DealBook: Ireland to Liquidate Anglo Irish Bank

LONDON – The Irish government passed emergency legislation on Thursday to liquidate Anglo Irish Bank, one of the country’s largest financial institutions.

The legislation, which was signed into law after an all-night parliamentary session, came after negotiations with the European Central Bank over swapping so-called promissory notes, which were used to bail out the Irish lender in 2009, for long-term government bonds.

The move is an effort to reduce Ireland’s debt repayments at a time when the country is still struggling under a cloud of austerity measures and meager economic growth.

The Irish Parliament rushed through the legislation to liquidate Anglo Irish, which was renamed Irish Bank Resolution Corporation after its failure and bailout, because details of the debt-restructuring plan leaked on Wednesday. Politicians had hoped to announce the deal after agreeing on new terms with the European Central Bank.

“I would have preferred to be introducing this bill in tandem with a finalized agreement with the European Central Bank,” the Irish finance minister, Michael Noonan, said in a statement.

The European Central Bank is considering the country’s latest proposals on Thursday, though European policy makers are concerned that a deal with Ireland could set a precedent for other indebted countries, like Spain, whose local banks also are facing mountains of debt.

As part of the deal to save Anglo Irish, Dublin injected more than 30 billion euros ($41 billion) into the local lender, of which around 28 billion euros is still outstanding.

The bailout has saddled the government with 3.1 billion euros in annual interest payments, or roughly the same amount Irish politicians have said they would cut in yearly government spending to reduce the country’s debt levels. The local government has been eager to reduce that multibillion-euro figure by swapping the high-interest debt into long-term government bonds that can be repaid over a longer period.

Ireland racked up huge debts in bailing out Anglo Irish and the rest of the country’s financial industry, eventually requiring a rescue package of 67.5 billion euros from the European Union and the International Monetary Fund in 2010. The authorities have demanded that Irish politicians slash government spending to reduce the country’s debt burden.

Confusion reigned on Thursday at Anglo Irish’s headquarters in Dublin, a day after employees were sent home early in preparation for the government-mandated liquidation.

Some staff members had returned to work, but the atmosphere remained tense, according to a person with direct knowledge of the matter, who spoke on condition of anonymity because he was not authorized to speak publicly.

“People have been told it’s business as usual, but it’s anything but that,” the person said.

The accounting firm KPMG has been appointed to oversee the liquidation.

Under the terms of the liquidation, Anglo Irish’s assets will be transferred to the National Asset Management Agency, the so-called bad bank set up by the government, or sold to outside investors.

Anglo Irish has been at the center of controversy since the beginning of the financial crisis. Three of its former executives, including its former chief executive, Sean FitzPatrick, are facing fraud charges in connection with loans that were improperly administered.

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DealBook: As Unit Pleads Guilty, R.B.S. to Pay $612 Million Over Rate Rigging

LONDON – The Royal Bank of Scotland on Wednesday struck a combined $612 million settlement with American and British authorities over accusations that it manipulated interest rates, the latest case to emerge from a broad international investigation.

In an embarrassing blow to the bank, its Japanese subsidiary also pleaded guilty to criminal wrongdoing in its settlement with the Justice Department. The R.B.S. subsidiary, a hub of rate-rigging activity, agreed to a single count of felony wire fraud to settle the case.

The settlement reflects the Justice Department’s renewed vigor for punishing banks ensnared in the rate manipulation case. In December, a Japanese subsidiary of UBS pleaded guilty to felony wire fraud as part of a larger settlement, representing the first unit of a big bank to agree to criminal charges in more than a decade.

As authorities built the R.B.S. case, they seized on a series of incriminating yet colorful e-mails that highlighted an effort to influence the rate-setting process, a plot that spanned multiple currencies and countries from 2006 to 2010. One senior trader expressed disbelief at reaping lucrative profits from the scheme, saying “it’s just amazing” how rate “fixing can make you that much money,” according to the government’s complaint. Another trader, after pressuring a colleague to submit a certain rate, offered a reward of sorts: “I would come over there and make love to you.”

In a statement on Wednesday, the American regulator leading the case slammed the bank for manipulating benchmarks like the London Interbank Offered Rate, or Libor. The regulator, the Commodity Futures Trading Commission, noted that R.B.S. employees “aided and abetted” other banks in the rate-rigging scheme and continued to run afoul of the law, though more covertly, even after learning of a federal investigation.

“The public is deprived of an honest benchmark interest rate when a group of traders sits around a desk for years falsely spinning their bank’s Libor submissions, trying to manufacture winning trades. That’s what happened at R.B.S.,” David Meister, the enforcement director of the commission, said in the statement.

Libor Explained

The settlement represents the latest setback for Royal Bank of Scotland, which has struggled to shake the legacy of the 2008 financial crisis. The British firm already has put aside $2.7 billion to compensate customers who were inappropriately sold loan insurance over recent years. On Jan. 31, British regulators also called on the bank and other local rivals to review the sale of interest-rate hedging products after more than 90 percent of a sample were found to have been sold improperly.

The broader rate-rigging case has centered on how much the Royal Bank of Scotland and a dozen other banks, including Citigroup and HSBC, charge each other for loans. Such benchmarks, including Libor, help determine the borrowing costs for trillions of dollars in financial products like corporate loans, mortgages and credit cards.

But the Royal Bank of Scotland, like many of its competitors, corrupted the process. Government complaints filed over the last year outlined a scheme in which banks reported false rates to lift trading profits and deflect concerns about their health during the crisis.

Authorities filed the first Libor case in June, extracting a $450 million settlement with the British bank Barclays. In December, UBS agreed to a record $1.5 billion settlement with European regulators, the Justice Department and the American regulator that opened the case, the Commodity Futures Trading Commission. The Justice Department’s criminal division, which secured the guilty plea from the bank’s Japanese unit, also filed criminal charges against two former UBS traders.

Some of the world’s largest financial institutions remain caught in the cross hairs of the case. Deutsche Bank has set aside an undisclosed amount to cover potential penalties.

While foreign banks have received the brunt of the scrutiny to date, an American institution could be among the next to settle. Citigroup and JPMorgan Chase are under investigation.

The Royal Bank of Scotland case represents the second-largest fine levied in the multiyear investigation into rate manipulation.

The Justice Department imposed a $150 million fine as part of a deferred-prosecution agreement with R.B.S., while the trading commission’s financial penalty reached $325 million. The Financial Services Authority, the British regulator, also levied a £87.5 million ($137 million) fine against the firm, one of the largest financial penalties ever from British authorities.

R.B.S., based in Edinburgh, had aimed to avert the guilty plea for its Japanese subsidiary. But the Justice Department’s criminal division declined to back down, and the bank had little leverage to push back. If it had balked at a plea deal, the Justice Department could have moved to indict the subsidiary.

“Like with Barclays and UBS, the settlement with R.B.S. is much more than a slap on the wrist,” said Bart Chilton, a commissioner at the trading commission who is a critic of soft fines on big banks.

In the wake of the settlement, Royal Bank of Scotland is shaking up its management team as it moves to repair its bruised image. John Hourican, the firm’s investment banking chief, resigned on Wednesday, and agreed to forgo some of his past compensation.

Royal Bank of Scotland, in which the government holds an 82 percent stake after providing a $73 billion bailout in 2008, also plans to claw back bonuses totaling $471 million to help pay for the rate-rigging penalty.

“We condemn the behavior of the individuals who sought to influence some Libor currency settings at our bank from 2006 to 2010. There is no place at R.B.S. for such behavior,” Stephen Hester, the bank’s chief executive, said in a statement on Wednesday. “Libor manipulation is an extreme example of a selfish and self-serving culture that took hold in parts of the banking industry during the financial boom.”

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DealBook: Liberty Global in Talks to Buy Virgin Media

6:59 a.m. | Updated

LONDON – Liberty Global, the international cable company owned by the American billionaire John C. Malone, is in discussions to buy the British cable company Virgin Media.

In a brief statement on Tuesday, Virgin Media said it was in talks with Liberty Global, which serves almost 20 million customers worldwide.

“Any such transaction would be subject to regulatory and other conditions,” Virgin Media said in a statement. Spokesmen for both Virgin Media and Liberty Global declined to comment further.

Shares in Virgin Media, which was formed through several mergers of small British cable companies and a cellphone company in the 2000s, rose almost 16 percent in afternoon trading in London on Tuesday.

Its shares have jumped almost 60 percent in the last 12 months, as more consumers sign up for so-called bundled services, including Internet and cellphone contracts.

The company, whose primary listing is on Nasdaq, is the second-largest pay-TV provider in Britain after BSkyB, which is partly owned by Rupert Murdoch‘s News Corporation.

Virgin Media’s market capitalization stands at $10.4 billion. Including debt, Virgin Media’s enterprise value is around $19.4 billion, according to data from Thomson Reuters.

To secure a deal, analysts at Espirito Santo said Liberty Global may have to pay as much as $24 billion, though they questioned whether the international cable company could afford to fund the acquisition because of its existing high levels of debt.

Analysts also said that it would be difficult for Liberty Global to make costs savings between its current European operations and those of Virgin Media, adding that Liberty had waited to make its move for Virgin Media until the British cable operator had carried out a series of upgrades to its network and restructured its debt.

“Unless another bidder comes out of the woodwork, it’s hard to see much more of a premium on the price,” said Patrick Yau, a media analyst at Peel Hunt in London.

The British billionaire Richard Branson, whose Virgin brand is now used for a variety of products and services, including airlines and banks, owns less than 3 percent of Virgin Media.

While the British cable operator has been picking up market share, the company currently has 4.9 million customers, or roughly half the number of subscribers as its larger rival, BSkyB, according to filings from the companies.

A potential deal for Virgin Media would put Mr. Malone head-to-head with Mr. Murdoch, his longtime rival.

In 2008, the Liberty Group, which has operations in 13 countries, completed its purchase of a controlling stake in DirecTV, the satellite television provider, from News Corporation in a cash-and-equity deal worth roughly $11 billion.

The deal came after Mr. Malone’s purchase of a 16 percent stake in News Corporation, which he then traded for the satellite television operator, a number of regional sports networks and around $550 million cash.

Liberty Global has been expanding its presence in Europe and has operations from Ireland to Romania, though it failed last month in its bid to acquire the Belgian telecommunications company Telenet Group for $2.7 billion. Liberty Global currently owns a 58 percent stake in Telenet.

In August, Liberty Media, the media conglomerate also controlled by Mr. Malone, agreed to buy a stake in Barnes & Noble for $204 million, but declined to buy the bookseller outright.

The move disappointed some investors after Liberty had earlier offered to buy a 70 percent stake of Barnes & Noble for $17 a share if its chairman, Leonard S. Riggio, who owns around 30 percent of the company, agreed to the deal.

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DealBook: Osborne Promises More Regulatory Power to Split Up British Banks

LONDON – British regulators will have the power to split up banks that fail to separate risky trading activity from retail banking, George Osborne, the country’s chancellor of the Exchequer, said on Monday.

As part of an overhaul over how the country’s banks operate, the British finance minister said regulators would be able to forcibly separate firms that failed to maintain a division between their retail banking and investment banking units.

The so-called ring-fencing of consumer deposits from risky trading activity is an effort to reduce the exposure to the wider British economy if one of the country’s largest banks goes bust.

Many of Britain’s largest banks have been engulfed in a series of scandals, and Mr. Osborne said the public was right to be angry over abuses in the country’s financial industry.

The spotlight is now focused on the Royal Bank of Scotland, which is expected to announce a settlement over the manipulation of a key benchmark rate as early as this week.

The bank, in which the government holds an 82 percent stake after providing a bailout, is said to be facing a fine of more than $650 million and a guilty plea against an Asian subsidiary related to the manipulation of the London interbank offered rate, or Libor.

Mr. Osborne said troubling behavior by those in Britain’s financial industry was unacceptable.

“Irresponsible behavior was rewarded, failure was bailed out, and the innocent – people who have nothing whatsoever to do with the banks – suffered,” Mr. Osborne said in a speech in Bournemouth, on the south coast of England.

During the recent financial crisis, a number of British banks, including the Lloyds Banking Group and Northern Rock, received multibillion-dollar bailouts after they ran into trouble because of exposure to risky assets.

To reaffirm the separation between retail and investment banking divisions, Mr. Osborne said on Monday that banks would have to appoint different senior managers to oversee each division. The new powers to forcibly split up banks are in response to fears that firms would try to find ways around dividing their retail and investment banking operations.

“No more rewards for failure. No more too big to fail. No more taxpayers forking out for the mistakes of others,” Mr. Osborne said.

Critics of the planned changes, however, say the separation of banks’ operations will make it harder for them to raise capital and provide financial support to British companies.

“This will create uncertainty for investors, making it more difficult for banks to raise capital, which will ultimately mean that banks will have less money to lend to businesses,” Anthony Browne, chief executive of the British Bankers’ Association, a trade body criticized for its role in the Libor scandal, said in a statement.

The changes, which form part of new banking legislation being submitted to Parliament on Monday, mirror similar efforts in the United States and Europe to reduce the effect of banks’ risky trading operations on the broader economy. The so-called Volcker Rule, which forms part of the Dodd-Frank Act and would prohibit banks from making risky bets with their money, is also nearing regulatory approval in the United States.

In Britain, authorities are going a step further by dividing the Financial Services Authority, the country’s financial regulator, into two separate units, as part of the widespread reforms.

In April, oversight of the country’s banks will be returned to the Bank of England, the central bank, while a new consumer protection agency will monitor market abuse.

The changes come after a series of recent settlements by British banks over illegal activity.

HSBC and Standard Chartered have agreed to pay a combined fine of more than $2 billion to American authorities related to money laundering allegations. Barclays reached a $450 million settlement with United States and British regulators in June related to the manipulation of Libor. And, in total, many of Britain’s largest banks have been required to pay billions of dollars of penalties after inappropriately selling loan insurance to customers.

“Our country has paid a higher price than any other major economy for what went so badly wrong in our banking system,” Mr. Osborne said on Monday.

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Iceland, Prosecutor of Bankers, Sees Meager Returns

Ilvy Njiokiktjien for The New York Times

"Greed is not a crime. But the question is: where does greed lead?" said Olafur Hauksson, a special prosecutor in Reykjavik.

REYKJAVIK, Iceland — As chief of police in a tiny fishing town for 11 years, Olafur Hauksson developed what he thought was a basic understanding of the criminal mind. The typical lawbreaker, he said, recalling his many encounters with small-time criminals, “clearly knows that he crossed the line” and generally sees “the difference between right and wrong.”

Today, the burly, 48-year-old former policeman is struggling with a very different sort of suspect. Reassigned to Reykjavik, the Icelandic capital, to lead what has become one of the world’s most sweeping investigation into the bankers whose actions contributed to the global financial crisis in 2008, Mr. Hauksson now faces suspects who “are not aware of when they crossed the line” and “defend their actions every step of the way.”

With the global economy still struggling to recover from the financial maelstrom five years ago, governments around the world have been criticized for largely failing to punish the bankers who were responsible for the calamity. But even here in Iceland, a country of just 320,000 that has gone after financiers with far more vigor than the United States and other countries hit by the crisis, obtaining criminal convictions has proved devilishly difficult.

Public hostility toward bankers is so strong in Iceland that “it is easier to say you are dealing drugs than to say you’re a banker,” said Thorvaldur Sigurjonsson, the former head of trading for Kaupthing, a once high-flying bank that crumbled. He has been called in for questioning by Mr. Hauksson’s office but has not been charged with any wrongdoing.

Yet, in the four years since the Icelandic Parliament passed a law ordering the appointment of an unnamed special prosecutor to investigate those blamed for the country’s spectacular meltdown in 2008, only a handful of bankers have been convicted.

Ministers in a left-leaning coalition government elected after the crash agree that the wheels of justice have ground slowly, but they call for patience, explaining that the process must follow the law, not vengeful passions.

“We are not going after people just to satisfy public anger,” said Steingrimur J. Sigfusson, Iceland’s minister of industry, a former finance minister and leader of the Left-Green Movement that is part of the governing coalition.

Hordur Torfa, a popular singer-songwriter who helped organize protests that forced the previous conservative government to resign, acknowledged that “people are getting impatient” but said they needed to accept that “this is not the French Revolution. I don’t believe in taking bankers out and hanging them or shooting them.”

Others are less patient. “The whole process is far too slow,” said Thorarinn Einarsson, a left-wing activist. “It only shows that ‘banksters’ can get away with doing whatever they want.”

Mr. Hauksson, the special prosecutor, said he was frustrated by the slow pace but thought it vital that his office scrupulously follow legal procedure. “Revenge is not something we want as our main driver in this process. Our work must be proper today and be seen as proper in the future,” he said.

Part of the difficulty in prosecuting bankers, he said, is that the law is often unclear on what constitutes a criminal offense in high finance. “Greed is not a crime,” he noted. “But the question is: where does greed lead?”

Mr. Hauksson said it was often easy to show that bankers violated their own internal rules for lending and other activities, but “as in all cases involving theft or fraud, the most difficult thing is proving intent.”

And there are the bankers themselves. Those who have been brought in for questioning often bristle at being asked to account for their actions. “They are not used to being questioned. These people are not used to finding themselves in this situation,” Mr. Hauksson said. They also hire expensive lawyers.

The special prosecutor’s office initially had only five staff members but now has more than 100 investigators, lawyers and financial experts, and it has relocated to a big new office. It has opened about 100 cases, with more than 120 people now under investigation for possible crimes relating to an Icelandic financial sector that grew so big it dwarfed the rest of the economy.

To help ease Mr. Hauksson’s task, legislators amended the law to allow investigators easy access to confidential bank information, something that previously required a court order.

Parliament also voted to put the country’s prime minister at the time of the banking debacle on trial for negligence before a special tribunal. (A proposal to try his cabinet failed.) Mr. Hauksson was not involved in the case against the former leader, Geir H. Haarde, who last year was found guilty of failing to keep ministers properly informed about the 2008 crisis but was acquitted on more serious charges that could have resulted in a prison sentence.

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Media Decoder Blog: In Wake of Restructuring, NBC News President Quits

8:30 p.m. | Updated

The longest-serving president of any of the three network news divisions, Steve Capus of NBC News, stepped down from his position on Friday, six months after Comcast restructured its news units in a way that diminished his authority.

Pat Fili-Krushel, chairwoman of the NBCUniversal News Group, said in a brief telephone interview on Friday that she would “cast a wide net” while searching for a successor to Mr. Capus. In the interim, the leaders of the news division will report directly to her.

Ms. Fili-Krushel became Mr. Capus’s boss last July when Steve Burke, the chief executive of NBCUniversal, consolidated all of NBC’s news units — NBC News, the cable news channels MSNBC and CNBC, and its stake in the Weather Channel — under a new umbrella, the NBCUniversal News Group. Mr. Burke asked Ms. Fili-Krushel, one of his most trusted lieutenants, to run it, while keeping Mr. Capus and the heads of the other units in place.

Ms. Fili-Krushel worked early in her career at HBO and Lifetime. A veteran of the Walt Disney Company, where she helped program ABC, and  Time Warner, where she was an administrator, she is by her own admission not a journalist.  But now she is, by default, the highest-ranking woman in the American television news industry — not just at the moment, but in the history of the medium. The heads of the news divisions at ABC and CBS are men, as are the heads of the Fox News Channel, CNN, and Bloomberg.

Ms. Fili-Krushel has kept a low public profile, but has been a forceful presence behind the scenes, recently moving from her office on the 51st floor of 30 Rockefeller Center, near Mr. Burke’s, to a new one on the third floor, where NBC News is based. On Friday, she said she had spent her first six months “learning, listening and getting to know the players here.” She called the News Group an “unbelievably strong organization.”

Though Mr. Capus’s exit saddened many at NBC News on Friday, it came as little surprise. He had previously reported directly to Mr. Burke, but after the restructuring he reported to Ms. Fili-Krushel, and he made no secret of his unhappiness with the change. His contract had a clause that allowed him to leave in the event that he no longer reported to Mr. Burke, according to two people with direct knowledge of the arrangement at NBC, and he decided to exercise that right after months of contemplation. The people insisted on anonymity because they were not authorized by the network to speak publicly.

Mr. Capus told Ms. Fili-Krushel of his intent to leave last Friday. It is likely that he would have left sooner, but a series of major news stories kept him busy late last year — including Hurricane Sandy, the presidential election and the school shooting in Newtown, Conn. Mr. Capus also oversaw the network’s response to the kidnapping of Richard Engel and an NBC News crew in Syria last month.

“It has been a privilege to have spent two decades here, but it is now time to head in a new direction,” he wrote in an e-mail to staff members on Friday afternoon.

Mr. Capus guided NBC through a revolutionary time in news-gathering and distribution. He maintained the news division’s profitability, managed tensions between NBC News and its increasingly liberal cable channel MSNBC, and fostered new business ventures like an in-house production company and an annual education summit. Last year, he unwound an old deal with Microsoft to give the news division complete control over its Web site, now named NBCNews.com, for the first time.

Ms. Fili-Krushel wrote in a separate e-mail to staff members that “NBC News is America’s leading source of television news and Steve has been a big part of that success.”

NBC News is the producer of the most popular evening newscast in the country. But its single biggest source of profits, the morning show “Today,” fell to second place last year, behind ABC’s “Good Morning America,” for the first time since the 1990s. The decline caused widespread anxiety inside the news division and speculation that Mr. Capus would be relieved of his duties.

Inside NBC, both Mr. Capus and the executive producer of “Today,” Jim Bell, received much of the blame for the botched removal of Ann Curry from “Today” last June, which worsened the show’s already tenuous position in the ratings. Ms. Fili-Krushel was put in charge just a few weeks later.

Mr. Bell was replaced at “Today” last fall and is now the executive producer for NBC Olympics. Savannah Guthrie is now the co-host of “Today,” and Ms. Curry is a national and international correspondent for the network, but is rarely seen. Mr. Capus’s exit was seen by some at the network as the last shoe that had to drop.

In his e-mail to staff members, Mr. Capus called it an “extremely difficult decision to walk away,” noting that he started at NBC as a producer 20 years ago this month. He did not make any mention of what he would do next. “Journalism is, indeed, a noble calling, and I have much I hope to accomplish in the next phase of my career,” he wrote.

“Today” continues to lose to ABC’s “Good Morning America” among total viewers, but lately it has won a few weeks in the 25- to 54-year-old demographic that advertisers covet.

“NBC Nightly News” has more successfully fended off ABC’s “World News,” despite an aggressive push by ABC. Mr. Capus said, “NBC News has grown in all key metrics — from ratings and reputation to profitability.”

A version of this article appeared in print on 02/02/2013, on page B2 of the NewYork edition with the headline: In Wake of Restructuring, NBC News President Quits.

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DealBook: Dutch Government Takes Control of SNS Reaal

The Dutch government took control of one of the country’s biggest financial institutions, SNS Reaal, after the troubled company failed to find a private-sector buyer.

The Dutch finance minister, Jeroen Dijsselbloem, said the government would spend 3.7 billion euros, or $5 billion, in taxpayer money to clean up the bank, which has struggled for years with unprofitable real estate loans. The government will also require the country’s top three banks — ING, ABN Amro and Rabobank — to contribute 1 billion euros next year in a one-time payment, he said.

The moves comes as Europe continues to deal with a sluggish economic and debt problems. Last year, Spain took over Bankia, a mortgage lender also hurt by property deals.

Problems at SNS Reaal, which is based in Utrecht, had intensified in the last two weeks as depositors began losing faith, fearing talks with potential buyers would fail. The company had been reportedly negotiating possible investments with CVC Capital Partners and other funds in the hope of averting disaster.

Mr. Dijsselbloem, the finance minister, said in a statement that the takeover ‘‘was made necessary by the extreme situation’’ of the bank and the ‘‘serious and immediate threat posed by that situation to the stability of the financial system.’’

Shareholders and subordinated bondholders of SNS Reaal will be wiped out, effective immediately, Mr. Dijsselbloem said. The holders of senior debt will be repaid and depositors will not lose their money.

Three top executives of SNS Reaal said in a statement that they were stepping down, as ‘‘they do not want to and cannot take responsibility for the nationalization scenario.’’ The three — Ronald Latenstein, the bank’s chief executive, Rob Zwartendijk, the chairman, and Ference Lamp, the chief financial officer — said they had done ‘‘everything in their power’’ to avoid a bailout.

‘‘The persons in question do not advocate the chosen solution, but respect the choice of the Ministry of Finance,’’ according to a statement.

The announcement is the latest in a spate of recent bad news about European banks. On Thursday, Deutsche Bank posted a surprise fourth-quarter loss of 2.2 billion euros, and problems continue at Monti dei Paschi di Siena, which received a bailout from the Italian government last year.

The case of SNS Reaal also adds urgency to efforts to set up procedures to identify and wind down terminally ill banks in a way that does not burden taxpayers.

The move also signaled the transfer of another of the Netherlands’ biggest financial institutions into state hands. The Dutch business of ABN Amro was nationalized in October 2008 after the collapse of Lehman Brothers sent the world financial system into shock.

ABN Amro had been taken over and split up by Royal Bank of Scotland, Fortis and Santander in a 2007 deal that has since come to epitomize the worst excesses of the credit bubble. Both Royal Bank of Scotland and Fortis, once the biggest Belgian financial house, were laid low by the debt burdens they took on for the ABN Amro deal when the credit crisis struck.

The ABN Amro deal also marred SNS Reaal, which needed a bailout in 2008 after it acquired the broken-up lender’s property business. That bailout has not been fully repaid.

As part of the deal announced Friday, the state will forgive 800 million euros of the unpaid bailout loans, inject 2.2 billion euros into SNS and write off 700 million euros from the bank’s property portfolio. ING estimated that its share of the cost of bailing out SNS Reaal would come to 300 million to 350 million euros, but said the impact on its finances would be limited.

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This post has been revised to reflect the following correction:

Correction: February 1, 2013

An earlier version of the article incorrectly spelled the name of the nationalized company. It is SNS Reaal, not SNS Reall.

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DealBook: Deutsche Bank Posts Surprise $3 Billion Loss

FRANKFURT – Deutsche Bank, Germany’s largest lender, reported a surprise net loss of 2.2 billion euros ($3 billion) for the fourth quarter of 2012 on Thursday, hurt by the diminished value of some assets as well as costs related to numerous legal proceedings.

The results underline the task ahead for Jürgen Fitschen and Anshu Jain, the co- chief executives who took over the bank less than seven months ago and have declared their intention to deal more severely with the legacy of the financial crisis.

“This is the most comprehensive reconfiguration of Deutsche Bank in recent times,” Mr. Fitschen and Mr. Jain said in a statement. They warned that “deliberate but sometimes uncomfortable change” lay ahead, adding that “this journey will take years not months.”

Deutsche Bank avoided a government bailout during the financial crisis, but has faced numerous lawsuits and official investigations, including a tax-evasion inquiry that led to a raid on company headquarters last month by German police.

“Significant” charges related to legal proceedings contributed to the loss, Deutsche Bank said, without providing specifics.

Analysts consider the bank to be among the most highly leveraged in Europe, and bank management has promised to reduce the number of risky activities, a process that sometimes requires it to recognize the reduced value of assets and book losses.

Despite the loss, Deutsche Bank said fourth-quarter revenue rose 14 percent, to 7.9 billion euros, from the period a year earlier. The bank also said it had increased the amount of capital held as insurance against risk, and reduced the amount of money it needed to set aside to cover possible bad loans. The bank said it had reduced total employee pay to the lowest level in years.

The bank had warned in December that it would incur major charges in the quarter, without saying how much.

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U.S. Economy Unexpectedly Contracted in Fourth Quarter

The United States economy contracted unexpectedly in the final quarter of 2012, hurt by weaker exports, a drop in military spending and a slower buildup in inventories.

The Commerce Department said Wednesday that economic output in the quarter fell at an annual rate of 0.1 percent, compared with growth of a 3.1 percent pace in the third quarter.

It marked the economy’s worst performance since the second quarter of 2009.

The third-quarter figures had been bolstered by a big jump in inventories, so part of the slowdown was expected as businesses eased back in the fourth quarter. Still, the magnitude of the pullback caught economists by surprise.

Businesses may also have cut back on production because of the fiscal uncertainty in Washington, economists said. In addition, exports have been hurt by slower growth overseas, especially in Europe.

Before Wednesday’s announcement, the consensus estimate among economists for fourth-quarter growth stood at 1.1 percent.

Because data for exports and inventories tends to be volatile, there was a wide range in the predictions. For example, while JPMorgan anticipated growth of 0.4 percent for the fourth quarter, Barclays expected a 1.5 percent increase.

This was the Commerce Department’s first estimate of fourth-quarter growth; revisions are due in February and March, so the final figure could go up or down significantly.

But economists expect that slow growth has continued into the first quarter of 2013, with the consensus estimate currently calling for output to rise at an annual rate of 1.5 percent.

Consumers have been more cautious recently, especially because of a tw0-percentage-point increase in payroll taxes beginning this month that will cost a worker earning $50,000 a year an extra $1,000 annually. That was reflected in a consumer confidence survey released Tuesday by the Conference Board, which reported a sharp downturn in January that it attributed in part to financial anxiety arising from a reduction in take-home pay.

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DealBook Column: Mary Jo White, Nominee for S.E.C.'s 'New Sherrif,' Has Worn Banks' Hat

“You don’t want to mess with Mary Jo.”

That’s what President Obama said about his pick to run the Securities and Exchange Commission, Mary Jo White. The nomination of Ms. White, a former prosecutor who took on the terrorists behind the bombing of the World Trade Center in 1993 and the Mafia boss John Gotti, was meant to signal that the S.E.C. would be getting tough on Wall Street. CBS called her “Wall Street’s new sheriff.” The Wall Street Journal said she would be “putting a tougher face on an agency still tainted by embarrassing enforcement missteps in the run-up to the financial crisis.” The New York Times said her appointment represented a “renewed resolve to hold Wall Street accountable.”

Hold on.

While Ms. White is a decorated prosecutor, she has spent the last decade vigorously defending — and billing by the hour — Wall Street’s biggest banks, as a rainmaking partner at the white-shoe law firm Debevoise & Plimpton. The average partner at the firm was paid $2.1 million a year, according to American Lawyer; but she was no average partner, very likely being paid at least double that. Her husband, John W. White, is a corporate partner at Cravath, Swaine & Moore. He counts JPMorgan Chase, Credit Suisse and UBS as clients. The average partner at Cravath makes $3.1 million. He, too, was a former official at the S.E.C. — he left Cravath to run the corporate division of the S.E.C. starting in 2006 just in time for the run-up to the financial crisis. He left in November 2008, a month after the bank bailouts, to return to Cravath.

It seems Mr. and Ms. White have made a fine art of the revolving door between government and private practice.

So how conflicted is Ms. White? Let’s count the ways.

They are well documented: she was JPMorgan Chase’s go-to lawyer for many of the cases brought against it relating to the financial crisis. She was arm-in-arm with Kenneth D. Lewis, Bank of America’s former chief executive, keeping him out of trouble when the New York attorney general accused Mr. Lewis of defrauding investors by not disclosing the losses at Merrill Lynch before completing Bank of America’s acquisition of the firm. (And empirically, Mr. Lewis did keep crucial information about the deal from investors.)

This is what she had to say about Mr. Lewis, in a court filing submitted on his behalf: “Some have looked to assign blame for every aspect of the financial crisis, even where there is no evidence of misconduct. This case is a product of that dynamic and does not withstand either legal or factual scrutiny.” It was a refrain she often made about her clients related to the financial crisis.

And then there was Senator Bill Frist, the Republican from Tennessee, whom she successfully represented when the S.E.C. and the Justice Department started an investigation into whether he was involved in insider trading in shares of HCA, the hospital chain. She persuaded them to shut down the investigation.

She also worked with Siemens, the German industrial giant, when it pleaded guilty to charges of bribery, paying a record $1.6 billion penalty.

And then, of course, there was John Mack. She worked for the board of Morgan Stanley during a now well-publicized 2005 investigation into insider trading that ended soon after she made a phone call to the S.E.C. Using her connections at the top of the agency, she dialed up Linda Thomsen, then the commission’s head of enforcement, to find out whether Mr. Mack, who was being considered for Morgan Stanley’s chief executive position, was being implicated. He ultimately wasn’t. As the Huffington Post pointed out in a recent article about Ms. White, Robert Hanson, an S.E.C. supervisor, later testified, “It is a little out of the ordinary for Mary Jo White to contact Linda Thomsen directly, but that White is very prestigious and it isn’t uncommon for someone prominent to have someone intervene on their behalf.”

All of Ms. White’s previous engagements create not only an “optics” problem, but a practical, on-the-job problem. She will most likely need to recuse herself from just about anything related to her previous work.

“I will not for a period of two years from the date of my appointment participate in any particular matter involving specific parties that is directly and substantially related to my former employer or former clients, including regulations and contracts,” is the language in an ethics pledge that she will have to agree to follow.

Some appointees, including Mary L. Schapiro, the former chairwoman of the S.E.C., recused themselves from any involvement in work that was related to a previous employer even after the two-year moratorium. Gary Gensler, the chairman of the Commodity Futures Trading Commission, recused himself from the investigation into MF Global because of his previous employment at Goldman Sachs, where Jon Corzine was the firm’s head, even though it had been years since the two had worked together.

And then there is the issue of Mr. White’s husband, who will have a continuing role at Cravath, one of the most pre-eminent firms in the country, whose clients include some of the nation’s largest corporations.

“This president has adopted the toughest ethics rules of any administration in history,” said Amy Brundage, a White House spokeswoman, “and this nominee is no exception. As S.E.C. chair, Mary Jo White will be in complete compliance with all ethics rules.”

None of these conflicts gets at another potential problem for Ms. White. The job of chairwoman of S.E.C. isn’t simply about enforcement; she has a deputy for that. The biggest challenge anyone who takes the job will have to confront over the next several years will be executing and enforcing provisions of Dodd-Frank and working to regulate electronic trading — something that even the most sophisticated financial professionals, let alone a lawyer, often have a tough time understanding. She has zero experience in this area.

Of course, there can always be a value to inviting a onetime rival onto the team.

“I believe she is one of those people who will understand that her public role will be very, very different than her role as a defense lawyer,” Dennis M. Kelleher of Better Markets, a watchdog group, told me. “I don’t think she’s going to be like so many others who don’t get that they have a very different role when they hold high public office.

“No question, she’s said some things that are controversial and questionable,” Mr. Kelleher said. “Moreover, I hope and expect that she will be asked publicly about them in the confirmation process and that she will have convincing answers.”

Of course, if she is confirmed, we must all hope that she can put her previous client relationships behind her and work for her new client — us.

A version of this article appeared in print on 01/29/2013, on page B1 of the NewYork edition with the headline: Nominee For ‘Sheriff’ Has Worn Banks’ Hat.

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U.S. Durable Goods Orders Exceed Estimates

WASHINGTON — Orders for durable goods jumped 4.6 percent in December, while a gauge of future business spending also rose, a sign that corporate worries over tighter fiscal policy may not have held back investment plans as much as feared at the end of 2012.

The Commerce Department said on Monday that overall durable goods orders jumped 4.6 percent, more than expected.

In addition, non-defense capital goods orders excluding aircraft, a closely watched proxy for investment plans, edged higher 0.2 percent. The government also revised higher its estimate for November.

Analyst estimates for goods orders averaged around 2 percent.

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J. Richard Hackman, an Expert in Team Dynamics, Dies at 72

J. Richard Hackman, a Harvard psychology professor whose fieldwork sometimes took him to the cockpit of an airliner to observe the crew in a nearly five-decade quest to determine the dynamics of teamwork and effective leadership, died on Jan. 8 in Boston. He was 72.

The cause was lung cancer, his wife, Judith Dozier Hackman, said.

Dr. Hackman, the author or co-author of 10 books on group dynamics, was the Edgar Pierce professor of social and organizational psychology at Harvard.

In one of his best-known books, “Leading Teams: Setting the Stage for Great Performances” (2002), he replaced the popular image of the powerful “I can do it all” team leader with that of someone who, as he wrote, had the subtle skills “to get a team established on a good trajectory, and then to make small adjustments along the way to help members succeed.”

The conditions for a successful team effort — among them “a compelling direction, an enabling team structure, a supportive organizational context and expert team coaching” — “are easy to remember,” Dr. Hackman wrote.

“The challenge,” he continued, “comes in developing an understanding of those conditions that is deep and nuanced enough to be useful in guiding action, and in devising strategies for creating them even in demanding or team-unfriendly organizational circumstances.”

Besides tracking the interplay of pilots, co-pilots and navigators aboard civilian and military planes, Dr. Hackman observed corporate boards, sports teams, orchestra players, telephone-line repair crews, hospital workers and restaurant kitchen staff members.

And in recent years, for his 2011 book, “Collaborative Intelligence,” he was allowed to observe interactions within the American intelligence, defense, law-enforcement and crisis-management communities.

“Although my main aspiration has been to provide guidance that will be useful to team leaders and members,” he wrote, “there are no ‘one-minute’ prescriptions here — creating, leading and serving on teams is not that simple.”

Anita Woolley, a professor of organizational behavior and theory at the Tepper School of Business at Carnegie Mellon University in Pittsburgh, said, “The key thing about Dr. Hackman’s work is that it stands in contrast to some of the more popular models of leadership that focused very much on style or how leaders behave, versus what they do.”

Rather than viewing pay as a prime motivator for good performance, she continued, “he focused on features of people’s jobs that made them more intrinsically satisfied: the freedom to determine how they conduct their work, having a variety of tasks, having knowledge of the ultimate outcomes of their work, knowing how their work affects or is received by other people.”

He also liked to overturn some of the received wisdom about teamwork. In a 2011 article for The Harvard Business Review, Dr. Hackman listed “Six Common Misperceptions About Teamwork.” Among them was this:

“Misperception No. 2: It’s good to mix it up. New members bring energy and fresh ideas to a team. Without them, members risk becoming complacent, inattentive to changes in the environment, and too forgiving of fellow members’ misbehavior.

“Actually: The longer members stay together as an intact group, the better they do. As unreasonable as this may seem, the research evidence is unambiguous. Whether it is a basketball team or a string quartet, teams that stay together longer play together better.”

John Richard Hackman was born in Joliet, Ill., on June 14, 1940, the only child of J. Edward and Helen Hackman. His father was an oil pipeline engineer, his mother a schoolteacher.

Dr. Hackman received a bachelor’s degree in mathematics from MacMurray College in Jacksonville, Ill., in 1962, and a doctorate in psychology from the University of Illinois in 1966. He soon joined the psychology and administrative sciences department faculties at Yale, where he taught until 1986, when he moved to the psychology and business departments at Harvard.

Besides his wife, who is an associate dean at Yale, he is survived by two daughters, Julia Beth Proffitt and Laura Dianne Codeanne, and four grandchildren.

After Dr. Hackman died, The Harvard Crimson wrote that for years he had “devoted countless hours to improving one team in particular — the Harvard women’s basketball squad, for which he volunteered as an honorary coach.”

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Labor Relations Board Rulings Could Be Undone

By ruling that Mr. Obama’s three recess appointments last January were illegal, the federal appeals court ruling, if upheld, would leave the board with just one member, short of the quorum needed to issue any rulings. The Obama administration could appeal the court ruling, but no announcement was made on Friday.

If the Supreme Court were to uphold Friday’s ruling, issued by the United States Court of Appeals for the District of Columbia Circuit, it would mean that the labor board did not have a quorum since last January and that all its rulings since then should be nullified.

Many Republicans and business groups applauded Friday’s ruling. They often assert that the appointments Mr. Obama made to the board have transformed it into a tool of organized labor. But many Democrats and labor unions say Mr. Obama’s appointments restored ideological balance to the board after it was tipped in favor of business interests under President George W. Bush

Mark G. Pearce, the board’s chairman, issued a statement saying the board disagreed with the ruling and suggested that other appeals courts hearing cases about the constitutionality of Mr. Obama’s appointments could reach a different conclusion.

“In the meantime, the board has important work to do,” said Mr. Pearce, whose agency oversees enforcement of the laws governing strikes and unionization drives. “We will continue to perform our statutory duties and issue decisions.”

Unless the Senate confirms future nominees to the board — Senate Republicans have blocked several of Mr. Obama’s board nominees — Mr. Pearce will be the only member left if Friday’s ruling is upheld. The board has five seats.

Representative Darrell Issa, a California Republican who is the chairman of the Oversight and Government Reform Committee, issued a statement that urged the recess appointees to “do the right thing and step down.” He added, “To avoid further damage to the economy, the N.L.R.B. must take the responsible course and cease issuing any further opinions until a constitutionally sound quorum can be established.”

The three disputed recess appointees included two Democrats, Sharon Block, deputy labor secretary, and Richard Griffin, general counsel to the operating engineers’ union; and one Republican, Terence Flynn, a counsel to a board member. Mr. Flynn resigned last May after being accused of leaking materials about the group’s deliberations. Another Republican member, Brian Hayes, stepped down when his term expired last month.

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DealBook: S.E.C. Pick Is Ex-Prosecutor, in Signal to Wall Street

9:13 p.m. | Updated

The White House delivered a strong message to Wall Street on Thursday, taking the unusual step of choosing two former prosecutors as top financial regulators.

But translating that message into action will not be easy, given the complexities of the market and Wall Street’s aggressive nature.

At a short White House ceremony, President Obama named Mary Jo White, the first female United States attorney in Manhattan, to run the Securities and Exchange Commission. Mr. Obama also renominated Richard Cordray as the director of the Consumer Financial Protection Bureau, a position he has held for the last year under a temporary recess appointment without Senate approval.

With the appointments, the president showed a renewed resolve to hold Wall Street accountable for wrongdoing, extolling his candidates’ records as prosecutors.

Ms. White spent more than a decade as a top federal prosecutor in New York City, overseeing the prosecution of the crime boss John Gotti and those responsible for the 1993 World Trade Center bombing. As an Ohio prosecutor, Mr. Cordray filed lawsuits against Bank of America and the American International Group.

“It’s not enough to change the law,” Mr. Obama said. “We also need cops on the beat to enforce the law.”

Still, Ms. White and Mr. Cordray face their own challenges.

While Ms. White, 65, is best known as an aggressive prosecutor, she also built a lucrative legal practice defending Wall Street executives, a potential concern for consumer advocates. And she lacks experience in the financial minutiae central to a regulatory role.

Mr. Cordray, 53, presents another potential problem for the White House. The Senate last year declined to confirm him in the face of Republican and Wall Street opposition to the newly created consumer bureau. Several Republicans on Thursday again voiced their concerns.

“There’s absolutely no excuse for the Senate to wait any longer to confirm him,” Mr. Obama said.

Both Midwestern natives, Ms. White and Mr. Cordray arrived in Washington as outsiders. A five-time “Jeopardy” champion from Ohio, Mr. Cordray became the consumer bureau’s enforcement chief after losing re-election for state attorney general. As Ohio’s top prosecutor, he became known as the Midwestern sheriff of Wall Street.

Ms. White, who was born in Kansas City, Mo., changed career paths after graduating with a master’s degree in psychology. She obtained a law degree from Columbia University in 1974, and a few years later, began her first stint as a federal prosecutor in Manhattan.

She ultimately became the United States attorney in Manhattan, earning a reputation as a tenacious prosecutor with an independent streak. Ms. White embraced the often-repeated joke that her office was the United States attorney for the “sovereign,” rather than Southern, district of New York.

In 1997, aides to Manhattan District Attorney Robert M. Morgenthau accused her of trying to thwart a state insider trading investigation by allowing a defendant charged by the district attorney’s office to plead guilty to federal charges. Doing so effectively ended Mr. Morgenthau’s case, but Ms. White was unapologetic. “To prosecute such crimes under only state law diminishes their seriousness,” she said at the time.

As the chief federal prosecutor in Manhattan, Ms. White pursued white-collar crime and Wall Street fraud. She secured a $340 million fine against Daiwa Bank for illegally covering up trading losses and other crimes.

She distinguished her career with a series of terrorism cases. She supervised the original investigation into Osama bin Laden and Al Qaeda, and oversaw six major trials, including those stemming from the 1993 World Trade Center bombing and a plot to blow up New York landmarks.

Patrick J. Fitzgerald, the former United States attorney in Chicago who previously worked under Ms. White, called her “a force of nature.”

She also trained a generation of federal prosecutors. Two former assistants became high-level S.E.C. officials: Robert S. Khuzami, the departing enforcement chief, and George S. Canellos, his deputy. Preet Bharara, the current United States attorney in Manhattan, whom Ms. White hired in 1999, emphasized her “legendary work ethic,” citing her 1 a.m. e-mail dispatches. Her philosophy, Mr. Bharara said, was that prosecuting wrongdoing was “not just about earning notches on your belt.”

While former employees described her as “no nonsense,” she was often spotted sipping a Bud Light at a weekly social gathering for junior prosecutors. And despite being barely 5 feet tall, she also was an exuberant point guard in a local lawyers’ basketball league, and once arrived at a tennis match on a red motorcycle, while Helen Reddy’s “I Am Woman” blared loudly.

With her prosecutorial victories and independent political status, Ms. White is expected to receive broad support on Capitol Hill. Senator Charles E. Schumer of New York joined a chorus of Democratic enthusiasm on Thursday, declaring that Ms. White was a “tough-as-nails prosecutor.”

But she could face questions about her command of Wall Street arcana.

Regulatory chiefs are often market experts or academics. If confirmed, Ms. White will succeed Elisse B. Walter, a longtime S.E.C. official, who took over as chairwoman after Mary L. Schapiro stepped down as the agency’s leader in December. Ms. Schapiro, a seasoned policy maker and specialist in market structure, overhauled the agency after it was blamed for missing the warning signs of the financial crisis. Ms. White, in contrast, built her career on the law-and-order side of the securities industry, with just a brief stint as a director of the Nasdaq.

The gaps in her résumé could complicate Ms. White’s agenda in the face of fierce Wall Street lobbying. Under the next chairman, the agency must write dozens of rules to carry out the Dodd-Frank act, a regulatory overhaul passed in response to the crisis. The agency also must grapple with the increasingly complex markets and rapid-fire trading that dominate Wall Street.

People close to the S.E.C. note, however, that her husband, John W. White, is a veteran of the agency. From 2006 through 2008, he was head of the S.E.C.’s division of corporation finance.

Ms. Schapiro also argued that Ms. White’s outsider status could inject new life into the agency. “Nobody comes in an expert across the board,” Ms. Schapiro said. “A fresh look on some of these policy issues might be exactly what we need.”

Ms. White could face additional questions about her career, a revolving door in and out of government. In private practice, she defended some of Wall Street’s biggest names, including Kenneth D. Lewis, a former chief of Bank of America. As the head of litigation at Debevoise & Plimpton, she also represented JPMorgan Chase and the board of Morgan Stanley.

Barbara S. Jones, who retired recently from the federal bench in Manhattan and now practices law at the firm Zuckerman Spaeder, said Ms. White, a close friend, would benefit from both prosecuting and defending executives over her career. “She has been on both sides,” Ms. Jones said. “She will be tough when she has to be, but she’ll be fair.”

At the White House on Thursday, Ms. White spoke only briefly, saying she would work “to protect investors and to ensure the strength, efficiency and the transparency of our capital markets.” Mr. Obama noted that Ms. White, whose 43rd wedding anniversary fell on Thursday, was a childhood fan of “The Hardy Boys,” as he was, adding that she “built a career the Hardy boys could only dream of.” “You don’t want to mess with Mary Jo,” he said.

Peter Baker and Kitty Bennett contributed reporting.

A version of this article appeared in print on 01/25/2013, on page A1 of the NewYork edition with the headline: Sign to Wall St. In Obama’s Picks For Regulators.

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DealBook: Commerzbank to Cut Up to 6,000 Jobs

LONDON – Commerzbank, the second-largest lender in Germany, is planning to cut up to 6,000 jobs in a bid to increase earnings, joining other European banks that have announced restructuring plans in recent months.

The bank said on Thursday that it expected to eliminate 4,000 to 6,000 jobs by 2016, or 7 to 10 percent of its work force.

The layoffs will affect Commerzbank’s global operations, particularly a retail division that had expanded rapidly in recent years, according to a person with direct knowledge of the matter who spoke on condition of anonymity because he was not authorized to speak publicly.

In the wake of tougher capital requirements, sluggish economic growth and growing concerns about risky trading activity, several European banks have announced efforts to reduce their work forces, shed unwanted assets and increase capital reserves.

In October, the Swiss financial giant UBS said it would eliminate 10,000 jobs in its investment bank in a move to reduce exposure to risky trading activity and to focus on its wealth management division.

Barclays, which is to formally announce its own restructuring plan on Feb. 12, also started consulting with staff members in its investment banking unit this week over potential layoffs.

The expected job cuts at Barclays could result in up to a 10 percent reduction, or around 2,000 jobs, in the division, according to two people with direct knowledge of the matter who spoke on condition of anonymity because they were not authorized to speak publicly. On Thursday, Barclays started to reduce the size of its investment banking staff in Asia by 15 percent, or 70 jobs, according to one of the people.

On Jan. 17, the firm’s new chief executive, Antony P. Jenkins, told staff members they should leave the bank if they did not want to help rebuild its reputation. Barclays agreed last year to a $450 million settlement with American and British authorities over the manipulation of the London interbank offered rate, or Libor, a crucial benchmark rate.

The layoffs at Commerzbank come after efforts by the bank’s chief executive, Martin Blessing, to sell some of the firm’s 160 billion euros ($213 billion) of noncore assets, including shipping and real estate investments. The bank is also trying to reduce its exposure to European sovereign debt because of continuing volatility in countries like Spain and Greece.

Commerzbank said it would start negotiations with employee unions in early February to decide on the final number of layoffs. The announcement comes a day after Mr. Blessing was spotted at a party on Wednesday night at the luxury Belvedere hotel in Davos, whose attendees also included Deutsche Bank’s co-chief executive Anshu Jain. The Commerzbank chief is attending the World Economic Forum in the Swiss town.

Commerzbank received an 18.2 billion euro bailout from the German government in 2008 after its mistimed acquisition of a rival German bank, Dresdner, for 5.5 billion euros at the height of the financial crisis. As part of the deal, the German government still owns a 24 percent stake in Commerzbank.

Shares in Commerzbank bank rose less than 1 percent in morning trading in Frankfurt on Thursday.

European banks have been struggling through a series of recent financial scandals, mounting demands to increase capital reserves and growing political pressure to increase lending to stimulate local economies.

The Continent’s major financial institutions will begin reporting earnings next week, and analysts will be waiting to see if they will follow UBS’s lead in announcing major changes in response to these pressures.

“We believe that UBS has kicked off the much-awaited industry restructuring, even if each bank takes a different path,” Citigroup banking analysts told investors in a research note.

Neil Gough reported from Hong Kong. Jack Ewing contributed reporting from Davos.

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McDonald's December Sales Help Fourth-Quarter Profit

(Reuters) - McDonald's Corp reported an unexpected rise in sales in December at established U.S. restaurants, helping to lift its fourth-quarter profit above analysts estimates.

The world's largest restaurant chain on Wednesday said sales at U.S. eateries open at least 13 months rose 0.9 percent in December, compared with an average estimate compiled by Consensus Metrix calling for a 1.78 percent drop in the month.

A push by the company to have more of its restaurants open on Christmas and a shift of the limited-time offering of its popular McRib sandwich to December, both helped boost U.S. sales during the month.

But analysts said the early part of 2013 will be tough for the chain as it runs short of quick fixes for boosting U.S. sales that have been hurt by stiffer competition for customers who are pinching pennies in a weak economic recovery.

Net income at the world's biggest restaurant chain rose to $1.40 billion, or $1.38 per share, from $1.38 billion, or $1.33 per share, a year earlier.

Analysts on average forecast $1.33 a share, according to Thomson Reuters I/B/E/S.

Total sales rose 1.5 percent to $4.59 billion.

McDonald's fourth-quarter global sales at restaurants open at least 13 months rose 0.1 percent. Analysts on average had forecast a 0.3 percent decline, according to Consensus Metrix.

(Reporting By Lisa Baertlein in Los Angeles and Brad Dorfman in Chicago; Editing by Maureen Bavdek)

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Storm and Pension Costs Leave Verizon With Bigger Loss

Verizon Communications is still adding plenty of customers and selling a lot of phones, but the impact from Hurricane Sandy and pension costs sank the company’s quarterly earnings.

The company on Tuesday reported a fourth-quarter loss of $4.22 billion, or $1.48 a share, more than double the loss a year ago. Damages from Hurricane Sandy cost 7 cents a share, and pension charges reduced earnings by $1.55 a share, Verizon said. Revenue climbed to $30.05 billion, a 5.7 percent increase compared with a year ago.

Analysts had expected adjusted earnings of 50 cents a share, compared to actual adjusted earnings of 45 cents a share, and revenue of $29.75 billion, according to Thomson Reuters.

“Verizon seized growth opportunities in the fourth quarter to cap a year of solid progress across the entire business,” said Lowell McAdam, chief executive of Verizon, in a statement. “We delivered a total return of 13.2 percent to shareholders in 2012, and we enter 2013 ready to accelerate the momentum we’ve achieved and create significant shareholder value in the years to come.”

The company, based in New York, said that its wireless business was growing. Over the quarter, it sold 9.8 million smartphones, compared with 7.7 million in the same quarter a year ago, and added 2.1 million contract subscribers, the most valuable type of customer, versus 1.2 million a year ago. The company said its new shared data plans helped increase the money it made from subscribers; average monthly revenue from each account grew 6.6 percent to $146.80.

Verizon Wireless, the largest American wireless carrier, is leading the race to build out its fourth-generation network, called LTE, which is faster and more efficient than its predecessor. The company has deployed LTE in 476 cities; AT&T, the second-biggest American carrier, is in a distant second with 135 cities.

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How M.I.T. Ensnared a Hacker, Bucking a Freewheeling Culture

Months earlier, the mysterious visitor had used the school’s computer network to begin copying millions of research articles belonging to Jstor, the nonprofit organization that sells subscription access to universities.

The visitor was clever — switching identifications to avoid being blocked by M.I.T.’s security system — but eventually the university believed it had shut down the intrusion, then spent weeks reassuring furious officials at Jstor that the downloading had been stopped.

However, on Jan. 3, 2011, according to internal M.I.T. documents obtained by The New York Times, the university was informed that the intruder was back — this time downloading documents very slowly, with a new method of access, so as not to alert the university’s security experts.

“The user was now not using any of the typical methods to access MITnet to avoid all usual methods of being disabled,” concluded Mike Halsall, a senior security analyst at M.I.T., referring to the university’s computer network.

What the university officials did not know at the time was that the intruder was Aaron Swartz, one of the shining lights of the technology world and a leading advocate for open access to information, with a fellowship down the road at Harvard.

Mr. Swartz’s actions presented M.I.T. with a crucial choice: the university could try to plug the weak spot in its network or it could try to catch the hacker, then unknown.

The decision — to treat the downloading as a continuing crime to be investigated rather than a security threat that had been stopped — led to a two-day cat-and-mouse game with Mr. Swartz and, ultimately, to charges of computer and wire fraud. Mr. Swartz, 26, who faced a potentially lengthy prison term and whose trial was to begin in April, was found dead of an apparent suicide in his Brooklyn apartment on Jan. 11.

Mr. Swartz’s supporters called M.I.T.’s decision a striking step for an institution that prides itself on operating an open computer network and open campus — the home of a freewheeling programming culture. M.I.T.’s defenders viewed the intrusion as a computer crime that needed to be taken seriously.

M.I.T. declined to confirm any of these details or comment on its actions during the investigation. The university’s president, L. Rafael Reif, said last week, “It pains me to think that M.I.T. played any role in a series of events that have ended in tragedy.” He appointed a professor, Hal Abelson, to analyze M.I.T.’s conduct in the investigation. To comment now, a spokeswoman for the university said, would be “to get ahead of that analysis.”

Early on Jan. 4, at 8:08 a.m., according to Mr. Halsall’s detailed internal timeline of the events, a security expert was able to locate that new method of access precisely — the wiring in a network closet in the basement of Building 16, a nondescript rectangular structure full of classrooms and labs that, like many buildings on campus, is kept unlocked.

In the closet, Mr. Halsall wrote, there was a netbook, or small portable computer, “hidden under a box,” connected to an external hard drive that was receiving the downloaded documents.

At 9:44 a.m. the M.I.T. police were called in; by 10:30 a.m., the Cambridge police were en route, and by 11 a.m., Michael Pickett, a Secret Service agent and expert on computer crime, was on the scene. On his recommendation, a surveillance camera was installed in the closet and a second laptop was connected to the network switch to track the traffic.

There may have been a reason for the university’s response. According to the timeline, the tech team detected brief activity from China on the netbook — something that occurs all the time but still represents potential trouble.

E-mails among M.I.T. officials that Tuesday in January 2011 highlight the pressures university officials felt over a problem they thought they had solved. Ann J. Wolpert, the director of libraries, wrote to Ellen Finnie Duranceau, the official who was receiving Jstor’s complaints: “Has there ever been a situation similar to this when we brought in campus police? The magnitude, systematic and careful nature of the abuses could be construed as approaching criminal action. Certainly, that’s how Jstor views it.”

Some of Mr. Swartz’s defenders argue that collecting and providing evidence to the government without a warrant may have violated federal and state wiretapping statutes.

John Schwartz contributed reporting.

This article has been revised to reflect the following correction:

Correction: January 21, 2013

An earlier version of this article misquoted part of statement by a spokeswoman for the Massachusetts Institute of Technology. Referring to a review of M.I.T.’s conduct that was commissioned by the university’s president, she said to comment now on the events surrounding Aaron Swartz’s arrest would be “to get ahead of that analysis,” not “to get ahead of that investigation.” 

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N.T.S.B. Rules Out a Cause for Battery Fire on 787 Dreamliner

TOKYO — The National Transportation Safety Board has ruled out excess voltage as the cause of a battery fire on the Boeing 787 Dreamliner jet operated by Japan Airlines at Boston’s Logan Airport this month, the agency said on Sunday.

Last week, governments across the world grounded the Dreamliner jet after a problem with a lithium-ion battery on a second 787 plane, flown by All Nippon Airways forced the jet to make an emergency landing in western Japan.

The agency said in a statement forwarded by a Boeing Japan representative that examination of the flight recorder data from the JAL B-787 airplane indicated that the battery in the auxiliary power unit “did not exceed its designed voltage of 32 volts.”

On Friday, a Japanese safety official told reporters that excessive electricity may have overheated the battery in the ANA-owned Dreamliner, which was forced to make an emergency landing at Japan’s Takamatsu airport last week.

American investigators have examined the lithium-ion battery that powered the auxiliary unit, where the battery fire started in the JAL plane, as well as several other components removed from the airplane, including wire bundles and battery management circuit boards, the safety agency statement said.

On Tuesday, the investigating group will convene in Arizona to test and examine the battery charger and download nonvolatile memory from the controller of the auxiliary power unit, it added.

The GS Yuasa Corporation of Japan makes the batteries for the Dreamliner, while Thales of France makes the control systems for the battery.

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Analysis: Amid Tears Lance Armstrong Leaves Unanswered Questions in Oprah Winfrey Interview

In an extensive interview with Oprah Winfrey that was shown over two nights, Lance Armstrong admitted publicly for the first time that he doped throughout his cycling career. He revealed that all seven of his Tour de France victories were fueled by doping, that he never felt bad about cheating, and that he had covered up a positive drug test at the 1999 Tour with a backdated doctor’s prescription for banned cortisone.

Armstrong, the once defiant cyclist, also became choked up when he discussed how he told his oldest child that the rumors about Armstrong’s doping were true.

Even with all that, the interview will most likely be remembered for what it was missing.

Armstrong had not subjected himself to questioning from anyone in the news media since United States antidoping officials laid out their case against him in October. He chose not to appeal their ruling, leaving him with a lifetime ban from Olympic sports.

He personally chose Winfrey for his big reveal, and it went predictably. Winfrey allowed him to share his thoughts and elicited emotions from him, but she consistently failed to ask critical follow-up questions that would have addressed the most vexing aspects of Armstrong’s deception.

She did not press him on who helped him dope or cover up his drug use for more than a decade. Nor did she ask him why he chose to take banned performance-enhancing substances even after cancer had threatened his life.

Winfrey also did not push him to answer whether he had admitted to doctors in an Indianapolis hospital in 1996 that he had used performance-enhancing drugs, a confession a former teammate and his wife claimed they overheard that day. To get to the bottom of his deceit, antidoping officials said, Armstrong has to be willing to provide more details.

“He spoke to a talk-show host,” David Howman, the director general of the World Anti-Doping Agency, said from Montreal on Friday. “I don’t think any of it amounted to assistance to the antidoping community, let alone substantial assistance. You bundle it all up and say, ‘So what?’

Jeffrey M. Tillotson, the lawyer for an insurance company that unsuccessfully withheld a $5 million bonus from Armstrong on the basis that he had cheated to win the Tour de France in 2004, said his client would make a decision over the weekend about whether to sue Armstrong. If it proceeds, the company, SCA Promotions, will seek $12 million, the total it paid Armstrong in bonuses and legal fees.

“It seemed to us that he was more sorry that he had been caught than for what he had done,” Tillotson said. “If he’s serious about rehabbing himself, he needs to start making amends to the people he bullied and vilified, and he needs to start paying money back.”

Armstrong, who said he once believed himself to be invincible, explained in the portion of the interview broadcast Friday night that he started to take steps toward redemption last month. Then, after dozens of questions had already been lobbed his way, he became emotional when he described how he told his 13-year-old son, Luke, that yes, his father had cheated by doping. That talk happened last month over the holidays, Armstrong said as he fought back tears.

“I said, listen, there’s been a lot of questions about your dad, my career, whether I doped or did not dope, and I’ve always denied, I’ve always been ruthless and defiant about that, which is probably why you trusted me, which makes it even sicker,” Armstrong said he told his son, the oldest of his five children. “I want you to know it’s true.”

At times, Winfrey’s interview seemed more like a therapy session than an inquisition, with Armstrong admitting that he was narcissistic and had been in therapy — and that he should be in therapy regularly because his life was so complicated.

In the end, the interview most likely accomplished what Armstrong had hoped: it was the vehicle through which he admitted to the public that he had cheated by doping, which he had lied about for more than a decade. But his answers were just the first step to clawing back his once stellar reputation.

On Friday, Armstrong appeared more contrite than he had during the part of the interview that was shown Thursday, yet he still insisted that he was clean when he made his comeback to cycling in 2009 after a brief retirement, an assertion the United States Anti-Doping Agency said was untrue. He also implied that his lifetime ban from all Olympic sports was unfair because some of his former teammates who testified about their doping and the doping on Armstrong’s teams received only six-month bans.

Richard Pound, the founding chairman of WADA and a member of the International Olympic Committee, said he was unmoved by Armstrong’s televised mea culpa.

“If what he’s looking for is some kind of reconstruction of his image, instead of providing entertainment with Oprah Winfrey, he’s got a long way to go,” Pound said Friday from his Montreal office.

Armstrong acknowledged to Winfrey during Friday’s broadcast that he has a long way to go before winning back the public’s trust. He said he understood why people recently turned on him because they felt angry and betrayed.

“I lied to you and I’m sorry,” he said before acknowledging that he might have lost many of his supporters for good. “I am committed to spending as long as I have to to make amends, knowing full well that I won’t get very many back.”

Armstrong also said that the scandal has cost him $75 million in lost sponsors, all of whom abandoned him last fall after Usada made public 1,000 pages of evidence that Armstrong had doped.

“In a way, I just assumed we would get to that point,” he said of his sponsors’ leaving. “The story was getting out of control.”

In closing her interview, Winfrey asked Armstrong a question that left him perplexed.

“Will you rise again?” she said.

Armstrong said: “I don’t know. I don’t know. I don’t know what’s out there.”

Then, as the interview drew to a close, Armstrong said: “The ultimate crime is the betrayal of these people that supported me and believed in me.”

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