BB&T buys Colonial bank; 4 other banks fail

Troubled Colonial BancGroup will be bought by rival BB&T Friday, the government said after state regulators closed the bank whose assets had been frozen by a federal judge.

The Montgomery, Ala., bank, which has 346 branches spread across Florida, Alabama, Georgia, Nevada, and Texas, is the sixth largest bank failure in U.S. history and by far the largest failure of 2009.

With $25 billion in assets and $20 billion in deposits, Colonial is 100 times larger than the typical bank to have failed this year.

BB&T (BBT, Fortune 500) will buy $22 billion of Colonial's assets, as well as its deposits and branches, leaving the remaining assets in the hands of the Federal Deposit Insurance Corp.

BB&T, based in Winston-Salem, N.C., is also a regional banking power, with 1,500 branches across the Southeast. It is also a major mortgage lender.

Most customers of Colonial should not be affected by the closing. The FDIC, the federal agency that has protected bank deposits since the Great Depression, will guarantee account balances up to $250,000.

But home buyers and those who want to refinance their mortgages could end up paying somewhat higher rates, even if they have never heard of Colonial, said Guy Cecala, publisher of trade publication Inside Mortgage Finance.

Cecala said Colonial was a significant player in the sector of the business known as "mortgage warehouse" lending, which provides financing needed by mortgage brokers and non-bank lenders to make home loans.

"The more firms like this that get out, the more dependent we get on large banks, and less competition there is. That's never a good thing," he said. Warehouse lending used to be a huge source of funds for home loans, according to Cecala, but the mortgage defaults and declining home prices of recent years has decimated the business.

"The warehouse lending market is now so fragile and so small, it doesn't help when we lose anybody," he said. "We have only a cup of water where we used to have a bucket of water." link.....

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France and Germany Lift European Economy

FRANKFURT — The European economy bounced back with unexpected strength in the second quarter after contracting sharply at the beginning of 2009, data released Thursday showed, offering the clearest evidence yet that a searing recession is drawing to a close.

The economy of the 27-nation European Union shrank at an annual rate of 1.2 percent in the three months that ended in June, while the 16 countries that use the euro, the common European currency, registered an annualized 0.4 percent decline in economic activity during the period. That contrasted with a shrinkage at an annual pace of 1 percent during the same period in the United States.

Despite being in negative territory, the European data underscore a sharp recovery from the first quarter of this year, when both the E.U. and the euro zone saw a 2.5 percent contraction, or a 10 percent annual rate. Underlying the surprisingly strong reading were solid performances in France and Germany, both of which grew by 0.3 percent in the second quarter, compared to the first, government data showed Thursday.

Germany, Europe’s largest economy, will still probably see its gross domestic product contract by about 6 percent for the full year, economists say. But the surprise expansion — most economists had expected a flat or slightly negative reading — underscores how German exporters are benefiting from growth in Asia and what may be a bottoming of the downturn in the United States.

“An export-driven, ‘V’-shaped recovery in the second half of this year is in the pipeline,” said Andreas Rees, chief German economist at UniCredit.

Germany’s economy expanded 0.3 percent from the previous quarter, ending a run of four straight quarters of contracting output in Germany, putting an end to the nation’s recession in its most technical sense. The modest expansion in the second quarter amounted to an annual growth rate of 1.2 percent. link.....

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Fed Meeting Likely to Signal Fate of Intervention Programs

When the Federal Reserve announces results of its policymaking meeting Wednesday, it should offer insights into whether the central bank will start unwinding some of its expansive interventions to prop up the economy.

The Federal Open Market Committee is all but certain to leave its target for short-term interest rates near zero, and likely will indicate that it intends to keep rates there for some time. The question is what the Fed will do with its less conventional programs rolled out over the past year.

Its decisions could signal how much longer the Fed will engage in extraordinary actions to support lending, and the call is a tough one. On one hand, the economy is starting to look better. On the other, financial crises can come in unpredictable waves, and Fed leaders still see considerable risks facing the economy and financial system.

"This has been such a severe economic decline that we could easily tip into a double-dip recession or have a slow recovery," said Bruce McCain, chief investment strategist of Key Private Bank in Cleveland. "But the longer you leave the programs in place, the more inflation risk there is. That makes it a very tough time to figure out what to do to negotiate between those two rocky shores."

The stock market fell Tuesday, off 1.3 percent as measured by the Standard & Poor's 500, as investors showed caution in advance of the Fed announcement. The steepest declines were in shares of financial companies. link....

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Activision 2Q Profit Soars, But Revenue Seen Dropping

Still, the Santa Monica, Calif.-based company reeled back revenue guidance for 2009 by 6% as it delayed two releases and forecast more difficult market conditions. The company also offered disappointing third-quarter guidance and expressed caution as to what impact the recession might have on its business.

"Given the continued economic uncertainty as well as hiring employment, we are monitoring the retail and consumer environment carefully," Thomas Tippl, the company's chief financial officer, said, according to a conference call transcript. He added that the company remained cautious.

Activision's comments come as the videogame sector, once considered recession-resistant, suffers through a long string of sales declines prompted by cautious consumers.

Still, the company's performance has been buoyed by strong sales of the latest installments of its "Guitar Hero" and "Call of Duty" franchises. It also released three movie-related games - "X-Men Origins," "Transformers: Revenge of the Fallen," and "Ice Age: Dawn of the Dinosaurs" - during the quarter.

Chief Executive Robert Kotick highlighted the "Prototype" and "World of Warcraft" games, which he said helped the company's North American and European market share rise 2.8 percentage points, to 12.7%.

Activision was formed in July 2008 by a merger with Vivendi SA's (12777.FR) Blizzard Entertainment, which makes comparisons difficult. The company's year-ago period reflects Blizzard's operations only.

Activision posted earnings of $195 million, or 15 cents a share, compared with $28 million, or 5 cents a share, a year earlier. Earnings excluding deferred revenue and other items fell to 8 cents from 14 cents. Net revenue nearly tripled to $1.04 billion. Adjusted for deferrals, revenue more than doubled to $801 million.

In May, Activision projected earnings of six cents on adjusted revenue of $775 million, below Wall Street expectations at the time.

Activision said it had three of the quarter's top 10 sellers in the U.S. with "Prototype," "Guitar Hero World Tour" and "Wolverine," according to market researcher NPD Group. Maintaining top-tier titles is important in the videogame industry, as fewer consumers risk spending their cash on lesser-known titles.

As the company reiterated its adjusted-earnings forecast for the year, it projected a third-quarter profit of three cents a share on adjusted revenue of $700 million. Analysts surveyed by Thomson Reuters, on average, projected 10 cents and $909 million, respectively. Releases during the quarter include "Guitar Hero 5," "Marvel: Ultimate Alliance 2" and "Wolfenstein." link.....

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Obama Says U.S. Has ‘Many More Months’ Before Full Recovery

President Barack Obama said it will take “many more months” for the U.S. to fully recover from the recession as employers continue to shed jobs.

The president said in his weekly address on the radio and the Internet that yesterday’s government report on the gross domestic product showed the recession was “even deeper than anyone thought” when he took office in January. The stimulus legislation passed by Congress in February and measures to stem home foreclosures have helped stem the slide, he said.

“Important steps that we have taken over the last six months have helped put the brakes on this recession,” Obama said. “But history shows that you need to have economic growth before you have job growth.”

Obama is putting the economy back at the forefront of his remarks to the public as polls show it remains the top concern of Americans. Next week he’s heading to Elkhart, Indiana, for an event focused on his economic policies. Obama said earlier this week that the U.S. “may be seeing the beginning of the end of the recession.”

The Commerce Department reported yesterday that the gross domestic product shrank at a 1 percent annual pace in the second quarter, less than forecast, after a 6.4 percent drop in the first three months of the year. The economy has lost 6.5 million jobs since the recession began in December 2007, and economists surveyed by Bloomberg this month forecast the jobless rate will exceed 10 percent by early 2010. The Labor Department is scheduled to release the July unemployment rate Aug. 7. The June rate was 9.5 percent.

Jobs and Recovery

“As far as I’m concerned, we will not have a recovery as long as we keep losing jobs,” Obama said. “And I won’t rest until every American who wants a job can find one.”

The GDP report is a “an important sign that we’re headed in the right direction” as business investment stabilizes, which may lead to more hiring.

“That’s when it will really feel like a recovery to the American people,” he said.

The revised government data showed that GDP has tumbled 3.9 percent since the second quarter of last year -- the biggest drop since quarterly records began in 1947. GDP has fallen four straight quarters, the longest ever.

“I know that there are countless families and businesses struggling to just hang on until this storm passes,” Obama said. “But I also know that if we do the things we know we must, this storm will pass. And it will yield to a brighter day.” link...

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Asia stocks up after US earnings, Bernanke comment

HONG KONG — Asian stocks rose modestly Wednesday after more U.S. companies posted stronger earnings and the Federal Reserve's chairman said the world's largest economy was on pace to recover this year. European markets were weaker.
Most markets in Asia posted gains of less than 1 percent after a mixed performance the day before. Wall Street futures fell along with crude oil prices.
Another round of better-than-expected earnings and improved forecasts in the U.S., this time from Caterpillar Inc. and Apple Inc., gave investors more reason to believe the worst of the global downturn was over.
That view was reinforced by Federal Chairman Ben Bernanke, who said the U.S. was set to turn around this year, albeit at a slow rate as rising unemployment continues to strain the economy. Investors also welcomed Bernanke's assurances the Fed would keep interest rates low for the time being.
Investors have rushed headlong into global equities over the last week or so as earnings lent more support to the case for a revival in economic growth.
Now, more and more investors are tip toeing as they try to determine the actual shape of the rebound, said Thomas Lam, senior treasury economist at the United Overseas Bank in Singapore.
"The U.S. economy either has stabilized or is stabilizing, there's no doubt about that," Lam said. "We have transitioned from thinking it's the end of the world to trying to see what the new world will look like."
In Japan, the Nikkei 225 stock average rose 71.14, or 0.7 percent, to 9,723.16.
South Korea's Kospi was up 0.3 percent. Shanghai's index gained 1.9 percent, Australia's benchmark advanced 0.4 percent and Taiwan's market edged up 0.5 percent.
Elsewhere, Hong Kong's Hang Seng added 253.26, or 1.3 percent, to 19,248.47. India's Sensex shed 1.3 percent.
During early trade in Europe, Britain's FTSE-100 lost 0.3 percent, Germany's DAX fell 0.3 percent and France's CAC-40 dropped 0.3 percent.
Wall Street added to its gains overnight.
The Dow rose 67.79, or 0.8 percent, to 8,915.94, its highest level since January.
The S&P 500 index rose 3.45, or 0.4 percent, to 954.58, its highest close since November. And the Nasdaq rose 6.91, or 0.4 percent, to 1,916.20, its 10th straight gain. The last time the index rose 10 straight days was in July 1997.
U.S. futures pointed to a weaker open Wednesday. Dow futures were off 66, or 0.7 percent, at 8,820 and S&P futures declined 5.9, or 0.6 percent, at 947.50.
Oil prices fell in Asia, with the September contract down 81 cents to $64.80 a barrel. On Tuesday, the August contract expired, rising 74 cents to settle at $64.72. link....

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UPDATE: Barnes & Noble Opens E-Bookstore With 700,000 Titles

SAN FRANCISCO (Dow Jones)-Barnes & Noble Inc. (BKS) on Monday launched an e-bookstore offering titles that can be read on Apple Inc.'s (AAPL) iPhone and iPod Touch, Research in Motion Ltd.'s (RIMM) BlackBerry smartphones, as well as most notebook and desktop computers.

The largest U.S. book retailer said its e-bookstore will offer more than 700,000 titles, including hundreds of new releases and bestsellers for $9.99.

Unlike online retailer Amazon.com Inc. (AMZN), whose e-book strategy has largely revolved around its Kindle reading device, Barnes & link......

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OIL FUTURES: Crude Settles +2.5% At $63.56, Aided By Stocks

NEW YORK (Dow Jones)--Crude-oil futures prices rose for a third day Friday, spurred by gains in equities amid fresh hopes of signs of economy recovery.

Light, sweet crude oil for August delivery on the New York Mercantile Exchange rose 2.5%, or $1.54, to settle at $63.56 a barrel, the highest level since July 6. Early in the week, crude was in the midst of a sell-off stretching for nine of the previous 10 days, slashing prices to a near-two-month low at just above $58 a barrel. link....

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PEPCO instructs staff to maintain service standards

ISLAMABAD: Pakistan Electric Power Company (PEPCO) has instructed its officers and staff members, working in the field, to extend maximum cooperation to its over 18 million valued consumers by maintaining service oriented standards of customer service. PEPCO has a vast network of its field offices in the jurisdictions of its distribution companies, as 925 sub-divisions and 192 divisions with 262,674km HT lines, 197,514km LT lines and 493,696 transformers installed. Consumers may face problems like power disruptions, faults in meters or cables, low voltage and defects in transformers. The PEPCO line staff was available round the clock in the field offices to rectify all sorts of problems in all types of weather at any time. These problems aggravate in summer season once the electricity load rises enormously due to excessive use of air conditioners and other appliances. The distribution system gets over stretched and develops technical faults leading to disruption of power supply. The PEPCO had intensified its efforts to grapple with the growing demand of electricity. New power generation plants were being commissioned and system augmentation programme was also being executed to tackle the problems of power disruptions, low voltage and over loading. The PEPCO staff replaces faulty meters and cables, upgrades transformers, strengthens and bifurcates feeders and also replaces power transformers of the grid stations with the heavy ones in the scorching heat, endangering their lives for public service. PEPCO authorities requested the consumers to understand the limitations of the company and acknowledge the efforts of its staff in providing electricity to such a huge customer base .The cooperation of the consumers was particularly required for energy discipline, conservation and electricity theft. During the hours of load management valuable consumers must try to understand the compulsions and adjust their daily life routine. PEPCO regrets the inconvenience caused to worthy consumers and assures that concrete steps were being taken to overcome this problem in the near future. staff report. link...

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Banks lend Rs202bn to farm sector in 11 months

KARACHI: Credit to the agriculture sector will remain much below the target set by the State Bank for the year 2008-09 despite significantly higher disbursement by the commercial banks.

The SBP had set Rs250 billion as the agriculture credit target for the current financial year ending on June 30, 2009. During the eleven months of this year, as reported by SBP on Monday, total agriculture disbursements were Rs202 billion.

The average monthly credit was Rs18.36 billion, while the remaining amount to chase the annual target is Rs48 billion. Banks would not be able to disburse Rs48 billion in one month, which means the annual target for agriculture credit disbursement has already been missed.

The SBP said that credit disbursement by commercial and specialised banks during the July-May rose by 9.31 per cent year-on-on year basis.

However, in absolute terms the agriculture disbursements increased by Rs17.2 billion against Rs184.9 billion made in 11 months of the previous year.

The big five commercial banks increased their agriculture lending by 14.7 per cent to Rs98.2 billion during this period. The big banks are MCB Bank, Habib Bank, United Bank, Allied Bank and National Bank of Pakistan.

Zarai Taraqiati Bank, the single biggest lender to the agriculture sector, also improved its credit growth by 12.8 per cent to Rs63.2 billion.

However, 14 domestic private banks loaned a combined Rs36.6 billion during this period, which was lower than the last year’s disbursement of Rs38.8 billion.

The SBP had set 25 per cent higher target for agriculture sector compared to last year’s target of Rs200 billion. However, the last year disbursements exceeded by Rs12 billion to Rs212 billion. link...

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