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PREVIEW-Citigroup's Pandit gets ready for his close-up

Reuters: [2008-05-06 18:53:00]

By Jonathan Stempel

NEW YORK, May 6 (Reuters) - Vikram Pandit's first five months as Citigroup Inc <C.N> chief executive have been no honeymoon.

Since taking over in December from Charles Prince, who quit under pressure, Pandit has presided over nearly $15 billion of reported losses, much of the bank's efforts to raise more than $40 billion of capital and a 41 percent dividend cut.

Pandit has also faced repeated demands from investors that he slash costs, divest poorly performing businesses and perhaps even break up the largest U.S. bank.

In a four-hour presentation to analysts and investors on Friday, Pandit and other top executives will lay out their vision for Citigroup. Pandit, known for his caution, has promised details on how he will make it run better.

"If people are expecting a grand design, they may be disappointed," said Marshall Front, who oversees $800 million at Front Barnett Associates LLC in Chicago. "I think he will give us the state of the union: where have we been, where are we now and where are we headed. We'll have a better idea of his stewardship in six months."

Investors have long viewed New York-based Citigroup, which has $2.2 trillion of assets and operates in more than 100 countries, as a bloated work in progress.

The bank's shares are down about one-fourth since Pandit took over and by more than half in the last year.

At the bank's nearly four-hour annual meeting last month, shareholders vented anger over the share price and executive pay, and employees expressed dismay over their treatment.

"I would like to hear some definition of how far they have to cut," said Michael Holland, who runs the money manager Holland & Co in New York. "Pandit would be smart to avoid any kind of time frames, keep expectations modest -- and try to outperform those expectations."

SMALL STEPS

Pandit has so far moved in smaller steps.

He has agreed to sell most of the CitiCapital commercial lending and leasing unit, resulting in a $325 million after-tax loss and the bank's stake in the CitiStreet benefits servicing venture, resulting in a $200 million gain.

The Wall Street Journal said he may sell Primerica Financial Services, an insurance and mutual fund sales unit.

Pandit reduced risk by cutting back on mortgage lending and deciding to unload $45 billion of loans, and selling $12 billion of loans to fund corporate buyouts at a discount.

He has also reorganized the U.S. wealth management unit and shaken up the organizational structure for consumer banking, Citigroup's biggest business.

Pandit lured Terri Dial, who revived Lloyds TSB Group Plc's <LLOY.L> U.S. banking business, to run North American consumer operations. He also installed former Morgan Stanley <MS.N> colleague John Havens to run investment banking.

Citigroup is also restructuring its Old Lane hedge fund unit, which Pandit once ran and letting outside investors withdraw their money. This comes less than a year after Prince paid about $800 million for Old Lane, in part to add Pandit.

And the bank has announced 13,200 job cuts in 2008. Analysts have said tens of thousands of further cuts may be needed. The bank ended March with 369,000 employees.

UPDATE 2-Toronto stocks boosted by record oil prices

Reuters: [2008-05-06 18:00:00]

(Updates to midday)

TORONTO, May 6 (Reuters) - The Toronto Stock Exchange pushed higher on Tuesday as its resource-heavy index benefited from surging resource shares as oil prices scaled new heights.

Resource companies led the upside, with Canadian Natural Resources <CNQ.TO> gaining C$2.45, or 2.8 percent, to C$90.40, and Suncor Energy <SU.TO> rising C$2.02, or 1.7 percent, to C$118.52, as the price of crude vaulted the $122 mark. Toronto's energy sector climbed 1.9 percent.

Oil shot up to a record high amid supply disruptions in Nigeria and continuing tension between Iran and the West over Iran's nuclear program.

The S&P/TSX composite index <.GSPTSE> was up 61.89 points, or 0.43 percent, at 14,336.23, but off of its session high of 14,382.67. Four of its 10 main sectors were higher.

The materials sector, home to resource shares, added 1.7 percent, helped by a 1.6-percent rise in gold producers as bullion prices took their cue from oil's direction.

Shares of Barrick Gold <ABX.TO> rose 52 Canadian cents, or 1.3 percent, to C$39.93 after the world's biggest gold miner reported strong first-quarter earnings.

Fertilizer companies Potash Corp of Saskatchewan <POT.TO> and Agrium <AGU.TO> also rose. Potash was up C$4.75, or 2.4 percent, at C$201.11, and Agrium climbed C$2.67, or 3.2 percent, to C$86.90.

Shares of food processor and distributor George Weston <WN.TO> added C$1.57, or 3.2 percent, to C$50.57 after its quarterly profit rose as it took steps to mitigate cost pressures.

Sun Life <SLF.TO> was among the biggest losers by weight, falling C$2.33, or 4.7 percent, to C$46.87, after operating earnings were hurt by global credit problems and a strong Canadian dollar.

The financial sector as a whole fell 1.1 percent, caught up in resurgent worries over the health of U.S. housing and credit markets after Fannie Mae <FNM.N>, the largest provider of U.S. home financing, posted a hefty loss and cut its dividend.

Bank of Nova Scotia <BNS.TO> was down 88 Canadian cents, or 1.8 percent, at C$47.95, and Royal Bank of Canada <RY.TO> was off 47 Canadian cents, or 1 percent, at C$48.23. ($1=$1.00 Canadian) (Reporting by Leah Schnurr; Editing by Peter Galloway)

((leah.schnurr@thomsonreuters.com; +1 416 941 8056; Reuters Messaging: leah.schnurr.reuters.net@reuters.com))

Keywords: MARKETS CANADA STOCKS

. Keywords: MARKETS CANADA STOCKS

FEATURE-N. Ireland looks to make peace dividend pay

Reuters: [2008-05-06 14:04:00]

By Jonathan Saul

BELFAST, May 6 (Reuters) - For years, Northern Ireland was a byword for brutality and fear. But now, the tiny province is selling itself as a central, low-cost land of business opportunity, and investors are buying.

A year after Catholic and Protestant political foes put aside decades of hostility and agreed to share power in a regional government, attention is focused on opening the public sector-heavy economy and attracting investment.

"There is no doubt that Northern Ireland is now seen as being open for business," Economy Minister Nigel Dodds told Reuters. "People now see a major opportunity."

Northern Ireland's proximity to Europe, its English speaking population and still relatively lower cost base than centres such as London are helping to lure foreign money.

U.S. investors lead the pack and accounted for at least half the 1.1 billion pounds ($2.2 billion) invested in the past five years especially in financial services, technology and pharmaceuticals. Asian and European firms are also arriving.

"Increased political stability has improved Northern Ireland's brand image in the eyes of the world," said Ulster Bank economist Richard Ramsey.

The government plans to pump almost 20 billion pounds ($39.7 billion) into the economy over 10 years to develop tourism, repair infrastructure and regenerate neighbourhoods that were violent flashpoints and scenes of clashes with British soldiers.

But there are hurdles. The corporate tax rate stands at 28 percent compared with just 12.5 percent in the Republic of Ireland, which boasts many of the same logistical and geographical advantages as its northern neighbour. Belfast is lobbying London to cut the rate, so far to no avail.

The global credit crunch, combined with a local housing market slowdown, could also put the brakes on growth in a region that was once a textiles hub and world leader in building ships, including the Titanic.

The province's success has won admirers especially among those seeking to rebuild their economies after violence or war.

Last month, a delegation from Iraq's southern province of Basra toured Northern Ireland to learn how inward investment helped transform the economy since violence abated.

FOREIGN INTEREST

A 1998 peace deal largely ended three decades of violence between majority Protestants, who favour British sovereignty in the province, and Catholics who mostly want a united Ireland.

Northern Ireland's authorities hope that era, which claimed over 3,600 lives and was known as The Troubles, is now closed, and they say they are already reaping a peace dividend.

In the past 10 years, over 100,000 jobs have been created, and the unemployment rate now stands at around 4.2 percent, below the UK average of about 5.2 percent.

Economic growth in Northern Ireland averaged around 2.9 to 3 percent from 1996 to 2007, which was above the United Kingdom's average of around 2.8 percent.

Aiming to build on this, Northern Ireland will host an investment conference this week, hoping to woo foreign firms to set up operations, especially in financial services.

U.S. firms are among the most active, building on historical links between Belfast and the huge Irish diaspora in the United States.

Former U.S. President Bill Clinton was credited with playing a major role in securing the 1998 peace deal, and his efforts were backed up by solid U.S. private investment.

In April, four New York City pension funds pledged to invest $150 million in a private equity fund that will target infrastructure projects.

"I think ... we have a great window of opportunity as far as the States is concerned," said Dodds.

Indian banking software provider Polaris said Citigroup's move to create a Belfast back office had been a key factor in its decision to set up its European operations there, especially since the U.S. investment group was a major client.

"When we actually got there, we realised that we had an opportunity to create a financial and technology hub in the city starting with a few projects that we got from Citibank," said Bikash Mathur, Polaris's managing director, EMEA.

Others, including Japanese electronics conglomerate Fujitsu, have expanded their operations and some, like U.S. technology company 3PAR, have set up research and development centres.

Lingering tensions still remain a challenge. Despite the power-sharing deal, armed republican dissidents and pro-British loyalist groups continue to be involved in paramilitary and criminal activities.

But most people, like taxi driver Philip Hanna, do not believe a return to all-out sectarian strife is likely.

"There is no stomach in both communities to go back to war," said Hanna, 39. "Confidence is growing because of the peace process. We just need more business now."

NATURAL BEAUTY

One key area ripe for growth is tourism. Northern Ireland has rolling hills, unspoilt coastlines and natural attractions such as the Giant's Causeway rock formations.

Just over 2 million people visited Northern Ireland last year, a rise of 40 percent from the late 1990s with revenue totalling around 783 million pounds ($1.55 billion), representing 3.5 percent of the total economy's growth.

"Everybody would buy into the notion that tourism here is incredibly important to the economy going ahead," said Orla Farren with Northern Ireland's Tourist Board.

Farren said the government hoped to increase tourism revenue by 40 percent and visitor growth by 25 percent over three years. With the emphasis on high-end spending, there is a need for more "products on the ground", she said.

Some are already seeking to tap into that need. Donald Trump is looking into options for a golf development, a spokeswoman for the U.S. property tycoon said.

Belfast is also breathing new life into the docks where the Titanic was built. The Titanic Quarter will be home to shops, restaurants, homes and offices and a visitor centre is mooted.

But Northern Ireland's corporate tax rate could act as a deterrent to investors. London has resisted bids to harmonise the rate with the Republic of Ireland's, fearing companies might rebase in Northern Ireland from other parts of the United Kingdom.

Developing skills and infrastructure is also important as the province will not be able to compete on lower costs alone. It is currently among the lowest productivity areas in the UK.

Seagate Technology, the world's largest computer disk-drive maker, decided last year to close its Limavady site and move the plant to Malaysia, mainly due to labour costs. Around 900 jobs will be lost.

"That (Seagate closure) is an example of an investment trying to compete on costs. We can't to do that," said Ulster Bank's Ramsey. "Northern Ireland is going to have to develop its skills and infrastructure."

(For an interview with Economy Minister Dodds, please double-click on [ID:nL02706528])

((Editing by Clar Ni Chonghaile; jonathan.saul@reuters.com; +353 1 500 1504; Reuters Messaging: jonathan.saul.reuters.com@reuters.net)) ($1=.5041 Sterling) ($1=.5041 Sterling)

Keywords: IRISH ECONOMY/

FEATURE-N. Ireland looks to make peace dividend pay

Reuters: [2008-05-06 09:04:00]