Restraining order

July 1, 2008

Zuberbuehler director of the Swiss Federal Banking Commission attends a news conference in BernAs if having the U.S. Justice Department on your back because your bankers may have been helping wealthy Americans avoid tax wasn’t enough, Swiss banking giant UBS also has to deal with grumpy regulators at home. The head of the Swiss Federal Banking Commission, Daniel Zuberbuehler (pictured), tells us that singling out UBS and Credit Suisse for tough treatment is justifiable and has laid down a tight timetable for new rules to restrain the two. The banks will be required to hoard considerably more capital, which will surely slow them down on Wall St. On Monday, the DOJ said it had asked a federal court in Miami to authorize the Internal Revenue Service to request information from UBS about U.S. taxpayers who may be using Swiss bank accounts to evade federal income taxes. Coughing up tax fraudsters to the IRS could make the sell-off of UBS’s U.S. wealth management backbone – once known as Paine Webber – a tad trickier, but perhaps no less necessary.

A detailed blow-by-blow of the death of Bear Stearns by Vanity Fair’s Bryan Burrough casts current market rumors rumbling about the health of Lehman Brothers in an eerie light. The author, who DealBook notes co-wrote “Barbarians at the Gate,” takes aim at CNBC and hedge funds as it works to uncover what it posits could be the “murder” of the country’s fifth-biggest investment bank. This morning, CNBC’s Charlie Gasparino and DealBook editor Andrew Ross Sorkin are talking about the prospects for Lehman being “taken out”.

High in the “priced to move” column, commercial lender CIT Group agreed to sell its home lending business to private equity firm Lone Star Funds for $1.5 billion in cash to increase liquidity, and said it would take a related second-quarter charge of $2 billion. CIT also agreed to sell its $470 million manufactured housing portfolio to Vanderbilt Mortgage and Finance for about $300 million. “These sales complete our exit from all home lending businesses, removing the uncertainty surrounding this asset class,” Chief Executive Jeffrey Peek said. Lone Star will also be taking on $4.4 billion of outstanding debt and other related liabilities. Home lending may not be that far off the path for CIT, but getting out of the business certainly helped tax preparer H&R Block, which announced strong results and a better outlook yesterday, so any price is clearly worth it – CIT’s stock was up over 11 percent in premarket trade.

Manitowoc said it had beaten out Illinois Tool Works in the official auction for British kitchen equipment maker Enodis. Manitowoc said it will pay 328 pence for each Enodis share, or about $2.45 billion, not including the assumption of about $249 million of the U.K. company’s debt. Enodis, which makes fast-food fryers, became the center of a takeover tussle between the two U.S. diversified manufacturers this spring. The two bidders saw Enodis, which counts Burger King and McDonald’s among its customers, as a way to play on rising demand for fast food in markets such as Asia.

Other deals of the day:

* Italy’s third-biggest refiner, Saras, said it has bought a 30 percent stake in an Italian wind power company from Australian investment firm Babcock & Brown.

* InBev stuck to its proposal to take over reluctant bid target Anheuser-Busch and said it would seek to give the latter’s shareholders a direct voice if the U.S. brewer still refused to talk.

* Norwegian recycling equipment maker Tomra said it bought Australian peer Ultrasort for 160 million Norwegian crowns ($31.48 million) in enterprise value.

* State-owned National Bank of Egypt has sold its holdings in six companies for a combined total of 5.29 billion Egyptian pounds ($993 million), the financial daily Al Mal said on Tuesday.

* Indonesia’s largest lender, PT Bank Mandiri, said it had acquired a 51 percent stake in automotive financing firm PT Tunas Financindo Sarana (Tunas Finance), for an undisclosed amount.

* U.S. pork producer Smithfield Foods Inc said that COFCO Limited, China’s largest agricultural trading and processing company, will buy a near-5-percent stake in the company.

* Israeli holding company Koor Industries said it has accumulated 100 million Swiss francs ($98.23 million) worth of shares in Credit Suisse Group.

* Major Chinese engine maker Weichai Power said it has agreed to take a stake in Beiqi Foton Motor under a deal to expand its business ties with the truck maker.

* British telecoms company Cable & Wireless said it was in talks with rival Thus Group about a potential 180 pence-per-share offer for the company.

* Malaysia’s TM International and Indian mobile operator Idea Cellular will launch an open offer on Aug. 22 to buy up to 20 percent of Spice Communications, their investment banker said.

* New Zealand rural services firm PGG Wrightson said it would pay NZ$220 million ($167 million) for a 50 percent stake in meat producer Silver Fern Farms (SFF), sending its shares lower.

* South Korea’s POSCO said it had agreed to buy a 10 percent stake in coal mining firm Macarthur from the Australian group’s shareholder Ken Talbot at A$20 a share.

(Picture: Director of the Swiss Federal Banking Commission, Daniel Zuberbuehler, at a news conference in Bern. 27/03/2007 – Reuters)

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