Morgan Stanley made big bet on Facebook

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The remote server returned an unexpected response: (417) Expectation failed.
By Nadia Damouni and Olivia Oran

NEW YORK | Fri May 18, 2012 10:05pm EDT

NEW YORK May 18 (Reuters) - Lead Facebook Inc underwriter Morgan Stanley took a bet earlier this week when it increased the size of the social networking firm's $16 billion initial public offering and it boosted the price.

Thanks to massive hype surrounding Facebook's historic public offering, the wager looked safe. But a rocky first day of trading has raised questions about whether it paid off.

After a delayed start to trading, Facebook's shares spent much of the day struggling to stay above the $38 IPO price - and ended with just a 23-cent gain.

As a result, Morgan Stanley may have spent billions of dollars to support the stock price by buying shares in the market. Some market participants said that the underwriters had to absorb mountains of stock to defend the $38 level and keep the market from dipping below it.

The firm did this by tapping into a 63 million share over-allotment option, or greenshoe, according to sources familiar with the deal.

As an indication of the cost, had Morgan Stanley bought all of the shares traded around $38 in the final 20 minutes of the day, it would have spent nearly $2 billion. Underwriters are not obligated to prop up a stock on debut, but typically do.

Morgan Stanley declined to comment.

The debut marks a rare stumble for a high-profile IPO. Facebook is the only recent U.S. internet listing not to enjoy a large price jump on its first day of trading. LinkedIn, Groupon and Pandora Media all saw significant gains at their public debuts.

The debut also underscores Morgan Stanley's go-it-alone handling of the offering process. Though 32 other underwriters signed on to the deal, Morgan Stanley retained tight control over information, decisions and allocations of shares, according to other underwriters.

To be sure, Morgan Stanley's strong approach may have been crucial to managing such a large, high-profile offering with so many underwriters. And the fact that the stock didn't soar on its first day means they achieved full value for their client.

Some issues were beyond Morgan Stanley's control. Glitches at the Nasdaq stock exchange delayed the start of trading by 45 minutes, and throughout the day many investors did not receive confirmations that their orders had been completed, brokers at Morgan Stanley, Raymond James & Associates and others said. That uncertainty about their positions may have prompted some investors to sell, worsening the downward pressure on the stock.

Nasdaq posted a notice late in the day saying that orders entered for the stock before trading started "resulted in nothing being done" and offering to match orders if customers send in requests by Monday. Sources said the exchange was working through the weekend to deal with the botched trades.

Facebook also altered its guidance for research earnings last week, during the road show, a rare and disruptive move.

In many ways, the deal is a crowning moment for Morgan Stanley. When it won the coveted role as Facebook's primary underwriter for its IPO, veteran technology banker Michael Grimes managed to convince executives at the social media giant that his bank would single-handedly control the process.

And as Grimes, co-head of global technology investment banking, boarded a Bombardier Global Express jet at Mineta San Jose International Airport with Facebook executives last week along with Morgan Stanley Internet banker Marcie Vu -- according to documents obtained by Reuters -- he had effectively accomplished his goal.

Successfully pulling off one of the largest IPOs in U.S. history would underscore Morgan Stanley's status as the top underwriter for tech offerings and set it above arch rival Goldman Sachs, with total global proceeds last year of $2.2 billion, according to Thomson Reuters data. But even with high profile deals like LinkedIn and Zynga under its belt, Morgan Stanley had to be careful.

And so the bank led a highly secretive, tightly controlled process in which other institutions -- including top underwriters JPMorgan Chase & Co and Goldman -- were effectively shut out.

"There was some frustration by JPMorgan and Goldman, as they were getting limited information. They thought they would be more inside the process," one source close to the matter said.

Goldman Sachs declined to comment. JPMorgan did not return calls seeking comment.

For its efforts, Morgan Stanley will receive 38 percent of the overall IPO fees, about $67 million, which is more than JPMorgan and Goldman combined, according to regulatory filings.

But more importantly, Morgan Stanley was the only bank actively talking to investors on the deal and able to pull the order book together, a rare feature for IPOs where top underwriters typically split the work more evenly.

At one of the venues during the investor roadshow, dozens of fund managers congregated at the St. Regis Hotel in New York including Neuberger Berman, SAC Capital Advisors LP, Soros Fund Management LLC, Tiger Global Management LLC and Och Ziff Capital Management Group LLC, trying to get a piece of the pie, according to the sources.

Representatives for Neuberger Berman, Tiger Global and Och Ziff declined to comment. The other funds were not immediately available for comment.

With almost all 33 Facebook underwriters kept in the dark about the deal, including additional changes to terms such as pricing range and IPO size, one underwriter called the process the "Morgan Stanley show" while another underwriter said the bank is "essentially running it by themselves."

JPMorgan pulled out all the stops when Facebook executives visited its New York headquarters. A Facebook-branded flag adorned the building and the bank gave out Facebook baseball hats and coffee cup holders. But the moves "mostly attracted press," said one source.

Facebook Chief Financial Officer David Ebersman and VP of Finance & Treasurer Cipora Herman were the primary executives working with underwriters, a separate source close to the matter said. Facebook Chief Operating Officer Sheryl Sandberg also remained actively involved.

Ebersman had been very thorough in his thinking throughout the process, one of the sources close to the matter said, considering everything from the more transparent Dutch Auction process that Google Inc used to a directed shares program. In the end, Facebook decided it wanted a traditional IPO process.

Their thought was to "bring in the right shareholders" as part of the IPO process and not get tangled up in other strategies that would be disruptive to the running of Facebook's business, the source said.

Zuckerberg was less involved, and also chose not to attend a majority of the roadshow stops last week, other than a brief appearance in his trademark hooded sweatshirt on May 7 at the Sheraton Hotel in New York and then again in Palo Alto that Friday.

The roadshow -- in which Zuckerberg was treated less as CEO and more as rockstar -- only lasted nine days rather than the typical 12.

Security was so tight that in New York attendees were asked for multiple forms of identification and were cross- checked against a list of names. According to one source, even one of Morgan Stanley's equity sales heads had difficulty entering the roadshow lunch because his name was accidentally left off of the list.

Until late Thursday night, co-managers were still left in the dark about their allotments and if they were even going to get shares, said one underwriter who preferred anonymity because the talks are private.

"Everything was very hush hush," he said.

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CORRECTED-Aramco launches Jizan, bidders revise Rabigh offer

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The remote server returned an unexpected response: (417) Expectation failed.

(Corrects paragraph 5 to make clear packages linked to Jizan refinery)

KHOBAR, Saudi Arabia May 17 (Reuters) - Saudi Aramco has invited bids for the construction of a new refinery in Jizan, an underdeveloped province bordering Yemen, industry sources said.

Aramco has also asked for revised offers for one of nine construction packages to expand the Rabigh petrochemical complex with Sumitomo Chemical, they said on Thursday.

The refinery in Jizan will have a capacity of 400,000 barrels per day and is far from oilfields on the Gulf coast.

Expected to be in operation in 2016, the refinery is part of plans by Aramco, increasingly looking to expand in downstream activities, to raise its domestic refining output capacity to 3.5 million bpd by 2016.

Bidding for the nine Jizan packages - including a hydrocracker, diesel hydrotreater, hydrogen production unit, crude distillation unit, vacuum distillation unit, and other units - was due to close mid-August, sources said.

Aramco and Sumitomo asked bidders to revise their proposals for a package called CP1 for cumene, phenol and cyclohexanone by May 30 with bidding validity due at the end of June.

The revision is due to the cancellation of the CP2 package for caprolactam and Nylon-6, as CP1 provides feedstock for the cancelled package.

South Korean group Daelim Industrial had submitted the lowest bids for CP1.

Sources said last week, British company Petrofac and South Korea group Engineering and Construction were among contractors that will be part of building the second phase. (Reporting by Reem Shamseddine; Editing by Dan Lalor)

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UPDATE 3-PJM secures capacity at base price of $136 per MW

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The remote server returned an unexpected response: (417) Expectation failed.

* PJM secures more than 164,000 MW of capacity resources

* Prices in Northern Ohio and the Mid-Atlantic higher

By Scott DiSavino

May 18 (Reuters) - U.S. power grid operator PJM said Friday its capacity auction secured a record amount of new generation, demand response and energy efficiency resources for the 2015/2016 delivery year to keep the grid reliable as dozens of coal plants retire.

PJM said the auction, known as the Reliability Pricing Model (RPM) auction, procured 164,561 megawatts (MW) of capacity resources at a base price of $136 per MW, making the auction worth more than $8.l billion.

That was a little lower than the $150-$190 base price forecasts range of some energy analysts.

"Capacity prices were higher than last year's because of retirements of existing coal-fired generation resulting largely from environmental regulations, which go into effect in 2015," Andy Ott, PJM senior vice president - markets, said in a release.

PJM serves 60 million people in 13 states in the Mid-Atlantic and Midwest and the District of Columbia.

Energy companies announced plans to retire almost 14,000 MW of mostly coal-fired generation in PJM over the next few years due primarily to environmental regulations.

Last year, the auction secured almost 150,000 MW of power resources at a base price of $125.99 per MW.

PJM said capacity prices were higher in northern Ohio and the Mid-Atlantic region.

For the Mid-Atlantic, PJM said capacity will cost $167 per megawatt.

Despite the higher price in the Mid-Atlantic region, New Jersey power company NRG Energy Inc said its proposed New Jersey project did not clear the auction.

"We're disappointed but will continue to develop the project," said NRG spokesman David Gaier.

Energy analysts said the plant likely did not clear the auction because prices were not high enough to meet PJM's minimum offer price rule for new generators.

NRG, along with New York oil company Hess Corp and privately held Maryland power company Competitive Power Ventures (CPV) received long-term contracts from New Jersey and Maryland to build new plants.

Officials at Hess and CPV were not immediately available for comment on their projects.

The Mid-Atlantic region includes utilities served by Pepco Holdings Inc's Atlantic City Electric, Delmarva Power and Pepco; Exelon Corp's Baltimore Gas and Electric and PECO; FirstEnergy's Jersey Central Power and Light, Metropolitan Edison and Pennsylvania Electric; PPL Corp's PPL Electric Utilities, Public Service Enterprise Group Inc's Public Service Electric and Gas; and Consolidated Edison Inc's Rockland Electric.

In FirstEnergy Corp's northern Ohio territory, PJM said the capacity price will be $357 per megawatt due to the high number of power plant outages in that area.

"The retirements impacted northern Ohio to a larger extent than the rest of PJM. PJM's board approved significant upgrades to address the transmission issues," Ott said.

On Thursday, PJM said its board approved $2 billion in transmission upgrades that will strengthen the grid especially in northern Ohio in response to the coal plant retirements.

RETAIL PRICES

Ott said the capacity prices' overall effect on retail consumer electricity rates would likely be moderated by other factors like weak natural gas prices.

"Capacity is a fairly small component of the retail price of electricity, and the cost of capacity at the retail level tends to be averaged out over several years," Ott said.

PJM said the auction procured a record 4,900 MW of new, mostly natural gas-fired generation to help replace the coal units expected to retire.

The auction establishes contracts with power producers who commit to make their facilities available to provide electricity for the PJM system for the delivery year.

In addition to the new generation, the auction secured a record 14,833 MW of demand response.

PJM's all-time peak demand is 158,448 MW.

A megawatt is enough electricity to power 800 to 1,000 homes.

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Solow lawsuit over Citigroup disclosures dismissed

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The remote server returned an unexpected response: (417) Expectation failed.

* Investor said Citigroup hid risk during 2008 financial crisis

* Judge: Lack of confidence caused liquidity problems for bank

By Jonathan Stempel

May 18 (Reuters) - Citigroup Inc and its Chief Executive Vikram Pandit on Friday won a dismissal of New York real estate developer Sheldon Solow's lawsuit accusing them of securities fraud for hiding the bank's risks during the 2008 financial crisis.

U.S. District Judge Robert Sweet in Manhattan said Solow failed to show that the defendants had materially misled him about Citigroup's liquidity and capitalization, or that his stock losses were caused when the bank's risks were realized.

Sweet had in November dismissed an earlier version of Solow's complaint, but gave the plaintiff a chance to replead. Friday's dismissal is "with prejudice", meaning that Solow cannot bring the case again.

Ira Lee Sorkin, a partner at Lowenstein Sandler representing Solow, did not immediately respond to a request for comment, including over whether his client plans an appeal. Citigroup did not immediately respond to a similar request.

The lawsuit is separate from nationwide litigation by Citigroup stock and bond investors over the bank's disclosures about its exposure to toxic mortgage debt. That litigation is overseen by Sweet's colleague, U.S. District Judge Sidney Stein.

Solow claimed the New York-based bank was responsible for his losing 87 percent of a $510,000 investment in 40,000 Citigroup shares that he bought in September and November 2008. He sold the shares in March 2009.

The developer contended that Citigroup overstated its financial health in late 2008 and early 2009, even trying to buy parts of Wachovia Corp before that struggling lender agreed to a takeover by Wells Fargo & Co.

He also said Citigroup even touted its strong capital levels and liquidity while quietly scrambling to obtain a federal bailout that included $20 billion of new capital.

Sweet, however, said Solow failed to link Citigroup's alleged concealments to the decline in its stock price, which fell briefly below $1.

"Citigroup's liquidity crisis can be attributed to a lack of confidence in the firm rather than the materialization of a risk defendants concealed," he wrote.

The case is Solow v. Citigroup Inc et al, U.S. District Court, Southern District of New York, No. 10-02927.

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UPDATE 7-Historic Facebook debut falls flat

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The remote server returned an unexpected response: (417) Expectation failed.

* Shares close flat

* Analysts blame large float, advertising revenue concerns

* Nasdaq investigating trade execution issues

By Alexei Oreskovic

SAN FRANCISCO, May 18 (Reuters) - The historic initial public offering of Facebook Inc did not go as planned on Friday, as the social networking company's sky-high valuation combined with trading glitches left the stock languishing near its offering price at the market close.

Facebook shares began trading late Friday morning and opened 11 percent above the $38 offering price, but after peaking at about $45 slid rapidly at the end of the day to close at $38.23. The IPO was the third-largest in U.S. history and valued eight-year-old Facebook at $104 billion.

The surprisingly weak debut of a stock that analysts had predicted would climb between 10 and 50 percent is not likely to dent the business prospects of Facebook, which boasts 900 million users and is upending business practices and social relationships around the world.

But the unexpected developments were a clear setback for Morgan Stanley, the lead underwriter on the deal, which sources said was forced to defend the $38 price level by buying shares on the open market. Many market participants said they expected the stock to remain under pressure next week.

The offering also proved an embarrassment for the NASDAQ: the opening was delayed as the exchange struggled with a huge volume of orders, and for much of the day there were long delays in order confirmation. The SEC said late Friday that it was reviewing the situation.

Social media companies and Internet companies that had hoped to benefit from a Facebook halo effect were instead dragged down Friday, with social gaming giant Zynga dropping almost 15 percent.

Analysts said Facebook may simply have over-reached in raising the IPO price range, pricing at the top of the range and increasing the size of the offering earlier in the week.

"The underwriters got greedy on behalf of selling shareholders and bumped the price high enough that they didn't get much of a bump on the first day," said Bill Smead, chief investment officer at Smead Capital Management, which did not buy Facebook shares in the IPO. "They increased the size of the deal and that really did a number on it."

Skeptics have argued all along that a valuation of more than $100 billion -- about equivalent to Amazon.com Inc and exceeding that of Hewlett-Packard Co and Dell Inc combined -- was far too high for a company that posted $1 billion in profit and $3.7 billion in revenue in 2011.

Concerns about Facebook's earnings potential were highlighted by General Motors' announcement this week that it would no longer buy paid advertising on Facebook.

"You don't need more than a small pencil and napkin to do a valuation on this, to say there are heroic assumptions in earnings growth to keep this at $100 billion, much less $115 billion or $120 billion," said Dave Rolfe, fund manager at River Park Wedgewood Fund, which does not own shares in Facebook.

"I know there's a lot of excitement and exuberance, but it seemed today that the market is starting to do some hard valuation math early on."

Facebook's opening day on Wall Street does not bode well for the stock's performance in the days ahead, said Channing Smith, portfolio manager at Capital Advisors Growth, which does not own shares in Facebook.

"If you're an investment banker or if you're long the stock, I would definitely be a bit worried as we walk away to the weekend," he said.

The weak IPO may also give pause to private investors in Silicon Valley who have been pouring money into next-generation Internet companies at very high valuations in the hope of eventually taking them public.

MEDIA CIRCUS

At Facebook's headquarters in Silicon Valley, the day began with company founder and Chief Executive Mark Zuckerberg, 28, symbolically ringing the opening bell for stock trading on Friday morning.

Wearing his trademark black hoodie, Zuckerberg, whose shares are worth nearly $20 billion and who retains voting control over the company, hugged and high-fived Sheryl Sandberg, Facebook's chief operating officer, who is credited with bringing crucial business discipline to a company founded in a Harvard dorm room.

The area outside Facebook's offices was packed with photographers, more than a dozen television trucks, and a TV news helicopter hovering overhead.

Outside Nasdaq headquarters in New York, crowds also gathered, even as exchange officials struggled to sort out trading problems that left investors guessing whether their buy and sell orders had actually been executed.

The IPO minted thousands of new paper millionaires among Facebook's 3,500 employees -- and a handful of billionaires among its founders and early investors. More than half of the proceeds of the IPO will go to existing shareholders, including early backers such as Accel Partners and Russia's DST Global.

In the run-up to the IPO, demand from institutional investors was strong, and many analysts had expected an influx of retail investors keen on owning a slice of a cultural phenomenon regardless of price. But that did not materialize.

"Flippers who waited all day for a pop that did not come decided to throw in the towel and get out," said Mohannad Aama, managing director at Beam Capital Management LLC in New York.

"That group also includes people who over-extended themselves in getting more shares than they can afford to hold -- whether they got it from the syndicate or from the open market once it opened around noon."

Still, from Facebook's perspective, the stock performance could be seen as reflecting smart pricing: Zuckerberg and early investors pocketed maximum gains and left little of the easy money on the table.

"You want to price the offering correctly. Institutional buyers get a little bump and the company raises the right amount of money," said Kevin Hartz, co-founder and CEO of Eventbrite, an online ticketing startup that is integrated with Facebook's platform. "If the stock has a massive bump on day one, that means you misread market demand and the company could have raised more money with the same amount of dilution, or could have raised the same amount of money with less dilution."

BATTLE OF THE GIANTS

Facebook faces many challenges as it takes its place beside Google, Apple and Amazon as one of the giant public companies defining the next-generation Internet economy. Google in particular views Facebook as a mortal threat and is moving aggressively to integrate social networking features across its products.

At the same time, scores of young companies are building new products and services, in some cases on top of the Facebook platform and in some cases in competition with it, and attracting huge amounts of investment capital.

A handful of such so-called Web 2.0 companies, including Zynga Inc, LinkedIn Corp, Yelp Inc and Groupon Inc, have already gone public, and others have been acquired by the industry giants. All of those stocks fell on Friday in sympathy with Facebook's weaker-than-expected debut.

In an indication of the land grab now under way in the Internet world, Facebook in April spent $1 billion to acquire Instagram, a tiny photo-sharing company with lots of users but no revenue. A Facebook rival, social scrap-booking site Pinterest, raised money earlier this week at a valuation of $1.5 billion in a sign that venture capitalists and other private investors still see enormous potential in Web 2.0 companies.

Many of Facebook's users spend hours a day on the site and share enormous amounts of personal information. That in turn enables Facebook to target its advertising to people's specific interests, and many analysts believe the huge store of personal information gives Facebook an advantage that Google and other cannot match.

"Literally everything you see on the Internet, you could see inside Facebook -- but done with much more of the social graph built into it," said Siva Kumar, CEO of e-commerce company TheFind. "In a way, they operate the mall, and everybody in the mall will pay some way or the other to Facebook."

Analysts say the company has vast untapped opportunities in mobile computing, where it has been weak thus far, and potentially in other Internet services such as email and search. Zuckerberg, though unproven as a public company CEO, is widely admired as a product visionary who has done a masterful job in continually improving the Facebook experience.

Skeptics, though, note that only a small percentage of Facebook users respond to advertising on the site. Google retains a big advantage in that regard, because advertising related to specific Internet searches is by nature far more relevant and thus more valuable.

In Silicon Valley, though, the conventional wisdom is that Facebook and its social media brethren will be an increasingly important force in the business world for many years to come.

And no matter how the industry dynamics unfold over the long term, the influx of wealth arising from Facebook's extraordinary growth has already helped drive a mini-boom in San Francisco Bay Area real estate. Income tax revenues related to the IPO will cut the state of California's budget deficit by an estimated $2 billion.

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CFTC opens probe into JPMorgan trading loss -NYT

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The remote server returned an unexpected response: (417) Expectation failed.

n" readability="53">May 18 (Reuters) - The Commodity Futures Trading Commission (CFTC) has opened an enforcement case to examine possible wrongdoing at JPMorgan Chase & Co in connection with the bank's multi-billion-dollar trading loss, The New York Times said late on Friday, citing people briefed on the matter.

The CFTC would join the FBI and the U.S. Securities and Exchange Commission among federal agencies examining the loss, which the largest U.S. bank said last week was at least $2 billion.

Members of the CFTC also voted on Friday to publicly disclose the existence of its investigation soon, a rare step it reserves for the most serious cases, the newspaper said.

The CFTC has disclosed an investigation into last October's collapse of MF Global Holdings Ltd, a futures and commodities brokerage from where large sums of customer money remain missing.

JPMorgan spokesman Joe Evangelisti declined to comment. The CFTC did not immediately respond to a request for comment.

The bank has not been accused of wrongdoing, and the newspaper said all of the investigations into its trading loss are preliminary.

CFTC Chairman Gary Gensler is expected to reveal his agency's investigation when he testifies before the Senate Banking Committee on Tuesday, the newspaper said.

JPMorgan Chief Executive Jamie Dimon is also expected to testify before that committee, after hearings on Wall Street reforms that are expected to end on June 6.

The CFTC began tracking JPMorgan's trading in April, the newspaper said, when reports surfaced that London-based trader Bruno Iksil was taking big bets in credit derivatives.

Its probe may examine whether the bank's trading affected that market, the newspaper said.

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UPDATE 2-Manulife, Metlife submit bids for ING Asia sale -sources

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The remote server returned an unexpected response: (417) Expectation failed.

* Shortlisted bidders will be notified by end-May - sources

* Sale could set record for Asia insurance M&A

* Eight to 10 bidders submitted offers - source

* Deal could yield about $100 mln in fees for bankers, lawyers

By Denny Thomas

HONG KONG, May 19 (Reuters) - Manulife Financial Corp and Metlife are among the companies that have submitted first round bids for ING's entire Asia life insurance business, sources said on Saturday, in what could be the largest Asia M&A insurance deal ever.

ING's long awaited sale of Asian life insurance and the asset management units will help the Dutch bancassurer to partly repay the 3 billion euros ($3.81 billion) of state aid plus the 50 percent premium it still owes the Dutch government. .

The bids were submitted late on Friday and the indicative offers ranged between 6-7 billion euros ($7.6-$8.9 billion), according to one source with knowledge of the matter. Of the eight to 10 companies that sent offers, a shortlist will emerge by the end of May, the source said, adding that five bidders expressed interest for the whole Asia division while the rest sought parts of the business.

Still, some suitors have developed cold feet, as demonstrated by Samsung Life Insurance's decision on Thursday to pull out of the race at the last minute. . South Korea's Kyobo Life has also dropped out, and it was also unclear whether Prudential Financial Corp took part in the first round.

Prudential Financial was seen as one of the strongest contenders to buy the whole Asian unit, and its absence from the process could be a setback to competitive dynamics of the auction, sources said.

A sale topping $7 billion would rank as Asia's top insurance M&A deal and add to a flurry of financial institutions deals being launched in Asia this year.

After receiving a government bailout in 2008, ING has sold 15.2 billion euros worth of assets across the world. The Asian sales would figure among the top two deals from ING's stable. .

Asian insurer AIA Group Ltd and Korea's KB Financial Group also submitted first round bids, sources said. Korea Life Insurance Co, Canada's Sun Life Financial Inc, and Switzerland's Zurich Insurance Group, were also expected to submit offers.

U.S. private equity fund J.C. Flowers & Co, TPG and Carlyle Group are among the buyout shops that have expressed interest, though they are expected to team up with a bidder to buy the Japanese business rather than bid on their own, sources said.

The sources declined to be identified because details of the auction process remain confidential. ING declined to comment.

Companies mentioned in this report either could not be reached for comment, or declined to comment.

As part of the Asian divestment, ING received about 10 initial bids for its Asian asset management business this week. The asset management business, expected to fetch between $500 million and $600 million, is being sold separately. .

ING had sent out more than a dozen information memorandums for its insurance business, which spans southeast Asia and includes operations in Japan and South Korea. A winning bid by a larger insurer could introduce more competition into Asia's rapidly growing life insurance market, currently dominated by AIA Group Ltd and British insurer Prudential plc .

RARE ASSET

ING's Asian operations offer a platform for insurers keen to expand their Asian footprint and tap into the region's rapid premium growth. Life insurance premiums in emerging Asia are forecast to grow at 9.5 percent this year and 8.7 percent next year, nearly three times the world average, according to Swiss Re estimates.

"This is a once-in-a-lifetime opportunity which many CEOs will find hard to let go," said one banker who is advising a potential buyer.

ING CEO Jan Hommen said last week that the Asian divestments would probably fetch less than 8 billion euros ($10.2 billion).

A deal would need to surpass $7.06 billion to become Asia's biggest insurance deal and overtake Australian fund manager AMP's 2011 purchase of AXA's Australian unit, Thomson Reuters data shows.

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UPDATE 1-CFTC opens probe into JPMorgan trading loss - source

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The remote server returned an unexpected response: (417) Expectation failed.

n" readability="56">May 18 (Reuters) - The Commodity Futures Trading Commission (CFTC) has opened an investigation into possible wrongdoing at JPMorgan Chase & Co in connection with the bank's multi-billion-dollar trading loss, a source familiar with the probe told Reuters.

The agency will soon disclose the existence of the investigation, the source said on Friday.

Earlier on Friday, the New York Times reported that the CFTC had opened an enforcement case, quoting people briefed on the matter.

The CFTC would join the FBI and the U.S. Securities and Exchange Commission among federal agencies examining the loss, which the largest U.S. bank said last week was at least $2 billion.

The CFTC has disclosed an investigation into last October's collapse of MF Global Holdings Ltd, a futures and commodities brokerage from where large sums of customer money remain missing.

JPMorgan spokesman Joe Evangelisti declined to comment. The CFTC did not immediately respond to a request for comment.

The bank has not been accused of wrongdoing, and the newspaper said all of the investigations into its trading loss are preliminary.

CFTC Chairman Gary Gensler is expected to reveal his agency's investigation when he testifies before the Senate Banking Committee on Tuesday, the newspaper said.

JPMorgan Chief Executive Jamie Dimon is also expected to testify before that committee, after hearings on Wall Street reforms that are expected to end on June 6.

The CFTC began tracking JPMorgan's trading in April, the newspaper said, when reports surfaced that London-based trader Bruno Iksil was taking big bets in credit derivatives.

Its probe may examine whether the bank's trading affected that market, the newspaper said.

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Obama pledges tough enforcement of Wall Street reforms

WASHINGTON | Sat May 19, 2012 5:59am EDT

WASHINGTON May 19 (Reuters) - President Barack Obama on Saturday called on the U.S. Congress to back his efforts for tough new financial industry oversight, saying a $2 billion trading loss at JPMorgan underscored the need for such regulation.

"We've got to finish the job of implementing this reform and putting these rules in place," Obama said in a weekly radio address that accused some on Wall Street of causing the 2007-2009 economic crisis because they "treated our financial system like a casino."

In a jab at Republicans who have been critical of banking industry reforms his administration is in the process of implementing, Obama said lawmakers should "stand on the side of reform, not against it."

The Democratic president is seeking re-election on Nov. 6 seeking to show he is willing to take a hard stance against Wall Street excesses but without being seen as discouraging investment.

Many Republicans in Congress have taken aim at Wall Street reform measures, saying they are unwieldy and could end up slowing investment and economic growth.

Obama said that while JPMorgan had the resources to handle losses of more than $2 billion, smaller banks might not have been able to do so. Without the new banking industry reforms, Obama said U.S. taxpayers could again "be on the hook for Wall Street's mistakes."

The deep economic recession the United States has recently begun climbing out of brought U.S. government bailouts of some large financial institutions, as well as heavy job losses, business failures and home mortgage foreclosures as the downturn spread.

The Dodd-Frank financial oversight law enacted in response to the financial crisis includes the Volcker rule, which bans banks from making speculative bets with company money. But it includes an exemption for trades done to hedge risk.

The Wall Street Journal reported on Wednesday that the JPMorgan loss prompted the White House to encourage Treasury Department officials to ensure tough enforcement of Dodd-Frank.

Obama complained that Republicans in Congress, in tandem with financial industry lobbyists, "have actually been waging an all-out battle to delay, defund and dismantle Wall Street reform."

Saying he backed free-market forces, Obama said some safeguards needed to be put in place to guarantee fair play.

"Unless you run a financial institution whose business model is built on cheating consumers or making risky bets that could damage the whole economy, you have nothing to fear from Wall Street reform," he said.

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UPDATE 1-Arizona towns at risk as wildfires hit U.S. Southwest

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The remote server returned an unexpected response: (417) Expectation failed.

(Adds comments, camper cited in Colorado blaze)

By Mike Saucier

PHOENIX May 18 (Reuters) - An Arizona wildfire threatened two more towns on Friday, with high winds on the way, even as firefighters made progress against the largest of a string of blazes spreading across the U.S. Southwest.

More than 1,000 firefighters in Arizona and Colorado were battling five major blazes that have consumed more than 55 square miles (142 square km) of ponderosa forest, brush and grass, and a new blaze erupted in Utah on Thursday.

The blazes were the first major wildfires in Arizona this year, after a record 2011 fire season in which nearly 2,000 blazes together swallowed more than 1,500 square miles (3,900 square km), according to the National Interagency Fire Center.

The Gladiator Fire in central Arizona, which has already destroyed four structures and forced the evacuation of about 350 residents of the old mining town of Crown King earlier in the week, was threatening two more tiny communities.

U.S. Forest Service spokeswoman Debbie Maneely said residents of Battle Flat and Pine Flat, which have fewer than 50 homes combined, have been alerted to evacuate within 24 hours.

Maneely said the situation was "really critical," with predictions of winds blowing 40 to 50 miles per hour (64 to 80 km per hour), and that more crews and equipment were being called in to fight the blaze, which has burned about 15 square miles in the Prescott National Forest since Sunday.

"We're praying for the firefighters' safety," said Lynn Ray, the manager of an emergency shelter for evacuees at a school in Mayer, Arizona, where billowing gray-black smoke from the Gladiator Fire was clearly visible.

"People who have homes are anxious to get back but have no idea right now as to when they'll be able to get back ... It's a wait-and-see situation," she added.

PROGRESS AGAINST LARGEST FIRE

Meanwhile, crews made slow progress against the biggest of the Arizona fires, which has scorched 22.6 square miles in the Tonto National Forest, about 40 miles north of Phoenix, since it started on May 12.

The Sunflower Fire was 15 percent contained on Friday, up from 10 percent a day earlier, Fire information officer Rick Hartigan of the Arizona Central West Zone Incident Management team said.

In Colorado, authorities cited a 56-year-old camper who admitted to accidentally starting the Hewlett Fire, which has burned for five days and charred more than 12 square miles in the Roosevelt National Forest.

James Weber told authorities his alcohol-fueled camp stove ignited the blaze, which some 300 firefighters are struggling to contain in low humidity, hot temperatures and rugged terrain. He tried unsuccessfully to douse the flames before fleeing the scene.

Weber later contacted authorities, admitting he started the fire, the U.S. Attorney's office in Denver said. He faces a $300 fine for starting a fire on federal land without a permit, although prosecutors said they also would pursue him for restitution costs.

More than a dozen homes were placed on a mandatory evacuation order, although none have been lost.

Governor John Hickenlooper declared the fire a disaster emergency on Friday, activating the Colorado National Guard and freeing up $3 million to assist in fire suppression efforts.

In Utah about 100 firefighters were battling the 500-acre (202-hectare) 73 Fire, which began on a state road about 60 miles southwest of Salt Lake City.

By midday, the blaze was about 50 percent contained, with light rain and cool temperatures aiding firefighters, although expected high winds for the afternoon could pose a threat. No homes or structures have been threatened. (Additional reporting by Keith Coffman in Denver and Jennifer Dobner in Salt Lake City; Writing by Mike Saucier and Cynthia Johnston; Editing by Xavier Briand and Lisa Shumaker)

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Peliculas Online

UK's Cameron, France's Hollande clash on Tobin tax

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By Adrian Croft

WASHINGTON | Fri May 18, 2012 6:56pm EDT

WASHINGTON May 18 (Reuters) - British Prime Minister David Cameron and new French President Francois Hollande clashed on Friday over the need for a financial transactions tax to fund growth but played down other differences over how to respond to the euro zone debt crisis.

Both leaders said after a first 35-minute meeting at the British ambassador's residence in Washington that they backed measures to cut deficits and spur growth in Europe, glossing over differences between Hollande's pro-growth stance and Cameron's emphasis on reducing debt.

But Cameron said he would maintain his staunch opposition to a tax on financial transactions that Hollande backs as a way to raise revenue to boost growth.

"On the financial transactions tax, I'm very clear, we are not going to get growth in Europe or Britain by introducing a new tax that would actually hit people as well as financial institutions," Cameron told reporters before his meeting at the elegant ambassador's residence, designed by famous British architect Edwin Lutyens in the 1920s.

"I don't think it is a sensible measure. I will not support it," he said.

Cameron, keen to prevent damage to Europe's leading financial centre in the City of London, has previously threatened to veto a European-wide financial transaction tax unless it was adopted globally, setting him on a collision course with France and Germany which back the idea.

A British government source said Hollande and Cameron agreed they had "different positions" on the financial transaction tax, also known as the Tobin tax.

Hollande also repeated to Cameron that he intended to pull France's combat troops out of Afghanistan this year, two years earlier than a NATO timetable for ending combat operations.

Cameron understood this was an election promise Hollande had made, the British source said.

On the euro zone economic crisis, Cameron said Hollande and he both wanted to see "stability in international markets."

"We both want to see countries deal with their deficits and we both want to see economic growth," Cameron said.

Hollande said the two leaders were "convinced we need to continue improving our public accounts while restoring growth."

On Greece, Hollande said he would like Greece to remain in the euro zone but it would be for the Greek people to "answer the question."

"My position is we should do everything possible so that they say yes to that," he said.

Cameron earlier called for "decisive action" to tackle the euro zone crisis.

"Britain wants to have a successful euro zone, that is where 40 percent of our trade goes. We need decisive action from euro zone countries in terms of strengthening euro zone banks, in terms of a strong euro zone firewall and decisive action over Greece. That has to be done," Cameron told reporters.

"Clearly the Greeks have to make their minds up, they have to make their decision. Decisive action needs to be taken. That's absolutely vital that it is because that will affect the stability not only of the euro zone economies. It affects our economy and it affects the world economy too," Cameron said.

The EU trade commissioner said earlier on Friday that European officials are working on contingency plans in case Greece bombs out of the euro zone

Cameron, a centre-right Conservative who built a close relationship with Hollande's predecessor Nicolas Sarkozy, snubbed Hollande when the Socialist leader visited London during his election campaign, but at Friday's meeting he invited Hollande to visit London soon.

Hollande made ironic reference to the snub, saying that since he had not been able to visit London before the election he would be "all the happier" to meet Cameron afterwards.

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