The Finance Arena – Financial Talks from a Singapore Financial Consultant
The US private sector slashed 473,000 jobs in June, a survey by payrolls firm ADP showed yesterday, emphasising ongoing weakness in the labour market despite signs the economy is stabilising. The June job eliminations were worse than the 395,000 expected by most analysts but lower than 485,000 in May, which was revised from the previous 532,000 figure.
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Lloyds Banking Group, a British state-controlled bank has slashed a further 2,100 jobs yesterday as it seek to streamline operations and recover from the global financial crisis and the costly takeover of rival HBOS. A spokesman reported “Lloyds Banking Group (LBG) is announcing today a number of organisational changes within its group operations and wholesale divisions. These changes follow careful and detailed reviews by the group and will result in the bringing together of a number of functions. Following these changes, up to approximately 2,100 roles will be affected over the next three years. This number is mitigated by the creation of approximately 350 new roles in the wholesale division.” Lloyds, which is 43% owned by the British government after a huge bailout, has now cut about 7,000 jobs following its creation in January, when Lloyds TSB bought rival lender HBOS in a government-brokered deal.
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UBS AG, the Swiss bank who is one of the world’s worst affected major banks in the global financial crisis, announced yesterday that it is expecting a 2nd quarter net loss and is planning to raise about US$3.48 billion of equity capital. UBS stated that it is offering about 293.3 million new shares at a price of 13.00 Swiss francs per share. UBS’s efforts to strengthen its capital base is welcomed by the Swiss government.
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AIG, the insurance titan announced yesterday that it will reduce outstanding US loans by US$25 billion by spinning off 2 business units in which the government will be given a preferred stake. AIG will be putting 2 life insurance subsidiaries – American International Assurance (AIA) and American Life Insurance (ALICO), into special purpose vehicles ahead of planned IPOs.
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Michelin, the French tyre maker reported yesterday that it looks set slash 2,800 jobs through early retirement and voluntary redundancies in the next 3 years, igniting concerns from the French government. Michelin further reported it will also shut down 1 of its plants in northern France at Noyelles-les-Seclin but will increase research and development funding at its Clermont-Ferrand plant by more than US$140 million. The downsizing will include 1,093 job cuts from 2010 and a programme to allow 1,800 voluntary redundancies over the next 3 years, the company reported, insisting that none of the planned redundancies would be forced.
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AIG, the ailing insurance giant was reported today that it may list its casualty insurance unit public, and put forward a sale of 20% stake, to raise billions of dollars to return public funds. ‘Because of what has happened to our parent company, we have to go on an independent track. It would be reasonable to conclude that a US listing was probably the most likely outcome,’ Mr Nicholas Walsh, AIU’s vice-chairman told the Nikkei.
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UBS’s long term debt and deposit ratings could be downgraded by Moody’s Investors Service, with the ratings agency warning that the Swiss bank’s financial troubles were not over. ‘The review reflects Moody’s view of the considerable challenges that UBS continues to face in its two largest business lines – Investment Banking and Wealth Management. Given the magnitude of the bank’s challenges and the length of time it may take to fully address them, the bank’s ratings are vulnerable to a downgrade of more than one notch. The bank has also experienced a significant turnover of senior managers over the past two years, which gives us some concerns about the continuity and effectiveness of management,’ stated David Fanger, Moody’s senior vice-president.
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AIG has taken its ex-chief to court, with accusation of him plundering a trust that the ailing insurance titan said was established to pay top performers. AIG argues that Mr Maurice Greenberg, 84, who helmed the company for decades, unlawfully took US$4.3 billion in stock in 2005, the year he was forced out as CEO. Although Mr Greenberg sold the US$4.3 billion block of stock in 2005, way before the price plummeted, he kept much of his personal fortune in AIG shares. When the government stepped in last year, taking a 79.9% stake in the company, Mr Greenberg and other shareholders were essentially wiped out.
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Amazon Inc will pay Toys R Us Inc US$51 million to conclude a long-standing legal dispute between the online retailer and the toy retailer. The lawsuit was over a partnership that accorded Toys R Us exclusive rights to supply some toy products on Amazon’s site. Toys R Us then claimed Amazon violated the partnership by allowing others to sell some toys on Amazon.com, while Amazon refuted that the toy seller failed to keep items in stock. The companies originally teamed up in 2000 after the toy seller’s Web site, Toysrus.com, suffered a brutal 1999 holiday season in which some customers’ toys were not delivered until after Christmas. That partnership was supposed to last through 2010.
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A surprise appearance by Apple CEO Steve Jobs at the company’s annual developer conference could raise its stock later today, but his absence might kick off a severe drop in prices. The Wall Street Journal started speculations of an early return by the weakening Jobs, who had earlier stated that he would be out until the end of June. Blogs and other media pounced on the report that the CEO could appear at Apple’s Worldwide Developer Conference in San Francisco later today.
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