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The main event today will take place around 3pm London time in Amsterdam when Judge Huub Willems rules on the fate of LaSalle and, by extension, on Barclays‘ and RBS’s attempts to buy ABN Amro. Already the accounts of the hearing on Saturday have been very entertaining but stand by for an exciting afternoon.
Lombard and our correspondents Peter Thal Larsen and Ian Bickerton ran through the banks’ main options this morning. Helpfully, Fox-Pitt has come out with some more well-considered scepticism about why the deal is bad for Barclays. They say ABN’s weak investment banking and asset management businesses will dilute the growth of BarCap and BGI. They point out, as I and others have, that the €3.5bn of synergies pencilled in look aggressive for an in-market deal, let alone a cross-border one.
The other fantastic story today, which is not British but which will be of huge interest in the City, is that UBS has given up on the hedge fund set up less than two years ago by John Costas, the former head of its investment bank. The fund, Dillon Read Capital Management, lost SFr150m for the bank in the first three months of this year, partly because of US subprime exposure. It will now be “reintegrated” into UBS, third party funds will be returned and Mr Costas will become a part-time senior adviser to the UBS board. Ouch. Also, I hear, but have not yet checked, that UBS bankers were heavily encouraged to put money in with Costas at the beginning.
With impeccable timing, Anuj Gangahar wrote a great piece this morning about investment bankers giving up on running hedge funds and returning to Wall Street. In addition to those he mentions, there was Chris Carter (ex-CSFB), who quit CQS and is now a big cheese at Morgan Stanley.
Otherwise there is lots going on among FTSE companies. Royal Dutch Shell posted first-quarter results well ahead of expectations after (slightly bizarrely) realising gains on equities held by its insurance companies and achieving a strong performance in chemicals and oil refining. This needs some clarification.
There are good Q1 figures, too, from BAT, Unilever (still no FD), and ICI (Asia and Latin America off-setting weakness in North America). Tomkins, on the other hand, looks dreadful as the slowdown among US carmakers continues to hurt.
We’ll need to gather some reaction to the Pensions Regulator’s instruction to trustees, reported on our front page this morning, that they demand substantial assets up front to safeguard retirement benefits in the event of an LBO.
Rumour of the day: FT Alphaville is hearing talk of stake-building in Hanson, supposedly by a rival, but we don’t know yet. Also, Pru shares are up more than 4 per cent on this story in the Telegraph about a shareholder suggesting it consider breaking itself up. Can’t see the rally lasting, though, as we’ve known - and we’ve written - that some shareholders feel this way for a long time. If the views turn out to be held by the Pru’s own M&G or The Childrens’ Investment Fund (not be toyed with, as Paul Murphy says) then that would be significant.