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Shares of Sallie Mae continued to slide yesterday after the nation's largest student lender announced it will seek up to $2.5 billion of additional capital to shore up its beleaguered balance sheet. The Virginia-based company said in public...

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.”

CITIGROUP Inc, the biggest US bank, may cut its dividend by 40 percent to preserve capital and write down more fixed income securities than it has told investors to expect, according to Goldman Sachs Group Inc. The New York bank may write off US$18.7 billion in collateralized debt obligations such as subprime mortgages, up from its November 4 estimate of as much as US$11 billion, Goldman's William F. Tanona wrote in a note on Wednesday. Citigroup, which paid out 54 cents each quarter this year, will have to raise US$6.2 billion in extra capital to reach its target, they wrote. "It will be a couple of quarters before the current credit crisis is fully digested by the markets," wrote Tanona, who has a "sell" rating on the stock. "Given the magnitude of the writedowns we assume and Citi's remaining exposure, we believe the firm has a serious need to preserve or raise additional capital." Chief Executive Officer Charles O. "Chuck" Prince III

UNITED Rentals Inc has agreed to accept a US$100 million breakup fee from Cerberus Capital Management LP, ending a six week battle over whether Cerberus could call off a US$4 billion acquisition of the largest US equipment-rental company. United Rentals rose 4.4 percent in New York trading after a 17 percent decline on December 21, when a Delaware Chancery Court judge ruled that private-equity firm Cerberus had the right to break off the takeover, Bloomberg News reported. United Rentals said it would not appeal and Cerberus said it would pay the fee. Cerberus agreed in July to pay US$34.50 per share for United Rentals' stock and backed out in November. Judge William B. Chandler III ruled last week that United Rentals should have known Cerberus had a right to pull out if it paid the US$100 million fee. "The decision out of Delaware was very clear," said Carl Tobias, a professor with the University of Richmond.

CHINA Investment Corp, the US$200 billion fund that last week invested US$5 billion in Morgan Stanley, has denied it bought a stake in the Australia & New Zealand Banking Group, Bloomberg News reported today. "We didn't buy any stake," Lou Jiwei, chairman of Beijing-based China Investment, said at a press event without elaborating. He also denied buying a stake in China Petroleum & Chemical Corp. The central government is loosening restrictions on overseas investment to counter inflows from a record trade surplus that has driven up local stock and property prices. Investing more money abroad will help cool the world's fastest-growing major economy and diversify risk for China's more than US$1.4 trillion of foreign-exchange reserves, the world's largest. Lou said on November 29 that CIC "wants to be a stabilizing force in the international capital markets." He cited a "recent example" in which a similar fund invested in a financial firm that had

INVESTOR William Ackman raised his stake in Target Corp, the second-biggest discount chain in the United States, and held talks with management on increasing the stock price. Ackman controls 10 percent of the company, up from 9.6 percent earlier this year, his Pershing Square Capital Management LP said on Monday in a regulatory filing, according to Bloomberg News. Pershing is seeking share repurchases and the sale of Target's credit-card loans, as well as "some kind of real estate transaction," a person familiar with the firm's plans said, declining to elaborate. Target has said it's evaluating whether to sell its US$7 billion credit-card portfolio and will make a decision in the first three months of 2008. Target's shares have declined 18 percent since Ackman amassed his stake in July. Pershing's holdings include stock and options to buy the shares. With swap contracts, Ackman has an "economic" interest in Target of almost 12.6 percent, up from 10.2 percent

CHINA Pacific Insurance (Group) Co Ltd shares fell back slightly in afternoon trade on the Shanghai Stock Exchange after this morning's stellar debut. The shares opened at a premium of 70 percent to their IPO price and sold as high as 51.97 yuan (US$7.09) before settling back to finish the day at 48.17 yuan -- 60.57 percent above the issue price of 30 yuan. The company issued one billion A shares on the Shanghai Stock Exchange, making it the third insurer listed on the Chinese mainland after its larger rivals China Life and Ping An Insurance. China has urged its largest financial firms to sell stock domestically to give mainland investors more choices. The A shares account for 12.99 percent of China Pacific's expanded share capital and the money raised through the domestic listing will be used to replenish capital to help expand the business, its prospectus said. Shenzhen-based Ping An, the nation's second-biggest insurer, raised US$5 billion in February in the world's

Merrill Lynch said it will sell up to $6.2 billion of newly issued common stock at a discount to two investors and divest its middle-market commercial-finance business to a unit of GE as its moves to bolster its capital.

The firm will raise capital from a Singaporean fund and a U.S. investment management firm. Merrill Lynch & Co., hit by huge sub-prime mortgage losses, said Monday it would boost its capital by selling as much as $6.2 billion of common stock -- at a discount -- to a Singaporean state-owned fund and to a U.S. investment management firm.

CHINA Pacific Insurance (Group) Co Ltd shares jumped 70 percent when it started its first day of trading in Shanghai this morning. China Pacific surged to 51 yuan (US$6.96) when it started trading at 9:30am from its Shanghai initial public offering price of 30 yuan. The company issued one billion A shares on the Shanghai Stock Exchange, making it the third insurer listed on the Chinese mainland after its larger rivals China Life and Ping An Insurance. The A shares accounts for 12.99 percent of China Pacific's expanded share capital and the money raised through the domestic listing will be used to replenish capital to help expand business, its prospectus said.

WALL Street advanced yesterday, boosted by news that Merrill Lynch & Co will receive an investment of up to US$6.2 billion from two investment groups. Trading volume was light in yesterday's abbreviated session -- a pro forma occurrence a day ahead of Christmas when most stock markets around the world are closed. Still, with only five trading days remaining in 2007, investors will perhaps be looking for any opportunity to tidy up their positions after a year that that brought the return of volatility after several years of unusual calm. Merrill Lynch provided the only significant news of the day. The investment firm said it was receiving a widely expected cash infusion from Singapore's government-controlled investment fund, Temasek Holdings, and US-based Davis Selected Advisers. The proceeds were expected to cushion Merrill's mortgage-related writedowns for the fourth quarter. Merrill also said it would sell most of its commercial finance unit to GE Capital. Terms of the deal

THE prospects of rising profit for China Pacific Insurance (Group) Co have created a buzz among stock analysts who forecast that the insurer's stock is likely to jump about 50 percent on its A share debut today in Shanghai. Everbright Securities Co expects shares of Pacific Insurance to be between 42.60 yuan (US$5.81) and 44.30 yuan apiece, up from its offering price of 30 yuan. Guotai Jun'an Securities has a higher valuation of 43.80 yuan to 46.80 yuan while Haitong Securities sees a range of 40.64 yuan to 45.22 yuan. Pacific Insurance raised 30 billion yuan in its Shanghai initial public offering last week, making it the sixth-biggest IPO on the Chinese mainland. The Shanghai-based insurer sold one billion yuan-backed new shares, or 13 percent of its enlarged capital, at the top end of its offering price range of 27 yuan to 30 yuan. "Pacific is the sole comprehensive insurer whose business is balanced between life and property and casualty insurance," said Pan

SAN FRANCISCO (MarketWatch) -- Treasurys were slightly lower Monday, pushing up yields, as firm stock prices decreased the appeal of fixed-income assets in extremely thin pre-holiday trading. U.S. bond trading will end early on Monday, and overnight Japanese and German markets were closed Monday for holidays. "With the holiday-shortened week, our expectations for any paradigm shifting events are pretty light," said David Ader, U.S. government bond strategist at RBS Greenwich Capital. "With the bench players now in the field until the New Year, we would err on the side of limited conviction for any moves over the next few trading sessions." The benchmark 10-year Treasury note was down 7/32 at 100 12/32, with a yield of 4.2%. The 30-year bond was down 10/32 at 106 9/32 with a yield of 4.61%. The two-year note was down 2/32 at 99 26/32 with a yield of 3.21%. On Wednesday, the Treasury Department will sell $22 billion in two-year notes, and on Thursday, it will sell $13 billion in five-year notes.

UNITED Rentals Inc, the largest construction-equipment rental company in the United States, lost a bid to force a US$4-billion takeover by Cerberus Capital Management LP when a judge ruled the agreement allowed the buyer to withdraw its offer. Delaware Chancery Court Judge William Chandler ruled on Friday that United Rentals officials should have known that Cerberus executives believed they had a right to pull out of the deal at any time as long as they paid a US$100 million fee. United alleged that Cerberus's RAM Holdings buyout entities agreed in July to pay US$34.50 per share for United Rentals' stock, and reneged on the deal in November amid weakened US credit markets. The stock has been trading in the low-US$20 range. United Rentals fell US$3.69 to US$17.91 on Friday. "The board of directors and management team of United Rentals will consider its alternatives under the circumstances, and they continue to believe strongly in United Rentals' future prospects,"

CHINA Construction Bank Corp said it plans to increase its overseas presence by opening branches in London and the Middle East. The nation's second-largest lender will apply to establish wholly-owned subsidiary banks in London and Dubai in the United Arab Emirates, as well as a branch in Doha, Qatar, according to a filing to the Shanghai Stock Exchange. All are subject to relevant regulatory approval, the Beijing-based bank said. CCB said it also plans a budget of 31.5 billion yuan (US$4.27 billion) for capital expenditure next year. Of that, 16.5 billion yuan would be used as purchase and construction expenditure, mainly for the establishment of business units, self-service banking facilities, technological items and IT equipments. The other 15 billion yuan would be for investment. Shares in CCB rose 0.31 percent to 9.81 yuan in Shanghai and added 0.3 percent to HK$6.68 (86 US cents) in Hong Kong. Meanwhile, CCB, which started Shanghai trading on September 25, said a

ADVANTAGE Partners LLC, Japan's largest buyout fund, offered to buy Tokyo Star Bank Ltd for as much as 252 billion yen (US$2.2 billion) in the nation's biggest bank takeover in two years. Advantage agreed to buy Dallas-based Lone Star Funds' 68 percent stake in the bank for 360,000 yen a share, it said in a statement on its Website, Bloomberg News said. It offered to buy the remainder of the bank's traded stock at the same price. Tokyo Star shares closed at 352,000 yen yesterday. The acquisition gives Advantage 35 branches and 1.5 trillion yen of deposits, with a niche in lending to small companies in Japan's capital. Tokyo Star has dropped 16 percent since talks between the two were first reported in May, as investors dumped Japanese banking stocks amid sluggish loan growth and losses on mortgage-related investments. "Advantage found value in the deal after Japanese financial institutions were sold down to very attractive levels," said Yoji Takeda, who helps manage

MERRILL Lynch & Co and CLSA Ltd are among six investment banks set to arrange State Bank of India's US$4.2 billion share sale, three people familiar with the plan said. Citigroup Inc, Deutsche Bank AG, Kotak Mahindra Capital Co and SBI Capital Markets Ltd may also underwrite the rights offer by the Mumbai-based bank, India's largest, the people said, declining to be identified before a formal announcement. State Bank's closest rival, ICICI Bank Ltd, led a record year for share sales by Indian companies as lenders raised funds to meet accelerating credit demand in the world's fastest-growing major economy after China. Merrill is the top-ranked adviser for a third year in India as companies sold US$25 billion of stock, Bloomberg News said. "The share sale will be made easier with economic and banking sector growth still strong," said R.K. Gupta, who manages US$100 million at Credit Capital Asset Management Ltd in New Delhi.

BOSTON (MarketWatch) -- Morgan Stanley Wednesday said it has entered into an agreement with China Investment Corp. to issue new capital of about $5 billion through equity units with mandatory conversion into common stock. China Investment Corp.'s total passive ownership in Morgan Stanley common shares, including the conversion of the equity units, will be 9.9% or less of total shares outstanding, the company said.

NEW YORK (MarketWatch) -- Plains Exploration & Production Company on Monday said it would sell oil and gas properties to Occidental Petroleum and XTO Energy for $1.75 billion. The Houston energy firm also set plans to buy back $1 billion in stock and spend $1.15 billion on its 2008 capital budget. "The oil and gas property divestments balance PXP's asset portfolio and align operator strengths to specific assets maximizing efficiencies and returns," PXP Chairman, President and Chief Executive Officer Jim Flores said in a statement. (An earlier version of this item incorrectly omitted the transaction with XTO Energy.)

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