GM buying Ally assets
General Motors’ (GM) finance arm is buying Ally Financial’s loan businesses in Europe, Latin America and part of a joint venture in China for US$4.25 billion. GM says having its own finance operations will let it make low-interest loans and cheap lease deals. Automakers with their own finance arms often subsidize loans and leases to boost sales. The move will help Ally repay a US$17.2 billion bailout from the US government during the banking industry meltdown of 2008. Before the meltdown, Ally was GM’s financial arm.
Agency switches to iPhones
A government agency has decided to buy iPhones for its employees, dumping its BlackBerry smartphones, citing their unreliability. The National Transportation Safety Board said in a public notice last week it would be contracting with Verizon Wireless for the iPhone 5, saying it is the “only device” that meets the agency’s needs. The announcement is more bad news for Canadian-owned Research in Motion, which makes the BlackBerry and has been traditionally dominant in US government agencies, but has been losing ground to Apple and to smartphones using the Google-backed Android system.
Tel Aviv good for startups
Tel Aviv’s startup ecosystem is second only to Silicon Valley’s because of the city’s software engineer population and access to venture capital, researcher Startup Genome said. The Israeli city beat out places commonly thought of as startup hotbeds, such as Los Angeles (No. 3), Seattle (No. 4) and New York (No. 5) in a global study published this week. Besides Tel Aviv and London at No. 7, North American cities dominated the top 10 in the study, which was funded by Spain’s Telefonica SA.
Household debt rises
Household debt has risen to a record in the third quarter as borrowing increased to finance homes and consumption. Household credit, the sum of home loans and credit purchases, rose 13.6 trillion won (US$12.5 billion) to 937.5 trillion won in the three months ended Sept. 30 from the previous quarter, the Bank of Korea said yesterday. The country’s economy grew 1.6 percent in the three months through September from a year earlier, the slowest pace since 2009.
Growth to stay weak: board
The US Conference Board said on Wednesday that its index of leading indicators increased 0.2 percent last month after a 0.5 percent gain in September, suggesting growth in the US economy could stay weak. The index is intended to anticipate economic conditions three to six months out. The strength came from lower interest rates, a drop in applications for unemployment benefits and an increase in demand for large manufactured goods. Only four of the 10 indicators that make up the index improved last month.
Firms’ rating downgraded
Sony Corp and Panasonic Corp had their long-term credit ratings downgraded to junk by Fitch Ratings. Sony’s rating was cut to “BB-” from “BBB-” by Fitch. Panasonic’s rating was lowered two levels to “BB,” with a negative outlook. Fitch also cut Panasonic’s short-term rating to “B” from “F3,” it said in a statement yesterday. The outlook on both ratings is negative.