World economy : More bad signs

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Declining numbers of passengers hit airlines
Malaysia Sun
Saturday 19th December, 2009


The number of passengers boarding flights this year, and the amount of cargo being transited by air, has dropped sharply on last year's levels.

The decline is the largest on record for the industry.

The International Civil Aviation Organization (ICAO) said Friday the overall traffic, on preliminary figures, will be down 3.10% for 2009, compared to 2008.

The fall in passenger numbers is in accord with the first negative growth in the global economy since the Great Depression of 1929. In 2001, passenger traffic fell by 2.90%, due in part to the terrorist attacks of 11 September on the United States.

International traffic fell by about 3.90% while domestic traffic fell by 1.80% this year. Total (international and domestic) traffic declined in all regions except for the Middle East, where carriers posted a strong 10% growth.

The double-digit domestic passenger traffic growth in the emerging markets of Asia and Latin America, and the relative strong performance of Low Cost Carriers (LCCs) in North America, Europe and Asia Pacific, helped curtail the severity of the decline in total traffic.

In 2009, cargo traffic was in even worsse shape than passenger traffic. It plummeted by 15% in terms of total freight tonne kilometres (FTK) compared to 2008, significantly worse than the 6.20% drop in 2001.

The cargo traffic of Asia Pacific carriers, which accounts for some 36% of global FTKs, declined by around 14%, while traffic of European and North American carriers that each account for 25% share of global FTKs dropped by some 18% and 17% respectively.

The ICAO, a specialized agency of the United Nations, was created in 1944 to promote the safe and orderly development of international civil aviation throughout the world. It sets standards and regulations necessary for aviation safety, security, efficiency and regularity, as well as for aviation environmental protection. The Organization serves as the forum for cooperation in all fields of civil aviation among its 190 contracted States.

 

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Huge 80 year old Californian bank collapses
Malaysia Sun
Saturday 19th December, 2009

The failure of Federal Bank of California will cost the FDIC $146.3 million
Founded in the depths of the depression in 1929, First Federal Bank of California, a Federal Savings Bank, has spent the past 80 years focused on meeting the banking needs of its community.

Headquartered in Santa Monica and locally managed, the bank was the sixth largest Los Angeles-based financial institution with thirty-nine branch locations and over $6 billion in assets. On Friday it became the latest fatality in the nation's accelerating number of bank failures.

First Federal Bank of California was closed Friday by the Office of Thrift Supervision.

The thrift regulator appointed the Federal Deposit Insurance Corporation (FDIC) as receiver.

To protect the depositors, the FDIC says it has entered into a purchase and assumption agreement with OneWest Bank, FSB, of Pasadena, California, to assume all of the deposits of First Federal Bank of California.

The 39 branches of First Federal Bank of California including locations in Santa Monica, Los Angeles, Long Beach, Agoura Hills, Palisades, Anaheim, West Hollywood, Marina del Rey, Pasadena, Culver City, Rancho Palos Verdes, Hermosa Beach, Irvine, Redondo Beach, Buena Park, Laguna Hills, Lomita, Encino, Mission Viejo, Westlake Village, Chatsworth, Tarzana, Commerce, Thousand Oaks, Torrance, and Pacific Palisades, will reopen on Saturday as branches of OneWest Bank, FSB. Depositors of First Federal Bank of California will automatically become depositors of OneWest Bank, FSB. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage, the FDIC said in a statement released late on Friday night. Customers should continue to use their existing branch until OneWest Bank, FSB can fully integrate the deposit records of First Federal Bank of California.

Over the weekend, depositors of First Federal Bank of California can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.

As of September 30, 2009, First Federal Bank of California had approximately $6.1 billion in total assets and $4.5 billion in total deposits. OneWest Bank, FSB did not pay the FDIC a premium for the deposits of First Federal Bank of California. In addition to assuming all of the deposits of the failed bank, OneWest Bank, FSB agreed to purchase essentially all of the assets.

The FDIC and OneWest Bank, FSB entered into a loss-share transaction on $5.3 billion of First Federal Bank of California's assets. OneWest Bank, FSB will share in the losses on the asset pools covered under the loss-share agreement. The loss-share transaction is projected to maximize returns on the assets covered by keeping them in the private sector. The transaction also is expected to minimize disruptions for loan customers. For more information on loss share, please visit: http://www.fdic.gov/bank/individual/failed/lossshare/index.html.

Customers who have questions about Friday's transaction can call the FDIC toll-free at 1-800-930-1849. The phone number will be operational this evening until 9:00 p.m., Pacific Standard Time (PST); on Saturday from 9:00 a.m. to 6:00 p.m., PST; on Sunday from noon to 6:00 p.m., PST; and thereafter from 8:00 a.m. to 8:00 p.m., PST. Interested parties also can visit the FDIC's Web site at http://www.fdic.gov/bank/individual/failed/firstfederal-ca.html.

Due to the Christmas Holiday, the toll-free number will not be operational between the hours of 3 p.m., Thursday, December 24, and 8:00 a.m., Monday, December 28. At that time the toll-free number will resume its normal hours.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $146.3 million. OneWest Bank, FSB's acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to all alternatives. First Federal Bank of California is the 140th FDIC-insured institution to fail in the nation this year, and the seventeenth in California. The last FDIC-insured institution to be closed in the state was Imperial Capital Bank, La Jolla, earlier today.

 

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Why 2010 will be a bad year for property funds
By Deborah Hyde | 14:07:25 | 30 November 2009

The commercial property team at HSBC is expecting a pretty miserable year for real estate investment trusts in 2010, predicting an average share price fall of 33%.

The team say there are a number of headwinds facing the sector and repeated their 'underweight' view on all the stocks they cover; British Land, Derwent London, Great Portland Estates, Hammerson, Land Securities, Liberty International, SEGRO, Shaftesbury and Workspace Group.

Analysts Nicolas Lyle and John Fraser-Andrews - rated the number one analyst on British Land and Land Securities by Starmine Professional - think property is set for a double dip correction as they expect property portfolio values to fall 10% next year.

They estimate £155 billion of bank debt needs to be renegotiated over the coming years and in 2010 £35 billion is set to mature while they believe there is only around £20 billion maximum capacity to absorb that.

And they calculate that a substantial whack of property related debt is backed by property valued above its long-term loan to value with much of that property currently trading in negative equity.

'Around 85% of commercial property loans made since 2004 are in breach of covenant. We believe the bank debt maturity bottleneck will require replacement by more expensive equity as lenders reduce exposure to the sector ahead of stale income growth potential in a deflationary economy,' they said, in a note.

'We expect the resulting shortage of funding available to property to lead to higher long-term borrowing costs and therefore higher required portfolio income returns than are being priced in by UK REITs share prices,' they added.

They said high vacancy rates, higher business rates and weak prospective occupier demand should lead rents to fall further in most sub-markets, which they forecast at 12% of business for UK REITs.