Banks in Europe Decline; Credit Suisse Raise $6.2 Billion

Devan Biswas
14 Feb, 2011
New York City

European market indexes closed mixed with a downward bias. Banks declined after the rating agency said it will revise its guidelines and factor in government support at more than 170 banks. The move is widely considered too late and too little. Credit Suisse strengthened capital.

[R]5:00 PM Frankfurt – European market indexes closed mixed with a downward bias. Banks declined after the rating agency said it will revise its guidelines and factor in government support at more than 170 banks. The move is widely considered too late and too little. Credit Suisse strengthened capital through bonds sales of $6 billion./R]

European markets closed lower as investors begin to focus on inflation and sovereign debts.

CAC 40 index declined 0.1% to 4,092.62 and IBEX 35 Index dropped 0.3%. FTSE 100 index declined 0.1% and DAX 30 index increased 0.3% to 7,396.63.

Credit Suisse Group AG agreed to sell to investors in Saudi Arabia and Qatar convertible bonds to raise Sfr6.2 billion to raise capital to meet regulator requirements.

The Swiss bank will sell the bonds to existing shareholders Qatar Holdings LLC and Olayan Group no earlier than October 2013 according to a statement released by the bank.

Banks are expected to sell as much as $1 trillion of contingent convertible bonds by 2015 to meet the revised capital guidelines laid out by the Basel III agreement.

General Electric Company agreed to acquire the well-support division of John Wood Group Plc for $2.8 billion.

Net proceed are estimated at $2.6 billion and John Wood plans to return $1.7 billion to shareholders and the rest to lower the debt.

Stock Movers

Andritz AG soared 3.1% to 64.90 euros after the company confirmed that is in talks to supply technology and its largest order to a pulp mill Punta Pereira in Uruguay. The company estimated size of similar orders to reach as much as 750 million euros.

BASF SE, Germany based chemical maker increased 2.48% to 59.45 euros after Citibank recommended the stock.

Banks in European trading generally closed lower after Moody’s said it will factor in the government support at 177 banks in 46 countries.

Banco Santander BBVA SA declined 1%. Allied Irish Banks Plc declined 2% and Lloyds Banking Group Llyods Banking Group Plc declined 1.6% and Unicredit SpA dropped 0.9%.

Carrefour SA rose 1.1% to 35.71 euros after JP Morgan Chase added the stock to its recommended list.

Credit Suisse AG increased 1.9% to Sfr 42.10 after the company confirmed raising capital to meet revised capital guidelines.

Hochtief AG increased more than 3% to 68.40 euros after the German contractor estimated higher earnings in 2010 on the strength in its Australian majority controlled company Leighton and the strong Australian dollar.

Meda AB soared 13% to 56.85 kronor after the drugmaker reported fourth quarter net dropped to 184 million kronor and announced the payment of 2 kronor dividend a share in the quarter.

Nokia Oyj declined 5.3% to 6.60 euros after the company did not quantify earnings from its partnership with Microsoft. Analysts at several banks including JP Morgan Chase and HSBC recommended selling shares.