The Wall Street Journal-20080201-Credit Crunch- In Brief
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Credit Crunch: In Brief
Full Text (475 words)Two Japanese Banks
Feel Subprime Pressure
Japan's two biggest banks said losses on U.S. mortgage securities expanded sharply in the last quarter of 2007, eating into profits as the subprime debacle finds victims among Japanese lenders. Mizuho Financial Group Inc., by far the hardest hit among Japanese banks, said its subprime-related loss for the nine months ended Dec. 31 more than doubled from its forecast two months ago to 345 billion yen ($3.24 billion). It warned the damage could grow to 395 billion yen for the year ending March 31. Mitsubishi UFJ Financial Group Inc., Japan's No. 1 lender by market value and assets, said losses related to mortgage-sector turmoil came to 55 billion yen for the nine-month period. Also Thursday, Nomura Holdings Inc., one of Japan's biggest victims of the subprime debacle, reported a 71% drop in quarterly earnings.
Friends Provident
Could Sell Lombard
U.K. life insurer Friends Provident PLC, which has had trouble raising money during the credit crunch, could sell its high-end insurer Lombard and its 53% stake in fund manager F&C Asset Management PLC. The sales would be part of sweeping changes to cut costs and boost cash flow amid concerns about its future. The insurer outlined a steep reduction to its dividend and said it will cut 600 jobs after a two-month review of its business. U.S. private-equity firm J.C. Flowers & Co. has said it is considering acquiring Friends. "Friends is wide open to takeover by Flowers. Investors will be begging for such a transaction," said Tim Young at Collins Stewart.
Standard Chartered
Takes SIV In-House
U.K. bank Standard Chartered PLC said it will take a $7.15 billion structured investment vehicle it manages onto its balance sheet, a move it says shouldn't materially affect its 2008 earnings or liquidity position. The bank, which makes most of its profit in Asia, said it will provide a backstop liquidity line on Whistlejacket Capital Ltd.'s $7.15 billion in senior debt outstanding. By selling off assets, Standard Chartered has reduced the size of the vehicle, which was $18.2 billion as of Aug. 31.
AXA Revenue Rises 20%
But Firm Freezes 2 Funds
French insurance company AXA SA reported a 20% jump in revenue last year, thanks to strong sales growth in the U.S. and Australia and the contribution from its acquisition of Winterthur. AXA also announced that it has barred withdrawals from its AXA Life Property and AXA Pension Property funds for up to six months, as it tries to avert a fire sale of assets, becoming the latest company hit by the slowing commercial-property market. AXA's move to slow investor withdrawals follows similar moves by Dutch insurer Aegon NV, U.K. insurer Friends Provident and others. The funds have been forced to impose waiting periods to avoid a liquidity crisis, as investors clamor to take their money out of the falling commercial-property sector.
