Santander agrees to buy Alliance Leicester for £1.26 bln
MADRID, July 14, 2008 (AFP) - Spain’s biggest bank, Santander, said Monday it had reached an agreement to buy British bank Alliance and Leicester in a deal worth 1.26 billion pounds (1.57 billion euros).
Under the terms of the deal Santander, which acquired British bank Abbey in 2004, will offer one of its shares for every three shares in Alliance and Leicester, the Spanish bank said in a statement sent to market regulator CNMV.
“For Santander, the acquisition will deliver increased critical mass for the Santander Group in the UK market,” the statement said.
“The acquisition allows the combination of A&L and Abbey’s complementary business operations, enhancing the competitive positioning of the products and services offered by the group, benefiting customers,” it added.
The deal values each Alliance and Leicester share at 299 pence, a premium of about 36.4 percent over the closign price on Friday of 219.25 pence.
Earlier Monday the British bank said it was in “advanced” talks with an unnamed party — later indentifued by the BBC as Santander — over the possible offer, worth the equivalent of 1.57 billion euros or 2.5 billion dollars.
The bank statement and report caused shares in the bank to soar 45.95 percent to 320 pence in morning trade on London’s second-tier FTSE 250 index.
Alliance Leicester, like many global banks, has been hampered by the US subprime home loan crisis and the subsequent worldwide squeeze on credit that began last August.
The bank’s share price had tumbled lower last week to close at 219.25 pence on Friday amid mounting international unease about the health of the US financial services sector.
Commercial banks have turned increasingly cautious about lending money to one another, creating a so-called credit-crunch.
Many major banking groups have suffered massive losses as a result of complex investments in the collapsed US subprime housing market.
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Can you trust your business to Google’s cloud?
A large number of Google Docs users couldn’t use their online word processor or presentations for about an hour Tuesday. But the glitch illustrates not just the troubles with cloud computing, but also the gradual progress in making the concept palatable.
Cloud computing, in which software runs not on PCs or company servers but instead on computers on the Internet, requires something of a leap of faith both technologically and culturally. Those making the move must get accustomed to a reliance on somebody else’s computing infrastructure, and that can be scary.
What’s gradually emerging, though, are guarantees and practical tools that likely will help ease the transition.
Google, for example, offers a service level agreement (SLA) promising that Gmail, the online e-mail component of its overall Google Apps service, will be available 99.9 percent of the time, with service credits extended to paying customers if Gmail dips below that level.
And SLAs are coming to the rest of Google Apps.
“We don’t have an SLA yet for Google Calendar or Google Docs, but it’s something we’re moving quickly toward,” said Rishi Chandra, product manager for Google Apps. Google wants “to get the same level of reliability for all of Apps,” he said.
Google is a major proponent of cloud computing, with advocacy work down to the level of trying to build ubiquitous high-speed networks, and Yahoo has just formed a cloud computing group of its own. The trend has the potential to seriously redistribute wealth within the computing industry.
There are two broad categories of cloud computing. First are online applications such as Google’s Apps, Yahoo’s Zimbra for e-mail, Zoho for office and business software, Adobe Buzzword for word processing, and Salesforce.com for managing customer relations. Second are general-purpose foundations such as Amazon Web Services, Saleforce.com’s Force.com, and Google App Engine on which customers can run their own applications.
Taking the plunge into the cloud
Service level agreements are the kind of contractual guarantees that appeal to CIOs making cost-benefit analyses. But there’s a gut-level factor at play here, too.
Psychologically, it’s well-known in risk analysis circles that people feel more comfortable with risk if they feel in control. Thus people are often more comfortable driving a car on a congested freeway compared with being flown somewhere in a commercial jet, regardless of the relative safety of the two forms of transport.
So naturally there’s some fear with cloud computing: it means you can’t reboot your laptop or check for blinking red lights on the data center servers.
Companies are working to address this side of the equation, too. One prime example is the Trust.salesforce.com site, which shows the response time for a Salesforce.com server transaction. It also details when problems happened, what they affected, and what caused them.
“We’ve found working with our customers they want transparency. They want to know exactly what’s going on all the time,” said Bruce Francis, Salesforce.com’s vice president of corporate strategy. “If there’s an issue, they’re not furious; they just want to know exactly what’s going on.”
Amazon.com, too, offers a basic status report dashboard for Amazon Web Services. “A service dashboard is something our developers asked us for, and we made the service available to them as soon as possible,” said spokeswoman Kay Kinton.
“Own your own risk”
And some others are even trying to make a business out of reducing the uncertainties of cloud computing. One is open-source monitoring and management software company Hyperic, which launched a CloudStatus service in June that monitors Amazon Web Services in greater detail. The company is working hard to extend its monitoring service to other sites, too, including Google App Engine, said Stacey Schneider, senior director of marketing.
“You can’t get away from owning your own risk. This is slowing the adoption of the cloud,” she said.
Google is trying to communicate better with users and customers, Chandra said, though he stopped short of revealing what the uptime is for Google Docs or detailing why exactly it had problems earlier this week.
“With the docs outage, we posted immediately in the administrative console that there was an issue. We posted to the help center and the phone line system that we were working quickly to resolve it,” Chandra said.
Asked whether Google plans its own status dashboard, Chandra wouldn’t share details but promised better help for users. “We’re trying to find even more ways to be more transparent about reliability,” he said.
Risks of non-cloud computing, too
Much ado can and should be made of the risks of cloud computing, but it should be noted that even the much more mature business of computing without a cloud has its risks. Downtime, either with ailing or stolen PCs or with overtaxed or faulty servers, is a serious problem there, too.
Those with high-end services boast of “five nines” of reliability, where services are available 99.999 percent of the year and therefore down no more than 5 minutes and 15 seconds per year. Google’s Gmail SLA, at 99.9 percent uptime, promises downtime of less than 9 hours per year.
That might not be five nines, and it’s for Gmail only today, but Google chooses to see the glass as half full.
“We talk to customers, and 99.9 percent is mostly much higher than most organizations with their internal service today,” Chandra said.
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Zurich withdraws from RBS Insurance bidding
Zurich Financial Services Group has confirmed that it is withdrawing from any further discussion with Royal Bank of Scotland (RBS) over the acquisition of the latter’s insurance business.
The move has raised questions over the viability of RBS’s proposed sale of the division, which includes Churchill, Direct Line, Privilege, UKI and NIG.
The brands currently hold one-third of the UK motor insurance market.
Other potential buyers to have lost interest in RBS Insurance include Generali of Italy, Ping An of China and Warren Buffett’s Berkshire Hathaway.
The group’s insurance division is valued at up to £7 billion and Zurich says it has made its decision after carrying out a detailed review of the business.
It is understood that Allianz and both Allstate and Travelers of the US remain in the bidding but the news of Zurich’s withdrawal will lead to further speculation that the division could be broken up.
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Freddie Mac in $3 bln debt sell-off to calm investor fears
WASHINGTON (AFP) - Troubled US mortgage giant Freddie Mac planned Monday to sell off three billion dollars in securities in a test of investor reaction to a bold rescue plan by the US Treasury.
Treasury Secretary Henry Paulson in a dramatic move on Sunday unveiled measures to bolster the two main US housing companies Fannie Mae and Freddie Mac, which were also given Federal Reserve oversight and bigger credit lines.
The measures proposed by Paulson now require Congressional approval.
The two firms own or guarantee almost half of all US home loans, or about five trillion dollars (three trillion euros) of debt, and have been in crisis amid the worst housing downturn in the United States in a quarter century.
Paulson said Sunday that the “central role” the two play in real estate financing meant they should continue to respond to shareholders and should not be taken over by the federal government.
To protect them from liquidity problems, Paulson said the two organizations would get a bigger credit line “temporarily” but gave no details on the amount or terms.
The Treasury Department will get temporary authority to buy their shares should that be necessary, Paulson said.
It was not immediately clear whether such purchases would be carried out on the market to support Fannie Mae and Freddie Mac’s share values or through a capital injection — which has not been possible thus far due to their weak share values.
Freddie Mac is scheduled to sell three billion dollars in short-term notes on Monday.
The Board of Governors of the Federal Reserve System meanwhile announced it had granted the Federal Reserve Bank of New York the authority to lend to Fannie Mae and Freddie Mac.
Any lending would be at the primary credit rate and collateralized by US government and federal agency securities. The authorization is meant to supplement the Treasury’s lending authority, officials said.
“We are grateful for the leadership of Secretary Paulson and (Fed) Chairman (Ben) Bernanke,” Fannie Mae CEO and president Daniel Mudd said.
He urged Congress to ensure “swift passage of the new legislative proposals, as well as the important initiatives underway to assist homeowners and help restore stability to the housing market.”
“We continue to hold more than adequate capital reserves and maintain access to liquidity from the capital markets,” Mudd said.
“Given the market turmoil, having options to access provisional sources of liquidity if needed will help to strengthen overall confidence in the market. “We will continue to do our part to provide liquidity, stability and affordability to the housing market now and in the future.”
White House press secretary Dana Perino said Sunday that “Fannie Mae and Freddie Mac play an important role in our housing finance system, and they should continue to play this role in their current forms as shareholder-owned companies.”
“This evening, after working with the companies, the Federal Reserve, and other regulators, Treasury Secretary Paulson outlined a plan that we believe will help add stability during this period. President (George W.) Bush directed Secretary Paulson to immediately work with Congress to act on this plan,” she added in a statement.
“It is crucial that Congress quickly work to enact this legislation as a complete package along with the strong oversight reform legislation recently passed in the Senate.”
Democratic presidential candidate Barack Obama offered a cautious reaction to the rescue plan, saying any actions taken with respect to Fannie Mae and Freddie Mac should be guided by two basic principles.
“First, we must maintain a steady flow of capital to the housing market to make sure that home ownership remains attainable and affordable for American families,” Obama said in a statement. “Second, any measures should protect taxpayers and not bailout the shareholders and management of Fannie Mae and Freddie Mac.”
The two government-chartered, shareholder-owned giants underpin some five trillion dollars in home loans, and the meltdown in their shares last week raised fears of a government bailout or a possible worsening of the credit crunch.
To organize the bailout of Bear Stearns by JPMorgan Chase, the Fed earlier this year agreed to back a restructuring worth some 30 billion dollars, with no guarantee its investment will be returned in full.
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Is E3 game gathering still influential?
The video game industry’s best-known event, E3, kicks off this week in Los Angeles, but most observers are expecting a lack of the kind of knock-your-socks-off news the show has been famous for in years past.
Perhaps the biggest E3-related news of all, that Microsoft announced it’s cutting the price of its Xbox 360 to $300, came Sunday, ahead of the company’s big press conference Monday.
In its heyday at the Los Angeles Convention Center, E3 was the world’s largest video game convention, famous not just for its major product surprises, but also for its eardrum-splitting noise, monstrous crowds, and barely clad “booth babes”–all of which contributed to it generally being seen as an example of the excesses of the industry.
After the 2006 iteration of the show, however, E3’s lords and masters in the video game industry decided to dial down the intensity by several orders of magnitude and announced the show would no longer be held at the gargantuan convention center or be open to the teeming masses.
Instead, the show was moved to nearby Santa Monica, Calif., and held in hotels. The result was a much smaller, invite-only affair that lost a lot of its excitement but perhaps better served its core purpose of bringing publishers and platform companies together with journalists and analysts.
Now, E3 returns to the Los Angeles Convention Center, albeit in the smaller format of last year. It starts Monday with Microsoft’s press conference and one by leading publisher Electronic Arts, and continues Tuesday with similar events by Sony and Nintendo. The official part of the show starts Wednesday.
But the industry now finds itself with a growing number of press events, conferences, and conventions throughout the year and around the world, and in the middle of a console cycle. All three major consoles, Microsoft’s Xbox 360, Sony’s PlayStation 3, and Nintendo’s Wii, are more than a year and a half old–and some are questioning whether E3 is still relevant.
“I think it’s a pretty low-key show now,” said Van Baker, an industry research analyst at Gartner who focuses mainly on the console side of the business. “It’s more like some of the traditional trade shows (in that) it’s all about business…I’m not even going to bother to go. I just don’t think I’m going to get anything out of it.”
Others, of course, feel differently, and think E3 is the perfect place to showcase the wide variety of big games coming out in the next year or so.
“We’re going crazy over E3,” said Adam Sessler, host and managing editor of video game TV network G4’s show X-Play, which will be featuring 17 hours of live E3 coverage this week. “This is definitely the biggest (E3) in terms of the amount of games you can see…So we’re having 35 live demos on our stage.”
To Sessler, the excitement is clearly about the games, a natural state of affairs given that most people think there is likely to be little interesting console news beyond the Xbox price cut.
He said he is most looking forward to demoing Fallout 3, from Bethesda Game Studios; Gears of War 2, an Xbox exclusive from Epic Studios; Resistance 2, a PlayStation 3 exclusive from Insomniac Games; and Mirror’s Edge, from Electronic Arts.
Indeed, Sessler said he thinks the industry hasn’t had as strong a lineup of forthcoming titles in a long time.
“In terms of the goods that are (about to be) available, I haven’t seen an E3 like this in five years,” he said. “I’m very proud of the industry in terms of the quality of titles available.”
Yet to observers like Baker, the problem with this year’s E3 is that most of the games people are most excited about have been announced for a very long time, and there aren’t expected to be many new titles revealed this week that will shake anyone up.
“Pretty much all the major title releases have been done already,” Baker said. “And barring a brand new title from one of the established publishers…there’s just not a lot of news. It’s an off year for the platforms, and that combined with the fact that the major publishers (have already announced all their big games), it’s tough to find stuff that’s that newsworthy.”
Another PS3 price cut?
With the reverberations of Microsoft’s Xbox price cut–giving that console a new competitive advantage over Sony’s PS3, which costs $399 for the 40GB model–likely to dominate the first day, at least, it is natural to wonder if Sony will counter by slashing the price of its own game machine. But no one expects to see that, especially because the company already did that not too long ago, releasing the 40GB version of the console in October.
“I don’t think they’re in a position where they can do another price drop,” Baker said, “without losing a fair bit of money. (So) I’m speculating that they will choose not to match the price drop.”
Others agree, and say the lack of a likely Sony price cut gives Microsoft some breathing room.
“As for Microsoft, I think they don’t need to announce anything but a price cut right now,” said Brandon Sheffield, editor in chief of Game Developer magazine, “especially since PS3 won’t be doing one.”
However, Sheffield said he was hoping that either Sony or Microsoft, or both, will announce what he called “motion peripherals,” which would essentially be their versions of Nintendo’s wildly popular Wiimote.
“It seems like an inevitability, and I’ve heard lots of rumors on both camps,” Sheffield said, adding that he thinks such a move by Sony could mean “the (PlayStation 2) repositioned as a Wii competitor.”
That would be a very interesting decision by Sony, and would leverage its massively successful PS2, which even today is still one of the best-selling game machines in the world. It would also lend credence to the company’s oft-repeated statement that its consoles have a 10-year lifecycle.
Baker also expects something like this to come out of Sony and/or Microsoft, but not at E3.
“I don’t think that will happen at E3,” Baker said. “I think it will happen closer to Christmas.”
Notwithstanding the enthusiasm of people like Sessler, it seems very likely that this year’s E3 is going to be short on news.
But while that might be problematic for the countless reporters on hand, it doesn’t mean the event will be a failure.
To Rich Taylor, the senior vice president of communications and research for E3’s organizer, the Entertainment Software Association, the point of the show is much more about making sure exhibitors and press convene and that developers and publishers are able to put their heads together.
“We’ll know the result (of that) as we get throughout the week,” Taylor said, “but all indications are, from early feedback and the way things are teed up, that folks are looking forward to a very successful and positive week.”
In addition, Taylor said, the lack of major console announcements frees up mind share for news and discussion about the games themselves.
“Hardware sucks the oxygen out of the room very easily” at E3, Taylor said. “In non-console-launch years, the software becomes the focus (and) we get to see so much of the creativity coming from game developers and game designers.”
Part of the problem when it comes to big surprises at events like E3, of course, is that the video game industry is horrible at keeping secrets. That’s why the Xbox price cut, the worst-kept secret in the industry for the last week or so, was on everyone’s lips long before everyone got to L.A.
But the same dynamic is far less true of the Japanese side of the industry.
“I think any surprises will be in the form of game announcements from Japanese companies,” Sheffield said. “They’re the only groups that are any good at keeping secrets about their products from the Western press, largely due to the language barrier.”
The same could hold true for the hardware side. While everyone seems to think they know what Microsoft and Sony will talk about at their big press conferences (which take place on Monday and Tuesday, respectively), there is little intelligence on what Nintendo has in store.
To Sessler, that could mean the Wii maker has something substantial up its sleeve.
“No one seems to have a clue what Nintendo’s going to do,” Sessler said, adding that what they do announce “could be one of the biggest eye-openers…I would not be surprised if there wasn’t a lot of talk that is Nintendo-focused” after the company’s press conference.
And that would be important for Nintendo, Sessler added, because while the Wii is a huge hit, the attach rate of its games “is not very impressive.”
“A lot of those casual gamers that bought (the Wii) haven’t continued to invest” in games, he said, adding that Nintendo could well address that issue at E3 Tuesday.
Still, when all is said and done, there aren’t many people who seem truly enthusiastic about this year’s E3, or E3s in the future.
But to Taylor, any talk of pessimism about the show’s influence on video games will be undercut by what actually goes on in L.A. in the next few days.
“Anyone who has anything to do with this industry is going to be centralized in downtown Los Angeles” this week, Taylor said, “and I think that is the best indicator of the vitality of E3.”
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Swiss Re appoints new deputy CEO
Swiss Re’s board of directors has appointed Stefan Lippe as deputy chief executive officer.
Lippe will also take on the duties of chief operating officer, and assumes his new role on 1 September.
He has worked for Swiss Re for more than two decades, and in his new post will supervise a broad range of operations including Group Technical Accounting & Services, Claims and Liability Management and Global IT.
He leaves behind his current post of (Re)Insurance Products to replace Andreas Beerli, who is set to retire partway through 2009.
Beerli has been with the firm for more than twenty years, and has supported development and restructuring of Swiss Re and held a number of senior posts.
He will retain membership of the executive committee until 30 June 2009, assisting the CEO with various projects during that time.
Elsewhere, Brian Gray has been appointed as chief underwriting officer and a member of the executive committee.
Gray will be responsible to the chief executive officer.
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