Residential Capital LLC’s parent said it expects the company didn’t break any financial covenants last month. And, even as international losses continued to mount from U.S. subprime problems, an Asian banking company was approved to establish operations in America.
Before that, First Financial Service Corp. named Gregory S. Schreacke as its new president, replacing Keith Johnson, who will continue as chief executive officer.
The Federal Reserve Board said it approved for eBANK Corp., based in Tokyo, Japan, to establish a representative office in San Francisco, Calif. The Internet-only bank, which engages in financial advisory activities rather than lending, will use the office to research technology related to Internet banking, and identify business opportunities with banks and companies in the United States.
GMAC LLC expects ResCap to meet its financial covenants at yearend 2007, according to a filing Thursday with the Securities and Exchange Commission. In November, ResCap had warned it would possibly require a capital contribution from parent GMAC Financial Services to maintain compliance with consolidated tangible net worth covenants contained in its credit facilities.
GMAC additionally said in the filing that it remains adequately capitalized and “expects to be profitable in 2008, with substantially reduced losses at ResCap due to risk mitigation actions undertaken.” Among recent activities are the conversion of $1.1 billion of preferred equity into common equity by GMAC’s owners and a $1 billion contribution by GM in the first quarter as part of the final settlement provisions related to the sale by GM of a 51 percent interest in GMAC. The company will not require any other cash injections from GMAC’s owners for 2007 and does not expect common dividend distributions in the interest of building capital.
First NLC Financial Services LLC has filed for Chapter 11 bankruptcy protection in a move to effectuate an orderly liquidation of its assets, parent Friedman, Billings, Ramsey Group Inc. announced Friday. The mortgage originator had announced its intent to file for the protection earlier this month. The filing was made in the U.S. Bankruptcy Court for the Southern District of Florida, West Palm Beach Division.
Fourth quarter profits for The Bank of New York Mellon tumbled 19 percent from the third quarter to $520 million partly because “deteriorating conditions in the U.S. housing market” led to a $118 million writedown in collateralized debt obligations that contained subprime exposure.
CIT Group Inc. reported a fourth quarter net loss of $130.7 million amid an increase of $297 million in reserves for credit losses, including a $250 million reserve for its held-for-investment home lending portfolio. The results also reflected a $42 million charge related to home lending receivables held for sale, including those sold during the quarter, and a pre-tax loss of $13 million in its Home Lending business principally due to impairment of retained interests on past off-balance sheet securitization transactions.
Meanwhile, Huntington Bancshares Inc. said its fourth quarter earnings were a negative $239.3 million, consistent with its forecast earlier this month. The results included a $512 million provision for credit losses, mostly stemming from the relationship with subprime mortgage lender and servicer Franklin Credit Management Corp.
The global impact of U.S. subprime woes has reached Bank of China, which is expected to writedown a fourth of its nearly $8 billion portfolio of U.S. subprime mortgage securities, the Wall Street Journal reported. The anticipated writedown is much larger than the $322 million the Chinese bank said it had reserved for subprime-related losses in its third quarter earnings announcement.
