UNITED STATES
Treasury to sell off insurer
The Treasury Department said on Friday it expects to raise US$5 billion from its sale of American International Group stock, cutting the government’s stake in the bailed-out insurer to 55 percent. The sale, which would bring a profit of about US$300 million to the Treasury, comes as President Barack Obama campaigns for a second term and has been forced to defend his administration’s decision to use taxpayer money to prop up companies during the crisis. The Treasury Department priced the offering at US$30.50 a share, six percent above the US$28.72 price needed for the government to break even on its investment in the insurer. AIG intends to buy up to US$3 billion of the offering.
BANKING
Ex-banker in the spotlight
A 30-year-old former Barclays PLC swaps trader in New York, who was fired from the bank in 2010, is among those drawing scrutiny from prosecutors in the deepening scandal over the manipulation of global benchmark interest rates. US prosecutors in Washington are looking at Ryan Reich’s activities while at Barclays between August 2006 and March 2010, said several people familiar with the situation, who declined to be identified because the bid-rigging investigation is ongoing. Reich, now a portfolio manager with New York-based hedge fund WCG Management, was dismissed from Barclays for allegedly sending inappropriate e-mails seeking internal bank information, according to two sources familiar with the situation. One of those sources, who used to work for the bank, said the information Reich sought concerned how the LIBOR benchmark rate was going to be priced, information that could have been useful for his trading positions.
BANKING
UniCredit’s Q2 profits tumble
Italian bank UniCredit SpA on Friday said second-quarter profits dropped 67 percent as it reinforced its capital buffers by nearly 2 billion euros. The net profit of 169 million euros compared with 511 million euros in the same period last year and was below analyst forecasts for 269 million euros, according to a survey by Factset. The earnings were net of 477 million euros spent to buy back bonds in the first quarter. The bank, Italy’s largest by assets, raised provisions for bad loans by 60 percent to 1.9 billion euros “reflecting the deteriorating credit environment that unfortunately we see in Italy,’’ chief executive Federico Ghizzoni told analysts.
GREECE
ECB loans add to bailout
The European Central Bank (ECB) has saved Greece from bankruptcy for the time being by securing it interim financing in the form of additional emergency loans from the Bank of Greece, German newspaper Die Welt said yesterday. The ECB’s Governing Council agreed at its meeting on Thursday to increase the upper limit for the amount of Greek short-term loans the Bank of Greece can accept in exchange for emergency loans, the newspaper said in an advance copy of the article due to appear in yesterday’s edition. Until now the Bank of Greece could only accept T-bills up to a limit of 3 billion euros as collateral for emergency liquidity assistance (ELA), but it has applied to have this limit increased to 7 billion euros, the daily said, citing central bank sources.
AI SPLURGE: The four major US tech companies have lost more than US$950 billion in value since releasing earnings and outlooks, while equipment makers were gaining Four of the biggest US technology companies together have forecast capital expenditures that would reach about US$650 billion this year — a flood of cash earmarked for new data centers and all the gear within them. The spending planned by Alphabet Inc, Amazon.com Inc, Meta Platforms Inc and Microsoft Corp, all in pursuit of dominance in the still-nascent market for artificial intelligence (AI) tools, is a boom without a parallel this century. Each of the companies’ estimates for this year is expected either near or surpass their budgets for the past three years combined. They would set a high-watermark for capital spending
China’s top chipmaker has warned that breakaway spending on artificial intelligence (AI) chips is bringing forward years of future demand, raising the risk that some data centers could sit idle. “Companies would love to build 10 years’ worth of data center capacity within one or two years,” Semiconductor Manufacturing International Corp (SMIC, 中芯) cochief executive officer Zhao Haijun (趙海軍) said yesterday on a call with analysts. “As for what exactly these data centers will do, that hasn’t been fully thought through.” Moody’s Ratings projects that AI-related infrastructure investment would exceed US$3 trillion over the next five years, as developers pour eye-watering sums
Bank of America Corp nearly doubled its forecast for the nation’s economic growth this year, adding to a slew of upgrades even after a rip-roaring last year propelled by demand for artificial intelligence (AI). The firm lifted its projection to 8 percent from 4.5 percent on “relentless global demand” for the hardware that Taiwanese companies make, according to a note dated yesterday by analysts including Xiaoqing Pi (皮曉青). Taiwan’s GDP expanded 8.63 percent last year, the fastest pace since 2010. The increase “reflects our sustained optimism over Taiwan’s technology driven expansion and is reinforced by several recent developments,” including a more stable currency,
COLLABORATION: Taiwan and the US could jointly find solutions to weaknesses in supply chain resilience for critical materials, focusing on mining and initial refinement Taiwan is likely to purchase rare earths from the US in the future, and is also in talks with Australia and Canada to strengthen global rare earth supply chain security, Minister of Economic Affairs Kung Ming-hsin (龔明鑫) said yesterday. Taiwan and the US last month concluded the sixth Economic Prosperity Partnership Dialogue, during which both sides signed a joint statement endorsing the principles of the Pax Silica Declaration, pledging to deepen cooperation in areas including critical minerals. At the time, Kung said the two sides would establish working groups to advance cooperation in areas including artificial intelligence, digital infrastructure, critical materials and
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