AIG bailout fails to lift market mood

AIG bailout fails to lift market mood

Brief rally peters out in region over fears of more turmoil ahead

By Goh Eng Yeow

ASIAN bourses failed to get any boost from the United States government’s shock move to try to calm global financial markets by throwing a US$85 billion (S$122 billion) lifeline to beleaguered financial giant American International Group (AIG).
A feeble attempt by regional stock markets such as Hong Kong and Singapore to rally petered out as their indexes closed at their lowest levels in two years, as investors braced themselves for more bad news from Wall Street.

This was in contrast to the jubilation experienced worldwide when troubled investment bank Bear Stearns was bailed by the US authorities out in March.

‘Investors should apply a more conservative approach and try not to react aggressively to sudden rises and falls in the market,’ advised Westcomb Securities in a note to clients yesterday.

It sounded like sensible advice in view of the flip-flops coming out of the US, where the government had apparently succumbed under strong political pressure to keep AIG afloat, after initially rebuffing its distress calls.

Some traders were worried that the US government might have opened a Pandora’s box, with other ailing US financial firms queuing up to seek help, to fix messes created by irresponsible decisions.

They were also fearful that Washinton’s actions may embolden the hordes of short-sellers on the look-out for the next vulnerable target on Wall Street.

As a result, the initial muted jubilation over AIG’s bailout was swiftly replaced by a sense of foreboding among traders that even more turmoil might lie ahead.

The benchmark Straits Times Index rose by over 33 points at the opening bell, only to sink into negative territory by mid-day, as traders offloaded banks and other blue-chips. It ended 42.14 points down at a new two-year low of 2,419.29, after losing up to 62 points in late trading - spooked by sell-offs in United Overseas Bank which fell 60 cents to $16.50 and DBS Group Holdings which shed 24 cents to $16.14.

In Hong Kong, the Hang Seng suffered a similar wild mood change, as it swung from an early gain of 399 points to a loss of 663.4 points, closing at 17,637.2. Big losers included mainland banks such as ICBC (plunging 9.9 per cent) and China Construction Bank (diving 8.2 per cent).

But while regional banks were hit by fears of contagion from Wall Street, local factors were to blame for the sell-down in other sectors such as plantations.

Plantation giant Wilmar International lost 25 cents to $2.61 on a hefty volume of 23.11 million on fears that there might be a glut of palm oil, whose price had crashed from RM3,700 to RM2,317 per tonne in the past three months.

Reflecting the sombre mood among investors, Merrill Lynch said yesterday that investors were turning to bonds as risk appetite hit a new low.

‘Many fund managers believe the global economy is already in recession, or likely to go into recession in the next 12 months,’ it added.

Source : Straits Time - 18 Sept 2008

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2,000 more Singapore rental flats to be built

2,000 more Singapore rental flats to be built

THE Housing Board (HDB) has announced that it will build another 2,000 rental flats, to cater to rising demand from needy families.
As at the end of last month, the HDB was managing about 43,000 one- and two-room rental flats for the Public Rental Scheme. It has set a goal of expanding this to 50,000 in three years.

Speaking at the HDB Annual Report 2007/2008 press conference, the board’s chief executive Tay Kim Poh said rental housing was a key option for genuinely needy families unable to buy a flat.

‘To meet their needs, HDB increased the supply by converting existing flats into rental flats and resuming the building of new rental flats. Almost 1,000 converted units were added to our rental housing stock,’ he said.

Conversion works at another two blocks in Redhill are also under way and, when completed, would add another 350 units of one- and two-room rental flats for allocation from early next year.

Demand for rental flats has been on the rise. In its financial year 2006, the HDB received 5,643 applications to rent flats. The following year, that number rose to 5,970.

Last month, the Government announced it would be introducing new rules on HDB rental flat eligibility in order to stamp out abuse of the system.

The Government is studying issues including checks to see if siblings and children of applicants own private property and requiring flat sellers to deposit part of their sales proceeds into their Central Provident Fund accounts.

The HDB said it would complete the review by year-end, and would release details after that.

ELIZABETH WILMOT

Source : Straits Time - 18 Sept 2008

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Coming up: 3,000 more HDB flats

Coming up: 3,000 more HDB flats

Govt to release more units for sale by year’s end as demand for homes doubles

By Fiona Chan, Property Reporter

To meet demand, the Housing Board has already released over 5,000 flats for sale so far this year, out of a planned 8.400 for the whole year. — PHOTO: HDB

THE Government will release 3,000 more HDB flats for sale by the end of the year, amid a doubling of demand for flats by home buyers.
‘Demand for new flats from young couples has definitely gone up since 2006,’ Mr Tay Kim Poh, the HDB’s chief executive, told reporters at the release of the board’s annual report on Tuesday.

Flat buyers bought 11,991 new flats in the year ended March 31, more than double the 5,712 recorded the year before.

To meet demand, the Housing Board has already released over 5,000 flats for sale so far this year, out of a planned 8.400 for the whole year. This is 40 per cent more than last year’s 6,000, which was already higher than the year before. Next year, ’should the demand remain strong’, the HDB ‘will release just as many’ flats, Mr Tay said.

For now, though, ‘unless our population grows very fast, there is no need to build at the same level as the 1980s’, he added.

The HDB’s unsold stock has dwindled from about 2,000 flats last year to some 1,500 now. Hopeful buyers have complained of difficulties and long waits in trying to secure a home.

‘Young couples looking for a flat should not come to us for a new flat. We don’t have a ready supply,’ Mr Tay said.

First-time buyers who are not particular about location, however, usually bag a flat on their first or second try, he said.

He also stressed that while the board is ‘concerned’ about rising construction costs, HDB flats remain ‘very affordable’. At this point, flat buyers are using about 20 per cent of their incomes to service their loans, and most do not have to use all of their Central Provident Fund money, he said.

‘When we price our flats, we don’t link it to development costs, but to market prices. If market prices stabilise, like they are appearing to do now, our flat prices will also be stable.’

Higher construction expenses, which by some estimates have risen by 20 per cent to 30 per cent in the last year, have hit the HDB less severely than some private developers. The board buys materials in bulk to supply to its contractors, mitigating the increase in costs, said Mr Sng Cheng Keh, its director of development and procurement.

For this year, the HDB’s focus is to meet the ‘rising aspirations’ of flat buyers and dwellers, said Mr Tay.

Source : Straits Time - 18 Sept 2008

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Temporary Singapore housing sites still needed

Temporary Singapore housing sites still needed

Mah: Despite 4 options to house them, there’s space shortage in short term

By Ang Yiying

The foreign worker population here went up by 102,000 last year, double the jump of 55,000 a year ago. Despite the housing crunch for these workers, Mr Mah said that restricting the numbers is not an option for the next couple of years if the economy is to grow. — ST PHOTO: DESMOND LIM

THE foreign worker population here went up by 102,000 last year, double the jump of 55,000 a year ago.
And with major contruction works lined up, a let-up is unlikely.

The influx is ruffling a growing number of feathers too: Complaints relating to illegal housing of foreign workers numbered 300 last year, but the number has already shot past 300 so far this year.

National Development Minister Mah Bow Tan said yesterday that restricting the number of foreign workers is not an option for the next couple of years if the economy is to grow.

The question is how they can be housed properly and, until more permanent housing becomes available in 2011, temporary facilities have to be created from nowvacant state buildings.

As at the end of last year, there were 577,000 foreign workers here, excluding maids. Of these, 180,000, or one-third, were doing construction work.

An estimated 80,000 to 100,000 are housed in illegal accommodations or living in conditions that are ‘not ideal’, Mr Mah noted.

Given that minimum standards of public health should be provided where they live, he listed four ways to house them.

Residential housing: in rented public housing or in private residential developments.

On-site living: on the grounds of or close to large construction projects.

Purpose-built dormitories: sited further away from residential areas or within or near industrial estates.

Factory-converted dormitories: Factory owners can convert 40 per cent of their industrial premises into dormitories. Guidelines have also been relaxed to allow such facilities to operate as commercial dorms.
But he noted that pursuing these options still leaves a housing shortage for foreign workers in the short term. This makes it necessary to identify sites for temporary accommodation lasting two to five years. Ten sites are being explored for such use.

But even if all these sites are converted into housing for workers, it will still not totally meet the demand, said Mr Mah.

He stressed that while efforts would be made to house workers in ways that would minimise noise and inconvenience to nearby residents, it would not be socially desirable or possible to totally segregate them.

With Singapore’s limited land area, creating huge foreign workers’ communities like those in the Middle East would not be possible, he added.

Does the lack of housing for foreign workers reflect poor planning?

Mr Mah said projects such as the two integrated resorts needed construction workers, and large investments calling for huge factories also required process workers.

‘Yes, we do some planning but the build-up of the spaces requires quite a lot of lead time so we could not anticipate that…To call it poor planning, to call it one of the problems of success because we were so successful, we did not anticipate this kind of issue.’

One option, he said, was to look into building self-contained complexes or campuses that house up to 20,000 workers.

Source : Straits Time - 18 Sept 2008

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Singapore DBS High Notes investors at risk

Singapore DBS High Notes investors at risk

Bank warns they may lose entire stake in Lehman-linked product

By Francis Chan

SOME local investors of a product linked to bankrupt investment giant Lehman Brothers have received late-night phone calls from DBS Bank warning them that their entire stake may be wiped out.
The investors have their cash in a product called DBS High Notes 5 that the bank offered wealthier clients last year. It came with a promised annual return of about 5 per cent.

But Lehman’s collapse on Monday means the product will be unwound and investors may only get a portion of their investment back - or none at all.

One 52-year-old customer told The Straits Times: ‘I received a call from my relationship manager late Tuesday night. He told me that…my investment may amount to zero.’

The man had invested $50,000 - savings he had earmarked for retirement.

A customer in her late 40s said: ‘My relationship manager called and told me to be prepared to receive a letter from the bank…[it] would say something to the effect that my investments in products like High Notes 5 may be totally gone.’

She invested $50,000 and US$30,000 (S$43,000) in two separate transactions.

Investors are mostly clients of DBS’s priority banking unit, DBS Treasures.

The product - DBS High Notes 5 - is a 5-1/2 year structured product linked to eight underlying shares, including Goldman Sachs, Morgan Stanley, Merrill Lynch, Macquarie Bank and Lehman.

Customers who invested in Notes 5 said they were sold on the relatively high 5 per cent annual payout by DBS. But now they just want their money back.

‘What we do not understand is: How can the fall of one bank cause our funds to just vanish when there are seven other stocks within the product that are still trading?’ said a man whose elderly aunt invested $50,000 in DBS High Notes 5.

According to a person familiar with the matter, the largest single investment made on High Notes 5 was $2 million, although this could not be verified by DBS.

DBS confirmed that it took immediate action to notify customers once it learned of Lehman’s chapter 11 bankruptcy filing.

‘As soon as the news broke we immediately started communicating…to our retail investor customer base,’ the bank said in an e-mail reply to The Straits Times. ‘We are very concerned and understand the anxieties our customers face as they wonder what will become of their hard-earned money.’

DBS said the Lehman collapse has triggered a ‘credit event’ and the bank called for a redemption of the notes on Monday.

It said unwinding of the product has begun and it will be at least 30 business days before clients learn of the final payout. But DBS also confirmed that investors in High Notes 5 may - ‘in the worst-case scenario’ - not get back their entire principal amount invested.

The product’s prospectus also indicated that in a credit event such as bankruptcy, the notes ‘will be terminated and the investor will receive zero payout’.

The bank said the product does not contain a guarantee that the principal will be protected. It also told The Straits Times it would ‘fully investigate’ claims by some customers that High Notes 5 was in fact sold on such a promise.

Meanwhile, UOB and OCBC Bank said that though some customers have invested in Lehman-linked products, the volume was ‘modest’ and ‘negligible’.

‘Since news of Lehman filing for Chapter 11 broke, we have taken a proactive approach in updating clients on the latest developments,’ said UOB’s spokesman.

OCBC’s spokesman said in an e-mail that its securities unit has advised customers to wait for updates from Lehman

Source : Straits Time - 18 Sept 2008

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Your money is safe AIG reassures policyholders

Your money is safe, AIG reassures policyholders

In Singapore, AIA staff try to calm edgy customers in queues

By Lorna Tan, Finance Correspondent

INSURER AIA yesterday continued to allay the concerns of edgy policyholders, reassuring them that its parent firm AIG will not reduce the capital of its subsidiaries or tap into Asian operations for cash.
The statement from AIG comes on top of news yesterday that the American insurer has received a US$85 billion (S$122 billion) loan from the US Federal Reserve that will effectively enable it to stave off bankruptcy.

Commenting on the rescue package, Alpha Financial Advisers’ chief executive Arthur Lim said that it brings some reprieve to a very bad situation and would buy the firm some time to get its house in order.

And Mr Gary Harvey, chief executive officer of ipac Wealth Management Asia, urged customers who are thinking of surrendering their plans to ignore the noise in the marketplace.

‘Many people - taxi drivers, friends and so on - are telling people what to do. I would strongly recommend that people seek advice from an appropriately qualified professional adviser before they act,’ he added.

For the second day in a row, hundreds of nervous policyholders continued to besiege AIA Singapore’s customer service centre. Similar scenes were played out in places like Taiwan and Hong Kong.

In Singapore, the line of about 150 people at the Finlayson Green service centre had, by noon, snaked all the way to the back of the building.

The crowd became so large that the insurer was forced to open a second service centre office on the ninth floor of AIA Tower next door.

Staff tried to reassure customers yesterday by displaying statements from AIA and the Monetary Authority of Singapore (MAS) as well as newspaper articles reporting that AIA could meet its obligations. They also showed press releases about the US government’s bailout of AIG.

Some policyholders in the crowd yesterday were unaware that AIG had been rescued.

A policyholder who wanted to be known only as Mr Sim had intended to terminate four endowment policies but decided to reconsider after The Straits Times told him about the bailout.

Mr Sim, 66, said: ‘I have three more years to go before my policies mature. Now that I’m clearer about what’s happening in the US, I will check my cash values now and reconsider my decision to terminate them today.’

For the past 18 years, he has been paying total annual premiums of $30,000 for his four policies - a hefty sum of $540,000.

However, some AIA policyholders remained unconvinced.

Ms Karen Tan, 45, said she still planned to surrender a whole life plan that she has kept for 20 years.

‘The policy has broken even so I might as well surrender it now,’ she told The Straits Times yesterday.

‘Even with the bailout by the US government, everything is still so uncertain.’

The MAS said on Tuesday that AIA has sufficient assets in its insurance funds to meet its liabilities. It also urged customers not to terminate their policies rashly as they could lose cover and suffer losses.

Even AIA’s competitors got in on the act, helping to calm the mood among policyholders here.

In an internal memo, NTUC Income chief executive Tan Suee Chieh told his staff not to encourage customers to terminate their policies hastily, ‘regardless of who they are insured with currently’. No poaching, in other words.

Before you cash your policy…
1 Find out its cash value. If your policy has not broken even, you will lose money.

2 If your health has worsened since you took up your AIA policy, you may not be able to find cover with another insurer.

3 Even if you can find cover, the premiums may be higher due to your health condition and/or age.

Source : Straits Time - 18 Sept 2008

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Crisis spreads to UK mortgage giant

Crisis spreads to UK mortgage giant

After AIG rescue, HBOS of Britain is in talks to be acquired by Lloyds TSB

By Lee Su Shyan, Assistant Money Editor

Embattled Edinburgh-based mortgage giant HBOS, which has one-fifth of British mortgages, is in advanced talks to be acquired by British financial giant Lloyds TSB Group. — PHOTO: REUTERS

A NEW front in the financial crisis has erupted in Britain just a day after a stunning US$85 billion (S$122 billion) rescue of the world’s largest insurer American International Group (AIG) by the US government.
Embattled Edinburgh-based mortgage giant HBOS, which has one-fifth of British mortgages, is in advanced talks to be acquired by British financial giant Lloyds TSB Group.

Saving Private America
In an all-too-familiar pattern, HBOS’ share price has plunged 80 per cent from its peak last year amid fears it might be the next financial titan to face collapse.

HBOS, the parent of Halifax and the Bank of Scotland, was heavily exposed to the toxic US sub-prime mortgage crisis, which triggered the wider financial crisis. Britain’s housing market is also slumping.

Yesterday, the Bank of England also extended a scheme to help banks navigate the grim market conditions. It involves swapping crisis-hit mortgage backed securities for much more secure bonds.

The AIG rescue was a breathtaking U-turn by the US government which had refused to help the insurer on Sunday. The US Federal Reserve explained the emergency deal will mean the ‘least possible disruption to the overall economy’.

The move provided some modest initial respite to shell-shocked markets, but could not calm Wall Street investors worried about more financial turmoil ahead.

The Dow Jones Industrial Average, in its first reaction to the AIG news, opened sharply lower by 203.47 points down, or 1.84 per cent, at 10,855.55.

Analysts also questioned whether the Fed’s move is just worsening the crisis. The Fed has spent some US$900 billion this year, shoring up US mortgage giants Fannie Mae and Freddie Mac; rescuing another Wall Street bank, Bear Stearns; and pumping funds into a shaky market.

One question is how these bailouts will be funded - mostly by the greenback printing press, analysts fear.

Another question is that investors with the smell of blood in their nostrils will bet on selling shares of struggling firms in a bid to push them over the brink, confident that the US government will ride to the rescue.

At least short-selling, as this practice is known, will be more difficult after the US Securities and Exchange Commission tightened rules against manipulative short-selling yesterday.

But analysts agreed that had AIG collapsed, the repercussions would have been far-reaching.

AIG insures a wide variety of products, but the disastrous move that nearly brought it to its knees was insuring investors who bought complex debt securities.

If these risky securities defaulted, then AIG would have been forced to pay out billions of dollars to meet its obligations.

And if AIG had been unable to pay off these claims, investors would have had to slash the value of the asset securities.

‘It would have been a chain reaction,’ the New York Times reported Dr Uwe Reinhardt, a professor of economics at Princeton University, as saying. ‘The spillover effects could have been incredible.’

Under the rescue deal, the Fed will give a two-year loan to AIG and get a 79.9 per cent stake. AIG has to repay the loan, probably by selling assets.

Management will go. Former Allstate chief executive Edward Liddy will take the helm at AIG, replacing ousted Robert Willumstad.

Markets which had taken a beating on Monday and Tuesday over AIG’s woes and Lehman Brothers’ bankruptcy reacted with relief after the news was released yesterday morning.

Singapore’s market opened 1.4 per cent higher, Japan rose 1.1 per cent, Hong Kong also surged 2.1 per cent. European markets similarly reacted positively, with the FTSE rallying 1.5 per cent and the French CAC also up by 1.4 per cent.

However, the Fed’s Tuesday decision to leave its benchmark interest rate unchanged at 2 per cent instead of cutting rates to boost confidence, was a dampener on investor sentiment.

Despite their hopeful openings, Asian markets ended mixed. The Straits Times Index fell to a fresh two-year low of 2,419.29 points after disappointing trade figures. The Hang Seng Index dived 3.6 per cent although the Nikkei bucked the trend, up 1.2 per cent. European markets ended about 2 per cent lower.

The US economy did not provide much cheer as data showed that construction of new homes fell by 6.2 per cent, pushing activity to the lowest level in 17 years.

The massive US trade deficit also increased by 4.3 per cent to US$183.1 billion in the April-June quarter.

Meanwhile, Britain’s third-largest bank Barclays said that it may buy parts of Lehman’s European investment bank after agreeing to acquire its American business for US$1.75 billion.

Investment banking giant Morgan Stanley rushed out better-than-expected financial results, but its shares and that of Goldman Sachs lost ground as worries over their financial health remain.

The AIG lifeline

The Fed gives a US$85 billion (S$122 billion) loan to AIG in exchange for a near 80 per cent stake in the company.

All of AIG’s assets and those of its subsidiaries are pledged to secure the loan.

AIG will be charged a nosebleed interest rate of 11.3 per cent, with a US$19 billion interest payment due at the end of the loan’s term.

This government lifeline will allow AIG to sell assets to raise cash in an orderly fashion.

Source : Straits Time - 18 Sept 2008

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Lehman’s fall marks Singapore office rent peak here

Lehman’s fall marks Singapore office rent peak here

Consultants expect demand for prime office space to ease as growth slows

(SINGAPORE) The collapse of Lehman Brothers Holdings Inc may contribute to an easing of demand for prime office space in Singapore, where commercial rents are already peaking amid slowing economic growth, property consultants said.

Downcycle: Grade A office rents will probably drop to $14 psf a month in 2009 from $16 this year, and fall further to $10 in 2010, when the first phase of Marina Bay Financial Centre is completed, says Merrill Lynch
The market turmoil that also this week forced the sale of Merrill Lynch & Co to Bank of America Corp and a bailout of American International Group Inc will probably further slow expansion by international companies in Singapore, said analysts at DTZ Debenham Tie Leung and Cushman & Wakefield.

‘Rents have peaked and with the collapse of Lehman and the further shakeout in financial markets, this is going to accelerate,’ said Ong Choon Fah, Singapore-based regional head of research at DTZ Debenham, a property consulting firm. ‘Financial companies are the ones occupying the very prime space and a lot of them are in survival mode.’

Home prices and office rents in Singapore have cooled after rising to records last year, and Colliers International said this month that office-vacancy rates in the US will rise to the highest in three years as financial-services companies slash jobs after reporting writedowns of US$515.8 billion.

Gains in Singapore office rents will be limited as global economic growth slows, the property researchers said. Singapore’s economy is forecast to grow between 4 per cent and 5 per cent this year, slowing from 7.7 per cent in 2007, as demand for Asian-made goods wanes and writedowns mount at banks and securities firms.

Lehman, which this week filed the biggest Chapter 11 bankruptcy in history, occupies office space in Suntec Real Estate Investment Trust’s Suntec development. The firm has about 270 employees in Singapore.

Suntec Reit, a property trust partly owned by Hong Kong billionaire Li Ka-shing, has dropped 26 per cent in Singapore trading this year. CapitaCommercial Trust, an office landlord run by South-east Asia’s largest developer, has slumped 36 per cent during the period.

So-called Grade A office rents will probably drop to about S$14 a square foot a month in 2009 from S$16 this year, Merrill Lynch analysts led by Kar Weng Loo estimated in an Aug 26 report.

Rents may fall further to S$10 in 2010, when the first phase of the 2.6 million-square-foot Marina Bay Financial Centre is scheduled to be completed, and to S$8 by 2011, the brokerage said. For the second half of 2008, rents for prime office space will be little changed after climbing about 7 per cent in the previous six months, said Donald Han, Singapore-based managing director of Cushman & Wakefield. Still, supply of prime office space is likely to remain tight until 2010 and any office space vacated by Lehman will probably be filled quickly, Mr Han said.

‘The market is still in a very healthy state and occupancy in Suntec, where Lehman has its offices, is in excess of 96 per cent,’ Mr Han said.

‘The only issue is that negative sentiment will creep in, with the fact that such a big investment bank that has a long history of operating in Singapore is collapsing will shock the market.’ - Bloomberg

Source : Straits Time - 18 Sept 2008

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Singapore Orchard Central over 50% leased

Singapore Orchard Central over 50% leased

Mall says more tenants in pipeline; confident despite economic turmoil

By UMA SHANKARI

FAR East Organization’s Orchard Central mall is more than 50 per cent leased some six months ahead of completion, the developer told BT yesterday.

A different world: Orchard Central’s high-traffic basement two will have a Mediterranean concept with food and goods coming from countries such as Italy, Spain, France, Turkey, Morocco and Greece
Rents at the mall, which has a net lettable area of 250,000 square feet, range from $20 per sq ft per month (psf pm) to more than $70 psf pm, said Far East deputy director for retail management Susan Leng. ‘We are still negotiating with a lot of potential tenants who are not in Singapore,’ she said.

Because of this, some leases are taking longer to tie down. But more tenants are in the pipeline, she said. The mall is expected to be completed in Q1 next year.

In July, Ion Orchard - a joint project by Singapore’s CapitaLand and Hong Kong’s Sun Hung Kai Properties, above Orchard MRT station - also said that it is 50 per cent leased. Tenants are paying base rent of up to $80 psf pm.

Both projects have been dogged by rumours of poor demand for space amid the current financial market turmoil.

The upcoming 313@Somerset - the third of only three new malls to come up on Orchard Road in more than a decade - has yet give any details on leasing or tenant mix. In May, Australian group Lend Lease Retail, which is developing the mall, said that it had started marketing to potential tenants six months earlier.

Ms Leng said that Orchard Central faces no problem. ‘I am fairly confident. Business has to carry on, even though economic cycles come and go.’

Unlike Ion Orchard, Orchard Central is looking for mid-range tenants because it is aimed at young working professionals. The fact that no luxury tenants have been named so far is not a concern, Ms Leng said.

She also unveiled the concept for Orchard Central’s high-traffic basement two. The level - which is expected to see high footfall because of its links to Somerset MRT station and shopping centres Centrepoint, Specialist Centre and 313@Somerset - will have a Mediterranean concept and will be called The Med.

With lettable area of 14,370 sq ft, The Med will house retail, lifestyle and F&B units such as restaurants, cafes, ice-cream parlours, wine and cheese specialty shops, bakeries, pizza shops, chocolatiers, delicatessens and florists. Food and goods featured will come from countries such as Italy, Spain, France, Turkey, Morocco and Greece. The level is designed by local firm DP Architects.

Source : Straits Time - 18 Sept 2008

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Barclays grabs some Lehman assets for US$1.75b - LONDON

Barclays grabs some Lehman assets for US$1.75b - LONDON

(LONDON) Barclays plc, which over the weekend balked at acquiring stricken Lehman Brothers Holdings Inc, agreed to pay about US$1.75 billion for some of the bank’s prime US assets following its bankruptcy filing.

Most of the price tag was accounted for by Lehman’s New York headquarters and two data centres, while the British bank will pay just US$250 million in cash for Lehman’s North American investment banking and capital markets businesses.

The operations include fixed income and equities sales, trading and research, and investment banking, giving Barclays a major US investment banking presence and helping its president Bob Diamond realise his ambition to take on Wall Street investment banks on their own turf.

The deal, announced late on Tuesday, would unite two big debt trading houses and could staunch the flow of customers fleeing Lehman in the wake of the largest bankruptcy in US history.

The Lehman operations to be acquired have about 10,000 employees, estimated trading assets of US$72 billion, and US$68 billion in liabilities.

The businesses will be merged into Barclays Capital, which is headed by Mr Diamond, a former executive of Credit Suisse First Boston and Morgan Stanley.

Barclays said that some of its shareholders had expressed interest in increasing their stakes in the bank as part of their support for the deal, and its board expects those discussions to lead to a subscription of at least US$1 billion of additional equity.

The deal needs to be approved by the US bankruptcy court in New York and can be terminated if it is not completed by next Wednesday. The deal does not include Lehman’s investment management division, which includes fund manager Neuberger Berman. On Monday, a person familiar with the situation said that a sale of that unit was also close to being announced. — Reuters

Source : Straits Time - 18 Sept 2008

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