Financial Times Summary
Thu 24 Jul 2008
Legal & General
The UK's biggest institutional investment group has questioned why more UK bank executives have not fallen on their swords over their shareholder's losses. Mark Burgess, head of equities at L & G Investment Management which owns about 4.5% of the UK stock market, suggested bank directors should be more accountable for the sector's spate of rescue rights issues and write-downs. He drew a stark contrast with the US where swathes of top executives have been made accountable for the flawed strategies and portfolios of toxic debt that have brought US banks low in the he past six months.
Northern Rock
Northern Rock, the stricken UK mortgage lender that was nationalised in February, has hired a long-standing Barclays director to be its new chief executive. Gary Hoffman, currently group vice-chairman at the UK's third largest bank, with join Northern Rock on a basic salary of £700,000. He will receive a further £1.2m in compensation for loss of his participation in incentive programmes at Barclays.
Tokio Marine
Tokio Marine is to buy US insurer Philadelphia Consolidated for £2.4bn in the second biggest purchase by a Japanese company this year. Japan's biggest non-life insurance group is to pay $61.50 a share in cash, a 67% premium over Nasdaq-listed Philadelphia's average share price over the past year.
CBA
Commonwealth Bank of Australia, the country's second largest lender, is in exclusive talks with RBS to acquire the Australian and New Zealand operations of ABN Amro. News of the talks comes less than a day after National Australia Bank, the countries largest bank, announced it was no longer interested in the assets. NAB declined to say why it had withdrawn from the auction. Japan's Nomura had also shown interest in the sale.
Goldman Sachs
Goldman Sachs has raised a $10bn fund to invest in loans backing leveraged buy-outs, taking advantages of a gap in the financing markets created by the credit crisis. The fund will buy senior loans, so-called because they were paid off before other debts. It comes in addition to an existing $20bn Goldman funds that invests in "mezzanine" debts, which are paid after the senior debt.
HBOS
HBOS registered its biggest one-day percentage gain in 8.5 years as short-sellers scrambled to close their positions. The frenzied buying was initially triggered by rumours of predatory interest from Spain's BBVA and then by speculation that Dresdner Kleinwort had managed to offload a large chunk of unwanted stock it was left with when HBOS's rights issue closed last week. Dresdner and Morgan Stanley were the underwriters to the £4bn cash call, which flopped spectacularly with just 8.3% of shareholders taking up their rights.
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