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AIG’s Bonus Unit Now in IRS’s Sights
Some of the same banks that got government-funded payouts to settle contracts with American International Group Inc. (NYSE:AIG) also turned to the insurer for help cutting their income taxes in the U.S. and Europe, according to court records and people familiar with the business. The Internal Revenue Service is challenging some of the tax deals structured by AIG Financial Products Corp., the same unit of the New York company that has caused political ire over $165 million in employee bonuses.
U.S. Stock-Index Futures Retreat; European Shares Fluctuate
U.S. stock-index futures fell and European shares fluctuated as banks and raw-material producers retreated after the biggest rally in the Standard & Poor’s 500 Index in five months. Asian shares advanced. Bank of America Corp. (NYSE:BAC) slid 4.5 percent after surging 26 percent yesterday. Rio Tinto Group (LON:RIO) and BHP Billiton Ltd. (NYSE:BHP) dropped for the first time in four days as copper snapped its longest streak of gains since 2007.
Geithner Tempts Investors With Loans, 25% Returns
The U.S. government’s plan to rid banks of toxic assets may attract investors with financing that helps generate returns as high as 25 percent, fund managers and analysts said. Loans from the Federal Reserve and Federal Deposit Insurance Corp. debt guarantees will bring out the bidders, said Paul DeRosa, a principal of Mount Lucas Management Corp., a $1 billion hedge fund based in Princeton, New Jersey.
Japan automakers’ sales tumble in February
Japanese automakers reported on Tuesday sharp declines in domestic sales and exports for the month of February, along with similar drops in global production. Toyota Motor Corp. (NYSE:TM), Japan’s largest automaker, reported that worldwide auto production, including output from its subsidiaries Daihatsu Motor Co. Ltd. and Hino Motors Ltd., fell by 49.6% in February from a year ago, to 434,179 units.
Dollar General Is Paying Off for KKR Fund
Dollar General Corp., owned by private-equity firm Kohlberg Kravis Roberts & Co., is expected to report strong fiscal 2008 results Tuesday. Its earnings before interest, taxes, depreciation and amortization, or Ebitda — a common measure of cash flow — rose about 35% for the 12 months ended Jan. 31, according to people familiar with the company.
Deutsche Bank and Credit Suisse Report Strong Start
Deutsche Bank AG (NYSE:DB) and Credit Suisse Group AG (NYSE:CS), two of Europe’s biggest banks, said 2009 started well after they posted losses last year and cut the compensation of their chief executive officers by about 90 percent. Deutsche Bank CEO Josef Ackermann said Germany’s biggest bank had a “good start” to the year and expects to return to profit after scaling back risky businesses and shedding toxic assets.
Buffett almost ‘in the money’ with Goldman warrants
Goldman Sachs (NYSE:GS) warrants held by Warren Buffett’s Berkshire Hathaway (NYSE:BRK) are close to becoming a lot more valuable after a sharp rally in the investment bank’s shares in recent months. In early October, Berkshire invested $5 billion in Goldman, getting 50,000 cumulative perpetual preferred shares in the investment bank that pay 10% a year.
Gap’s Banana Republic to open accessories store
Gap Inc.’s (NYSE:GPS) upscale Banana Republic chain, struggling with declining sales, plans to open a test store selling limited-edition accessories mostly below $100 to lure ever-more discriminating shoppers seeking both style and value. Edition by Banana Republic — featuring limited-edition handbags and jewelry, along with some shoes, sunglasses and personal-care products from Banana Republic — will open exclusively in Gap’s hometown Westfield San Francisco Centre in May.
Coca-Cola Rejection Defended by China’s Ministry of Commerce
China’s Ministry of Commerce defended its blocking of Coca-Cola Co.’s (NYSE:KO) bid for the nation’s biggest domestic juice maker, denying the decision was aimed at protecting a national brand. Coca-Cola’s acquisition of China Huiyuan Juice Group Ltd. (HKG:1886) would have hurt competition by strengthening its control of China’s juice and beverage market and enabling it to abuse its dominance, the ministry said in a statement on its Web site, providing its first detailed explanation of its decision.
