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CALGARY–Groupe Aeroplan Inc , which operates Air Canada's frequent flier program, reported a $1.1 billion quarterly loss Friday after it wrote down the value of goodwill on its books due to the global economic meltdown.

Groupe Aeroplan said it was forced to take a $1.2 billion noncash asset impairment charge, mostly related to goodwill associated with its spinoff from the airline's parent company.

That overshadowed a big jumps in operating income and revenue.

In the fourth quarter, the company lost $1.07 billion, or $5.39 a share, compared with a year-earlier profit of $52 million, or 26 Canadian cents a share.

Excluding the charge, the loyalty program operator earned $87 million, or 44 Canadian cents a share paperless payday loans. It has been expected to earn 25 Canadian cents a share, according to a Reuters Estimates average of analysts' forecasts.

Revenue, including gross billings on the sale of Aeroplan miles, was $430 million, up 95 per cent from $222 million in the fourth quarter of 2007.

Chief Executive Rupert Duchesne said he was confident the company's business model will help it weather the downturn, but said economic conditions made it difficult to predict future business performance.

Groupe Aeroplan shares were down 63 Canadian cents, or 7 per cent, at $8.38 on the Toronto Stock Exchange.

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Representatives of the receiver that has taken control of the financial empire of Allen Stanford have “temporarily” closed the Greensboro office of the Stanford Group.

A sign on the door of the company’s Green Valley Road office said that office was “temporarily closed” but added the company “is still in operation but under the management of a receiver.”

The Securities and Exchange Commission filed suit against Stanford and his companies last week, alleging a multibillion dollar fraud centered on the sale of high-yield certificates of deposit that promised improbably high returns to investors.

Dallas lawyer Ralph Janvey is the court-appointed receiver in the case. He said in a notice on his Web site that he is in the process of “physically securing” Stanford offices as part of the investigation quick payday loan.

Customer accounts have been frozen until the receiver can confirm there are no claims against those accounts. Janvey said in Web site that he “understands that the freeze implemented under the order can cause inconvenience and in some cases hardship.”

A source associated with the Greensboro Stanford Group office said employees were asked to leave Monday, but have not yet been given any further information about their employment status. The office has eight advisors plus support staff.

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Costa Rica’s economy may slow to a standstill this year as foreign direct investment drops “severely” and demand for the Central American country’s exports wanes, President Oscar Arias said.

“The rate of growth this year is going to be between zero and one percent,” Arias said in an interview in his office in San Jose yesterday. That’s less than half the central bank’s forecast for growth of 2.2 percent in the $30 billion economy.

As part of a recovery plan announced last month, Arias said the government will seek to borrow more from international lenders, raise pensions by 15 percent and build schools and roads to create jobs. The government may also inject more capital into state-owned banks to ease access to credit, he said.

Arias, 68, is mid-way through his second four-year term as president, following an earlier mandate in 1986-1990, when he won a Nobel Peace Prize. This time, he staked his presidency on the passage of trade accords, including an agreement between the U.S. and Central America called DR-CAFTA.

Costa Rica’s economy may expand less than the forecast rate of 2.2 percent this year, down from an estimated 2.9 percent in 2008, central bank chief Francisco de Paula Gutierrez said on Feb. 5. Economic activity fell by 3.1 percent in December from the year-ago month, the third straight decline, bank figures show.

Intel Exports

“Output is definitely growing at a slower rate, and though I don’t know if we are there yet or on our way there, Costa Rica will have a recession,” Francisco Antonio Pacheco, president of the legislative assembly, said in an interview yesterday.

Exports from Intel Corp.’s Costa Rican unit fell 32 percent to $485 million in the fourth quarter from the year-ago period, company figures show. Exports will likely drop through the first quarter of this year, San Jose-based spokeswoman Karla Blanco said in an interview. The plant accounts for about a fifth of Costa Rica’s exports.

Arias said foreign direct investment this year “will come down severely,” dropping as much as 40 percent. He said the government isn’t considering tax cuts and may inject more capital into state-owned banks.

“Fortunately, our banking system is okay. We don’t have a financial crisis here,” he said. “We don’t have to go through that long and sad process of socializing losses and privatizing profit as most countries in the industrialized world” have had to do, he said.

Protectionist Measures

Arias called on the developed world to combat protectionist measures bad credit unsecured personal loans. Officials from countries including Canada expressed concern after the U.S. Congress inserted a “buy American” requirement into a $787 billion economic stimulus bill. The provision was modified in the final legislation.

“The industrialized countries need to know that poor countries have a dilemma, have one single choice, either to export goods and services or to export people,” Arias said. “Poverty needs no passport to travel. They are not going to stop immigration, undocumented immigration, illegal immigration, by building walls.”

Arias won the Nobel Peace Prize for uniting Central American leaders behind a plan in 1987 to bring an end to the region’s civil wars.

Costa Rican voters in October 2007 gave their approval for a free-trade agreement with the U.S. A rejection of the accord would have marked the first time a free-trade deal with the U.S. was refused by any country.

The central bank’s Gutierrez told reporters in San Jose this month that U.S. and other export markets are deteriorating faster than expected.

Trade Accords

Costa Rica’s exports dropped 19 percent in January from the year-ago month, according to the trade ministry. Exports to the U.S., Costa Rica’s largest trading partner, were down 17.6 percent during that time, the ministry said.

Costa Rican Trade Minister Marco Vinicio Ruiz yesterday said the government is seeking trade accords with China, Singapore and the European Union as part of a strategy to diversify markets and lessen the effects of the financial crisis.

“During this crisis, we’ve shown that we have a very diversified economy,” Ruiz said in an interview in San Jose. “A key part of our strategy is to have more relations with Asia.”

Negotiations with Europe may be completed “before July,” Ruiz, 55, said. The accord would then go to Congress for approval. Agreements with China and Singapore are in the early stages and may also be completed before the government leaves office in May 2010, Ruiz said.

About 64 percent of exports from Costa Rica, a nation of 4.3 million people, are to countries other than the U.S., up from the early 1980s when 99 percent of exports were to the world’s biggest economy, Ruiz said.

Ruiz said the government’s “goal” is to have 94 percent of Costa Rica’s trade protected by accords, up from 25 percent at the start of the government’s four-year mandate.

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Ameren’s 840,000 natural gas customers in Illinois will see heating prices decline further next month because of a continued weakening in energy demand.

Retail prices for natural gas, which makes up about two-thirds of customers’ bills, will go down 17 percent or 19 percent depending on the utility, St. Louis-based Ameren said. The price for Cilco and CIPS customers will drop to 64 cents a therm from 77 cents. AmerenIP prices will fall to 68 cents from 84 cents.

Natural gas demand has eroded, especially among industrial customers, as the recession lingers. Retail gas prices charged by Ameren’s Illinois utilities have fallen as much as 55 percent since their peak last fall guaranteed unsecured personal loan.

"We also recognize that the extremely cold temperatures that occurred in December and January meant that our customers used more natural gas this year than a year ago," said Scott Glaeser, Ameren’s vice president of gas supply.

Ameren utilities buy gas from producers across the country. Retail prices are adjusted monthly depending on changes in the wholesale market.

jtomich@post-dispatch.com | 314-340-8320

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Why us? That’s the cry from St. Louis bankers who find their bonuses capped by the new federal stimulus bill.

Like several St. Louis bankers, Gary Douglass, CEO at Pulaski Bank, complains that the law designed to limit excess on Wall Street is snagging banking’s small fry as well.

"There’s one big paintbrush, and everybody gets painted with it," Douglass says. "People do need to be mad, and things need to be fixed, but the little guys didn’t cause the problem."

Others bankers say that they understand why taxpayers’ money ought to come with strings attached, and that the bank bailout is supposed to free up lending, not line bank executives’ pockets.

The pay limit, slipped into the bill at the last minute by Sen. Christopher Dodd, D-Conn., applies to banks that took capital injections from the U.S. Treasury under the Troubled Asset Relief Program. The bill limits annual bonuses for top executives to an amount 50 percent of base pay.

The amendment sailed through Congress on a wave of consternation after news that Wall Street banks had paid billions in bonuses to top bosses after taking bailout money from the government. So far, five St. Louis banks have taken the federal cash: Enterprise Financial, Pulaski Bank, First Banks, Centrue Bank, and most recently, Reliance Bancshares, which announced Friday that it accepted $40 million from the Treasury.

But the bill also will affect pay at out-of-town financial companies with big operations in St. Louis, such as Bank of America and Wells Fargo, the new owner of St. Louis-based Wachovia Securities, and Marshall & Ilsley, parent of Southwest Bank. They also took federal cash.

Bankers are still pondering the regulations, and the Treasury still has to draft specific rules. How many executives are affected will depend on how much money each institution took from the Treasury. At some big banks, the top 25 executives could be covered.

Some St. Louis institutions rely heavily on bonuses to compensate top leaders. At least five current executives at Wachovia Securities made more than $1.5 million in 2007, when the company still operated under the A.G. Edwards name. Their pay ranged up to $2.8 million. At the most, base pay made up $220,000 of that, with nearly all the rest in bonuses.

A spokeswoman for Wells Fargo, Wachovia’s new owner, declined to comment.

Local commercial bankers say they don’t make Wall Street-level salaries, where top executives at major firms pull in tens of millions of dollars.

In 2007, the latest figure available, the highest-paid officer at Enterprise Financial was former CEO Kevin Eichner, who earned $1.1 million, with more than half of it bonus lowest fee payday loans. At Pulaski, then-CEO Walter Donius made $345,000.

By contrast, Bank of America chief executive Ken Lewis was paid more than $20 million in 2007.

Executives at Pulaski and Enterprise say they took the federal money even though they didn’t need it, because the extra capital would let the banks expand their lending. Much of the money went to banks that regulators consider healthy, they note.

The biggest area recipient of federal money was First Banks, a Clayton-based bank with branches from Florida to California. The bank took major losses in the California real estate market. The $295 million federal capital infusion came on top of more than $100 million injected into the bank last summer in a self-bailout by its owners, the family of Jim Dierberg.

The bank reported last month a $202 million loss for the last three months of 2008 as the bank set aside money to cover bad loans and took a noncash loss involving tax allowances.

CEO Terrance McCarthy says the bank is paying no management bonuses this year. In 2007, McCarthy earned $862,000, with $375,000 of that in bonus.

At Enterprise Bank, president Steve Marsh worries about the government "micromanaging compensation." Area bankers say bonuses encourage good performance. If the law limits bonuses, banks may simply increase salaries. Then even bad performers will get hefty pay, and good performers will leave for companies that aren’t under the bonus limits.

"When you limit pay, you potentially get mediocrity into the system," says Robert Witterschein, Southwest Bank’s president.

Others don’t buy that argument. There’s plenty of talent waiting to replace people who leave, says Ed Lawrence, a professor of banking at the University of Missouri-St. Louis.

"Nothing hurts the industry more than the sight of executives taking out millions while feeding on the public trough," he said, adding that Wall Street executives "are a bunch of whiners who have raped the system long enough."

He notes that banks place restrictions on the people they lend to. The government should do the same when handing money to banks, he said.

Some think the pay restriction could prompt some banks to return the government’s money quickly, which could restrain their ability to lend. But others note that federal regulators wouldn’t let a bank that really needs capital return it.

jgallagher@post-dispatch.com

314-340-8390

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The U.K. inflation rate fell to nine-month low in January after cheaper fuel, food, transport and housing eased pressure on prices as the recession deepened.

Consumer prices rose 3 percent from a year earlier, compared with a 3.1 percent pace in December, the Office for National Statistics said today in London. Prices fell 0.7 percent from December, the most for a year.

Inflation subsided as prices of petroleum, diesel, home rents, cars and air fares declined. With interest rates approaching zero, Bank of England Governor Mervyn King says the bank may have to create money and pump it into the economy to keep inflation from falling too far below the 2 percent target.

“Inflation will certainly fall much further in the coming months,” said Nick Kounis, an economist at Fortis Bank NV in Amsterdam. “Consumer spending is falling sharply and often prices take time to respond to that. It won’t change the Bank of England’s view. We see it taking rates down to zero next month.”

Inflation slipped to the 3 percent upper limit of the government target for the first time since April. Fuel and lubricant prices fell 15.2 percent on the year, the most since records began in 1997. Core inflation, which strips out costs of energy, alcohol, tobacco and food, accelerated to 1.3 percent in January from 1.1 percent in December, the statistics office said.

Early Discounts

The drop in consumer-price inflation was less than economists expected, with upward pressure coming from games and toys, furniture, households appliances and alcohol as retailers limited discounts after slashing prices in December to boost flagging Christmas sales. The median of 31 forecasts in a Bloomberg survey was a rate of 2.7 percent. Taking the two months together, discounting was steeper than in the same period a year earlier.

Sterling rose on speculation the central bank may slow the pace of rate cuts. The pound was at $1.4231 and 88.52 pence per euro at 2:15 p.m in London.

Gross domestic product will contract 3.3 percent this year, the Confederation of British Industry said yesterday payday loans with no fax. From the start of the recession in the third quarter of last year, the economy will shrink 4.5 percent, almost as much as in the early 1980s during Margaret Thatcher’s first term, the group said.

The Bank of England has cut the benchmark rate from 5 percent in October to 1 percent this month, the lowest since the bank was founded in 1694, and King said last week the economy is in a “deep recession.”

Money Creation

The bank, which now has the authority to buy commercial paper from companies under a program financed from the sale of government securities, may now need to increase the money supply by buying government and corporate bonds, King said. Policy makers may consider the decision at their next rate-setting meeting on March 5.

Inflation will slow to 0.5 percent at the end of 2010, the central bank said last week. It breached the 3 percent ceiling last year after a surge in oil prices. The financial crisis has now sparked fears of a sustained fall in prices.

Retail-price inflation slowed to 0.1 percent in January, the lowest since March 1960, from 0.9 percent in December. The fall was largely due to cheaper mortgage costs. Excluding mortgage interest payments, inflation slowed to 2.4 percent from 2.8 percent.

Cheaper oil is easing pressure on inflation. Crude has fallen 75 percent since they reached a record $147 a barrel in July, and fell below $38 this week.

BP Plc, Europe’s second-biggest oil company, on Feb. 3 reported its first quarterly loss in seven years. Randgold Resources Ltd. said Feb. 9 it expects costs to fall further this year as prices for fuel and commodities such as steel decline.

The Bank of England says inflation may prove stronger than policy makers expect if the drop in sterling drives up import prices. The pound has fallen 27 percent against the dollar in the last 12 months as prospects for the economy worsened.

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CB Richard Ellis Group Inc. ranked first nationally in investment sales activity in 2008, with 18 percent market share, according to Real Capital Analytics.

Los Angeles-based CB Richard Ellis (NYSE: CBG) totaled $25.3 billion in transaction values, according to RCA, which tracks national commercial real estate sales of $5 million and greater

CB Richard Ellis was the leader in office, retail, industrial and multi-family properties. RCA estimates that at least $141 billion of office, industrial, retail, multi-family and hotel properties were sold in the U.S. in 2008.

CB Richard Ellis was the nation’s top firm in office sales in 2008 with 22 percent market share. The firm also performed well in industrial, with $4.5 billion in sales.

In a Feb. 11 conference call with investors, CB Richard Ellis CEO Brett White said, "We seek to gain market share through a downturn as producers and clients continue to migrate to quality service platforms in difficult times instant payday loan. We continued to gain market share in the fourth quarter, as evidenced by our performance in the investment sales business. Our share there was more than the number two and three players in the market combined."

Global real estate is facing one of its most challenging years in 2009 because of the lending crisis.

"We anticipate that capital markets activities will remain weak," White told investors. "[The] leasing condition will remain soft and the industry will continue to experience higher volatility in sales activities."

CB Richard Ellis, the largest publicly-traded commercial real estate services firm in the world - and the largest in the Albany, N.Y., region - reported its profit dropped 78.5 percent to $83.9 million in 2008 .

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Some large U.S. banks, may require more aid to stay solvent, the New York Times reported on Friday, citing economists and other finance experts.

A sober assessment of the growing mountain of losses would overwhelm the value of the banks’ assets, the paper reported.

“The United States banking system is effectively insolvent,” it quoted Nouriel Roubini, a professor of economics at the Stern School of Business at New York University, as saying.

He estimates that total losses on loans by U.S. financial firms and the fall in the market value of their assets will reach $3.6 trillion, up from his previous estimate of $2 trillion, according to the New York Times.

Adam Posen, a senior fellow at the Peterson Institute for International Economics, was quoted as saying that the government would have to play a more prominent role in sorting out the banking industry.

“Putting it off only brings more troubles and higher costs in the long run,” he said. “At this moment, the liabilities they have far exceed their assets,” he added. “They are insolvent.”

None of the experts’ research focuses on individual banks, it said, adding that there are exceptions among the 50 largest banks in the country guaranteed online payday loans.

Even banks that might technically be insolvent can continue business for a long time, and could recover their financial health when the economy improves, the paper said.

U.S. Treasury Secretary Timothy Geithner on Tuesday unveiled a plan to soak up as much as $1 trillion in bad assets on banks’ books and expand a Federal Reserve program to support up to $1 trillion in new loans.

For banks to resume the ample lending needed to restart the wheels of commerce, the answer is a larger, more direct government role than in the Treasury Department’s plan outlined this week, the paper cites the economists and experts as saying.

The government needs to plunge in, weed out the weakest banks, pour capital into the surviving banks and sell off the bad assets, the experts told the paper.

(Reporting by Ajay Kamalakaran in Bangalore; Editing by Jan Dahinten)

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Roche Holding AG said in a regulatory filing Monday that Genentech Inc. sought a price of $112 a share to buy out the remainder of the company.

That was $23 a share above the $89-a-share price Roche offered in July and above the price it made in the hostile takeover bid it launched late last month.

Instead of the $44 billion that the Swiss company offered, Genetech asked for about $52 billion for the 44.2 percent of South San Francisco-based Genentech (NYSE:DNA) that it doesn’t already own payday loan lenders.

I the filing Monday, Roche said Genentech refused "to engage in a meaningful discussion on value" and was over estimating the projections it was making on its cancer drug Avastin.

Roche said it intends to exercise its option to hold a majority of the seats on Genentech’s board.

Genentech closed Monday at $82.70 in Monday, down 30 cents.

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The Ontario government is being urged to allow "unlimited deposit insurance" for consumers who park their money at credit unions in this province – a proposal that, if adopted, could intensify the competition for personal deposits with big banks.

Central 1 Credit Union – an umbrella organization representing nearly 200 credit unions in Ontario and British Columbia – made its case for that change in a prebudget submission to Finance Minister Dwight Duncan. It argued that Ontario’s current ceiling on deposit insurance, set at $100,000, is out of step with coverage provided in other provinces.

Moreover, a shift to unlimited deposit insurance would "increase consumer confidence" during the current economic malaise by bolstering the protection of hard-earned savings, according to the group.

"As the Ontario economy embarks on a period of little-to-no growth, Central 1 believes the Ontario government should take steps that will boost confidence among consumers, businesses and financial institutions," its submission states.

Other provinces already provide unlimited deposit insurance to credit union members. British Columbia is the latest convert, with Premier Gordon Campbell scrapping the previous $100,000 cap last October. The move was among 10 key measures outlined in his economic plan to "alleviate the impacts" of the global financial crisis on the province.

Alberta, Manitoba and Saskatchewan also provide unlimited coverage on deposits held in credit unions. Three other provinces – Newfoundland and Labrador, New Brunswick and Nova Scotia – have a $250,000 cap, while Prince Edward Island’s maximum is $125,000. That makes Quebec the only other province with a $100,000 limit.

The Deposit Insurance Corp. of Ontario is charged with the responsibility of protecting depositors of credit unions from loss here. The 32-year-old government agency has more than 200 members.

"By offering unlimited deposit insurance, DICO and Ontario credit unions can work together to ensure sustained confidence in our system," said Central 1, adding such a move would also "make the administration of deposit insurance less complicated."

Ontario’s credit unions are prepared to bear the full cost of the stepped-up coverage. "Furthermore, moving to unlimited deposit insurance would likely increase the size of the fund administered by the Deposit Insurance Corp. of Ontario … as credit unions would likely be required to pay a premium on those deposits that are currently uninsured."

DICO’s deposit insurance reserve fund was estimated at $122 million, or 0.63 per cent of insured deposits, at the end of 2008. The agency says the fund is "slightly ahead of target, due to lower than anticipated claims and improved recoveries on previous losses."

Its official goal is 0.61 per cent of insured deposits, according to its annual report. The reserve fund was worth $105.3 million at the end of 2007.

Finance Minister Dwight Duncan met with Central 1 representatives to discuss unlimited deposit insurance in late November. His office declined to comment on whether he might act on the idea in the upcoming budget.

Duncan, however, has pledged to “modernize” the credit union sector. Yesterday, the province launched public consultations on other proposed regulatory changes that focus on technical issues such as governance, regulatory oversight, risk management, innovation and consumer protection flexcheck cash advance.

“Our government is serious about financial services regulation in Ontario,” Duncan said in a release. “The aim of these changes is to balance the needs of credit unions to remain competitive with the need for regulatory prudence, an important goal in light of the current global financial turmoil.”

Central 1’s request on deposit insurance, however, comes at a time when jittery consumers are increasingly seeking safe havens for their money. Some banks are already reporting a swell in deposits. That trend is expected to continue across the financial services industry this year as consumers sock away cash to ride out the recession.

Big banks largely dominate Ontario’s deposit-taking market. Industry statistics suggest credit unions and caisses populaires have about a 5 per cent market share. Within the Greater Toronto Area, credit unions have a 2 per cent share.

There are already suggestions that unlimited deposit insurance could give credit unions a leg up by sharpening the competition for deposits in Ontario. That’s because major banks, regardless of which province they operate in, offer clients a maximum $100,000 worth of savings protection via the Canada Deposit Insurance Corp.

While federal Finance Minister Jim Flaherty strengthened certain CDIC powers in the Jan. 27 budget, he resisted calls to elevate deposit insurance coverage. He faced pressure to do so after the U.S. Congress hiked coverage – provided by the Federal Deposit Insurance Corp. – from $100,000 (U.S.) to $250,000 until the end of 2009.

Thomas Velk, a banking expert at McGill University, said there’s no doubt that unlimited deposit insurance for credit unions "would be competitively disadvantageous" for banks in the key Ontario market.

The Canadian Bankers Association, however, suggested that consumers also consider a number of different factors when choosing where to bank, including products, services, branch locations, ABM networks and customer loyalty.

"Bank customers’ deposits are well protected and its important to point out that banks in Canada are stable and strong. CDIC insurance would only be needed in the highly unlikely event that a bank failed," Maura Drew-Lytle said in an email. She did not say if the CBA would oppose such a move.

Until now, the Ontario government has been reluctant to enhance deposit insurance for credit unions unless the federal government would provide a similar boost for the banks, said Central 1 spokesperson Art Chamberlain.

"But we are encouraging them to move on their own in this area where they’ve got the legislative authority," he added.

Bruce Cran, spokesperson for the Consumers’ Association of Canada, agrees unlimited depositor insurance is a "step in the right direction" toward enhancing consumer protection and market choice. Velk, however, worries about what such a move could mean for taxpayers.

"The problem with all these insurance schemes … they’re all massively undercapitalized, especially given the situation," Velk said.

"So, the trivial premiums that would be collected – even if they raised the premium in the case of making the coverage unlimited – would be far inadequate to meet the potential losses."

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