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Bank of America is replacing some customers’ credit cards because of a data theft at a New Jersey card processing company. The bank won’t say how many cards it is replacing.

Last week, Heartland Bank in St. Louis also said it was replacing customer cards.

The data theft occurred at Heartland Payment Systems in New Jersey low fee payday loans. Heartland Bank says it is not affiliated with Heartland Payment Systems.

jgallagher@post-dispatch.com | 314-340-8390

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Bank of Japan policy board members said they should focus on lowering longer-term borrowing costs for companies after cutting the overnight rate to 0.l percent in December, meeting minutes show.

Interest rates on corporate debt remained high, so the bank should consider taking steps “that would have stronger downward impact on these rates,” some members said, according to minutes of the Dec. 18-19 meeting released in Tokyo today.

As well as cutting the benchmark rate from 0.3 percent at the gathering, the bank decided to buy commercial paper for the first time to counter the deepening credit squeeze. The board last week forecast the sharpest economic contraction in the postwar era as the global recession hammers Japan’s exporters.

“Today’s minutes reveal that, after this, they’re going to move more to longer-term rates,” said Masamichi Adachi, senior economist at JPMorgan Chase & Co. in Tokyo, who used to work at the central bank. “Banks are less willing to lend to each other, therefore rates are going up.”

The central bank last week said it will buy 3 trillion yen ($33.7 billion) in A1 rated commercial paper, including asset- backed debt, from lenders through March 31. It also said it may start buying corporate bonds of up to one year in maturity.

Board members agreed that corporate financing conditions have “deteriorated sharply” as businesses find it more expensive to sell commercial paper and corporate bonds or borrow directly from banks.

Costlier to Borrow

The spread on three-month commercial paper issued by companies rated A1 against government financing bills of the same maturity has widened to 83 basis points from 12.5 basis points before the collapse of Lehman Brothers Holdings Inc. on Sept. 15.

A few members said large companies are seeking loans from banks because they are struggling to raise finance by selling debt, and that’s making it more difficult for smaller businesses to borrow. Bank lending climbed 4.1 percent in December, the fastest pace in 16 years, as the global financial crisis forced companies out of the corporate debt market paydayloans.

“The Bank of Japan will probably continue to adopt steps to shore up companies’ borrowing and lenders’ balance sheets because the economy is in freefall,” said Tomoko Fujii, head of Japan economics and strategy at Bank of America Corp. in Tokyo.

Exports plunged a record 35 percent in December from a year earlier as people around the world stopped buying cars and electronics. The decline in demand probably caused Japanese companies to cut factory production at a record pace last month, economists predict a report will show on Jan. 30.

Shrinking Economy

Gross domestic product will shrink 1.8 percent in the year ending March 31 and 2 percent next year, the board members said. Both projections would exceed a 1.5 percent decline in the year ended March 1999, the worst since 1945. The economy will recover to expand 1.5 percent in the year ending March 2011, they said.

The central bank cut the key overnight lending rate at the meeting because the economy’s deterioration was an “emergency” and the policy board needed to take all practicable steps immediately, the minutes said.

One member said a further reduction shouldn’t be ruled out because the economy was “very likely to deteriorate further.” Some said 0.1 percent was the “lowest possible level that would not impair the proper functioning of the market mechanism.”

Board member Tadao Noda, a former executive of Mizuho Holdings Inc., opposed the cut, saying it would have a “marginal stimulative effect on the economy.” Noda, the only dissenter, also said a reduction would make it unprofitable for investors to trade in the money market.

Another member, Atsushi Mizuno, said the bank should lower the interest rate it pays on the reserves lenders deposit at the central bank to zero percent. The board kept that rate at 0.1 percent at the meeting, removing any difference, or spread, between what it pays on the reserves and the key lending rate.

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General Electric Co reported a 44 percent drop in quarterly profit on weakness at GE Capital and its lighting and appliance units, and warned that 2009 would be “extremely difficult.”

Despite meeting Wall Street’s lowered estimates, earnings at GE Capital — its Achilles heel for the past year — tumbled 67 percent. GE’s energy infrastructure unit, which makes electric turbines and windmills, was the highlight, recording 11 percent profit growth.

Chief Executive Jeff Immelt said on Friday the result — which met Wall Street’s expectations — reflected brutal economic conditions.

“We’re planning for a really tough environment,” Immelt told analysts on a conference call. “The recession is tough, the financial services crisis is worse.”

Investors have become increasingly concerned over the past month that the world’s largest maker of jet engines and electric turbines may have to sacrifice its $1.24 per share annual dividend.

Analysts are also asking whether it could lose its coveted top-tier credit rating, after Standard & Poor’s lowered its outlook to “negative” in December.

“GE is not fully out of the woods and macro uncertainties continue to point to continued risk for the dividend and AAA-rating,” said Goldman Sachs analyst Terry Darling.

The 52-year-old Immelt defended the dividend, calling it “a good return to investors in this moment of uncertainty online payday loans. But we’re not straining in order to pay it … We’ve got lots of cash.”

GE shares fell 5 percent, or 68 cents, to $12.80 on the New York Stock Exchange.

MEETS FORECAST, MAINTAINS OUTLOOK

The Fairfield, Connecticut-based company reported a fourth-quarter profit of $3.72 billion, or 35 cents per diluted share, compared with $6.7 billion, or 66 cents, a year earlier, as the U.S. conglomerate and economic bellwether closed out one of the toughest years in its 117-year history.

Factoring out one-time items, results met Wall Street’s expectations, according to Reuters Estimates.

Revenue fell 4.8 percent to $46.21 billion.

In early December, the company sharply lowered the high end of its fourth-quarter profit forecast.

“While GE clearly is being impacted by recession and its financial business is being impacted by the financial meltdown, they are navigating it,” said David Katz, chief investment officer, Matrix Asset Advisors. “They are getting through, they are earning money through it.” 

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Two years after opening, Progress West HealthCare Center in O’Fallon, Mo., will expand with a new medical office building that will bring more general physicians and specialists to south St. Charles County.

Construction of the 60,000-square-foot office building is expected to be completed by the second quarter of 2010.

"It will allow us the ability to have our first expansion from hospital services," said John Antes, president of Progress West.

Antes said the new medical facility at the 72-bed hospital will provide additional outpatient services such as therapy, cardiac care and imaging. Looking ahead to 2010 and 2011, Antes said cancer care could be the next service provided at the hospital’s 48-acre campus.

Part of the $30 million project also will include a 40,000-square-foot data center to operate as the primary computer and data processing site for the entire BJC HealthCare system to replace a facility in midtown St faxless payday advance. Louis.

Both buildings are expected to meet requirements for Leadership in Energy and Environmental Design certification.

Construction manager for the project is Clayco/Legacy and the architectural firm is Arcturis.

Progress West became BJC HealthCare’s 13th hospital when it opened in early 2007.

bbernhard@post-dispatch.com | 314-340-8129

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Clayco Inc. promoted Lance Cage to senior vice president of Clayco Realty Group. In his new position, Cage will manage all stages of real estate development projects.

Previously vice president of Clayco’s corporate business unit, Cage brings to the position more than 20 years’ experience.

Cage holds a master’s degree in business administration from the University of Dayton in Ohio, a bachelor’s in civil engineering from Washington University and a bachelor’s in liberal arts from Wheaton College in Wheaton, Ill.

He is a registered professional engineer and a LEED-accredited professional with the United States Green Building Council payday loan.

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Citigroup Inc () will close its private banking unit in China, which targeted the country’s growing ranks of millionaires, and fold the operations into its consumer banking arm as it streamlines its businesses, sources familiar with the situation said on Tuesday.

Citigroup declined to comment on the restructuring plan but said it would continue to offer private banking services. “Citi remains entirely committed to the private banking space in China, and we will continue to invest in it,” it said in a statement.

Several dozen employees at the three-year-old private banking unit will be transferred to other positions inside the bank, including the consumer banking business, said the sources, who declined to be identified as they were not authorized to speak to the media.

The unit’s closure comes as the New York-based lender, the third-largest U.S. bank by assets, is close to selling a stake in its Smith Barney retail brokerage business to Morgan Stanley (), aiming to shore up its balance sheet.

Both its private bank and Smith Barney are under Citigroup’s wealth management group.

Citigroup’s private banking businesses elsewhere in Asia, including Hong Kong and Singapore, are operating normally and it is unclear whether the decision to close the China operation would herald similar restructuring elsewhere, said the sources.

RUSH FOR WEALTH

Lenders including HSBC Holdings Plc (), Standard Chartered Plc (), Bank of China () and Bank of Communications (), rushed to launch private banking services in China in recent years, jostling for business from a growing wealthy class created by the once-booming economy paydayloans.

Operations faced an acute shortage of experienced private bankers, in a country where such services were almost unheard of three years ago, and struggled with high rates of staff turnover.

Client managers-turned-private bankers found the business required more than just playing golf with wealthy clients, while overseas-trained private bankers faced challenges including stringent capital controls, a limited range of products and the lack of a mature set of rules governing the industry.

Citigroup started private banking in China in 2006, targeting wealthy Chinese with net worth of at least $10 million, a typical threshold for such services globally.

Although private banking’s prospects remain bright in China, with HSBC forecasting a population of 16 million high net-worth individuals in China by 2011 with $6.2 trillion in total assets, foreign banks face tough hurdles.

“Private banking services are constrained by a scarcity of outlets and a limited number of financial tools,” said Wang Jing, head of private banking at China Merchants Bank ().

“Business models transplanted from overseas may not work in China.”

Citigroup’s global private banking clients have access to a wide range of risk management and hedging instruments, including interest-rate swaps, options, structured notes and warrants, according to the company’s website. 

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The number of Americans collecting unemployment benefits surged to a 26-year high as the labor market worsened in a yearlong recession.

Initial jobless claims unexpectedly fell by 24,000 to 467,000 in the week that ended Jan. 3, the lowest level in almost three months, the Labor Department said today in Washington. The total number of people getting benefits rose a week earlier to 4.6 million, the most since 1982.

While the government projects a surge in firings in late December and early January, job cuts may have come earlier last year as sinking sales and the worst credit conditions in seven decades forced companies such as General Motors Corp. and Chrysler LLC to pare costs. The claims report came as President- elect Barack Obama warned the U.S. risks sinking deeper into an economic crisis without a stimulus package of about $775 billion.

“The labor market is just hemorrhaging here,” said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York, who correctly forecast claims would fall. “Just look at the continuing claims numbers, they give you a better idea of what is going on. Nobody can find work once they’re fired.”

Jobless claims were projected to rise to 545,000, according to the median projection of 35 economists in a Bloomberg News survey. Estimates ranged from 480,000 to 600,000. Claims in the prior week were revised to 491,000 from 492,000.

December Jobs

The government may report tomorrow the economy lost another 510,000 jobs in December, bringing the 2008 total to a six-decade high of 2.4 million, according to economists surveyed by Bloomberg. The unemployment rate probably jumped to 7 percent, the highest level since 1993.

Economists surveyed last month projected the rate will climb to 8.2 percent by the end of 2009, signaling job cuts are likely to keep rising. Martin Feldstein, a Harvard University professor and former adviser to President Ronald Reagan, yesterday predicted during an interview on Bloomberg Television that the jobless rate may eventually exceed 10 percent.

“I don’t believe it’s too late to change course, but it will be if we don’t take dramatic action as soon as possible,” Obama said in the address, delivered at George Mason University in the Washington suburb of Fairfax, Virginia. “If nothing is done, this recession could linger for years.”

Obama has pledged his plan will save or create 3 million jobs over the next two years.

Moving Average

The four-week moving average of claims, a less volatile measure, fell to 525,750 for the period ending Jan. 3, compared with 552,750 the prior week, today’s report showed.

Automakers were among companies shutting down operations last year earlier than the government anticipated, leading to a jump in claims when the figures are adjusted for seasonal variations 500 fast cash. Those increases reverse in later weeks when the Labor Department’s computations project the firings will take place.

MFR’s Shapiro also said the numbers are being influenced by changing patterns in retail employment this year. Since merchants expected a drop in sales, they hired fewer workers and, as a result, now need to fire fewer seasonal employees than usual, he said.

The unemployment rate among people eligible for benefits, which tends to track the jobless rate, held at 3.4 percent. The unemployment rate, continuing claims and the state claims figures are reported with a one-week lag.

Thirty-two states and territories reported a decrease in new claims for the week ended Dec. 27, while 21 showed an increase.

Seasonal Changes

Jobless claims reflect weekly firings and tend to rise as job growth — measured by the monthly payroll report — slows.

The economy entered a recession in December 2007, the National Bureau of Economic Research announced Dec. 1. Economists surveyed by Bloomberg early last month projected gross domestic product would shrink in the fourth quarter by 4.3 percent, the biggest decline since 1982, and would continue contracting through the first half of 2009.

Federal Reserve policy makers saw “substantial” risks to the economy last month as they cut the benchmark interest rate to a record low and pledged o expand emergency loans if necessary.

“Conditions in the labor market deteriorated considerably in recent months as most major industry groups shed jobs,” the Fed said this week as it released minutes of the Dec. 15-16 monetary policy meeting.

GM, Chrysler

As General Motors and Chrysler last month sought billions of dollars in loans to keep operating, the major U.S. automakers also idled or slashed production to clear out inventories.

Chrysler idled all 30 of its assembly plants on Dec. 17 for at least a month, while Ford said 9 of 15 North American factories would shut for the first week in January. GM announced output cuts Dec. 12 that affected 20 plants.

Firings are rippling from manufacturers and construction companies to service industries as demand falters.

EMC Corp., the world’s biggest maker of storage computers, said yesterday it will cut about 2,400 positions, about seven percent of its workforce.

Retailers including Talbots Inc. and Sears Holdings Corp. may close stores in the first half of the year, according to the International Council of Shopping Centers, as job losses and economic concerns keep consumers from the shops. Sales at stores open at least a year fell as much as 2 percent in November and December even as stores offered discounts of 65 percent or more.

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Bank of England Governor Mervyn King may abandon his reticence to shore up the financial system as the economy slides deeper into a recession.

With the central bank set to cut the U.K.’s key interest rate to the lowest in history this week, King may soon be forced to follow the Federal Reserve and pursue other ways to pump money into an economy contracting for the first time since 1991.

King’s first course of action will probably be to expand the 200 billion-pound ($290 billion) program that allows banks to swap illiquid securities for government debt, economists say. That would suggest he will be more aggressive in helping banks after criticism from executives and former policy makers that he was too focused on the dangers of reckless lending.

“The balance between moral hazard and doing what’s necessary to get the economy back on track is shifting,” said Nick Kounis, chief European economist at Fortis in Amsterdam and a former U.K. Treasury official. “King has made a big deal in the past about not being too generous, and it would be quite a big U-turn for him.”

King’s Monetary Policy Committee will on Jan. 8 reduce its main rate to 1.5 percent from 2 percent, according to the median of 50 forecasts in a Bloomberg News survey of economists.

That would be the lowest since the bank was founded in 1694 to finance King William III’s war against France. The European Central Bank’s benchmark stands at 2.5 percent. Rates in the U.S. and Japan are close to zero.

Blame

King has been under fire since the credit crisis started in 2007 for being too slow to help the banking system. Lawmakers criticized the Bank of England, along with the government and regulators, for not doing enough to soothe the market tensions that led to the collapse of Northern Rock Plc.

In September, King refused to extend the Special Liquidity Scheme beyond its original October deadline until the collapse of Lehman Brothers Holdings Inc. forced him to reverse his decision. The program now runs until Jan. 30.

King “must shoulder some of the blame” for the near- collapse of mortgage lender HBOS Plc in the subsequent market turmoil, Keith Skeoch, chief executive officer of Standard Life Investments Ltd., said in September. Former policy makers Charles Goodhart and Willem Buiter have said it was a mistake for King to put any deadline on the liquidity program.

“I would hope they’ll be more generous,” said Michael Saunders, chief Western European economist at Citigroup Inc. in London. “I would hope they’d realize the cost of the emphasis on moral hazard is to throw a lot of fairly blameless households and businesses to the recession cash advance no fax.”

Recession

The Bank of England is now stepping up its response and joining Prime Minister Gordon Brown in encouraging banks to resume lending. British house prices lost almost a fifth of their value last year, HBOS said Jan. 2, and manufacturing contracted for an eighth month.

U.K. officials cut their main rate by 1.50 percentage points in November, the most since 1992, and have reduced it by a total of 3.75 percentage points since December 2007.

The dilemma facing King and other central bankers is that near-zero interest rates and still-frozen credit markets mean monetary policy now packs less of a punch, forcing them to look for other methods to spur lending.

Fed Chairman Ben S. Bernanke on Dec. 16 cut the rate for overnight loans between banks to a target range of zero to 0.25 percent, and the Fed said it would buy unlimited quantities of securities. Three days later, the Bank of Japan lowered the overnight lending rate to 0.1 percent from 0.3 percent and decided to buy corporate debt for the first time.

Wider Range

Bank of England officials may not be far behind after last month identifying a need “for further measures to underpin lending growth.” One option is to loosen the Special Liquidity Scheme’s terms by reducing the fees banks pay to participate, said David Tinsley, an economist at National Australia Bank in London.

King could also widen the range of securities that can be swapped beyond those originated before 2008 or scrap the program in favor of a bigger arrangement.

“The bank has been quite sharp in trying to keep some kind of moral hazard considerations,” said Tinsley. “Cutting the fees and removing the deadline for origination would be a powerful way of boosting liquidity.”

King told lawmakers in November that the Bank of England would cooperate closely with the Treasury were rates to fall close to zero.

Greater willingness by King to step beyond conventional tools shows the change in his thinking, says Roger Bootle, founder of Capital Economics and a former adviser to the U.K. Treasury.

“King’s been on a remarkable intellectual journey over the last year or so,” he said. “He probably placed too much emphasis on moral hazard for too long. I don’t think you can accuse him of conservatism after what he’s been saying recently.”

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