insto - Australian financial markets

NAB is facing a consumer backlash in the UK as its banking units, Yorkshire and Clydesdale Banks, have asked mortgage holders to make up the difference on payments incorrectly calculated since 2005 due to a computer glitch. An undercharging in interest since 2005 has affected 18,000 customers whose mortgages did not amortise correctly. The banks want to increase monthly payments for half the customers by at least 25 pounds a month, rising to 300 pounds a month for others.

Investment banking revenues have dropped to six year lows in the first half of 2009, according to Dealogic. The analyst house says core investment banking revenue fell to US$469 million from January to June, compared with about US$733 million a year earlier. Dealogic says Bank of America Merrill Lynch tops the league table for 2010 year to date in the ECM space thanx to its role on QBE Insurance and Lend Lease transactions. UBS claims top spot for revenue, with Goldman Sachs in second place and Macquarie third.

German construction group Bilfinger Berger has taken the plunge, announcing plans to list its Australian businesses under the new name of Valemus. The IPO could raise up to $1.4 billion, making it the largest on the ASX since the Myer raising late last year. Investment banks including Goldman Sachs, Macquarie Capital, Deutsche, RBS, CommSec and law firm Clayton Utz will share an estimated $57 million in fees from the float.

A Datamonitor study claims that 5 percent of Australian consumers – or 1 million people - would not go to traditional financial institutions for their financial needs and these numbers are growing daily. Such disengagement is not limited to those at the lower end of the socio-economic scale, it includes high income earners and the well educated.

CBA is on track for a record-breaking full year earnings result of $6 billion despite signs of headwinds in the early part of 2010. CBA last week announced interim net earnings of $2.94 billion for the six months to December 31 in a result which featured a continuing fall in bad debts, but a dip in underlying profit for the last quarter. For the quarter ended March 31, CBA announced an unaudited third-quarter cash profit of $1.5 billion, up 30 percent on the previous year. Analysts saw a slippage of margins offsetting the positive of lower bad debt charges.

Credit Suisse’s director of alternative investments Richard Quin finds himself the new head of a boutique investment management firm after last week’s purchase by Challenger Asset Management.

Challenger has paid an undisclosed sum for Credit Suisse Investments (Australia), which has $1.5 billion in five separate funds under management in addition to two property funds with $290 million.

Macquarie has named the materials and healthcare sectors as prime areas for M&A over the next year. In materials, Macquarie has nominated Boral Worley Parsons and Adelaide Brighton as corporates with M&A ambitions while it says that cashed-up healthcare firms could look to Europe for potential targets. Sonic Healthcare could bid for Germany’s Labor Leverkusen, while Ansell might look for opportunities for its occupational division.

Dealogic is forecasting a strong year for Australian M&A, forecasting that locally based investment banks will share fees of US$103 million, the second highest on record after a bumper 2007. The local operations of Goldman Sachs JBWere, JPMorgan, Citigroup and HSBC showed significant jumps in profit, and this pattern is expected to be repeated when Bank of America Merrill Lynch, Credit Suisse, UBS, Macquarie and Deutsche Bank report at the end of the month.

The coal industry takeover action around Macarthur Coal is ongoing, with several possible permutations still possible. Macarthur has rejected two bids: a $3.7 billion bid from New Hope Corp, and a sweetened $4 billion bid from US-based Peabody Energy. Macarthur said last Friday an investment bank representing Xstrata, one of its largest shareholders, had had “preliminary and highly conceptual” discussions on another outcome, details of which it did not divulge. Meanwhile, Macarthur has suspended its own plans to acquire junior producer Gloucester Coal.