Bank of America bail-out agreed

Bank of America will receive $20bn (£13.4bn) in fresh US government aid and $118bn worth of guarantees against bad assets.

The emergency funding will help the troubled bank - the US's largest - absorb the losses it incurred when it bought Merrill Lynch.

In return for the money, the US Treasury will take a stake in the bank.

Just hours after the aid package was announced, Merrill Lynch posted a fourth-quarter 2008 loss of $15.31bn.

Bank of America reported a loss of $1.7bn, compared with a profit of $268m for the same period a year earlier.

Bank of America had been seen as one of the strongest US banks, at least until its decision to take over Merrill.

"They were probably one of the best banks out there, balance sheet-wise, until they did the Merrill deal," said Cassandra Toroian at Bell Rock Capital.

Financial stability

The government stepped in after fears that the deteriorating capital base threatened the viability of the bank and could have posed a threat to the financial sector and the wider economy.

India's economy to grow by 7-7.5 pc in 08-09: Finmin

A key finance Ministry official projected India's growth rate at 7-7.5 per cent in the current fiscal, lower than projected by the Reserve Bank as well as the growth recorded in the first half of this fiscal.

"India, after remaining in high growth trajectory continuously for the last four years is now projected to grow between 7 and 7.5 per cent during the current financial year," Economic Affairs Secretary Ashok Chawla said at the Third India China Financial Dialogue in New Delhi on Friday.


Indian economy grew at the rate of 7.8 per cent in the first half of the current fiscal compared with 9.3 per cent in the same period last fiscal.


However, growth is expected to lower much after the first half, as industrial growth turned negative in October and stood at just 2.4 per cent in November.


The RBI has estimated Indian economy to grow at 7.5-8 per cent, but it may also lower its growth forecasts.


RBI Governor D Subbarao had recently indicated that the central bank may revise down the GDP projections at its third quarterly review of the credit policy, slated for 27th January.


Chawla said India has taken a number of steps to inject liquidity into the financial system, recapitalised banks and other systemically important institutions to tide over the crisis.


He identified banking sectors and capital markets as areas where the expert teams of India and China would jointly work and evolve a time-bound strategy for closer engagement.


The Economic Affairs Secretary said that both India and China have to work together to ensure that reform initiatives ushered in tangible results for developing nations.

Crunch 'cost Arabs $2.5 trillion'

The global economic crisis has cost Arab countries $2,500bn (£1,690bn) in the last four months alone, according to Kuwait's foreign minister.

Sheikh Mohammed al-Sabah told reporters in Kuwait City that oil-rich Gulf Arab states had postponed or cancelled 60% of development projects.

He did not give details for his figures, which were released days before an Arab Economic Summit.

Stock market falls and a low oil price have contributed to the losses.

The biggest loss was an estimated 40% drop in the value of Arab investments abroad, which had previously totalled around $2.5tn, AFP news agency reports.

"The Arab world has lost $2.5 trillion in the past four months," Mr Sabah said after meeting fellow foreign and finance ministers.

Kuwait City is due to open a two-day Arab Economic Summit on Monday, the first of its kind.

Arab League Secretary General Amr Moussa earlier described the meeting of 22 heads of state as "the largest and most important" Arab event of 2009.

Microsoft is accused by EU again

The European Commission has accused Microsoft of harming competition by bundling its Explorer web browser with its Windows operating system.

The commission said it had reached the preliminary view that the US software giant had undermined consumer choice and infringed EU rules.

Microsoft and the European Union have engaged in legal battles over competition issues for years.

Last year, the EU fined Microsoft 899m euros ($1.4bn; £680.9m).

Browser battle

In its statement on Friday the Commission said: "Microsoft's tying of Internet Explorer to the Windows operating system harms competition between web browsers, undermines product innovation and ultimately reduces consumer choice."

Microsoft that it was studying the commission's preliminary finding, and did not rule out requesting a formal hearing.

It has been given eight weeks to reply.

The US software firm controls the majority of the web-browsing market through its Explorer browser.

Analysts say the company has diversified enormously and is now no longer so reliant on its Windows operating system, with revenue coming from Xbox sales and server software.

In February 2008, the EU fined Microsoft 899m euros for defying sanctions imposed on it for anti-competitive behaviour.

The penalty - which was then one of the largest imposed by the European Commission - came after Microsoft failed to comply with an earlier 2004 ruling that it had abused its market position.

Citigroup to split as losses grow

Struggling US banking giant Citigroup has announced plans to split the firm in two, as it reported a quarterly loss of $8.29bn (£5.6bn).

It said it would realign into two new firms, Citicorp and Citi Holdings.

Citicorp will handle the company's traditional banking work, while Citi Holdings will take on the firm's riskiest investment assets.

Last autumn, Citigroup had to be rescued by the US government in a bail-out deal totalling $45bn.

The government also agreed to guarantee up to $306bn (£205bn) of risky loans and securities on Citigroup's books.

'Ongoing efforts'

"Given the economic and market environment, we have decided to accelerate the implementation of our strategy to focus on our core businesses," said Citigroup chief executive Vikram Pandit.

"This will help in our ongoing efforts to reduce our balance sheet and simplify our organisation.

"We are setting out a clear roadmap to restore profitability."

Citigroup's net loss for the last three months of 2008 works out at $1.72 per share, worse than analyst expectations of $1.31.

Its quarterly revenues were down 13% to $5.6bn, which Citigroup said reflected "the impact of a difficult economic environment and weak capital markets".

"I think people knew it was going to be bad, but I'm surprised it's this bad," said Matt McCormick, portfolio manager at Bahl & Gaynor Investment Counsel in Cincinnati.

Good and bad

Analysts say the split essentially puts Citigroup's solid and profitable consumer banking interests in the hands of the new Citicorp, while the bad investment debts that forced it to seek government help go into Citi Holdings.

This will enable Citicorp to return to profitability much quicker than would have been possible for Citigroup as a single firm.