Archive for November, 2008

Brazil stocks down early (AP)

Tuesday, November 18th, 2008 | Finance News

SAO PAULO, Brazil – Brazil's stocks are off in early trading, with the Ibovespa stock index falling 2.2 percent to 34,936.

Investors continue to be spooked by the prospects of a global recession — a fear reinforced by Japan's weekend announcement that its economy is shrinking.

The local currency also was edging downward Tuesday. The real sat at 2.3 to the U.S. dollar despite central bank injections of dollars into the market to help prop up the real.

Central Bank President Henrique Meirelles says the bank had thrown $46 billion into the market as of Nov. 14.

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World bank profits tumble, jobs slashed (Reuters)

Tuesday, November 18th, 2008 | Finance News

TOKYO/LONDON (Reuters) –
Major world banks showed the strain of economic crisis on Tuesday, with Britain's Barclays altering its fund-raising plans to quell shareholder anger and profits in Japan's largest bank tumbling.

Japan's economy minister said recession in the world's second-biggest economy could last longer than feared and falling UK inflation, and the prospect of the same in the United States, paved the way for further interest rate cuts.

The crisis, which began with a collapse in the U.S. housing market undermining major financial institutions, also showed further signs of hitting industry and retail.

Barclays, facing shareholder ire following a decision to take 5.8 billion pounds from Middle East investors on terms tougher than the British government offered, canceled this year's executive bonuses, as U.S. investment bank Goldman Sachs and Swiss bank UBS have done.

It also said Qatar Holding LLC and Sheikh Mansour Bin Zayed Al Nahyan would each make up to 250 million pounds ($372.9 million) of reserve capital instruments available to existing shareholders -- effectively offering the prospect of enjoying some of the higher rates of return agreed to Gulf investors.

Barclays, one of the four biggest UK banks, had declined to accept any capital from the government under a 37 billion pound bailout, wary of conditions imposed on their operations.

The crisis has taken a firm hold in Asia too.

Japan's biggest bank, Mitsubishi UFJ Financial Group, announced first half profit had tumbled 64 percent and stuck to its recently lowered full-year forecast, hit by recession at home and losses on its stock portfolio.

Australia's biggest investment bank, Macquarie Group, said it was heading for its first fall in annual profit in 17 years.

HSBC added to the employment gloom, saying it would cut a further 500 staff in Asia, mostly in Hong Kong, due to deteriorating economic conditions and caution about next year.

Citigroup Inc, the second biggest U.S. bank, revealed plans on Monday to cut 52,000 jobs by next year, the second-largest corporate lay-off plan in history.

INFLATION WANING

In Britain, already officially in recession, inflation dropped to 4.5 percent in October from 5.2 the previous month.

The larger than expected fall heightened expectations of a substantial cut in the UK's 3.0 percent interest rate next month to stimulate the economy and temper growing fears of deflation, following a dramatic 1.5 percentage point cut this month.

U.S. producer prices, due later, are expected to show pipeline inflation pressures there dropping sharply.

In a further sign of the crisis spreading to the broader economy, major British retailer John Lewis Partnership's department store sales fell 14 percent year-on-year in the latest week, according to the Daily Telegraph newspaper.

British building supplies company Wolseley announced a slew of layoffs and shop closures. Property developer Barratt said its forward order book was 43 percent smaller than the previous year.

Politicians are seeking ways of stimulating demand, possibly by tax cuts, while others resort to more innovative measures.

Taiwan said it would issue shopping vouchers worth T$3,600 ($108) to its citizens. Premier Liu Chao-shiuan said the plan was expected to contribute 0.64 percent to GDP.

In Washington, lawmakers argued over a proposal by Senate Democrats for a $25 billion bailout loan for the auto industry to stave off an even wider economic collapse.

"The reason people think failure could be cataclysmic is that there are so many companies that are tied to the auto industry," said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co.

Automakers have been hit by a collapse in consumer spending, triggered by a housing crash and worsened by rising unemployment. Officials say even with major stimulus measures in place, it will take a long time for the U.S. economy to recover.

"There's going to be stress in the capital markets for a number of months here because housing prices are still declining and I think it's moved beyond housing," Treasury Secretary Henry Paulson said at a conference.

Paulson and Federal Reserve Chairman Ben Bernanke will testify to Congress later on the $700 billion U.S. bailout plan.

Shares fell, extending Monday's losses, as the Citigroup job cut programme doused expectations for a financial sector recovery in 2009.

European shares dropped 1.7 percent. Japan's Nikkei shed 2.3 percent.

(Additional reporting by Reuters bureaus worldwide; Editing by Mike Peacock)

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Citi to cut less than 300 jobs in Singapore (Reuters)

Tuesday, November 18th, 2008 | Finance News

SINGAPORE (Reuters) –
Citigroup (C.N) may cut less than 300 jobs in Singapore, a sign Asia could see much smaller cuts than other regions as part of the U.S. bank's global restructuring plan, sources told Reuters on Tuesday.

The job cuts, which will be implemented soon, are part of plans revealed by Citigroup on Monday to cut 52,000 staff globally by early next year in a dramatic move to restore the second-biggest U.S. bank to health.

Citigroup employs about 9,000 people in Singapore and the layoffs account for about 3 percent of its staff, said a source who declined to be identified because the plans were not public.

"In Singapore, there will be modest headcount reductions," a bank spokesman said. "Our business in Singapore continues to register robust year-on-year growth and remains a regional center for management and operations for Citi globally."

Citi recently opened its 20th branch in the city-state, a growing center for financial services and private banking.

It was unclear how many jobs will be cut in other parts of Asia. Citi employs 55,000 people in Asia including Japan.

WEALTH MANAGEMENT

A second source familiar with the plan told Reuters around 150 job cuts will be at Citi's wealth management unit in Asia excluding Japan.

The source said over 60 percent of the cuts will be in Singapore and Hong Kong. Citi's Asian wealth management unit excluding Japan has 1,200 people.

A Citigroup spokesman in Hong Kong declined to comment on the numbers but said it expected a reduction in overall headcount in the region.

"We are repositioning our business to be more efficient and productive in the current difficult market conditions. As a result, some jobs will change and others may no longer be necessary," the Citigroup spokesman said in a statement.

The job cuts in the wealth management business is a reversal of a trend seen until last year when rival banks were furiously poaching private bankers to grow their business in Asia where wealth was growing at a double-digit pace.

The dramatic plunge of financial markets has prompted wealthy clients to sell stocks and shun higher-fee products for the comfort and safety of cash, private bankers and industry experts told the Reuters Wealth Management Summit last month.

Citi's wealth management unit in Asia including Japan managed $288 billion worth of assets at the end of the third quarter of 2008, down 7 percent from the same period a year ago.

The unit, which includes the private bank as well as Smith Barney Australia and Citi Nikko Cordial in Japan, earned net income of $59 million in the third quarter, down 58 percent from a year ago, according to Citi data.

UBS (UBSN.VX), HSBC (HSBA.L) and Citi are considered the top three players in Asia's private banking market.

(Additional reporting by Tony Munroe in Hong Kong; Editing by Neil Chatterjee)

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