareholder approval, Heineken will own 81.6 percent of Asia Pacific. The international brewer would then move to buy out the remaining shareholders, spending an estimated $2 billion.

“I am pleased that FN’s Board has agreed that our increased offer, which is now final, represents excellent value for FN and APB shareholders,” Jean-François van Boxmeer, Heineken’s chairman and chief executive, said in a statement.

The acquisition will give Heineken a stronger base from which to bolster its Asian operations, as Western brewers look to emerging markets to compensate for flat sales elsewhere.

Analysts had said that a higher bid from Heineken was in the offing, especially after Thai Beverage announced this week that it had added to its stake in Fraser Neave, giving it a potentially bigger say in the terms of a revised deal.

Heineken said that it planned to pay for the deal through cash on hand, an existing revolving credit facility and new financing lined up by its banks, Credit Suisse and Citigroup. The company said that it planned to cut its net debt to below 2.5 times its earnings within 24 months of closing the transaction.

As part of the deal, Fraser Neave cannot solicit or hold talks with alternative bidders for its Asia Pacific stake. Should its shareholders reject Heineken’s offer at the conglomerate’s annual meeting, it must pay the brewer a break-up fee of about $45 million.

Article source: http://dealbook.nytimes.com/2012/08/17/heineken-clinches-deal-for-asia-pacific-breweries-with-4-5-billion-offer/?partner=rss&emc=rss

DealBook: Credit Suisse Raises Capital Reserves as Profit Increases

A branch of Credit Suisse in Basel, Switzerland. The I.R.S. asked for help in locating information on American account holders.Arnd Wiegmann/ReutersA branch of Credit Suisse in Basel, Switzerland.

4:25 a.m. | Updated

LONDON – Credit Suisse said on Wednesday that its net profit rose 2.6 percent in the second quarter, as the bank announced a number of measures to increase its capital reserves in response to concerns from Switzerland’s central bank.

Credit Suisse said the steps to improve its capital base included issuing bonds to investors that convert into shares, as well as the sale of financial assets.

The measures will add 8.7 billion Swiss francs ($8.9 billion) to its capital reserves by the end of July. The bank expects to raise an additional 6.6 billion francs by the end of the year.

The European bank said it was tapping several existing global investors, including the giant money manager BlackRock, as well as new investors including Singapore’s sovereign wealth fund, Temasek, to increase the bank’s capital position.

The steps come after the Swiss National Bank singled out Credit Suisse last month as a bank that needed to “significantly expand its loss-absorbing capital during the current year.” Credit Suisse’s local rival, UBS, should just continue with its efforts to strengthen its capital, the central bank said.

At the time, Credit Suisse said it was “comfortable” with its progress toward increasing capital reserves. The bank said on Wednesday that it was responding to the calls from the Swiss central bank.

Credit Suisse’s chief executive, Brady W. Dougan, told investors on a conference call on Wednesday that he disagreed with the Swiss central bank’s statement about the firm’s capital position, but the Swiss bank had responded to calm concerns about its financial strength.

“The capital measures that we announced today take any question of the strength of our capitalization off the table,” Mr. Dougan said in a statement. “This is a robust and balanced set of capital initiatives.”

In response to the improvement in the bank’s capital position, the Swiss National Bank said it supported the steps.

“In an environment that remains particularly challenging for the international banking system, these measures substantially increase the resilience of Credit Suisse,” the Swiss central bank said in a statement.

Credit Suisse said the steps would increase its core Tier 1 capital ratio, a measure of firm’s ability to weather financial shocks, to 9.4 percent by the end of the year, compared with 7 percent at the end of the second quarter.

The bank’s share price rose 6.2 percent in morning trading in Zurich. Stock in the Swiss firm has fallen 39 percent in the last 12 months.

Credit Suisse also said it had achieved 2 billion francs of costs savings during the first six months of the year, and would now look for an additional 1 billion francs of savings by the end of 2013.

As part of the new cost savings sought by the end of next year, 550 million francs will come from the firm’s global investment banking unit, according to a company statement. The bank has previously said it intends to reduce its European investment banking division. An additional 450 million francs of savings will be extracted from the firm’s private banking division.

Net profit in the three months ended June 30 rose to 788 million francs from 768 million francs in the period a year earlier, while net revenue dropped to 6.2 billion francs from 6.9 billion francs.

Despite market volatility caused by the European debt crisis, pretax profit in Credit Suisse’s investment banking unit rose 84 percent, to 383 million francs. Pretax profit at the firm’s private banking division fell 7 percent, to 775 million. The bank did not provide the net profit figures.

Article source: http://dealbook.nytimes.com/2012/07/18/credit-suisse-boosts-capital-reserves-as-profit-rises/?partner=rss&emc=rss