WSF Headline Roundup - 5/9/08 - Citi may sell $400B in assets; Oil over $125; Fortress losses; AIG Losses; Merrill expects higher consumer loan defaults; Wachovia splits chairman & CEO titles; UK giving homeowners foreclosure help; Sears cutbacks

• Citigroup considers $400bn asset sale
• Oil surpasses $125 per barrel ahead of US driving season
• Fortress battered after first-quarter loss
• AIG plunges to record loss
• Merrill Expects U.S. Consumer Loan Defaults to Rise
• Dresdner Drags Allianz Results Lower
• Wachovia splits two top jobs
• U.K. Offers Help for Homeowners as Foreclosure Claims Rise
• Sears, Like Consumers, Cuts Back

Citigroup considers $400bn asset sale - Financial Times 

Citigroup will on Friday identify as much as $400bn in non-core assets that could be sold as part of plans to reduce costs and restore profit growth to double-digit rates, according to people close to the situation.
 
  At a long-awaited meeting with Wall Street analysts, Vikram Pandit, Citi’s chief executive, also plans to confirm his pledge, first disclosed in the Financial Times, to cut Citi’s cost base of over $60bn by about 20 per cent.

 

Despite his desire to prune Citi’s balance sheet aggressively, Mr Pandit will use the meeting to rebuff calls for a break-up of the company, say sources familiar with his thinking. They say he will defend Citi’s “universal banking model” combining consumer and wholesale banking.
 
  Mr Pandit is likely to say that about 20 per cent of Citi’s $2,000bn-plus balance sheet consists of “legacy” assets – entire businesses or trading positions outside its core businesses in commercial, consumer and investment banking.....

Oil surpasses $125 per barrel ahead of US driving season - AP 

Oil prices surged past $125 per barrel Friday on the eve of the U.S. driving season as a weakening U.S. dollar drove investors to snap up commodities.
 
  Light, sweet crude for June delivery rose as high as $125.12 a barrel in electronic trading on the New York Mercantile Exchange at midday before falling back to $124.86 by early afternoon in Europe.
 
  On Thursday, the contract rose to a record close of $123.69 a barrel.
 
  In London, Brent crude contracts also hit record highs before slipping and traded up $1.13 on the day at $123.97 a barrel on the ICE Futures exchange. Earlier Friday, Brent had reached $124.25 before falling back....

Fortress battered after first-quarter loss - Financial Times 

Shares in Fortress Investment Group, the publicly traded alternative investment business, slid by as much as 8 per cent on Thursday, as it fell into loss in the first quarter amid tough trading conditions for hedge funds.
 
  The performance of Fortress and other publicly traded hedge funds and private equity groups, such as Blackstone and Och Ziff, is closely watched as one of the best indications of the overall health of the alternative investment business.

They are also scrutinised by competitors in the private equity and hedge fund businesses as they try to gauge how investors are reacting to the continuing turmoil in the credit markets and its knock-on effects.
 
  The fund manager reported a first quarter loss of $69m, or 74 cents per share, compared to a profit of $62.1m in the same period in 2007. Assets under management grew 46 per cent over the first quarter a year earlier to $34.2bn.....

AIG plunges to record loss - Financial Times 

The crisis at American International Group deepened on Thursday after $15bn in credit-related writedowns plunged the US insurer into a record quarterly loss, and prompted it to raise $12.5bn to bolster its weakened balance sheet.
 
  AIG’s poor first quarter results and capital raising plans will increase pressure on Martin Sullivan, chief executive, and dispel investor hopes that turbulence in the credit markets has subsided.

AIG also announced that it was seeking a new chief financial officer after Steven Bensinger, the current finance chief, was moved to the financial services unit as vice-chairman.
 
  Including almost $15bn in fourth-quarter losses and writedowns, the credit crisis has cost AIG more than $30bn.....

Merrill Expects U.S. Consumer Loan Defaults to Rise - Bloomberg 

Merrill Lynch & Co. expects defaults on U.S. consumer loans and credit cards will rise, putting strain on the world's largest economy, Chief Executive Officer John Thain said.
 
  ``Continuation of falling home prices, rising food prices, rising energy prices and higher unemployment will result in a pull back on the part of U.S. consumers,'' Thain said at a press briefing in Mumbai today. That ``will continue to drag the U.S. economy for the next 6 to 12 months.''
 
  The largest U.S. brokerage has no immediate plans to raise more capital, Thain said. Merrill has written down $31.7 billion in assets while its stock plunged 45 percent since the beginning of 2007 as the meltdown in the U.S. subprime-mortgage market spawned a global credit squeeze....

Dresdner Drags Allianz Results Lower - Wall Street Journal 

Allianz SE Friday reported a 65% decline in first-quarter net profit, hurt by write-downs of €845 million ($1.3 billion) at the insurer's banking arm, Dresdner Bank, which remained in the red for the third consecutive quarter.
 
  Europe's largest insurer also cast doubt on its medium-term outlook, although it still considers it achievable. "While 2008 will remain a challenging year, the longer this environment persists the harder it will also be to achieve our medium-term outlook," Chief Financial Officer Helmut Perlet said. "Although we are seeing somewhat lesser tension in U.S. residential mortgage prices as well as cautiously rebounding equity markets, it is hard to predict when the stormy weather will end."
 
  Shares of Allianz fell 1.4% to €128.52 in morning trading on a slightly lower Frankfurt market. Shares have fallen around 10% year to date.
 
  Allianz's midterm forecast is for annual gains of 10% in operating profit in the 2007-2009 period, from an adjusted €10 billion in 2006. But the insurer noted "this is subject to a normal level of operating profit contribution from Dresdner Bank."...

Wachovia splits two top jobs - Financial Times 

Wachovia, the fourth largest US bank by assets, has stripped the chairmanship from Ken Thompson but left him as chief executive following big loan losses and regulatory problems.
 
  The move to install Lanty Smith as non-executive chairman of the board came two days after Charlotte-based Wachovia nearly doubled the size of its first-quarter loss to $708m after adding $315m in writedowns on the value of life assurance policies it takes out on its own employees.

 

The fresh writedown came after the bank, hit by mortgage losses and rising credit costs, last month reported a $393m first-quarter loss and revealed plans to raise $7bn in new capital. Last month, Wachovia also agreed to pay up to $144m to settle claims that it had failed to stop abusive telemarketing practices.
 
  In a statement, Mr Thompson said that he and his management team were “pleased” that Mr Smith, chairman and chief executive of Tippet Capital, a merchant banking firm, was willing to take on the role of non-executive chairman of the board.....

U.K. Offers Help for Homeowners as Foreclosure Claims Rise - Bloomberg 

The U.K. government pledged help for people struggling to keep up with mortgage payments as the number of households at risk of losing their homes reached the highest in more than a decade.
 
  Housing Minister Caroline Flint said the government will offer free legal advice to homeowners and improve training for people working in housing and debt support agencies such as the National Housing Advice Service. The government will also ask lenders to improve the advice it offers customers seeking to refinance debts.
 
  ``Most lenders are now passing on interest-rate cuts, and we want to see the rest follow as soon as possible,'' Flint said in a statement issued by her office in London today. ``But for the minority of owners who may need support and advice now, we want to ensure it is there for them in the right place and at the right time.''....

Sears, Like Consumers, Cuts Back - Wall Street Journal 

Sears Holdings Corp. Chairman Edward S. Lampert said the retailer is taking a conservative stance amid weak consumer spending, cutting its work force and paring budgets in response to an uncertain outlook.
 
  Sears, with $53 billion in 2007 revenue, is expected to report weaker sales and a sharp decline in profit in its fiscal first quarter, ended Saturday. It earned $216 million on sales of $11.7 billion in the year-ago quarter.
 
  Addressing shareholders at the annual meeting, Mr. Lampert said the economy "certainly hasn't gotten better" since the fourth quarter, and it is unclear whether consumers are "pausing" after years of steadily increasing spending or are "done for a while." In recent months, Sears has cut several hundred jobs at its headquarters and U.S. distribution centers to reduce costs, and it is shunning spending on new stores, part of its conservative financial tack.....

Comments

[MSF]

HEY LAMPERT TRY CUTTING THE SALARIES OF THE EXECUTIVES.

PAY ON PERFORMANCE,,,NOT ON FAILURE WITH A MULTI MILLION SEVERANCE.