ECB Lends Banks $645B, Exceeding Forecast (Bloomberg)
The European Central Bank will lend euro-area banks a record amount for three years in its latest attempt to keep credit flowing to the economy during the sovereign debt crisis. The Frankfurt-based ECB awarded 489 billion euros ($645 billion) in 1,134-day loans today, the most ever in a single operation and more than economists’ median estimate of 293 billion euros in a Bloomberg News survey. The ECB said 523 banks asked for the funds, which will be lent at the average of its benchmark interest rate — currently 1 percent — over the period of the loans. They start tomorrow. “It was obviously an offer the banks could not refuse,” said Laurent Fransolet, head of fixed-income strategy at Barclays Capital in London. “It shows the ECB is not out of ammunition and it gives banks security on liquidity for a few years. On the other hand it means banks will rely on the ECB for longer.”
Banks May Flock to ‘Free Money’ as ECB Awards 3-Year Loans (Bloomberg)
“This is basically free money,” said Jens-Oliver Niklasch, a strategist at Landesbank Baden-Wuerttemberg in Stuttgart. “The conditions are unbeatable. Everybody who can will try to get a piece of this cake.”
Moody’s Warns of Euro Crisis Threat to UK’s Rating (Reuters)
Britain’s top-notch debt rating is under threat from the crisis in the euro zone, and further shocks to the country’s economy could derail government efforts to balance the budget, ratings agency Moody’s said on Tuesday. Britain’s scope to absorb further fiscal shocks while retaining its stable outlook and triple-A rating have deteriorated over the past year due to weak growth, and the country faces “formidable and rising challenges,” Moody’s said. “Since the last annual report, the amount of headroom for Britain has declined,” Moody’s analyst Sarah Carlson told Reuters after the publication of the ratings agency’s end-of-year assessment of Britain’s ability to repay its debts.
Doubts Arise In Euro’s Birthplace (WSJ)
Now, as financial anguish in the euro zone reveals flaws in the monetary union, the crisis is exposing deep divisions not only among Europe’s national leaders but even within the consensus-minded and long-supportive Netherlands. A unified pro-euro position projected for years by the Dutch political and economic establishment has begun to crack. “We could look at the euro as a failed project,” said Hans Hoogervorst, a former Dutch finance minister and current chairman of the International Accounting Standards Board, on Dutch television last week. The Netherlands’ current finance minister said much the same a few days earlier. The Central Planning Bureau, the Dutch equivalent of the U.S. Congressional Budget Office, last month said the creation of a monetary union had been about politics, and its economic gains have been “minimal.”
Fortress CEO to Take Leave in Wake of SEC Suit (Reuters)
Fortress Investment Group said on Wednesday that its chief executive, Daniel Mudd, is taking a leave of absence after financial regulators charged that he committed securities fraud during his time as CEO at Fannie Mae…Fortress said that the matter related to Mudd’s previous employment and was not impacting it or its business operations.
To Attract Potential Investors, Mets Add Perks To The Deal (NYT)
But for those perhaps uncertain over whether to part with their millions, the owners have listed some less obvious perks that would come with a share of the Queens ball club. Access to Mr. Met, the team mascot, although the degree of access is not entirely spelled out. It definitely means you, as a part-owner, can schmooze with Mr. Met at Citi Field. It’s less clear whether you could get him to come to your child’s birthday party without a fee. A formal business card, complete with the prominent designation: “Owner.” And if you are a wealthy doctor, commodities trader or real estate mogul who wants to try to swat the ball over the newly pulled-in outfield fences at Citi Field on a Mets day off, you are entitled to attend what appears to be an exclusive kind of fantasy camp: “Owners’ workout day.” These benefits of ownership are laid out in a term sheet given by the Mets’ owners to prospective partners. The document, drawn up by the club’s investment banker and obtained by The New York Times, runs to three pages.
Fed Spells Out Rules For New Banks (WSJ)
The biggest U.S. banks will be required to limit their financial ties to one another under new proposed rules aimed at preventing the collapse of one big institution from triggering a larger, cascading crisis. The net credit exposures between any two of the nation’s six largest financial firms, including J.P. Morgan Chase & Co. and Goldman Sachs Group Inc., would be limited to 10% of a company’s regulatory capital, under a proposed package of regulations released by the Federal Reserve on Tuesday. Most other firms covered by the rule would be subject to a 25% limit, as required by the Dodd-Frank financial-overhaul law. The new 10% limit for the biggest firms was unanticipated by the industry and has the potential to scale back the capital-markets businesses of large institutions, analysts said. “Is this a back-door way to shrink those banks?” said Paul Miller of FBR Capital Markets.
MF Global Transfer Draws Scrutiny (WSJ)
Investigators on the hunt for missing customer money from MF Global Holdings Ltd. are scrutinizing about $200 million moved to a company account at J.P. Morgan Chase & Co. three days before the securities firm filed for bankruptcy protection, according to people familiar with the matter. The transfer has drawn interest from investigators partly because J.P. Morgan asked MF Global in a letter the following day to attest that the Oct. 28 shift of funds didn’t violate regulations designed to protect customer money. The letter suggests that officials at J.P. Morgan, which cleared some trades for MF Global, had become concerned that the securities firm might have gotten the money by dipping into customer funds. Commodity Futures Trading Commission rules prohibit futures brokers from using customer money for their own trading purposes.
Hedge-Fund Refuge Sought by Traders as Banks Cut 233,000 Jobs (Bloomberg)
Traders in energy, metals and agriculture are opening or joining hedge funds after leaving financial firms that cut more than 233,000 jobs this year, data compiled by Bloomberg show. Departures of commodity traders from banks probably rose 10 percent this year, according to Commodity Search Partners Ltd., a Brighton, England-based recruiter. Pay for that group will drop 24 percent on average, estimates Options Group, a New York- based recruitment firm.
Mark Mobius Sees End to Euro Crisis by June (CNBC)
FYI: “The European crisis isn’t as deep and terrible as people think,” he was quoted as saying by Valor. “Nations there are in a process of negotiations and that takes time.” Mobius, the Franklin Templeton executive who pioneered emerging markets investing, expects Europe’s debt crisis to be resolved in the middle of next year, sparking a rise in global bourses, Brazilian newspaper Valor Economico reported on Wednesday.
N. Korea Military, Uncle to Share Power With Kim’s Heir (Reuters)
North Korea will shift to collective rule from a strongman dictatorship after last week’s death of Kim Jong il, although his untested young son will be at the head of the ruling coterie, a source with close ties to Pyongyang and Beijing said. The source added that the military, which is trying to develop a nuclear arsenal, has pledged allegiance to the untested Kim Jong un, who takes over the family dynasty that has ruled North Korea since it was founded after World War Two.
$88 Million Apartment Under Her Tree (NYP)
The 22-year-old daughter of a Russian billionaire received an $88 million condo from her filthy-rich dad — who dropped a fortune on what Realtors said was the most expensive-ever residential transaction in Manhattan. A company associated with Ekaterina Rybolovleva, the daughter of Russian billionaire Dmitriy Rybolovlev, signed a contract to purchase the 6,744-square-foot, full-floor condominium at 15 Central Park West, from Sandy Weill. “Ms. Rybolovleva is currently studying at a US university,” representatives for the blond heiress and equestrian said in a statement. “She plans to stay in the apartment when visiting New York. Ms. Rybolovleva was born in Russia, is a resident of Monaco and has resided in Monaco and Switzerland for the past 15 years.”