October 28, 2021

DealBook: Deadline Approaches for European Banks’ Recapitalizations

Hannelore Foerster/Bloomberg News

LONDON — European banks must submit their recapitalization plans to their national authorities by Friday as the banks seek to increase their capital reserves by a combined 115 billion euros, or $147 billion.

The deadline, set by the European Banking Authority, is part of regulators’ efforts to strength European institutions’ core Tier 1 ratios, a measure of a bank’s ability to weather financial shocks, to 9 percent by June.

Banks, including Deutsche Bank and Société Générale of France, have until Friday to provide national authorities with guidance on how they expect to raise the extra money. The plans will be reviewed by the banking authority in early February, and authorities have the power to veto any recapitalization strategies they don’t agree with.

On Thursday, Commzerbank of Germany, which must raise 5.3 billion euros by June, said it was more than halfway to meeting the new requirements. The bank expects to raise the remainder through a combination of reducing assets on its balance sheet and retaining future earnings, according to a company statement.

Earlier this month, Grupo Santander of Spain, which must raise 15 billion euros, the largest amount by any European bank, said it had reached its capital target six months ahead of the banking authority’s deadline. The bank, based in Madrid, increased its reserves largely by converting 6.8 billion euros in bonds into shares, retaining profits and selling a stake in its Brazilian unit to an outside investor.

So far, banks have shied away from using capital markets to raise the extra reserves. Many are waiting to see the result of Italian bank Unicredit’s 7.5 billion euro so-called rights offerings, which allows exiting shareholders to buy new stock in a company at a discount. Initially, investors showed little interest in the issuance, but market participants, who were not authorized to talk publicly, say the subscription rate could reach as much as 95 percent when the offering closes at the end of the month.

“Investors believe UniCredit will pull through the crisis,” said an investment banker at a leading firm in Europe, who spoke on condition of anonymity because he was not authorized to talk publicly. “Hedge fund have been building sizable positions in the bank.”

Article source: http://dealbook.nytimes.com/2012/01/20/deadline-approaches-for-european-banks-recapitalizations/?partner=rss&emc=rss

DealBook: ING Outlines Strategy to Pay Back Government Bailout

Jan Hommen, chief of ING.Toussaint Kluiters/United Photos — ReutersJan Hommen, chief of ING.

7:42 p.m. | Updated

LONDON — The Dutch financial services group ING said Friday that it would not pay a dividend to shareholders until it had repaid all of the state aid it received during the recent financial crisis.

ING’s chief executive, Jan Hommen, said the bank’s priorities over the next two years also include increasing its core Tier 1 capital ratio — a measure of a bank’s ability to weather financial shocks — to 10 percent, from 9.6 percent at the end of September, despite rising regulatory costs.

Updating investors on the bank’s strategy, Mr. Hommen said ING was focused on repaying the bailout from the Dutch government. In 2008, the firm received 10 billion euros, or $12.8 billion, from local authorities, and still has to repay 3 billion euros.

ING did not say when it would repay the state aid, other than “as soon as possible.” It also has to split up its banking and insurance assets by the end of 2013 to comply with requirements attached to the bailout.

“Given the ongoing crisis in the euro zone and increasing regulatory capital requirements, we need to take a cautious approach and pay special attention to liquidity, funding and capital,” Mr. Hommen said in a statement. “In 2011, market circumstances became increasingly difficult and volatile, and we expect that to remain the case in the near future.”

The company’s stock had fallen 2 percent by the close of trading in Amsterdam on Friday. ING’s share price has fallen 20.5 percent over the last 12 months.

ING also announced that it expected to save 300 million euros a year by 2015 through so-called procurement initiatives, which will look to centralize purchasing across the firm to reduce costs.

The Dutch company wants to reduce its cost-income ratio — a measure of a bank’s profitability — to 50 to 53 percent by 2015. The figure was 55.8 percent at the end of the third quarter of 2011.

“By managing our balance sheet more efficiently, ING will increase returns and grow customer lending without increasing the balance sheet,” Mr. Hommen said.

Like other European financial institutions, ING has been reducing its exposure to the Continent’s sovereign debt crisis. The Dutch firm reduced its holdings in Southern European sovereign debt by 1.2 billion euros in the fourth quarter of 2011, according to a company statement.

Last year, ING reduced its total exposure to these debt-ridden countries by 4 billion euros, but still has approximately 2 billion euros of Southern European sovereign debt on its balance sheet.

On Thursday, ING announced that it was abandoning plans for an initial public offering of its combined Asian and European businesses, citing turbulence in the equity markets.

The firm said it was now considering a sale of its Asian business, but still planned to pursue a separate I.P.O. for its European arm.

“Given the uncertain economic outlook and turbulent financial markets, especially in Europe, ING has decided to explore other options for its Asian insurance and investment management business,” Mr. Hommen said in a statement.

Article source: http://feeds.nytimes.com/click.phdo?i=fa2fc54132177134f7ef219aac872d06

Stocks & Bonds: Wall Street Indexes End the Week on the Upside

The market’s three main indexes have been climbing steadily in recent weeks as quarterly results trickled out and proved better than expected in many cases.

While the one-day gains on Friday were minimal, they were enough to build on past advances and to push the broader market and the Dow to their best monthly performances this year.

The dollar, on the other hand, declined against its index of six currencies to a three-year low, said Brian Dolan, the chief currency strategist at Forex.com.

The euro was at $1.4839 on Friday, up from  $1.4821 on Thursday.

“It is weak across the board,” said Mr. Dolan of the dollar. “U.S. interest rates are low and going to stay low, and other central banks are tightening. There is very little on the fundamental horizon to alter that downtrend.”

But corporate results have surpassed many forecasts.

About 300 of the companies in the Standard Poor’s 500-stock index have reported quarterly results so far, and nearly 80 percent have said sales and operating earnings were higher in the first quarter than they were in the quarter a year ago, according to a survey compiled by Howard Silverblatt, the senior index analyst at Standard Poor’s.

Russell T. Price, the senior economist for Ameriprise Financial, said the first quarter had suffered some economic and financial shocks from the disaster in Japan and the higher oil prices fueled by turmoil in the Middle East and North Africa.

But he said quarterly results were “coming out so much better than expected.” He added, “It is a pretty good indication that corporate America is able to deal with the headwinds.”

Some companies benefited from the higher oil prices. Energy shares in S. P. were up more than 1 percent on Friday.

Exxon Mobil released results on Thursday that reflected an increase in higher oil prices in the first quarter, reporting a 69 percent rise in net income to $10.7 billion, or $2.14 a share. Its shares rose less than 1 percent to $87.98.

Occidental Petroleum rose 8.71 percent to $114.29 after it reported on Thursday that profit rose to $1.55 billion, beating forecasts.

Industrial shares were also up.

Caterpillar, the heavy equipment maker, climbed more than 2.4 percent to $115.41 after its first-quarter income of $1.23 billion a share topped Wall Street’s expectations.

The Goodyear Tire and Rubber Company was 12.04 percent higher at $18.15 after reporting a profit that was four times greater than forecast.

The markets were also partly lifted this week by the Federal Reserve statement on Wednesday that it would continue to stimulate growth with low interest rates.

The Dow Jones industrial average closed up 47.23 points, or 0.37 percent, at 12,810.54, a nearly 4 percent rise in the month and its best close since May 2008. Eighteen of the 30 components rose.

The S. P. was 0.23 percent, or 3.13 points higher, at 1,363.61, in its highest close since June 5, 2008. It rose 2.85 percent in April, its best monthly advance this year.

The Nasdaq was 1.01 points higher at 2,873.54, weighed down by Microsoft, which reported that its third-quarter profit was up 31 percent, but that revenue from the division that includes the Windows operating system fell 4 percent.

Microsoft was down by 2.96 percent at $25.92. Research in Motion, the maker of the BlackBerry, was down by about 14 percent at $48.65 after it lowered its forecast for the current quarter.

The market has also been assessing the latest indicators of growth and spending this week. The government reported on Thursday that the economy grew at a rate of 1.8 percent in the first quarter. Consumer spending increased 0.6 percent in March.

Interest rates were lower. The Treasury’s benchmark 10-year note rose 7/32, to 102 26/32, and the yield fell to 3.29 percent from 3.31 percent late Thursday.

Article source: http://feeds.nytimes.com/click.phdo?i=f490b4187ea14c7055565eb34eae9274

Wall Street Indexes End the Week on the Upside

The market’s three main indexes have been climbing steadily in recent weeks as quarterly results trickled out and proved better than expected in many cases.

While the one-day gains on Friday were minimal, they were enough to build on past advances and to push the broader market and the Dow to their best monthly performances this year.

The dollar, on the other hand, declined against its index of six currencies to a three-year low, said Brian Dolan, the chief currency strategist at Forex.com.

The euro was at $1.4839 on Friday, up from  $1.4821 on Thursday.

“It is weak across the board,” said Mr. Dolan of the dollar. “U.S. interest rates are low and going to stay low, and other central banks are tightening. There is very little on the fundamental horizon to alter that downtrend.”

But corporate results have surpassed many forecasts.

About 300 of the companies in the Standard Poor’s 500-stock index have reported quarterly results so far, and nearly 80 percent have said sales and operating earnings were higher in the first quarter than they were in the quarter a year ago, according to a survey compiled by Howard Silverblatt, the senior index analyst at Standard Poor’s.

Russell T. Price, the senior economist for Ameriprise Financial, said the first quarter had suffered some economic and financial shocks from the disaster in Japan and the higher oil prices fueled by turmoil in the Middle East and North Africa.

But he said quarterly results were “coming out so much better than expected.” He added, “It is a pretty good indication that corporate America is able to deal with the headwinds.”

Some companies benefited from the higher oil prices. Energy shares in S. P. were up more than 1 percent on Friday.

Exxon Mobil released results on Thursday that reflected an increase in higher oil prices in the first quarter, reporting a 69 percent rise in net income to $10.7 billion, or $2.14 a share. Its shares rose less than 1 percent to $87.98.

Occidental Petroleum rose 8.71 percent to $114.29 after it reported on Thursday that profit rose to $1.55 billion, beating forecasts.

Industrial shares were also up.

Caterpillar, the heavy equipment maker, climbed more than 2.4 percent to $115.41 after its first-quarter income of $1.23 billion a share topped Wall Street’s expectations.

The Goodyear Tire and Rubber Company was 12.04 percent higher at $18.15 after reporting a profit that was four times greater than forecast.

The markets were also partly lifted this week by the Federal Reserve statement on Wednesday that it would continue to stimulate growth with low interest rates.

The Dow Jones industrial average closed up 47.23 points, or 0.37 percent, at 12,810.54, a nearly 4 percent rise in the month and its best close since May 2008. Eighteen of the 30 components rose.

The S. P. was 0.23 percent, or 3.13 points higher, at 1,363.61, in its highest close since June 5, 2008. It rose 2.85 percent in April, its best monthly advance this year.

The Nasdaq was 1.01 points higher at 2,873.54, weighed down by Microsoft, which reported that its third-quarter profit was up 31 percent, but that revenue from the division that includes the Windows operating system fell 4 percent.

Microsoft was down by 2.96 percent at $25.92. Research in Motion, the maker of the BlackBerry, was down by about 14 percent at $48.65 after it lowered its forecast for the current quarter.

The market has also been assessing the latest indicators of growth and spending this week. The government reported on Thursday that the economy grew at a rate of 1.8 percent in the first quarter. Consumer spending increased 0.6 percent in March.

Interest rates were lower. The Treasury’s benchmark 10-year note rose 7/32, to 102 26/32, and the yield fell to 3.29 percent from 3.31 percent late Thursday.

Article source: http://www.nytimes.com/2011/04/30/business/30markets.html?partner=rss&emc=rss