The Obama administration is close to a plan to buy bad assets from financial companies. The House votes today on the president's stimulus plan. Yahoo posts a loss but beats Wall Street's estimate. Target cuts jobs.
Financials are sparking a rally today, on hopes that President Barack Obama will move forward with a "bad bank" plan.
Under the plan, the government would buy the toxic assets weighing on financials' balance sheets to help get the credit markets flowing and give a lift to the troubled sector, CNBC reported late Tuesday.
Federal Deposit Insurance Corp. Chairwoman Sheila Bair is pushing to manage the plan, Bloomberg News reported. A plan could be announced as early as next week.
Stocks were higher on the news. At 11:35 a.m. ET, the Dow Jones Industrial Average was up 126 points to 8,301. The Nasdaq Composite Index had gained 43 points to 1,547, and the Standard & Poor's 500 Index added 20 points at 866.
Crude oil fell 48 cents to $41.10 this morning after tumbling more than $4 Tuesday to close at $41.58 a barrel.
Financials were jumping this morning. JPMorgan Chase (JPM, news, msgs) was up $2.41, or 9.6%, to $27.47; Citigroup (C, news, msgs) had added 71 cents, or 20%, to $4.26; and Morgan Stanley (MS, news, msgs) was up $2.15, or 11%, to $21.67.
The S&P Banking Index ($BIX.X, news, msgs) rose 17.1% as well.
Meanwhile, Obama has a big test today: The House of Representatives will vote on his $825 billion economic stimulus package. Obama has been courting Republicans in an effort for bipartisan support of his plan, but not all Republicans are convinced the plan will work.
"This Democrat bill won't stimulate anything but more government and more debt," Rep. Mike Pence, R-Ind., said Tuesday. "House Democrats (will) use a time of national crisis to fund big government priorities under the guise of stimulating the economy."
And the Federal Reserve will announce its decision on interest rates this afternoon. Economists expect the central bank to keep rates at the current levels of between 0% and 0.25%.
"The Fed's job is going to be to convince markets and the broader public that they can still support the economy . . . even with the funds rate at zero," said Al Broaddus, the former president of the Richmond Fed.
Wells Fargo, Boeing post results
Wells Fargo (WFC, news, msgs) shares were soaring $4.17, or 25.7%, to $20.36 this morning despite the bank's report of a net loss of $2.55 billion, or 79 cents per share, down from profit of $1.36 billion, or 41 cents per share, in the same period a year ago.
Wells Fargo said the loss was mostly due to its merger with Wachovia. Analysts had been looking for profit of 33 cents per share.
The bank said it will not take any more Troubled Assets Relief Program funds and will keep its quarterly dividend.
Meanwhile, Boeing (BA, news, msgs) this morning said it lost $56 million, or 8 cents per share, in the fourth quarter – down from a profit of $1 billion, or $1.36 per share, in the same period a year ago.
Boeing's results included charges related to its machinist strike, difficulties in its 747 program and a litigation issue. Analysts had been looking for earnings of 76 cents per share.
Boeing, a Dow component, said it will earn between $5.05 and $5.35 per share for 2009, shy of Wall Street's estimate of $5.76 per share.
The stock rose 62 cents, or 1.4%, to $43.84 this morning.
And AT&T (T, news, msgs), another Dow stock, reported a 23% drop in profit for the fourth quarter.
AT&T earned $2.4 billion, or 41 cents per share, down from $3.1 billion, or 51 cents per share, in the same quarter a year ago. Excluding items, the company earned 64 cents per share, a penny shy of estimates.
The telecommunications company said it added 2.1 million wireless subscribers in the quarter, including 1.9 million Apple (AAPL, news, msgs) iPhone subscribers.
AT&T shares fell 53 cents, or 2%, to $25.40 today. Apple shares were up $2.26, or 2.5%, to $92.99.
Wall Street bonuses take a dive
Wall Street lost billions in 2008, but New York bankers took home $18.4 billion in bonuses last year.
Still, cash bonuses paid to New York City employees of Wall Street firms fell 44% last year -- from the $32.9 billion executives took home in 2007 -- according to New York State Comptroller Thomas DiNapoli, who stressed the cuts' painful effect on the New York's economy.
"A 44% decline in the bonus pool will ripple through the regional economy and the state and the city will lose major tax revenues," DiNapoli said in a press release. "The securities industry has already lost tens of thousands of jobs and the industry is still continuing to write off toxic assets. It's painfully obvious that 2009 will probably be another difficult year for the industry."
Employment in the securities industry in New York City fell from 187,800 in October 2007 to 168,600 in December 2008, a loss of 19,200 jobs, or 10.2%, the comptroller's office said.
The average bonus declined by 36.7% to $112,000 last year.
Yahoo swings to a loss
Yahoo (YHOO, news, msgs) had a rough fourth quarter.
The Internet company late Tuesday reported a net loss of $303 million, or 22 cents per share, down from $206 million, or 15 cents per share, in profit in the same quarter a year earlier.
Excluding items, Yahoo earned 17 cents per share, topping Wall Street's estimate by 4 cents.
Shares rose 79 cents, or 7%, to $12.13 on the news.
Net revenue at Yahoo slipped 2% to $1.38 billion in the fourth quarter.
Yahoo said expects income from operations will be between $75 million and $85 million in the current quarter, far short of the consensus estimate $165 million.
"The marketplace is extremely difficult right now, we're still seeing strong growth in the search business, and display has slowed down, and I have no idea how advertisers will react over the next two or three quarters," Chief Financial Officer Blake Jorgensen said in an interview with Thomson Reuters.
One analyst was concerned about the outlook.
"This is pretty ugly," Sanford Bernstein analyst Jeffrey Lindsay, told MarketWatch.com. "They're trying to reset expectations as low as possible."
Yahoo CEO: 'Everything's on the table'
Comments from Yahoo Chief Executive Officer Carol Bartz could offer a little hope for investors who want Yahoo to be acquired or to sell its search business.
"If there's something to look at, we'll look at it," Bartz said on a conference call with analysts. "Everything's on the table."
But Bartz did not go quite so far as to talk about any sort of deal. In fact, Bartz tried to reel in any speculation about a sale by saying that she did not join Yahoo with a preconceived notion to do a search deal.
"I'm still learning about the business," Bartz said. "Search is a very valuable part of (the) business."
It's been a year since Microsoft (MSFT, news, msgs) first approached Yahoo and offered $31 per share for the company; Microsoft ended up walking away from a higher $33-per-share bid in May; Yahoo shares have since tumbled. (Microsoft is the publisher of MSN Money.)
Disappointed shareholders blamed then-CEO Jerry Yang -- whom Bartz replaced earlier this month -- for failing to secure the Microsoft deal and for letting an advertising partnership with Google (GOOG, news, msgs) fall apart.
"I think there's a 100% chance they'll have meaningful conversations," Tom Wilde, CEO of video search company EveryZing, told Fortune, referring to Yahoo and Microsoft. "In terms of something meaningful actually happening, I would put that at about 70%."
Microsoft most recently has said it does not want to purchase all of Yahoo but would still be interested in its search business.
Target cuts jobs
Target (TGT, news, msgs) late Tuesday followed in what's become a long line of companies announcing layoffs.
The discount retailer said that it plans to cut its work force by approximately 9%, which would eliminate about 1,000 jobs.
The current plan includes eliminating 600 jobs and 400 open positions, primarily in the Minneapolis/St. Paul area. Most of the layoffs occurred Tuesday.
The company also said it will close its Little Rock, Ark., distribution center, which employs 500 people, later this year.
Target has struggled to compete with Wal-Mart Stores (WMT, news, msgs), which has managed to weather the economic downturn better than most -- if not all -- other retailers.
Shares of Target jumped $1.77, or 5.3%, to $35.11 this morning.
Fund data provided by Morningstar, Inc. © 2005. All rights reserved.StockScouter data provided by Gradient Analytics, Inc.Quotes supplied by Interactive Data.MSN Money's editorial goal is to provide a forum for personal finance and investment ideas. Our articles, columns, message board posts and other features should not be construed as investment advice, nor does their appearance imply an endorsement by Microsoft of any specific security or trading strategy. An investor's best course of action must be based on individual circumstances.
Wednesday, January 28, 2009
Monday, January 26, 2009
Thain says hid nothing from BofA, to repay costs
NEW YORK (Reuters) – Former Merrill Lynch Chief Executive John Thain defended the acquisition of the brokerage by Bank of America Corp (BAC.N) and said the bank knew of Merrill's losses and bonuses before the merger closed.
In a memo to Merrill employees, Thain also said he plans to reimburse Bank of America for $1.2 million spent to renovate his office a year ago, calling the expense "a mistake in the light of the world we live in today."
The renovation expenses, including a reported $35,115 commode and a $1,405 trash can, have become became the latest symbols of corporate excess. News of the expenses surfaced on January 22, the same day Thain was ousted as Bank of America's head of global banking, securities and wealth management, and just three weeks after the $19.4 billion merger closed.
Still, Thain's insistence that Bank of America knew the extent of Merrill's condition put added pressure on Bank of America CEO Kenneth Lewis, who has been criticized over the bank's falling share price, and increasing speculation about his future as chairman and CEO.
Bank of America has been hit with several lawsuits over its failure in December to disclose Merrill losses and talks with the U.S. Treasury Department, which led to a $20 billion capital infusion from the government.
The Charlotte, North Carolina-based bank said on January 16 that Merrill lost $15.31 billion in the fourth quarter. Shares were down 82 percent from September 15, when the merger was announced, through Friday.
Bank of America's board of directors is scheduled to meet on Wednesday.
In the memo, which was posted on several news Web sites, Thain said Merrill's fourth-quarter losses stemmed almost entirely from positions taken on by his predecessor, Stanley O'Neal, who was ousted in October 2007.
"We were completely transparent with Bank of America," Thain said. "They learned about these losses when we did."
Thain also challenged reports that Bank of America was critical of $4 billion in bonuses that Merrill awarded a few days before the merger closed, and earlier than in past years.
He said Merrill's discretionary bonuses were down 41 percent from a year earlier, and that the size, composition and timing of payments "were all determined together with Bank of America."
Bank of America spokesman Scott Silvestri declined to discuss the board meeting, or Thain's memo, apart from bonuses.
"John Thain and the Merrill Lynch compensation committee made the decision on the amount and timing of year-end compensation," he said. "We had no legal right to challenge it."
Bank of America shares rose 52 cents to $6.76 on the New York Stock Exchange.
(Reporting by Jonathan Stempel; editing by John Wallace and Jeffrey Benkoe)
In a memo to Merrill employees, Thain also said he plans to reimburse Bank of America for $1.2 million spent to renovate his office a year ago, calling the expense "a mistake in the light of the world we live in today."
The renovation expenses, including a reported $35,115 commode and a $1,405 trash can, have become became the latest symbols of corporate excess. News of the expenses surfaced on January 22, the same day Thain was ousted as Bank of America's head of global banking, securities and wealth management, and just three weeks after the $19.4 billion merger closed.
Still, Thain's insistence that Bank of America knew the extent of Merrill's condition put added pressure on Bank of America CEO Kenneth Lewis, who has been criticized over the bank's falling share price, and increasing speculation about his future as chairman and CEO.
Bank of America has been hit with several lawsuits over its failure in December to disclose Merrill losses and talks with the U.S. Treasury Department, which led to a $20 billion capital infusion from the government.
The Charlotte, North Carolina-based bank said on January 16 that Merrill lost $15.31 billion in the fourth quarter. Shares were down 82 percent from September 15, when the merger was announced, through Friday.
Bank of America's board of directors is scheduled to meet on Wednesday.
In the memo, which was posted on several news Web sites, Thain said Merrill's fourth-quarter losses stemmed almost entirely from positions taken on by his predecessor, Stanley O'Neal, who was ousted in October 2007.
"We were completely transparent with Bank of America," Thain said. "They learned about these losses when we did."
Thain also challenged reports that Bank of America was critical of $4 billion in bonuses that Merrill awarded a few days before the merger closed, and earlier than in past years.
He said Merrill's discretionary bonuses were down 41 percent from a year earlier, and that the size, composition and timing of payments "were all determined together with Bank of America."
Bank of America spokesman Scott Silvestri declined to discuss the board meeting, or Thain's memo, apart from bonuses.
"John Thain and the Merrill Lynch compensation committee made the decision on the amount and timing of year-end compensation," he said. "We had no legal right to challenge it."
Bank of America shares rose 52 cents to $6.76 on the New York Stock Exchange.
(Reporting by Jonathan Stempel; editing by John Wallace and Jeffrey Benkoe)
Friday, January 23, 2009
Former Merrill chief Thain out at Bank of America
NEW YORK – John Thain resigned under pressure from Bank of America on Thursday after reports he rushed out billions of dollars in bonuses to Merrill Lynch employees in his final days as CEO there, while the brokerage was suffering huge losses and just before Bank of America took it over.
The bonuses were paid before Bank of America's acquisition of Merrill became final on Jan. 1, and while Bank of America was privately telling the government that Merrill was losing so much money that the deal might fall through unless it could get more federal bailout money.
Bank of America later received an additional $20 billion from the government, in part to offset the unexpected Merrill losses. The brokerage lost $15 billion in the fourth quarter and more than $27 billion for the year.
The bonuses, typically paid in January, were instead given in December and totaled $3 billion to $4 billion, the Financial Times reported Thursday. Bank of America would not confirm the size of the bonuses.
Scott Silvestri, a Bank of America spokesman, noted that Merrill was still operating as an independent company at the time the bonuses were paid. Had Thain not acted early, it would have been up to Bank of America to pay or reduce the bonuses later.
Bank of America CEO Kenneth Lewis flew to New York on Thursday to meet with Thain, and within hours the spokesman issued a terse statement saying the two had "mutually agreed that his situation was not working out and he would resign."
The government helped orchestrate the acquisition of Merrill by Bank of America over the same weekend in September that another investment bank, Lehman Brothers, went under, setting off the most intense period of the financial crisis.
The government also promised last week to guarantee about $97 billion in losses on Bank of America's troubled assets, most of it coming from Merrill Lynch.
Thain himself did not accept a bonus last year. Nor did four other top executives at Merrill: its president and chief operating officer, its president of global wealth management, its chief financial officer and its general counsel.
Thain, 53, is a former head of the New York Stock Exchange and a former chief operating officer of investment bank Goldman Sachs. He had been named head of a wealth management division of the merged businesses of Merrill and Bank of America.
In 2007, Thain topped the list of highest-paid CEOs in American business, with a compensation package valued at $83 million, according to an Associated Press analysis. That included a signing bonus and other enticements that helped lure him from the NYSE to lead Merrill.
New York Attorney General Andrew Cuomo has opened an investigation into the bonuses, a person familiar with the probe told The Associated Press on Thursday. The person spoke on condition of anonymity because the investigation is ongoing.
Silvestri said Lewis was aware of Thain's decision to grant the bonuses, and some analysts said the disclosure also increases pressure on Lewis.
Bank of America stock, which was already tumbling Thursday, fell further after reports of Thain's departure but later regained ground. It closed down 97 cents, or more than 14 percent, at $5.71.
Bank of America stock has been among the hardest hit in the financial sector. It has lost almost 60 percent of its value since the Merrill deal went through. The stock is down 85 percent from one year ago.
"From a shareholder standpoint, board standpoint, you would really have to question his judgment," said Jason O'Donnell, a bank analyst with Boenning & Scattergood Inc.
It is unclear who would replace Lewis as Bank of America CEO if he were ousted by the board of directors. Thain was rumored to be most likely to be Lewis' eventual successor, O'Donnell said.
"Clearly Lewis made a bad deal. Thain did a very good job in selling him on the prospects of Merrill," he said. "He needs to take responsibility for that transaction."
At the very least, the payment of bonuses indicates Thain was "completely tone-deaf to the culture of B of A," said Tony Plath, finance professor at the University of North Carolina at Charlotte.
"My surprise is the board gave him an opportunity to resign and didn't just fire him," he added.
A spokesman for Rep. Barney Frank, the Massachusetts Democrat who chairs the House Financial Services Committee, said Frank was "very disappointed to learn this news, and these banks are the toughest people in the world to try to help."
Sens. Johnny Isakson, R-Ga., and Kent Conrad, D-N.D., said at the Capitol that they were not familiar with the details of the situation but that it would be an outrage to award bonuses in advance while the brokerage firm was suffering big losses.
"If it's found to be true that people were taking huge bonuses while accepting government assistance or taking bonuses while their shareholders were taking huge losses, it's unconscionable in my judgment," Isakson said.
Some analysts expected Thain to leave soon anyway. When two huge companies link up, one of the CEOs from the standalone companies usually departs. Bank of America named its general counsel, Brian Moynihan, to replace Thain.
Bank of America has come under criticism for acquiring Merrill and its huge losses, and Lewis has spoken out in the past about his dislike of the investment banking business.
In October 2007, after Bank of America posted a 32 percent drop in third quarter profits, hurt heavily by investment banking results, Lewis said: "I've had all of the fun I can stand in investment banking at the moment. So to get bigger in it is not something I really want to do."
___
AP Business Writer Ieva M. Augstums reported from Charlotte, N.C.
The bonuses were paid before Bank of America's acquisition of Merrill became final on Jan. 1, and while Bank of America was privately telling the government that Merrill was losing so much money that the deal might fall through unless it could get more federal bailout money.
Bank of America later received an additional $20 billion from the government, in part to offset the unexpected Merrill losses. The brokerage lost $15 billion in the fourth quarter and more than $27 billion for the year.
The bonuses, typically paid in January, were instead given in December and totaled $3 billion to $4 billion, the Financial Times reported Thursday. Bank of America would not confirm the size of the bonuses.
Scott Silvestri, a Bank of America spokesman, noted that Merrill was still operating as an independent company at the time the bonuses were paid. Had Thain not acted early, it would have been up to Bank of America to pay or reduce the bonuses later.
Bank of America CEO Kenneth Lewis flew to New York on Thursday to meet with Thain, and within hours the spokesman issued a terse statement saying the two had "mutually agreed that his situation was not working out and he would resign."
The government helped orchestrate the acquisition of Merrill by Bank of America over the same weekend in September that another investment bank, Lehman Brothers, went under, setting off the most intense period of the financial crisis.
The government also promised last week to guarantee about $97 billion in losses on Bank of America's troubled assets, most of it coming from Merrill Lynch.
Thain himself did not accept a bonus last year. Nor did four other top executives at Merrill: its president and chief operating officer, its president of global wealth management, its chief financial officer and its general counsel.
Thain, 53, is a former head of the New York Stock Exchange and a former chief operating officer of investment bank Goldman Sachs. He had been named head of a wealth management division of the merged businesses of Merrill and Bank of America.
In 2007, Thain topped the list of highest-paid CEOs in American business, with a compensation package valued at $83 million, according to an Associated Press analysis. That included a signing bonus and other enticements that helped lure him from the NYSE to lead Merrill.
New York Attorney General Andrew Cuomo has opened an investigation into the bonuses, a person familiar with the probe told The Associated Press on Thursday. The person spoke on condition of anonymity because the investigation is ongoing.
Silvestri said Lewis was aware of Thain's decision to grant the bonuses, and some analysts said the disclosure also increases pressure on Lewis.
Bank of America stock, which was already tumbling Thursday, fell further after reports of Thain's departure but later regained ground. It closed down 97 cents, or more than 14 percent, at $5.71.
Bank of America stock has been among the hardest hit in the financial sector. It has lost almost 60 percent of its value since the Merrill deal went through. The stock is down 85 percent from one year ago.
"From a shareholder standpoint, board standpoint, you would really have to question his judgment," said Jason O'Donnell, a bank analyst with Boenning & Scattergood Inc.
It is unclear who would replace Lewis as Bank of America CEO if he were ousted by the board of directors. Thain was rumored to be most likely to be Lewis' eventual successor, O'Donnell said.
"Clearly Lewis made a bad deal. Thain did a very good job in selling him on the prospects of Merrill," he said. "He needs to take responsibility for that transaction."
At the very least, the payment of bonuses indicates Thain was "completely tone-deaf to the culture of B of A," said Tony Plath, finance professor at the University of North Carolina at Charlotte.
"My surprise is the board gave him an opportunity to resign and didn't just fire him," he added.
A spokesman for Rep. Barney Frank, the Massachusetts Democrat who chairs the House Financial Services Committee, said Frank was "very disappointed to learn this news, and these banks are the toughest people in the world to try to help."
Sens. Johnny Isakson, R-Ga., and Kent Conrad, D-N.D., said at the Capitol that they were not familiar with the details of the situation but that it would be an outrage to award bonuses in advance while the brokerage firm was suffering big losses.
"If it's found to be true that people were taking huge bonuses while accepting government assistance or taking bonuses while their shareholders were taking huge losses, it's unconscionable in my judgment," Isakson said.
Some analysts expected Thain to leave soon anyway. When two huge companies link up, one of the CEOs from the standalone companies usually departs. Bank of America named its general counsel, Brian Moynihan, to replace Thain.
Bank of America has come under criticism for acquiring Merrill and its huge losses, and Lewis has spoken out in the past about his dislike of the investment banking business.
In October 2007, after Bank of America posted a 32 percent drop in third quarter profits, hurt heavily by investment banking results, Lewis said: "I've had all of the fun I can stand in investment banking at the moment. So to get bigger in it is not something I really want to do."
___
AP Business Writer Ieva M. Augstums reported from Charlotte, N.C.
Thursday, January 22, 2009
Lloyds Banking Group Slides; FTSE 100 Modestly Lower
Lloyds Banking Group on Tuesday became the latest British bank to see its share price plunge, with shares in the lender at one point trading down as much as 48% in London's top share index.
Lloyds Banking Group (LYG) shares closed down 31.1% at 45 pence. At one point in the session, the shares fell as low as 34 pence, a drop of approximately 48% from Monday's 65 pence closing price.
The British government currently holds 43% of Lloyds Banking Group.
"The market is betting that further banking nationalizations will be necessary," said Manoj Ladwa, senior trader at ETX Capital.
On Monday, Royal Bank of Scotland shares slumped more than 60% after the bank revealed that it could be on track to post the biggest annual loss in U.K. corporate history and that the U.K. government would take a bigger stake in the lender.
RBS shares traded higher in the morning but eventually closed down 11.2%.
"The financial sector is on government life support," noted Richard Batty, investment director for strategy at Standard Life Investments.
Lenders that the government does not hold stakes in also had a rough session on Tuesday, with Barclays (BCS) down 17.2% and HSBC Holdings (HBC) down 3.2%.
"The question that investors are grappling with is what's going to happen to the economy given the importance of the financial sector. We see a severe recession," said Batty at Standard Life.
The sterling hit a six-year low against the dollar on Tuesday and was recently down 2.5% at $1.40.
Overall, the U.K. FTSE 100 index closed down 0.4% to 4,091.40. Other European shares also lost ground, as did U.S. stocks.
On Tuesday, Barack Obama takes power as the 44th U.S. president and his inauguration speech is expected to lay out an agenda for change in troubled times.
"We already have details of the $825 billion fiscal stimulus package. On some estimates the package will raise GDP by around 3% to 4% over the next couple of years and save or create around 3.5 million jobs. Success will crucially depend on the bank lending channel," noted economists at UBS.
Mineral extractors up, some retail relief
Still, oil producers advanced in London, with Royal Dutch Shell (RDSA) shares up 1.4% and BP (BP) shares up 1.8%.
In the retail sector, Burberry Group shares jumped 12.4%.
It said that its revenue in the three months ended Dec. 31 rose 30%, boosted by currency moves, which was about 14% above Merrill Lynch expectations.
The firm said that markets were challenging and volatile in the period. It's aiming cut costs further and plans to restructure its Spanish operations and consolidate U.K. manufacturing.
There could be around 250 redundancies in Spain and up to 290 redundancies in the U.K.
Shares of pub operator J.D. Wetherspoon surged 14.9%. Comparable sales in the 12 weeks to Jan. 18 rose 2.6%, an improvement on fiscal first-quarter performance when sales rose 1.5%.
"We feel consumers will become increasingly more price sensitive in 2009 and J.D. Wetherspoon is in an enviable position to take market share," noted analysts at Altium Securities. (END) Dow Jones Newswires
01-20-09 1211ET
Copyright (c) 2009 Dow Jones & Company, Inc.
Lloyds Banking Group (LYG) shares closed down 31.1% at 45 pence. At one point in the session, the shares fell as low as 34 pence, a drop of approximately 48% from Monday's 65 pence closing price.
The British government currently holds 43% of Lloyds Banking Group.
"The market is betting that further banking nationalizations will be necessary," said Manoj Ladwa, senior trader at ETX Capital.
On Monday, Royal Bank of Scotland shares slumped more than 60% after the bank revealed that it could be on track to post the biggest annual loss in U.K. corporate history and that the U.K. government would take a bigger stake in the lender.
RBS shares traded higher in the morning but eventually closed down 11.2%.
"The financial sector is on government life support," noted Richard Batty, investment director for strategy at Standard Life Investments.
Lenders that the government does not hold stakes in also had a rough session on Tuesday, with Barclays (BCS) down 17.2% and HSBC Holdings (HBC) down 3.2%.
"The question that investors are grappling with is what's going to happen to the economy given the importance of the financial sector. We see a severe recession," said Batty at Standard Life.
The sterling hit a six-year low against the dollar on Tuesday and was recently down 2.5% at $1.40.
Overall, the U.K. FTSE 100 index closed down 0.4% to 4,091.40. Other European shares also lost ground, as did U.S. stocks.
On Tuesday, Barack Obama takes power as the 44th U.S. president and his inauguration speech is expected to lay out an agenda for change in troubled times.
"We already have details of the $825 billion fiscal stimulus package. On some estimates the package will raise GDP by around 3% to 4% over the next couple of years and save or create around 3.5 million jobs. Success will crucially depend on the bank lending channel," noted economists at UBS.
Mineral extractors up, some retail relief
Still, oil producers advanced in London, with Royal Dutch Shell (RDSA) shares up 1.4% and BP (BP) shares up 1.8%.
In the retail sector, Burberry Group shares jumped 12.4%.
It said that its revenue in the three months ended Dec. 31 rose 30%, boosted by currency moves, which was about 14% above Merrill Lynch expectations.
The firm said that markets were challenging and volatile in the period. It's aiming cut costs further and plans to restructure its Spanish operations and consolidate U.K. manufacturing.
There could be around 250 redundancies in Spain and up to 290 redundancies in the U.K.
Shares of pub operator J.D. Wetherspoon surged 14.9%. Comparable sales in the 12 weeks to Jan. 18 rose 2.6%, an improvement on fiscal first-quarter performance when sales rose 1.5%.
"We feel consumers will become increasingly more price sensitive in 2009 and J.D. Wetherspoon is in an enviable position to take market share," noted analysts at Altium Securities. (END) Dow Jones Newswires
01-20-09 1211ET
Copyright (c) 2009 Dow Jones & Company, Inc.
Wells Fargo names president of Florida banking
Wells Fargo has tapped Shelley Freeman, its top officer in Los Angeles, to head the massive bank network it acquired in Florida from Wachovia Corp. on Dec. 31.
Freeman, who will be based in the Wachovia Financial Center in Miami as the Florida regional president of community banking, has been with San Francisco-based Wells Fargo (NYSE: WFC) for 12 years.
She comes from Los Angeles, where she was regional president of that market and national co-leader for the bank’s affluent customer support strategy.
Before that, Freeman led Wells Fargo’s interest investment services and directed its private banking and brokerage administration.
Freeman heads the largest branch network in the state. Wells Fargo did not have any Florida branches until it acquired Wachovia. Now, Freeman will handle that network’s retail, small business and standard business banking.
Wachovia is the second largest bank in the Jacksonville market, with $6.6 billion in local deposits and 22.6 percent market share, according to Federal Deposit Insurance Corp. data from June 30.
Wachovia had an 18.7 percent market share in Florida, with $71.1 billion in deposits. One of Freeman’s first tasks will be selecting the next level of leadership here, Wells Fargo spokeswoman Kathy Harrison said. Some positions could be eliminated, but there will also be plenty of job openings. The Wachovia signs will eventually be switched to Wells Fargo, but that’s not of immediate concern, Harrison added.
Freeman, who will be based in the Wachovia Financial Center in Miami as the Florida regional president of community banking, has been with San Francisco-based Wells Fargo (NYSE: WFC) for 12 years.
She comes from Los Angeles, where she was regional president of that market and national co-leader for the bank’s affluent customer support strategy.
Before that, Freeman led Wells Fargo’s interest investment services and directed its private banking and brokerage administration.
Freeman heads the largest branch network in the state. Wells Fargo did not have any Florida branches until it acquired Wachovia. Now, Freeman will handle that network’s retail, small business and standard business banking.
Wachovia is the second largest bank in the Jacksonville market, with $6.6 billion in local deposits and 22.6 percent market share, according to Federal Deposit Insurance Corp. data from June 30.
Wachovia had an 18.7 percent market share in Florida, with $71.1 billion in deposits. One of Freeman’s first tasks will be selecting the next level of leadership here, Wells Fargo spokeswoman Kathy Harrison said. Some positions could be eliminated, but there will also be plenty of job openings. The Wachovia signs will eventually be switched to Wells Fargo, but that’s not of immediate concern, Harrison added.
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