venerdì 28 settembre 2012

Sterling dips vs euro as Spain budget soothes market

The euro edged higher against sterling on Friday after investors gave a cautious welcome to Spain's 2013 draft budget, although gains were expected to be capped by uncertainty over when the country may ask for a bailout.
Analysts said a European Union annual farm subsidy to the UK, expected to be transferred later in the session, would also limit euro strength versus the pound. The subsidy could see around 3 billion euros ($3.85 billion) of flows into Britain.
The euro rose 0.2 percent to 79.64 pence, moving away from a three-week low of 79.23 pence hit on Thursday.
With no UK data scheduled for Friday market players said moves in sterling would be driven by events in the euro zone and broader investor appetite to take on risk.
"For today the market is giving Spain the benefit of the doubt. The backdrop is slightly supportive for risk," said Chris Turner, head of FX strategy at ING.
Spain unveiled a 2013 budget based on spending cuts that many saw as an effort to pre-empt the likely conditions of an international bailout.
Many market players said a Spanish bailout request would be seen as a positive for the euro and other perceived riskier currencies, as it would allow the European Central Bank to start buying the country's bonds and lower borrowing costs.
Investors were also looking ahead to the results of an audit on the recapitalisation needs of Spanish banks, that could knock the euro if banks' funding needs are much bigger than anticipated.
Citi analysts said the EU farm subsidy payment was likely to have been priced into euro/sterling, meaning there was limited scope for the pound to push significantly higher.
"We suspect that euro/sterling downside maybe less pronounced in the very near term especially given that the market has moved in anticipation of more euro/sterling weakness ahead," they said in a note.
A slight improvement in recent UK data helped support sterling, after second quarter UK gross domestic product was revised higher on Thursday to show 0.4 percent contraction, up from an original estimate of 0.7 percent contraction.
Investors will focus on UK PMI surveys next week to gauge the likelihood of the economy emerging from recession.
"The UK economic outlook has been picking up very mildly and sterling looks the best of a bad bunch among the G4 currencies," said ING's Turner.
Sterling rose 0.1 percent against the dollar to $1.6241 but held below last week's 13-month high of $1.6310.
Technical strategists said a break above that level could see sterling rally towards $1.65, near the top end of the range roughly between $1.52 and $1.66 that it has traded in since mid-2011.
The sterling trade-weighted index was steady at 84.7. A move above there would out the index at its strongest level in nearly four years.

Stock index futures point slightly higher

European shares rose on Friday, led by Spanish blue-chips after the country's crisis budget raised expectations it would apply for a sovereign bailout.
Japan's Nikkei .N225 average hit a two-week closing low as concerns about falling revenues for Japanese companies in China outweighed optimism over Spain's new economic reform plans.
Spain was set to remain in focus on Friday as Spanish banks learn from an audit the extent of the damage from the collapse of a real estate boom and Moody's publishes a review of the country's credit rating, possibly downgrading it to junk status.
The U.S. Commerce Dept releases August personal income and consumption data at 1230 GMT. Economists in a Reuters survey expect a 0.2 percent rise in income and a 0.5 percent increase in spending. In July, income rose 0.3 percent and spending was up 0.4 percent.
The Institute of Supply Management in Chicago publishes its September index of manufacturing activity at 1345 GMT. The index is seen at 53.0, a repeat of the August reading.
Thomson Reuters and the University of Michigan release their final September consumer sentiment index at 1355 GMT. It is expected to come in at 79.0, compared with 79.2 in the preliminary September report.
Apple's (AAPL.O) competitor Research In Motion (RIM.TO) reported a narrower-than-expected loss on Thursday. The struggling BlackBerry maker bolstered its cash reserves, sparking optimism ahead of the launch of its make-or-break line of next-generation smartphones.
Groupon Inc (GRPN.O), the world's largest online daily deals provider, is reshuffling senior management roles in an attempt to fix its struggling European business - a shake-up that will also include the departure of its chief of international business.
Facebook Inc (FB.O) is taking a small step toward becoming an e-commerce platform by launching a feature for users to buy and send real gifts worth as much as hundreds of dollars.
Abbott Laboratories (ABT.N) for years misstated that the executive handpicked to head its pending pharmaceutical spinoff held both bachelor's and master's degrees, and on Thursday called the misinformation "an administrative error".
Medtronic Inc (MDT.N), the world's largest stand-alone maker of medical devices, said that it will buy orthopedic device maker China Kanghui Holdings (KH.N) for $755 million to enter the Chinese medical device market.
Drugs retailer Walgreen is due to report fourth-quarter results, expected to show a decline inearnings per share to 0.56 from 0.57 one year earlier. The company lost customers and revenue after a contract dispute left it unable to fill prescriptions for Express Scripts patients.
The Dow Jones industrial average .DJI shot up 72.46 points, or 0.54 percent, to 13,485.97 on Thursday. The Standard & Poor's 500 Index .SPX rose 13.83 points, or 0.96 percent, to finish at 1,447.15. The Nasdaq Composite Index .IXIC gained 42.90 points, or 1.39 percent, to close at 3,136.60.

Euro Climbs Against Dollar on Spain; Yuan Rises

The euro advanced for a second day against the dollar after Spain’s pledge to meet its deficit target improved prospects for an international rescue that may help stem Europe’s financial turmoil.

Europe’s shared currency also appreciated for a second day against the yen after data showed German retail sales rose more than forecast in August. The dollar weakened against 14 of its 16 major counterparts before a report forecast to show consumer spending probably stagnated in August, after adjusting for inflation. China’s yuan rose to the strongest level against the dollar since the nation unified official and market exchange rates at the end of 1993.
“Optimism is on the up again, because Spain’s budget shows a willingness to compromise, and this is helping the euro,” said Carolin Hecht, a currency strategist at Commerzbank AG in Frankfurt. “In terms of sustainability of this move we see many risks, because the past has shown that Spain is likely to miss its targets.”
The euro advanced 0.2 percent to $1.2935 at 7:46 a.m. London time, trimming its weekly decline to 0.4 percent. It rose less than 0.1 percent to 100.26 yen, on track for a 1.2 percent drop over the week. The yen advanced 0.1 percent to 77.51 per dollar after earlier touching 77.44, the strongest since Sept. 13.
Europe’s 17-nation currency will end the year at $1.23, Hecht predicted, because risks, including the prospect of Spain’s credit rating being reduced to non-investment grade, or junk status, will cause it to weaken.
Moody’s Investors Service said Aug. 30 that it would probably extend its review of Spain’s credit rating, which started June 13, through the end of this month in order to get more information on support measures for the nation. Moody’s currently ranks Spain at Baa3, one step above junk.
China’s yuan rose as much as 0.3 percent to 6.2856 per dollar.

Sony to invest $644 million in Olympus, become top shareholder

In a widely flagged deal, Sony said in a release that it will hold an 11.46 percent stake after buying new shares issued by Olympus. The two companies will also look for ways to cooperate in digital cameras.
"We are aggressively pursuing the growth of our medical business, with the aim of developing it into a key pillar of our overall business portfolio," Sony's Chief Executive Kazuo Hirai said in a statement on Friday.
Sony wants to nurture new businesses as it retreats from money-losing television manufacturing, while Olympus needs cash to fix its depleted finances after an accounting scandal forced it to restate several years of earnings.
Although it fits Sony's revival strategy, some analysts have questioned the cost of the acquisition in the wake of losses, arguing that a non-capital tie up would have made more sense.
Prompted by persistent weakness in its consumer electronics division, Standard & Poor's on Tuesday cut Sony's long-term debt rating by one notch to BBB, the second-lowest investment grade.
In selecting Sony as a partner, Olympus rejected offers from medical device maker Terumo Corp (4543.T) and camera maker Fujifilm Holdings Corp (4901.T). Those two companies, which compete more directly with Olympus, were proposing closer ties than Sony.
Rocked by the accounting scandal, Olympus booked a net loss of 49 billion yen in the year to March 31.
In June, its ratio of shareholders' equity to total assets fell to 2.2 percent from 4.6 percent in March. The figure is a barometer of a company's liquidity, with the 20 percent level regarded as indicative of financial stability.
The allotment of new shares to Sony is expected to raise the ratio to 10 percent.
Sony's Hirai and Olympus's President Hiroyuki Sasa will hold a press conference in Tokyo at 0030 GMT on Monday to explain the alliance. ($1 = 77.6950 Japanese yen).

Chinese shares outperform

Asian shares outside Japan rose on Friday on optimism economic reform and budget plans unveiled by Spain will help the debt-saddled nation manage its debt imbalances, potentially pre-empting the likely conditions of international assistance.
Riskier currencies such as the Australian dollar, the euro and commodities also edged higher while the dollar remained defensive, with investors cautiously warming up to risk as Spain's latest steps could activate the European Central Bank's bond-buying plan aimed at capping Madrid's high borrowing costs.
Sentiment was buoyed by Spain's announcement on Thursday of a detailed timetable for economic reform and a budget based mostly on sharp spending cuts rather than tax hikes, as Madrid continues to talk with European Union authorities about the terms of a possible aid package.
"It's a move in the right direction because at the very least they have to meet the conditions for the ECB to buy their bonds," said Tetsuro Ii, CEO of Commons Asset Management.
A marginal rise in U.S. stock futures hinted at a steady start on Wall Street, and financial spreadbetters expect London's FTSE 100, Paris's CAC-40 and Frankfurt's DAX to open as much as 0.7 percent higher.
The MSCI index of Asia-Pacific shares outside Japan rose 0.7 percent, led by the outperformance in Chinese shares, and was set for a quarterly gain of 8.5 percent.
Hong Kong shares rose 0.3 percent and Shanghai jumped 1 percent on hopes China will take measures over the coming long holiday or ahead of the expected leadership transition as early as next month to boost the economy and support domestic stock markets.
The yen hit a two-week high against the dollar of around 77.50 yen on Friday. The dollar index measured against a basket of currencies eased 0.2 percent after losing 0.4 percent on Thursday for its biggest daily drop in two weeks.
The euro rose 0.2 percent to $1.2934, rebounding from a two-week low of $1.2828 touched on Thursday, and the Australian dollar, widely seen as a gauge for investor risk appetite, rose 0.3 percent to $1.0466.
Asian credit markets firmed, narrowing the spread on the iTraxx Asia ex-Japan investment-grade index by three basis points.
While Spain's latest move and speculation for Chinese stimulus supported market sentiment on Friday, they also represented vulnerability in the efforts to resolve the euro zone debt crisis and the global economies hit by Europe's woes.
Reflecting choppy market sentiment, the CBOE Volatility index which measures volatility expected in the Standard & Poor's 500 index fell 11.7 percent on Thursday fo r its sharpest daily decline in three weeks, just a day after the index posted its biggest daily rise in 2-1/2 weeks.
"The budget represents two steps forward and one step back, which is why the euro only moved slightly higher," said Mary Nicola, a strategist at BNP Paribas.
Later on Friday, a stress test of Spain's banking sector will be released, which will reveal how much more money is needed to recapitalise its banks. Moody's latest credit rating review is also expected this week.
Shares in Australia, heavily reliant on resources demand from China, inched up 0.2 percent, but were capped on concerns over the economic weakness in the world's second-largest economy, with Fitch Ratings cutting its 2012 growth forecast for China from 8 percent to 7.8 percent on Friday.
"There are a lot of people out there who are very concerned about whether or not the stimulus in China is real or coming through," said Damien Boey, an equity strategist at Credit Suisse.
Japan's Nikkei stock average bucked the rest of Asia and slumped 1 percent amid concerns about falling revenues for local companies in China, hit by recent anti-Japan protests.
Following fresh monetary stimulus unveiled by the United States and Japan this month, markets have retained expectations for China to cut interest rates to spur growth, as weakening demand in China has damaged global economies and weighed on investor sentiment.
Data on Friday showed Japan's industrial output fell more than expected in August as the world's third-largest economy was held back by a strong yen, the euro zone debt crisis and a slowdown in its top export market China.
Thailand, Southeast Asia's second-largest economy, also saw factory output in August falling a bigger-than expected 11.32 percent from a year earlier as faltering global demand weighed, raising the chances for an interest rate cut.
Beijing approved about $150 billion-worth of infrastructure projects this month.
But China's biggest listed steelmaker, Baoshan Iron & Steel Co expressed doubt that attempts to prop up the slowing economy would revive demand in the world's biggest market for the metal. A slump in iron ore prices had triggered a broad sell-off in riskier assets.
Brent crude futures rose 0.3 percent to 112.36 a barrel, as Spain eased investor worries about Europe's fiscal crisis and revived hopes of a recovery in oil demand growth. Worries about supplies from the Middle East also provided support. U.S. crude was up 0.5 percent to $92.32.

European Stocks Rise

European stocks opened higher Friday after Spain's 2013 budget announcement and ahead of the results of an independent stress test on the nation's banks.
London's FTSE 100 opened 0.3% higher, Germany's DAX gained 0.5% and France's CAC-40 rose 0.5%.
The Spanish government's 2013 budget plan includes severe cuts and reforms, making a European bailout more likely. The government said that the draft budget would cut overall spending by €40 billion ($51.65 billion).
"With the Spanish budget paving the way for an official bailout request, renewed concern about the euro-zone crisis has eased," Crédit Agricole Corporate & Investment Bank said in a note to clients.
European Commissioner for Economic and Monetary Affairs, Olli Rehn, said Madrid's budget was a major step toward recovery, that in some ways, goes beyond what the group has recommended.
"With the conditionality uncertainty now out of the way, the unanswered questions pertain mainly to the timing of any forthcoming bailout request and the political machinations required for a request for aide to come through," Crédit Agricole said. "A possible sequencing would be: the European Commission and the ECB send an official message welcoming the measures; Spain makes a formal request for a light package; a memorandum of understanding is signed; Outright Monetary Transactions are activated."
But Spain still has a hurdle to overcome Friday, with the results of the independent bank stress tests due. According to recent press reports, the audit is expected to show a capital shortfall of about €60 billion.
Greece will also be in focus, after its coalition partners Thursday reached a deal on a multibillion-euro austerity plan demanded by its international creditors. The package, which still has some details outstanding, now has to get the approval from creditors and Parliament.
Meanwhile, in France, the government will present a budget with €10 billion of cuts and €20 billion of tax increases, aimed at bringing the deficit down to 3% of gross domestic product in 2013, from a projected 4.5% this year.
On the data front, the flash estimate of euro-area inflation for September is due at 0400 ET. In the U.S., personal income and spending figures are at 0830 ET, Chicago PMI is at 0945 ET and University of Michigan confidence is at 0955 ET.
In Asia, markets were mostly higher Friday. Japan's Nikkei was down 0.9%, but Hong Kong's Hang Seng Index was up 0.3%, Australia's S&P/ASX 200 and South Korea's Kospi Composite were both up 0.2%, and the Shanghai Composite added 1%.
In currency markets, the euro was a touch higher against the dollar and early Friday was fetching $1.2927 from $1.2918 late Thursday in New York. The dollar was at ¥77.49 from ¥77.60.
November Nymex crude oil futures were up $0.47 at $92.32 per barrel and the November Brent oil contract was up $0.36 at $112.37. Spot gold was up $3.90 at $1,781.30.

giovedì 27 settembre 2012

Ex-Credit Suisse trader Kareem Serageldin arrested in Britain

A former Credit Suisse executive wanted in the U.S. on fraud charges linked to distorting the value of mortgage securities during the financial crisis has been arrested in Britain, authorities said Thursday.
U.S. Federal prosecutors have alleged that Kareem Serageldin conspired with two of his employees to hide the deteriorating condition of the U.S. housing market in 2007 in order to keep the value of bonds based on subprime mortgages artificially high, thereby fattening their bonuses.
He was slated to receive more than $7 million in compensation in 2007 before the company learned about the alleged fraud and withheld $5.2 million of his pay. The fraud, which prosecutors described earlier this year as "a tale of greed run amok," was blamed as responsible for a portion of the $2.65 billion write-down Credit Suisse announced in March 2008.
Serageldin — Credit Suisse's former managing director and global head of structured credit — has been charged with conspiracy, falsifying books and records, and wire fraud in the U.S. The charges carry a potential penalty of 45 years in prison.
Two other Credit Suisse traders pleaded guilty to conspiracy charges in cooperation deals with prosecutors in February. At the time, U.S. prosecutors urged Serageldin, an American citizen living in England, to return to the U.S. and answer the charges against him.
Scotland Yard confirmed that Serageldin, 39, was taken into custody on Wednesday.
Extradition proceedings against him will begin Thursday at London's Westminster Magistrates' Court.
The subprime mortgage crisis fueled the financial meltdown in the fall of 2008 that pushed the U.S. into the most severe recession since the Great Depression of the 1930s.
U.S. federal regulators have brought civil charges against several big Wall Street firms accused of misleading investors about securities linked to risky mortgages in the years leading up to the financial crisis. The biggest settlement of the Securities and Exchange Commission's charges was with Goldman Sachs in July 2010. The firm agreed to pay $550 million.
Most of the government's cases related to banks' handling of mortgage securities in the run-up to the financial crisis have been civil proceedings, not criminal. All the cases have involved complex investments called collateralized debt obligations, securities that are backed by pools of other assets, such as mortgages.

H and M misses profit forecasts, delays U.S. online launch

The world's second-biggest clothing retailer Hennes and Mauritz missed profit forecasts on Thursday, as grim economic conditions and a heatwave kept shoppers away and expensive currency transactions hit margins in the third quarter.
H and M said it would postpone the launch of online services in the United States, the world's largest online market, until mid-2013. The group had previously planned the launch for this autumn. But it said it would press on with plans for a higher-priced alternative range in its shops.
Pretax earnings were 4.90 billion crowns ($740 million) in H and M's third quarter, which runs from June to August, compared with a year-ago 4.85 billion crowns and a mean forecast for 5.37 billion in a Reuters poll of analysts.
The group continued to gain market share, but gross margin fell to 58.2 percent, below the same quarter last year and shy of analysts' forecasts.
In Europe, where H and M has the largest part of its business, many retailers are struggling as consumers curb spending faced with rising unemployment and cuts in government support. This year unusually hot August weather made them even less inclined to spend on new lines of autumn wear.
For H and M those difficulties were exacerbated by expansion costs - it plans to open 300 new stores this year - and complicated currency swings. It makes most of its purchases in relatively strong U.S. dollars, sells mainly in weak euros, and then has to translate it all back into the Swedish crown, which has surged this year.
"We all knew that the strengthened dollar was bad for the sourcing in Asia and that inflation in Asia is bad for H and M's gross margin, but this hit harder than I expected," said Sydbank analyst Nicolaj Jeppesen.
Espirito Santo Investment Bank analyst Caroline Gulliver said: "The gross margin benefits H and M has achieved through the past decade, from shifting sourcing to lower cost countries, have now come to an end."
Total sales in the Sept. 1-25 period, the beginning of the group's fiscal fourth quarter, rose by 14 percent in local currencies.
H and M shares, which have gained some 7 percent this year, were down 5.2 percent at 0851 GMT, underperforming a 1.2 percent fall on the STOXX Europe 600 retail index.
However the retailer confirmed it would press ahead with the launch of a new concept, called "and Other stories", a higher priced range which targets women and will sell a broad selection of clothes, shoes and accessories.
The project is seen an effort to keep up with its largest rival Spain's Inditex, which runs the Zara chain and last week beat first-half profit forecasts. Inditex has more than twice the number of stores and has been successful at operating several different store concepts.
While many retailers have felt the pinch from the global economic downturn, H and M and Inditex have up to now fared better than most thanks to their focus on cheap fashion and a broad geographic presence that includes faster-growing emerging markets. H and M has more than 2,600 stores across 44 markets.
"Conditions in the fashion retail industry continued to be challenging in many markets - both as regards the weather and the macro-economic climate," H and M's CEO Karl-Johan Persson said, but added: "We see significant opportunities for continued growth both in stores and online."

Peregrine Pharma shares fall on capital woes

Peregrine Pharmaceuticals Inc (PPHM.O) said it has capital to fund its operations until April as it was forced to pay off a loan after it reported errors in data from a lung cancer study, sending its shares down as much as 15 percent in extended trade.
Its lenders deemed the company in default after Peregrine said on Monday that positive results reported earlier this month from the study contained major discrepancies, shocking investors and driving its shares down.
In a regulatory filing, Peregrine said its lenders demanded payment of the outstanding principal amount of $15 million and accrued interest under a loan agreement dated August 30, 2012.
The company had $18.99 million in cash and cash equivalents as of July 31, 2012.
Peregrine said it repaid the loan in full and its funds would last through the fourth quarter of its fiscal year 2013, unless it raises additional capital.
Peregrine's shares closed at $1.66 on Wednesday on the Nasdaq, but fell to $1.41 after the bell.

mercoledì 26 settembre 2012

Crude Oil Future Slips in Asia on EU Concerns, High Stocks

Crude-oil futures slipped in Asia Wednesday, with developments in Europe, surplus oil stocks and the likelihood of global oil demand weakening further weighing on prices.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in November traded at $90.89 a barrel at 0542 GMT, down $0.48 in the Globex electronic session. November Brent crude on London's ICE Futures exchange fell $0.52 to $109.93 a barrel.
Nymex crude tracked a broader decline in U.S. stock markets overnight, after Federal Reserve Bank of Philadelphia President Charles Plosser said the Fed's quantitative easing measures may not help economic growth--and could damage the central bank's credibility.
In Europe, Commissioner for Economic and Monetary Affairs Olli Rehn said the euro zone has reinforced its toolkit to tackle its sovereign debt crisis, but that fiscal union can't be expected to happen overnight, and that the macroeconomic outlook is bleak.
"Expect the risk-off sentiment to prevail today amid growing doubts about the efficacy of the recent global monetary stimulus," Singapore-based OCBC Bank said in a note.
U.S. oil inventory data is due at 1430 GMT from the Energy Information Administration. Analysts surveyed by Dow Jones Newswires expect the figures to show crude-oil stocks rose 1.1 million barrels in the week ended Sept. 21.
A survey released Tuesday by the American Petroleum Institute, a trade group, showed crude-oil stocks rose by 335,000 barrels.
Markets will be watching U.S. new home sales data due at 1400 GMT, U.S. mortgage applications at 1100 GMT and Germany's consumer price index at 1200 GMT.
Geopolitical tensions continue to provide some support for crude. Addressing the UN General Assembly, President Barack Obama Tuesday said the U.S. will do what it must to ensure Iran doesn't obtain a nuclear weapon, but didn't outline any specific new steps.
Meanwhile, European Union member states are discussing a United Kingdom proposal for a complete asset freeze on Iran's central bank, according to two EU diplomats.
Nymex reformulated gasoline blendstock for October--the benchmark gasoline contract--rose 266 points to $2.9937 a gallon, while October heating oil traded at $3.0952, 134 points lower.
ICE gasoil for October changed hands at $969.50 a metric ton, down $7.75 from Tuesday's settlement.

U.S. probe of HSBC tangled up in bureaucracy, infighting

In the second half of 2010, a senior federal prosecutor in West Virginia drafted an impassioned plea to his bosses in Washington to end infighting as multiple government agencies pursued a high-stakes investigation of HSBC Holdings Plc.
William Ihlenfeld II had been fighting a losing battle against fellow prosecutors in Washington and Brooklyn, who were jointly conducting a parallel probe into the British bank's controls over illicit transactions.
Ihlenfeld, the U.S. Attorney in Wheeling, West Virginia, said in the draft letter, a copy of which has been seen by Reuters, that there had been a breakdown in the relationship, and his office had been told to stand down in June 2010 by the Department of Justice, just as they were preparing to indict the bank for as many as 175 counts of money laundering.
An earlier mediation had failed. So for the first time in 30 years, Ihlenfeld said his office was seeking an arbitration of such a dispute.
"We have made several offers to amicably settle this dispute by dividing the investigation in a way that guaranteed the two investigations would never interfere with each other," Ihlenfeld wrote. "Despite our best effort, all of our offers have been categorically rejected. None of our proposals has even induced a counter-offer."
"As a general proposition, there is no reason why the professionals from different DOJ components cannot work together for the common good," Ihlenfeld wrote in the letter addressed to Gary Grindler, then the acting deputy attorney general. "This particular situation is no exception."
It is not clear whether Ihlenfeld ultimately sent the letter or whether the Department of Justice agreed to arbitrate the dispute. But the draft provides a rare insight into the secret world of prosecutors, and sheds new light on a large and complex U.S. investigation that some two years later may lead to a settlement of more than $1 billion with HSBC.
At least 11 different U.S. departments, offices and regulators - largely comprising the two competing groups - as well as the U.S. Senate have probed HSBC for money-laundering lapses in investigations that date back to at least 2007.
Ihlenfeld's letter, other Department of Justice documents, regulatory filings and interviews with those close to the HSBC prosecution show how multiple - and sometimes overlapping - inquiries have slowed the prosecution and added to costs, as well as led to rancor within the department and between different government agencies.
They also underscore the problems the government faces in policing global banks such as HSBC that can enable a wide range of illicit transactions -- from small-time fraud to laundering of tens of billions of dollars for drug cartels and countries that are the subject of U.S. sanctions, such as Iran.
At one point, for example, a U.S. prosecutor in West Virginia was forced to explain to HSBC that dual Justice Department probes were not duplicative, according to a letter from the prosecutor to the bank's lawyer.
Such strife among different government agencies has surfaced in other complex investigations. In August, New York State bank regulator Benjamin Lawsky drew the ire of federal agencies when he independently pursued a $340 million settlement with another British bank, Standard Chartered Plc, rather than being part of an ongoing federal probe.
It is all at least partially due to a heightened effort by U.S. and state regulators to crack down on money laundering. Besides HSBC and Standard Chartered, a series of global banks including JPMorgan Chase & Co and Citigroup Inc have faced investigations into lapses related to money laundering.
A Department of Justice spokesman said in an emailed statement that the department continues to "aggressively pursue" the HSBC probe "in coordination with its internal components and external partners."
"Financial investigations, by their nature, are complex and time consuming," spokesman Dean Boyd wrote. "The department's track record in bringing successful enforcement actions in the banking industry speaks for itself, and has had a significant, positive impact on banking industry practices."
Spokespeople for the federal prosecutors in Brooklyn and West Virginia, as well as the other government agencies mentioned in this article declined to comment.
An HSBC spokesman also declined comment.
Prosecutors in Ihlenfeld's office had been working since at least December 2008 on the case, which originated with an investigation of a local doctor's use of HSBC accounts to move $3 million tied to Medicare fraud, according to the letter.
But as the investigators looked deeper, they realized the case was merely "the tip of the iceberg", Ihlenfeld wrote.
Prosecutors in West Virginia had been working with two units of the Treasury Department - the Internal Revenue Service's Criminal Investigation arm and the Financial Crimes Enforcement Network (Fincen), which enforces anti-money laundering laws.
Brooklyn prosecutors, meanwhile, had aligned with the more powerful Washington-based Asset Forfeiture and Money Laundering Section of the Department of Justice. Investigators in that enterprise also included the Drug Enforcement Administration and the Immigration and Customs Enforcement, a unit of the Department of Homeland Security.
The Asset Forfeiture unit had the power to veto any proposed money laundering indictment or settlement with HSBC, according to the letter.
Ihlenfeld touted the support of his own team, the IRS and Fincen, describing the agencies' investigators as "the best of the best when it comes to paper cases."
He also wrote that his office was much further along in the investigation, arguing that his group had devoted well over 5,543 hours to the investigation.
In one swipe at Brooklyn prosecutors, Ihlenfeld wrote that they did not realize that HSBC operated a bulk cash processing center "within walking distance" of their offices until West Virginia prosecutors pointed it out to them during the mediation.
He wrote that on March 24, 2010, the top prosecutor in Brooklyn had said that their investigation was "just starting".
"Even if DOJ's budget was unlimited, it would be wasteful for" the competing group to replicate what was already a successful investigation, he wrote.
In the end, Ihlenfeld did not win the battle. Prosecutors, including those in Washington, now oversee the probe, which is still ongoing.
For HSBC, after more than five years of investigation, a final settlement may be approaching. The bank has already set aside $700 million to cover those costs, and said in a regulatory filing in July that they could be "significantly higher".

Euro zone worries send shares lower

The market's focus was on Spain and Greece: protesters clashed with police in Madrid on Tuesday as the government prepared to unveil its 2013 budget on Thursday; and Greeks held a general strike as ministers sought to renegotiate a bailout.
The worries over a worsening in the euro zone's financial crisis have contributed to a sharp rise in volatility on equity markets, leading to the worst day since June for the S&P 500 index on Tuesday and subsequent falls across Asia.
"With the demonstrations in Madrid on Tuesday, the euro zone crisis is intensifying again, and this had an immediate impact on U.S. indexes last night," FXCM analyst Nicolas Cheron said.
Also fuelling negative sentiment, Philadelphia Fed President Charles Plosser said on Tuesday that the Fed's latest monetary stimulus will not do much to boost economic growth or lower unemployment and raises the risk of longer-run inflation.
As a result the MSCI world equity index was down 0.7 percent at 332.70 points with Europe's blue chip STOXX 50 opening one percent lower, led by falls in Spanish, Italian and French markets.
The single currency lost 0.3 percent to $1.2863, having dipped to $1.2856 at one point, its lowest level in two weeks.
Borrowing costs for Italy and Spain were also rising sharply after Italian Prime Minister Mario Monti said he would not run in an election due next year. Spain's prime minister, Mariano Rajoy, also said he would seek an international rescue package - but only if debt financing costs remained too high for too long.
Italian 10-year bond yields were up 9 basis points to 5.2 percent, and equivalent Spanish yields rose 12 basis points to 5.89 percent.

Vitol trades Iranian fuel oil, skirting sanctions

Vitol, the world's largest oil trader, is buying and selling Iranian fuel oil, undermining Western efforts to choke the flow of petrodollars to Tehran and put pressure on Iran's suspected nuclear weapons program.
Vitol last month bought 2 million barrels of fuel oil, used for power generation, from Iran and offered it to Chinese traders, Reuters established in interviews with 10 oil trading, industry and shipping sources in Southeast Asia, China and the Middle East. A spokesman for Vitol declined to comment.
Swiss-based Vitol is not obliged to comply with a ban imposed in July by the European Union on trading oil with Iran because Switzerland decided not to match EU and U.S. sanctions against Tehran.
The company earlier in the year stopped trading Iranian crude oil from its main European offices before the July 1 EU embargo deadline. But the trading sources said it has continued to deal in Iranian fuel oil from the Middle East.
The tale of the cargo of Iranian fuel oil involves tanker tracking systems being switched off, two ship-to-ship transfers, and blending of the oil with fuel from another source to alter the cargo's physical specification.
Privately-held Vitol SA is led by its long-time CEO Ian Taylor, a Briton. Taylor was among leading donors to Britain's ruling Conservative Party named in March by the Prime Minister's office as having dined with David Cameron at his private apartment in Downing Street amid the fall-out from a "cash for access" party funding scandal. Britain is a vociferous critic of Tehran's nuclear program and a leading advocate of the EU sanctions.
Vitol has said previously it is in compliance with sanctions against Iran, but has declined to say whether or not it would follow the strict EU regulations rather than Switzerland's.
Rival Swiss-based traders Glencore and Trafigura said in July they had halted all Iranian oil trade, even though the Swiss government opted against following measures imposed by Washington and Brussels.
The measures have halved OPEC member Iran's crude oil export revenues, devaluing the rial currency and bringing financial hardship to millions of Iranians.
On top of the EU ban, Iran's four biggest oil buyers - China, India, Japan and South Korea - have reduced their imports by at least a fifth to secure exemptions from the threat of U.S. financial sanctions on their companies.
Vitol last year earned record revenue of $297 billion, a near-five-fold increase since 2004. It does not reveal profits.
Fuel oil is a small part of its trading portfolio, accounting for $24 billion of revenue last year compared to $105 billion from crude and $100 billion from other refined products.
Profit margins on oil trade are typically very low, but traders said Iran's difficulties in finding buyers because of sanctions are likely to have made for a fat profit margin for trading its fuel oil.
Vitol acquired the Iranian fuel oil early this month in a ship-to-ship transfer off Malaysia from a National Iranian Tanker Company (NITC) vessel, the Leadership, onto a Vitol-chartered tanker, the Ticen Ocean.
The Ticen Ocean was sub-contracted by Vitol for floating storage off the Malaysian port of Tanjung Pelepas from Titan Petrochemicals, a Hong Kong company which itself hired it from shipowner Frontline of Norway.
Frontline said Titan had told it the ship was not used to store Iranian oil. "Our only counterpart in this matter is Titan and they have said it is not correct that there has been Iranian oil on the boat," said Frontline CEO Jens Martin Jensen.
Titan did not return calls or emails seeking comment.
The Leadership left Iran's main oil export terminal at Kharg Island during the week of August 23, passing through the Strait of Malacca before disappearing from freight tracking systems off the Malaysian coast on September 4. Since sanctions were imposed, Iranian vessels have frequently switched off the onboard 'black-box' transponders used in the shipping industry to monitor vessel movements.
Industry sources in Tanjung Pelepas who monitor shipping transfer operations in Malaysian waters said Vitol later brought alongside another tanker, the Speranza, to replace the Ticen Ocean as floating storage. The Speranza, owned by China's Sino Shipping Holdings, arrived at Tanjung Pelepas on September 13-14, Reuters data shows.
Vitol also transferred some of its fuel oil from the Ticen Ocean between September 11-12 to another vessel, the Kamari I, according to Reuters data. That cargo was delivered to Vitol's storage terminal on the Malaysian island of Tanjung Bin, inside Tanjung Pelepas port, one trading source said.
Traders said the company then blended the oil in storage with fuel oil sourced from Europe, calling it a "special blend" and offered it to Chinese traders. Reuters was given a copy of the specifications of the cargo on offer.
Vitol first asked a $30 premium to Singapore's benchmark 180-centistoke fuel oil price, said a Chinese industry executive who manages some of China's many small, independent refineries, known as teapots. That would have valued the 2-million-barrel cargo at about $250 million.
"Because the offer was too high, our people didn't really carry on the talks," the Chinese executive said. "Vitol also appeared not in a hurry to sell, so was not being aggressive."
Two Asian refinery buyers who were then offered the oil said the asking price was cut to a $12-$14 premium to Singapore benchmark prices, or around $175 million in total.
"Vitol is offering the cargo as a special blend to teapot refiners in Shandong," said a China-based trader. "No one's agreed to buy the Vitol cargo. I declined because I wasn't sure of the quality and specifications."
At the time of publication it is not known whether Vitol had agreed a deal to sell the oil.
Vitol's use of the Ticen Ocean to store Iranian oil could put the tanker's insurance at risk. The vessel is insured by the North of England P&I Association.
The EU's oil embargo bans EU insurers who underwrite around 90 percent of the world's tanker fleet from providing cover for ships carrying Iranian oil.
Mike Salthouse, director of North Insurance Management, which acts as manager for the North of England P&I Association, said it would not provide cover for tankers storing or transporting Iranian oil.
"We would not expect to continue to insure any fleet actively engaged in this trade," he said, but declined comment specifically on the Ticen Ocean.