Australian Regulator Sues Three Banks; Lynas in a Rare Earth Malawi Deal

Chandrasekhar Atreya
22 Dec, 2010
New York City

Australian indexes edged up and BHP Billiton led gainers. Australia

[R]6:00 PM Sydney, Australia – Australian indexes edged up and BHP Billiton led gainers. Australia’s corporate regulator initiated legal proceedings against three banks over the collapse of Storm Financial in 2009. Lynas Corp received approval from Malawi government to acquire a rare earth resource for $4 million.[/R]

The Sydney stock market closed marginally higher on low trading volume after gains in BHP Billiton offset with declines in banks.

The benchmark ASX 200 Index was up 6.5 points or 0.14% to close at 4,778.4 and the Australian dollar closed at 99.71 U.S cents in Sydney.

Australia’s economy looks set to cool a bit in the beginning of 2011 from the strong growth recorded earlier this year, new data suggested.

The annualized growth rate Westpac-Melbourne Institute’s leading index released today recorded a rate of 4.1% in October, just over the long-term trend of 3.3%. The index has fallen from its peak of 9.7% in March indicating the pace of economic activity is like to reduce within three to nine months into the future.

Dubai ports operator DP World confirmed today it has agreed to sell 75% stake in its Australian operations to New York-based Citi Infrastructure Investors for $1.5 billion.

“The total proceeds will go towards reducing DP World’s net debt as part of our overall strategy to improve balance sheet flexibility,” Dubai-based DP World said.

Telstra informed its shareholders that the company hopes to complete a A$11 billion deal for building and operating the NBN network by the middle of next year.

In its letter to shareholders the company said the release of the NBN Co business plan on Monday had given the company greater certainty over finalizing a definitive agreement by the end of this year.

The corporate regulator in Australia began legal proceedings against Commonwealth Bank, Bank of Queensland and Macquarie Group over the collapse of Storm Financial.

Storm Financial clients, including many retirees who were encouraged to borrow against their homes to invest in shares, lost as much as A$3 billion when the markets crashed in late 2008.

Investors and bankers are hoping that the deal activities are likely to sustain in 2011 especially on the back of late year deals like Lend Lease’s A$1.04 billion purchase of Valemus and Atlas’s buyout of Giralia Resources and Rio Tinto’s $3.8 billion Riversdale play.

Lynas Corp said it received approval from the Malawi government to acquire a rare earth resource project in the country for $4 million.

The explorer said in its filing to the Australian Securities Exchange today that the minister of mines in Malawi approved the transfer of the mining license for the Kangankunde Carbonatite Complex to Lynas.

Stock Movers

BHP Billiton gained 0.88% or 40 cents to close at A$45.82. Rival Rio Tinto added 8 cents to close at A$86.78.

Commonwealth Bank, the subject of the corporate regulators’ legal proceedings, lost 13 cents to A$50.87. Westpac was down 10 cents to A$22.61 and ANZ dropped 7 cents to close at A$23.63. National Australia Bank dropped 16 cents to close at A$24.05.

Shares of Telstra were steady at A$2.77 after saying its negotiations with the federal government on NBN would take longer than expected.

Shares in Lynas Corp were up 7 cents or 4.4% to close at A$1.66 after saying it had received approval from the Malawi government to acquire a rare earths resource project for $4 million.

Fashion retailer Noni B fell 6.14% to close at A$1.07 after saying first half same store sales fell by 2.5%.