Oct 18, 2011

UPDATE 1-UniCredit weighs options as recapitalisation looms


* Cost cutting, asset sales mulled along with cap hike (Recasts with board meeting, banker, background)By Silvia Aloisi and Gianluca SemeraroMILAN, Oct 18 (Reuters) - The board of UniCredit SpA met on Tuesday as Italy’s biggest bank by assets weighs options to shore up its capital position as required by European leaders pressing banks to recapitalise to contain a spreading debt crisis.A banker close to UniCredit told Reuters he believed the bank was nowhere near agreeing a capital increase, which would be the third since the beginning of the financial crisis in 2008 and is a challenging option given current market prices.The banker said UniCredit would likely first focus on administrative cost-cutting — which analysts say could yield 1 billion euros ($1.4 billion) — and asset sales, although UniCredit has repeatedly denied it would sell its highly profitable Turkish and Polish units.Bank executives said Tuesday’s board meeting would be routine but one source close to the situation said there could be a “quick exchange of views” on the bank’s upcoming business plan and likely capital increase.The bank’s capital shortfall is estimated by most analysts at between 5 billion euros ($6.9 billion) and 7 billion depending on core capital requirements.However some analysts say the bill could rise to as much as 13 billion euros if stress scenarios and losses on sovereign debt holdings are applied — a huge task for a bank whose market capitalisation has shrunk to just over 18 billion.CAPITAL JITTERSUniCredit, which has a limited exposure to Greek debt but has some 40 billion euros of Italian government bonds in its books, is expected to present a business plan on Nov. 14 and in any case by year-end. CEO Federico Ghizzoni has repeatedly said any capital-boosting measures will be unveiled with the plan.The bank is the only big Italian lender to have stayed out of 11 billion euros worth of capital increases so far this year and investors have grown jittery over when and how it will take action to meet higher capital requirements alongside other European banks.The stock has lost 40 percent of its value since July. On Tuesday, it was up 1.9 percent, but was still worth less than 1 euro after shedding 18 percent in the previous two sessions.Ghizzoni said earlier this month the bank could strengthen its capital by retaining its profits and via small divestments, with a capital increase depending on market conditions.One major constraint is the limited availability of cash at the bank’s core shareholder foundations, which have strong political ties and together own about 13 percent of UniCredit.Another hurdle is that the Libyan investment authority and central bank — which together hold a 7.5 percent stake in UniCredit that is in the process of being unfrozen — would likely be reluctant to take part as the country’s new leaders focus on rebuilding after the civil war.Ghizzoni has said he would be open to new investors and there has been market talk that Chinese or Singaporean sovereign wealth funds may be interested in buying a stake.As for the possibility of asset disposals, analysts say major asset sales in central and eastern Europe would undermine the group’s international strategy and also its ability to partly offset higher funding costs through geographical diversification. ($1 = 0.727 Euros)

Oct 18, 2011

US officials, banks to tackle mortgage refinancing plan - WSJ


Federal officials have been trying to broker a settlement with the five largest mortgage servicers - Ally Financial Inc, Bank of America , Citigroup Inc , J.P. Morgan Chase and Wells Fargo & Co — the Journal said.It is not clear how many borrowers would qualify for help, the paper added.Officials are pushing for a plan in a bid to break a legal impasse with big banks over alleged foreclosure abuses and ease problems in the housing market, the paper said.Discussions are still fluid and any final outcome is uncertain. Talks between government officials and the banks are expected to continue this week, the newspaper said.JPMorgan declined to comment to Reuters on the Journal report. Reuters could not immediately reach the other four lenders for comment outside regular U.S. business hours.

Oct 17, 2011

U.S private equity firm buys 5 pct in Media Nusantara


Saban will pay 1,000 rupiah a share, valuing MNC at $1.56 billion, for 692.33 million shares of MNC. It will buy the stake from MNC’s parent company PT Global Mediacom , a holding company owned by media mogul Hary Tanoesoedibjo, MNC said in a statement on Monday.The Los Angeles-based firm, which owns the Power Rangers franchise, will have an option to buy an additional 346.2 million shares or 2.5 percent stake in the company over the next 27 months, it said.”We view our investment in MNC as strategically important to the continued expansion of Saban Capital Group’s investment franchise in Asia,” said Adam Chesnoff, president and CEO of Saban, in a statement.MNC owned the biggest market share in Indonesia’s free to air TV market, as it owns three free-to-air TV stations, including market leader PT Rajawali Citra Televisi Indonesia.It also controls several newspapers and magazines and radio networks.Shares of MNC had closed up 0.9 percent at 1,090 rupiah before the statement about Saban’s interest. The shares have risen 14 percent so far this year, outperforming the Jakarta stock index’s 0.7 percent advance.

Oct 17, 2011

Palin’s 2012 plan: help others defeat Obama


“I apologize to those whom are disappointed in this decision…  But I believe that they, when they take a step back, will understand why the decision was made and understand that really you don’t need a title to make a difference in this country,”  Sarah Palin said on Fox New after closing the door to a 2012 presidential campaign. The former Alaska governor, and 2008 Republican vice presidential nominee, ended months and months of speculation on Wednesday by announcing her decision not to throw her hat into the ring. While she isn’t hitting the trail as a White House candidate, Palin clearly intends to remain a player on the political stage. “In the coming weeks I will help coordinate strategies to assist in replacing the president, re-taking the Senate and maintaining the House,” she said in a statement posted on  Facebook. She also says she’ll continue “driving the discussion for freedom and free market.” Some Highlights from Palin’s  flirtation with 2012 presidential race: September 3, 2011 – Palin wows Tea Party of America rally in Indianola, Iowa, with what sounds like a campaign stump speech. It was widely anticipated that she’d use the speech to announce her candidacy.  Two days later, she gave a speech at a Tea Party Express Rally  in Manchester, New Hampshire. August 12, 2011 – Palin makes a surprise stop at the Iowa State Fair in Des Moines — scheduled neatly between a debate between declared Republican contenders and the Ames straw poll. It was her second high-profile trip of the summer to Iowa. June 28, 2011 – Palin attends premiere of “The Undefeated,” a flattering documentary about her at the opera house in Pella, Iowa. She said she was still studying a potential presidential run, although her daughter said she had already made up her mind. May 27, 2011 – Palin’s political action committee releases a video announcing her  “One Nation” campaign-style bus tour . The tour  stirs  speculation that she might be preparing to jump into the race. Less than a month later, the bus was parked on what Real Clear Politics reported was an extended pit stop. May 29, 2011 -  Palin rolls into Washington on a Harley-Davidson for the annual Rolling Thunder rally to honor veterans, fueling speculation about a White House run. Jan 12, 2011 -Palin accuses critics of “blood libel” for linking fiery campaign rhetoric to a mass shooting in Tucson in which Arizona Representative Gabrielle Giffords was severely wounded. Her eight-minute video is posted on YouTube on the same day President Obama  delivers an address at a service honoring victims of the  shooting. November 14, 2010 - Palin’s  reality TV series  “Sarah Palin’s Alaska” premieres on cable television’s  “The Learning Channel.” September 28, 2010 – Palin is in the audience in a Los Angeles studio to support daughter Bristol, a contestant on ABC’s “Dancing With the Stars.” September 17, 2010 -  Palin speaks at the Iowa Republican Party’s Ronald Reagan Dinner in Des Moines as her influence among Tea Party activists is on the rise. August 29, 2010 - Palin joins Fox TV host Glenn Beck for a “Restoring Honor” rally at the Lincoln Memorial urging a return to what they said were traditional American values of service to others and a belief in God. June 23, 2010 -  Palin’s  “Mama Grizzlies” video is uploaded on  YouTube.  It looks  and sounds  like a political campaign ad –  “Look out Washington, because there’s a whole stampede of pink elephants crossing and the e.t.a. for them stampeding through is November 2, 2010,” Palin says in the video. It raises questions about whether she intends to run for president. November 18, 2009 – Palin opens cross-country tour promoting her memoir “Going Rogue: An American Life.” July 3, 2009 - Palin resigns as Alaska’s governor with 18 months left in her term. Her decision, announced in a statement in her home town of Wasilla, Alaska, fuels  speculation that she might be positioning herself for a presidential run in 2012. January 2009 - Palin’s  political action committee, SarahPAC, is launched “dedicated to building America’s future by supporting fresh ideas and candidates who share our vision for reform and innovation.”   Photo Credits: (Palin at Tea Party rally in Indianola, Iowa; at Iowa State Fair); (Palin at Rolling Thunder); (Palin at Tea Party Express rally in Boston, April 2010); (Palin’s books ‘Going Rouge’ in a Michigan bookstore)

Oct 12, 2011

Budget battle hobbles Clinton as clock ticks down


* Clinton “cobbling together” aid for nascent democraciesBy Andrew Quinn and Arshad MohammedWASHINGTON, Oct 12 (Reuters) - Time and money are running short for Hillary Clinton.After surprising the world in 2009 when she signed up as secretary of state for her Democratic rival President Barack Obama, Clinton has repeatedly said she will stand aside after Obama’s term ends in January 2013, leaving her just 15 months to cement her legacy as America’s top diplomat.But as the clock winds down, Clinton also faces one of the biggest domestic battles of her life: ensuring that U.S. spending on diplomacy and foreign aid survives the whirlwind of budget cuts swirling through Congress.”We are engaged in a very challenging budget discussion with the Congress which will to some extent determine where our priorities are and what we do,” Clinton told Reuters in an interview on Tuesday.”There are so many emerging actors who can influence events in ways that either advantage or disadvantage us nationally, or promote or undermine the values that we stand for. So we really have to have a broad comprehensive global presence at the very time when we’re having the money cut,” she said.The sweeping view from Clinton’s suite of meeting rooms atop the gray-walled State Department complex includes enduring symbols of American power and prestige anchored by the spire of the Washington Monument.But like that monument — closed to visitors after a rare earthquake in August — American power in the latter half of Clinton’s State Department tenure is looking shaky.Budget hawks in Congress, empowered both by Republican electoral gains and grim news about the U.S. deficit, cut some $8 billion off Obama’s request for the State Department and U.S. foreign aid for last year and propose to whack another $8.6 billion from their combined budget in fiscal 2012.Lawmakers are looking for another $1.2-$1.5 trillion in deficit reduction measures across the government over the next decade and State and aid budgets, which got about $49 billion for the current fiscal year.The crunch comes as Clinton’s State Department grapples with a fast-expanding docket of problems ranging from the U.S.-led war in Afghanistan and managing relations with Pakistan and China to the flagging Middle East peace process and fallout from Arab uprisings across the Middle East and North Africa.For Clinton, who came into office vowing to promote U.S. “smart power” by ramping up both U.S. aid and civilian engagement around the world, the threatened downscaling of U.S. involvement is both dangerous and disappointing.”I do believe that our leadership is critical to our economic revival and to our security and safety in the world,” Clinton said. “So it’s something that I’m going to try to explain and connect to what people are going through right now.“‘COBBLING TOGETHER’But there is only so much a cash-starved secretary of state can do — even if polls repeatedly show her as one of the most popular political figures in the country.Clinton has used a series of speeches to advocate for international spending even at a time of rising domestic economic fears.”As we debate the choices ahead, we must resist the temptation to turn inward and undercut our leadership by slashing investments in diplomacy and development, which account for only 1 percent of the federal budget,” Clinton said in one such address on Wednesday at a Washington think-tank.But the results of the U.S. pullback are already coming into focus.In Tunisia, which the Obama administration frequently cites as an Arab country on the right track after a popular revolt toppled its longtime president in January, the United States has been able to contribute only around $40 million in aid.”We’re cobbling together what we can to help them … and you multiply that many times over (for) Libya, Egypt, Jordan, Yemen, the other Gulf countries. We have to be a lot more creative with the dollars that we have in order to get the impact that we’re seeking,” she said.Clinton’s colorful political history and undeniable star-power have helped to raise the profile of the State Department, aided by an unflagging work ethic which has seen her log more than 600,000 miles (965,000 km) in air travel — more than twice the distance from the Earth to the Moon.But while she is certain to draw headlines, Clinton says her remaining time at the State Department will also be devoted to studying “trendlines” — the long, slow changes taking place around the world that promise to rewrite the U.S. strategic calculus over time.These, Clinton said, include issues close to her heart such as women’s empowerment as well as U.S. energy security and nuclear non-proliferation, and stepping up engagement with increasingly powerful regional actors such as Nigeria, India and Brazil.Clinton said she aggressively promotes the Obama administration’s vision of global U.S. engagement, underscoring that the United States must take the lead in managing global problems to secure both economic prosperity and national security at home.”Leadership has to be earned. It has to be earned over and over again,” Clinton said.”I hope that people will understand that, while we have to fix our problems at home, we cannot abdicate our leadership without it eventually boomeranging on us.”

Oct 12, 2011

UPDATE 3-US reveals Volcker rule’s murky ban on Wall St bets


* Industry, consumer groups complain about complexity* Proposal acknowledges fine line on proprietary tradingBy Dave Clarke and Alexandra AlperWASHINGTON, Oct 11 (Reuters) - U.S. regulators unveiled a ban on Wall Street banks’ trading for their own profit, but the long-awaited Volcker rule proposal was so complex that banks blasted it as unworkable and consumer groups dismissed it as too weak.The rule, required by last year’s Dodd-Frank financial oversight law, is aimed at avoiding a repeat of the 2007-2009 financial crisis by curbing excessive risk-taking.It has been difficult for the government to craft a rule that reins in Wall Street while protecting the trades that big banks execute on behalf of clients.Regulators are giving the public until Jan. 13, 2012, to comment on the rule. That is more time than expected, and could result in more pressure to change elements of the rule.The proposal includes more than 350 questions that regulators want interested parties to weigh in on, particularly on how the government should write exemptions that allow banks to still make markets for their customers and hedge risk in their portfolios.”Only in today’s regulatory climate could such a simple idea become so complex, generating a rule whose preamble alone is 215 pages, with 381 footnotes to boot,” American Bankers Association Chief Executive Frank Keating said in a statement.”How can banks comply with a rule that complicated, and how can regulators effectively administer it in a way that doesn’t make it harder for banks to serve their customers and further weaken the broader economy?” he asked.On the other side of the issue, the consumer coalition Americans for Financial Reform said regulators warped a simple ban into a weak crackdown that is weighted toward preserving banks’ flexibility.”Unfortunately, the proposal issued today falls well short of what the Volcker Rule could and should achieve,” AFR said.The Federal Reserve and other bank regulators acknowledged in the proposal that it will be challenging for the government to identify “proprietary trading” that will be banned under the rule.The proposal said drawing the line between prohibited and permitted trading “often involves subtle distinctions that are difficult both to describe comprehensively within regulation and to evaluate in practice.”The rule is expected to have the most impact on large banks such as Goldman Sachs , Morgan Stanley and JPMorgan Chase , and could shave off billions of dollars in annual revenues.”CUMBERSOME” RULEThe Volcker rule, named after former Federal Reserve Chairman Paul Volcker who championed the measure, aims to prevent banks from making risky trades by prohibiting short-term trading for their own profit in securities, derivatives and other financial products.It will also prohibit banks from investing in, or sponsoring, hedge funds or private equity funds.The idea behind the rule is to prevent banks that enjoy some sort of government safety net, such as deposit insurance on customer accounts or access to Fed money, from using that backstop to make money for themselves.Industry groups have argued for broad exemptions for trades done to make markets for customers, and for trades used to hedge against certain risks in the banks’ portfolios.The proposal includes both types of exemptions, but it is difficult to determine how they will work in practice.At a minimum, the proposed rule would increase costs and discourage firms from making markets in securities, said Dwight Smith, a partner at Morrison & Foerster LLP, a law firm which works with investment banks.”It calls for some very precise management of that business and some very detailed record-keeping,” said Smith. “It becomes very cumbersome.”The impact of the proposed rule will likely be discussed with investors as banks host quarterly earnings calls starting Thursday with JPMorgan.Barclays Capital analyst Jason Goldberg said in an Oct. 7 research report that executives would be well-served to show investors how they will cope with the Volcker rule restrictions, with bank stocks already beaten down this year.Regulators on Tuesday acknowledged that controversy has surrounded the Volcker rule from the outset.”The proposed rule has been noted as long, the issues are complex, so I think we made the right decision in allowing the full 90 days for comment,” said John Walsh, acting director of the Office of the Comptroller of the Currency, which oversees the nation’s largest banks.Walsh spoke at a meeting of the Federal Deposit Insurance Corp board which agreed on Tuesday to put the proposal out for comment.The Securities and Exchange Commission is due to discuss the Volcker rule proposal at a meeting on Wednesday. The Commodity Futures Trading Commission has yet to announce how it will proceed.The proposal released by bank regulators on Tuesday is largely similar to a draft of the rule leaked last week that received a mixed reaction from industry groups.The Securities Industry and Financial Markets Association, for instance, raised concerns about whether the exemption for market-making trades is too narrow.Randy Snook, a SIFMA executive vice president, said on Tuesday that financial firms need to be able to provide capital and liquidity to markets.”There is a real legitimate concern here that everything gets cast as prop trading. This isn’t just about speculative activity, in our mind,” Snook said.A note released on Monday by Bernstein Research said, based on the draft, that the rule “will have a very negative impact on the business models of fixed-income trading for Wall Street brokers.” Bernstein estimates the impact could be 25 percent less in revenues.To stop foreign-owned banks reaping a windfall or skirting the rule, prohibited trades cannot be conducted if a party to the transaction is a U.S. resident or a bank employee involved in the transaction is physically located in the United States.Under the Dodd-Frank law, the Volcker rule goes into effect on July 21, 2012.

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