KUALA LUMPUR, Feb 16 – Malaysia’s CIMB Group Holdings Bhd is in talks to buy the Asian equities and investment banking units of Royal Bank of Scotland Group Plc, two sources with direct knowledge of the matter said today.

“Negotiations are ongoing but nothing is confirmed,” one of the sources said.

The other source confirmed that CIMB, the second-largest bank by assets in Malaysia, was in talks with RBS but did not know whether the negotiation was exclusive.

The Financial Times reported on Feb. 8 that CIMB and China International Capital Corp. are the remaining bidders in the running to buy RBS’ Asian equities, mergers and acquisitions and research businesses.

An official with China International Capital declined to comment when contacted.

RBS said today that it remained in active discussions with potential buyers for various parts of the Asian businesses that it had identified for sale.

“We will provide a further update based on material developments,” said one RBS’ company official.

RBS has been selling some of its businesses as part of its plan to scale down its non-core units on its road to recovery from the 2008 financial crisis.

The bank recently sold its aircraft leasing unit to Sumitomo Mitsui Financial Group and Sumitomo Corp for US$7.3 billion (RM22.36 billion).

  KUALA LUMPUR, Feb 15 – Malaysia’s economy grew at an annual pace of 5.2 per cent in the fourth quarter of 2011, slowing from the previous three months as the trade-dependent country felt the effects of weaker global activity, the central bank said today.

 

The fourth-quarter growth, which beat economists’ expectations of a 5 per cent expansion, was underpinned by strong domestic consumption.

The expansion in the last three months of the year took the economy’s full-year growth to 5.1 per cent. That is a marked slowdown from 7.2 per cent in 2010 as the Southeast Asian country felt the impact of weaker activity in advanced economies and uncertainties over the euro zone debt crisis.

“For the Malaysian economy, the favourable growth in the fourth quarter was underpinned by sustained domestic demand amid (a) weaker external environment,” the central bank said in a statement.

“Going forward, the more challenging external environment could present greater downside risks to Malaysia’s growth prospects.”

Private consumption rose 7.1 per cent from a year ago, while public spending jumped 23.6 per cent.

GDP growth had accelerated in the third quarter to 5.8 per cent but the central bank cautioned of a weaker outlook as global uncertainties erode demand for exports.

The central bank has kept monetary policy on hold since May 2010, when it hiked the benchmark interest rate for the fourth time after starting a tightening cycle in 2010.

Inflation in December eased to an annual pace of 3.0 per cent from 3.3 per cent in November and is expected to fall further, which could give the central bank leeway to cut interest rates at its next meeting in March. – Reuters

  NEW YORK, Feb 16 — Stocks fell yesterday for the third session in four, with market direction largely dictated by the swings in shares of Apple, the largest company in the world.

 

The S& P 500 appeared set for a strong move off a nine-month high as Apple Inc shares gained three per cent in early trading, helped by Tuesday’s disclosures that prominent hedge-fund managers had been buying the stock.

But Apple, the largest company by market capitalization, turned negative around midday and closed down 2.3 per cent to US$497.67 (RM1,494), quickly reversing the Nasdaq index’s advance. The stock had climbed as high as US$526.29 during the session.

The fortunes of both S& P and Nasdaq have been closely tethered to Apple of late, with the benchmark S& P index and Nasdaq a near-perfect correlation over the last 50 days, showing they are moving almost in lockstep.

Doreen Mogavero, chief executive of trading firm Mogavero, Lee & Co, said from the floor of the New York Stock Exchange investors were concerned about a report that Apple had asked online retailer Amazon to halt sales of its iPad in China.

A Chinese technology firm is trying to ban shipments of Apple’s iPad tablet in and out of the country in a legal battle over the iPad name.

An Apple spokeswoman referred to the company’s website that says Amazon is not an authorised reseller of iPads in China or the United States.

Volume on the iPhone maker’s shares surged to 50 million shares, an increase of over 400 per cent when compared with its 30-day average.

“This morning, in a bout of panic buying, Apple was up another 17 points, dragging a reluctant market along with it,” said Larry McMillan, president of McMillan Analysis Corp. in Morristown, New Jersey, in a report. The sharp decline “broke the market, and for the first time in quite a while, an early rally has degenerated into afternoon selling.”

Apple option flow was a total of 1.77 million contracts, surpassing the record of 1.3 million contracts set last Thursday, according to Trade Alert President Henry Schwartz. About nine per cent of the option volume market-wide was on Apple.

The S& P hit a peak of 1,355.87, just shy of its July 2011 high. A break above that level would take the benchmark to its strongest since at least May of last year.

“You are looking at good old exhaustion inside of the market,” said Keith Bliss, senior vice president at Cuttone & Co in New York. “From a technical standpoint, we had strong resistance at 1350, 1355 in the market, and there was no real appetite to get through it.”

The Dow Jones industrial average dropped 97.33 points, or 0.76 per cent, to 12,780.95. The Standard & Poor’s 500 Index lost 7.27 points, or 0.54 per cent, to 1,343.23. The Nasdaq Composite Index fell 16.00 points, or 0.55 per cent, to 2,915.83.

Industrial stocks led declines on the S& P 500, with Deere & Co off 5.4 per cent at US$84.28 after investors expected the farm equipment company to give a stronger full-year forecast.

US manufacturing output rose solidly in January and a gauge of factory activity in New York state hit a 1-1/2-year high in February, adding to a run of fairly upbeat data, even though overall industrial production was flat last month.

Decliners on the Dow, which underperformed the broader market, included industrial and material stocks like Caterpillar Inc, down 1.7 per cent at US$112.53.

Earlier the Dow industrials were trading near a 3 1/2 high and the Nasdaq was at a more than 11-year high.

Also weighing on the market, European Union sources said finance officials were examining ways of delaying parts or even all of a second bailout for Greece, while still avoiding a disorderly default. That rekindled fears about the region’s debt crisis.

Volume was solid with about 7.38 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, above the daily average of 6.98 billion.

Declining stocks outnumbered advancing ones on the NYSE by 1,723 to 1,273, while on the Nasdaq, decliners beat advancers 1,586 to 925. — Reuters

  BRUSSELS, Feb 16 — Euro zone finance officials are examining ways of delaying parts or even all of a second bailout programme for Greece while still ensuring it avoids a disorderly default, several EU sources said yesterday.

 

The delays could possibly last until after Greece holds elections expected in April, they said, although it depends to what extent Greek political leaders make firm commitments on further spending cuts and labour reforms unpopular with voters.

While most elements of the package, which will total €130 billion (RM520 billion), are in place, some euro zone finance ministers are not satisfied that all Greece’s political party leaders are fully behind the reforms and so want legal guarantees.

It is also not clear that Greece’s debt-to-GDP ratio, which currently stands at around 160 per cent, will be cut to 120 per cent by 2020 via the agreement, as demanded by the “troika” of the European Commission, IMF and European Central Bank.

“There are proposals to delay the Greek package or to split it, so that an immediate default is avoided, but not everything is committed to,” one official briefed on preparations for a euro zone finance ministers call later in the day told Reuters.

“They’ll discuss the options,” he said, adding: “There is pressure from several countries to hold off until there is a concrete commitment from Greece, which may not come until after they’ve held elections.”

Under the “split” proposal, a debt swap agreement between Greece and private sector Greek bondholders could go ahead.

The process, which aims to cut Athens’ debt burden by €100 billion via banks and insurers taking losses, was supposed to begin tomorrow but is now likely to begin next week, depending on the outcome of talks among euro zone finance ministers in the coming days.

If successfully completed, the swap would allow Greece to meet a €14.5 billion bond redemption payment on March 20, which if missed would result in default.

But the bulk of the €130 billion bailout would be held back as leverage over Athens.

The euro slid to its lowest in more than a week against the dollar in response to the Reuters report and safe-haven German Bund futures rose to session highs.

Greece’s conservative party leader Antonis Samaras, widely tipped as the country’s next prime minister, pledged in writing that if elected he would stick to an agreed programme of welfare and job cuts – a commitment demanded by euro zone ministers before they would agree to the new bailout.

“It is fair to say that my patience has run out,” Dutch Finance Minister Jan Kees de Jager told US National Public Radio. “We have to see the evidence of implementing the measure into law and just promises are not enough, not anymore.”

One senior euro zone diplomat said the pressure being applied on Athens to meet its commitments seemed to be working, and suggested that as long as that held, more radical proposals for re-examining the second package may not be necessary.

“With every small piece of news that we get from Athens, the situation is becoming better. Whether it will hold all the way through, we can’t know. They’ll have to discuss that tonight and come back to it on Monday, I imagine.”

Germany, Finland and the Netherlands are the countries pushing to delay the package, two other officials said, with Germany the most adamant and suggesting that final approval should only be granted after new elections are held.

Euro zone finance ministers began a conference call at 1600 GMT to discuss how to proceed. The call replaces a face-to-face meeting that was cancelled late on Tuesday because Greece had not provided sufficient commitments from its side.

Asked whether the package could be split, a spokesman for the European Commission said it was not yet decided.

“Up until now in the discussions, this has always been treated as an entire package,” Amadeu Altafaj, spokesman on economic and monetary affairs told reporters, adding specifically on the private-sector portion:

“Up until now, that’s never been separated out. Now what will happen tonight, I don’t know, I can’t pre-empt that. But that’s certainly the logic we’ve been following so far.”

One major problem with splitting the package is whether private holders of Greek bonds would be willing to sign up to a swap if Greece’s financing, which makes up the bulk of the second package, is not in place, since that would mean the state might not be able to meet future bond payments.

As a result, one euro zone source said it was possible that the entire second package – the private sector portion and the remainder – could be delayed until after Greek elections, when everyone hopes for greater clarity and commitment.

“This would mean we have to pay the €14.5 billion on March 20, which would be a total waste,” said the euro zone source, who took part in discussions among deputy heads of euro zone finance ministries on Tuesday.

“But there is still money left from the first programme so we could do it,” the source said, referring to Greece’s first, €110 billion bailout programme, agreed in May 2010. “This would mean that the talks on the second programme, including PSI (private sector involvement), which is part of the package, would be moved until there is a new Greek government in place.”

The frustration expressed by Germany, the Netherlands and others, reflected in the proposal to delay the rescue package, is in part designed to put political pressure on Athens. But officials say it is also genuine and a sign that patience is wearing thin after two years of trying to sort out Greece.

Data from Athens on Tuesday showed the economy shrank 7.0 per cent in the fourth quarter of 2011 on an annualised basis, making it all the harder for Greece to meet its debt targets. One official estimated that Greece’s debt-to-GDP ratio may only fall to 140 per cent by 2020 given the latest figures, way above the targeted 120 per cent.

For now, the central aim of euro zone finance ministers remains to push ahead with the second package as agreed last October, which would mean signing off on PSI in the coming week, possibly at a Eurogroup meeting set for Monday.

  NEW YORK, Feb 16 — Moody’s warned yesterday it may cut the credit ratings of 17 global and 114 European financial institutions in another sign that the impact of the euro zone government debt crisis is spreading throughout the global financial system.

 

The US rating agency said its action on financial institutions from 16 European nations reflected the impact of the debt crisis and deteriorating creditworthiness of its governments.

It cited more fragile funding conditions, increased regulatory burdens and a tougher economic environment for its review of banks and securities firms with global reach.

Moody’s salvo follows rounds of downgrades in European sovereign ratings as the euro zone’s struggle to keep its weakest link Greece afloat has been driving up borrowing costs and straining finances of other nations.

Last Monday, Moody’s cut the ratings of six European nations including Italy, Spain and Portugal and warned it could strip France, Britain and Austria of their top-level AAA grade.

Last month, Standard & Poor’s cut France’s and Austria’s top ratings and downgraded seven other euro zone nations. It also cut the euro zone’s bailout fund by one notch.

Moody’s said it was reviewing the long-term ratings and standalone credit assessments of Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Royal Bank of Canada.

The long-term ratings and standalone credit review of European banks includes Barclays, BNP Paribas , Credit Agricole, Deutsche Bank, HSBC, Royal Bank of Scotland and Societe Generale.

Moody’s said it was also extending the reviews of the long-term ratings and standalone credit assessments of Credit Suisse, Macquarie, Nomura and UBS.

“Capital markets firms are confronting evolving challenges, such as more fragile funding conditions, wider credit spreads, increased regulatory burdens and more difficult operating conditions,” Moody’s said in a statement.

As a result, the longer-term profitability and growth prospects of the institutions under review had diminished.

In its review of European banks, Moody’s said that once it is completed, the ratings will “fully reflect the currently foreseen adverse credit drivers.”

European banks’ bond holdings of struggling euro zone nations Greece, Portugal, Ireland, Spain and Italy have trapped Europe in a vicious circle.

The falling value of the debt puts pressure on banks, which in turn weighs on lending and economic activity, making it tougher to sustain the growth that governments badly need to shore up their finances.

European Union leaders have been trying to put a financial “firewall” around the most afflicted nations, but jittery market sentiment suffered a fresh setback on Wednesday when several EU sources told Reuters that the euro zone was considering a delay in parts of a second bailout plan for Greece.

Moody’s said that for 99 European financial institutions, the standalone credit assessments have been placed on review for downgrade. For 109 institutions, the long-term debt and deposit ratings have been placed on review for downgrade.

For 66 institutions, the short-term ratings have been placed on review for downgrade. — Reuters