Frontrunning: February 8

  • Greek Premier to Seek Bailout Consensus Amid Political Quarrels (Bloomberg)
  • Merkel makes case for painful reform (FT)
  • Bernanke Cites Risks to Progress of Recovery (WSJ)
  • Proposed settlement with banks over foreclosure practices dealt a setback (WaPo)
  • Merkel Approval in Germany Climbs to Highest Level Since 2009 Re-Election (Bloomberg)
  • Francois Hollande will spark next euro crisis (MarketWatch)
  • China’s Central Bank Pledges Support for Housing Market (Bloomberg)
  • Italy Pushes for Europe Growth Policy (Bloomberg)
  • Santorum bounces back in Republican race (FT)
  • China 'Big Four' Banks Issued CNY320 Billion New Yuan Loans In Jan (WSJ)
  • Gasoline and diesel prices raised (China Daily)

Overnight Press Digest

WSJ

* The European Central Bank (ECB) made key concessions over its holdings of Greece's bonds, which will smooth the path toward a new Greek bailout, said people briefed on Greece's debt-restructuring negotiations.

* Goldman Sachs Group Inc and Morgan Stanley clarified for the first time that managers are also on the line when firms seek to recover pay under "clawback" policies.

* U.S. companies are adding capacity at home, replacing aging equipment and even moving production back from overseas.

* Large shareholders of Xstrata came out against the company's plan to merge with Glencore International, highlighting what could be a difficult task selling the giant deal to shareholders and regulators.

* Yahoo said Chairman Roy Bostock and three other directors have volunteered not to stand for re-election to the company's board. The company named two new outside directors.

* Hawker Beechcraft, which announced Tuesday it has hired a restructuring veteran as its chief executive, has also hired bankruptcy and restructuring lawyers, said people familiar with the matter.

* General Motors Co is preparing to disclose "horrendous" fourth quarter losses out of its European Opel/Vauxhall unit and is demanding deep cuts from labor unions there, a GM official said on Tuesday.

* U.S. banks have been dogged in recent years by tougher regulation and sluggish loan growth. But Citigroup Inc believes things will turn around for its U.S. retail-banking operations. By 2014, "people will really see a difference" in improved customer service and product sales at Citibank branches, said the bank's U.S. retail and commercial banking chief, Cecilia Stewart, in recent interviews.

* Caesars Entertainment Corp priced 1.81 million shares of its stock at $9 a share to raise around $16.3 million, a small amount but one that opens the door for some investors to cash out. The company is selling a tiny portion of itself -- just 1.4 percent -- in what is one of the smallest IPOs in recent history.
 

FT

RBS BOSS SAYS RESTRUCTURING HAS COST 38 BILLION POUNDS

Stephen Hester has revealed that the dramatic restructuring of Royal Bank of Scotland has cost 38 billion pounds ($60.32 billion) in a rallying memo to staff days after the embattled chief executive waived a 1 million pound bonus. http://www.ft.com/cms/s/0/729c21ea-51b0-11e1-a99d-00144feabdc0.html

MISYS AND TEMENOS AGREE ON KEY MERGER TERMS

Misys and Temenos have reached agreement on the key terms of a proposed 2 billion pound merger that would create the world's largest supplier of risk-management computer software to banks. http://www.ft.com/cms/s/2/dedebc7c-51c0-11e1-a99d-00144feabdc0.html#axzz1lXLa4LJ6

US BANKS SNAP UP MORTGAGE PRODUCTS

Banks have been responding to low interest rates by snapping up billions of dollars of bundled mortgage products that resemble the sliced-and-diced debt blamed for the financial crisis. http://www.ft.com/cms/s/0/e6ea9e94-4e8d-11e1-ada2-00144feabdc0.html#axzz1lXLa4LJ6

YAHOO CHAIRMAN EXITS AS REVIEW DRAGS ON

Yahoo chairman Roy Bostock and three other directors are to step down as part of a boardroom clean-out, marking the latest attempt by the U.S. internet company to win back investor confidence as it continues to pursue a change in strategic direction. http://www.ft.com/cms/s/2/753c10d2-51d2-11e1-a30c-00144feabdc0.html

TWO BIDDERS LEFT IN RUNNING FOR RBS ASIAN UNITS

Just two bidders remain in the running to buy Royal Bank of Scotland's Asian equities, mergers and acquisitions and research businesses, after three potential buyers dropped out of the race. http://www.ft.com/cms/s/0/24a4e736-5176-11e1-a99d-00144feabdc0.html

BOMBARDIER SET TO ANNOUNCE UK JOB SECURITY

Workers at the UK's last train maker are expected to hear this week that their jobs are safe from its Canadian owner Bombardier, ending months of uncertainty about the future of the factory in England. http://www.ft.com/cms/s/0/f4cdabf2-51a1-11e1-a9d7-00144feabdc0.html

UBS FIGHTS TO HANG ON TO KEY STAFF

UBS is paying out 300 million Swiss francs ($328.7 million) in long-term bonuses to its top bankers, as it fights to retain senior personnel following a $2.3 billion trading scandal and a sweeping restructuring of its investment banking business. http://www.ft.com/cms/s/0/3208283a-518e-11e1-a9d7-00144feabdc0.html

MOSCOW PLANS TO PUT DEAD LAWYER ON TRIAL

Russian investigators have said they may prosecute a dead lawyer who worked for a foreign investment fund in the latest bizarre twist to a case that has come to exemplify investor fears about Russia's rule of law. http://www.ft.com/cms/s/0/ef3b4172-51b5-11e1-a30c-00144feabdc0.html

ELBARADEI URGES EGYPTIAN PEOPLE TO WORK TOGETHER

Egyptians must overcome economic and political differences to unite and put the country on the path to democracy and away from military rule, former presidential candidate Mohamed ElBaradei said on Wednesday. http://www.ft.com/cms/s/0/e6c36bac-50b9-11e1-8cdb-00144feabdc0.html

NYT

* Wal-Mart Stores Inc said it had devised standards to determine what is healthy and would label the foods that meet those standards, as part of its promise last year to improve the nutritional quality of the food it sells.

* Glencore International, the largest commodities trading company in the world, said it would buy the remaining stake in the mining company Xstrata that it did not already own, in a long-anticipated deal that would create a mining giant with a market value of nearly $90 billion.

* Yahoo Inc board is being overhauled, with the company replacing nearly half of the directors. Yahoo's Chairman Roy Bostock wrote in a letter to shareholders that neither he nor the company's three longest-serving directors would stand for re-election.

* U.S. Federal Reserve Chairman Ben Bernanke defended the Fed's efforts to control inflation and unemployment during an appearance Tuesday before the Senate Budget Committee.

* Greek political leaders postponed for yet another day a decision on an austerity package - including 20 percent cuts to base pay for workers in private companies and a loosening of public sector job protections - in exchange for the billions in loans Athens needs to prevent a default in March.

* Richard Holwell, the federal judge in Manhattan who presided over the insider trading case of the hedge fund manager Raj Rajaratnam, is stepping down from the bench to set up his own law firm.

European Economic Highlights

  • Germany Exports s.a. for December -4.3% m/m – lower than expected. Consensus -1.0% m/m. Previous 2.5% m/m.
  • Germany Imports s.a. for December -3.9% m/m – lower than expected. Consensus 0.9% m/m. Previous -0.4% m/m.
  • Germany Current Account for December €19.3B – higher than expected. Consensus €15.2B. Previous €14.3B.
  • Germany Trade Balance for December 12.9B – lower than expected. Consensus 13.6B. Previous 16.2B.
  • France Bus. Sentiment for January 96 – in line with expectations. Consensus 96. Previous 96.
  • France Central Govt. Balance for December -€90.8B – in line with expectations. Consensus -€90.8B. Previous -€97.2B.
  • Switzerland Unemployment Rate for January 3.4% - lower than expected. Consensus 3.5%. Previous 3.3%.
  • Switzerland Unemployment Rate s.a. for January 3.1% - in line with expectations. Consensus 3.1%. Previous 3.1%.

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