Reversing nine straight months of escalating unemployment, the Department of Economic Development announced Tuesday that the state’s jobless rate decreased slightly in April.
Unfortunately, the gains did not reach into Missouri’s two major metropolitan areas. The DED said the St. Louis vicinity shed 3,900 jobs last month; Kansas City lost another 5,800.
Statewide, the DED estimates that 249,900 Missouri residents were out of work last month. Seasonally-adjusted, unemployment in Missouri dropped to 8.1 percent last month, down six-tenths of a percentage point from the March figure, 8 free business cards.7 percent.
The national unemployment rate for April, seasonally adjusted, stood at 8.9 percent.
Missouri’s slight rebound was led by re-hiring in the construction industry along with the federal jobs added by the U.S. Census Bureau. Overall, businesses continued to pare non-farm payrolls in the manufacturing, retail, administrative positions, health care, social assistance and leisure and hospitality sectors.
MINNEAPOLIS — Airlines are doing a better job of taking care of the passengers they still have, according to a new study.
Passenger satisfaction with airline service rose 3.2 percent earlier this year, the first increase in six years, according to a University of Michigan study to be released today.
The increase came as the number of passengers dropped and airlines reduced flying. Also passengers checked fewer bags as luggage fees became more common, making it easier for airlines to keep track of the bags that remained. Enplanements on U.S. routes dropped 1.5 percent in 2008, according to the Federal Aviation Administration.
And if fewer passengers are the reason for the improved satisfaction score, imagine how happy they’ll be this year, when the FAA expects domestic boardings to fall 8.8 percent.
Southwest Airlines Co. had the highest score, 81 on a zero-to-100 scale. After that it was Continental Airlines Inc. at 68, Delta Air Lines Inc. at 64, AMR Corp.’s American Airlines at 60, US Airways Group Inc. at 59, Northwest Airlines at 57, and UAL Corp.’s United Airlines at 56.
The overall satisfaction improvement at airlines masked some big jumps at individual carriers, according to the university’s American Customer Satisfaction Index.
The most improved were Continental Airlines Inc., up 9.7 percent, and US Airways Group Inc., up 9.3 percent. Customer satisfaction at US Airways was on the rebound after a big drop in 2007, when it had the worst on-time showing among big carriers. For 2008, US Airways was first among big carriers for on-time arrivals.
Continental also regained lost ground after a drop the previous year. Delta Air Lines Inc.’s score rose 6.7 percent.
American Airlines’ score fell 3.2 percent, though it was still in the middle of the airline pack.
American Airlines spokesman Tim Smith said the airline’s internal customer satisfaction measurements show big improvements from a year ago paydayloans. He said American has "customer experience teams" at its airports that look for ways to improve customer service, and that last week American paid out some $14 million in employee rewards for meeting customer service and operational goals.
United’s score was unchanged from last year, when it was also in last place.
"We need to focus on the basics of running a good airline, and that means one that runs on-time with clean planes. When our flights are on-time and our planes are clean, we can deliver great service to our customers," United spokeswoman Robin Urbanski said.
Claes Fornell, a University of Michigan business professor and director of the research center that compiled the customer satisfaction data on airlines and other industries, said traffic dropoff appears to have as much to do with the airline improvement as any action taken by the airlines.
"Nobody’s making any money," he said. "It’s very difficult in that environment to provide good customer service."
The study noted that even though airlines showed some improvement, their average score of 64 was good enough for a tie with newspapers but lower than most other industries measured, including utilities (74) the Postal Service (82), express delivery companies (82), movies (70), and cellular phone service (69).
The phone survey of about 25,000 people during the first quarter of this year had them rate their satisfaction with companies in a variety of industries, including airlines. The index was created based on responses to questions about overall satisfaction, intention to be a repeat customer and perception of quality, value and expectations.
U.S. homebuilder sentiment jumped to its highest level in eight months in May, a private survey showed on Monday, supporting views that the three-year housing slump might be close to an end.
The National Association of Home Builders/Wells Fargo Housing Market Index rose to 16 from 14 in April, in line with market expectations.
The NAHB attributed the second straight monthly increase in the gauge — which measures builder confidence in the market for newly built, single-family homes — to “the best home buying conditions of a lifetime.”
The group’s chief executive officer, Jerry Howard, told Reuters that the two consecutive months of gains in the index were encouraging.
“It is a very important indicator that we are approaching the bottom and market stability could be just around the corner, that is what we are hoping for,” said Howard.
“We are looking to reach bottom during the course of this summer and probably bounce along the bottom until early fall before things really start to get back to normal. We don’t expect market equilibrium until 2012.”
The Dow Jones home construction index surged 5.77 percent, led by Lennar Corp after Citigroup upgraded its rating on the second largest U.S. homebuilder to “buy.”
The Federal Reserve’s aggressive cuts in interest rates to almost zero percent and buying of mortgage-backed securities have lowered the cost of home loans pay day loan lenders.
That, together with an $8,000 tax credit for first-time buyers, is helping to lending some stability to the distressed housing market.
Other housing indicators have recently shown a sharp slowing in the pace of the market’s decline, raising optimism a bottom is not too far away.
The collapse of domestic house prices and the subsequent global credit crisis were the main catalysts for the U.S. recession, now in its 17th month.
“The good news is that we likely have the worst of the housing crisis behind us. The bad news is that the housing market is only improving with turtle speed,” said Torsten Slok, a senior economist at Deutsche Bank in New York.
The NAHB report also showed two out of three subindexes of the Housing Market Index rising in May.
The current sales conditions gauge climbed two points to 14, while the sales expectations measure for the next six months rose three points to 27. The traffic of prospective buyers index was unchanged at 13 in May.
(Reporting by Lucia Mutikani; Additional reporting by Julie Haviv in New York; Editing by Leslie Adler)
Canadians have a love-hate relationship with our banks.
We love that they’ve remained financially strong during an historic global credit storm, earning worldwide praise and ensuring our money is safe. We hate how much we often pay in fees and interest charges for banking services and loans, and many complain about the banks’ usually fat profits.
Adding to the "love" side of the equation these days: some mortgage rates have dropped considerably. Many homeowners are now enjoying variable mortgage rates below 2 per cent.
Adding to the "hate" side: stubbornly high credit-card interest rates and recent moves by several banks to hike rates on personal lines of credit – at a time when the Bank of Canada has slashed its key overnight rate to a historic low of just 0.25 per cent in a bid to revive the economy.
Banks explained the recent moves to raise rates on lines of credit by saying their cost of borrowing has risen dramatically amid the credit crunch. That argument holds less water lately, since credit conditions have steadily improved this year and the banks’ cost of capital has fallen.
But credit-card holders carrying a balance aren’t likely to see relief anytime soon. Financial institutions may be paying less to borrow certain funds, but experts say that is unlikely to have a downward pressure on rates. That’s because most of those loans are not backed by collateral, making them relatively "risky" even in good economic times. The unemployment rate is at a seven-year high, which is fuelling a spike in credit-card defaults and personal bankruptcies.
Most banks are expected to report climbing losses on cards when they disclose their second-quarter results later this month – that’s despite taking action to cut credit limits on dodgy accounts and hiking penalties for those who pay late.
As evidence mounts that increasing numbers of Canadians are struggling to pay off those debts, the federal government is once again facing pressure to regulate. Parliamentarians have embarked on two studies, marking at least the fifth and sixth time they’ve launched probes since the mid-1980s.
Federal Finance Minister Jim Flaherty, meanwhile, plans to release a "set of regulations" in the coming weeks. "The other part is financial literacy, making sure people understand what is disclosed to them," Flaherty said last week.
Critics, however, are already dismissing Flaherty’s plan as political posturing. And that’s fuelling a contentious debate on whether Ottawa should impose a cap on credit-card interest rates.
Senator Pierrette Ringuette, a Liberal who spearheaded the Senate banking committee’s study of credit and debit, is convinced that it should. "It is absolutely absurd to have interest rates on credit cards at 19 and up to 25 per cent," she said, noting that banks are getting relief on their funding costs.
Aside from historically low Bank of Canada rates, the London interbank offered rate, or LIBOR, has fallen in recent months, signalling that banks are more willing to lend to each other in international markets. Even medium-term funding costs, such as the spread between five-year bank bonds and government bonds, are heading south, albeit not as rapidly as shorter-term rates. Longer-terms costs, though, remain elevated. The Canadian Bankers Association says each bank needs its own mix of funds. It also estimates the Bank of Canada’s key rate represents about 1 per cent of overall borrowing.
Nonetheless, if banks are getting more breathing room, so should consumers, said Ringuette fast payday loans. But she hesitates to define a ceiling for rates because banks refuse to disclose their costs and revenues on cards.
Previous parliamentary committees have tried but the issue has proved controversial. One report in 1989 recommended a cap of eight percentage points above the bank rate. Another in 1992 suggested caps were a bad idea.
The NDP, meanwhile, currently advocates a cap of five percentage points above the banks’ prime rates. "Credit-card companies can still make billions of dollars off that type of interest rate," said Glenn Thibeault, the NDP’s consumer protection critic, concluding a cap should be considered because more Canadians are falling behind on their bills.
Rate-cap advocates have long insisted the idea has economic merit. In 1997, Industry Canada estimated that for each percentage-point drop in credit-card interest rates, $10 million is put back into the economy per month, according to parliamentary transcripts. Government officials, however, were unable to provide a more recent estimate.
Not everyone, however, supports the idea of a cap – even those who appear to be agitating for regulation. Mel Fruitman, spokesperson for the Consumers’ Association of Canada, said other issues such as reduced grace periods and stiffer penalty charges are proving more "insidious."
Said Fruitman: "Simply putting a cap on the service charges, the interest charges might not have the desired result without sorting out these other problems."
The Canadian Community Reinvestment Coalition worries that banks would retaliate to a cap by choking off credit to lower-income Canadians. Chairman Duff Conacher said Ottawa should instead undertake a "forensic audit" of banks’ fees and interest rates to determine if their profit margins are reasonable, about 15 to 20 per cent over cost.
Costs vary from bank to bank, according to the bankers’ association. It also stresses that several variables are considered when setting interest rates, including the provision of an interest-free period from purchase to payment and the risks associated with providing "unsecured credit." There are also a slew of costs for transactions, technology, rewards programs, fraud and delinquencies.
"Credit-card interest rates tend to be higher than other loans because there is no collateral involved so there is a higher risk for the issuer," said spokesperson Maura Drew-Lytle in an email.
And while losses appear to be on the rise, about 70 per cent of Canadian households pay off their credit card balances in full each month, she said. Canadians who carry a balance have lower-cost alternatives including more than 60 low-rate cards in addition to personal lines of credit.
Of course, some say cardholders carrying a balance have only themselves to blame for paying high rates of interest; don’t take on debt you can’t afford. And some academics flatly reject the need for caps or more government study on credit cards.
Tom Velk, a banking expert at McGill University, says Canadians are equally cynical about the current round of parliamentary hearings.
"I think it is demagoguery, it’s vote buying, it’s, you know, putting on a show for people who believe that the banks are run by robber barons and so on," he said.
"I don’t think anything will come of it of any significance."
Singapore’s Temasek TEM.UL sold its 3 percent stake in Bank of America in the first quarter of this year, taking a loss of around $3 billion in the process, as the state investor refocuses on emerging markets.
Temasek invested in Merrill Lynch and other global banks during the early phase of the credit crisis but, like most sovereign wealth funds, was burned by losses as the crisis deepened.
Temasek ended up with a stake in Bank of America when the U.S. bank bought Merrill in January.
But the U.S-centric Bank of America may not have been the first choice of investment for Temasek, given the state investor focuses on global companies that aim to grow in Asia, sources familiar with Temasek’s thinking told Reuters.
Analysts said Bank of America did not offer the global banking franchise that prompted Temasek and other sovereign funds to buy into Merrill and other Western banks.
Singapore’s bigger sovereign wealth fund, GIC, also invested in Citigroup and UBS.
“Bank of America is no longer a global franchise. It’s pulled out from a lot of its overseas operations,” said Mike Kerley, a London-based fund manager at Henderson Global Investors low interest personal loan.
He added the U.S. Federal Reserve’s recent ’stress tests’ on banks showed BofA needed to raise new capital, which would dilute the holdings of existing investors such as Korea Investment Corp.
Bank of America’s shares in Frankfurt were up 1 percent in early European trade on Friday.
CLOSER TO HOME
Temasek has also recently become more aggressive in the Asian market and is eyeing investments in Latin America and Russia.
The cash from the BofA stake sale partly allowed Temasek to subscribe to rights issues of Asia-focused Standard Chartered, Singapore’s DBS and Indonesia’s Bank Danamon.
This week it bought more shares in China Construction Bank from Bank of America.
“It seems they feel the China growth story is better than the ‘green shoots’ of recovery in the U.S.,” said Song Seng Wun, chief executive of CIMB Research in Singapore.
He said Temasek probably sold its BofA holdings to cap its exposure to financial stocks, which at the end of March 2008 was 40 percent of its portfolio.
The Obama administration moved on Wednesday to exert more control over the shadowy over-the-counter derivatives market, now closely linked to the global credit crisis.
Federal regulators proposed subjecting all over-the-counter derivatives dealers — whose trades are not made through an exchange, making them hard to monitor — to “a robust regime of prudential supervision and regulation,” including conservative capital, reporting and margin requirements.
The plan, sketched out by Treasury Secretary Timothy Geithner and top regulators at a news conference, marks a big step in the administration’s push to rewrite rules for banks and financial markets in response to a credit crisis that has sent economies around the globe reeling.
U.S. officials have pumped billions of dollars of taxpayer money into banks and automakers to try to stem the crisis. Last week, they wrapped up “stress tests” at the nations 19 largest banks and told ten of them to raise a combined $74.6 billion.
The Obama administration is now aiming to bolster regulatory oversight of the financial system.
Over-the-counter derivatives are presently difficult to monitor and supervise. Billionaire investor Warren Buffett has called derivatives “financial weapons of mass destruction.”
Under current law, they are only loosely policed.
“We’re going to require for the first time all standardized over-the-counter derivative products be centrally cleared,” Geithner told the news conference compare car insurance prices.
EXPLOSION IN TRADING
Trading of OTC derivatives, instruments that derive their value from other assets, exploded in size in recent years, with many large firms — such as mega-insurer American International Group — charging into the burgeoning market.
The global market is pegged at about $450 trillion.
When the U.S. real estate bubble burst, firms such as AIG were left with mountains of complex, hard-to-sell financial instruments on their books.
In the United States, four large banks control over 90 percent of the derivatives market: JPMorgan Chase & Co, Bank of America Corp, Citigroup Inc, and Goldman Sachs Group Inc. All have received taxpayer aid.
Officials did not make clear which agency would be in charge of the crackdown. They said they would work together to prevent “forum shopping” for weak rules. Lawmakers disagree over which agency should oversee OTC derivatives clearing.
Laws enforced by both the Securities and Exchange Commission and Commodity Futures Trading Commission would have to be amended by Congress to accommodate the administration’s plans.
ST. LOUIS — A cast of politicians and luminaries including the Rev. Jesse Jackson and U.S. Sen. Claire McCaskill on Monday urged beleaguered local steel and autoworkers to "keep the faith."
Steelworker Larry Heath heard the message from the Kiener Plaza stage.
But he admitted keeping the faith is becoming increasingly difficult, with relentless layoffs and plant closures buffeting the region’s labor force.
"We could be competitive again, if they’d just level the playing field," said Heath, who has worked a total of six weeks at the Granite City steel mill so far this year.
The Keep It Made in America rally, the kickoff of a bus tour from St. Louis to Texas, came on the heels of news that the Chrysler LLC plans to permanently shutter its manufacturing plants in Fenton.
McCaskill, D-Mo., said addressing the Fenton pickup plant’s closure is tough right now "because none of us really knows what’s happening in bankruptcy" court or who is making operational decisions — the bankruptcy judge or Fiat SpA no fax instant cash advance.
"We’re monitoring it every day," McCaskill said on the sidelines of the rally.
Passionate in defense of American-made products, the crowd of about 300 were unabashed in citing the culprits the say are stealing their jobs.
The Fenton workers directed their ire at Chrysler’s decision to keep another pickup factory open in Mexico.
"We’re the backbone of this country, and they’re shutting us out and keeping the Mexican plant open," said Jim Lutes of Cadet, Mo., employed 12 years at the Ram plant.
Leo Yeakey of Wentzville, with 42 years at General Motors, fears GM’s Wentzville van plant will be next for closure.
"First it was Ford (in Hazelwood) that closed, now it’s Chrysler," he said. "I pray that GM isn’t next. But it’s like a cancer, it just keeps growing."
LOS ANGELES–The slump in Las Vegas may be bottoming out, but odds are good that a coming wave of new resorts will hinder any rebound in hotel rates or casino revenue.
That could put a cap on profits at recession-battered casino companies.
MGM Mirage, Las Vegas Sands Corp. and Wynn Resorts Ltd. this week reported stronger-than-expected first-quarter results, helping to boost their heavily battered stock prices.
"I see that starting in September – maybe October, more appropriately – we are going to have an accelerated booking pace … I hesitate to use the word getting back to normal, but I think we are getting close to getting back to normal in 2010," Sheldon Adelson, Sands’ chair and chief executive, said this week.
Analysts, however, warn that there is no concrete evidence as yet that the bottom of the downturn is in sight in Las Vegas.
"There has been some talk of things turning around in Las Vegas … but I don’t see any real evidence," said Majestic Research analyst Matthew Jacob.
Las Vegas Strip casinos won 17 per cent less money from gamblers in the first three months of this year than they did a year earlier, according to Nevada gaming regulators.
As the recession stalls travel demand and airlines trim flight capacity, the number of visitors to Sin City has fallen about 9 per cent over the same period, and the average daily room rate fell nearly 32 per cent in March from a year earlier.
Meanwhile, Strip projects like CityCenter, Fontainebleau Las Vegas and the Cosmopolitan, planned when there was no end in sight to the gambling boom, will start opening later this year, adding by 2010 nearly 16,000 luxury hotel rooms to the gambling corridor’s existing supply.
That’s an increase of about 11 per cent from the current total of 141,000 rooms, which reflects the opening last December of Wynn’s Encore and the debut in January 2008 of Las Vegas Sands’ Palazzo.
The total also includes expansions at the Hard Rock Hotel & Casino, set to start opening this summer, and new time-share towers at Planet Hollywood cash loan.
The largest project is the 27-hectare CityCenter, a multi-tower joint venture between MGM and Dubai World that will begin a phased opening in October.
"The opening of CityCenter later this year will add additional hotel and gaming capacity to an already struggling Las Vegas market and is likely to impact MGM’s 100 per cent owned properties," Buckingham Research analyst John Grassano said in a research note this week.
MGM, the largest Las Vegas Strip operator, owns nine other properties along the gambling corridor, ranging from the high-end Bellagio to the more mass-market Circus Circus.
Chief executive Jim Murren believes the new capacity will not cannibalize MGM’s existing operations.
"We have designed CityCenter in a fashion that it does not compete directly against the other properties," he said during a conference call this week.
"We are not adding significant gaming capacity to the market … The intent is to complement, not compete with, our portfolio, and frankly the portfolios of our competitors."
He predicted that CityCenter’s "18 million square feet of excitement" will boost demand for travel to Las Vegas.
"We think the visitation in Las Vegas is going to be up at least 5 or 6 per cent next year. And we think we are going to be largely responsible for it," Murren said.
Even that rate, however, would fall well short of the coming room supply increase.
"The earnings story is tough … Casinos have lots of fixed costs and they have already cut what they can," said Bill Lerner, an analyst at Union Gaming Group.
But he said he is hopeful that once people who do travel to Las Vegas begin to spend more money, the shift will be reflected in the stock prices of casino operators.
Ed Brock has to start planning for Halloween a bit earlier than most people. Brock, the owner of the Johnnie Brock’s chain of costume stores, typically starts looking in late April for temporary retail space for as many as 10 seasonal locations he operates during the fall.
Usually, landlords delay signing agreements with Brock until June or July. But this year, four have been spurred by the frighteningly bad economy into signing lease agreements for Brock’s little shops of horror — at an average of about 30 percent lower than normal leasing price.
"They’re working out what I need to work out," Brock said of negotiations with commercial landlords. "They know I’m a very good tenant, so they want me to stick around. A year ago, they would have said, ‘Tough noogies.’"
With businesses looking to cut costs, many owners of retail and office space are hearing cries for cut-rate rent from current and potential tenants, say local real estate experts. Owners, in turn, have become open to negotiating and dropping rates slightly as vacancies rise, said Dave Randolph, first vice president for real estate brokerage firm CB Richard Ellis.
"It went from this laundry list of tenants out there kicking tires, and then a lot of tenants said, ‘I’d better hold off on the expense of a move,’" Randolph said.
St. Louis’ commercial market doesn’t tend to have dramatic spikes in price to the north or south, Randolph noted. The average rate for both office space and retail space during the first quarter of 2009 — $18.77 per square foot and $12.97 per square foot, respectively — were down from the previous quarter, but not dramatically, according to agencies that track that data. Fourth-quarter numbers from 2008 were $13.16 for retail space and $19.06 for office space.
Randolph said he had been able to get about 5 percent savings in rent, at most, for some clients. But more often than lowering rent, landlords are renegotiating other terms, Randolph said. Five-year leases are being reduced to two years, for example.
But in extreme cases, landlords sometimes do more. In recent months, Randolph said, he was able to barter for a rent reduction of 15 percent for one large client.
"These office managers ask me to find some way to reduce costs," he said. "I knew if they didn’t get rent reduced, there was going to be some kind of layoffs."
The situation has put large landlords in a difficult position, said Glenn Guenther, principal for Discovery Group, a real estate services firm based in Maryland Heights. Landlords are facing some tenants that make a compelling argument for rent relief, while others make an argument for it but may not need it, he said.
"The key for landlords today is to keep tenants in place and keep that income stream in place, because the cost of losing the tenant, going through the vacancy and having to retrofit the space for the new tenant is extraordinary," Guenther said cashadvance.
The decision is being weighed on a case-by-case basis at Duke Realty, one of the area’s largest property owners. The firm has had only about a dozen requests for renegotiation from its more than 200 St. Louis tenants, said Toby Martin, vice president of Duke’s St. Louis operations. But it has also seen a fair number of clients go through bankruptcies, so Martin said the firm was being sensitive to clients’ financial matters.
"If they can make a case that they have a plan that they’ve really evaluated what they need … and they’ll make good use of the cash flow that would be freed up by that, then we can talk about doing some trade-offs," Martin said.
Brock, for one, has asked for rate cuts at only his temporary locations. However, he said, he has lost first-quarter sales from theater programs that usually drive business, as area schools have faced spending cuts. He said he knew things hadn’t been bad enough to justify lowering rates on his permanent leases — at least not yet. If sales drop further, though, he said he might have to bring his accounting books and ask for relief from the landlords of his permanent locations. Brock owns two costume stores, in St. Louis Hills and McKinley Heights in south St. Louis, and one gift and card store in Shrewsbury.
Unfortunately for many tenants, the economy is too rough for them to take better advantage of the situation, said Piers Pritchard, second vice president for commercial real estate firm Colliers Turley Martin Tucker. Pritchard said he had witnessed this new negotiating environment while representing both tenants and landlords. He said landlords weren’t really losing too much because many business owners were being overly cautious by signing shorter lease extensions. In return, landlords are able to solidify partnerships with most stable businesses, in hopes of emerging from the recession with a core group of healthy and loyal tenants.
Pritchard also noted the adage that all real estate is local has held true. More bargaining has taken place among downtown owners, while top-flight space in hotter markets such as Clayton has seen less turnover, he said. At the Pierre Laclede Center in Clayton, for example, Pritchard said the owner he represented had had just one client leave in the past 18 months despite raising rent rates. However, the owner has also invested millions in facility upgrades, including a renovated lobby and fitness center.
"We’ve been able to retain almost every tenant that’s had a lease roll over in that building the last three years," he said. "They’ve committed to capital improvements. There’s a lot to be said for a strong and stable owner which has really kept a comfort level for all the tenants."
U.S. regulators may be tempted to force bank marriages and asset sales to fill multi-billion dollar capital holes exposed by their stress tests.
But a rapid redrawing of the banking landscape like the one last fall may not be in the cards, banking industry experts say, even though the capital shortfalls at the 19 largest U.S. banks are much larger than analysts had expected.
Citigroup analyst Keith Horowitz wrote that banks, other than his own, may need to raise $75 billion after the tests.
The results are due on Thursday, and about 10 of the 19 banks may need capital, according to media leaks.
While seeking stronger partners could be tempting to the weaker banks, their healthier brethren will likely want to repay money they got under the Treasury Department’s $700 billion Troubled Asset Relief Program (TARP) before they use their capital for acquisitions.
And regulators may not have the needed leverage to force these banks to buy their needy rivals, the experts said.
Still as some banks find it hard to raise money, and with mergers often offering significant cost savings, regulators may try to forge a handful of deals, they said.
Some companies may try to sell assets to raise capital, but regulators are unlikely to give weaker banks six months to raise capital unless they have assets they can plausibly sell in that time, said Seamus McMahon, chief executive of bank consulting firm McMahon Advisory LLC credit scores.
“If what you are saying is that you are waiting for market conditions to improve and you have no plausible plans in place by June, I don’t think they will hesitate to force some of these banks together,” McMahon said.
The list of likely acquirers could include banks such as US Bancorp, JPMorgan Chase & Co and Morgan Stanley, McMahon said.
Targets could include banks such as SunTrust Banks Inc, Regions Financial Corp, KeyCorp and Fifth Third Bancorp, he added.
Citigroup Inc, which a source said needs $5 billion, could be an acquirer as well despite all its troubles, as takeovers could be a way for it to get much-needed deposits, McMahon said.
RELUCTANT BUYERS?
In urging any mergers, though, regulators will want to be careful that they do not create a new problem instead of solving one.
“You don’t want to put two stones together and see if they float,” said Jonathan Weld, a banking lawyer at Shearman & Sterling.
Powered by WordPress -- XHTML 1.0