Financial Times Summary
Wed 22 Oct 2008
General Overview Mervyn King last night gave his gloomiest assessment of Britain's economic prospects since it becoming Bank of England governor in 2003, saying that the country was now "entering a recession". He compared the recent capital flight from British banks with a "mild form" of a 1990s-style emerging markets crisis, warning about the risk of another sharp decline in sterling and an even deeper recession.
BlackRock
BlackRock, one of the world's biggest fund management companies, had an unexpectedly high drop in earnings of 15% in the third quarter as investors pulled money from their funds in the last weeks of September. BlackRock, 49% owned by Merrill Lynch, said its net income fell to $218m, from $255m in the same quarter in the previous year.
Lloyds
Lloyd's, the world's oldest insurance market, said it expected to incur £1.3bn of claims from hurricanes like Gustav and Ike. The figure is after recoveries under the reinsurance policies that Lloyd's insurers themselves buy. Lloyd's said its estimate was based on a loss to the entire global insurance and reinsurance industries of $20-25bn higher than forecasts from the commercial modelling companies.
Barclays
Barclays has announced plans for the first public bond from a bank to benefit from UK government guarantees, setting the precedent for other British banks to access the capital markets using the guarantee. While the size of the deal is not set, it is likely to be a benchmark bond and could total close to £775m with a three year maturity, one person with knowledge of the deal said.
Barclays Capital Barclays Capital has pounced in Japan, poaching dozens of former Lehman Brothers employees from Nomura to help build up equity sales and research capabilities. The UK group said yesterday it had hired about 100 professionals, mostly from the former Lehman Brothers, including senior managers and Japanese equity analysts.
Henderson Global Investors
Receivers to Sigma Finance, the last of a once-$400bn industry of complex investment funds wrecked by the credit crunch, have appointed UK money manager Henderson Global Investors as advisers to help sort out what creditors to the vehicle will recover.
Bayern Lb
BayernLb has become the first German bank to seek help from the government's $655bn rescue fund, with its board yesterday announcing it would request a 5.4bn euros capital injection to shore up the bank's balance sheet. The move by the regionally owned lender follows a wave of government -banked recapitalisation in Europe's financial sector, the fruits the multiple bail-out packages put in place this month by many countries.
Bank of America Gregory Fleming and Thomas Montag, two of Wall Street's best-known bankers are in advanced negotiations to remain at Bank of America following its planned $36bn all-share takeover of Merrill Lynch according to people close to the situation. Retaining Mr Fleming and Mr Montag, who were among the most senior executives at Merrill, would be a coup for BofA's chief executive Kenneth Lewis following speculation the two might leave after the deal.
Prudential Prudential insisted yesterday its capital position was robust, as it said it was looking at parts of American International Group and confirmed that it was rowing back on a key Asian profitability target. The Pru, whose shares have been hit by concerns about its financial health, said its surplus under European capital rules fell from £1.4bn at June 30th to £1.2bn at the end of September, mainly owing to £300m of credit losses.
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