Business news with words analyst+billion+capital. 42 news.

Goldman Sachs took the knife to its Wall Street rivals yesterday, predicting that the credit crunch would force Citigroup to slash its dividend by 40 per cent. At the same time it emerged that Merrill Lynch was preparing to cut 1,600 jobs from its trading desks. William Tanona, a leading Goldman Sachs analyst, said that Citigroup, the world’s largest bank, would have to cut its payout to shareholders to preserve its capital position and write off $18 billion ($£9 billion) of assets in the fourth quarter, compared with earlier estimates of $11 billion. Goldman said that Citigroup would need fresh capital of between $5 billion and $10 billion in addition to a recent $7.5 billion commitment from the Abu Dhabi Investment Authority. Under that deal, the Abu Dhabi sovereign wealth fund is protected from a possible dividend cut, as it bought Citigroup bonds convertible into stock. The bonds, which will vest into a 5 per cent shareholding on conversion, pay an annual coupon of 11 per cent, compared with the existing dividend yield for shareholders of 7.3 per cent. Citigroup$’s largest shareholders include Capital Research & Management, with 4.6 per cent, Prince Alwaleed bin Talal, who controls 3.97 per cent, and Barclays Global Investors, with 3.76 per cent. Mr Tanona said that he had raised his loss estimates for Merrill Lynch and JPMorgan and forecast that, combined with Citigroup, the three will have chalked up $33.6 billion of writedowns in the fourth quarter. Goldman said it now forecast that Merrill and JPMorgan would record increased writedowns of $11.5 billion and $3.4 billion respectively $– up from $6 billion and $1.7 billion. Most of the writedowns are linked to the banks$’ exposure to collateralised debt obligations, special debt instruments that were invested in risky assets, such as US sub-prime mortgages. Mr Tanona said: “We still believe it will be a couple of quarters before the current credit crisis is fully digested by the markets.”

NEW YORK (Reuters) - Citigroup Inc (C.N) may need to slash its dividend 40 percent to preserve capital, and with Merrill Lynch & Co (MER.N) and JPMorgan Chase & Co (JPM.N) may write off $33.6 billion of debt this quarter as the global credit crunch deepens, a Goldman Sachs & Co analyst said.

LONDON (MarketWatch) -- Merrill Lynch may write off between $4 billion and $7 billion this quarter, according to a note from CIBC World Markets analyst Meredith Whitney following the U.S. firm's capital boost on Monday. She previously estimated write-downs of $6 billion. "Merrill Lynch accomplished the first step in what we expect to be a several step process with this capital raise. Next step should be further asset disposals and purging of its balance sheet. But we believe the most disruptive step of true structural reorganization/right sizing will dominate the bulk of 2008," she told clients.

Merrill is in advanced talks to receive a capital infusion of up to $5 billion from Singapore's Temasek. The news comes amid analyst predictions that mortgage write-downs for the firm may double with another $8 billion or more in the fourth quarter.

CITIGROUP Inc Chief Executive Officer Vikram Pandit's decision to bail out seven subprime-infected investment funds with US$49 billion in assets may increase the chance of a dividend cut at the largest United States bank. The rescue package erodes the bank's capital buffer against loan losses, Bank of America analyst John McDonald has written in a report. The move adds pressure on the bank to reduce its quarterly 54-cent-a-share payment to investors, said Meredith Whitney, an analyst at CIBC World Markets. "The risks continue to mount for this already vulnerable financial giant," Whitney said in a report. Citigroup's SIV plan "will further imperil its fragile capital ratios going into the fourth quarter and surely pressure the company to continue to raise capital, sell assets and cut its dividend." Citigroup has tumbled more than 40 percent this year on the New York Stock Exchange as the collapse of the subprime mortgage market led to at least US$9 billion of

VIKRAM Pandit, Citigroup's newly appointed chief executive officer, may cut costs and sell assets to shore up capital in the face of growing mortgage losses. "Nothing is off the table," Pandit, 50, said in an interview, reported by Bloomberg News. Each of Citigroup's businesses will be scrutinized "objectively and dispassionately" as part of a "front-to-back review" of expenses and productivity, he said. Citigroup picked Pandit, a former Morgan Stanley president who joined less than six months ago, to succeed Charles O. Prince, who was forced to step down when the biggest US bank said mortgage-related writedowns may reach US$11 billion in the fourth quarter. Citigroup's credit rating - currently AA from Standard & Poor's - is being reviewed for a possible downgrade. "Citi is the worst-capitalized bank of its peers by a longshot," CIBC World Markets analyst Meredith Whitney said in an interview. Citigroup, based in New York, has faced

MACROVISION Corp, the maker of movie anti-piracy software, dropped the most in six years in Nasdaq trading after agreeing to pay US$2.8 billion, more than double its market value, for Gemstar-TV Guide International Inc. Investors questioned Macrovision's strategy and its ability to finance the stock and cash transaction, said Mark Argento, an analyst at Minneapolis-based Craig-Hallum Capital Group, Bloomberg News said. Gemstar, the provider of interactive program listings co-owned by Rupert Murdoch's News Corp, had its biggest decline since May 2004 on the Nasdaq Stock Market. Macrovision "does not have the liquidity of a larger acquirer," and Gemstar investors were expecting an all-cash deal, said Argento, who doesn't own Gemstar stock. "The Street obviously thinks there's more risk than reward." The purchase of Los Angeles-based Gemstar gives Macrovision a company that was News Corp Chairman Murdoch's worst investment, resulting in almost US$6 billion of

MIZUHO Financial Group Inc, Japan's second-biggest bank by assets, said it will invest 150 billion yen (US$1.4 billion) in its investment banking unit to cover losses from failed United States home loans. Mizuho Securities Co will raise the funds by selling new shares to Mizuho Corporate Bank Ltd, its biggest shareholder, helping to improve its capital base, the bank said in a statement filed to the Tokyo Stock Exchange yesterday. The cash infusion will enable the securities unit to bolster underwriting and trading after saying last month it will probably post a loss of 92 billion yen for the fiscal year because of subprime-related investments, Bloomberg News said. Writedowns on the value of such instruments cost the jobs of chief executive officers at Merrill Lynch & Co, Citigroup Inc and UBS AG this year. "The wholesale business has growth potential but requires risk," said Yuri Yoshida, a Tokyo-based analyst at ratings company Standard & Poor's. "Mizuho needs a

SHENZHEN Development Bank will sell shares to Shanghai Baosteel Group Corp to raise 4.22 billion yuan (US$571 million) to boost its capital. Baosteel, China's biggest steel maker, will buy 120 million shares at 35.15 yuan apiece and promised not to sell the shares until 36 months after the placement, the Shenzhen-based bank told Shenzhen Stock Exchange yesterday. Baosteel will hold 5.4 percent stake of the bank after the placement. The capital will be used to boost the lender's capital adequacy ratio, which stood at 4.27 percent at the end of September. It is the only Chinese listed bank whose capital adequacy ratio falls below the nation's eight percent threshold. This has kept the bank from boosting loan growth and expanding its network. "The move will act as a shot in the arm to the lender as capital fallout has been an obstacle curbing its growth in recent years," said Qiu Zhicheng, a Haitong Securities Co analyst. Haitong increased its rating on the bank from

SHENZHEN Development Bank will sell shares to Shanghai Baosteel Group Corp to raise 4.22 billion yuan (US$571 million). Baosteel, China's biggest steel maker, will buy 120 million shares at 35.15 yuan each and agreed not to sell the shares for 36 months after the placement, the Shenzhen-based bank said today in a statement to the Shenzhen Stock Exchange. Baosteel will hold a 5.4 percent stake in the bank after the placement. The money will be used to boost the lender's capital, which sat at 4.27 percent at the end of September. It is the only listed bank whose capital adequacy ratio falls below the regulator's threshold. The issue prevented the bank from boosting loan growth and expanding its network. ``The move will act as a shot in the arm to the lender as capital fallout has been an obstacle that has slowed its growth,'' said Qiu Zhicheng, a Haitong Securities Co analyst. Haitong increased its rating on the bank from "hold'' to "add.'' China Securities Co

BHP Billiton, the world’s largest mining company, should increase its $132 billion proposal to win over shareholders of rival Rio Tinto Group or drop the takeover bid, RBC Capital Markets said. “BHP has one place to go — to be successful it must increase the offer,” RBC said in a report dated Nov. 28 and written [...]

CITIGROUP Inc is selling up to 4.9 percent of itself for US$7.5 billion to the investment arm of the Abu Dhabi government, giving the largest US bank fresh capital as it wrestles with the subprime mortgage crisis and the resignation of its chief executive. The capital injection will shore up Citi's balance sheet, which has been hurt by some US$6.8 billion of writedowns and losses in the third quarter, and the potential for another US$11 billion in the fourth quarter. Many investors feared Citi would have to cut its dividend to boost its capital base. The sale may also signal the freefall in US financial stocks is near the end, analysts said. "Citi is big, it's widely followed and when people see confidence in it, it should mean something," said Bo Brownstein, an analyst covering financial stocks at Cambiar Investors in Denver, Colorado. The dollar rose against the yen on the news and Japanese bank stocks also rallied. In Tokyo trading, Citi shares fell 4.2 percent

CHINA stocks may continue their technical rebound today, but analysts rule out a sharp rise in the index for the week amid likely thin turnover. Meanwhile, huge subscription funds locked up by the initial public offerings of China Railway Group and several other firms are set to be unfrozen today, making more money available in the market. China Railway's IPO netted about 3.38 trillion yuan (US$456.8 billion), a record on the mainland stock market. "The capital available is going to be ample this week, that's good for a further rebound," said Qin Hong, an analyst at Bohai Investment. The benchmark Shanghai Composite Index ended last Friday off 5.34 percent for the week at 5,032.13. Trading volume has shrunk, which indicated investors were choosing to stay out of the market. "If only turnover could rise this week, which means investors are willing to get back, there will be a real rebound," said Zhang Gang, an analyst at Southwest Securities. Qian Qimin at

SHARES in Shanghai rebounded yesterday from a three-month low on recovering blue chips. But analysts said a sharp increase was not foreseeable this year, and that this was indicated by a year-low turnover. The benchmark Shanghai Composite Index rose 0.96 percent to 5,032.13 yesterday. Advancers outnumbered decliners 667 to 99 yesterday with 80 companies kept flat. Turnover shrank to 50.21 billion yuan (US$6.8 billion) yesterday from a day ago's 64.73 billion yuan. It marked the lowest trading value this year. "The low trading value indicated that capital is still quite tight at the market and most investors still chose to sit on sidelines," said Wen Xiaodong, a Chaosi Huake Consulting analyst. "It's difficult to see an immediate sharp increase of the index in the near future." Wen said the index may rebound to 5,200 next week but a wild bull run is yet to start. Qin Hong, a Bohai Investment analyst, said the strong yuan also helped to boost sectors such

VENTURE capital investment by Chinese-funded institutions surged 186.1 percent in the third quarter of this year from the previous quarter, with 38 contracts signed involving US$907.1 million, according to a recent report by ChinaVenture, a domestic financial consulting service provider. In the third quarter, Chinese-funded and foreign-funded venture capital investment altogether stood at US$1.1 billion nationwide, up 44.3 percent from the second quarter. The investment was spread over 109 deals, the report said. "Although the growth of Chinese-funded institutions in venture capital investment has gained momentum, they lack behind foreign competitors in terms of experience, scale of the funds and professionalism," Liu Liang, a senior analyst at ChinaVenture and one of the writers of the report, told Xinhua. The focus of the venture capitalists had shifted from high-tech industry to traditional industries, namely franchised business, education, manufacturing, media and

BOSTON (MarketWatch) -- Swiss bank UBS may face fourth-quarter write-downs on mortgage-related investments as high as 8 billion Swiss francs, or $7.11 billion, The Wall Street Journal reported Thursday, citing an analyst report from Lehman Brothers. However, in a separate press report, UBS has told analysts this week that the bank does not expect to make a large fourth-quarter mark-down on its estimated $39 billion of subprime-related exposure. Chief Financial Officer Marco Suter told analysts the $8 billion write-down figure batted around in the press is not correct, Reuters reported. UBS would spread the losses over several quarters to avoid a dividend cut or raising capital, Suter said, according to the report.

US stocks have plunged to a two-month low after banks reported mounting losses from bad home loans and Cisco Systems Inc said corporate spending on computer equipment may falter. Citigroup Inc shares fell to the lowest since March 2003. The biggest US bank said its mortgage-backed bonds and related securities may have lost US$11 billion in value. Morgan Stanley also disclosed losses, while New York expanded a probe into home-loan appraisals linked to Washington Mutual Inc, Bloomberg News reported. "Every day it's a new bank that comes out with a write-off," said Jeremy Blackman, a research analyst at Austin, Texas-based Hester Capital Management LLC, which manages US$1.5 billion. "If the credit markets dry up and the economy starts to slow, that's going to transfer over to consumer spending and business spending." Cisco led technology stocks in the Standard & Poor's 500 Index to the steepest weekly decline since July 2002. The world's largest maker of

U.S. private equity firms have passed the $263 billion fundraising mark this year, besting the $258 billion record set last year with more than six weeks left in 2007. The ability of private equity firms to continue to raise billions of dollars -- even as the buyout industry has begun to struggle to invest capital -- demonstrates sustained investor confidence in the industry. But observers warn that these firms could find it more difficult to collect money in the near future. PE firms -- including buyout, venture capital, funds of funds, mezzanine and other operations -- had closed 364 funds as of Nov. 7, down from the 403 funds closed last year, according to Dow Jones & Co. publication Private Equity Analyst. As has been typical in recent years, leveraged buyout firms raised the bulk of the money, drawing in $203.2 billion, or 77 percent of the total capital raised. By contrast, venture capital firms raised about $30 billion. If private equity firms continue to raise money at the same pace, the year-end tally could easily best $300 billion. But the potential for fundraising to continue at a robust pace in 2008 is much less certain, given the recently sluggish environment for dealmaking.

THE Shanghai International Group Co has become wholly state-owned, paving the way for consolidation of its holdings in financial companies. Its five government-affiliated shareholders gave their stakes to the city's State-owned Assets Supervision and Administration Commission, the Shanghai Pudong Development Bank said in a statement to the Shanghai Stock Exchange yesterday. Shanghai International, which owns 33.9 percent of the bank, is the largest shareholder in Pudong Bank. The bank is the only publicly traded company in the group and Citigroup Inc has a small stake. Pudong Bank and Shanghai International share the same chairman, Ji Xiaohui. The Shanghai government boosted the capital of Shanghai International to 10.58 billion yuan (US$1.42 billion), the statement said. Qiu Zhicheng, a Haitong Securities Co analyst, said the move is to centralize the stake structure of Shanghai International, which was set up in 2000. The move itself is neutral to Pudong Bank, Qiu said.

COLONY Capital LLC, the Los Angeles-based leveraged buyout firm, may abandon its four-billion-euro (US$5.8-billion) offer for Tamoil SA, Libya's state-owned oil refiner. People familiar with the situation made the revelation to Bloomberg News yesterday. Colony, run by Thomas Barrack, hasn't been given complete data on Tamoil's assets, liabilities and taxes, said the unnamed people. Tamoil owns refineries in Germany, Italy and Switzerland and more than 3,000 filling stations in Europe. Libyan leader Muammar Qaddafi has been selling government-controlled assets and seeking foreign investment since the United States and Britain ended about two decades of economic sanctions in 2004 after he agreed to stop supporting terrorists. "What investors want to see is not necessarily more announcements, they want to see some deals actually completed," said Kenneth Katzman, senior analyst for Middle Eastern affairs with the Congressional Research Service in Washington. Should