Report - Goldman To Lay-Off Thousands
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According to the newspaper, which did not quote its sources, the Wall Street firm is expected to cut back headcount in line with future revenue projections, and is believed to want to axe staff to make room for top talent looking to make a move away from troubled rivals. Morgan Stanley will also report its second-quarter earnings Tuesday. Analysts expect Goldman's profits to be around 30% off, whilst Morgan Stanley could see a profit fall of around 60%.
Reuters reports that Lehman Brothers analyst Roger Freeman expects Merrill Lynch to post a loss for the second-quarter. He said in a research note issued last week: 'at this point, we expect Merrill to report a modest loss, due mainly to incremental reductions in carrying values related to monoline hedges on asset-backed securities'.
The Independent reports that leading investors in Royal Bank of Scotland (RBS) have told Merrill Lynch, the bank's adviser, that CEO Sir Fred Goodwin has 12 months to sort out the bank's problems - or he must walk. The newspaper quotes an unnamed fund manager who said: 'Yes, we've spoken to Merrill on this issue. At least for now, he's bought himself some time. But he should recognise that this isn't a long-term endorsement. RBS hasn't been managed well. The ABN AMRO deal now looks very, very ill advised'.
The Sunday Times reports that Barclays Bank is close to raising some $4bn in a placing with a group of the world's largest sovereign wealth funds. The move is required to beef up the bank's balance sheet. In the meantime, the bank's chairman, Marcus Agius (speaking in Kuala Lumpar), said that '(the global credit) crisis is not near an end. I think it will have a little further to go. But we are beginning to see trades taking place, and assets beginning to come to their real value. It will work its way out'.
Reuters reports that Commerzbank has lowered its 2008 outlook for Credit Suisse, Deutsche Bank and UBS, saying that it expects the firms 'to post additional losses related to their structured and leverage finance portfolios'.
The Wall Street Journal reports that UBS has confirmed just short of 100% of its new $15bn share offering has now been taken up.
The Financial Times reports that AIG CEO Martin Sullivan has been ousted after 3 years at the helm. He will be replaced by former Citi executive Robert Willumstad, who adds the CEO portfolio to his chairman responsibilities. The firm has posted some $13bn in losses in the last two quarters, mostly due to exposure to US subprime lending and related products.
The Daily Telegraph reports that, according to The Bank of England, hedge funds have sustained significant losses making wrong-way bets that UK inflation would fall. UK in May stood at 4%, its highest level for 11 years.
Finally, Bloomberg reports that former chairman of the US Federal Reserve, Alan Greenspan, has said that there has been a 'pronounced turnaround' in the US financial markets, and that there's now a 'reduced possibility' of a deep recession.
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