Wall Street Breakfast: Eurozone Banks To Borrow €250B From ECB

by: Wall Street Breakfast
Wall Street Breakfast
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Eurozone banks are expected to borrow about €250B in cheap four-year money from the European Central Bank in September and December under the ECB’s "targeted long-term financing operations". The new loans would come on top of the more than €1T in cheap finance the ECB pumped into the financial system between late 2011 and 2012 to avert a financial crisis, and are expected to boost lending to the region’s credit-starved businesses.

Russia may impose restrictions or a ban on vehicle imports from Western countries, if the U.S. and EU impose additional sanctions on Moscow, reports the Vedomosti. The paper says that the proposals have already been sent to Vladimir Putin for consideration but no decision has been made yet. The ban would not apply to foreign automakers' production inside Russia.

China's anti-trust regulator has found Mercedes-Benz (DDAIY) guilty of manipulating prices for after-sales services, says Reuters quoting the Xinhua news agency. The auto market and other industries have been under investigation in China, as the country increases its efforts to bring companies into compliance with its 2008 anti-monopoly law. The legislation allows China's National Development and Reform Commission to impose fines of up to 10% of a company's Chinese revenues for the previous year.

Sonic Automotive will announce its creation of EchoPark today, a chain of preowned-vehicle stores that will challenge used-car retailers such as CarMax (NYSE:KMX) and Asbury Automotive (NYSE:ABG). EchoPark is part of Sonic's (NYSE:SAH) $350M investment to revamp its approach to selling cars, amid increasing U.S. demand for preowned vehicles. As one of the country's largest car-dealers, Sonic posted $8.8B of sales in 2013.

The WSJ reports that Credit Suisse played a large role in assembling the billions of dollars in securities that were issued by offshore investment vehicles of Banco Espirito Santo (OTCPK:BKESY). Regulators have already identified at least four offshore investment vehicles whose securities were sold with the help of Credit Suisse (NYSE:CS) to the bank's customers. Portuguese authorities are making Espirito Santo buy back the securities, continuing the heavy losses sustained by the bank.

Private equity firms TPG Capital and The Blackstone Group (NYSE:BX) are closing in on a deal to purchase subprime mortgage lender Kensington. Kensington is owned by Investec (OTC:IVTJY), which bought the company for £283M ($473M) in 2007 just as the financial markets began to seize up. The takeover has not yet been finalized, but insiders say the deal is likely to be announced this week.

KKR and Australian property manager Abacus Property Group have agreed to buy 70% of the World Trade Center in Melbourne for A$120.4M ($112.1M). The deal will be KKR's (NYSE:KKR) first real estate investment in Australia, having previously focused on markets such as China, India and South Korea.

Apache has announced a discovery of as much as 300M barrels of crude at an exploration well off the shore of Western Australia. If confirmed, the reserves would mark Australia's largest oil discovery in decades. The country is in need of oil sources to replace fast diminishing reserves, and Apache's (NYSE:APA) discovery may reopen a frontier of oil exploration which was abandoned years ago after wells turned up dry.

Samsung is planning to set up a factory to produce mobile phones primarily for Indonesia, one of the world's fastest growing markets for the devices. Production capacity at the facility in West Java will be initially set at 100K units per month, but will eventually climb to 900K. Seeing sales of its flagship Galaxy models weaken in more established markets, Samsung (OTC:SSNLF, OTC:SSNGY) is turning to markets with low smartphone penetration rates and higher disposable incomes like Indonesia.

The DOJ has filed additional charges against FedEx relating to its previous lawsuit which accused the shipping company of distributing controlled substances from illegal online pharmacies. The new indictment charges FedEx (NYSE:FDX) with conspiracy to launder money, stating that the company collected payments on some prescriptions to return to the issuer. The company plans to also plead not guilty to the new charges.

Despite Chugai Pharmaceutical denying a rumor on Saturday of a Roche (OTCQX:RHHBY) takeover, Chugai (OTCPK:CHGCY) shares jumped 15% to close at ¥3,825 on the Tokyo Stock Exchange, recording the stock's largest advance in more than 14 years. Sources say Roche will acquire the 38% stake of Chugai stock it does not already own for $10B, although the company says it is not even discussing the idea with Roche.

Telecom Italia is preparing an offer of as much as €7B ($9.4B) to outbid Telefonica (NYSE:TEF) for Vivendi's (OTCPK:VIVHY) Brazilian broadband unit, GVT. Previously, Telefonica offered $9B to merge GVT with its mobile and wireline subsidiary Vivo. If the deal goes through, Vivendi would receive a 20% stake in Telecom Italia (NYSE:TI) and a share in the combined companies' Brazilian units.

Deutsche Telekom is mulling acquisitions of smaller cable operators, reports Focus magazine. "We are closely monitoring the TV-cable market and keep purchasing options open," says the company's head of German operations Niek Jan van Damme. "But things must fit together." Deutsche Telekom (OTCQX:DTEGY) also recently announced that it is open to a deal for T-Mobile USA, but confirmed that it currently has no offer for the company which would boost the provider's position.

Following the rejection of their unsolicited $625M bid this past week, Cutrale and Safra Group have filed preliminary proxy materials aimed at a hostile takeover of Chiquita Brands (NYSE:CQB). The companies are asking Chiquita shareholders to vote against its planned merger with Irish tropical fruit company Fyffes (OTCPK:FYFFF) and adjourn a special shareholder meeting set for Sept. 17.

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Today's Markets:
In Asia, Japan flat at 15323. Hong Kong flat at 24955. China +0.6% to 2239. India +1.1% to 26391.
In Europe, at midday, London +0.6%. Paris +1.1%. Frankfurt +1.5%.
Futures at 6:20: Dow +0.4%. S&P +0.4%. Nasdaq +0.4%. Crude -1% to $96.38. Gold -0.2% to $1304.
Ten-year Treasury Yield +2 bps to 2.36%

Today's economic calendar:
10:00 NAHB Housing Market Index

Notable earnings before today's open: CMGE, FSYS, JKS

Notable earnings after today's close: FN, JMEI, PWRD, URBN

See full real-time earnings coverage »

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