Business news with words assets+billion+credit. 60 or more 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.”

An agreement has been reached on the sale of Cheyne Finance, a structured investment vehicle now known as S.I.V. Portfolio, to bidders including Goldman Sachs, the fund’s receivers, Deloitte & Touche said. The $7 billion S.I.V. Portfolio, managed by the hedge fund Cheyne Capital Management, went into receivership in September. The agreement comes after talks with a number of bidders over the last few weeks and consultation with the informal creditors’ committees, Deloitte said. Under the deal, certain reinvestment opportunities will be offered to some existing creditors of the company. S.I.V.’s, held by banks, hedge funds or other institutions, issue a mixture of short-term debt and capital and buy longer-term assets, which may pay more interest than the amount they pay on their notes. The vehicles encountered trouble in August when liquidity in the credit markets dried up as investors faced exposure to the subprime market.

CENTRO Properties Group, the Australian owner of US malls which lost 80 percent of its market value last week, has hired three advisers to help it refinance debt and negotiate funding options that may include selling assets. Lazard Carnegie Wylie will "facilitate any transaction" and find investors to help repay or settle bank debt, Jim Kelly, a spokesman for Centro in Sydney, said yesterday, Bloomberg News reported. KPMG will negotiate with Centro's bankers to help refinance A$3.9 billion (US$3.4 billion) by a February 15 deadline and Freehills will act as the company's legal advisers, Kelly said. Chief Executive Officer Andrew Scott said last week he may sell some of Centro's more than A$25 billion of shopping centers in the US, Australia and New Zealand after more than A$4 billion was wiped from the company's market value, making it Asia's worst casualty so far of the global credit squeeze. Melbourne-based Centro's eight most valuable properties are in Australia and

CITIGROUP Inc, Bank of America Corp, and JPMorgan Chase & Co have abandoned a United States Treasury-sponsored plan to buy assets from cash-strapped structured investment vehicles. The "SuperSiv" fund brokered by Treasury Secretary Henry Paulson, said to be about US$80 billion when it was announced in October, "is not needed at this time," the banks said. The need for a bailout has diminished as HSBC Holdings Plc, bond insurer MBIA Inc and other companies that manage SIVs arranged their own rescues. The steps lessened the threat that SIVs would dump their holdings and further affect credit markets suffering from losses in securities tied to subprime mortgages. New York's Citigroup said last week it would guarantee US$58 billion in debt from SIVs it manages in order to avoid a sale of the assets, Bloomberg News reported. More than 20 banks, SIVs and investment managers participated in the discussion with BlackRock Inc the adviser, the statement said. The banks

After just a few months in her new role as Bank of the West's first private banker for most of Kansas, Kelly Uran has been promoted to vice president for the $59 billion, San Francisco-based bank. The promotion comes about the same time Uran and her private banking colleagues in three other Midwestern cities have exceeded their first-year goals in developing a private banking business for Bank of the West's Great Plains division. "Since (the launch of private banking in the Midwest) the group has brought in $21 million in new loans and over $11 million in new deposits," said Bob Wolff, Bank of the West spokesman in Los Angeles. "That's fairly significant." In April, Bank of the West began rolling out private banking across its entire system, which is spread across 19 Western and Midwestern states. Private banking is a package of credit and deposit products and services to wealthy customers -- whom the bank defines as people with more than $500,000 in liquid assets, a household annual income of $250,000 or a net worth of at least $1 million, not including their home.

LEHMAN Brothers Holdings Inc, the largest US underwriter of mortgage-backed bonds, faces legal action by Australian municipal governments after the value of their subprime-related investments dropped as much as 86 percent. Wingecarribee Shire Council, in the Southern Highlands in New South Wales, is suing Lehman for "deceptive and misleading conduct" in selling A$3 million (US$2.6 million) of subprime-linked collateralized debt obligations, the council's managing director Mike Hyde said in a media statement yesterday. New York-based Lehman, which manages up to A$1 billion on behalf of 35 councils in New South Wales and Western Australia, may face further action as the assets in its US mortgage-linked product have declined amid a shakeout in global credit markets, Bloomberg News said. "We strongly deny the claims made in the press statement that we have not acted in their best interests, or that we have engaged in any misleading or deceptive conduct," Sinead

ICBC Credit Suisse Asset Management Ltd announced it will raise up to 22 billion yuan (US$2.87 billion) under the Qualified Domestic Institutional Investor scheme. The subscription period for the fund, named the China Opportunity Global Stock Fund, will run from January 3 to February 1. It includes both individual and institutional investors via all major banks and securities companies in the country. Thus far, only four QDII products exist - the JPMorgan Fund QDII, Harvest Overseas Fund, Huaxia Global Selected Stock Fund and Southern Global Enhanced Balanced Fund. Different from the first batch of QDII, the China Opportunity Global Stock Fund will focus on Chinese mainland listed companies in overseas markets and foreign companies that will benefit from China's economic growth. The QDII fund plans to allocate more than 60 percent of its assets in stocks, but will also invest in government bonds, repurchase agreements, stock index futures and derivatives.

SAN FRANCISCO (MarketWatch) -- Treasury bonds were slightly higher Thursday, sending yields lower, after downbeat weekly jobless claims and leading indicator data increased the safe-have appeal of fixed-income assets in thin market conditions ahead of next week's holiday. "As liquidity remains a scarce resource, we expect the volatile conditions in the market will remain a theme -- at least into the end of the year," said David Ader, U.S. government bond strategist at RBS Greenwich Capital. The U.S. Federal Reserve will auction another $20 billion worth of lending Thursday, its second such move as part of a coordinated plan to ease global credit conditions. The benchmark 10-year Treasury note was up 2/32 at 101 27/32, with a yield of 4.024%. The 30-year bond was up 6/32 at 109 6/32 with a yield of 4.437%. The two-year note was up 2/32 at 100 3/32 with a yield of 3.070%.

BOSTON (MarketWatch) -- Morgan Stanley said Wednesday it's writing down an additional $5.7 billion of mortgage-related assets, taking the total fourth-quarter loss to nearly $10 billion in the latest sign that the credit crunch is worsening.

Anthony Bolton, the veteran fund manager at Fidelity International, is calling the bottom for property stocks and considering buying battered-down shares in housebuilders and retail companies. Speaking to investors yesterday at the annual meeting of his £400 million Fidelity Special Values fund, Mr Bolton said that he had bought into a number of well-known UK property stocks in recent weeks. News of Mr Bolton’s strategy came as a report revealed that prices of commercial property buildings had suffered a record one-month fall in November, twice as steep as the worst monthly price declines felt in 1990, at the depth of the last commercial property recession. Values of commercial buildings fell 4 per cent in November, bringing the three-month decline to 7.25 per cent, according to the Investment Property Databank (IPD). If price falls continue at the same rate then the value of offices, shops and warehouses could be 29 per cent down in mid2008 from their peak last summer. The share prices of Britain’s six largest quoted property groups - British Land, Land Securities, Hammerson, Liberty International, Segro and Brixton – have fallen on average by 45 per cent since January. Mr Bolton steps down from running both the Special Values Fund and Fidelity’s flagship £3.2 billion Special Situations Fund at the end of the month. He has run Special Situations since 1979, producing annualised returns of 20 per cent a year. Mr Bolton held a large weighting in property until earlier this year. British Land and Land Securities have been favoured investments. “Now with share prices falling, I’ve started to add back into this area,” Mr Bolton told investors yesterday. The sharp decline in quoted property stocks reflects fears that companies’ underlying building assets were overvalued. This summer’s credit crunch prompted the sudden withdrawal of the large numbers of leveraged buyers who had been propping up the investor market for the past two years. Their sudden absence caused investor demand to slump and capital values to fall, even though the rental market across offices, retail and industrial has held up. But price falls of individual assets, even after the release of yesterday’s IPD figures, are still far shallower than the declines marked down on property stocks, many of which have halved this year. This discrepancy has presented a

Vikram Pandit, the new chief executive of Citigroup, has put his bank under further financial strain by bringing $49 billion ($£24 billion) worth of high-risk off-balance sheet investments onto its books just as new analysis predicts it will need to take a $30 billion writedown on its loan portfolio next year. In his first decisive move as Citigroup$’s leader, Mr Pandit pledged to provide the necessary funds to keep afloat seven so-called structured investment vehicles (SIVs) - independent debt-financed entities – that the bank runs and is ultimately responsible for. These kind of opaque funds are finding it virtually impossible to refinance their debt as the value of their mortgage-related securities declines. Many are being forced into a fire sale of assets to maintain their capital base, which is pushing prices down further. The US Treasury is working with Citigroup, Bank of America and JP-Morgan Chase to set up a $100 billion fund to prop up prices by buying assets from the SIVs. However, in what may prove an embarrassing failure for Henry Paulson, the US Treasury Secretary, Citigroup$’s decision to back its SIVs has taken the already struggling bailout fund to the brink of collapse. It emerged last week that the fund had scaled down its ambitions to less than half the original target because it could not attract enough banks to participate in the scheme. Citigroup’s move, which came despite repeated assurances that it would not bring the SIVs onto its balance sheet, removes the key beneficiary of the bailout fund, since the bank had the largest exposure to the vehicles on Wall Street. Analysts said that despite Citigroup’s assurances that it “continued to support [the fund’s] formation”, it is unlikely to take its role as a key architect of the fund so seriously now that it will no longer require its services. Citigroup has already announced that it expects to lose about $15 billion this year from declines in the value of sub-prime related investments. It is expected to suffer further writedowns after taking the SIVs onto its books because of their exposure to bonds, backed by high-risk home loans, that are rapidly declining in value after a surge in defaults on the underlying mortgages. But the bank is likely to suffer much larger writedowns next year, as defaults on mortgages, credit card debt and car

CITIGROUP Inc will take over seven troubled investment funds and assume US$58 billion of debt to avoid forced asset sales that would further erode confidence in capital markets. Moody's Investors Service lowered the bank's credit ratings. The biggest US bank by assets will rescue the so-called structured investment vehicles, or SIVs, taking responsibility for their US$49 billion of assets, the New York-based company said in a statement. Citigroup follows HSBC Holdings Plc, Societe Generale SA and WestLB AG in bailing out SIVs to avert fire sales of assets, Bloomberg News reported. The funds, which sell short-term debt and invest the proceeds in higher-yielding securities, have cut their holdings by more than 25 percent since August to US$298 billion, according to Moody's. The decline may reduce the urgency for a bailout sponsored by the US Treasury, Citigroup, Bank of America Corp and JPMorgan Chase & Co. "That was really the last major outstanding piece of the SIV

SPENDING on China's urban fixed assets slid slightly last month, another outcome of the tighter monetary policies that aim to contain China's fast growing economy, the National Bureau of Statistics said yesterday. The economic barometer may continue to fall after the government lending curbs take further effect, analysts said. Urban fixed-asset investment in the first 11 months rose 26.8 percent from a year earlier to 10.06 trillion yuan (US$1.36 trillion). The growth pace slowed a bit from the 26.9-percent gain through October. Spending on property development expanded 31.8 percent to 2.16 trillion yuan, accelerating further from the 31.4-percent increase in the first 10 months. Investment in coal exploration and production rose 24.1 percent to 145.2 billion yuan while petroleum and natural gas saw their spending increase 9.6 percent to 164.6 billion yuan. "A slowdown for investment growth in November shows that the recent credit control in China is starting to cool

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

WASHINGTON Mutual Inc, the biggest United States savings and loan company, will write down the value of its home-lending unit by US$1.6 billion in the fourth quarter and cut about six percent of its workforce as mortgage-market losses increase. WaMu, led by Chief Executive Officer Kerry Killinger, also slashed its quarterly dividend to 15 cents a share from 56 cents and forecast a loss for the quarter, according to a statement on Monday from the Seattle-based bank. Provisions for bad loans will be US$1.5 billion to US$1.6 billion, more than the US$1.3 billion the company previously predicted. It plans to shutter 190 of 336 home-loan centers. Fitch Ratings and Moody's Investors Service Inc lowered WaMu's credit rating, citing the firm's deteriorating mortgage assets. The bank has lost 56 percent of its market value this year, the worst performance in the 24-member KBW Bank index, amid declining US housing prices and record home loan delinquencies. WaMu said it plans to sell

EUROPEAN stocks have risen for a second week, boosted by expectations the Federal Reserve will lower interest rates and after the United States government moved to avert further defaults in the housing industry. Royal Bank of Scotland Plc led gains in banks after the lender wrote down 1.5 billion pounds (US$3 billion) of credit assets, in line with analysts' estimates. Xstrata Plc paced mining stocks higher amid takeover speculation in the industry. The Dow Jones Stoxx 600 Index added 0.7 percent to 372.88 last week. The measure rose to its highest in a month as investors speculated the Fed will lower its benchmark lending rate this week and after the Bank of England cut interest rates for the first time in two years, Bloomberg News said. "Investors have been cheered in recent days by signs that the authorities recognize the downside risks to their economies and are acting decisively to address them," said Richard Scott, who helps oversee about US$2.4 billion at Iimia

SAN FRANCISCO (MarketWatch) -- Despite an estimated exposure of some $8 billion in potentially risky structured investment vehicles in September, assets at six money market funds run by Charles Schwab & Co. Inc. don't appear to be in any immediate danger of being pulled down by the ongoing meltdown in credit markets.

NEW YORK (MarketWatch) -- Discover Financial Services said Monday that it may take a fiscal fourth-quarter charge in excess of $400 million related to its U.K. credit-card business and announced a $1 billion stock buyback. The projected impairment charge "will be equal to all or substantially all of the goodwill and other intangible assets" of the Goldfish business, which as of Aug. 31 was about $422 million. "We have concluded that continued disruption in the U.K. financial markets, higher interest rates and our decision to reduce our loan exposure to the U.K. market have negatively affected the book value of our Goldfish business," said Discover Chief Executive David Nelms. "While the U.K. credit card market remains very challenging, our efforts to refocus this business have begun to produce positive results." Goldfish was acquired last year from British bank Lloyds TSB Group PLC for $1.76 billion. Meanwhile, Discover's board authorized up to $1 billion in stock repurchases over the next three years. Shares of Discover closed Friday at $17.37 and rose to $17.52 in premarket trading.

ASIAN stocks rose, trimming the biggest monthly decline in more than a year, after Federal Reserve chairman Ben Bernanke reinforced speculation that United States policymakers would cut borrowing costs to bolster growth. The Commonwealth Bank of Australia led gains by banks after Bernanke said policymakers must decide whether "renewed turbulence" in credit markets had damped growth prospects in the world's biggest economy, according to Bloomberg News. BHP Billiton Ltd rose to a three-week high after copper prices climbed, with the commodities industry group advancing the most in the MSCI Asia Pacific Index. "A rate cut is being viewed as more likely," said Nicole Sze, an investment analyst in Singapore at Bank Julius Baer & Co, which manages US$350 billion in assets. "That will provide short-term relief to the market because there have been concerns about the risks that might result if credit costs remain high." The MSCI index added 1.1 percent

FORTIS, part of a group that bought ABN Amro Holding NV in Europe's biggest banking takeover, plans to raise 2.5 billion euros (US$3.7 billion) by selling bonds convertible into shares to help finance the deal. The bonds will have no stated maturity and will pay a coupon of 175 basis points to 250 basis points more than the euro interbank offered rate, or Euribor, Fortis said yesterday via email. They can be exchanged for shares when the stock rises 30 percent to 35 percent from current market prices, Bloomberg News reported. Fortis, based in Brussels and the Dutch town of Utrecht, is rebuilding its capital base after it joined Royal Bank of Scotland Group Plc and Banco Santander SA in the 71.5-billion-euro acquisition of Amsterdam-based ABN Amro, the biggest Dutch bank. Fortis sold 13.4 billion euros worth of stock in October, got a 10-billion-euro credit line and has sold bonds and assets to help fund its part of the deal. "We are somewhat surprised regarding the timing