plus 3, Royal Bank Of Scotland Loses $5.5 Billion In 2009 - CBS News

Royal Bank Of Scotland Loses $5.5 Billion In 2009 - CBS News
Thai court to rule on seizing Thaksin's fortune - La Crosse Tribune
Moody's: Greece must act on fiscal plans - Reuters
Bernanke seeks to preserve Fed's power by compromising with Congress - Washington Post

Royal Bank Of Scotland Loses $5.5 Billion In 2009 - CBS News

Posted: 25 Feb 2010 02:05 AM PST

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(AP) LONDON (AP) - Royal Bank of Scotland Group PLC, government-owned after being bailed out, reported a loss of 3.6 billion pounds for 2009 but beat expectations and said the peak of bad loans from the economic crisis may have passed.

CEO Stephen Hester, who along with his deputy waived any bonus for the year, cited improvements but said a "hard slog" lay ahead.

The loss compared to a 24.3 billion pounds loss, a British corporate record, racked up by RBS in 2008 following the disastrous takeover of the Dutch Bank ABN Amro. RBS wrote off 16.9 billion pounds in goodwill in 2008 related to ABN Amro and in RBS' NatWest subsidiary.

The analysts' consensus forecast was a loss of 5.7 billion pounds.

Revenue rose 34 percent to 31.7 billion pounds, up from 23.6 billion pounds in 2008. The bank booked impairment losses of 13.9 billion pounds for the year, compared to 7.4 billion in 2008.

RBS, which is 84 percent owned by the government after being bailed out during the worst of the credit crisis, said its operating loss shrank from 6.9 billion pounds in 2008 to 6.2 billion pounds.

In the fourth quarter, RBS reported a net loss of 765 million pounds, down from 1.8 billion in the third quarter.

RBS shares were up 3.4 percent at 37.35 pence as the London Stock Exchange opened.

"The spike in the share price in early trade is likely to be in reaction to the amount of bad news previously factored into the valuation," said Richard Hunter, analyst at Hargreaves Lansdown Stockbrokers.

RBS was the biggest casualty of the banking crisis in Britain, which also saw the government taking over mortgage lender Northern Rock and buying a 43 percent stake on Lloyds Banking Group.

"We have exceeded all the principal milestones we set for the first year of our plan. An 8.3 billion profit for 2009 in our core businesses provides evidence that the new RBS can deliver sustainable earnings," said Chief Executive Stephen Hester.

The "core" operating profit included 5.7 billion pounds from RBS' Global Banking and Markets investment arm, "which successfully took advantage of buoyant markets despite the handicaps of its own radical restructuring," Hester said.

"RBS is also becoming safer and smaller more quickly than we expected. We have already completed 70 percent of our planned balance sheet reduction. Most importantly, our customer base remains loyal as we implement the changes to our business," Hester said.

Hester said loan impairments of 13.1 billion pounds, compared to 6.5 billion pounds a year earlier, "may have peaked in 2009" but he cautioned that "2010 will be a year of hard slog, with limited visibility of our end value."

The pace of Britain's economic recovery and regulatory changes were key unknowns, he said.

Hester and Deputy Chief Executive Gordon Pell both waived their bonus payments for the year, but the bank won government approval to dish out 1.3 billion pounds to employees.

"On bonus payments for 2009, we were guided by a policy to pay the minimum necessary to retain and motivate staff who are critical to the recovery of RBS," the bank said.

RBS agreed in November to divest RBS Insurance, Global Merchant Services and its interest in RBS Sempra Commodities as a condition for joining the British government's asset protection scheme to insure the company against losses on 282 billion pounds of risky loans. It was also obliged to sell within four years its RBS branch network in England and Wales, and NatWest branches in Scotland.

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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Thai court to rule on seizing Thaksin's fortune - La Crosse Tribune

Posted: 25 Feb 2010 02:05 AM PST

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Thailand is bracing for "Judgment Day" on Friday _ when the highest court decides whether to seize the $2.29 billion fortune of the country's divisive ex-leader, Thaksin Shinawatra.

The universal assumption is that the Supreme Court will confiscate at least part of Thaksin's fortune, which was frozen after his ouster in a 2006 coup that was staged because of his alleged corruption and abuse of power.

The big question is whether Thaksin supporters will react to the verdict with riots. That could usher in a painful new chapter in Thailand's political crisis after four years dominated by a bitter and sometimes violent rivalry between the allies and foes of the former telecommunications tycoon.

Thaksin won two landslide election victories and remains popular among Thailand's rural poor who benefited from his policies. But he is generally loathed by the urban elite, including in the military and bureaucracy, who contend he sought to usurp the power of the country's revered constitutional monarch, King Bhumibol Adulyadej.

Ahead of Friday's verdict, Prime Minister Abhisit Vejjajiva's government has called in the troops. More than 20,000 soldiers and police will be on alert nationwide _ with about 6,000 in Bangkok, the capital. Judges have been offered safe havens. Banks have been told to stock extra cash to accommodate panic withdrawals.

The verdict is timed to minimize the blow to Thailand's stock market, which like the economy and tourism industry have suffered through the instability. Judges will begin reading their ruling at 1 p.m. (0600 GMT) and are expected to finish after the market closes ahead of a three-day holiday weekend.

"If everybody remains calm and accepts the (ruling), Thailand will get through this situation," Abhisit said Wednesday.

Thaksin supporters say the talk about violence is government propaganda designed to discredit them. The pro-Thaksin Red Shirts, known formally as the United Front for Democracy against Dictatorship, say no protests are scheduled for Friday but a peaceful "million man march" will be held March 14 in Bangkok.

The 60-year-old Thaksin, who jumped bail and fled the country in 2008, is currently based in Dubai.

Thaksin plans to give a running commentary on Friday's proceedings by holding a live videolink as judges read the ruling, which will be broadcast to supporters from the headquarters of the opposition Puea Thai party, which is allied to him, the party said.

"If I don't receive justice, I will fight for it in every way," Thaksin told supporters earlier this week via videolink. "I am willing to negotiate. But if I am persecuted and bullied, I will not tolerate it."

Thaksin's served as Thailand's prime minister for five years until he was unseated by the September 2006 coup. Critics accused the tycoon-turned-politician of massive corruption and abusing his power by shaping government policy to enrich his family's telecommunications empire. He was convicted in absentia of conflict of interest in 2008 and sentenced to two years in prison.

A nine-judge panel at the court's special Criminal Division for Political Office Holders will determine if Thaksin concealed his assets after becoming prime minister and used his office to enrich himself. His 76.77 billion baht ($2.29 billion) fortune was frozen after the coup and is reportedly stashed in more than 100 bank accounts and other investments belonging to himself, his now ex-wife, his children and other relatives.

Judges will consider several cases of Thaksin's alleged policy abuse, including a multimillion dollar government loan to Myanmar in 2004. Thaksin is accused of endorsing the US$127 million low-interest loan in exchange for the junta's purchases of satellite services from Shin Satellite, then controlled by Thaksin's family.

The Supreme Court's decision technically cannot be appealed _ it is the highest court _ though defense lawyers have 30 days after the ruling to submit new evidence deemed significant to the case.

Thailand is talking about little else at the moment. The mostly anti-Thaksin national media have been counting down to the verdict for weeks, calling it "The Big Day," and "Judgment Day."

Thaksin supporters are demanding fresh elections and say their real mission is to end injustice in Thai society where the real power is held by the elite. They say Abhisit took power illegitimately after court rulings unseated two post-coup governments led by Thaksin allies.

"We can expect to see some assets _ if not all _ confiscated by the Supreme Court," said Thitinan Pongsudhirak, a political scientist and director of the Bangkok-based Institute of Security and International Studies. "But it would not put an end to Thailand's crisis, because now Thaksin's supporters the Red Shirts ... have evolved into their own force to be reckoned with."

"They are more than just Thaksin now, and Thailand's problem now is more than just Thaksin."

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Moody's: Greece must act on fiscal plans - Reuters

Posted: 25 Feb 2010 12:46 AM PST

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TOKYO (Reuters) - Moody's Investors Service said on Thursday any changes in its ratings on Greece would depend on whether Athens was smoothly enacting its fiscal reform plans as promised.

Crisis in Credit

Pierre Cailleteau, the head of Moody's global sovereign ratings, told Reuters in an interview that Moody's would follow the situation in Greece and see what was happening on the ground.

"We have to look at the facts and whether the government of Greece is going to do what it has promised to do," he said.

Rival ratings agency Standard and Poor's said on Wednesday it may downgrade Greece's BBB+ rating by one or two notches within a month, citing downside risks to growth that could hinder the country's deficit-cutting plan.

Cailleteau said that if in the next couple of months Moody's sees that Athens is implementing its plan as promised, it could keep the rating where it is or stabilize the outlook.

"Or if we see, based on evidence, that there is a deviation from the plan, we will change our rating accordingly. So a small deviation would lead to a small downgrade and a large deviation -- which we think is unlikely -- would lead to a large downgrade," Cailleteau said.

Moody's said earlier this month that debt-stricken Greece could face the risk of a multi-notch rating cut if its public finances remained unsustainable.

Moody's currently has Greece's long-term debt rating at A2 with a negative outlook.

"We want to evaluate the rating quickly but at the same time we are reasonable people. You can't expect a government to turn around a fiscal position in a few weeks," Cailleteau said.

Asked if Greece was in imminent need of support, he said Moody's did not think so.

"All the evidence we have so far is that Greece has been able to raise funds," he said.

European Union finance ministers earlier this month set Greece a deadline of May 15 to take urgent measures to rein in its budget deficit in addition to a mid-March deadline for a review of its progress so far.

Fears over Greek debt have hit the euro and lifted Greek bond yields this year. Investors are looking closely at how Europe tackles the problem.

The euro tumbled to its lowest in a year against the yen on Thursday and dipped within sight of a recent nine-month low against the dollar, below $1.3500.

JAPAN NEEDS TO WORK ON FISCAL PLANS

Moody's said it didn't think the problems in the euro zone would spread to countries such as Australia, New Zealand, China or Japan.

Tom Byrne, senior vice president and Asia regional credit officer at Moody's, said China still had a strong fiscal position.

"There could be contingent liabilities in the banking sector from the credit surge. But we think the Chinese economy has strong medium term growth prospects at least," Byrne said in an interview with Reuters Insider television.

"We don't see any exogenous threats to China."

But Japan's sovereign debt rating could come under pressure if its economy performed poorly and the government failed to draw up convincing fiscal plans, he said.

"The question that we're asking ourselves is ... can Japan get back on course, the course it was on before the (global) crisis?" Byrne said.

"For that to happen we have to see improved confidence in the economy, certainly improved confidence by the corporate sector, and also we have to see a bit more clear cut fiscal policies."

Last May, Moody's raised Japan's domestic debt rating to Aa2 from Aa3, saying the domestic market was able to absorb new borrowing from the most indebted government in the industrial world.

At the same time, it downgraded the foreign currency rating to Aa2 from AAA.

"The issue is if the deficit cannot be reduced over years beyond 2010, that would be credit negative," he later told a news conference.

In January, rival ratings agency Standard & Poor's threatened to cut Japan's credit rating unless it produces a credible plan to rein in its soaring debt and lift growth in an economy plagued by persistent deflation.

Japan's public debt now stands around 200 percent of gross domestic product, the highest among developed economies. (Additional reporting by Charlotte Cooper and Hiroyasu Hoshi; Editing by Hugh Lawson)

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Bernanke seeks to preserve Fed's power by compromising with Congress - Washington Post

Posted: 25 Feb 2010 03:02 AM PST

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Testifying before the House Financial Services Committee, Bernanke said he will support legislation to disclose the names of companies that take advantage of special Fed lending programs, so long as enough time has passed since the loan requests to avoid stigmatizing the firms. He also said he will support expanding congressional oversight of many of the Fed's functions if its power over monetary policy is exempted.

Congressional ire at the Fed has been boiling for months, driven by such factors as the Fed's role in a series of bailouts, its regulatory failures that contributed to the financial crisis and its secrecy. Many lawmakers even aim to strip the Fed of its power to regulate banks, an idea that Bernanke is fighting.

In his semiannual testimony on monetary policy, Bernanke's conciliatory approach appeared to soothe some tensions, as the tone was much more civil than in his other recent congressional appearances. Eight members of Congress congratulated him on his confirmation to a second four-year term last month. The wildly unpopular bailout of American International Group, for which he has regularly been pilloried, was mentioned only three times during the four-hour hearing. In comparable testimony last July, it came up 17 times.

Critics have long complained that the Fed will not disclose the names of banks and other institutions that borrow money through special programs set up during the financial crisis. Fed leaders have argued that if the information were disclosed, it would cause firms to avoid using the special facilities for fear of being stigmatized. The special programs would therefore be less effective.

Bernanke told the House committee that the Fed is "prepared to support legislation that would require the release of the identities of the firms that participated in each special facility after an appropriate delay." He added, "It is important that the release occur after a lag that is sufficiently long that investors will not view an institution's use of one of the facilities as a possible indication of ongoing financial problems."

Compromise, to a point

With the proposal, Bernanke seemed to be offering a compromise to lawmakers who would prefer requiring immediate and complete disclosure of the beneficiaries of Fed programs. He did hold out an exception, arguing that loans from the "discount window" -- an emergency lending program for banks that has been a key function of the Fed throughout its 97-year history -- should not be subject to disclosure, even with a delay.

"We think it's very important to keep the names of the borrowers confidential, and the reason is that banks will only come to the discount window in a period of crisis or panic, and if they believe that their names will be revealed, that that would indeed, in fact, intensify the crisis or panic," Bernanke said.

Similarly, Bernanke endorsed allowing Congress, through the Government Accountability Office, to review much of the Fed's operations. But he included a major exception: monetary policy, such as decisions on interest rates, which he has long argued must remain independent from congressional meddling.

"We would support legislation authorizing the GAO to audit the operational integrity, collateral policies, use of third-party contractors, accounting, financial reporting and internal controls of these special credit and liquidity facilities," Bernanke said. But, he added, "it is vital that the conduct of monetary policy continue to be insulated from short-term political pressures."

Rep. Ron Paul (R-Tex.) has proposed GAO audits of all Fed activities, including monetary policy, and his legislation has been co-signed by a majority of House members and was included in financial regulatory reform legislation passed by the House.

"I get that question asked almost everywhere I go: Where are we at in terms of auditing the Fed?" Rep. Michele Bachmann (R-Minn.) said at the hearing.

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