Archive for September, 2008

Fortis talks to continue over weekend (Reuters)

Saturday, September 27th, 2008 | Finance News

Financial authorities are holding discussions over the future of Fortis (FOR.BR) this weekend, while the troubled Belgian-Dutch financial group is seeking to close key divestments deals.

As of Saturday, financial authorities were contacting other institutions, a source familiar with the situation told Reuters, although no particular solution was preferred and nothing concrete was likely to emerge before Sunday.

Fortis investors face a weekend of uncertainty after the banking and insurance group went out of its way on Friday to reassure them that it was solvent and in no danger of collapse following market talk the company could become another casualty of the credit crisis.

Veerle De Schryver, a spokewoman for the Banking, Financial and Insurance Commission (CBFA), said: "The parties will discuss scenarios for Fortis in a cooperative way."

She declined to say exactly which parties would be involved in the talks. Another CBFA official told Flemish radio talks would include the government, market regulators and the Belgian central bank.

The Dutch central bank (DNB) declined to comment, although Nout Wellink, also a European Central Bank governing council member, canceled a Chicago trip to return to the Netherlands.

Fortis is hoping to announce deals to sell off parts of its business by Monday in an attempt to show investors it can raise cash and restore confidence in the business, while buyers for the business may emerge over the weekend, local media reported.

As its shares plummeted more than 20 percent to 15 year-lows on Friday, Fortis called an emergency news conference to say its position was strong and that it would expand assets sales to as much as 10 billion euros ($14.6 billion) to raise cash.

After a fifth straight day of share declines, Fortis also named a new chief executive, nominating banking chief Filip Dierckx, 52, to replace interim CEO Herman Verwilst.


Dierckx and Fortis managers are scrambling to complete some deals this weekend, reported Dutch daily Financieele Dagblad, citing unnamed sources from Dutch bank ABN AMRO, which Fortis bought parts of last year.

"Fortis is working with all its power to sell business units during the crisis," the newspaper said.

Belgian newspaper De Tijd said the heads of Belgium's big banks and financial supervisors would hold talks over Fortis in a bid to restore confidence among savers and investors.

Several Belgian and Dutch media outlets cited France's BNP Paribas (BNPP.PA) as a potential buyer.

"A sustainable solution has to come in the coming days," a source told the Belgian paper.

At the core of market concerns is Fortis' liquidity, but the financial group reminded investors that it was sitting on a funding base of 300 billion euros. The European Central Bank has also made clear that it is ready to fund any liquidity shortfalls as European money markets remain effectively frozen.

"They are feeling strong but developments go fast. Look at what happened with Lehman Brothers. Of course, we cannot compare Fortis to Lehman, they're different banks, but things can change quickly," said Rob Koenders of Dutch asset manager Harmony Vermogensbeheer, which holds Fortis shares.

In Turkey, where Fortis is listed (FORTS.IS) as a 94 percent-owned subsidiary worth 1.071 billion lira ($868.1 million), the group sought to reassure investors that its position remained strong.

"Fortis Turkey is still continuing its commercial activities successfully and it is growing in a stable fashion," the financial group said in a statement.


Weekends have become a tense time for financial institutions and investors because they have been marked recently by around-the-clock negotiations to save some prominent U.S. financial institutions.

Two weeks ago, U.S. investment bank Lehman Brothers (LEHMQ.PK) filed for bankruptcy protection and Merrill Lynch agreed to be taken over by Bank of America (BAC.N) over a long and tense weekend. Since then, U.S. insurer American International Group (AIG.N) was rescued by U.S. authorities, and Washington Mutual (WM.N) was closed by the government and sold to JPMorgan Chase & Co. (JPM.N)

A bailout deal in Washington could restore confidence in the European financial sector and together with a new CEO and a more open communication policy, Fortis could be saved, a senior Fortis insider told Reuters.

Verwilst told a conference call on Friday there was no way that Fortis would go bankrupt.

The biggest vulnerability for Fortis right now would be depositors withdrawing funds and forcing the bank to shore up more capital than it is capable of.

Fortis shares, which closed down 20 percent at 5.2 euros on Friday, has lost more than two-thirds of its value since buying the Dutch operations and asset management arm of ABN AMRO as part of a three-bank, 70 billion euros buyout consortium.

(Additional reporting by Gilbert Kreijger in AMSTERDAM, Paul Taylor in BRUSSELS and Daren Butler in ISTANBUL; Editing by William Hardy)


Alitalia rescue back on track, says minister: report (Reuters)

Saturday, September 27th, 2008 | Finance News

MILAN (Reuters) -
The rescue of Alitalia (AZPIa.MI) from bankruptcy is back on track, Italy labor minister Maurizio Sacconi told Il Giornale newspaper in an interview given before key pilots' unions also signed up to the deal early on Saturday.

"The critical mass is there already," Sacconi said, adding that even without the agreement of the pilots, "we can say we have got the deal back on track."

After 12 hours of negotiations which dragged on into the early hours of Saturday, pilots' representatives agreed to get on board the rescue plan from a group of Italian investors, clearing a major hurdle to the deal.

The two remaining flight assistant unions said there had been "steps forward" and they would reconvene for talks on Monday.

German airline Lufthansa (LHAG.DE) met Alitalia's unions on Friday to discuss its plans to take a stake in Alitalia in conjunction with the Italian investor group CAI.

CAI has said it will extend its offer to October 15. The sale process has dragged out for over 19 months as two governments have sought to find a buyer for the state's 49.9 percent in the airline, which loses some 2 million euros a day.

Sacconi told Il Giornale that despite the progress made this time around, there were still problems to tackle.

"I don't see any last minute surprises, but we need to be aware that there is a lot to do," including securing approval from the European Union, buying smaller airline Air One under plans by CAI to put the two carriers together, and valuing the assets to be bought.

Sacconi said interest from international carriers such as Lufthansa showed the plan had wings.

"The fact that the three major European groups -- British, Air France-KLM (AIRF.PA) and Lufthansa, want to take part, shows that the Alitalia plan is credible on an international scale too," he told Il Giornale.

Air France-KLM has said it would be ready to invest in a restructured Alitalia with a minority stake.

(Reporting by Jo Winterbottom; Editing by Lincoln Feast)


Credit Suisse aims to hire 1,000 wealth managers: paper (Reuters)

Friday, September 26th, 2008 | Finance News

SINGAPORE (Reuters) -
Swiss bank Credit Suisse (CSGN.VX) plans to hire another 1,000 relationship managers or more globally over the next three years to boost its wealth management business, an executive said in a newspaper report on Saturday.

Walter Berchtold, CEO of global private banking, is looking to poach from other banks and hire corporate bankers to add to the group's 3,370 relationship managers, since there are opportunities for investors amid the credit crisis, he said in an interview published in Singapore's Business Times.

"There are short-term opportunities in the credit world. Other great opportunities are some of the stocks that are truly global players, that have great products, great distribution franchises -- that are retreating to very reasonable pricing in terms of PEs (price-to-earnings ratios)," Berchtold was quoted as saying.

"These are opportunities for people who have been holding back to make very valuable investments."

Credit Suisse (CS.N) has seen billions of credit-linked writedowns this year but has been hit by the credit crisis to a lesser degree than its larger rival UBS (UBSN.VX) and core rich clients have kept their money at the bank.

Berchtold said it was wrong to blame the way banks are structured or business models for the crisis, but instead it was the failure of risk management and decision-making. He saw the crisis ending in the first half of 2009.

"We are not out of the woods yet. The industry will have to resize itself...but this hasn't really sunk into the industry yet. We still have a lot of balance-sheet repairing," he said.

"We will slowly but surely come out of it. And then you will see a lot of activity in the financial industry, because we have a lot of new CEOs almost everywhere," he said, adding there would be a lot of M&A, restructuring on the credit side and new businesses created around the current crisis.

"There's trillions of dollars of paper floating about -- someone will take care of it, start bundling it."

(Reporting by Neil Chatterjee; Editing by Lincoln Feast)