Opening Bell: 05.27.11

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Israeli Central Bank Chief Explores IMF Bid (WSJ)
Israeli central banker Stanley Fischer is examining a formal bid to head the International Monetary Fund, said an official familiar with his thinking, and figures he has an outside shot at the job if there is a deadlock in the voting. Mr. Fischer, a former deputy managing director of the IMF, is a long shot. While he's widely respected among central bankers and finance ministers, his current position as Israel's central bank governor would make it tough to win the support of Arab nations and other emerging-market countries, said an Arab official who has worked with Mr. Fischer.

Dexia Takes $5.1 Bln Charge on Asset Sales (Bloomberg)
Dexia SA, the French-Belgian bank forced to shrink its balance sheet by 35 percent by 2014, said it will take a charge of 3.6 billion euros ($5.1 billion) for the anticipated sale of mostly U.S. residential mortgage-backed securities and long-term bond disposals.

Bachus Comforts Wall Street While Bashing Dodd-Frank at Home (Bloomberg)
“The people who wreaked havoc on our district were the people who took bribes and the people who bribed the contractors, they were people that did unnecessary swaps,” Bachus told reporters after speaking to a bankers group in Washington this month. “Jefferson County’s problem is a debt problem and a criminal problem. It was criminal behavior then, it is criminal behavior now.”

G-8 Launches 'Arab Spring' Partnership (WSJ)
The Group of Eight leading industrialized nations launched a partnership with "Arab Spring" countries in transition Friday, directing multilateral development banks to take the lead in coordinating the provision of aid of over $20 billion to Egypt and Tunisia.

Tudor Leads Hedge Funds Using Options to Bet on China as Jabre Buys Puts (Bloomberg)
Tudor Investment Corp. and Moore Capital Management LLC each bought at least 7 million options on the iShares FTSE China 25 Index Fund (FXI) during the quarter ended March 31, according to regulatory filings. Other money managers who used options to bet on or against the FTSE 25 included Philippe Jabre, George Weiss and Brian Stark.

Citi seeks to keep $1 billion Lehman collateral (Reuters)
In a filing in U.S. Bankruptcy Court in New York, Citigroup said it was entitled to keep the $1 billion, which it obtained from Lehman in order to continue providing clearing services for foreign exchange transactions. The trustee overseeing the liquidation of Lehman Brothers filed the claim against Citigroup and its subsidiaries last March, arguing that the $1 billion was obtained under coercion and that the amount should be part of a general asset pool to be divided among creditors in accordance with bankruptcy law.

Fitch Lowers Japan Outlook (WSJ)
Fitch Ratings on Friday lowered its outlook for Japan's sovereign debt to negative from stable, citing the risks associated with the nuclear power plant crisis and noting that the country's gross debt ratio is already the highest of any country it tracks.

S&P identifies troubling trends in CMBS market (Reuters)
Increasingly aggressive property appraisals, so-called "incentive management fees" for hotel properties, and the limited return of "pro forma" underwriting are among the troubling trends that Standard & Poor's cites as red flags in the quickly evolving revival of the commercial mortgage-backed security market.

Libyans ‘robbed our own bank’ to fund uprising (WaPo via EasyStreet/Heidi Moore)
In the days after Libya’s rebels rose up against Moammar Gaddafi, they faced a vexing challenge: How do you pay for a revolution? They figured that part of the answer could be found inside the secure vaults of the Benghazi branch of the Central Bank of Libya, where Gaddafi’s government held about $505 million. And they decided the money should be theirs because they believed it belonged to the Libyan people. “Let me put it this way: We robbed our own bank,” said Ali Tarhouni, the rebels’ U.S.-educated finance minister, who ordered the March heist. By drilling a hole in a wall and hiring a locksmith to play with a safe’s combination, rebel leaders turned the Gaddafi government’s money into the lifeblood of their uprising.

Basel III break for banks in EU (FT)
The 500-plus page draft, which has not been officially released, could allow EU banks to count more of the capital in their insurance subsidiaries than the global rules call for. It will also allow some banks to continue issuing hybrid capital – preference shares and other debt-like instruments – for longer than expected. The biggest French financial companies, including Société Générale and BNP Paribas, and the UK’s Lloyds Banking Group have insurance arms. They would benefit disproportionately from the exception.

Hedge fund Man Group reports better than expected profits (BBC)
Man Group, the world's second-largest hedge fund manager, has reported better than expected profits for the year to the end of March. The firm reported pre-tax profits of $324m (£199m) for the period. The results were down on the previous year because of costs that were associated with the take-over of rival GLG partners.

Pensions Leap Back to Hedge Funds (WSJ)
Public pension plans are lifting hedge-fund investment, seeking to boost long-term returns despite losses suffered in some funds in the financial crisis. Also, pension officials are using the historically strong returns of hedge funds to justify a rosier future outlook for their investment returns. By generating more gains from their investments, pension funds can avoid the politically unpalatable position of having to raise more money via higher taxes or bigger contributions from employees or reducing benefits for the current or future retirees.

Bocom to ‘Narrow the Gap’ in Pay to Attract Top Bankers from Foreign Firms (Bloomberg)
Bocom International plans to add 60 bankers, including managing directors and leading industry analysts, to its 300- plus workforce, chief executive officer Tan Yueheng said in a May 23 interview in Hong Kong. The Bank of Communications Co. unit rented an additional 11,000 square feet of office space in Hong Kong this year. “For key positions, we are definitely willing to pay more,” said Tan, 49. “Chinese investment banks tend to pay less to bankers than foreign peers. We do want to narrow the gap to lure talent.”

Serbia may ask IMF for 1 billion euros (Reuters)
The Serbian government may ask the International Monetary Fund for about 1 billion euros ($1.4 billion) as part of its future precautionary deal with the lender, an IMF official said on Friday.

Fidelity Counters Pimco, Goldman With Bullish Dollar View (Bloomberg)
“The value of the dollar is close to a bottom,” John Carlson, manager of the Fidelity New Markets Income Fund (FNMIX), wrote in a report yesterday on the company’s website. “I’ve never been more optimistic on the long-term prospects of the U.S. dollar and U.S. economy.”

A Fraud Played Out on Family and Friends (NYT)
This week, [Daren] Palmer, 42, agreed to plead guilty to federal criminal charges that he ran a $78 million Ponzi scheme, a rural Western version of the kind of fraud Bernard L. Madoff operated in New York…The Justice Department has prosecuted dozens of similar so-called affinity fraud cases across the country in recent years. Yet here in Idaho, Mr. Palmer’s deception was remarkable for its scale, and its intimacy. His investors included his father, his brother-in-law, his neighbors, a car dealer, a builder whose son he coached in football, and others. Prosecutors say investors lost more than $20 million.

A prostitute robbed a branch of Subway in Darwin then stripped off as she made her getaway (Daily Telegraph)
Angela Elizabeth Honeysett, 25, pleaded guilty to the bizarre crime in Darwin, northern Australia, in which she threatened the restaurant's staff with a knife and demanded they put cash in a pink bag. Having grabbed $500 (US$531), she pulled off her purple top as she ran from the diner then jumped into a getaway car and escaped just minutes before police arrived.

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