Europe banks unveil losses
Mon, Jan 26, 2009
Reuters
PARIS/AMSTERDAM - EUROPE'S crisis-hit banks unveiled billions of euros more in losses and big job cuts on Monday but shares in ING, BNP Paribas and Barclays all jumped on optimism they are getting to grips with the financial crisis.
BNP Paribas BNPP.PA, France's biggest bank by market capitalisation, expects to post a fourth-quarter net loss of around 1.4 billion euros (S$2.7 billion) hit by writedowns.
ING said it faced a 2008 loss of 1 billion euros, ousted its chief executive, cut jobs and is turning to the Dutch state for loan guarantees, while Britain's Barclays said it has no need to raise capital and remains profitable despite an 8 billion pound ($11 billion) 2008 writedown.
By 1155 GMT Barclays shares were up 57 per cent at 80.6 pence, after almost halving last week on fears it needed capital. BNP shares jumped 13 percent to 24.3 euros and ING rose 22 percent to 6.46 euros.
The DJ Stoxx European bank index was up 6 per cent at 123.9 points, putting it on course for its biggest rise since Dec 8.
The index has still lost 17 percent this year.
ING shares were buoyed by the government guarantee.
'It's just a major relief,' said Mr Theodoor Gilissen analyst Paul Beijsens about ING. 'At the moment we can't predict whether the market will get worse. ING may need more help, but at this point they addressed a major risk.'
ING unveiled a sweeping shake-up that will cut 7,000 of its 130,000 jobs and see Chief Executive Michel Tilmant replaced by board chairman Jan Hommen, former chief financial officer at Dutch electronics group Philips.
It said the Dutch government would cover 80 per cent of its 27.7 billion euros in subprime and slightly better quality mortgages. The government will take on the risk at a 10 percent discount to par value and receive 80 percent of any cash generated from the portfolio.
Tough, but profitable
BNP said it now expects a 2008 profit of about 3 billion euros, down from about 4 billion expected by analysts, according to Reuters Estimates.
'The fourth quarter was marked by exceptionally violent movements in the capital markets, especially in the equity markets,' BNP said.
Both BNP and SocGen plan to take part in a second tranche of support of 10.5 billion euros which the French government is due to launch.
Barclays, whose shares had crashed two-thirds in the last two weeks, took the unusual step of issuing an open letter from its chairman and chief executive to address worries.
The bank said it was not seeking funds from private investors or the UK government and had seen 'a good start to 2009' and repeated its forecast of 2008 profits of over 5.3 billion pounds. It moved its results forward to Feb 9.
Royal Bank of Scotland also announced 750 job cuts at Irish unit Ulster Bank.
The turmoil in financial markets is forcing lenders to revamp operations across Europe, including in the asset management sector as fund managers grapple with clients withdrawing their money and writedowns on investments.
French banks Credit Agricole and Societe Generale announced plans to merge their asset management arms, which would create Europe's fourth largest.
The new company will be 70 per cent owned by Agricole and 30 per cent owned by SocGen.
Mon, Jan 26, 2009
Reuters
PARIS/AMSTERDAM - EUROPE'S crisis-hit banks unveiled billions of euros more in losses and big job cuts on Monday but shares in ING, BNP Paribas and Barclays all jumped on optimism they are getting to grips with the financial crisis.
BNP Paribas BNPP.PA, France's biggest bank by market capitalisation, expects to post a fourth-quarter net loss of around 1.4 billion euros (S$2.7 billion) hit by writedowns.
ING said it faced a 2008 loss of 1 billion euros, ousted its chief executive, cut jobs and is turning to the Dutch state for loan guarantees, while Britain's Barclays said it has no need to raise capital and remains profitable despite an 8 billion pound ($11 billion) 2008 writedown.
By 1155 GMT Barclays shares were up 57 per cent at 80.6 pence, after almost halving last week on fears it needed capital. BNP shares jumped 13 percent to 24.3 euros and ING rose 22 percent to 6.46 euros.
The DJ Stoxx European bank index was up 6 per cent at 123.9 points, putting it on course for its biggest rise since Dec 8.
The index has still lost 17 percent this year.
ING shares were buoyed by the government guarantee.
'It's just a major relief,' said Mr Theodoor Gilissen analyst Paul Beijsens about ING. 'At the moment we can't predict whether the market will get worse. ING may need more help, but at this point they addressed a major risk.'
ING unveiled a sweeping shake-up that will cut 7,000 of its 130,000 jobs and see Chief Executive Michel Tilmant replaced by board chairman Jan Hommen, former chief financial officer at Dutch electronics group Philips.
It said the Dutch government would cover 80 per cent of its 27.7 billion euros in subprime and slightly better quality mortgages. The government will take on the risk at a 10 percent discount to par value and receive 80 percent of any cash generated from the portfolio.
Tough, but profitable
BNP said it now expects a 2008 profit of about 3 billion euros, down from about 4 billion expected by analysts, according to Reuters Estimates.
'The fourth quarter was marked by exceptionally violent movements in the capital markets, especially in the equity markets,' BNP said.
Both BNP and SocGen plan to take part in a second tranche of support of 10.5 billion euros which the French government is due to launch.
Barclays, whose shares had crashed two-thirds in the last two weeks, took the unusual step of issuing an open letter from its chairman and chief executive to address worries.
The bank said it was not seeking funds from private investors or the UK government and had seen 'a good start to 2009' and repeated its forecast of 2008 profits of over 5.3 billion pounds. It moved its results forward to Feb 9.
Royal Bank of Scotland also announced 750 job cuts at Irish unit Ulster Bank.
The turmoil in financial markets is forcing lenders to revamp operations across Europe, including in the asset management sector as fund managers grapple with clients withdrawing their money and writedowns on investments.
French banks Credit Agricole and Societe Generale announced plans to merge their asset management arms, which would create Europe's fourth largest.
The new company will be 70 per cent owned by Agricole and 30 per cent owned by SocGen.
