Archive for category Financial Market
First Federal Bank of California and Imperial Capital Bank of La Jolla closed
Posted by admin in Financial Market on December 19th, 2009
by E. Scott Reckard - Dec. 19, 2009
Los Angeles Times
Both are sold immediately to other Southern California institutions. Regulators have closed 140 U.S. banks this year, 16 in California.
Two more loss-battered Southern California banks were shut down by regulators Friday and immediately sold to two of the largest financial institutions based in the region.
Stung by defaults on tricky adjustable mortgages, 80-year-old First Federal Bank of California was closed by federal savings and loan regulators, with its 39 branches to reopen today as part of OneWest Bank.
Pasadena-based OneWest, created early this year from the ashes of collapsed home lender IndyMac Bank, agreed to assume all of First Federal’s deposits, so no customers will lose money, the Federal Deposit Insurance Corp. said.
In Friday’s other California failure, Imperial Capital Bank of La Jolla, rocked by troubled loans for apartments and commercial mortgages, was dealt off by the FDIC to City National Bank of Los Angeles, which is emerging as one of the survivors of the banking industry’s near-meltdown.
Like OneWest, City National agreed to assume all of the acquired bank’s deposits, even amounts that exceeded the FDIC’s caps on insurance coverage.
Imperial Capital’s nine branches — six in California, one in Maryland and two in Nevada — are to reopen Monday as City National offices.
City National was the largest commercial bank with headquarters in Southern California until Pasadena’s East West Bank agreed last month to take over a failed rival in the Chinese American niche, San Francisco’s United Commercial Bank. That deal beefed up East West, giving it $19 billion in assets to City National’s $18 billion.
The latest combinations gives City National more than $21 billion in assets and OneWest about $24 billion, although such comparisons matter little given the fact that the acquirers will have to spend much of their time downsizing by working through portfolios of distressed loans. Indeed, OneWest’s balance sheet is still stuffed with IndyMac loans that had been targeted for sale before the private market for mortgages dried up, although the FDIC is sharing losses on those loans.
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Regulators Pull Plug on Bank
Posted by admin in Financial Market on December 5th, 2009
by David Enrich - Dec. 5, 2009
The Wall Street Journal
Federal regulators on Friday seized AmTrust Bank, a battered Cleveland thrift kept alive this year after local politicians pleaded with the government for a second chance.
AmTrust is the fourth-largest U.S. bank or savings institution to fail so far this year. A total of 130 lenders have collapsed in 2009, the highest number of failures since 1992 as regulators intensified their push to rid the industry of weak institutions.
The family-owned AmTrust, with $12 billion in assets and roots back to 1889, had been in trouble for more than a year. Like many other banks during the housing bubble, AmTrust barreled into unfamiliar geographic areas with aggressive mortgage and construction lending. Net losses of about $1 billion since last year’s second quarter consumed nearly 80% of its capital.
New York Community Bancorp Inc., Westbury, N.Y., is acquiring AmTrust and its 66 branches. The purchase is a dramatic expansion for New York Community, which runs a handful of banks in New York and New Jersey. The company has made seven acquisitions since 2000, none of them outside the New York City metropolitan area, where it has about 212 branches.
The Federal Deposit Insurance Corp. said the AmTrust failure was expected to cost its deposit-insurance fund about $2 billion. AmTrust’s deterioration over the past year likely resulted in the bank selling for a lower price than it would have fetched if the thrift had been seized earlier, said people familiar with the government-led auction.
As part of the deal, the FDIC is shielding New York Community from most losses on $9 billion of AmTrust’s assets.
AmTrust has been riding a regulatory rollercoaster for the past year. Last fall, its primary regulator, the Office of Thrift Supervision, rejected AmTrust’s requests for aid through the federal government’s Troubled Asset Relief Program.
The OTS then slapped AmTrust with a cease-and-desist order, citing “unsafe and unsound banking practices,” and required the thrift shore up its capital, stop making certain loans and rein in the rates being offered for customer deposits.
After AmTrust missed a deadline to raise capital, the FDIC in January approached other banks to gauge their takeover interest — a sign the agency was gearing up to seize the thrift, according to people familiar with the matter. Executives figured it was about to meet the same fate as its cross-street rival, National City Corp., which regulators had forced into a sale to PNC Financial Services Group Inc.
But AmTrust benefited from the advocacy of politicians, including Rep. Steven LaTourette (R., Ohio), who pleaded with Treasury and White House officials not to kill a second Cleveland bank. Cleveland’s Democratic mayor, Frank Jackson — a critic of National City’s forced sale — also sought to protect AmTrust.
At the same time, regulators were hoping that federal rescue programs being rolled out would stem the number of seized banks.
U.S. stock futures rise after Bank of America repayment plan
Posted by admin in Financial Market on December 3rd, 2009
by Steve Goldstein - Dec. 3, 2009 7:21 AM est
MarketWatch.com
LONDON (MarketWatch) — U.S. stock futures rose on Thursday as markets interpreted news that Bank of America is repaying the government $45 billion as a sign that economic conditions are improving.
S&P 500 futures rose 3.3 points to 1,111.20 and Nasdaq 100 futures gained 2.25 points to 1,793.70. Futures on the Dow Jones Industrial Average rose 27 points.
U.S. stocks were languid on Wednesday, with the Dow Jones Industrial Average retreating 19 points while the S&P 500 rose fractionally and the Nasdaq Composite rose 9 points. ADP estimated job losses of 169,000 but the Fed’s Beige Book said economic conditions improved modestly.
Goldman Sachs authored their first eight recommended trades for 2010, which include a bet against volatility in the S&P 500, a pick for Russian stocks and growth in the British pound vs. the New Zealand dollar.
The bank sees 4.4% global growth in 2010 and 4.5% in 2011, but no increase in short term interest rates in the U.S.
“This would appear to be rather positive for risky assets, potentially sowing the seeds for fresh asset overvaluations down the road,” the strategists said. “This in turn — as you can imagine — makes us somewhat nervous about many possible risks out there, including those that relate to the Fed tightening earlier than we currently expect.”
Markets will get a read on central bank risks Thursday, with the European Central Bank due to make an interest rate decision at 7:45 a.m. ET, followed by a press conference with ECB President Jean-Claude Trichet at 8:30, and Federal Reserve Chairman Ben Bernanke is due to testify at his confirmation hearing at 10.
Also out will be data on weekly jobless claims, a revised calculation of third-quarter productivity, and the ISM non-manufacturing index for November.
Retailers also will be reporting same-store sales for November. The International Council of Shopping Centers, after two downward revisions, expects sales to rise between 3% and 4%.
Attention also will be on the banking sector as Bank of America /quotes/comstock/13*!bac/quotes/nls/bac (BAC 16.20, +0.55, +3.51%) late Wednesday said it’s going to repay $45 billion of TARP funds, including through the sale of $18.8 billion of securities. See Bank of America story.
Bank of America /quotes/comstock/13*!bac/quotes/nls/bac (BAC 16.20, +0.55, +3.51%) rose 3.7% in pre-market trade.
The long awaited NBC Universal deal between Comcast /quotes/comstock/15*!cmcsa (CMCS.A 15.29, -0.02, -0.13%) and General Electric /quotes/comstock/13*!ge (GE 16.19, -0.10, -0.62%) , with GE getting $8 billion in cash out of the deal in which Comcast will hold a 51% stake. Comcast also announced it was increasing its dividend by 40%. Shares of both Comcast and GE rose marginally. See NBC story.
The Nikkei 225 rallied 3.8% in Tokyo, helped by hopes that steps will be taken to weaken the yen and also by talks that could lead to PSA Peugeot Citroen buying up to a 50% stake in Mitsubishi Motors, news that sent the Japanese automaker surging.
The pan-European Dow Jones Stoxx 600 edged up 0.2%.
Oil futures rose 47 cents to $77.07 a barrel, while gold futures added nearly $5 an ounce. The dollar rose vs. the yen but dropped against the euro ahead of the ECB decision.
BOJ to Provide 10 Trillion Yen in Emergency Credit
Posted by admin in Financial Market, World News on December 1st, 2009
By Mayumi Otsuma
Dec. 1 (Bloomberg) — The Bank of Japan said it’s ready to pump more money into the financial system after unveiling a 10 trillion yen ($115 billion) program to help an economy battered by falling prices and the yen’s surge to a 14-year high.
“If there is a shortage of liquidity we are prepared to provide more funds,” Governor Masaaki Shirakawa said after an emergency board meeting in Tokyo today that decided to offer three-month loans at 0.1 percent to commercial banks.
Bond yields fell the most in 13 months, lowering borrowing costs for companies whose profits are being threatened by deflation and the yen’s advance. Today’s action constitutes “quantitative easing in the broad sense” said Shirakawa, who earlier today faced demands from government ministers to complement a stimulus package that Prime Minister Yukio Hatoyama will release this week.
“The BOJ was facing a lot of pressure from the markets and the government, so it wanted to show that it was being proactive,” said Junko Nishioka, chief economist at RBS Securities Japan Ltd. in Tokyo. “The BOJ’s understanding is that deflation risks have increased.”
The yen pared losses after earlier falling the most in more than a month on speculation the bank would take action that would limit the currency’s appreciation. It traded at 86.83 per dollar at 11:39 a.m. in London from 87.53 before the announcement. Last week the yen reached 84.83, the highest since 1995, threatening earnings at exporters including Toyota Motor Corp.
Bond Yields
The yield on Japan’s five-year bond dropped 7.5 basis points, the most since October 2008, to a four-year low of 0.455 percent. The Nikkei 225 Stock Average closed 2.4 percent higher before the decision was published.
The policy board kept the key overnight lending rate at 0.1 percent, a level that Shirakawa said is already effectively zero, indicating he is unlikely to lower the rate.
The bank also maintained its monthly purchases of Japanese government bonds at 1.8 trillion yen. Analysts expect the central bank to expand the bond transactions eventually.
“Today’s move is only the first tentative step by the Bank of Japan to a much more substantive quantitative easing policy,” said Glenn Maguire, chief Asia-Pacific economist at Societe Generale SA in Hong Kong. “Ultimately, JGB purchases will form the bulk of that policy — and to have any meaningful effect, those purchases will have to be in excess of 2.2 to 2.5 trillion yen per month.”
FHA considers tighter lending rules
Posted by admin in Financial Market, Housing Market on December 1st, 2009
Dec. 1, 2009
By Market Mix Up
In other news… it has been brought to many people’s attention that FHA is considering tighter lending rules. They say the percentage of delinquencies on new loans this year is on the rise. How much worse is it going to get before we hit the bottom???
This clearly isn’t a good sign!!!!!
Check out the full article from USA Today.
China’s overdue credit-card debt reported rising sharply
Posted by admin in Financial Market, Mixed Economy, World News on November 30th, 2009
By John Letzing - Nov. 30, 2009 07:27 PM est
MarketWatch.com
SAN FRANCISCO (MarketWatch) — While China has the reputation in the West as a nation of frugal savers, a state-media report Tuesday cited another sharp rise in overdue credit-card accounts, highlighting a downside to the country’s rapidly expanding economy.
Credit-card debt at least six months overdue rose 126.5% for the first three quarters of 2009 compared to the same period last year, Xinhua news agency reported, citing People’s Bank of China data.
By the end of September, China’s banks had issued 175 million credit cards, a 33.3% increase from last year, according to the report — which said that the central bank has warned of potential risks of mounting overdue credit-card debt.
Accounts overdue by six months or more made up 3.4% of China’s total credit-card debt outstanding at the end of the third quarter, a 0.3% increase over the prior period, the report said.
Credit-card debt at least six months overdue had risen 131.3% in the second quarter of this year compared to the same period last year, according to the report, following a 133.1% increase in the quarter before that.
U.A.E. Will Support Banks in Dubai Credit Crisis
Posted by admin in Financial Market, World News on November 29th, 2009
by Vikas Bajaj & Graham Bowley - Nov. 29, 2009
The New York Times
MUMBAI — The United Arab Emirates central bank on Sunday said that it stood behind domestic and foreign banks operating in Dubai after last week’s announcement that Dubai World needed more time to pay back some of its $60 billion in debt.
Dubai surprised the financial world on Wednesday when it said it would ask creditors of Dubai World, the conglomerate behind its rapid expansion, to agree to a six-month standstill on the debt. Global markets sank on the news.
On Sunday, the central bank said it set up a “liquidity facility” for the Dubai banks, and tried to reassure investors that the banking system there was more sound and liquid than a year ago.
Whether these moves will restore investor confidence remains to be seen as soon as Monday, when most U.S. traders return from a long holiday weekend.
In recent days, investors have begun worrying that Dubai’s debt troubles might be the first in a series of panics in developing countries that borrowed too much money in the past few years — much as in 1997, when Bangkok became the first capital to crumple in the Asian financial crisis.
Many analysts said their biggest worries were not about whether Dubai would fully repay its lenders, or how much assistance it would receive from its neighbor Abu Dhabi. Rather, these people said, their main concern was what Dubai’s problems said about the rest of the world.
These analysts fear that while Dubai may have spent its borrowed money more extravagantly than most, it is far from alone in having taken on too much debt for dubious real estate projects. Investors have already raised alarms about debts in Ireland, Greece and East European countries.
During the shortened U.S. trading day Friday, the first since the Wednesday announcement by Dubai that it was seeking more time to repay billions in loans, investors sold bonds of other emerging markets and drove up the price of insuring against a default by those same countries.
If investors’ fears about a crisis in emerging markets were realized, it would be a severe setback to a fragile global economy that has yet to fully recover from the credit crisis last year.
