Monday, April 14, 2008
Saudi to leave some oil finds for future
Reuters)Saudi Arabia's King Abdullah said he had ordered some new oil discoveries left untapped to preserve oil wealth in the world's top exporter for future generations, the official Saudi Press Agency (SPA) reported. "I keep no secret from you that when there were some new finds, I told them, 'no, leave it in the ground, with grace from god, our children need it'," King Abdullah said in remarks made late on Saturday. US President George W Bush in January urged the Saudi King to help tame soaring prices by encouraging Opec to pump more oil. On separate trips to Saudi Arabia this year, the US Energy Secretary also asked for more oil, while the Vice-President discussed high prices with the king. The kingdom has spent billions on building over 2 million bpd of spare crude capacity and is the only country in the world able to bring online large volumes of crude supply quickly to deal with unexpected supply shortages. Opec held production steady at meetings in February and March despite calls for more oil from the US and other consumers. Opec officials blame the high price on factors beyond the group's control such as the weak dollar, investment flows into commodities and speculation. Saudi Oil Minister Ali Al Naimi said last week that global oil markets were well supplied and there was no need to put more oil on the market, despite prices hitting a record of over $112 a barrel last week. Saudi Arabia has trimmed its output to around 9 million bpd to reflect lower customer demand, a Saudi oil source said on Friday. The kingdom had in previous months pumped around 9.2 million bpd. Crude demand traditionally dips at this time of year after the end of winter as refiners carry out maintenance and prepare to meet summer demand. Saudi production capacity stands at around 11.3 million bpd, and is scheduled to rise to 12. 5 million bpd next year.
Friday, April 11, 2008
Southwest Planes Had Cracks an Inspection Might Have Found
By MATTHEW L. WALD
WASHINGTON — Five Southwest Airlines planes grounded last month because they had not been properly inspected had precisely the kind of cracks that the inspection order was intended to detect, an official of the agency testified Thursday to a Senate subcommittee. The testimony, by the associate administrator for safety of the Federal Aviation Administration, was the most explicit statement so far that the epidemic of aircraft groundings had genuine safety roots. But the agency’s troubles seemed to deepen as the subcommittee chairman, Senator John D. Rockefeller IV, Democrat of West Virginia, compared the F.A.A.’s handling of its lapses to the Pentagon’s handling of the abuse of prisoners at Abu Ghraib, and suggested that punishments should reach higher into the ranks. “Nobody at the top ever gets fired,” said Mr. Rockefeller, chairman of the Senate Commerce aviation subcommittee, while questioning Nicholas A. Sabatini, the F.A.A. associate administrator.
Mr. Sabatini blamed subordinates for the problem, though he acknowledged his responsibility. Senator Rockefeller, suggesting that heads should roll, remarked, “You’re responsible, but you don’t have to be accountable?” The F.A.A.’s recent decision to audit the airlines for compliance with its rules, resulting in an unprecedented wave of aircraft groundings, has been driven largely by revelations from a House committee, but the Senate was hardly friendlier. Mr. Rockefeller told a panel of witnesses, “It’s catastrophic economically, and it’s an embarrassment to the nation. ‘’
Mr. Sabatini stressed that statistically, the recent past has been the safest period in aviation history.
“We didn’t get here by accident,” he said, with no evident recognition of the double entendre. He attributed safety gains to extensive use of operating data by his agency and the airlines to isolate areas of risk and focus on them. In recent audits to determine if the airlines were complying with F.A.A. orders, “we found we had achieved 99 percent compliance, but it’s the other 1 percent that keeps me up at night,” Mr. Sabatini said. He used stronger language to describe what Southwest had done in flying planes that it knew had not been properly inspected. While the airline’s executives testified under oath last week that there was no safety-of-flight problem, Mr. Sabatini’s prepared testimony said the flights had been putting thousands of passengers at risk. Some senators said, however, that in a data-driven system, under which F.A.A. inspectors mostly review records rather than look at aircraft, the agency might have lost touch with actual conditions. Calvin L. Scovel III, the inspector general of the Transportation Department, of which the F.A.A. is part, said the problems at Southwest, where planes that had not been inspected were allowed to keep flying, amounted to “fundamental breakdowns in F.A.A. oversight.” These troubles, he said, were “symptomatic of much deeper problems in several key areas of F.A.A.’s oversight.”
In addition to the current maintenance crisis, the agency faces severe challenges in hiring employees in large numbers to replace air traffic controllers and safety inspectors; thousands have reached retirement age in the last few years or will soon. The biggest safety challenge of all may be the risk of runway collision, said Steven R. Chealander, a member of the National Transportation Safety Board. Mr. Chealander said that the number of serious runway incidents this year was double the level of early last year.
WASHINGTON — Five Southwest Airlines planes grounded last month because they had not been properly inspected had precisely the kind of cracks that the inspection order was intended to detect, an official of the agency testified Thursday to a Senate subcommittee. The testimony, by the associate administrator for safety of the Federal Aviation Administration, was the most explicit statement so far that the epidemic of aircraft groundings had genuine safety roots. But the agency’s troubles seemed to deepen as the subcommittee chairman, Senator John D. Rockefeller IV, Democrat of West Virginia, compared the F.A.A.’s handling of its lapses to the Pentagon’s handling of the abuse of prisoners at Abu Ghraib, and suggested that punishments should reach higher into the ranks. “Nobody at the top ever gets fired,” said Mr. Rockefeller, chairman of the Senate Commerce aviation subcommittee, while questioning Nicholas A. Sabatini, the F.A.A. associate administrator.
Mr. Sabatini blamed subordinates for the problem, though he acknowledged his responsibility. Senator Rockefeller, suggesting that heads should roll, remarked, “You’re responsible, but you don’t have to be accountable?” The F.A.A.’s recent decision to audit the airlines for compliance with its rules, resulting in an unprecedented wave of aircraft groundings, has been driven largely by revelations from a House committee, but the Senate was hardly friendlier. Mr. Rockefeller told a panel of witnesses, “It’s catastrophic economically, and it’s an embarrassment to the nation. ‘’
Mr. Sabatini stressed that statistically, the recent past has been the safest period in aviation history.
“We didn’t get here by accident,” he said, with no evident recognition of the double entendre. He attributed safety gains to extensive use of operating data by his agency and the airlines to isolate areas of risk and focus on them. In recent audits to determine if the airlines were complying with F.A.A. orders, “we found we had achieved 99 percent compliance, but it’s the other 1 percent that keeps me up at night,” Mr. Sabatini said. He used stronger language to describe what Southwest had done in flying planes that it knew had not been properly inspected. While the airline’s executives testified under oath last week that there was no safety-of-flight problem, Mr. Sabatini’s prepared testimony said the flights had been putting thousands of passengers at risk. Some senators said, however, that in a data-driven system, under which F.A.A. inspectors mostly review records rather than look at aircraft, the agency might have lost touch with actual conditions. Calvin L. Scovel III, the inspector general of the Transportation Department, of which the F.A.A. is part, said the problems at Southwest, where planes that had not been inspected were allowed to keep flying, amounted to “fundamental breakdowns in F.A.A. oversight.” These troubles, he said, were “symptomatic of much deeper problems in several key areas of F.A.A.’s oversight.”
In addition to the current maintenance crisis, the agency faces severe challenges in hiring employees in large numbers to replace air traffic controllers and safety inspectors; thousands have reached retirement age in the last few years or will soon. The biggest safety challenge of all may be the risk of runway collision, said Steven R. Chealander, a member of the National Transportation Safety Board. Mr. Chealander said that the number of serious runway incidents this year was double the level of early last year.
Frontier Airlines files for Chapter 11 protection
Wichita Business Journal - by Denver Business Journal
Frontier Airlines filed for Chapter 11 bankruptcy late Thursday in federal bankruptcy court in New York City in response to what the airline said was a threat to its liquidity resulting from actions by its principal credit card processor. On its website, the airline said it would continue its full schedule of flights and will honor tickets and reservations and provide refunds and exchanges under its standard policies. Frontier offers three flights a day to Denver from Wichita's Mid-Continent Airport using its Lynx carrier. Its frequent flyer program and customer service programs would remain unaffected, as will wages and benefits, the company said. Suppliers and other vendors payments would be unaffected, the airline said.
"Frontier is committed to delivering exceptional customer service and we intend to continue delivering on that promise with normal operations throughout our reorganization process," said Sean Menke, Frontier President and CEO. "To be clear, we filed for very different reasons than those of other recent carriers, and our customers and employees can be confident that we intend to keep on flying and providing outstanding service and products." The airline said it made the decision to file for Chapter 11 bankruptcy after its credit processor changed its fee schedule, specifically its hold back of customer receipts. That, the airline said, severely threatened its liquidity.
"Given the recent progress we have made towards strengthening our balance sheet and obtaining additional financing, it is truly unfortunate that we have had to take this action," Menke said. The company listed assets of $98.3 million and debts of $92.2 million as of Dec. 31, 2007. Its top five creditors are Wells Fargo $93,491,208.79; the City & County of Denver $2,408,887.38; Total Petrochemicals Inc. $2,366,875.29; Airport Revenue Fund $1,817,919.59; World Fuel Services Inc. - Wire $1,557,138.66, according to the bankruptcy filing. Frontier Airlines Holdings, Inc. common stock is traded on NASDAQ's National Market under the symbol FRNT.
Thursday, April 10, 2008
Alliant Bid for MacDonald Rejected by Canada
By Alexandre Deslongchamps and Sean B. Pasternak
April 10 (Bloomberg) -- The Canadian government rejected the C$1.33 billion ($1.31 billion) sale of MacDonald Dettwiler and Associates Ltd.'s satellite business to Alliant Techsystems Inc., marking the first time Canada has blocked a foreign takeover since at least 1985.
Industry Minister Jim Prentice wrote to Edina, Minnesota- based Alliant on April 8 to say the proposed takeover doesn't provide a ``net benefit'' to Canada, according to an e-mailed statement today from his office in Ottawa.
``It's a shot across the bow and the government knows that this will be taken very seriously, not only by the prospective buyer, but also the U.S. government,'' said Richard Clark, a lawyer with Stikeman Elliott LLP in Toronto who specializes in mergers.
MacDonald Dettwiler fell C$4.13, or 8.8 percent, to C$42.72 at 10 a.m. trading on the Toronto Stock Exchange, the biggest decline in 11 months. Alliant gained 30 cents to $107.89 in New York Stock Exchange trading.
Alliant offered in January to acquire the space business of MacDonald Dettwiler, including Radarsat-2, a remote sensing satellite that scans Canada's Arctic region.
Technology Concern
Canadian lawmakers from all parties said at hearings in Ottawa this month that they're concerned the technology may become subject to U.S. national security laws and that Canada may lose its priority with Radarsat.
``If you are an investor in MacDonald Dettwiler at the moment, you are not going to be happy about this decision at all,'' said Paul Bradley, an analyst at Fraser Mackenzie Ltd. in Toronto. The sale made sense for the company, because the unit's lack of access to the U.S. market made it difficult to grow, he said.
Under Canadian investment law, Prentice can block any takeover of a Canadian company worth more than C$295 million if the deal doesn't provide ``net benefits'' to the economy, such increased productivity and research and development. This is the first time a foreign takeover has been rejected under the Investment Canada Act, which has governed takeovers since 1985.
There's a good chance Alliant will succeed in reversing Prentice's decision, Clark said. Alliant has 30 days to respond to the notice. Prentice will comment on his decision later today, spokeswoman Deirdra McCracken said in an email.
High Stakes
``It's a pretty high stakes game, and I would think that the potential U.S. buyer will try and see what it can do to resurrect the deal,'' Clark said.
Richmond, British Columbia-based MacDonald Dettwiler is an information technology company that also builds robotic parts for the International Space Station, including the Dextre robot that was installed during the Shuttle Endeavour's last mission.
The purchase would help Alliant build complete satellite systems. The MacDonald Dettwiler unit has 1,900 employees and estimated sales of $500 million for fiscal 2009.
``I don't think as a general term investors will look at this and say all of a sudden Canada is not open to foreign investment,'' because a similar acquisition in other countries would also face a stringent review, Bradley said.
Alliant spokesman Brian Grace and MacDonald Dettwiler spokeswoman Wendy Keyzer didn't immediately return phone calls placed before business hours today seeking comment.
April 10 (Bloomberg) -- The Canadian government rejected the C$1.33 billion ($1.31 billion) sale of MacDonald Dettwiler and Associates Ltd.'s satellite business to Alliant Techsystems Inc., marking the first time Canada has blocked a foreign takeover since at least 1985.
Industry Minister Jim Prentice wrote to Edina, Minnesota- based Alliant on April 8 to say the proposed takeover doesn't provide a ``net benefit'' to Canada, according to an e-mailed statement today from his office in Ottawa.
``It's a shot across the bow and the government knows that this will be taken very seriously, not only by the prospective buyer, but also the U.S. government,'' said Richard Clark, a lawyer with Stikeman Elliott LLP in Toronto who specializes in mergers.
MacDonald Dettwiler fell C$4.13, or 8.8 percent, to C$42.72 at 10 a.m. trading on the Toronto Stock Exchange, the biggest decline in 11 months. Alliant gained 30 cents to $107.89 in New York Stock Exchange trading.
Alliant offered in January to acquire the space business of MacDonald Dettwiler, including Radarsat-2, a remote sensing satellite that scans Canada's Arctic region.
Technology Concern
Canadian lawmakers from all parties said at hearings in Ottawa this month that they're concerned the technology may become subject to U.S. national security laws and that Canada may lose its priority with Radarsat.
``If you are an investor in MacDonald Dettwiler at the moment, you are not going to be happy about this decision at all,'' said Paul Bradley, an analyst at Fraser Mackenzie Ltd. in Toronto. The sale made sense for the company, because the unit's lack of access to the U.S. market made it difficult to grow, he said.
Under Canadian investment law, Prentice can block any takeover of a Canadian company worth more than C$295 million if the deal doesn't provide ``net benefits'' to the economy, such increased productivity and research and development. This is the first time a foreign takeover has been rejected under the Investment Canada Act, which has governed takeovers since 1985.
There's a good chance Alliant will succeed in reversing Prentice's decision, Clark said. Alliant has 30 days to respond to the notice. Prentice will comment on his decision later today, spokeswoman Deirdra McCracken said in an email.
High Stakes
``It's a pretty high stakes game, and I would think that the potential U.S. buyer will try and see what it can do to resurrect the deal,'' Clark said.
Richmond, British Columbia-based MacDonald Dettwiler is an information technology company that also builds robotic parts for the International Space Station, including the Dextre robot that was installed during the Shuttle Endeavour's last mission.
The purchase would help Alliant build complete satellite systems. The MacDonald Dettwiler unit has 1,900 employees and estimated sales of $500 million for fiscal 2009.
``I don't think as a general term investors will look at this and say all of a sudden Canada is not open to foreign investment,'' because a similar acquisition in other countries would also face a stringent review, Bradley said.
Alliant spokesman Brian Grace and MacDonald Dettwiler spokeswoman Wendy Keyzer didn't immediately return phone calls placed before business hours today seeking comment.
Wednesday, April 9, 2008
Pfizer warns of lung cancer with inhaled insulin
(Reuters) - Pfizer Inc (PFE) and Nektar Therapeutics (NKTR) said on Wednesday clinical trials of the inhaled insulin Exubera found increased cases of lung cancer, leading Nektar to end talks with potential partners to market the product. Nektar shares tumbled 24 percent in early trading, while shares of MannKind Corp (MNKD), which has been developing its own inhaled insulin, plummeted more than 56 percent. Pfizer was little changed at $21.00. Over the course of the clinical trials, Pfizer said six of the 4,740 Exubera-treated patients versus one of the 4,292 patients not treated with Exubera developed lung cancer. One lung cancer case was also found after Exubera reached the market. Pfizer updated the Exubera labeling to include a warning with safety information about lung cancer cases found in patients who used Exubera, which U.S. regulators approved in January 2006.
The warning states all patients who developed lung cancer had a prior history of cigarette smoking, and that there were too few cases to determine whether the development of lung cancer is related to Exubera use. Pfizer said in October it would stop marketing Exubera, ending its involvement with a product once thought to have the potential to become a $2 billion-a-year blockbuster with the promise of helping diabetics avoid needle sticks. Instead, sales were negligible.
The warning in the label stemmed from an ongoing review of data from the Exubera clinical trial program and post-marketing experience by Pfizer and the U.S. Food and Drug Administration, Pfizer said. Pfizer said it will be discussing the timing of marketing authorization withdrawals with regulatory agencies. Since Pfizer's exit last year, Eli Lilly (LLY) and Novo Nordisk (NOVOb) also ended inhaled insulin development programs. Nektar said it will cease all spending associated with its inhaled insulin programs and will not incur charges related to the event.
Tuesday, April 8, 2008
Washington Mutual Gets $7 Billion From TPG-Led Group
(Bloomberg) -- Washington Mutual Inc., the largest U.S. savings and loan, got $billion from a group of investors led by David Bonderman's TPG Inc. after losses on subprime loans ate up capital and erased 74 percent of its market value.
Washington Mutual sold 176 million shares at $8.75 a piece, 33 percent below yesterday's closing price on the New York Stock Exchange, and preferred shares, the company said in a statement today. The lender also slashed its dividend and announced 3,000 job cuts. The stock fell as much as 13 percent.
Chief Executive Officer Kerry Killinger, struggling to reassure investors the bank has enough capital to stay afloat, said the dividend cut will preserve $490 million annually. Seattle-based Washington Mutual, which said today it lost $1.1 billion in the first quarter, will stop making loans through mortgage brokers and close 186 home-lending offices.
``It's dilutive for shareholders on a massive basis, so it's not great for the company, but it's great for the system that capital can be raised during these stressful times,'' Vincent Farrell, a principal at New York-based Scotsman Capital Management LLC, said on Bloomberg Radio.
Washington Mutual fell 76 cents to $12.39 a share at 10:28 a.m. in New York Stock Exchange composite trading.
Banks and securities firms including Citigroup Inc. and Lehman Brothers Holdings Inc. sought cash infusions after record losses tied to subprime home loans. The world's biggest financial companies have written down assets or set aside money to cover more than $232 billion in bad loans, according to data compiled by Bloomberg.
`Substantial' Capital
``This substantial new capital -- along with the other steps we are announcing today -- will position us for a return to profitability as these elevated credit costs subside,'' Killinger said in the statement.
Washington Mutual said it will set aside $3.5 billion because of expected losses on home loans and expects to charge off $1.4 billion in losses during the first quarter. The company had been expected to lose $344 million, or 39 cents per share, the average of industry analysts who follow the company, CreditSights Inc. analyst David Hendler said in a report today.
As part of the agreement Washington Mutual will stop making loans through mortgage brokers and close its freestanding home loan offices, while focusing on its 2,500 bank and small business lending offices. The quarterly dividend was cut to 1 cent a share from 15 cents.
Bonderman, TPG's founding partner, will be added to the board. Larry Kellner, CEO of Continental Airlines and former chief financial officer of American Savings Bank, will be an observer at TPG's request. Bonderman declined to comment through a spokesman, Owen Blicksilver.
Market Value
The lender, known as WaMu, once ranked among the 11 biggest originators during 2006 of subprime mortgages, which are made to people with the weakest credit.
Overdue loans and foreclosures set a record last year in the U.S., and Washington Mutual posted its first loss since 1997 in the fourth quarter. The company wrote down the value of its home-mortgage unit by $1.6 billion.
Washington Mutual has lost about three-quarters of its market value in the past year ended last week, leaving the company almost tied with Cleveland-based National City Corp. among the worst performers in the 24-stock KBW Bank Index. National City, Ohio's biggest bank, ranked 10th among subprime lenders in 2006, according to a March ranking last year by Inside Mortgage Finance.
Washington Mutual ranked sixth among U.S. mortgage companies last year, according to trade publication Inside Mortgage Finance.
Default Rates
Subprime loans typically have the highest default rate, and bad subprime mortgages set a record in the fourth quarter, according to the Mortgage Bankers Association. That contributed to the current U.S. housing slump, the worst in at least a quarter of a century.
More than 100 home lenders have sought buyers, halted loans or gone out of business since the start of 2007, according to data compiled by Bloomberg.
The company ranks sixth with a 3.2 percent share of U.S. bank deposits behind Bank of America Corp., JPMorgan Chase & Co., Wachovia Corp., Wells Fargo & Co. and Citigroup Inc., Killinger said in a Jan. 29 investor conference. It had $194.3 billion in deposits as of Dec. 31.
Washington Mutual sold 176 million shares at $8.75 a piece, 33 percent below yesterday's closing price on the New York Stock Exchange, and preferred shares, the company said in a statement today. The lender also slashed its dividend and announced 3,000 job cuts. The stock fell as much as 13 percent.
Chief Executive Officer Kerry Killinger, struggling to reassure investors the bank has enough capital to stay afloat, said the dividend cut will preserve $490 million annually. Seattle-based Washington Mutual, which said today it lost $1.1 billion in the first quarter, will stop making loans through mortgage brokers and close 186 home-lending offices.
``It's dilutive for shareholders on a massive basis, so it's not great for the company, but it's great for the system that capital can be raised during these stressful times,'' Vincent Farrell, a principal at New York-based Scotsman Capital Management LLC, said on Bloomberg Radio.
Washington Mutual fell 76 cents to $12.39 a share at 10:28 a.m. in New York Stock Exchange composite trading.
Banks and securities firms including Citigroup Inc. and Lehman Brothers Holdings Inc. sought cash infusions after record losses tied to subprime home loans. The world's biggest financial companies have written down assets or set aside money to cover more than $232 billion in bad loans, according to data compiled by Bloomberg.
`Substantial' Capital
``This substantial new capital -- along with the other steps we are announcing today -- will position us for a return to profitability as these elevated credit costs subside,'' Killinger said in the statement.
Washington Mutual said it will set aside $3.5 billion because of expected losses on home loans and expects to charge off $1.4 billion in losses during the first quarter. The company had been expected to lose $344 million, or 39 cents per share, the average of industry analysts who follow the company, CreditSights Inc. analyst David Hendler said in a report today.
As part of the agreement Washington Mutual will stop making loans through mortgage brokers and close its freestanding home loan offices, while focusing on its 2,500 bank and small business lending offices. The quarterly dividend was cut to 1 cent a share from 15 cents.
Bonderman, TPG's founding partner, will be added to the board. Larry Kellner, CEO of Continental Airlines and former chief financial officer of American Savings Bank, will be an observer at TPG's request. Bonderman declined to comment through a spokesman, Owen Blicksilver.
Market Value
The lender, known as WaMu, once ranked among the 11 biggest originators during 2006 of subprime mortgages, which are made to people with the weakest credit.
Overdue loans and foreclosures set a record last year in the U.S., and Washington Mutual posted its first loss since 1997 in the fourth quarter. The company wrote down the value of its home-mortgage unit by $1.6 billion.
Washington Mutual has lost about three-quarters of its market value in the past year ended last week, leaving the company almost tied with Cleveland-based National City Corp. among the worst performers in the 24-stock KBW Bank Index. National City, Ohio's biggest bank, ranked 10th among subprime lenders in 2006, according to a March ranking last year by Inside Mortgage Finance.
Washington Mutual ranked sixth among U.S. mortgage companies last year, according to trade publication Inside Mortgage Finance.
Default Rates
Subprime loans typically have the highest default rate, and bad subprime mortgages set a record in the fourth quarter, according to the Mortgage Bankers Association. That contributed to the current U.S. housing slump, the worst in at least a quarter of a century.
More than 100 home lenders have sought buyers, halted loans or gone out of business since the start of 2007, according to data compiled by Bloomberg.
The company ranks sixth with a 3.2 percent share of U.S. bank deposits behind Bank of America Corp., JPMorgan Chase & Co., Wachovia Corp., Wells Fargo & Co. and Citigroup Inc., Killinger said in a Jan. 29 investor conference. It had $194.3 billion in deposits as of Dec. 31.
Thursday, March 27, 2008
Santander Sells Interbanca to GE in $1.6 Billion Swap
By Charles Penty (Bloomberg)
Banco Santander SA, Spain's largest bank, agreed to buy finance companies in Germany and the U.K. as part of an asset swap valued at 1 billion euros ($1.58 billion) with General Electric Co.
GE is buying Italian wholesale lender Interbanca, a unit that Santander retained after selling Banca Antonveneta SpA to Banca Monte dei Paschi di Siena SpA, the Santander-based lender said in a statement today. Santander will take over GE Money's units in Germany, Austria and Finland and credit-card and auto-finance divisions in the U.K.
Santander is taking on 9 billion euros in loans to expand its consumer-finance unit, which accounted for 9 percent of group profit last year. The expansion comes as slowing economies in Spain, Europe and the U.S. threaten to drive up loan defaults, said Alejandro Ruyra, an analyst at Landsbanki Kepler in Madrid.
``It's more efficient to leverage this business as much as they can,'' said Ruyra in an interview today. ``In the short-term it's true this business doesn't have the greatest outlook.''
Santander Consumer Finance earned 168 million euros in the fourth quarter, up 18 percent from a year earlier. Loan defaults as a proportion of total loans for the business stood at 2.84 percent in December, up from 2.57 percent a year earlier. The loan-loss ratio for the group as a whole was 0.95 percent.
Santander shares climbed 0.9 percent to 12.66 euros at 12:40 p.m. in Madrid, valuing the bank at 79.2 billion euros. The shares are down 14 percent this year.
GE is seeking partners or buyers for credit card, mortgage and loan units outside the U.S. to reduce riskier financial assets, three people with knowledge of the plan said last month.
The sale of GE's consumer-loan units in Europe expands on CEO Jeffrey Immelt's announcement in December to do the same for the U.S. card unit. He wants to shift as much as $50 billion in assets to commercial-finance businesses that have higher returns and lower risks of default.
Banco Santander SA, Spain's largest bank, agreed to buy finance companies in Germany and the U.K. as part of an asset swap valued at 1 billion euros ($1.58 billion) with General Electric Co.
GE is buying Italian wholesale lender Interbanca, a unit that Santander retained after selling Banca Antonveneta SpA to Banca Monte dei Paschi di Siena SpA, the Santander-based lender said in a statement today. Santander will take over GE Money's units in Germany, Austria and Finland and credit-card and auto-finance divisions in the U.K.
Santander is taking on 9 billion euros in loans to expand its consumer-finance unit, which accounted for 9 percent of group profit last year. The expansion comes as slowing economies in Spain, Europe and the U.S. threaten to drive up loan defaults, said Alejandro Ruyra, an analyst at Landsbanki Kepler in Madrid.
``It's more efficient to leverage this business as much as they can,'' said Ruyra in an interview today. ``In the short-term it's true this business doesn't have the greatest outlook.''
Santander Consumer Finance earned 168 million euros in the fourth quarter, up 18 percent from a year earlier. Loan defaults as a proportion of total loans for the business stood at 2.84 percent in December, up from 2.57 percent a year earlier. The loan-loss ratio for the group as a whole was 0.95 percent.
Santander shares climbed 0.9 percent to 12.66 euros at 12:40 p.m. in Madrid, valuing the bank at 79.2 billion euros. The shares are down 14 percent this year.
GE is seeking partners or buyers for credit card, mortgage and loan units outside the U.S. to reduce riskier financial assets, three people with knowledge of the plan said last month.
The sale of GE's consumer-loan units in Europe expands on CEO Jeffrey Immelt's announcement in December to do the same for the U.S. card unit. He wants to shift as much as $50 billion in assets to commercial-finance businesses that have higher returns and lower risks of default.
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