Archive for October, 2010

ICBC buys small U.S. brokerage firm: report

Sunday, October 31st, 2010 | Finance News

SHANGHAI (Reuters) – Industrial & Commercial Bank of China (0349.HK)(601398.SS), the world's biggest lender by market value, paid a token $1 for a small U.S. brokerage firm, the Wall Street Journal reported on Monday, citing people familiar with the matter.

Beijing-based ICBC is buying the Prime Dealer Services unit of Fortis Securities from BNP Paribas SA (BNPP.PA), allowing France's biggest-listed bank to dispose of the last remaining business unit of Fortis Securities for little or no cost, the journal said.

BNP Paribas took control of the Belgian-Dutch financial group Fortis when it was stripped down to a pure insurer after the financial crisis in 2008 and renamed Ageas (AGES.BR).

ICBC could potentially get into the lucrative business of underwriting securities in the United States via the Fortis unit, which provides clearing and financing services to some 75 clients in the U.S. and Europe, it added.

The acquisition could bring in about $15 million in annual profit for ICBC, Joseph Spillane, chief executive officer of the new ICBC entity, was quoted by the Journal as saying.

Spillane declined to comment on the financial terms of the deal, the Journal said.

(Reporting by Soo Ai Peng; Editing by Ken Wills)


Potential damages in EMI case reduced

Sunday, October 31st, 2010 | Finance News

NEW YORK (Reuters) – The amount of potential damages that British private equity firm Terra Firma could receive if a case against Citigroup Inc regarding music group EMI goes its way has fallen, according to court documents.

The dispute is between British financier Guy Hands' Terra Firma and Citigroup over Hands's $6.4 billion buyout of legendary music company EMI in 2007.

Hands's Terra Firma Capital Partners accuses Citi banker David Wormsley and Citigroup of duping Hands into thinking there was a rival bid in the offing by private equity firm Cerberus Capital Management for the EMI company he coveted. As it turned out, there were no other offers.

The Financial Times and Wall Street Journal reported that the judge presiding over the case on Wednesday threw out one of three premises that supported Terra Firma's claim for about $8 billion, and asked that the firm's lawyers withdraw another, reducing the amount of potential damages to about $2 billion.

According to a court document, the court determined on Wednesday that the methodology used by a Marianne deMario, listed in Terra Firma's witness list, as applied to the issue of lost profits from the investment was "insufficiently reliable" to allow her to testify about those kinds of damages.

The plaintiff also withdrew its proffer of testimony by her on the issue of "locked in damages," the document said.

DeMario had calculated 'lost profits damages' of 4.4 billion euros which it was claimed Terra Firma would have earned on the money it invested in EMI, had it been put to use elsewhere, a separate court document said.

Terra Firma has been seeking as much as $8 billion in damages for its fraud claim at the trial, which started on October 18 and is expected to end on November 5.

The deal has come to reflect some of the worst aspects of the credit boom, when companies were loaded with debt.

If Terra Firma loses at trial, it could be forced to hand over EMI to creditor bank Citigroup, which provided 2.6 billion pounds ($4 billion) in loans for the acquisition. The bank's reputation for facilitating such deals could suffer if the jury decides Hands was defrauded.

Terra Firma and Citi declined comment.

The case is Terra Firma et al v Citigroup et al, U.S. District Court for the Southern District of New York, No. 09-10459.


Japan will aim to join U.S.-led trade pact: report

Sunday, October 31st, 2010 | Finance News

TOKYO (Reuters) – Japan will aim to join a U.S.-led Asia-Pacific free trade initiative while pursuing agricultural reform to overcome resistance from farmers, the Nikkei business daily reported on Monday.

Business lobbies, worried Japan is lagging behind rivals such as South Korea in free trade deals, want Prime Minister Naoto Kan to offer to take part in the U.S.-led Transpacific Partnership (TPP) when he hosts the November 13-14 Asia-Pacific Cooperation (APEC) summit, which President Barack Obama will attend.

The government is set to announce basic guidelines for free trade deals this week ahead of the APEC summit. But many ruling Democratic Party lawmakers fear fallout from the TPP on Japan's long-protected and politically powerful farmers.

The Nikkei said the government would express its willingness to join negotiations for the TPP, which would eliminate tariffs on goods traded within the zone, in basic guidelines for Japan's free trade and economic partnership deals, for which it aims to get cabinet approval on Friday.

To address concern among farmers, the government also aims to compile a medium-term plan for reforms in agriculture and other key areas, details of which will be fleshed out after the APEC meeting, the newspaper added.

The government is expected to offer measures aimed at bolstering the international competitiveness of Japan's agricultural sector such as support for exports. It also plans to expand income subsidies to farmers, Nikkei said.

Even if Japan shows interests in participating in the TPP negotiations, it needs to get approval from other nations involved in TPP talks, including the United States, Singapore and Australia, to join talks.

Adding Japan, one of the world's largest economies, would greatly increase the potential market-opening gains of the proposed pact. But it could also complicate the negotiations because of U.S. industry concerns about lowering remaining tariffs on Japanese-made autos, and Tokyo's previous resistance to opening its rice and other agricultural markets.

(Reporting by Yoko Nishikawa; Editing by Chris Gallagher)