EWS AT A GLANCE
National City’s cash infusion
A group of investors is close to injecting $6 billion to $7 billion into Cleveland-based regional bank National City, according to media reports. The investors are led by private equity group Corsair Capital. National City, which reports earnings on Tuesday, has been hit by steep losses from risky mortgage assets. (Reuters) Corsair and other investors will buy new shares of National City for about $5, below Friday’s closing price of $8.33 a share. Corsair will own about 9.9 percent of the bank. (The Wall Street Journal) With their stock diluted and an expected dividend cut, “shareholders continue to get penalized,” said RBC Capital Markets analyst Gerard Cassidy. (Bloomberg)
England’s $100 billion mortgage bailout
The Bank of England unveiled a plan to help Britain’s ailing mortgage industry, offering to swap $100 billion worth of government bonds for mortgage-backed securities. The plan aims to ease the nation’s credit crunch by encouraging banks to step up their lending to one another and to customers. (AP in Yahoo! Finance) Only assets around by the end of 2007 are eligible. The credit swap is good for one to three years, and the banks will retain much of the risk of losses from the assets. (Bloomberg) “This is not going to undo the harm that’s already been done to the economy,” said BNP Paribas economist Alan Clarke, but “it might just stop things getting any worse.” (Reuters)
Bank of America earnings fall 77 percent
Bank of America posted a 77 percent drop in quarterly profit, to $1.21 billion, falling short of analysts’ expectations. (AP in Yahoo! Finance) The bank set aside $6 billion for bad loans. The consumer banking unit at Bank of America, the No. 2 U.S. bank, accounted for a majority of its income last year, and the bank took a hit from rising unemployment and the housing slump, as missed credit-card and mortgage payments rose. (Bloomberg) To raise capital, Bank of America is reportedly selling some of its 9 percent stake in China’s No. 2 bank, China Construction Bank, and considering a sale of its equities prime brokerage unit to France’s BNP Paribas. (Financial Times, free registration)
Love in a bottle, on the side
Investment banker and Fox Business Network financial pundit John Layfield, a one-time professional wrestler, sells love in a bottle on nights and weekends. His beverage, Mamajuana Energy, is a nonalcoholic version of a traditional Dominican drink, mamajuana. Layfield sells the 2-ounce “sexual endurance drink” for about $4.99 a shot, calling it similar to “liquid Viagra.” But sexual health experts question the potency of the drink, which Layfield developed with Arizona herbal product firm Baywood International. “It’s a bogus promise,” says Dr. Andrew McCullough at New York University, “Marketing hocus pocus.” (The New York Times, free registration)
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