Opening Bell: 02.26.09

Posted by William Richards, Feb 26, 2009, 7:55am

Picture 773.pngRBS Unveils $34B Loss (Reuters)
"Royal Bank of Scotland reported the biggest loss in British history on Thursday and said the government's stake could rise as high as 95 percent after it stumped up billions to insure the bank's risky assets.

RBS also unveiled plans to cut 2.5 billion pounds ($3.56 billion) in costs as part of a restructuring plan which will see it exit or reduce its presence in 36 of the 54 countries it operates, which could see 20,000 job cuts."

UBS appoints ex-Credit Suisse head as CEO (Reuters)
Marcel Rohner out, Oswald Gruebel in.

Citi Closing On Deal With US Government (WSJ)
It looks like this deal for 40% ownership could go down today. Thoughts? Concerns? Secret island where we can all go if shit gets bad?

"Citigroup Inc. is closing in on an agreement to boost the federal government's stake in the company to as much as 40%, according to people familiar with the situation. A deal could be announced as soon as Thursday."

A Look At The Stress Test (WSJ)
The plan calls for banks being able to operate under 10%+ unemployment and as much as 25%+ decline in housing prices, and if they can't, they either have to raise private funds or take the Government cheddar. I can appreciate the Administration wanting to secure banking, for you know, the people, but forcing banks to take money at 10% is fundamentally fucked up.

"Economists said most of the nation's largest banks will likely have to raise capital under the economic assumptions that regulators plan to use. The stress test assumes an unemployment rate averaging 8.9% in 2009 and 10.3% in 2010. Because that is an average for a whole year, the test envisions the jobless rate reaching higher than those levels on a monthly basis during these stretches. It was 7.6% in January"

Government To Step It Up In Student Loans (NYT)
There's two parts to this (relative to us). Firstly, if student loans had been able to fail we would be faced with a mass of students looking for jobs in what's arguably the worst economy in like 2/3 years. Secondly, more bankers are going back to school (for whatever reason) here recently, and given the combination of severance packages and greed I'm pretty confident some of you are going to be looking to explore the "free money for now" route.

Geithner Blames Bankers For Loss Of Confidence (CNBC)
No, and that's fair - we blame the Government (in part).

Liddy Pleads For Forgiveness As AIG Unravels (Bloomberg)
It's cool Liddy. No worries. No one in finance really expected you to pay that shit back anyway, the terms were ridiculous. And yes, we understood given the circumstances you weren't really in a position to negotiate. Do this, if you're going to go out: do it with a bang. I mean pro's for everyone, all over the place. Fill the office. Distribute coke with snow blowers. GO TEAM!

China Toughens M&A/Loan Stance (Reuters)
Looks like mighty red is getting a little weary of how its banks are acting: the people resposible for running over its citizens in tanks is now stepping up reg's in their finance industry. I'm psyched.

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