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US Regulators Shut Three more Banks

SAN FRANCISCO - Regulators seized banks in Illinois, Utah and Minnesota as lenders continue to show signs of weakness amid indications the US economy is recovering from the worst economic crisis since the Great Depression.

The Federal Deposit Insurance Corp. was named receiver for three banks shuttered by state regulators: Town Community Bank and Trust, of Antioch, Illinois; St. Stephen State Bank of St. Stephen, Minnesota; and Barnes Banking Co. of Kaysville, Utah.

The regulator agreed to share losses on $56.2 million of Town Community Bank assets with First American Bank, of Elk Grove Village, Illinois, which assumed the failed lender’s deposits. The FDIC also agreed to share losses on $20.4 million of St. Stephen State Bank assets with First State Bank of St. Joseph, of St. Joseph, Minnesota. The agency created a bridge bank to hold Barnes deposits.

The closings will drain $296.3 million from the FDIC’s deposit insurance fund, which fell into a deficit in the third quarter of last year. The agency in November decided to require banks to prepay three years of premiums with the goal of raising an estimated $45 billion for the fund.

The FDIC, which is anticipating bank failures will cost the insurance fund $100 billion through 2013, in December increased its 2010 budget by 56 per cent to $4 billion to help manage shutdowns. More than 170 banks have failed since 2007. Today’s closings bring the 2010 tally to four. — Bloomberg

Production in the US rose for a sixth consecutive month, consumers gained confidence and price increases slowed, indicating the economic recovery is being sustained, according to Federal Reserve figures and other reports.

US lenders, meanwhile, are buckling under loans tied to commercial real estate, which is plummeting in value. Prices have dropped 44 per cent from their October 2007 peak, according to the Moody’s/REAL Commercial Property Price Index. — Bloomberg

Aramex and Oman’s Firm in Partnership Deal

MUSCAT - Aramex, a Dubai-based global logistics and transportation solutions provider, reiterated its ambitious plans on Saturday to expand across the MENA region with a joint venture deal with a leading Omani business house.

It said its new partnership with Zubair Corporation, or Z-Corp, would offer businesses in Oman integrated services such as warehousing and distribution, sea, air and ground transportation, freight forwarding and customs brokerage. Z-Corp will outsource significant warehousing and logistics portfolio needs to Aramex.

Top officials from both sides said the new company would cater to a wide range of industries, including telecommunications, FMCG, military, retail and IT. A state-of-the-art logistics centre will be built in Oman as part of the agreement, the first phase of which will be completed in early 2011.

The facility, to be located near the Nasseem Garden area of Barka on the outskirts of Muscat, will be a ŒLeadership in Energy and Environmental Design’ (LEED) certified building.

“This agreement with Z-Corp marks an important step towards expanding the range and depth of our services in Oman while expanding our supply-chain solutions network across the MENA,” Fadi Ghandour, Founder and CEO of Aramex, said before signing the pact with Rashad bin Mohammed Al Zubair, Vice-Chairman of Z-Corp.

“As one of the leading diversified business groups in Oman, Z-Corp has complex and demanding logistics and supply chain requirements,” said Zubair. “It was vital for us to partner with a flexible and adaptable service provider with a global foot print capable of delivering customised supply chain solutions yet compliant to best practices.”

Later, addressing a news conference, Ghandour said the new tie-up was proof of Muscat’s growing prominence as a regional logistics and supply chain hub. “This is the first of a series of such ventures we are planning across the region,” he added. — Our Correspondent

Ghandour said Aramex’ performance in 2009 exceeded its expectations despite the global financial crisis. Although revenues in the first three quarters of the year fell by 10 per cent, the net income rose by 24 per cent, he added. One of the key reasons for the good show, he underlined, was that the company had “very little debt”.

He also noted that apart from the real estate sector the Gulf in general had escaped relatively unscathed from the economic meltdown, stressing that the GCC was the only region in the world that did not report a negative GDP growth.

ravindranath@khaleejtimes.com