Money world

A year ago, ABN AMRO was at the center of a fiercely fought $100 billion takeover battle. Now the Dutch bank’s new owner Fortis is struggling to find a buyer for ABN at a knock-down price.

Partly-nationalized Belgian-Dutch bank Fortis is hoping to sell ABN for 10 billion to 12 billion euros ($14.3-$17.2 billion), but analysts estimate that the Dutch bank is more likely to fetch between 6 billion and 8 billion euros.

ING had come closest to buying ABN AMRO, sources familiar with discussions have said, but walked away on Monday because a deal would not meet its “financial requirements.”

Fortis put ABN up for sale as part of its rescue deal with Benelux governments on Sunday.

The other potential buyers were unlisted Dutch rival Rabobank and BNP Paribas, and both were approached, sources familiar with the weekend’s emergency government talks said.

Analysts say other possible buyers include Deutsche Bank, Royal Bank of Scotland and Spain’s Santander http://us-no-fax-payday-loans.com. The latter two partnered Fortis last year in a consortium to buy ABN and carve it up.

Barclays, which lost its bid for ABN last year, has also been cited as a possible buyer, but that is seen unlikely after its purchase of Lehman’s U.S. broker-dealer operations and as rival RBS took the ABN wholesale operations it once coveted.

“The obvious buyer really was ING,” said JPMorgan Securities analyst Duncan Russell. “The only to reason to buy it is if you’ve got synergies.” 

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WASHINGTON – Key lawmakers who struck a post-midnight deal on a $700 billion (dollar figures U.S.) bailout for the financial industry predicted Sunday it would pass Congress, putting in place the largest government intervention in markets since the Great Depression.

Flexing its political muscle, Congress insisted on a package that gives lawmakers a stronger hand in controlling the money than the Bush administration had wanted. The rescue plan casts Washington’s long shadow over Wall Street with the federal government taking over huge amounts of devalued assets from beleaguered financial firms in exchange for more oversight.

Under the plan, lawmakers could block half the money and force the president to jump through some hoops before using it all. The government could get at $250 billion immediately, $100 billion more if the president certified it was necessary, and the last $350 billion with a separate certification – and subject to a congressional resolution of disapproval.

Still, the resolution could be vetoed by the president, meaning it would take extra-large congressional majorities to stop it.

The proposal is designed to end a vicious downward spiral that has battered all levels of the economy, in which hundreds of billions of dollars in investments based on mortgages gone bad have cramped banks’ willingness to lend.

Lawmakers had to navigate between angry voters – many of whom view the plan as a rescue package for the wealthy on Wall Street – and Bush administration officials who warned that inaction would cause the economy to seize up and spiral into recession.

Negotiators sought Sunday to iron out the final shape of the legislation, which House Republicans still had to review. It was their fierce opposition to a federal rescue that nearly torpedoed an emerging bipartisan pact late in the week.

But officials in both parties were hopeful for a House vote Monday, and the two presidential candidates said they probably would support it.

"This is the bottom line: If we do not do this, the trauma, the chaos and the disruption to everyday Americans’ lives will be overwhelming, and that’s a price we can’t afford to risk paying," Sen. Judd Gregg, the chief Senate Republican in the talks, told The Associated Press on Sunday. "I do think we’ll be able to pass it, and it will be a bipartisan vote."

A breakthrough came when Democrats agreed to incorporate a GOP demand – letting the government insure some bad home loans rather than buy them – designed to limit the amount of federal money used in the rescue.

Another important bargain, vital to attracting support from centrist Democrats and Republicans who are fiscal hawks, would require that the government, after five years, submit a plan to Congress on how to recoup any losses.

The presidential nominees came behind the outlines of the bailout.

"This is something that all of us will swallow hard and go forward with," said Republican Sen payday loans in 1 hour. John McCain of Arizona. "The option of doing nothing is simply not an acceptable option."

His Democratic rival, Illinois Sen. Barack Obama, sought credit for taxpayer safeguards added to the initial proposal from the Bush administration. "I was pushing very hard and involved in shaping those provisions," he said.

House Republicans said they’re still reviewing the plan.

"We are not ready to say that a deal is done," Rep. Eric Cantor, R-Va.

Congressional leaders announced a tentative deal in the early hours of Sunday morning after marathon negotiations at the Capitol.

"We’ve still got more to do to finalize it, but I think we’re there," said Treasury Secretary Henry Paulson, who also participated in the negotiations in the Capitol.

Executives whose companies benefit from the rescue could not get "golden parachutes" and would see their pay packages limited.

The government would receive stock warrants in return for the bailout relief, giving taxpayers a chance to share in financial companies’ future profits.

To help struggling homeowners, the plan requires the government to try renegotiating the bad mortgages it acquires with the aim of lowering borrowers’ monthly payments so they can keep their homes.

"Nobody got everything they wanted," said Democratic Rep. Barney Frank of Massachusetts, chairman of the House Financial Services Committee. He predicted it would pass, though not by a large majority.

Gregg, R-N.H., said he thinks taxpayers will come out as financial winners. "I don’t think we’re going to lose money, myself. We may, it’s possible, but I doubt it in the long run," he said.

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Stock markets fell sharply today as many U.S. lawmakers gave a tepid response to pleas from Federal Reserve chairman Ben Bernanke and Treasury Secretary Henry Paulson to quickly approve a US$700-billion rescue plan for financial institutions.

Paulson told the Senate Banking Committee that the bailout, which would see U.S. taxpayers buy mortgages and other risky assets, must be passed, saying the alternatives would be far worse for the economy.

"They know that this is massive in terms of its scope and the potential liability to the U.S. taxpayer is significant. But at the end of the day, what choice to we have?" observed Paul Taylor, chief investment officer at BMO Harris Private Banking.

Toronto's S&P/TSX composite index came closed down 105.44 points at 12,532.63, after commodity stocks deteriorated.

The Canadian dollar was down 0.27 of a cent to 96.5 cents US as investors took in a higher than expected reading on inflation for August.

Statistics Canada said today the annual rate of inflation hit 3.5 per cent, primarily because of higher costs for gasoline and oil. Core inflation rose to 1.7 per cent in August, from 1.5 per cent in July.

"These figures would normally be a bit unsettling for the Bank of Canada, if they didn't have much bigger fish to fry," said BMO Capital Markets economist Doug Porter.

"Don't look for any quick retreat in Canadian headline inflation in the next few months."

The TSX Venture Exchange was down 37.39 points to 1,538.6.

New York's Dow Jones industrial average gave up 161.52 points to 10,854.17 on top of Monday's 373-point tumble.

The Nasdaq composite index lost 25.64 points to 2,153.34 while the S&P 500 was off 18.87 points to 1,188.22 as Bernanke bluntly warned lawmakers they risk a recession with higher unemployment and increased home foreclosures unless they act on the bailout plan.

The uncertainty punished U.S cashadvance. financials as Bank of America lost 85 cents to US$33.30 and Washington Mutual gave back 13 cents to US$3.20.

However, the TSX financial sector were up two per cent with CIBC (TSX: CM) ahead $1.80 to $62.27 while Scotiabank (TSX: BNS) advanced $1.57 to $49.38.

Investors also closely watched oil prices after anxiety over the bailout and a short-covering rally powered crude to its biggest-ever one-day rise Monday.

The TSX energy sector was off two per cent as the November crude contract on the New York Mercantile Exchange receded $2.76 to US$106.61. Sector heavyweight EnCana (TSX: ECA) was down 84 cents to $73.36 while Suncor Energy Inc. (TSX: SWU) fell $1.35 to $48.05.

The TSX gold sector moved down 3.5 per cent as the December bullion contract in New York backed off $17.80 to US$891.20 an ounce. Goldcorp Inc. (TSX: G) gave back 78 cents to $37.11 while Barrick Gold Corp. (TSX: ABX) declined 81 cents to $38.80.

The base metals sector, which along with the energy sector has enjoyed some sharp recent gains on U.S. dollar weakness and a move into so-called hard assets, was also down 3.5 per cent with Teck Cominco Ltd. (TSX: TCK.B) losing $1.23 to $35.52 and HudBay Minerals (TSX: HBM) off 12 cents to $6.69.

Also dragging the TSX lower was Potash Corp. (TSX: POT), down $18.03 or 9.7 per cent to $167.80.

The Brookfield Residential Property Services division of Brookfield Asset Management Inc. (TSX: BAM.A) has agreed to buy GMAC Home Services, a U.S. provider of home financing, real estate brokerage and relocation services.

The price was not disclosed and Brookfield Asset shares were off eight cents to $27.84.

On the TSX, declines beat advances 973 to 561 with 219 unchanged as 404.4 million shares traded worth $7.05 billion.

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MONTREAL–Leasing company Railpool has ordered 58 Traxx electric locomotives in a deal worth at least $276 million (U.S.), not counting options for a further 80 locomotives, Bombardier Inc. said yesterday.

Bombardier Transportation, the Montreal-based company’s rail equipment division, will do the manufacturing and assembly work at several of its plants in Europe, most of them in Germany.

The delivery of the first locomotives is planned for August 2009.

The Traxx product family is designed for the transport of goods as well as passengers on national and international routes.

The final assembly of the locomotives for Railpool will take place in Kassel, Germany.

The car bodies will be produced at Bombardier’s site in Wroclaw, Poland and the bogies are to be supplied by Bombardier’s site in Siegen, Germany quick payday loans. The propulsion and controls technology and the propulsion equipment will come from the German production sites in Hennigsdorf and Mannheim.

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Sweden's government will say today that the budget surplus is set to narrow next year as it cuts taxes and increases spending to cushion the economic slowdown.

The surplus will shrink to 1.1 percent of gross domestic product and 1.6 percent of GDP in 2010 from an estimated 2.8 percent this year, according to an advance copy of the budget obtained by Bloomberg News. The government will publish it at 10 a.m. today.

“We believe the government will actually post a budget deficit of 1.3 percent in 2010,'' said Robert Bergqvist, Chief Economist at Skandinaviska Enskilda Banken AB. Economic growth will be slower and unemployment higher than the government predicts, he said.

The government will use 32 billion kronor ($4.8 billion), or about 1 percent of GDP, next year to lower income and corporate taxes and boost spending on research, schools, roads and railways. The spending plans will help maintain household spending after economic growth in the second quarter matched the slowest pace in more than 11 years.

Headline inflation, which reached its highest rate in almost 15 years in August, will accelerate to an average 3.8 percent in 2008 from 2.2 percent last year, before slowing to 2.4 percent in 2009 and 1.3 percent in 2010, the government forecast.

Total government debt will fall to 27.5 percent of GDP from 31.1 percent. By the end of 2011 it will have reached 19.2 percent, the government forecast.

The government has posted budget surpluses every month this year after cutting taxes and lowering benefit payouts to boost employment and as it sold stakes in three firms including Vin & Sprit AB, the distiller of Absolut Vodka.

It had prior to today already revealed most of its financial forecasts, including those for economic growth and unemployment. It will officially publish the budget tomorrow at 10 a.m. in Stockholm.

Last Month

The government maintained its forecast from last month that the economy will grow 1.5 percent this year, 1.3 percent in 2009 and 3.1 percent in 2010 creditreport. Unemployment will rise to 6.4 percent next year and 6.6 percent in 2010 from 6 percent in 2008.

The government will cut income taxes for the third time in as many years, taking total cuts to about 60 billion kronor, or 6.6 percent of labor taxes, since grabbing power in late 2006.

It will also cut the corporate tax to 26.3 percent from 28 percent and lower the general payroll tax by 1 percentage point from 32.4 percent in an attempt to make Sweden more business-friendly.

Lower payroll taxes will be offered employers who hire people under the age of 26. The government has already cut this tax for companies who employ certain immigrants, the disabled and people younger than 25 or older than 65.

“When it comes to the possibility of further reforms in the next few years, it's important to look at risk. The view is now that the negative risks dominate,'' the government said in the budget document.

Came to Power

Prime Minister Fredrik Reinfeldt's coalition government came to power in late 2006 after 12 consecutive years of Social Democratic rule pledging to increase employment by cutting taxes, lower benefits and making it cheaper for companies to hire staff.

It trails the three-party opposition bloc, which includes the Social Democrats, Left party and the Greens, by 8.5 percentage points, according to an opinion poll by Skop published this week. It follows the resignation of three ministers, opposition to the government's lowered sick and unemployment benefits and the proposed expansion of a controversial surveillance law.

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NEW YORK–A bankruptcy judge decided just after midnight Saturday that Lehman Brothers can sell its investment banking and trading businesses to Barclays, the first major step to wind down the nation's fourth-largest investment bank.

U.S. Bankruptcy Judge James Peck gave his decision in a courtroom packed with lawyers at the end of an eight-hour hearing, which capped a week of financial turmoil.

The deal was said to be worth $1.75 billion earlier in the week but the value was in flux after lawyers announced changes to the terms on Friday. It may now be worth closer to $1.35 billion, which includes the $960 million price tag on Lehman's Midtown Manhattan office tower.

Lehman Brothers Holdings Inc. filed the biggest bankruptcy in U.S. history Monday, after Barclays PLC declined to buy the investment bank in its entirety.

The British bank will take control of Lehman units that employ about 9,000 employees in the U.S.

"Not only is the sale a good match economically, but it will save the jobs of thousands of employees," said Lehman lawyer Harvey Miller of Weil, Gotshal & Manges.

Barclays took on a potential liability of $2.5 billion to be paid as severance, in case it decides not to keep certain Lehman employees beyond the guaranteed 90 days. But observers have said Barclays' main reason for acquiring Lehman is to get its people and presence in North America, making widespread layoffs less likely.

"It's unimaginable to me that they can run the business without people," said Lehman's financial adviser, Barry Ridings, of Lazard Ltd.

Barclays had little competition to land the deal.

Miller said that before it filed for bankruptcy, Lehman had negotiated with just one other bidder, Bank of America Corp. BofA instead announced Monday that it would buy Merrill Lynch & Co., saving it from a fate similar to Lehman's. That deal was originally valued at $50 billion.

Miller said that since Lehman filed for bankruptcy, Barclays had been the only buyer to express interest in acquiring even parts of the 158-year-old investment bank.

Lehman lawyers announced a number of changes to the deal before the hearing, which started at 4:30 p.m. Friday and continued well past midnight Saturday.

Lehman lawyers said the value of stock Barclays will buy and liabilities it will assume has fallen since the start of the week due to market volatility. Under the new deal, Barclays will buy $47.4 billion in securities and assume $45.5 billion in liabilities.

Barclays also said it would buy three additional units – Lehman Brothers Canada Inc., Argentina-based Lehman Brothers Sudamerica SA and Lehman Brothers Uruguay SA absolutely free credit report. The two South American entities are part of Lehman's money management business. Barclays is not paying extra to get the three units.

There was no change to a $250 million goodwill payment and the purchase of two data centers in New Jersey that will go to Barclays, although Barclays may pay less for them. Lehman's investment management business Neuberger Berman was not bought by Barclays.

The Securities Investor Protection Corporation liquidated Lehman accounts on Friday under a bankruptcy-style process to transfer assets from 639,000 Lehman customer accounts – about 130,000 of which are owned by individual investors – to Barclays accounts.

"The substance of this transaction is to continue a business for the benefit of the economy," Lehman lawyer Miller said in court.

The hearing drew more than 200 lawyers and observers, who spilled into overflow rooms on two floors of the U.S. Bankruptcy Court in Lower Manhattan.

In response to the extraordinary events of the week, the Bush administration announced Friday the biggest proposed government intervention in financial markets since the Great Depression. Some are calling it an "RTC-style bailout" in reference to the government-owned Resolution Trust Corp. that wound down the assets of Savings and Loan Associations, mostly in the 1980s.

"Somehow Lehman Brothers gets left on the sidelines," said Daniel Golden of Akin Gump Strauss Hauer & Feld LLP, who represents clients holding about $9 billion in bonds. "We believe this was a flawed sales process. It benefits Barclays and the federal government but not the creditors of this estate.

"The economic landscape seems to have changed over the last two days," he said. "Yet the debtors and the Fed seem determined that nothing get in the way of this transaction.''

Had Lehman filed for Chapter 11 a week later than it had, its fate may have been different.

"This is a tragedy – maybe we missed the RTC by a week,'' Miller said.

"That occurred to me, as well," the judge said. "Lehman Brothers became a victim, in effect the only true icon to fall in the tsunami that has befallen the credit markets.''

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WASHINGTON – The U.S. government, trying to boost investor confidence in the face of a market crisis, took the unprecedented step today of temporarily banning a practice of betting against financial stocks.

The move by the Securities and Exchange Commission will temporarily ban what is called short selling of 799 financial stocks. The rule took effect immediately and extends through Oct. 2.

Short selling involves borrowing a company's shares, selling them, and pocketing the difference when the stock falls. It is a legitimate method of trading – it can make markets more efficient and bring in more capital – but the government argues that it has widened the scope of the recent financial crisis and contributed to the collapsing values of investment and commercial bank stocks in particular.

In Canada, the head of Quebec's securities commission said today Canadian regulators are considering whether to ban short-selling of stocks as well, and a decision will be made relatively quickly.

Quebec's Jean St-Gelais said at a financial markets conference in Montreal that Canadian regulators are attempting to determine if there is a problem with short-selling. He noted that some of short-selling techniques that have been occurring in the United States are banned in Canada.

In another development, the SEC also eased restrictions on the ability of companies to buy back their own shares, also through Oct. 2, a move aimed at helping restore liquidity to the distressed and volatile market.

The turmoil has swallowed some of the most storied names on Wall Street. Three of its five major investment banks – Bear Stearns, Lehman Brothers and Merrill Lynch – have either gone out of business or been driven into the arms of another bank.

In its announcement, the SEC said it was acting in concert with the U.K. Financial Services Authority, which announced a similar ban there Thursday. Some British politicians claim short-selling was partly responsible for HBOS PLC's abrupt takeover by banking rival Lloyds TSB PLC on Thursday.

The SEC said it hoped its move would protect the integrity of the securities markets and boost investor confidence. The agency said it wanted a time out on aggressive, "unbridled" short-selling in financial stocks, and said it would consider measures to address short-selling in other publicly traded companies.

"The commission is committed to using every weapon in its arsenal to combat market manipulation that threatens investors and capital markets," SEC chairman Christopher Cox said in a statement. “The emergency order temporarily banning short-selling of financial stocks will restore equilibrium to markets."

The SEC also imposed a new requirement, also temporary, for investment managers to publicly report their new short sales of stocks.

Cox said the moves would not be necessary in a well-functioning market and are only temporary steps pay day loans. He had met Thursday night with members of the U.S. Congress, Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke.

The 799 companies covered by the ban are an A-to-Z of the U.S. financial institutions, including the powerhouse investment banks such as Goldman Sachs Group Inc. and Morgan Stanley and commercial banks running the gamut from Bank of America Corp. to Cape Fear Bank Corp.

SLM Corp., which is known as Sallie Mae and is the biggest U.S. student lender is on the list, as are Charles Schwab Corp., Berkshire Hathaway Inc. and Principal Financial Group Inc.

Washington Mutual Inc., the largest U.S. thrift, which has lost billions from subprime mortgage exposure and seen its shares plunge in recent weeks, also is on the SEC list.

The stock of the NYSE Euronext, the biggest stock exchange, is subject to the short-selling ban. Also covered are a number of foreign financial companies whose stock is traded on U.S. exchanges, such as Lloyds TSB Group PLC of Britain and China Life Insurance Co. Ltd.

Other entities have taken their own steps against short sellers. The California Public Employees' Retirement System, the largest U.S. pension fund, is no longer lending out shares of Goldman Sachs and Morgan Stanley to short sellers.

Not all short-selling is alike. On Wednesday, the SEC adopted rules it said would provide permanent protections against abusive instances of "naked" short-selling, in which sellers don't even borrow the shares before selling them, and then look to cover positions immediately after the sale. Those new rules took effect Thursday, shortening the required time for short sellers to deliver the stocks underlying their transactions.

But some critics assailed those new measures as inadequate, and asked for a prohibition on all naked short-selling, similar to the SEC's 30-day emergency ban this summer covering the stocks of mortgage finance giants Fannie Mae and Freddie Mac and 17 large investment banks.

New York Attorney General Andrew Cuomo said his office will investigate whether some short sellers spread rumors and negative information to drive down the share prices of Lehman, American International Group Inc., Goldman Sachs, Morgan Stanley and other firms.

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HSBC (HSBA.L: Quote, Profile, Research, Stock Buzz) dropped a $6.3 billion offer for 51 percent of Korea Exchange Bank (004940.KS: Quote, Profile, Research, Stock Buzz), blaming turmoil in financial markets and ending what would have been the biggest cross-border move in South Korea’s bank sector.

Abandoning the long-running deal, which had been beset by regulatory delays, added to speculation HSBC would look to buy a distressed western peer amid a financial sector shakeout that has seen share prices plunge and forced a hasty round of dealmaking.

“In the light of developments around the world, not least changes in asset values in world markets, we do not believe it would be in the best interests of shareholders to continue to pursue this acquisition on the terms negotiated last year,” HSBC Asia CEO Sandy Flockhart said in a statement.

Shares in KEB, South Korea’s sixth-ranked bank, tumbled 8 percent to 11,600 won by 12:55 a.m. EDT on Friday in a broader market up 4.7 percent. Global stocks rallied on news the United States government was looking at a comprehensive solution to the financial crisis.

John Grayken, chairman of U.S payday loan cash advance loan. private equity firm Lone Star LS.UL, which was selling the KEB stake, said he was disappointed with HSBC’s decision to walk away from the deal.

Shares in HSBC (0005.HK: Quote, Profile, Research, Stock Buzz), Europe’s biggest bank by market value, rose nearly 6 percent in Hong Kong.

HSBC, less damaged than many from the subprime mortgage meltdown, has been rumored as a potential suitor for ailing U.S. savings and loan Washington Mutual (WM.N: Quote, Profile, Research, Stock Buzz) and UK rival Royal Bank of Scotland (RBS.L: Quote, Profile, Research, Stock Buzz).

“Maybe it’s better for HSBC to look at other markets. U.S. bank valuations are very depressed. That is very attractive to HSBC,” said Y.K. Lee, analyst with Core Pacific-Yamaichi in Hong Kong. 

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Shares of Nortel Networks Corp. plumbed new depths yesterday after the troubled maker of telecom equipment cut its sales forecast for the year and surprised analysts with news that it was looking to sell a key division to raise cash.

Once a darling of the technology sector, Nortel’s stock plummeted more than 50 per cent to close at $2.76, down $2.96, on the Toronto Stock Exchange – its lowest point in more than 25 years.

That gave Nortel a market capitalization of about $1.4 billion, a far cry from the nearly $375 billion it enjoyed during the lofty heights of the tech bubble.

The Toronto-based company, which has already cut thousands of jobs over the past few years as part of a massive restructuring effort, said sales were being impacted by a "sustained and expanding economic downturn" that has caused customers to shelve plans to buy telecom equipment in the near future.

Nortel forecast full-year sales for 2008 would drop by as much as 4 per cent, compared with a previous forecast of single-digit growth.

In response, Nortel said it planned to implement additional cost-cutting initiatives and further restructuring efforts, although it did not specify what they would be.

As well, Nortel revealed that it is exploring the sale of its Metro Ethernet Networks unit, which accounts for 14 per cent of the company’s business and is considered to be a growth engine.

"A tough story just got tougher as Nortel scrabbles to strategically reshape itself while its numbers erode," wrote Phillip Armstrong, an analyst with RBC Capital Markets, in a note to clients.

Just two weeks ago, Nortel trumpeted a deal with phone giant Bell Canada Inc. in which Metro Ethernet Networks’ optical technology would be used to dramatically increase the capacity of Bell’s broadband Internet network.

Bond rating agency DBRS downgraded Nortel’s outlook to "stable" from "positive" and said a sale of the unit would remove the company from a growth area that was expected to be a "partial driver" of the company’s overall turnaround.

But Nortel’s board appeared to be left with little choice.

"We’re being realistic," Mike Zafirovski, Nortel’s CEO, told analysts during a conference call bad credit payday advance. "In today’s environment with our balance sheet … the view is that it would be very advantageous to make some decisions to remain relevant in areas where we can focus."

It’s the latest attempt by Nortel to rebound from the massive accounting scandal that cost it billions and remake itself as a 21st Century telecommunications provider at a time when the industry is tightening its spending. The restructuring has so far included more than 4,000 job cuts in the past two years and the relocation of thousands of other employees to countries where costs are cheaper.

While Nortel had previously appeared reluctant to part with any of its business units, analysts said a successful sale would leave the company to focus more heavily on sales of networking equipment that large companies use in their offices, an area dominated by heavyweights such as Cisco Systems.

Zafirovski declined to comment on whether there has been any interest in purchasing the division, saying only that it was his preference to sell the unit in an all-cash deal so proceeds could be used to shore up Nortel’s balance sheet.

But observers speculated that Nortel might have a tough time getting a good price for the unit, if a buyer can indeed be found.

"When a company is selling under duress, the buyers know you’re under pressure to sell," said Andy Woyzbun, a lead analyst with Info-Tech Research Group.

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MONTREAL – BCE Inc. shares continued to slide today as investors feared that the crisis in the U.S. financial sector could threaten the $52-billion privatization.

A combination of factors undermined the share value of Canada's largest telecommunications company. In addition to general nervousness, some investors may be concerned about rumoured problems facing Citigroup, one of the deal's key lenders.

Professional institutions have also been forced to sell their BCE holdings to cover hedge fund and arbitrage losses.

"All of these things are contributing to BCE falling but it's not the only risk arbitrage deal getting hammered out there," said Elliott Soifer, vice-president of Desjardins Securities International.

BCE's shares (TSX: BCE) lost nearly four per cent today on the Toronto Stock Exchange, down $1.48 to $37.37 in the afternoon after losing 4.4 per cent Monday same day payday loans.

While he shares concerns about the impact of a further weakening of the financial services sector, Soifer said he doesn't believes the takeover agreement by a consortium led by the Ontario Teachers' Pension Plan is threatened.

Telecom analyst Troy Crandall of MacDougall, MacDougall & MacTier said there's less risk to the purchse than there was before the Supreme Court ruling that sanctioned the takeover.

"I still think there's time for the deal to go through in December," he said in an interview.

The agreement is not contingent on financing and the banks won several concessions, including the suspension of dividends, before they re-signed the agreement with the consortium.

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