Business and Finance

The European Central Bank left its benchmark interest rate at a record low as policy makers weigh the risks of withdrawing emergency lending measures amid Greece’s fiscal crisis.

The Frankfurt-based ECB kept its key rate at 1 percent, as predicted by all 52 economists in a Bloomberg News survey. President Jean-Claude Trichet has promised to give details on the next step in the ECB’s exit strategy when he holds a press conference at 2:30 p.m. today.

Greece’s soaring budget gap has roiled financial markets and sent bond yields surging in Spain and Portugal, whose deficits have also swelled in the wake of Europe’s worst recession since World War II. The crisis is undermining confidence in the euro area’s economic recovery and complicating the ECB’s plans to scale back the liquidity measures it introduced to nurse the region through the slump.

Trichet must avoid any hint that the ECB will prematurely end its unlimited cash support for euro-area banks, said Colin Ellis, an economist at Daiwa Capital Markets in London. “It could spook markets, push up interest rates and make it more difficult for countries like Greece to finance its debt.”

Greece, which must replenish 20 billion euros of borrowing in April and May, today began selling 10-year bonds.

‘Addicted’

The euro stayed lower against the dollar after the announcement and was down 0.2 percent to $1.3674 as of 1:47 p.m. in Frankfurt.

The Bank of England today left its benchmark rate at a record low of 0.5 percent and kept the target for its bond- purchase program at 200 billion pounds ($302 billion).

The cornerstone of the ECB’s program has been to provide banks with unlimited funding at its key rate in the hope they will lend it on to households and companies. The ECB has already said it will stop giving banks 12 and six-month loans to ensure they don’t become “addicted” to the cheap cash.

Officials will today decide whether to extend the policy of unlimited allotment in its remaining seven-day, one-month and three-month refinancing operations beyond the current guarantee of April 13. Before the global financial crisis, banks were required to bid for funds in auctions.

“Trichet will be very keen to show that the ECB will not have its exit strategy held hostage by the Greek situation,” said Laurent Bilke, a former ECB forecaster who now works for Nomura International Plc in London free credit score. “They always said they would announce the next steps of the exit this month, and they will.”

Demonstrations

The Greek government has announced a series of spending cuts to convince investors it can reduce its budget gap, plans that have prompted protests and strikes. Demonstrators today took over the Finance Ministry building in central Athens and blocked streets in the city.

As well as Greece, ECB policy makers have to take into account the sluggish economic recovery. The central bank in December forecast growth of 0.8 percent this year after a 4.1 percent contraction in 2009. Trichet will present new forecasts today.

“The recovery feels more vulnerable than it did in December, when the ECB initiated the exit,” said Mark Wall, an economist at Deutsche Bank AG in Frankfurt.

Inflation Muted

Euro-area growth almost ground to a halt in the fourth quarter, the European Union confirmed today. Unemployment held at the highest level in more than 11 years in January and economic confidence unexpectedly weakened in February. The European Commission last month said the economy may fail to gather strength for most of 2010.

The cooling recovery is keeping a lid on prices, reducing the need for the ECB to tighten policy any time soon. Inflation eased to 0.9 percent last month from 1 percent in January. That compares with the ECB’s aim to keep inflation just below 2 percent.

Goldman Sachs Group Inc. this week pushed its forecast for the first ECB rate increase into 2011 from the fourth quarter of this year, and said the bank will exit non-standard measures more slowly than previously anticipated.

“The tensions surrounding Greece and the banks in general are likely to inject some concern that a too-fast exit could be dangerous,” Goldman’s chief European economist Erik Nielsen said in a note to investors. “We now believe that they’ll aim for a somewhat more gradual path than the one we have been forecasting for some time.”

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GMAC Inc., the auto and home lender bailed out twice by the U.S. government, received a third rescue package valued at $3.79 billion that gives taxpayers a majority stake in the Detroit-based company.

The infusion will bolster lending at GMAC as it absorbs $3.8 billion in new pretax charges and decides what to do with its loss-plagued home mortgage unit, according to statements from the agency and the company yesterday. The aid comes on top of about $13.5 billion previously earmarked for GMAC, which regulators have said is crucial to the U.S. auto industry.

Chief Executive Officer Michael Carpenter is struggling to return the lender to profitability amid losses at the Residential Capital mortgage unit, known as ResCap, which GMAC may close or sell. GMAC is the primary lender to General Motors Co. and Chrysler Group LLC, the automakers that went into bankruptcy during the recession.

“We needed the capital in this order of magnitude; we weren’t arguing for less,” Carpenter said in a phone interview. “As the business becomes proportionally more and more of an auto-finance business, one of the lowest-risk businesses there is, my hope is that the capital ratios we need will get relaxed over time.”

The rescue package calls for the Treasury to buy $2.54 billion of trust preferred securities that pay 8 percent, and $1.25 billion of mandatory convertible preferred stock, known as MCP, at 9 percent, according to the statements. The government also received warrants to buy more securities.

‘They Need GMAC’

“The Obama administration has decided to keep GM alive one way or the other and they need GMAC to do it,” said David Olson, president of mortgage research firm Wholesale Access in Columbia, Maryland. The firm counts GMAC as a client. “To bail out the car companies you need to bail out the finance companies.”

The Treasury’s current holding of non-convertible preferred stock will be swapped for $5.25 billion of the new MCP, and $3 billion of Treasury’s existing MCP will be converted into common, GMAC said.

The conversion of preferred into common “somewhat deleveraged” the company, Carpenter said. When coupled with improved conditions at the mortgage operations, it “will improve access to the capital markets in the near term” and lead to a quicker repayment of government funds, he said.

GMAC Stakeholders

The U.S. stake will rise to 56.3 percent from 35.4 percent. The U.S. also controls General Motors, GMAC’s former parent, whose stake shrinks to 6.7 percent. The stake held by Cerberus Capital Management LP, the New York-based investment firm, falls to 14.9 percent from 22 percent. An independent trust for the benefit of GM holds about 9.9 percent, GMAC said. GMAC doesn’t have publicly traded shares.

“In May, the Treasury Department made a commitment to all institutions that engaged in the stress tests that we would ensure their capital needs are met,” Treasury Department spokesman Andrew Williams said in an interview. “We are making good on that promise.”

GMAC was the only company of 19 that underwent stress tests that wasn’t able to raise capital in the private sector, Williams said. Still, the Treasury said the aid was less than originally planned because restructurings at GM and Chrysler caused less disruption at GMAC than regulators expected. Tim Price, a partner at Cerberus, didn’t return a call for comment.

ResCap’s Fate

GMAC affirmed that it’s looking at “strategic alternatives” for ResCap, ranked among the nation’s 10 biggest home lenders and once one of the largest marketers of subprime mortgages. The parent company wrote down $2 billion in ResCap mortgage assets in preparation for selling them and set up a $500 million reserve tied to the servicing unit that does billing and record-keeping for home loans.

“There will be individual asset sales in the near future but whether some larger concept evolves is a matter of time,” Carpenter said. “We think ResCap and the mortgage business is stable and that we don’t have to do anything crazy. We have no urgency.”

GMAC is being approached “every day with interesting ideas” for the unit, Carpenter said. The shoring up of ResCap allows the government to keep a stake in a company making home loans, said Mirko Mikelic, senior portfolio manager at Fifth Third Asset Management, which owns GMAC bonds.

GMAC contributed $2.7 billion of capital to ResCap in the form of mortgage loans acquired from the Ally Bank unit, debt forgiveness and cash, according to the company statement. GMAC “does not expect to incur additional substantial losses from ResCap,” the company said.

Mortgage Assets

At the Ally unit, GMAC bought “certain higher-risk mortgage assets” at fair value of $1.4 billion, which triggered an estimated $1.3 billion pretax charge. Those assets were contributed to ResCap. GMAC also gave $1.3 billion of cash to Ally to maintain its capital, the statement said.

The infusion is the final dose of capital needed to close a shortfall found by Federal Reserve stress tests in May. GMAC asked the Treasury Department to delay providing the cash when Carpenter was named CEO, replacing Alvaro de Molina on Nov. 16. The deadline for meeting the requirements had been Nov. 9.

GMAC got $12.5 billion in two previous government bailouts and another almost $1 billion that was funneled through GM, which used it to invest in GMAC. The U.S. will name two additional board members in conjunction with its increased stake, according to the statements.

The latest capital infusion and restructuring weren’t enough to stabilize ResCap and assure a return to profitability, according to Moody’s Investors Service.

While the changes were positive, ResCap “has been unprofitable on a quarterly basis for three years, its liquidity position is tenuous, capital insufficient and franchise impaired,” Moody’s said in a statement. GMAC didn’t guarantee continued support for ResCap, and without such help, “we believe ResCap would eventually default,” Moody’s said.

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The number of Americans filing for initial unemployment insurance jumped last week, the government said Thursday, with a figure that was above analysts’ expectations.

There were 474,000 initial job claims filed in the week ended Dec. 5, up 17,000 from the previous week’s unrevised 457,000, the lowest level since September 2008, the Labor Department said in its weekly report.

A consensus estimate of economists surveyed by Briefing.com expected 455,000 new claims.

The 4-week moving average of initial claims was 473,750, down 7,750 from the previous week’s revised average of 481,500

"Today’s number is less surprising than last week’s and takes the wind out of the sails for hopes of a super fast recovery. But 474,000 would have been a welcoming number not too long ago." Said Tim Quinlan, economist at Wells Fargo. "We’re still seeing a gradual, relative improvement in the job market."

Continuing claims: The government said 5,157,000 people filed continuing claims in the week ended Nov. 28, the most recent data available. That’s 303,000 down from the preceding week’s revised 5,460,000 claims.

The 4-week moving average for ongoing claims fell by 123,500 to 5,416,500 from the previous week’s revised 5,540,000.

But the slide may signal that more filers are dropping off those rolls into extended benefits.

Continuing claims reflect people filing each week after their initial claim until the end of their standard benefits, which usually last 26 weeks. The figures do not include those who have moved to state or federal extensions, or people whose benefits have expired.

Congress passed legislation last month to extend federally paid benefits up to 99 weeks, depending on the state, but the law only helps those who exhaust the unemployment lifelines by the year’s end no fax payday loans.

Lawmakers in the House and the Senate introduced bills last week to push the deadline to apply for unemployment benefits as far back as 2011.

State-by-state: Jobless claims in 21 states declined by more than 1,000 for the week ended Nov. 28, the most recent data available. Claims in California dropped the most, by 28,672, which the state attributed to a shorter work week due to the Thanksgiving holiday and fewer layoffs in the service industry.

Seven states said the claims increased by more than 1,000. Claims in Wisconsin jumped by 8,067, which a state-supplied comment said was due to layoffs in the construction, service and manufacturing industries.

Outlook. While claims popped from their downward trajectory, Quinlan said the figure is lower than the number filed in October and most of November, and a significant improvement from the filings in March that were above 600,000.

"One week is not a trend maker," said Quinlan, adding that when claims fell from 580,000 to 534,000 between mid-August and mid-September, they jumped back up above 550,000 in the last week of September before declining again.

"We’ve seen a recovery in every sector of the economy except the job market, and now that last segment is finally falling into place," he said. "The second half of 2009 has been characterized by a slowing in the pace of job losses. The first half of 2010, we should see actual job growth."  

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With rising unemployment stymying the president’s economic revival plans, the Obama administration is huddling with business leaders, academics and other experts Thursday to find a way to jumpstart hiring.

Some 130 people will gather for the afternoon jobs summit at the White House on the eve of the government’s November unemployment report. The nation is expected to have lost another 114,000 jobs, with unemployment remaining at 10.2%, the highest in 26 years, according to an economists’ survey.

The employment picture is certainly grim. Nearly 16 million Americans are out of work, one-third of whom have been unemployed for more than six months. There are now six workers competing for every job vacancy.

President Obama and some lawmakers are searching for a way to stem this unrelenting loss of jobs, which is casting doubt on effectiveness of many of his economic programs, from his $787 billion stimulus plan to his $75 billion foreclosure prevention initiative.

"We are going to be bringing together people from all across the country … to explore how we can jumpstart the hiring that typically lags behind economic growth, but we don’t want to wait," Obama said last week.

Invited executives include Google CEO Eric Schmidt, Disney chief Bob Iger, Boeing head James McNerney and AT&T’s Randall Stephenson. Also expected are United Steel Workers president Leo Gerard, San Antonio Mayor Julian Castro, former Fed vice chairman Alan Blinder and Paul Krugman, the Nobel Prize-winning economist and New York Times columnist.

The guests will also include small business owners, academics and non-profit leaders.

On the schedule are discussions on green jobs, small business employment, infrastructure and exports. Also, breakout groups will look at ways to encourage business competitiveness and to better prepare workers for the economy of the future.

The discussions will be led by top administration officials, including Treasury Secretary Tim Geithner, Council of Economic Advisers Chair Christina Romer, Labor Secretary Hilda Solis and Energy Secretary Steven Chu. Obama will make opening and closing remarks.

There’s no shortage of job growth proposals being bandied about. Though all sides agree that rising unemployment must be addressed, the solutions run the gamut. Some left-leaning economists and politicians are pushing for another round of stimulus, while their conservative counterparts are calling for tax breaks, such as a hiring credit for companies who add to their payrolls.

Indicative of just how contentious job creation is, House Republicans are holding an alternate roundtable on Thursday to discuss what they call the administration’s "job-threatening" policies.

"From the Obama administration, which produced a trillion-dollar ’stimulus’ that didn’t create jobs "immediately" as promised, comes a "jobs summit" that won’t actually help create jobs," said House Republican Leader John Boehner, R-Ohio. "Now more than ever, America needs more jobs, not more debt online payday loans."

Just how much Washington can do to boost hiring remains to be seen.

The administration and Congress are tied up with health care reform and foreign policy issues. And their ability to institute new programs will be hampered by the nation’s record budget deficit.

Though experts say the economy is recovering, they don’t expect jobs to return anytime soon. The National Association for Business Economics pushed recently pushed back their expectations for when companies will start adding positions to mid-2010. They previously had predicted a gain of 12,000 jobs a month in the first quarter.

Some of the proposals

Some of the leading ideas under discussion include:

• offering a payroll tax holiday, which would temporarily suspend the 12.4% tax on workers’ first $106,800 of wages;
• creating a new jobs hiring credit;
• giving more money to states and localities to close budget deficits. These shortfalls could cost 900,000 jobs in 2010 alone, according to one think tank;
• and offering public-service employment.

One measure that is more likely to be enacted is an extension of unemployment benefits. One million people could lose unemployment benefits in January if Congress doesn’t lengthen the deadline to apply for federal aid beyond Dec. 31, according to the National Employment Law Center.

This week, two groups at opposite ends of the political spectrum offered a bevy of suggestions on how to spur job creation.

The U.S. Chamber of Commerce on Monday sent a letter to the president with seven policies that it said are crucial to job creation. Its suggestion include expanding infrastructure investment by removing regulatory and other requirements, as well as better preparing American students for future jobs and lowering tax rates on entrepreneurs.

"While the government can help support some jobs in the short run, the only way to meet this challenge over the long term is through a vibrant and dynamic free enterprise system," Thomas Donohue, the chamber’s president.

The Economic Policy Institute, on the other hand, supports more government spending on transportation infrastructure and school buildings, as well as the creation of one million public service positions.

The labor-supported group, which released a five-point plan Monday that it says will create 4.6 million jobs in its first year, also supports extending unemployment benefits and health insurance subsidies. And it wants to see the president and lawmakers send more funds to state and local governments and create a hiring credit.

"Some people have questioned whether we can afford to do more to create jobs, but they’ve got it backwards," said Lawrence Mishel, EPI’s president. "We can’t afford not to do more." 

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Dubai World’s debt problems are a wake-up call that the economic recovery is still fragile and that there are still risks, OECD Secretary General Angel Gurria told Reuters.

Gurria said the incident had reminded markets of growing debt concerns, something that should prompt governments to be cautious in withdrawing from large stimulus measures to boost growth after the worst global recession in decades.

Dubai spooked financial markets last week when it said two flagship firms, Dubai World and its Nakheel unit, planned to delay repaying billions of dollars in debts.

Dubai World “is a reminder of the fragility of the recovery process and that fact that it is still in its infancy and that there are still downside risks,” Gurria told Reuters during a summit of Ibero-American leaders in Portugal. “It’s a property development gone bad, but a big one.”

He said governments should “keep their guard up,” and err on the side of caution when deciding to cut stimulus packages.

“It’s better to stay a little longer than to withdraw too early,” Gurria said. “There is now also this parallel concern that debt is accumulating at a very fast speed and that obviously is a problem because markets are also getting very tense about that.”

Dubai has alerted markets to those risks in recent days as have growing budget deficits in some countries, such as Greece which saw a widening of its bond spreads last week.

Gurria said the downturn was taking its toll on balance sheets.

“So you are having a lot of pressure on many balance sheets because of market related portfolios, that are not subprime, they weren’t wrong in the beginning, but they are getting sour because of the economic situation in general,” he said.

Gurria also warned of the growing risks of the so-called carry trade, whereby investors borrow funds in a currency with low interest rates or countries such as the United States to finance investments in countries with higher-yielding assets like China, driving prices higher.

“There is a danger of creating a bubble, because if you have a very large flow into a relatively stable number of assets you create inflation in the prices that is not consistent with the real change in value of the assets,” he said.

He said assets such as Chinese stocks had risen much more than many other markets because of this process.

“You can create artificially high prices which can then with one piece of bad news or one movement in the exchange rate or interest rates suddenly burst, and that is when you have a disorderly adjustment,” Gurria said.

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Dubai ruler Sheikh Mohammed Bin Rashid Al Maktoum fired one senior aide and removed three others from the board of Dubai’s main holding company as the debt-laden emirate tries to secure a second $10 billion injection of funds.

On Nov. 20, Sheikh Mohammed removed the governor of the Dubai International Financial Centre, Omar Bin Sulaiman, who had led efforts to transform Dubai into a Middle East finance hub. A day earlier, he dropped Mohammad al-Gergawi, Sultan Ahmed Bin Sulayem and Mohammed Ali Alabbar from the board of the Investment Corporation of Dubai. The three were at the forefront of a construction drive that began in 2002 and collapsed last year after the global financial crisis engulfed Dubai.

Sheikh Mohammed’s moves were aimed at exerting more control over the web of competing, state-owned companies that he used to accelerate diversification away from oil and which amassed $80 billion of debts. Shares in Dubai fell to a two-month low yesterday following the reshuffle.

“Dubai is trying to get the maximum investor subscription for this $10 billion bond issue,” said Christopher Davidson, a professor at Durham University in the U.K. and author of the 2008 book “Dubai: The Vulnerability of Success.” “Sheikh Mohammed needs to put new people in who are not tainted by the bubble economy of past years.”

The Dubai Financial Market General Index yesterday lost 2.6 percent, falling to 2,073.66. Abu Dhabi’s measure slipped 2 percent to its lowest since Sept. 2.

The sheikh’s sweeping changes introduced “a degree of uncertainty” which unsettled the markets, said Farouk Soussa, an analyst with Standard & Poors in Dubai.

Bond Issue

The Dubai government is in the final stages of preparing the second half of the bond issue, Alabbar said on Nov. 20. Investors will buy a “reasonable chunk” of the bond, he said. The bonds will be issued before the end of the year, Sheikh Ahmed bin Saeed Al-Maktoum, chairman of the emirate’s Supreme Fiscal Committee, said on Nov. 16.

The remainder is likely to be bought by the federal government in Abu Dhabi, which has 90 percent of the oil in the U.A.E. and bailed out Dubai in February with a $10 billion bond issue subscribed entirely by the U.A.E. central bank.

Dubai’s real-estate market was the worst affected by the global financial crisis. Home prices have tumbled about 50 percent from their peak, and may drop another 20 percent this year, Deutsche Bank AG said in June.

Waterfront Development

Bin Sulayem is chairman of Dubai World, a state-run holding company that has about $59 billion of debt and other liabilities paydayloans. It controls property developer Nakheel PJSC, which has had to cancel plans for a new waterfront development the size of Hong Kong Island. Nakheel has to repay a $3.52 billion bond maturing in December.

Al-Gergawi is chairman of Dubai Holding, which owns developers including Dubai Properties LLC, Sama Dubai LLC and Tatweer LLC. Tatweer has put on hold a project to build “Dubailand,” a Disneyland-style leisure park that would be three times the size of Manhattan. Alabbar is chairman of Emaar Properties PJSC, the largest developer in the U.A.E., which is building the world’s tallest tower.

The cost of protecting Dubai bonds from default rose 3 percent to 313 basis points on Nov. 20, five-year credit-default swap prices show. The contracts, which get more expensive as perceptions of credit quality worsen, traded at 287 basis points on Oct. 20, the lowest in 12 months, Bloomberg data show.

‘More Carefully’

The emirate will study the viability of projects more closely in the future, Sheikh Mohammed said Sept. 9. “We’ll be more careful now,” he said.

In June, Emaar said it was in talks to combine with Dubai Properties, Sama Dubai and Tatweer as it aims to control the supply of new buildings amid a glut of homes.

The replacement of the DIFC governor is part of efforts to improve the efficiency of government institutions and companies, and “consolidate the emirate’s growing importance as an international center for finance, business, trade, tourism and all services,” Mohammed Ibrahim Al Shaibani, director-general of the ruler’s court, said in an e-mailed statement on Nov. 20.

Ahmed Humaid al-Tayer, the new governor of the DIFC, which is home to regional offices of banks including Goldman Sachs Group Inc. and Deutsche Bank AG, said Nov. 21 he would pursue the same strategy as his predecessor. Al-Tayer is also chairman of Emirates NBD PJSC, the U.A.E.’s biggest bank by assets, and remains a member of the ICD board along with Al Shaibani, the head of the ruler’s court.

The other four board members are Sheikh Mohammed, two of his sons and his uncle.

The four sidelined Dubai powerbrokers have to some extent been made scapegoats, said Simon Henderson, an expert on the Gulf monarchies at the Washington Institute for Near East Policy.

“They were given authority and access to capital and told to go out there and expand Dubai, they were given a license and latitude, and to that extent, they were obeying orders,” he said.

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Human Genome Sciences Inc said on Monday its experimental lupus drug Benlysta was successful in a second large clinical trial, paving the way for approval of the first new treatment for the disease in 50 years.

Results of the late-stage trial showed patients given a high dose of the drug, Benlysta, experienced a statistically significant improvement in symptoms compared with those taking a placebo.

Hopes for Benlysta have been growing since July, when it was shown to work in a first clinical trial to the surprise of many experts who had been skeptical, given the previously poor track record of new lupus treatments.

But to win approval from regulators, Human Genome and its partner GlaxoSmithKline Plc needed to have a second successful study result.

“This is a pivotal moment in lupus research,” said Margaret Dowd, president of the Lupus Research Institute, an organization that funds lupus research but did not fund Human Genome Science’s trial.

“It demonstrates the power of innovative science to drive discovery and achieve solid clinical results in the complex autoimmune disease of lupus.”

Panmure Gordon analyst Savvas Neophytou said the companies had struck gold with the latest results and predicted that registration of the drug would now be “routine,” adding the new blockbuster could be on the market by mid-2010.

Shares in Human Genome jumped 18 percent in early trading in Germany, while Glaxo stock was down 1 easy online payday loans.5 percent.

Glaxo and Human Genome, which will share profits from Benlysta on a 50-50 basis, said they planned to file for approval in the first quarter of next year.

$3 BILLION POTENTIAL

Assuming Benlysta now gets approved, Human Genome and Glaxo will have a drug worth as much as $3 billion a year, according to some analysts — nice for Glaxo, the world’s No. 2 drugmaker, and transformational for Human Genome, a small Rockville, Maryland-based company that has struggled in the shadows for years.

Data from a composite of three measures in the latest trial showed that after 52 weeks, 43.2 percent of patients taking 10 milligrams of Benlysta in combination with standard of care achieved an improvement in symptoms, with no significant worsening of disease in individual organs.

That compared to a figure of 33.8 percent for patients taking Benlysta in combination with a placebo.

The result met the main goal of the clinical trial.

Lupus causes the immune system to attack the body’s own tissue and organs, including the joints, kidneys, heart, lungs, brain, blood and skin. It can cause arthritis, kidney damage, chest pain and skin rash, among other disorders. 

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Merrill Lynch veteran Robert McCann, the new head of UBS’s loss-making U.S. wealth management unit, said he had no plans to sell the business that was battered by a high-profile tax row.

McCann, who led the wealth management business at Merrill Lynch until early this year, took up his $850,000-a-year post at the Swiss bank on Tuesday and vowed to rebuild trust at its American unit.

He had been courted by UBS Chief Executive Oswald Gruebel since July and sued his former employer to enable him to join a rival.

The U.S. wealth division of UBS was hit by 5.8 billion Swiss francs ($5.8 billion) of client withdrawals in the second quarter of this year, as the bank fought a bruising tax case with U.S. authorities, and analysts say it is still suffering.

That has prompted some to speculate that UBS might eventually want to sell the business - a proposition that McCann rejected.

“I had to go to court against two of my former employers to be able…to work with UBS,” McCann said. “I would have not done that if the whole goal was to sell the company.”

McCann, said he would unveil his new strategy for the unit in the first quarter of 2010 but already expected to make selective cost cuts. His aim was to have a more nimble and more cost-efficient structure, he said.

The 51-year-old executive said he would take a performance-related bonus that his base salary would be

$850,000.

During a court hearing in his case against Bank of America, which bought Merrill Lynch, McCann said he had to give up a bonus that could have topped $5 million.

Speaking from a hotel room in mid-town Manhattan just before he took up the new job, McCann told reporters he was “excited” at the prospect of joining the Swiss wealth management giant and that he got on very well with Gruebel from the start.

“We immediately established a chemistry between the two of us,” he told reporters.

The new U.S. wealth chief will report to Gruebel and be a member of UBS’ executive board. McCann said his predecessor, Marten Hoekstra, is leaving UBS.

Analysts welcomed McCann’s appointment, which had been widely expected.

“We believe McCann has the managerial capacity needed to revise and restructure the U.S. wealth management Americas business to become more profitable,” said Vontobel analyst Teresa Nielsen, adding it would still be possible to spin off the unit. 

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Bank of England Deputy Governor Charles Bean said rising asset prices and improved confidence may be signs the central bank’s bond purchases are working.

“It seems that activity here and elsewhere has probably troughed, so some of the worst downside risks look unlikely to crystallize,” Bean said in a speech in London today. “The rise in asset prices and the recovery in confidence since the start of the quantitative easing program have been significant.”

The Bank of England last week pledged to stick to its plan to buy 175 billion pounds ($277 billion) of bonds to cement Britain’s recovery from the worst recession in a generation. Policy makers have signaled they will reevaluate their program in November, when they produce new forecasts for economic growth and inflation.

Bean said the difference between U.K. government bond yields and overnight-indexed swap rates of the same maturity has fallen by about 0.75 percentage point since the asset purchases started in March.

Since that effect hasn’t been seen in the U pay day loan lenders.S. or the euro area, it “strongly suggests that the movement may be related to our gilt purchases,” Bean said.

He also cited rising stock prices, and the fact that U.K. companies have issued more than 60 billion pounds worth of bonds and equities since January.

The central bank won’t hold all its purchases to their maturity, Bean said.

“At some stage, as the recovery proceeds, the Monetary Policy Committee will need gradually to remove the large monetary stimulus that we have imparted to the economy, otherwise we will be in danger of overshooting our 2 percent inflation target,” Bean said.

“The process of selling off the gilts can then be expected to push gilt yields back up towards where they would have been in the absence of the quantitative easing program,” he said.

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Wynn Macau’s strong debut in Hong Kong on Friday shows appetite for gambling stocks is strong despite high valuations, and will cheer U.S. casino rival Las Vegas Sands, which plans a listing later this year.

Wynn Macau shares ended 6 percent higher at HK$10.70 versus an IPO price of HK$10.08, defying forecasts of, at best, a flat start due to its relatively high IPO price. The closing price valued the casino giant at $6.9 billion.

“For big-cap IPOs, its performance is pretty good,” said Peter Pak, vice president at BOCI Research. “Its pricing is not cheap, but Macau’s gaming revenue has been rising and that helped boost confidence.”

Wynn Macau’s $1.63 billion IPO, the world’s sixth-largest this year, could speed up the expected listing for Las Vegas Sands, which plans to raise up to $2 billion in a Hong Kong offering for its Asia assets, most notably in Macau.

Macau, once owned by Portugal and now a special administrative region under Chinese rule, is the world’s biggest gambling market and the only place in China where gambling is legal.

Gambling revenues hit a monthly high of $1.4 billion in August, a faster-than-expected recovery compared with Las Vegas, and revenues are expected to have been stronger still in September as China relaxed restrictions on its citizens crossing into Macau from Guangdong province.

“The timing is very opportunistic to do an IPO taking advantage of strength in the Hong Kong stock market and a renaissance, if you will, of the Macau market,” said Robert LaFleur, a U.S. gaming analyst with Susquehanna Financial Group, which is a market maker in Wynn shares no faxing pay day loans.

“It establishes some firm valuation benchmarks for Macau operations and that’s been very supportive of a fairly significant run in stocks like Las Vegas Sands and Wynn,” LaFleur added.

Wynn, which had a 16.4 percent market share of Macau in 2008, is one of a handful of gambling “pure plays” there, with Melco Crown Entertainment, Galaxy Entertainment Group and SJM Holdings.

The listing by the Asia unit of Wynn Resorts marked a major victory for Hong Kong’s stock market, netting its first IPO for a big global brand in years.

“Wynn is a known name compared with other recent IPOs that many people have not heard about, so it’s probably easier to sell,” said Nicholas Yeo, head of China and Hong Kong equities at Aberdeen Asset Management.

“The strong (Wynn) debut will boost the valuations of LVS’s IPO,” said Antonny Cheng, managing director at Gain Asset Management.

The Wynn Macau offering comes as the global IPO market heats up, encouraged by a rebound in stock markets worldwide. Santander Brasil and Verisk Analytics raised nearly $10 billion between them on Tuesday.

IPO JACKPOT

The strong reception for Wynn, and for Yingde Gases Group and Ausnutria Dairy Corp, among others, on Thursday, could also end a trend of weak performance in recent offerings as sentiment improves, brokers said. 

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