The following are the day's top business stories:
1. Citigroup's Pandit Gets a Raise, Morgan Stanley's Gorman Settles for Less 2. Bank of America's Kitchen Sink Writedown Means Moynihan `Better Do Better' 3. Treasury 10-Year Yields Rise by Most in Six Weeks on Prospects for Growth 4. U.K. Commission Is `Unlikely' to Seek Full Break-Up of Banks, Vickers Says 5. SEC Recommends Common Fidicuary Standard for Brokers, Investment Advisers 6. European Rescue Fund May Buy Bonds, Recapitalize Banks, ECB's Stark Says 7. State Bank of India Net Increases 14%, Beating Estimates, on Loan Demand 8. Olbermann Exits MSNBC, Leaving Cable News Network Without Top-Rated Host 9. Hong Kong New-Home Sales May Reach 26-Month Low, Centaline Property Says 10 France Telecom Said to Be in Talks to Buy as Much as Half of DailyMotion 11.Cupidtino Matches Apple Fanatics Online for Love in the Time of IPhones 12.Most Read on Bloomberg: Jobs Takes Leave, Brokers Starve, Goldman Declines
1. Citigroup's Pandit Gets a Raise, Morgan Stanley's Gorman Settles for Less
Citigroup Inc. boosted Chief Executive Officer Vikram Pandit´s base salary to $1.75 million from $1 after the bank´s first profit for a year under his watch as Wall Street firms announced pay packages for top managers. James Gorman, Morgan Stanley´s chief executive officer since last January, was awarded deferred stock and options valued at about $7.4 million for his performance in 2010, when the firm´s shares trailed rivals. JPMorgan Chase & Co. awarded Chief Executive Officer Jamie Dimon´s top 15 executives more than $73 million in restricted shares, plus stock options, for their performance last year. Pandit´s raise is effective immediately, Citigroup said yesterday. Pandit, 54, has led the New York-based lender since December 2007 and oversaw its $45 billion bailout by taxpayers the next year. In February 2009, he told lawmakers his salary would be capped at $1 until the firm returned to profitability, and this week it reported a $10.6 billion profit for 2010. "He´s accomplished what he set out to do a couple of years ago," said Gary Townsend, president of Hill-Townsend Capital LLC in Chevy Chase, Maryland. "This boosts him back up to something that is at least respectable."
2. Bank of America's Kitchen Sink Writedown Means Moynihan `Better Do Better'
Investors barely blinked yesterday when Brian T. Moynihan wrapped up his first year leading Bank of America Corp. by announcing more writedowns and a second straight quarterly loss. They may not be so forgiving for 2011. "It was a bad quarter for the industry but particularly for Bank of America," said Thomas Brown, chief executive officer of Second Curve Capital LLC, a New York hedge fund focusing on financial firms. "It should be tough for everybody again in the first quarter, and Bank of America better do better on a relative basis." Moynihan, Bank of America´s 51-year-old CEO, booked a $4.1 billion provision for loan buybacks, which was $1.1 billion more than he disclosed three weeks earlier, and wrote down mortgage operations by $2 billion. That brought 2010 impairments to $12.4 billion tied to credit-card and mortgage units purchased by predecessor Kenneth D. Lewis. Investors may regard new writedowns as Moynihan´s problem. "The clock is clearly ticking at Bank of America," said Tony Plath, a finance professor at the University of North Carolina at Charlotte. "How long will institutional investors be happy with a 14- or 15-dollar stock price? They need to make $16 billion or $17 billion a year, that´s what it will take."
3. Treasury 10-Year Yields Rise by Most in Six Weeks on Prospects for Growth
Treasuries fell, pushing up 10-year note yields the most in six weeks, as economic reports in the U.S. and Europe bolstered speculation the global recovery is building momentum and damped government debt´s refuge appeal. Thirty-year bond yields rose to an eight-month high after European officials pledged to strengthen the safety net for debt-strapped countries and a record sale of U.S. inflation- linked notes drew lower-than-average demand. The Treasury will sell $99 billion of notes next week as the Federal Reserve meets and President Barack Obama gives his State of the Union speech. "We´ve seen the continuation of positive economic data and some confidence in the European sovereign crisis, which have both weighed on Treasuries," said Sean Simko, who oversees $8 billion at SEI Investments Co. in Oaks, Pennsylvania. "We are still range-bound and in a tug of war in rates ahead of a potential big news week that includes the Fed meeting and the State of the Union address." Benchmark 10-year note yields rose eight basis points in New York yesterday, or 0.08 percentage point, to 3.41 percent, from 3.33 percent on Jan. 14, according to BGCantor Market Data. It was the most since the five days ended Dec. 10. They touched 3.47 percent on Jan. 20, the highest level since Jan. 5. The 2.625 percent securities due in November 2020 fell 5/8, or $6.25 per $1,000 face amount, to 93 17/32.
4. U.K. Commission Is `Unlikely' to Seek Full Break-Up of Banks, Vickers Says
The Independent Commission on Banking said it´s unlikely to seek a full breakup of U.K. banks, while examining "ring-fencing" investment banking from consumer banking. "While the ICB is unlikely to favor radical reforms of narrow or limited purpose banking, their aims deserve recognition," John Vickers, chairman of the committee and former Bank of England economist, said today in a speech delivered in London. "In particular they seek by structural reform and much higher capital and/or liquidity requirements to limit or make redundant the government guarantee on risky activities." The government-sponsored commission is halfway through its examination of whether to break up the banks to increase competition and financial stability in the wake of the banking crisis. The five-member committee reports its conclusions to Chancellor of the Exchequer George Osborne in September and produces an interim report in April. The committee will examine whether to "ring-fence" the retail banking activities of systemically important institutions and require them to be capitalized on a stand-alone basis, while maintaining them within a single holding company, Vickers said. It is also "vital" to ensure that if an investment bank fails, depositors´ money isn´t put at risk, he added.
5. SEC Recommends Common Fidicuary Standard for Brokers, Investment Advisers
The U.S. Securities and Exchange Commission is recommending a common fiduciary standard for brokers and registered investment advisers who provide personalized investment advice. The SEC said there´s a need for a uniform fiduciary standard "no less stringent than currently applied to investment advisers," according to the staff report delivered to Congress yesterday. The agency was asked by Congress to study the effectiveness of current rules with the option of creating a universal standard as part of the Dodd-Frank financial services overhaul law enacted on July 21. Broker-dealers currently are held to a suitability standard that calls for advice that meets their clients´ needs when the product is sold, instead of the fiduciary duty imposed on registered investment advisers to put their clients´ best interests first. Republican commissioners Troy Paredes and Kathleen Casey issued a joint statement opposing the study as written and its release. The report "does not adequately recognize the risk that its recommendations could adversely impact investors," according to the statement.
6. European Rescue Fund May Buy Bonds, Recapitalize Banks, ECB's Stark Says
European Central Bank Executive Board member Juergen Stark said measures to strengthen the region´s rescue fund could include purchases of government bonds or injecting cash into commercial banks. "I could imagine the" European Financial Stability Facility "recapitalizing banks or buying sovereign debt," Stark said in an interview with Dutch newspaper Het Financieele Dagblad published today, according to an e-mailed transcript from the Frankfurt-based central bank. "But this issue has to be decided at the political level." European leaders are seeking ways to overhaul their crisis- response measures after Ireland and Greece last year were both forced to seek external aid. While the ECB purchased government bonds and provided banks with unlimited cash to fight the region´s fiscal crisis, President Jean-Claude Trichet has called on governments to step up efforts to restore confidence. The decision to buy government bonds was an "extraordinary step taken under extraordinary circumstances," Stark said. ECB council member Athanasios Orphanides said on Jan. 14 that the central bank may be able to stop buying bonds if "EFSF asset purchases improved the functioning of the monetary-policy transmission mechanism."
7. State Bank of India Net Increases 14%, Beating Estimates, on Loan Demand
State Bank of India, the nation´s largest lender, posted third-quarter profit that beat analysts´ estimates as accelerating economic growth boosted loan demand. Net income rose to 28.3 billion rupees ($619 million) for the three months ended Dec. 31, from 24.8 billion rupees a year earlier, the Mumbai-based bank said in an e-mailed statement. The profit compared with the 27 billion-rupee average of 29 estimates compiled by Bloomberg News. The profit gains may help Chairman Om Prakash Bhatt meet a target of 18 percent credit growth for the year ending March 31, when his five-year term at the helm ends. Analysts at brokerages including Macquarie Research´s Suresh Ganapathy said the earnings were better than expected, but sustaining the growth will be difficult.
8. Olbermann Exits MSNBC, Leaving Cable News Network Without Top-Rated Host
Keith Olbermann, the television host who led MSNBC out of the cable-news cellar with a partisan approach that sometimes ruffled feathers, left the network two months after a two-day suspension. Last night´s show was the final "Countdown With Keith Olbermann," the cable network said yesterday in an e-mailed statement. Talks to end the host´s contract have been under way for awhile, said a person with knowledge of the situation. Olbermann´s exit deprives the network of its top-rated prime-time program. The 51-year-old host clashed with his bosses in November over political donations that raised questions about advocacy and journalism. He was suspended for violating NBC News policy and reinstated after two days. "There were many occasions, particularly in the last two and a half years, where all that surrounded the show, but never the show itself, was just too much for me," Olbermann told the audience. "But your support and loyalty, if I may use the word, insistence, ultimately required that I keep going."
9. Hong Kong New-Home Sales May Reach 26-Month Low, Centaline Property Says
The number of private new-home sales in Hong Kong may drop to a 26-month low in January as developers held back new units during the Christmas holiday, Centaline Property Agency Ltd. said in an e-mailed statement today. Centaline expects to see 200 new home sales in the city for the full month of January, the lowest number since the 122 seen in November 2008, Research Director Wong Leung-sing said in the statement. They´re expected to fetch a combined HK$2.5 billion ($321 million), a 23-month low. Hong Kong´s government intensified a yearlong battle to curb surging prices with additional taxes and tightening policies on Nov. 19, slowing total home sales in the city to a seven-month low in December. It announced on Jan. 5 that it´s considering a plan to let banks widen the scope of credit checks on mortgage applicants. Centaline based its estimates on the 149 new-home sales, with combined value of HK$2 billion, registered by Jan. 19. The forecasts represent a 54 percent drop from December´s 433 transactions and a 55 percent decline from the combined HK$5.5 billion sales value last month.
10.France Telecom Said to Be in Talks to Buy as Much as Half of DailyMotion
France Telecom SA is in talks with DailyMotion SA to buy as much as half of the online video provider, according to two people familiar with the discussions. France´s largest phone company may announce the beginning of exclusive negotiations to buy a third to one half of DailyMotion on Jan. 25, said the people, who declined to be identified or to specify the value of the potential investment because the discussions are private. In 2009, French sovereign-wealth fund FSI, one of France Telecom´s largest investors, put 7.5 million euros ($10.2 million) into DailyMotion, a rival to Google Inc.´s YouTube. France Telecom Chief Executive Officer Stephane Richard is targeting new services to win a piece of the market dominated by Google, Apple Inc. and Facebook Inc. Last year, he complained large online traffic generators such as YouTube make money using phone networks without contributing to their upkeep. He proposed a system of billing by data usage.
11.Cupidtino Matches Apple Fanatics Online for Love in the Time of IPhones
Mel Sampat´s girlfriend was getting jealous of his iPhone. Once a Microsoft Corp. program manager loyal to his company´s wares, Sampat left his job last February and became an Apple Inc. convert, buying an iPhone, MacBook and Nano. By early April, his new fetish had become contentious. At their dinner table in San Francisco, Sampat´s girlfriend would complain he was too busy playing with his gadgets to pay attention to her. "Can´t we talk about us?" Sampat recalls her saying. "Can´t we talk about `Desperate Housewives?´" As their bickering escalated, Sampat, 31, reached a breaking point, Bloomberg Businessweek reports in its Jan. 24 issue.
-0- Jan/23/2011 00:35 GMT
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