|
U.S. acts to shore up crisis-hit Bank of America
2009-01-16
NEW YORK (AFP) - The US government mobilised to shore up Bank of America Friday, injecting another 20 billion dollars in capital, as Japanese carmakers once seen as rock-steady shed jobs and cut costs in further signs of a painful global recession. Asian, European and US stock markets nonetheless managed to rally as investors were heartened by Washington's fresh assistance to the banking sector. Bank of America, the largest US bank by assets, will get another 20 billion dollars in fresh capital and a 118-billion-dollar asset guarantee to help it absorb broker Merrill Lynch, the US Treasury Department announced. The bank has already received 25 billion dollars (19 billion euros) in capital injections from the 700-billion-dollar US financial bailout fund set up to rescue banks hit by the financial turmoil from the home mortgage meltdown. That included 10 billion dollars for the investment brokerage firm Merrill Lynch, which Bank of America bought in a deal that closed January 1. Bank of America will have to meet strict restrictions on executive pay, one of the conditions set by Democrat lawmakers in Congress. Another US banking behemoth, Citigroup, meanwhile reported a larger-than-expected fourth quarter net loss of 8.29 billion dollars, its fifth consecutive quarter in the red. European banks too have been battered by the crisis and have looked to governments for assistance. In Dublin, share trading in troubled Anglo Irish bank was suspended following an announcement it was to be nationalised. Prime Minister Brian Cowen insisted that the bank was still solvent. The European Commission said it had been informed in advance of the decision and would check the deal to ensure there was no illegal state aid involved. Elsewhere Russia allowed a fifth consecutive daily devaluation of its currency, pushing the ruble to another record low against the dollar, and there was no let-up in the seemingly relentless torrent of gloomy economic and corporate news. In Japan, Honda Motor Company said it would not renew contracts for 3,100 temporary workers and extended a suspension in production at its British factory from two to four months. Fuji Heavy, the maker of Subaru cars, warned of its first annual loss in 15 years. Mobile phone maker Sony Ericsson said it had plunged deep into the red in the third quarter with a net loss of 25 million euros (33.7 million dollars), although its sales volumes beat analysts' expectations. In the United States the latest inflation figures raised fears for a damaging bout of deflation, a sustained period of falling prices that can strangle growth and employment. US consumer prices fell 0.7 percent in December, capping a 2008 inflation rate of 1.8 percent amid a deepening recession, government data showed Friday. It was the third straight monthly decline in the seasonally adjusted consumer price index (CPI), according to the Labor Department. BusinessEurope, the European employers association, warned that European companies could increasingly be driven into bankruptcy unless it became easier to get credit, highlighting a reluctance by banks to make loans in the current climate. Bank of Japan governor Masaaki Shirakawa underscored the bleak picture of the world economy. "The global financial markets remain, on the whole, under heavy strain," Shirakawa said. The global economy was "slowing down rapidly," he added. The Bank of Japan is reportedly considering spending two trillion yen (22 billion dollars) to buy corporate debt, as it seeks new ways to ease a credit crunch. Despite an onslaught of dismal corporate news, global equity markets responded positively to reports of renewed US government backing for Bank of America. In European afternoon trade on Friday London soared 3.12 percent, Frankfurt jumped 3.00 percent and Paris rallied 3.33 percent, snapping a run of heavy losses as investors had fretted over the prospect of a deep global recession. In Asia, Tokyo's Nikkei index jumped 2.58 percent by the close, bouncing back from the previous day's near six-week low, while Hong Kong inched up 0.1 percent. And US stocks rallied at the opening, news of the US government rescue helping to ease fears about a further deterioration of the banking sector.
|  |
 Sony optimistic on 3-D TVs, in-house display (2009-11-26) | | Sony eyes 3D, networked products to revive growth (2009-11-19) | | Samsung Q3 profit trebles on memory chips, LCD (2009-10-29) | | Mobile phone giant Nokia sues Apple over iPhone (2009-10-22) | | Nokia posts first quarterly loss this decade (2009-10-15) | | Microsoft unveils line of Windows phones (2009-10-06) | | Germany wants a million electric cars by 2020 (2009-08-19) | | Court says ex-Samsung boss guilty over bond deal (2009-08-14) | | Ericsson wins auction for Nortel's wireless assets (2009-07-25) | | Nortel, a fallen Canadian icon, starts asset sales (2009-07-24) | | Microsoft, Nokia hit back at Apple with virtual stores (2009-02-17) | | Samsung unveil first solar-powered phone (2009-02-16) | | First solar-powered phone goes on display (2009-02-16) | | Japan economy shrinks at fastest pace in 35 years (2009-02-15) | | Motorola sees weak quarter, suspends dividend (2009-02-03) | | North Korea preparing for ballistic missile launch: media (2009-02-02) | | Ericsson reports profit drop, to cut 5,000 jobs (2009-01-21) |  U.S. acts to shore up crisis-hit Bank of America (2009-01-16) | | Motorola to cut 4,000 more jobs in 2009 (2009-01-14) | | China issues 3G mobile phone licenses (2009-01-07) | | LG Electronics to introduce broadband HDTV featuring Netflix (2009-01-06) | | Retailers slash prices to entice holiday shoppers (2008-12-26) | | Amazon says 2008 holiday season was 'best ever' (2008-12-26) | | Wal-Mart worker dies after shoppers knock him down (2008-11-28) | | LG, Sharp, Chunghwa fined 585 mln dlrs for price-fixing (2008-11-12) |
|
|
|
|
| 
