February 5, 2009

Financial firms still struggling in Europe

Swiss Reinsurance said U.S. billionaire Warren Buffett would invest $2.6 billion in the company, after it lost $861 million in 2008.

Swiss Re said it would also consider raising about $1.72 billion more in capital markets, The New York Times reported Thursday.

The deal allows Buffett's holding company, Berkshire Hathaway, to buy bonds that will be converted into Swiss Re shares in three years at about $21 each, the Times said. The billionaire's holding company currently owns 3 percent of the reinsurance company. At the end of the deal, if Buffett converts the bonds to shares, he would own about 25 percent of the company, Mark Nicholson, an analyst at Standard & Poor's Equity Research said.

On Thursday, Deutsche Bank Chairman Joseph Ackermann said looking forward, we see continuing very difficult conditions for the global economy.

Ackermann's remark, issued in a statement, was made after the largest German bank posted losses of $6.2 billion for the fourth quarter, the Times said.

Spanish bank Banco Santander also warned of a challenging year ahead. The bank's net profits fell 2 percent in 2008, compared with 2007, to $11.45 billion, the Times said.