Goldman still cautious about economy

Fortune) -- If the worst is over for the financial sector, you'd never know it to listen to Goldman Sachs.

The New York-based investment firm posted a $1.8 billion first-quarter profit Monday evening, then capitalized on those gains by selling $5 billion in stock Tuesday morning.

The developments put Goldman (GS, Fortune 500) on track to become the first big bank to repay the funds it received from Treasury last fall in the Troubled Asset Relief Program.

Once regulators complete their stress test of Goldman and sign off on the repayment plan, the firm will again be free to manage its affairs as it pleases, without fears that details on its pay practices will provoke outrage in Congress.

Despite this, Goldman chief financial officer David Viniar was hardly celebratory on a conference call with analysts and investors Tuesday morning.

Viniar said Goldman remains cautious about the economy and suggested that the firm expects the prices of assets such as real estate to continue to fall.

While further declines may not hammer Goldman, given its reduced exposure to troubled asset classes like real estate and corporate buyout loans, they could weigh on the results of other banks in coming months. Regional banks in particular hold large amounts of commercial real estate on their books.

"There are headwinds still with values, asset values," Viniar said in response to one question Tuesday. "I think those headwinds are less for us because we don't have that many anymore ... but there are still headwinds and that makes us cautious."

Goldman shares, which have surged during the bank stock rally of the past month, dropped 5% Tuesday to about $123, in line with the price of the $5 billion offering.

The drop in Goldman's stock helped lead the KBW Bank index, which has nearly doubled off its multidecade low over the past month, lower in midday trading.

Shares of beaten down bank Citigroup (C, Fortune 500) were rising, however, while those of seemingly healthier firms such as JPMorgan Chase (JPM, Fortune 500) edged lower.

Chase and Citi are both scheduled to report their first-quarter results later this week. The stronger-than-expected earnings from Goldman and Wells Fargo last week have spurred hopes that Chase and Citi will post similarly strong results.

Barclays Capital analyst Jason Goldberg raised his earnings estimates for both banks Tuesday, saying he expects them to benefit from better capital markets results and strong mortgage revenue. He now expects Citi to post its first profit in six quarters.

Read more at Fortune

ACA Capital shares could fall on subprime: Barron's

(Reuters) - Should the U.S. subprime troubles prove to be systemic across different geographies, then not only would shares be hammered, but the company could be toast, Barron's said.




If ACA buckles under, Wall Street firms whose securities the company insured would also be hurt. The $61 billion of ACA's insured exposure would come cascading back to balance sheets of the likes of Bear Stearns , Merrill Lynch , Lehman Brothers , and Citigroup along with some 25 other Wall Street counterparties, Barron's said.


Read more at Reuters.com Bonds News

HK financier Francis Leung joins CVC as adviser

(Reuters) - Leung, a long-time banker to Hong Kong tycoon Li Ka-shing with close China ties, was with Citigroup Global Markets as chairman of Asia until last year focusing on developing Citigroup's Greater China investment banking business, CVC said.




CVC, which is a major shareholder in global motor racing business Formula 1, owns interest in Australia's media group PBL Media, Japan's restaurant chain Skylark, Singapore's precision metals stamping firm Amtek, Malaysia's largest paper packaging firm GS Paper and Packaging, and Chinese wood fibreboards maker Plantation Timber Products.


Read more at Reuters.com Business News

UPDATE 1-Turkey's Akbank H1 net profit soars 35 pct

(Reuters) - Akbank, part-owned by Citigroup , turned a net profit
of 1.2 billion lira , it said in a statement.




Total loans grew 17.4 percent from the end of last year to
35.6 billion lira, with consumer loan growth of 19 percent.


Read more at Reuters.com Market News

Citigroup sees subprime losses at Fannie, Freddie

(Reuters) - Citigroup, in the report published on Thursday, estimates
that the two companies' retained portfolios contain $182
billion of subprime bonds, almost all of which are rated
triple-A, based on public disclosure by Fannie Mae and
Freddie Mac and their regulator, the Office of Federal
Housing Enterprise Oversight,.




Fannie Mae and Freddie Mac have exposure to over $3
trillion in mortgages due to their guarantee portfolios and
$1.4 trillion in their retained portfolios, but the vast
majority of this exposure is prime mortgages, Citigroup said.


Read more at Reuters.com Bonds News

U.S. Stocks Rebound After Economy Grows More Than Forecast; Banks Advance

(Bloomberg) -- U.S. stocks rebounded from the
biggest declines since February and bank shares climbed from a
10-month low after a government report showed the economy grew
at the fastest pace in more than a year last quarter.

Citigroup Inc., Bank of America Corp. and JPMorgan Chase &
Co., the largest U.S. banks, advanced. Chevron Corp., the
second-biggest U.S. oil company, gained after it said earnings
rose as profit margins improved on gasoline and other fuels.
Ford Motor Co. advanced on an upgrade by Merrill Lynch & Co.
after the second-biggest U.S. automaker reported its first
profit in eight quarters.


Read more at Bloomberg Stocks News

U.S. Stock-Index Futures Fall; Citigroup Drops, Google Tumbles in Europe

(Bloomberg) -- U.S. stock-index futures fell before
Citigroup Inc., the world's biggest financial-services firm, and
Caterpillar Inc., the world's largest maker of earthmoving
equipment, report quarterly earnings.

Citigroup and Caterpillar shares declined in Europe. Google
Inc. tumbled after rising costs at the world's most-popular
Internet-search engine caused second-quarter profit to miss
analysts' estimates.


Read more at Bloomberg Stocks News