Finance news. My opinion.

Weak demand for office space and an influx of new buildings has caused landlords to drop rents for commercial buildings in the GTA.

Average asking rents fell 9 per cent or from $17.83 in 2008 to $16.20 per square foot by the end of last year, according to a report by Colliers International Monday.

"The impact of the recession still lingers on Toronto’s office market," said the real estate services firm.

Office vacancies continued on an upward trend, hitting 6.1 per cent equal to 11.3 million square feet at the end of 2009 – a 20 per cent increase. Colliers says things will get worse before they get better, with vacancies hitting 6.9 per cent before the trend is reversed.

"Historically, there has been a lag between economic recovery and its impact on the GTA office market," said John Arnoldi, managing director with Colliers.

Another problem has been with sub-leases, where troubled companies looking to reduce overhead dump part of their office space back onto the market.

The sub-lease market is up 48 per cent from a year earlier, and is now above one million square feet.

That space now competes with existing vacancies and accounts for about 10 per cent of total vacancies.

Meanwhile, commercial landlords say their biggest concern during the recession is the financial stability of tenants as tough economic times are resulting in higher rent defaults.

In a survey of Canadian commercial investors by Colliers, 92 per cent of respondents said "tenant financial credit rating" was at the top of their list when it came to making a leasing decision. This compares to 33 per cent when the survey was last taken in 2007

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Regulators closed regional banks in three U.S. states Friday, bringing the total number of failed banks this year to 133, the Federal Deposit Insurance Corp. said.

Customers of the failed banks are protected. The FDIC, which has insured bank deposits since the Great Depression, currently covers accounts up to $250,000.

In Florida, the Office of the Comptroller of the Currency (OCC) closed Republic Federal Bank, NA, and the FDIC was named receiver.

The four offices of the Miami-based bank will reopen Monday as branches of 1st United Bank, which is based in Boca Raton, Fla.

1st United will acquire all of the failed bank’s $352.7 million deposits. It will also buy $267.1 million of the $433 million worth of assets Republic Federal had on its books as of late September.

Elsewhere, state regulators in Kansas closed the six branches of SolutionsBank, which is based in Overland Park.

Arvest Bank, of Fayetteville, Ark., will assume all of the failed bank’s $421.3 million worth of deposits and will purchase all of its $511.1 million in assets. SolutionsBank branches will reopen Monday as branches of Arvest Bank.

The sole branch of Mesa, Ariz.-based Valley Capital Bank, NA, was closed by the OCC. Its roughly $41 million in deposits and $40 million in assets will be assumed by Enterprise Bank & Trust, of Clayton, Miss one hour payday loan.

The FDIC said customers of the failed banks can access their money over the weekend by writing checks or using ATMs or debit cards. Checks will continue to be processed, and borrowers should make mortgage and loan payments as usual.

An average of 11 banks have failed per month this year, and the FDIC’s deposit insurance fund has slipped into the red for the first time since 1991.

As of the end of September, the fund was $8.2 billion in the hole. But that figure includes $21.7 billion the agency has earmarked for future bank failures.

Friday’s failures of the three banks will cost the FDIC an estimated $252.1 million.

The fund is expected to move back into the black by 2012 as banks repay their insurance premiums over the next three years, which the FDIC says could raise $45 billion.

This year’s tally of bank failures is the highest number since 1992, when 181 banks failed. But the total is far from 1989’s record high of 534 closures which took place during the savings and loan crisis, when the insurance fund also carried a negative balance. 

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It is "inadequate" for global regulators to merely create new rules for the financial sector, because preventing another crisis also requires an equivalent focus on the day-to-day supervision of the industry, says Canada’s top banking regulator.

Julie Dickson, superintendent of the Office of the Superintendent of Financial Institutions, made the remarks Wednesday during an address at the Women in Capital Markets luncheon in Toronto. While the OSFI is updating its supervisory framework and increasing its oversight of risk management, Dickson does not want to cross the line by intruding into the management of banks.

While regulations tend to focus on issues such as banks’ capital requirements, supervision centres on when and how regulators intervene in the industry, Dickson said. When it comes to supervision, there are significant differences in supervisory regimes around the world.

"To the extent that some financial systems were more resilient than others, we need to focus on what worked well," Dickson said. "Day-to-day supervision is one such area that deserves focus and that has not been discussed as yet in any great depth internationally; it should be."

Supervision can involve more on-site visits and proactive intervention when a company’s risk management process appears weak. Dickson made it clear that the regulator will not hesitate to step up its on-site verification if it feels that a financial institution is being deliberately opaque about its business. "We have considerable powers to use if required," she said cash advance now.

While some U.S. supervisors have established permanent offices in the banks, the OSFI prefers to take a "balanced" approach. That’s because its mandate stipulates "regulation and supervision must be carried out having regard to the fact that boards of directors are responsible for the management of financial institutions."

Still, whenever a company appoints a new chief risk officer, the OSFI does consider how that appointment affects its own risk assessment.

"We discuss how much depth the new CRO (chief risk officer) has, the person’s clout and general disposition toward risk. At times, I have to say we have expressed, within OSFI, positive and negative views about such appointments," Dickson said.

Nonetheless, she is wary about the regulator being involved in the actual selection of those individuals. "I think you are crossing the line when you do that," she said.

The OSFI, meanwhile, is "developing guidance on minimum expectations for firms in setting risk appetite," while bolstering its scrutiny of risk management around the use of models.

With respect to board composition, Canadian financial institutions should be filling more of those seats with bankers in an effort to "deepen" expertise on financial issues, she said. "It’s something all institutions should be paying attention to."

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Of all the headaches Bank of America faces these days, none is more painful than its ongoing quest to find a new CEO.

More than a month-and-a-half has passed since Ken Lewis announced his plans to retire from the Charlotte, N.C.-based bank at the end of the year. Still, a successor has yet to emerge.

Some have blamed disorganization among company board members, who were arguably caught flat footed when Lewis first made his stunning announcement at the end of September.

Lewis had previously said he planned to serve until after the bank paid back the money received last fall under TARP, or the Troubled Asset Relief Program.

But the government aid might be part of the problem. Over the past year, regulators pumped more than $45 billion into the nation’s largest bank, nearly half of which came after Bank of America (BAC, Fortune 500) realized that the scope of losses at investment bank Merrill Lynch were much more severe than first thought. BofA agreed to buy Merrill last year just as Lehman Brothers was about to go under.

As one of seven companies to get "exceptional" assistance, BofA has had to succumb to a handful of government demands, including having the pay packages of its top executives reviewed by Kenneth Feinberg, the Obama administration’s so-called "pay czar".

That has apparently scared away some potential successors.

William Demchak, for example, a leading executive at Pittsburgh-based PNC (PNC, Fortune 500), reportedly brushed aside inquiries by the firm amid fears about what kind of scrutiny might be imposed by Feinberg, according to the a recent report by the Wall Street Journal.

Robert Kelly, the chairman and CEO of Bank of New York Mellon (BK, Fortune 500), was also believed to be in the running for BofA’s top post earlier this month before announcing to staff he was not interested.

"No one wants to work for an institution where the government is calling the shots," said Charles Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware.

Looking inside and out

That reluctance could give some internal candidates, who have already come to grips with life under the government’s thumb, a leg up on the competition.

At least two BofA insiders are believed to be in the running for Lewis’ job - Brian Moynihan, the recently appointed head of BofA’s key retail banking business and Greg Curl, the bank’s chief risk officer.

Neither candidate, however, has won a ringing endorsement from Wall Street.

"We believe the board will find it cannot justify either candidate based on their professional merits," wrote Jonathan Finger, a partner at the Houston-based investment manager Finger Interests, in a regulatory filing earlier this month. The firm owns shares of BofA.

Finger and other big institutional investors who helped lead a successful campaign to strip Lewis of his title of chairman earlier this year, have instead lobbied for making a clean break with the Lewis era.

They have demanded that the company hire an outsider, or at least someone who has been away from BofA for some time.

A Bank of America spokesperson said that the company was interviewing both internal and external candidates, but would not comment on recent speculation on who those candidates might be bad credit cash loan.

Two names outside the company that were widely cited in the wake of Lewis’ resignation were James Hance and Alvaro de Molina, two long-time BofA veterans. Both had previously been chief financial officer for the bank. Hance is now the chairman of telecom firm Sprint Nextel (S, Fortune 500).

Molina has suddenly become available after stepping down as CEO of auto financing firm GMAC on Monday. Some experts have downplayed his chances though since he may have generated some ill will by hiring away dozens of BofA employees following his departure in late 2006.

"Even burned down bridges can be repaired, but I don’t know if BofA can forgive his recruiting efforts when he left," said Raymond James analyst Anthony Polini.

The speculation hasn’t stopped there. Even New Jersey governor Jon Corzine, who lost a bid for re-election this month, was briefly mentioned as a successor, before the former Goldman Sachs (GS, Fortune 500) executive quashed such rumors last week.

Many challenges for a new leader

As rabid as the speculation is about who will replace Lewis, no decision is expected to be made until next week at the earliest. A company spokesperson said the board was looking make a decision "around Thanksgiving."

Whoever does secure the position, however, will certainly have their hands full.

The new CEO will have to establish an exit strategy to pay back TARP funds and get out from under the government’s thumb.

Lewis’ successor will also have to navigate a minefield of new industry regulations that could hurt BofA more than other banks.

A sweeping set of changes are set to go into effect for the credit card industry in February. BofA is currently the second largest issuer of credit cards in the country, according to the industry trade publication Nilson Report. Even more changes are likely ahead as Congress pushes forward with additional financial regulatory reforms.

There has even been increased talk on Capitol Hill of giving regulators the power to break up some of the nation’s largest financial institutions, a group that would most certainly include BofA.

On top of all that, there are many internal challenges facing the company, namely the integration of Merrill Lynch, said William Atwood, executive director of the Illinois State Board of Investment, which owns nearly 2 million shares of BofA.

The company also faces what could be an ugly legal fight with the Securities and Exchange Commission over BofA’s alleged failure to notify shareholders of its decision to pay Merrill executives outsized bonuses last year.

BofA had originally worked out a $33 million settlement with the SEC over the matter, but a judge threw out the agreement, setting the stage for a trial early next year.

"The board has a singular opportunity to get it right," said Atwood. "In one fell swoop they can really strengthen the whole organization." 

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Bank of Canada Governor Mark Carney and Finance Minister Jim Flaherty said other countries must make more of an effort to stabilize the world economy after Canada has done its part.

Carney said imbalances that world leaders have identified as threats to a global recovery are between countries like the U.S. that run large trade deficits and surplus countries like China. Flaherty said Asian countries must allow their currencies to float more freely.

“There is no question about Canada’s contribution already to this effort and the real issues lie elsewhere,” Carney said in an interview in Istanbul, where he attended a meeting of G-7 officials with Flaherty.

The G-7 repeated its statement that “excessive volatility and disorderly movements” in exchange rates threaten the global recovery. While the statement did not single out the U.S. dollar, it came at the end of a week in which policy makers from Canada to France said a sliding dollar risks impeding their recoveries from the deepest global recession since World War II.

The U.S. dollar has dropped 14 percent against the Canadian dollar over the past six months. The Canadian currency strengthened 0.8 percent to C$1.0716 per U.S. dollar at 1:27 p.m. in Toronto, from C$1.0802 on Oct. 2.

Canada, which had a three-decade run of trade surpluses until last December, has posted record deficits this year amid slumping sales to U.S. On arriving to Istanbul, Flaherty said he was concerned about the U.S. dollar’s weakness.

Policy Changes

Carney said a rebalancing of global growth will require the narrowing of the “orders of magnitude” of current account surpluses and deficits through changes in macroeconomic, structural and exchange rate policies in some countries.

“Some of those shifts in policies have begun,” Carney said, adding that rebalancing of the global economy “will also take a shift in relative exchange rates.”

Carney declined to say whether the reference to excessive volatility in the G-7 statement was a reference to the U.S. dollar.

“We’ve seen tremendous volatility over the last year. I think anybody who is active in the currency market would confirm that,” Carney said. “We’ve seen tremendous volatility across a range of major currencies.”

Carney told reporters on Oct. 3 the G-7 statement should be seen in the context of encouraging sustainable global growth.

Major Imbalances

Asked in yesterday’s interview whether Canadians would need to endure an even stronger currency to help correct global imbalances, Carney said: “The major imbalances are not between the U.S. and Canada, they are between major deficit countries, which include the United States, and major surplus countries, such as China.”

The lack of flexibility in some Asian currencies “creates imbalances, it creates distortions in the world marketplace and that’s what we are trying to avoid,” Flaherty said. “If we are going to have our currencies as market currencies then we all need to have our currencies fluctuate.”

Carney repeated concern that the strong Canadian dollar is a risk to the bank’s inflation forecast. He said the bank looks at currency movements in the context of their effects on inflation, saying the currency “is a downside risk to inflation, which is why we mention it.”

Recent strength in the dollar reflects higher commodity prices and “generalized weakening” of the U.S. dollar, Carney said in a speech last week, without saying how much each factor contributed. Bank of Canada officials have said in the past the bank may use monetary policy to counter movements in the currency not related to Canada’s economic fundamentals.

Carney also commented yesterday on data last week that showed the country’s economy unexpectedly stalled in July and U.S. job losses unexpectedly accelerated as “consistent with the expected unevenness of the recovery.”

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The Bank of England plans to keep buying as much as 175 billion pounds ($290 billion) of assets to cement the economy’s recovery from the worst recession in a generation.

The decision by the nine-member Monetary Policy Committee, led by Governor Mervyn King, was forecast by all 35 economists in a Bloomberg News survey. The central bank also kept the benchmark interest rate at 0.5 percent, as predicted in a separate survey of 60 forecasts.

Signs that the economy is returning to growth helped push the U.K.’s benchmark FTSE-100 index above 5,000 for the first time in almost a year yesterday. While King last month argued for even more bond purchases by the central bank, today’s decision suggests most officials are convinced the recovery is on track for now.

“Just because they’ve done nothing today doesn’t mean they won’t do anything in the future,” said Brian Hilliard, chief economist at Societe Generale SA and a former Bank of England official. “The economy is turning round but we are underperforming continental Europe. The third-quarter growth outlook is miserable. We’re out of recession probably but in an anemic way.”

The pound rose as much as 0.4 percent after the decision to $1.6580 and was at $1.6557 as of 12:15 p.m. in London. Some investors had speculated the Bank of England may cut the interest it pays commercial banks on deposits today in an effort to encourage lending.

The bank has kept its rate at a record low since March to fight the economic and financial crisis unleashed by the collapse of Lehman Brothers Holdings Inc. a year ago. The European Central Bank kept its benchmark interest rate at 1 percent for a fourth month on Sept. 3. The U.S. Federal Reserve’s target range is zero to 0.25 percent.

Brown’s View

Prime Minister Gordon Brown, who faces a general election in less than a year, wants to avoid complacency and keep up stimulus measures as the economy shows “interesting and encouraging” signs, his spokesman said yesterday.

The recession probably ended in May, the National Institute of Economic and Social Research, whose clients include the central bank and the Treasury, said this week. House prices rose 0.8 percent in August, Lloyds Banking Group’s Halifax division said today, while a survey of services companies showed the fastest pace of expansion in almost two years.

Redrow Plc, the U.K. homebuilder that saw founder Steve Morgan rejoin management in March, said today that reservations for new homes in the first 10 weeks of its financial year rose 72 percent from a year earlier amid “strong buyer demand” after the housing market stabilized.

Stocks Fall

The FTSE-100 was at 4968.13 as of 12:15 p.m. in London. The benchmark stock index rose above 5,000 yesterday for the first time since October and has increased 34 percent in the past six months.

“Things are looking up in the economy,” said Neville Hill, an economist at Credit Suisse Group in London and a former U.K. Treasury official. “The flow of the data in the past month does not press them urgently into doing more.”

The global recovery is prompting some officials to discuss withdrawing stimulus. The U.S. Federal Reserve signaled in minutes published Sept. 2 that it’s already trying to prepare investors for an end to some of its asset purchases. ECB President Jean-Claude Trichet last week outlined how his central bank will withdraw stimulus, though he stressed it’s “premature” to say the crisis is over.

Lending Concerns

King is nevertheless concerned that banks aren’t lending enough and he said last month they have “a very long way to go” before capital is rebuilt. Royal Bank of Scotland Group Plc and Barclays Plc, two of Britain’s biggest banks, have cut lending even after promising the government to make more credit available.

Manufacturing activity still showed contraction in August after growth the previous month, a survey of factories showed. Mortgage approvals, which rose above 50,000 in July, still remain half the total in the same month two years ago.

King sought 200 billion pounds in asset purchases last month in a minority vote backed by David Miles and Timothy Besley, who left the panel on Aug. 31. In June 2007, when King last dissented from the majority because he wanted an interest- rate increase, the panel supported it at the next month’s decision.

Deputy Governor Charles Bean said last month that the effects of the purchases so far have been “moderately encouraging” and that gilt yields are as much as 75 basis points lower than they would otherwise be. He said that it is still “very early to draw conclusions” on the plan’s efficacy. The bank has bought about 140 billion pounds in assets so far.

The yield on the 10-year gilt was at 3.75 percent today, up from 3.02 percent at the start of the year. The yield fell as low as 2.933 percent on March 13, two days after the central bank said it would start its asset purchase program.

“While it’s still a pretty uncertain recovery story at the moment, they’ve still got plenty to go through,” said James Knightley, an economist at ING Financial Markets in London. “It’s all looking a lot healthier so for the moment they don’t need to do anything else.”

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The U.S. economy is at risk of dipping again after the government’s stimulus package runs out next year, Harvard University economist Martin Feldstein said.

“The economy is still weak and it’s not at all clear that the upturn that we’ve seen recently is the beginning of a sustainable rise,” Feldstein said today in an interview on Bloomberg Television in Jackson Hole, Wyoming. “There’s a serious danger that come the end of this year and the beginning of next year we will see it slipping back down again get a free credit report.”

Feldstein endorsed Federal Reserve Chairman Ben S. Bernanke for a second term at the U.S. central bank after his current term ends in January.

“He certainly deserves it. He has done a remarkably creative job of dealing with these problems,” Feldstein said. “They have kept credit going” and “the Fed has stepped in where the private markets have been absent.”

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German business confidence probably rose for a fourth month in July, suggesting Europe’s largest economy is shaking off its worst recession since World War II.

The Ifo institute in Munich will say its business climate index, based on a survey of 7,000 executives, increased to 86.5 from 85.9 in June, according to the median of 32 forecasts in a Bloomberg News survey. The index reached a 26-year low of 82.2 in March. Ifo releases the report at 10 a.m. today.

The German economy may return to growth this quarter as a global recovery boosts exports and government measures to stimulate domestic spending kick in. Manufacturing orders rose for a third month in May and industrial production surged the most in almost 16 years. The Bundesbank said July 20 that the economy shrank “only slightly” in the second quarter after its record 3.8 percent contraction in the first.

“Improving sentiment and rebounding orders suggest things will go up from here,” said Ralph Solveen, an economist at Commerzbank AG in Frankfurt. “While there won’t be a soaring recovery, we’re optimistic that we’ll see positive data for the rest of the year.”

That may provide a boost for Chancellor Angela Merkel, who will seek a second term in office in national elections in September. Her coalition government is spending about 85 billion euros ($121 billion) to revive the economy, which it predicts will contract 6 percent this year.

‘Rocky Road’

Executives’ assessment of the current situation as well as their expectations will improve, according to the survey of economists. Still, German investor confidence unexpectedly fell this month, the ZEW Center for European Economic Research said on July 14 life insurance quote.

“We still have a rocky road ahead of us and won’t reach cruising speed for some time,” said Mario Gruppe, an economist at NordLB in Hanover. “We’ll return to growth slowly. The recession has been too severe and its consequences will accompany us for several years.”

Economists at Allianz SE, Europe’s biggest insurer, this week forecast the German economy will expand 2.3 percent in both the third and fourth quarters before contracting again in the first three months of 2010.

Continental AG, the German car parts and tire manufacturer burdened with 11 billion euros of debt, on July 20 said it returned to profit in the three months through June after two quarters of losses by pursuing spending cuts.

Praktiker AG Chief Executive Officer Wolfgang Werner said July 22 that Germany’s second-largest home-improvement retailer made a “good start” to the third quarter.

Belgian business confidence rose for a fourth month in July, the central bank in Brussels said yesterday. In France, the euro area’s second-largest economy, confidence also climbed for a fourth month, Paris-based statistics office Insee said.

The European Central Bank has cut its benchmark interest rate to a record low of 1 percent, offered to lend banks as much cash as they need for up to 12 months and started buying covered bonds in a bid to unlock credit markets and restore growth in the 16-nation euro region.

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Australian consumer prices rose in the three months through June, stoking speculation the central bank has finished a record round of interest-rate cuts.

The consumer prices index gained 0.5 percent from the first quarter, when it advanced 0.1 percent, the Bureau of Statistics said in Sydney today. That matched the median estimate of 19 economists surveyed by Bloomberg. Annual core inflation was 4.2 percent, which is above the central bank’s target range.

Traders raised bets on the size of future interest-rate increases after today’s report showed costs rose for health care, household contents and clothing. Australia’s economy is better than the central bank forecast a few months ago, helped by exports to China, the lowest borrowing costs in half a century and government spending, central bank Assistant Governor Guy Debelle said today.

“It’s becoming increasingly difficult to make a case for further rate cuts,” said Stephen Walters, chief economist at JPMorgan Chase & Co. in Sydney. Policy makers will be “thinking ‘do we want policy at 3 percent when all these green shots are growing into trees?’. The answer is no,” he said.

Investors increased bets Australia’s overnight cash rate target will be higher in 12 months, according to a Credit Suisse Group AG index based on swaps trading.

Currency Rises

Traders forecast the key rate will be 88 basis points higher in a year, the index showed at 2:21 p.m. in Sydney, compared with 82 basis points of gains before today’s report was released. At the start of June, they forecast 3 basis points of reductions. A basis point is 0.01 percentage point.

Australia’s currency rose to 81.53 U.S. cents at 2:25 p.m. from 81.47 cents just before the report was released. The two- year government bond yield fell 1 basis point, or 0.01 percentage point, to 4.12 percent.

Health costs rose 2.3 percent in the second quarter and prices of household contents and services advanced 2.2 percent, today’s report showed. By contrast, banking services charges fell 1.7 percent and food slipped 0.9 percent. The annual headline inflation rate slowed to 1.5 percent from 2.5 percent.

The Reserve Bank’s core inflation measures, which exclude the largest price increases and declines, were also published today. The weighted-median gauge of inflation advanced 0.8 percent in the quarter for an annual increase of 4.2 percent, the eighth quarter that the measure has held above the Reserve Bank’s target range of between 2 percent and 3 percent fast cash loan.

Rate Cuts

“The very sticky core inflation measure means the Reserve Bank has been correct to remain on hold for the last couple of months,” said Annette Beacher, senior fixed-income strategist at TD Securities Ltd. in Singapore. “Moving aggressively last year has given them time to assess the data” this year.

Governor Stevens and his board left the overnight cash rate target at 3 percent on July 7 for a third month after cutting it by a record 4.25 percentage points between September and April.

The interest-rate cuts and A$22 billion ($18 billion) in government cash handouts to low and middle-income households are helping the economy rebound from the financial crisis, recent reports suggest.

“Monetary policy and fiscal policy are really working here,” Reserve Bank Assistant Governor Debelle told a function organized by the Mortgage and Finance Association of Australia in Melbourne today. “The economy is looking better than we thought it might a few months ago.”

Gross domestic product unexpectedly rose 0.4 percent in the first quarter from the previous three months, when it shrank 0.6 percent, unemployment has climbed less than forecast by the government, and business and consumer confidence have jumped.

Job Losses

In May, the central bank forecast the economy would shrink 1 percent this year.

The jobless rate averaged less than 5.7 percent in the June quarter, below the 6 percent predicted by the Treasury department in May. Canberra-based Access Economics forecast yesterday that the unemployment rate will peak at 7.5 percent, a percentage point lower than the government’s prediction.

Still, central bank policy makers said in the minutes of their July 7 meeting, released yesterday in Sydney, that they expect inflation will cool in coming months, increasing their scope to cut borrowing costs if needed to spur growth.

The Reserve Bank predicted in May that annual headline inflation will fall to within or below its target range this year, after holding above 3 percent in 2008. The bank is due to revise its forecasts on Aug. 7.

“The current inflation outlook afforded scope for some further easing of monetary policy, if that were needed to give further support to demand at a later stage,” yesterday’s minutes said.

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DETROIT — For the new owners of Saab Automobile to make money selling small numbers of cars across the globe, they have to return to the Swedish automaker’s roots, industry analysts say.

Somehow, a consortium of investors led by custom sports car maker Koenigsegg Automotive AB must restore Saab to the quirky, cutting edge and reliable brand once favored by professionals who wanted to look smart rather than wealthy.

"It was seen as a discerning choice," said Tim Urquhart, senior automotive industry analyst with the consulting firm IHS Global Insight in London. "It was a professional’s vehicle, a doctor’s or an architect’s. A quality vehicle, but not an obvious statement like Mercedes or BMW."

GM announced Tuesday that it has struck a tentative deal to sell the storied brand, which started as a Swedish aircraft maker.

Koenigsegg, a tiny company which produces only a dozen super cars a year costing more than $1 million each, was founded in 1994 by von Koenigsegg, a Swedish sports car fanatic and entrepreneur who remains chief executive.

Von Koenigsegg, in an interview with Swedish television, seemed to agree, saying that the new owners would try to restore some of the brand’s heritage while finding a place in the market between upscale and mainstream.

"This is neither a luxury or a people’s car, but it has its own niche — a bit of postmodern comfort, sporty, but with environmental thinking," von Koenigsegg said credit scores. "We want to capture the Swedish aspect too. GM had a bit more of an international approach, and Saab drowned a little bit in that context."

IHS analyst Urquhart said GM didn’t seem to know what to do with Saab, and failed to set its models apart from mainstream brands. The Saab 9-7X sport utility vehicle, for example, is very similar to a Chevrolet TrailBlazer, and the 9-3 midsize sedan is a close relative of the Pontiac G6.

"Without being too rude about it, GM sucked all the brand value out of it," Urquhart said.

Tom Libby, an independent Detroit-area auto analyst, agreed that Saab lost its uniqueness in the now-crowded luxury segment and will have to find a new niche.

"We know that safety is addressed. We know that performance is addressed. We know that pure upscale luxury is addressed," he said. Saab has to find a "white space that’s not covered. I don’t know what that is right now."

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