Good morning New York,
FT ALPHAVILLE
Marc Rich, 1934-2013: The commodities trader and founder of what became Glencore has died of a stroke in Meggen near Lucerne, Switzerland at the age of 78. (FT take)
NEWS
"Italy risks potential losses of billions of euros on derivatives contracts it restructured at the height of the eurozone crisis, according to a confidential report by the Rome Treasury that sheds more light on the financial tactics that enabled the debt-laden country to enter the euro in 1999." (Financial Times)
Chinese interbank lending rates dropped after the PBoC made clear it would provide liquidity support where needed, and said it had already provided such support. The one-year interest-rate swap, the fixed cost needed to receive the floating seven-day repo rate, slid 16bps to 3.91% by late morning in Shanghai, according to Bloomberg calculations. The overnight and seven-day repo rates fell 40bps and 78bps respectively. (Bloomberg) (Financial Times)
Basel presses ahead with plans to limit bank borrowing: Global regulators pressed ahead on Wednesday with plans to limit overall bank borrowing and make it easier for investors to compare institutions, announcing that banks will have to calculate and disclose their "leverage ratios" according to a newly agreed global formula starting in 2015. On Wednesday, the Basel group, which includes representatives of 27 major financial centres, announced it had agreed on a common formula that measures top quality capital as a percentage of total assets, both on and off balance sheet, without any adjustment for risk. It aims to force banks to meet a minimum leverage ratio of at least 3 per cent in 2018. (Financial Times)
Kevin Rudd takes on Julia Gillard for Australia leadership: Australian prime minister Julia Gillard and her predecessor Kevin Rudd will face off later on Wednesday in a contest for the leadership of the ruling Labor party. Mr Rudd's decision to challenge ends weeks of speculation. Labor is on course for a heavy defeat at September's national election by the Liberal National coalition, led by Tony Abbott. (Financial Times) At pixel it looked like Rudd had it.
BP escalates efforts to block 'inflated' payments: BP is sending letters to lawyers for hundreds of businesses that it believes have received excessive compensation payments under the settlement for victims of the 2010 Deepwater Horizon disaster, warning them that they might have to pay the money back. It has also put advertisements in US newspapers on Wednesday, accusing "trial lawyers and some politicians" in the Gulf of Mexico region of "encouraging the submission of thousands of claims for inflated losses". (Financial Times)
Bond yields could undermine recovery in global banks' balance sheets: Under new capital rules, unrealised losses in these "available for sale" portfolios hit banks' equity capital. "I would think most institutions are going to have a fairly sizeable hit to their equity," said a senior executive of a top US bank. (Financial Times)
King criticises 'meddling' banks in final public BoE appearance: "Sir Mervyn complained that bankers left meetings with the new Prudential Regulation Authority about increasing their capital stocks and immediately called the prime minister and chancellor to put "tremendous pressure" on politicians to water down the rules." He said that in at least one case, calls were then made to the PRA about the banks' concerns." (Financial Times)
Dublin worries that Anglo Irish tapes will harm its attempts to win debt relief from the EU: "It makes it more difficult, of course it does, but we're going to continue to work to get the best possible outcome for the Irish taxpayer," said Eamon Gilmore, Ireland's deputy prime minister on Tuesday. (Financial Times)
US oil and natural gas operations are increasingly vulnerable to cyber attacks that can harm competitiveness and lead to costly outages at pipelines, refineries or drilling platforms, a new Council on Foreign Relations report says. (Reuters)
Markets: Global stocks are mixed, with European bourses firmer but Shanghai losing further ground as concerns linger about the health of the Chinese banking system. Growth-focused asset prices are receiving some support from relative optimism over the US economy, but the corollary to this positivity is a worry that greater expansion only hastens the end of the Federal Reserve's market supportive measures; a view that is pushing gold to a near three-year low. The FTSE All-World equity index is up 0.4 per cent as the FTSE Eurofirst 300 adds 1.1 per cent – helped by news German consumer morale is at a near six-year high – and as US index futures suggest the S&P 500 will gain 3 points to 1,591 writes the FT's Global Markets scout leader Jamie Chisholm.
