The Investment Blog from Advantage 'zyaada'

The large U.S. credit card issuers American Express Co and Capital One Financial Corp said rising customer delinquencies reduced second-quarter earnings. Thus, profit decreased by 84 % at American Express, while Capital One reported a third straight quarterly loss. Both are writing off close to $1 out of every $10 they lend, even after the government let them repay federal bailout money. American Express repaid $3.39 billion and Capital One $3.55 billion. Besides, shares of American Express dropped 4.4 % to $28.14, and Capital One dropped 4.8 % to $26.50 in after-hours trading.Moody`s Investors Service said defaults on U.S. credit cards rose to a record 10.76 % in June and could reach 13 % by the middle of 2010. According to economists, charge-off rates are closely tied to the nations unemployment rate, which has reached an all-time high 9.5 % since 1983 and is widely expected to soon reach double digits.American Express said quarterly net income available to common shareholders decreased to $102 million, or 9 cents per share, from $650 million, or 56 cents, a year earlier. Before preferred stock dividends, net income was $337 million. Capital One, based in McLean, Virginia, had a quarterly net loss available to shareholders of $275.5 million, or 65 cents per share, compared with a profit of $452.9 million, or $1.21, a year earlier. Before preferred stock dividends, profit was $224.2 million.

via American Express and Capital One .

Related Reading:

        

zyakaira notes: sadly, not enough people have invested in the emerging markets or even in the next slice of America in this downturn..don’t they want to buy cheap anymore?

Stock markets rewarded companies such as Johnson & Johnson JNJ.N and Cisco CSCO.O who were brave enough to make acquisitions in the months after Lehman Brothers collapse, a study released on Monday showed.

Although firms who made purchases worth $100 million or more suffered an average 25.5 percent fall in their stock price, they outperformed the wider market by 6.3 percentage points, the Towers Perrin/Cass Business School research found.

Global mergers and acquisitions M&A plunged 40 percent in the first half of 2009 to $941 billion, as shrinking economies, volatile markets and scarce debt hammered corporate confidence. The World Bank forecasts the global economy will shrink 2.9 percent this year.”Companies with M&A in mind should be emboldened by our analysis: fortune favors the brave,” the studys authors, led by Marco Boschetti, wrote.

“Fears that M&A is riskier post-Lehman seem to be misplaced.”Repeat acquirers did even better, on average outperforming the MSCI World Index by 8.1 percent.Among them, Cisco Systems Inc, Johnson & Johnson, Abbott Laboratories ABT.N, BG Group Plc BG.L, and Symantec Corp SYMC.O all outperformed world, regional and sector indexes.However, other multiple acquirers such as Eli Lilly and Co LLY.N, Medtronic Inc MDT.N and Banco Santander SA SAN.MC underperformed on some or all measures.

via Brave post-Lehman M&A rewarded by market -study| Deals| Reuters.

Related Reading:

        

Today’s summary from a newshound recmmended on linkedin.com ( the story was recommended.. )

Remember state-owned German lender KfW Bankengruppe ?

Well, back in September last year, the bank was busy cutting down its exposure to Lehman Brothers, but then someone executed an erroneous (and unstoppable) automated currency swap valued at $426m with Lehman on the very day it went belly up! The German government was up in arms and the bank was the object of ridicule at home, with Germany’s biggest-circulation newspaper, Bild, splashing a ‘Germany’s Dumbest Bank’ headline over its front pages. The upshot was that two of the bank’s management board members were suspended pending an investigation, and one, Peter Fleischer, ended up getting fired and taking the bank to court in Frankfurt.

And guess what ? Fleischer won the case. The bank was ordered to pay him 2 years salary, bonuses and interest. Nice.

FT Alphaville reports that shares in Commerzbank rose over 18% Wednesday, after the European Central Bank approved Germany’s ‘bad bank’ plan, which will allow participants to offload toxic assets from their balance sheets and pretend that they don’t exist

The Financial Times reports that Bank of America was hoping to raise about $3bn from the sale of asset management unit Columbia Management, but bids are described as ‘lukewarm’, and the unit may end up on

via World’s ‘Dumbest’ Bank Gets Caught Again :: Business News :: Here Is The City News :: The Latest Business & Financial Markets News And Views.

Related Reading:

        

YOUR FAVE ROCK NOW AVAILABLE AT THE SUPER MARKET – Off the SHELF?

Is Tesco mulling a bid for Britain’s state-owned lender Northern Rock?The Times of London reported that the British supermarket chain had emerged as a potential bidder for Northern Rock, which the U.K. government is seeking to unload ahead a general election.However, Reuters, citing an industry source, said Tesco, Britain’s biggest retailer, is unlikely to be interested in a bid for the nationalized bank.Potential bidders, including Tesco, Richard Branson’s Virgin Group and private equity funds, have shown interest in Northern Rock, Britain’s highest-profile victim of the credit crunch that was nationalized in February 2008, The Times said.Reuters, citing its source, said that while the supermarket group had expressed some interest in the past, this had not led to anything.Tesco said it did not comment on rumor and speculation, Reuters said.The supermarket group announced a major push into banking last July with a 950 million pound deal to buy out Royal Bank of Scotland’s stake in their joint banking venture.Eager to cash in on growing disillusionment with traditional banks, Tesco said in March it planned to open bank branches in 30 of its stores by the end of this year.

via Is Tesco Eyeing a Bid for Northern Rock? – DealBook Blog – NYTimes.com.

Related Reading:

        

Standard Chartered and Australia’s ANZ are in advanced talks to acquire separate parts of the Asian retail and commercial assets being sold by Royal Bank of Scotland, according to people familiar with the matter.Standard Chartered is now in pole position to acquire RBS units being sold in China, India and Malaysia, while ANZ was closing in on assets in Hong Kong, Taiwan, Singapore, Vietnam and Indonesia, said people familiar with the situation.

The assets are expected to fetch around $1bn-$1.5bn for the stricken UK lender.“The process is progressing well but nothing is yet final,” said one person familiar with the matter.HSBC could also pick up some of the assets, should talks with the other banks fail to reach a successful conclusion, said people familiar with the situation.

RBS put the assets up for sale this year, after posting the biggest loss in British corporate history. The bank, which is 70 per cent owned by the UK government, made a loss of £24.1bn $35.3bn last year and is shrinking its £2,000bn balance sheet.Its regional retail banking platform vastly expanded after the 2007 acquisition of the Asian operations of ABN Amro, which had built up significant branch networks in countries such as China and India.

RBS’s Asian retail assets include 170 branches, including 28 in India and 13 in China.The sale of the Asian assets has been complicated by RBS’ decision to retain its wholesale banking footprint in key regional markets.There has been uncertainty about whether banking authorities in the eight individual markets would rubber-stamp the transfer of branch licences to the potential acquirers, some of whom already boasting large retail networks in countries such as China and India.

A successful conclusion of the talks would transform ANZ’s footprint in the region and bolster its strategy to become a “super-regional” lender. The bank in May announced a A$2.5bn capital raising to fund a potential bid for RBS assets.

via FT.com / Companies / Banks – StanChart and ANZ poised to split RBS Asian assets.

zyakaira notes: StanChart benefits from ANZ not being in a hurry to confront RBI and enter India with a fresh licence, i guess…Also, RBS’ new branches will also become Stamchart. While Stanchart has a large presence in India, they are hardly notable for Wealth Management

Related Reading:

        

Let's go macky, what are you doing here on a Friday

Subscribe to our newsletters here

For booking a consultation online:

I offer online scheduling using BookFresh

Advantages.us now well on its way to a Top 10K ranking in India, Watch out! India market oriented articles are more specifically indexed here and here. Why one can’t write on the dealmaking one is part of..well because it is a deal and then only some because one can’t disclose client and deal confidentiality. But then a person who evaluates a blog writer for an executive position is anyway starting on the wrong foot.. The blog is just building a information base and does not give away his character at work, his business models or his work content necessarily. There is no question to it. This one is a pretty successful business deal maker. He has the access. He could do wonders for an action-oriented organisation.

Related Reading:

        

Office Depot said Tuesday that the private equity firm BC Partners has made a $350 million investment through a preferred stock purchase, giving it a stake in the office supplies chain of approximately 20 percent.

BC bought about $275 million of the company’s Series A convertible perpetual preferred stock and approximately $75 million of its Series B conditional convertible perpetual preferred shares.

Office Depot, which previously announced that it would close approximately 9 percent of its North American stores and cut 2,200 jobs, said it will use the proceeds for general corporate purposes.

The Boca Raton, Fla.-based chain, which plans to open fewer locations next year, has seen its sales and stock price slide as corporate customers, many of them small businesses, cut spending because of the recession. The investment by BC Partners is looked at by Office Depot as a way to improve its balance sheet and provide some ”financial flexibility.”

The Series A stock included in the preferred stock purchase can be converted into common stock immediately at a conversion price of $5 per share, which is a 32 percent premium to Office Depot’s Monday closing stock price of $3.79 per share.

The Series B stock will become convertible at the same terms as the Series A shares if stockholders approve shares being issued in connection with the conversion.

The investment also allows for three BC Partners executives to become part of Office Depot’s board, which has grown to 14 members. Among those joining the board include managing partner Raymond Svider, senior partner James Rubin and partner Justin Bateman.

The transaction, which was approved by Office Depot’s board, closed Tuesday morning.

Related Reading:

        

PVR raising another tranche of Private Equity while profit making ventures hold back _TYY4

Hotels begin to fill up again as Indians settle for domestic holidays _TYY4(ftags)
less than 20 seconds ago from TweetDeck

Govt not to allow offshore SPVs so easily _TYY4
1 minute ago from TweetDeck

Vipul Shah’s London Dreams, Akshay’s Blue and Aamir’s 3 Idiots are pitching for $27 million but no buyers – No UTVi, Eros or Studio 18 _TYY4
2 minutes ago from TweetDeck

Ghazini was bought for $20 m, Wellcome for $10 million by Studio 18, Singh is Kingg also for $13 million _TYY4
6 minutes ago from TweetDeck

PVR, Mahindra Holidays coming out with IPOs _TYY4
7 minutes ago from TweetDeck

Innovative reopens in Bangalore _TYY4
7 minutes ago from TweetDeck

Bollywood dumping big budget movies because of the industry rift/slowdown _TYY4
8 minutes ago from TweetDeck

Hyderabad Metro has finally decided Maytas cannot execute the 12000-crore rupees project #Indian #Stocks _TYY4
9 minutes ago from TweetDeck

B’lore promo #1: Fast Social media updates leave you dizzy? Feel priceless about it with the New Nokia N97.. http://tr.im/twiN97 <<<Call us
about 1 hour ago from web

Market trend unlikely to improve. Time for value buying #Indian #Stocks Spend time at http://bit.ly/ESXFE for an insider view of the budget
about 2 hours ago from CoTweet

RT @zyaada Check @blrmoneytalkz for Investments #Indian #Stocks #GDOW and @urban_mash for city and lifestyle chatter
about 2 hours ago from CoTweet

Is Retail going to bounce back? http://bit.ly/5943b (We are at http://advantages.us)
about 2 hours ago from CoTweet

Market trend unlikely to improve. Good time for value buying
about 2 hours ago from CoTweet

B'lore promo #1: Fast Social media updates leave you dizzy? Feel priceless about it with the New Nokia N97.. http://tr.im/twiN97 <<<Call us
about 2 hours ago from web

$FXE Euro likely to reverse trend now and start back to 1.45
about 2 hours ago from CoTweet

Related Reading:

        

U.S. regulators are drawing up rules that would make it easier for private equity firms to acquire troubled banks, aiming to free up more funds to recapitalize lenders, the Financial Times reported, citing people close to the situation.

The plan, which has yet to be finalized, may require private equity companies to inject substantial capital into lenders and to agree not to sell them for at least two years, the newspaper reported.

Obama administration officials continue to stress concerns about ensuring sufficient capital in the financial system, even as several financial institutions have begun lining up to return funds borrowed under the governments $700 billion troubled asset relief program to cope with the financial crisis.

The paper cited analyst estimates that private equity firms could provide up to $50 billion to recapitalize banks.

The Federal Deposit Insurance Corporation, which is charged with taking over failed lenders, is leading the drafting of the new rules, the paper quoted people familiar with the situation as saying.

The FDIC board, which also includes representatives from other banking regulators, is expected to discuss the matter in the next few weeks, it said.

Buy-out funds wanting to buy a troubled bank would have to disclose performance measures and marketing materials to allay fears that they might use the banks to subsidize other companies in their portfolio, it added.

The Federal Reserve has limited private equity groups to bank stakes of less than 25 per cent, reflecting concerns over conflicts of interests, but the latest crisis has prompted regulators to take a softer stance, the paper said.

via U.S. drafting rules to spur PE bank buyouts: report | Reuters .

Related Reading:

        

BlackRock Inc., started 21 years ago in a one-room office by former mortgage-bond trader Laurence Fink, agreed to buy Barclays Plc’s investment unit for $13.5 billion to become the world’s largest money manager.

BlackRock will pay $6.6 billion in cash and the rest in stock for Barclays Global Investors, the New York-based company said today in a statement. Barclays will hold a 19.9 percent stake in the combined company. Financing will include $2.8 billion from the sale of equity to institutional investors and as much as $2 billion in loans from Barclays and other banks.

The purchase, the biggest of a fund manager, creates a company overseeing $2.7 trillion in assets, more than the Federal Reserve. BlackRock will add about $1 trillion in investments that track market indexes, which are attracting clients at the expense of funds whose managers choose securities to buy and sell. It’s the first top-ranked firm to attempt to combine both types of businesses.

“This will bring the greatest sweep of products to our clients,” Fink, BlackRock’s chairman and chief executive officer, said in a telephone interview. “This transaction is transformational.”

Barclays, the U.K.’s third-largest bank, agreed in April to sell BGI’s IShares exchange-traded fund unit to London-based CVC Capital Partners Ltd. for $4.4 billion. The bank, which is seeking to raise capital to replenish loan losses, had until June 18 to find a better deal for IShares or all of BGI, which analysts last month valued at more than $10 billion.

Combined Value

The private-equity firm, which has until June 18 to match BlackRock’s offer, is unlikely to submit a higher bid, said a person familiar with the talks, who declined to be identified. CVC will instead receive a $175 million breakup fee. Officials at the firm declined to comment today. Barclays can no longer solicit bids for San Francisco-based BGI from other buyers.

The combined company will have a market value of more than $34 billion, Fink, 56, said on a conference call. The deal will add to per-share cash earnings by 10 percent in 2010, he said.

“It looks like a good price, a strong gain and it removes the rights issue prospect for Barclays,” said Simon Maughan, an analyst at MF Global Securities in London who has a “buy” rating on Barclays. “It will allow Barclays to redeploy capital in Barclays Capital for at least as good a return as BGI.”

Barclays will have a net gain of $8.8 billion from the sale, which will increase its core Tier 1 capital ratio, a measure of financial strength, by 150 basis points to 8 percent as of Dec. 31, 2008, the bank said in a statement.

via World’s largest money manager

Related Reading: