- BofA threatens legal action against ABN
- As Funds Leverage Up, Fears of Reckoning Rise
- Heard on the Street: Clean Books Bolster Traditional Lenders
- KKR bid team to pocket £60m in fees
- Deutsche Bank Hires Eight M&A, Equity Bankers in Asia
- More headlines below
- Dresdner to double hedge fund specialists
- HSBC Sells London Base to Metrovacesa for U.K. Record
- Home builder accused of paying for survey results
- GM, Ford May Say April U.S. Sales Fell Amid Industry Slowdown
- Delta Exits Bankruptcy With New Overseas Routes, Fewer Workers
BofA
threatens legal action against ABN – Financial Times
Bank of America, the world’s second-largest bank, has threatened to take legal action against Dutch lender ABN Amro if there is any attempt to interfere with its plans to buy LaSalle, ABN’s subsidiary.
The threat, issued at a court hearing in Amsterdam on Saturday, raises the prospect of a protracted legal battle over the future of the Dutch bank, which is the subject of competing bids from Barclays and a consortium led by Royal Bank of Scotland.
A Dutch commercial court is planning to rule on Thursday whether to halt the sale of LaSalle to BofA, led by chief executive Kenneth Lewis, for $21bn in cash. VEB, a Dutch shareholder group, argues that the deal should be put to shareholders.
Lawyers for BofA told the court that any attempt to delay the deal would trigger legal action in New York…
Delayed ruling on ABN ‘poison pill’ pushes bid to wire
- Daily Telegraph
A Dutch court inadvertently pushed the world’s biggest banking takeover battle right down to the wire yesterday, after a judge delayed a ruling until after he had returned from an American lecture trip.
Judge Huub Willems of the Amsterdam district court’s Enterprise Chamber said that he will have to wait until Thursday before deciding whether or not to grant a request from ABN Amro’s shareholders to block a sale of the Dutch bank’s US operations, LaSalle.
The sale of LaSalle to Bank of America was announced last week alongside ABN’s £90bn merger with Barclays. But ABN shareholders claim the deal is a "poison pill" which stymies a potential counter-bid for the whole of the Dutch bank from a rival consortium led by Royal Bank of Scotland – which has said it can pay a higher price…..
As Funds Leverage Up,
Fears of Reckoning Rise – Wall Street Journal
Hedge-fund manager John Paulson made $1 billion using a complex financial instrument to pump up a bet that the subprime-mortgage market would crater. The parent company of retail giant Sears made $74 million using a similar device to boost its wager that a basket of stocks would rise in value.
Both were playing with leverage — the magical power that allows investors to make big investments without putting big money on the table. These days, they have lots of company. Thanks to advances in financial engineering, investors have never had so many different ways to make commitments that exceed their bankrolls. And never before has leverage wormed its way into so many nooks of the financial world.
We’re living on planet leverage, and regulators and market gurus are growing nervous.
How did this happen? For starters, hedge funds and leveraged-buyout funds have proliferated. They’re pioneers in boosting returns using borrowed money, the most traditional form of leverage. Also, investment banks are pumping out newfangled leveraging tools such as derivatives, complex securities that allow hedge funds and other investors to add leverage without borrowing money…..
Heard on
the Street: Clean Books Bolster Traditional Lenders – Wall Street Journal
The subprime meltdown has shown that few banks were able to resist the appeal of making unconventional home loans to riskier borrowers in exchange for charging higher fees.
This earnings season, cracks began showing in the quality of many banks’ loan portfolios, such as at Countrywide Financial Corp. Others such as SunTrust Banks Inc. and M&T Bank Corp. had trouble finding buyers for their riskier loans and were forced to sell them at a loss or mark down their value on their books.
Still, some regional and community banks steered clear of the subprime sector. Hudson City Bancorp Inc., Zions Bancorp and UCBH Holdings Inc. stayed away from making low-documentation or no-documentation home loans, even to the most credit-worthy borrowers. When they wrote home mortgages, they insisted borrowers put at least 20% down and prove that they could pay them off. They collected deposits and focused almost entirely on commercial lending….
KKR bid team to pocket £60m in fees
- The Independent
The bankers who advised on the £11.1bn bid for Alliance Boots will sit down tomorrow with Kohlberg Kravis Roberts and the chemist’s deputy chairman, Stefano Pessina, to hammer out their fees.
The three banks – Unicredito, Merrill Lynch and JPMorgan Cazenove – can expect to pocket more than £60m between them for helping complete the first private equity buyout of a FTSE 100 company, according to sources. The news will anger unions who have voiced fears that the new owners – KKR and Mr Pessina – will cut jobs in order to recoup what many saw as a very dear price for the chemist and wholesale drugs distributor.
The purchasers were forced to raise their initial £9.7bn offer after board rejections and a bidding war with a group led by rival firm Terra Firma.
Investment banks usually sign formal fee arrangements before beginning work on a takeover. On this deal, however, the advisers chose to leave such considerations until after it was all completed…..
Deutsche Bank Hires Eight M&A, Equity Bankers in Asia
- Bloomberg
Deutsche Bank AG hired eight investment bankers and equity market specialists in Asia after slipping in advising on mergers in the region.
Germany’s biggest bank hired Gordon Paterson, 46, as Asia head of mergers and acquisitions excluding Japan from Citigroup Inc. Angus Barker, 38, former head of UBS AG’s financial sponsor group, which advises and finances buyout firms, will also join the Frankfurt-based bank as head of the group in Asia Pacific, Deutsche Bank spokesman Michael West said.
Zhang Lee, Deutsche Bank’s Asia-Pacific regional head of global banking, is adding employees after the value of announced takeovers in the region reached a record $187 billion last quarter. Deutsche slipped to seventh this year from fourth in 2004 in advising on Asia-Pacific acquisitions, ceding ground to UBS and Morgan Stanley….
Dresdner to double hedge fund specialists
- Financial TImes
Dresdner Kleinwort plans to double the number of hedge fund specialists in its investment bank over the next three years as the bank, owned by insurer Allianz, seeks to raise hundreds of millions of euros extra revenue from the rapidly growing industry.
This week Dresdner will announce it has poached Roberto Morelli from Citigroup to be its London-based head of sales of equities to hedge funds in Europe. Last week it hired Chris Baildon, from UBS, to head equities sales to US hedge funds, and earlier this month Nick Lee, a long-standing M&A banker, switched to focus on hedge funds in corporate finance.
Martin Newson, hired last November to set up the bank’s hedge fund solutions group, said the investment bank was aiming to increase hedge fund sales from 10-15 per cent of fees and commissions to 25 per cent within three years. The bank does not disclose the level of fees and commissions for each division but Mr Newson said it amounted to hundreds of millions of euros extra…..
HSBC Sells London Base to Metrovacesa for U.K. Record
- Bloomberg
The London headquarters of HSBC Holdings Plc, Europe’s largest bank by market value, was bought by Spanish real estate company Metrovacesa SA for 1.09 billion pounds ($2.2 billion), a record for a U.K. building.
HSBC will remain in the 45-story tower at 8 Canada Square, in the Canary Wharf business district, according to a statement today. About 8,000 people work in the building, which was designed by Norman Foster and has 1.1 million square feet of space.
“People are prepared to pay a premium to get into the London market, even when some are calling the top of the market,” said Sarah Bate, head of central London research at Knight Frank
LLP….
Home builder accused of paying for survey results
- The News & Observer
Shortly after Andre Gray bought a new home in north Charlotte in 2001, he recalls receiving two letters in the mail.
One was a customer satisfaction survey about the builder, Beazer Homes USA.
The other was from Beazer, offering Gray $100 to give the company high marks.
Gray said he needed the cash, so he followed the instructions.
Three other Charlotte-area customers also say Beazer paid for their answers on the survey….
GM, Ford May Say April U.S. Sales Fell Amid Industry Slowdown
- Bloomberg
General Motors Corp. and Ford Motor Co. probably will say U.S. sales fell in April as rising gasoline prices reduced consumer demand for new cars.
Sales declined 3 percent from a year earlier for GM, 9.7 percent for Ford and 2.2 percent for DaimlerChrysler AG’s Chrysler, according to the average adjusted estimates of six analysts in a Bloomberg survey. Toyota Motor Corp. may report little change in sales, said Ronald Tadross, a Banc of America Securities auto analyst.
“It might be an abnormally low month,” George Magliano, New York-based director of auto research for Global Insight Inc., said in an interview. “It started off strong but just fell from there. The domestics may have to really ramp up incentives to get people to these dealerships.”….
Delta Exits Bankruptcy With New Overseas Routes, Fewer Workers
- Bloomberg
Delta Air Lines Inc., the third- largest U.S. carrier, exits bankruptcy today with less debt, 6,000 fewer workers and 60 new overseas routes that may determine whether it will become profitable again.
By shuffling planes, Atlanta-based Delta undertook the industry’s fastest international expansion without buying new jets. That global bet may be more important after airlines said U.S. fare growth stalled last quarter.
“From a standpoint of revenue mix and network strategy, the cards are really lining up pretty nicely right now for Delta versus the rest of the industry,” said William Warlick, an analyst in Chicago at Fitch Inc. The risk is that overseas travel may weaken, blunting Delta’s advantages, he said….
Subprime headlines can be found here: Wall
Street Folly: Subprime Meltdown
