Good News From Banks
They are European banks, but good banking news has been scarce, and its arrival helps moderate the chicken-little talk:
Barclays shares skyrocketed after it said it expects pretax profits of over 5.3 billion pounds ($7.3 billion) for the full year 2008 despite writing down 8 billion pounds on bad assets. The bank also said it would not need any bailouts beyond some guarantees on toxic assets — dispelling fears it was set to be part-nationalized.
The news was a breath of fresh air for the banking sector, which was braced for the worst in Britain. Separate news also showed that banks are taking measures to fix their balance sheets and boost lending to the economy.
France’s Societe Generale SA and Credit Agricole SA said they will merge their asset management businesses.
Dutch ING announced 7,000 job cuts, the resignation of its CEO and a euro3.3 billion ($4.22 billion) loss for the fourth quarter. But it also said the state would take on 80 percent of a euro27.7 billion portfolio of risky assets in exchange for a nominal sum. Its shares were down 4.3 percent.
In France, BNP Paribas SA said it expects to report a euro1.4 billion loss in the fourth quarter due to weaker investment banking, but predicts a net profit of around euro3 billion for the full year thanks to the “good performance” of retail banking and asset management.