Knight Capital rescue plan
Knight Capital Group Inc, driven to the brink of bankruptcy by trading losses last week, has agreed to a US$400 million cash infusion through the sale of convertible securities, two people with direct knowledge of the matter said. Getco LLC, the automated trading firm backed by General Atlantic LLC; Blackstone Group LP and brokerages Stifel Nicolaus & Co and TD Ameritrade Holding Corp are investing, according to the people, who asked not to be named because the agreements are not public. Stephens Inc and Jefferies Group Inc are taking part and the securities will represent a 70 to 75 percent stake in the company, one of the people said. Knight, whose market-making unit executes about 10 percent of US shares, has been fighting for survival since a computer breakdown spewed orders through stock exchanges on Wednesday and led to a US$440 million loss. The mishap spurred calls in Congress for an examination of whether an increase in automation is damaging the integrity of the US equity market, the world’s largest with US$16.4 trillion in share value.
Bank deal for toxic debt
Economy Minister Luis de Guindos says the government is set to approve a new law creating an asset management agency, or “bad bank,” to deal with the toxic assets that have led many Spanish banks to seek an EU bailout. The toxic assets — expected to total 200 billion euros (US$244.9 billion) — will be segregated from the banks, and dealt with by the new agency. De Guindos said on Sunday in an interview with newspaper ABC that the law is up for approval on Aug. 24. The EU is to provide up to 100 billion euros for banks struggling from non-performing loans, foreclosed property and other unwanted assets resulting from the collapse of the country’s real estate market. Leading banks, such as Banco Santander SA, are not expected to need help.
Shell shifts giant cash base
Energy giant Royal Dutch Shell is to move some of its cash pile from European banks due to the eurozone debt crisis, the Times newspaper reported yesterday, citing the group’s chief financial officer. Chief finance officer Simon Henry told the daily that the Anglo-Dutch group was looking at putting some of its 12.13 billion euros in cash into US government bonds and banks. “There’s been a shift in our willingness to take credit risk in Europe,” Henry said. The Times said Shell was still required to keep some money in Europe to fund its operations.
Army’s controls curtailed
Pyongyang has shut down a military-run company tasked with attracting foreign investment due to its poor performance, as the regime tries to rein in the army, a report said yesterday. Chosun Ilbo newspaper, citing a South Korean government source, said the Taepung International Investment Group — created in 2009 by approval of the powerful National Defence Commission — was recently closed down. “Taepung, when it first opened, had an ambitious goal to solicit foreign investment of US$10 billion in 2010 and US$120 billion within five years, but made little progress,” said the source quoted by Chosun. The shutdown was also intended to curb the military that had grown too powerful under the late ruler Kim Jong-il, it said.