Friday, June 25, 2010

Financials-UK banks face rising risk levels if they don’t move quickly to raise the GBP750-800B required to refinance their borrowings due by the end of ’12 $XLF


· Austria - becomes the first country in Europe to publish its bank stress tests - the results argue that its banks would be fine, although there are some issues.  First, the test is based on tier-1 capital (not core T1) - keep in mind that there is a sig. amount of gov't-capital in Austria banks that counts towards tier-1.  Also - liquidity wasn't really considered and "tail" sov risks (lie a Greek restructuring) aren't even looked at.  Bottom Line on these Austria tests - pretty much a non-event and other countries (Spain, France, Germany) will need to publish tests w/more disclosures and parameters. 

· European Union officials are meeting today in Brussels to discuss whether Spanish savings banks and Germany’s state-owned regional Landesbanken should be included in the current round of stress tests – Bloomberg

· Bond sales - Company debt offerings globally declined 8 percent this week to $36.9 billion – Bloomberg 

· Banks – global financial institutions win slight reprieve from Basel committee re Basel III liquidity standards; new proposals to be outlined at this weekend’s G20 summit; according to the FT – “the committee is likely to shelve the idea that banks should be forced to maintain a longer term “net stable funding ratio” that aligns the maturity of their assets and liabilities” (FT)

· Mizuho Financial Group Inc., Japan’s second-largest publicly traded bank by assets, plans to sell up to 6 billion new shares to boost capital – Bloomberg 

· AIG – tensions are evident in the senior ranks of AIG says the FT; the chairman, H Golub, is said to be at odds w/the CEO, Robert Benmosche; the latest issue dividing the men was the failed sale of AIG’s Asian business to Prudential PLC (PUK in the UK).  Benmosche apparently was in favor of cutting the asking price so that PUK could win the support of its shareholders for the deal, something Golub rejected.  The gov’t is said to be worried that both men could resign.  FT

· AIG – MFC said it would be interested in buying American International Group Inc.'s (AIG) AIA Group Ltd. to expand its insurance business in Asia (DJ)

· UK banks face rising risk levels if they don’t move quickly to raise the GBP750-800B required to refinance their borrowings due by the end of ’12; the BOE’s Financial Stability Report on Fri warns that UK banks face larger refinancing risks over the next two years vs. counterparts in the US, Germany, France, or Italy; the BOE also says further writedowns are possible (FT)

· HRB - $2.3B 4Q revenues are in-line, $2.11 beats $2.04 consensus.  Maintaining guidance of $140-$150mm in cost savings achieved by FY'12. HRB won't be providing earnings guidance, but will give directional insights on earnings call.  Digital performance picked up at the end of the qtr, up 0.4% y/y vs (0.6%) as of 4/15/10.  Online returns +4.3% y/y drove digital, vs. +2.6% y/y as of 4/15/10. Expectations were low, the quarter was fine, nothing to write home about.

· GS – the company retakes the top spot in global M&A advisory – Reuters  

· EFG Eurobank, Greece's second-largest lender, plans no merger in the near future (Reuters)

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