2024-03-07 00:05

NEW YORK, March 6 (Reuters) - Bankrupt crypto companies FTX and BlockFi have resolved their disputes stemming from the companies' collapses in 2022, with FTX agreeing to pay BlockFi up to $874 million, according to court documents filed on Wednesday. The settlement is subject to approval by U.S. Bankruptcy Judge John Dorsey in Wilmington, Delaware. The two companies had sued each other in 2023, seeking to recover money they had loaned each other before they both went bankrupt in November 2022. Under the new settlement, FTX agreed to prioritize a $250 million payment to BlockFi, and the remainder of the settlement is contingent on its efforts to repay its own customers in bankruptcy. The two companies had a close relationship before a 2022 market crash revealed FTX's widespread misuse of customer funds. BlockFi provided loans to FTX's affiliated hedge fund Alameda Research, and it turned to FTX for rescue financing during a volatile cryptocurrency market in summer 2022. FTX could pay BlockFi up to $689 million on account of the Alamexa loans, but only the first $250 million is guaranteed. The remainder is contingent on FTX's ability to first repay its own customers and other creditors, according to court documents filed in Delaware and New Jersey bankruptcy courts. FTX also agreed to pay BlockFi an additional $185.3 million, to account for the amount that BlockFi held in its FTX trading accounts when the cryptocurrency exchange collapsed in 2022. FTX expects to fully repay its own customers, but that result is not guaranteed, an FTX attorney said in January. BlockFi had previously agreed to repay FTX up to $275 million from the 2022 rescue loan, but only if it can first repay its own customers in full. BlockFi has said it is unlikely to fully repay customers who had interest-bearing BlockFi accounts. The company previously estimated that those customers might receive between 39.4% and 100% of the value in their accounts. As part of the agreement, BlockFi agreed to drop its lawsuit over 56 million in Robinhood (HOOD.O) , opens new tab shares that were allegedly pledged as collateral for BlockFi's loans to Alameda. Those equity shares were later seized by the U.S. Department of Justice when FTX founder Sam Bankman-Fried was arrested. Bankman-Fried was convicted in November 2023 of stealing $8 billion from FTX customers. He is set to be sentenced on March 28, and is expected to appeal his conviction. https://www.reuters.com/technology/ftx-reaches-settlement-with-blockfi-may-pay-up-874-million-2024-03-07/

2024-03-06 23:35

SAN ANTONIO, Texas, March 6 (Reuters) - Fast-food chain Panera Bread has loosened its standards for animal welfare and so-called clean ingredients in its food ahead of a planned IPO, according to internal company documents seen by Reuters, shaving an estimated $21 million off its annual costs. Its stores across the U.S. were directed in late February to begin removing signs and artwork that include the phrases "No Antibiotics Ever," "Vegetarian Fed," "Grass Fed Pasture Raised," "Animal Welfare," or any mention of "Hormones," the internal documents said. The work is set to be completed by March 27, according to the documents. The soup and sandwich company, which prides itself on having high standards for sourcing ingredients, changed internal policies to remove the requirement its suppliers only use cattle that are pasture-raised, the documents said. Its new policy allows the use of some antibiotics in pork and turkey products, and allows chicken and cattle to be fed with feed containing animal products. The relaxing of standards marks a shift in corporate strategy for Panera, which the internal documents refer to as an "evolution" of "clean and animal welfare policies." Asked to comment, a Panera spokesperson said in a statement: "As we grow to reach more guests, we continue to hold ourselves to high standards for the ingredients we use and are continuously making changes to our menu to deliver high quality products. "We strongly believe in transparency around our ingredients and make that information available to our guests." Based near St. Louis, Panera has more than 2,000 stores in the U.S. and Canada. It was acquired and taken private in 2017 for $7.5 billion by Luxembourg-headquartered private equity firm JAB Holdings. Last May, Panera announced it was planning an eventual IPO. Panera goes through nearly 3 million pounds of bacon every year. The chain expects to use more bacon after adding a bacon avocado melt to its menu, increasing use of bacon bits by 26%-36%, internal documents from last summer said. Those documents also said that Panera's previous commitments on pork limited its ability to innovate with the meat because antibiotic-free pork accounts for only 5% of total pork availability. Not changing standards on animal welfare would incur added costs for the increased use of bacon bits, and pose long-term supply risks related to supplier capacity and potential legislation, the documents said. Federal lawmakers last year proposed the Ending Agricultural Trade Suppression (EATS) Act that would curb states’ ability to regulate agricultural products sold within their borders, although the legislation has not moved since last June. In 2017 Panera announced it had removed artificial ingredients from its U.S. menu, following a commitment to "clean" ingredients in 2014 and the 2015 publication of a list of prohibited additives, which it calls its "No No List." At the beginning of January, three additives — phosphates, sorbic acid, and maltodextrin — were removed from the "No No List", according to the internal documents and archived versions of that list. Before the changes, the list contained 76 prohibited additives. Polling showed Panera that it led competitors on consumer associations with healthiness and responsibly sourced ingredients, according to internal presentations from last year reviewed by Reuters. A presentation for executives from October said the change in strategy would make its supply chain more flexible, particularly for pork products and save the company an estimated $21 million annually. The presentation also outlined research into relaxing standards even further but said this was not recommended. "Further modifications to stances on chicken and pork confinement would result in approximately $8M of savings but carries a much larger brand risk and would put us in a non-competitive position with our policies," the October presentation said. It also recommended continuing to restrict artificial preservatives "due to brand positioning risk". Tyson Foods (TSN.N) , opens new tab, one of Panera's main suppliers of meat products, reintroduced certain antibiotics to its chicken supply chain last summer. The company at the time said the antibiotics used are not important to human health. Tyson declined to comment. https://www.reuters.com/business/panera-loosens-animal-welfare-ingredients-standards-ahead-ipo-internal-documents-2024-03-06/

2024-03-06 23:03

WASHINGTON, March 6 (Reuters) - Nearly 50 Democrats in the U.S. Congress on Wednesday urged the Federal Trade Commission to probe oil and gas company deals and expand current investigations to protect consumers and industry competition. The industry went on a $250 billion buying spree in 2023, taking advantage of companies' high stock prices to secure lower-cost reserves. Exxon Mobil (XOM.N) , opens new tab Chevron Corp (CVX.N) , opens new tab, and Occidental Petroleum (OXY.N) , opens new tab made acquisitions worth a total of $135 billion in 2023. The trend has continued this year with deals such as Chesapeake Energy (CHK.O) , opens new tab agreeing in January to buy Southwestern Energy (SWN.N) , opens new tab, a $7.4 billion deal that will make it the largest independent U.S. natural gas producer. "If a small group of dominant firms is allowed to control this industry, American consumers and industry competition will only suffer," the Democrats, including Senate Majority Leader Chuck Schumer, and Representative Ro Khanna, wrote in a letter to the FTC. "Therefore, we urge the FTC to extend its current investigations, open inquiries into these new deals, and take all appropriate actions to protect competition in this industry." U.S. Energy Secretary Jennifer Granholm, asked about recent mergers at an event held by Axios, said she was concerned about monopolies because President Joe Biden is "obsessed about bringing down prices" including for gasoline. But Granholm also expressed hope that mergers could accelerate a trend by some large oil and gas companies to act on climate and clean energy. "Many of the majors, many of them not all ... have been taking action on climate and clean energy and a lot of the folks who are small level producers were not as interested, or didn't have the resources to address (those issues) so I'm encouraged that there seems to be a movement in this direction," Granholm said. https://www.reuters.com/markets/deals/us-democrats-urge-antitrust-regulator-probe-oil-gas-mergers-2024-03-06/

2024-03-06 23:02

ECB keeps policy rate at record 4% Projections show lower growth and inflation this year Lagarde says "we will know a lot more in June" FRANKFURT, March 7 (Reuters) - The European Central Bank kept borrowing costs at record highs on Thursday while cautiously laying the ground to lower them later this year, saying it had made good progress in bringing down inflation. Having underestimated a sudden surge in prices two years ago, the central bank for the 20 countries sharing the euro has been reluctant to declare victory over what turned out to be the most brutal bout of inflation in decades. But with new forecasts pointing to lower inflation and growth, ECB policymakers on Thursday indicated they were preparing for a first cut in interest rates, probably in June, provided incoming data, especially on wages, confirms the trend. "We did not discuss cuts for this meeting, but we are just beginning to discuss the dialling back of our restrictive stance," ECB President Christine Lagarde told a press conference. Lagarde hinted strongly that was more likely to happen at the ECB's June 6 meeting, as wage data for the first quarter will then have been published. Sources have been telling Reuters similar for months. The ECB has another policy meeting before then, on April 11. "We will know a little more in April, but we will know a lot more in June," Lagarde said. She noted that inflation, including nearly all underlying measures, has been falling towards the ECB's 2% target and is now expected to come in lower over the next two years than the central bank had anticipated only a few months ago. In new quarterly economic projections released on Thursday, the ECB cut its forecast for price growth this year from 2.7% to 2.3% and said it now expects inflation to fall to 1.9% in summer 2025 and stay there until the end of 2026. Lagarde struck a cautious tone, however, saying more evidence was needed before the ECB cuts rates. "There is a definite decline (in inflation) which is underway and we are making good progress towards our inflation target," Lagarde said. "We are more confident as a result, but we are not sufficiently confident." Investors have pencilled in three, or more likely four, cuts to the 4% rate the ECB pays on bank deposits this year, taking it to 3.25% or 3.0% . "ECB President Christine Lagarde today took another cautious step towards a first rate cut," Jörg Krämer, chief economist at Germany's Commerzbank, said. "Lagarde hinted for the first time that the ECB believes a first rate cut in June is possible." LOWER INFLATION AND GROWTH Inflation has been declining for nearly 18 months, to 2.6% in February. This was partly the result of a steep fall in fuel costs, which were boosted by Russia's invasion of Ukraine, but also reflected the ECB's steepest ever increase in borrowing costs, which has brought lending to a standstill. But underlying inflation excluding volatile food and fuel prices was still 3.1% last month, while an index for the price of services, which are closely linked to wage growth, rose by nearly 4%. Lagarde highlighted domestic inflation - including services - as the single most stubborn category. "We also look very carefully at data concerning underlying inflation and here we are seeing a decline across the board ... except domestic inflation," Lagarde said. Tighter monetary policy has taken a toll on economic growth, which has been stagnating and is likely to continue to be weak. The ECB now expects the euro zone's GDP to expand by 0.6% compared to 0.8% in its last round of projections in December. And growth could turn out to be even lower than projected. "The risks to economic growth remain tilted to the downside," Lagarde said. https://www.reuters.com/world/europe/ecb-hold-rates-take-baby-steps-towards-first-cut-2024-03-06/

2024-03-06 22:54

March 6 (Reuters) - New York Community Bancorp (NYCB.N) , opens new tab said on Wednesday it had raised $1 billion from investors including former U.S. Treasury Secretary Steven Mnuchin's Liberty Strategic Capital and named a former Comptroller of the Currency its new CEO. Investment firms Hudson Bay Capital, Reverence Capital Partners, Citadel Global Equities, other institutional investors and certain members of the bank's management also participated in the equity investment, according to NYCB. The bank's stock had a rollercoaster session, falling 45% prior to the announcement, bouncing 30% higher after finally closed 7.4% higher. KBW's analyst Chris McGratty said in a note to clients that the capital raise is painful for existing shareholders but should reduce fear of systemic risks. "This is a good solution for the broader system, shows ability to attract private capital, and the management and board overhaul provide credibility with investors", McGratty wrote. He believes the bank may still sell assets and transfer credit risk to further increase its capital ratio above the current 10% target. Kevin Heal, banking analyst at Argus Research, expects the deal to allay fears for depositors and added that unlike Silicon Valley Bank, which had uninsured deposits that were "blown off the door in billions", NYCB does not have the same level of un-insured deposits. Joseph Otting, the new BNCY CEO, is the former Comptroller of the Currency under president Donald Trump, and had been CEO and board member of OneWest from 2010 through 2015, when the bank was sold to CIT Group. One of the founders of OneWest bank is Steven Mnuchin, one of the new investors in NYCB. "In evaluating this investment, we were mindful of the bank's credit risk profile," Mnuchin said in a statement. Mnuchin will join NYCB's expanded board. NYCB has been under pressure since it posted a surprise fourth-quarter loss on Jan. 31, weighed down by higher provisions tied to its exposure to the beleaguered commercial real estate (CRE) sector. It slashed its quarterly dividend by 70% to bolster capital to deal with stricter regulation that banks with assets of $100 billion and above are subject to. NYCB's acquisition of Flagstar Bank in 2022 and Signature Bank assets last year pushed it above that threshold. The stock is down about 70% since its Jan. 31 announcement. The latest round of sell-off in NYCB shares was triggered last week, when the bank disclosed it found "material weaknesses" in internal controls tied to its review of loans. It also revised its quarterly loss to 10 times higher than previously stated. The bank on Wednesday named Joseph Otting, former Comptroller of the Currency, its new CEO. Otting will replace Alessandro DiNello, who will be the non-executive chair after serving as CEO for only a few days. Liberty Strategic will infuse $450 million, Hudson Bay $250 million and Reverence Capital will inject $200 million, NYCB said. Jefferies was the exclusive financial adviser and sole placement agent for NYCB for the latest investment. The capital infusion comes nearly one year after the failures of Silicon Valley Bank, and Signature Bank - which precipitated the regional banking panic which has undermined market confidence in some regional lenders. The FDIC assisted the sale of both SVB and Signature, as well as later the auction of First Republic Bank, through guarantees against losses and allowing buyers to only take on certain assets: NYCB, for example, did not acquire Signature's commercial real estate portfolio. PacWest meanwhile agreed in July to be sold to Banc of California (BANC.N) , opens new tab, in a deal which saw private investors supply $400 million of new capital to help reinforce the combined bank's balance sheet. CRE CONCERNS Several Wall Street analysts have flagged concerns that the lender's exposure to CRE could also require it to build additional capital reserves to absorb potential losses on loans. "We believe this review of internal controls could lead to additional CRE-related reserve building, particularly related to the company's NYC rent-regulated multifamily exposure," brokerage Wedbush wrote in a note earlier this month. NYCB has pledged to reduce its exposure to CRE. (This story has been refiled to remove an extraneous word, in paragraph 14) https://www.reuters.com/markets/us/embattled-lender-nycb-seeks-cash-infusion-wsj-reports-2024-03-06/

2024-03-06 22:29

March 6 (Reuters) - Minneapolis Federal Reserve Bank President Neel Kashkari on Wednesday signaled that stronger economic data since the start of the year will likely make it appropriate for the Fed to cut rates only twice, or possibly just once, this year. "I was at two in December," Kashkari said in an interview on WSJ Live, referring to the number of quarter-point interest-rate cuts he had penciled in when Fed policymakers last made their quarterly economic forecasts. Fresh projections are due in two weeks, when the Fed next meets to set policy. "It's hard to see, with the data that's come in, that I'd be saying more cuts than I had in December," Kashkari said. "It seems like at a base case I'd be where I was in December, or potentially one fewer, but I haven't decided." The median forecast of his colleagues in December was three rate cuts this year, which would take the Fed policy rate to a range of 4.5%-4.75%, from its current 5.25%-5.5% range. Kashkari said the "base case scenario" is that the Fed will not raise rates any further, a view shared by all Fed policymakers, based on their forecasts published in December and remarks since. If the economy stays resilient and inflation proves to be more entrenched than expected, Kashkari said, "the first thing we do is keep rates where they are for an extended period of time." With the economy and the labor market strong and inflation coming down, he said: "I would want to see the argument for, why do we think we're actually tamping down the economy if the economy is ongoing in such a healthy way?" The Fed does want to avoid a downturn, he said, and to stick a "soft landing" where inflation falls but the job market does not collapse, as it historically has done when the Fed has waged a battle with too-high inflation. But now, he said, "if the economy is doing very well, maybe the economy can sustain this rate environment when we didn't realize that was possible," Kashkari said. https://www.reuters.com/markets/us/feds-kashkari-sees-two-rate-cuts-most-this-year-2024-03-06/