WSF Headline Roundup - 1/14/09 - Happy birthday, Vikram; HSBC needs $30B?; Deutsche Bank loss; Barclays rejiggers board; Banks need bigger bailout; Geithner issues much ado about nothing; Toyota troubles; Ivy muni debt

• Pandit Dismantles Weill Empire to Salvage Citigroup
• HSBC Falls After Report Bank May Need $30 Billion
• Deutsche Bank Reports EU4.8 Billion Loss on Trading
• Man Group Assets Fall 21%; Shares Decline in London
• Barclays moves to refresh its board
• Banks Are in Need of Even More Bailout Money
• Geithner Backed by Obama, Lawmakers After Queries
• J.P. Morgan Cuts Use of 3rd-Party Brokers
• Oil rises to near $39 on Bernanke comments
• Chrysler in asset sale talks; Renault denies
• Toyota sees U.S. inventory in line by May
• Toyota, Facing Crisis, Turns to Founding Family Scion
• Satyam Officials Sold Most Stock in India Before Fall
• Neiman Marcus acts on $700m bonds
• Princeton Sells Bonds at Lower Rates Than Harvard
• Cornell to Cut Spending After Endowment Falls 27%
• Goldman Plans Takeover of Universal Studios Japan
• Goody's retailer files bankruptcy, will liquidate

Pandit Dismantles Weill Empire to Salvage Citigroup - Bloomberg

Vikram Pandit is unraveling his empire to save his bank. 

Citigroup Inc.’s chief executive officer said yesterday he would cede control of the Smith Barney brokerage to Morgan Stanley. Pandit may also dump the CitiFinancial consumer-lending unit, tag Tokyo-based Nikko Asset Management Co. for eventual sale and rein in trading with the bank’s own capital, people familiar with the matter said. 

Pandit, who turns 52 today, spent 13 months on the job trying to integrate a New York-based behemoth assembled by predecessors Sanford “Sandy” Weill and Charles O. “Chuck” Prince. Yet he incurred $20 billion of net losses and was forced to accept $45 billion of rescue funds from the U.S. government. Now, he’s slicing off divisions of a company he described six months ago as “a truly global universal bank.”.....

HSBC Falls After Report Bank May Need $30 Billion - Bloomberg

HSBC Holdings Plc, Europe’s largest bank by market value, fell in Hong Kong after Morgan Stanley analysts predicted it may have to raise as much as $30 billion and halve its dividend as earnings drop. 

London-based HSBC slid 1.8 percent to HK$71.75 at 10:55 a.m. local time, the biggest loss in a week and the third straight decline. 

HSBC’s profit is likely to fall “sharply” this year and won’t recover until 2011 at the earliest, Morgan Stanley analysts including Michael Helsby and Anil Agarwal said in a note yesterday. A stock sale would be the first for HSBC since the financial crisis started in 2007, forcing rival banks and brokers worldwide to raise more than $800 billion.....

Deutsche Bank Reports EU4.8 Billion Loss on Trading - Bloomberg

Deutsche Bank AG, Germany’s biggest bank, reported a record loss of about 4.8 billion euros ($6.3 billion) in the fourth quarter after the worst financial crisis since the Great Depression pummeled debt and equity trading. 

The bank fell as much as 13 percent in Frankfurt trading. The loss, which compares with a profit of about 1 billion euros a year earlier, also reflects provisions for debt backed by bond insurers and “substantial injections” of cash into money market funds, the Frankfurt-based bank said today. 

Deutsche Bank has “scaled back or exited trading strategies most affected by market turbulence,” Chief Executive Officer Josef Ackermann said in a statement. The German bank lost about $1 billion from bad bets involving bonds hedged by credit-default swaps in the quarter, plus $500 million trading equities, two people with knowledge of the matter said this week. The company reported its first annual loss in more than 50 years....

Man Group Assets Fall 21%; Shares Decline in London - Bloomberg

Man Group Plc, the largest publicly traded hedge-fund manager, said assets under management fell 21 percent in the last three months of 2008, more than expected, as it wrote down two funds linked to Bernard Madoff. 

Man Group dropped as much as 11 percent in London trading after the firm said in a statement that assets under management were $53.3 billion as of Dec. 31, down from $67.6 billion at the end of September and $61 billion at the beginning of November. The firm had been forecast to report about $55.6 billion of assets under management, according to analysts at UBS AG. 

Man Group said its decision in November to reduce the amount it borrows and invests in Man Global Strategies cut assets under management by $9.7 billion. Net outflows, or redemptions offset by new sales, totaled $3.2 billion, more than the $1 billion Credit Suisse Group analysts had expected. Man Group also wrote down to zero last month its holdings in funds linked to Madoff, 70, who was arrested for allegedly running a $50 billion fraud....

Barclays moves to refresh its board - Financial Times

Barclays has taken its first step towards refreshing its board and heading off a shareholder confrontation at its annual meeting.

Sir Nigel Rudd, deputy chairman, will not seek re-election at the annual meeting in April. His departure is likely to be followed by moves to replace other non-executive directors.

Sir Nigel, who has been with Barclays for 13 years, took the decision after agreeing to become chairman of Invensys, an engineering company, from July....

Banks Are in Need of Even More Bailout Money - NY Times

Even before word came on Tuesday that Citigroup might split into pieces to shore up its finances, an unpleasant message was moving through Congress and President-elect Barack Obama’s transition team: the banks need more taxpayer money.

In all likelihood, a lot more money. 

Mr. Obama seems to know it; a week before his swearing-in, he is lobbying Congress to release the other half of the financial industry bailout fund. Democratic leaders in Congress seem to know it, too; they are urging their rank and file to act quickly to release the rescue money. And Ben S. Bernanke, the chairman of the Federal Reserve, certainly knows it......

Geithner Backed by Obama, Lawmakers After Queries - Bloomberg

Treasury Secretary-designate Timothy Geithner won Senate Finance Committee Chairman Max Baucus’s support after answering questions about almost $50,000 in back taxes and interest he owed to the Internal Revenue Service. 

“We need a Treasury secretary quickly given the dire economic straits we’re in,” Baucus said after the panel held an emergency meeting today to discuss the issue. The committee set Geithner’s confirmation hearing for Jan. 16. 

President-elect Barack Obama nominated Geithner to take over the Treasury Department as the government grapples with the worst financial crisis in decades and an economy mired in recession. The Treasury oversees the IRS, the country’s tax-collecting agency.....

J.P. Morgan Cuts Use of 3rd-Party Brokers - Wall Street Journal

J.P. Morgan Chase & Co. said it will stop underwriting prime mortgages that are originated through third-party brokers, relying instead on its vast branch network to make home loans to creditworthy customers.

The move reflects a retreat by financial institutions that once leaned heavily on brokers to help fuel the mortgage business. Since housing prices collapsed, banks have turned away from brokers and said that loans originated through that channel have proved to be less creditworthy than mortgages that are originated inside their own walls.....

Oil rises to near $39 on Bernanke comments - AP

Oil prices rose to near $39 a barrel Wednesday in Asia after Federal Reserve Chairman Ben Bernanke said a stimulus package could help revitalize the ailing U.S. economy.

Light, sweet crude for February delivery was up 94 cents to $38.72 a barrel by midday in Singapore in electronic trading on the New York Mercantile Exchange. The contract rose overnight 19 cents to settle at $37.78....

Chrysler in asset sale talks; Renault denies - Reuters

Struggling U.S. automaker Chrysler is in talks to sell assets to Renault-Nissan and parts supplier Magna, sources with knowledge of the discussions have told Reuters, though the French automaker on Wednesday denied such talks were under way.

The third-largest U.S. automaker is under pressure to restructure after accepting $4 billion in U.S. government loans as slowing economies and tight financing shrink global demand for vehicles.....

Toyota sees U.S. inventory in line by May - Reuters

Toyota Motor Corp said on Tuesday that the production cuts announced so far would bring its U.S. inventory of unsold cars and trucks in line with demand by May but more reductions may be needed if demand falls further.

"I can't rule out any further production cuts because it'll all depend on where the market heads," Toyota's U.S. marketing head, Jim Lentz, said in an interview at the North American International Auto Show.

"But right now we're confident that by spring we'll be in good shape," he said....

Toyota, Facing Crisis, Turns to Founding Family Scion - Bloomberg

Akio Toyoda, the grandson of Toyota Motor Corp.’s founder and the company’s next president, will confront a challenge largely unknown to his ancestors: decline. 

Toyoda, 52, will succeed Katsuaki Watanabe, 66, as president of Toyota this year, people familiar with the plan have said. He will take over as the carmaker’s two largest markets, the U.S. and Japan, are plummeting, forcing Toyota to reduce inventories by halting production. The company plans to slash about 5,000 temporary workers in the two countries in the face of the first operating loss in 71 years. 

“The company’s path of rapid growth until now is unsustainable,” said Takashi Aoki, who helps manage about $1.3 billion at Mizuho Asset Management Co. in Tokyo. “Now, it faces shrinkage and possibly the need to get out of some businesses.”.....

Satyam Officials Sold Most Stock in India Before Fall - Bloomberg

Satyam Computer Services Ltd. executives reaped $1.8 million from share sales in the six months before a botched takeover and fraud inquiry at India’s fourth- largest software exporter triggered a record fall in its stock. 

Nine officials led by Chief Financial Officer V. Srinivas sold a combined 267,358 shares since July 14, according to filings by the company to the Bombay Stock Exchange. That’s more stock than the combined insider sales at 30 companies on India’s benchmark index, according to data compiled by Bloomberg.....

Neiman Marcus acts on $700m bonds - Financial Times

Neiman Marcus, the US luxury department store taken private in 2005, is invoking its right to capitalise its interest payments on $700m of its bonds as it faces a slump in business from the US’s wealthiest shoppers. 

Neiman said in a regulatory filing on Tuesday that it had decided to utilise the bond’s “payment in kind” feature “given the dislocation in the financial markets and the uncertainty as to when reasonable conditions will return”.....

Princeton Sells Bonds at Lower Rates Than Harvard - Bloomberg

Princeton University raised $1 billion in its first taxable bond sale since 1994 at lower rates than Harvard University paid a month ago. 

The Princeton sale was split between 10-year 4.95 percent notes and 30-year 5.7 percent bonds, according to data compiled by Bloomberg. Both maturities yield 270 basis points more than Treasuries of similar maturity. On Dec. 5, Harvard sold 6 percent 10-year notes and 6.5 percent 30-year bonds at a so- called yield spread of 337.5 basis points for both issues. A basis point is 0.01 percentage point. 

Princeton’s lower rates reflect increased investor interest for debt securities other than government bonds after investment- grade issues tumbled 6.8 percent in 2008, the worst performance in at least 35 years. Harvard raised funds on the day that the average spread on investment-grade debt hit a record, according to Merrill Lynch & Co.....

Cornell to Cut Spending After Endowment Falls 27% - Bloomberg

Cornell University probably will cut spending by 5 percent next year after the school’s endowment fell 27 percent in the final six months of 2008, President David Skorton said. 

“We’re throttling back our expenditures,” Skorton said in an interview today in New York. “We’re going to need a 10 percent correction in our budget in the next three to five years,” which will be achieved through increased revenue and reduced spending. 

The Cornell fund had $5.39 billion in assets after a 2.7 percent increase in the fiscal year ended June 30. The fund gained 25.9 percent in fiscal 2007.....

Goldman Plans Takeover of Universal Studios Japan - Bloomberg

Goldman Sachs Group Inc. fund plans to make a takeover bid for full control of USJ Co., operator of the Universal Studios Japan theme park in Osaka, a person familiar with the plan said. 

Goldman’s Tokyo-based Crane Holdings fund that now holds a 41 percent stake is preparing to acquire the remaining shares in the company by March 31, the person said, declining to be identified because no announcement has been made. The 59 percent stake to be purchased would be worth about 50 billion yen ($560 million) at yesterday’s closing price on the Tokyo Stock Exchange.....

Goody's retailer files bankruptcy, will liquidate - Reuters

Goody's LLC, a privately held family apparel retailer that emerged from bankruptcy in October, has filed for Chapter 11 protection again, and said it plans to liquidate its remaining 282 stores.

A "significant downturn in the national economy caused severe and unexpected financial pressures," and led to "unexpectedly poor" sales in the holiday season, Goody's said in a Tuesday filing with the U.S. bankruptcy court in Wilmington, Delaware.

Several retailers have filed for bankruptcy protection in recent months, including Boscov's Inc, Circuit City Stores Inc and KB Toys Inc......