JP Morgan makes £12m loss on easyJet stake sale

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The Independent Online

The American investment bank JP Morgan was nursing a £12m loss last night from the sale of a 16.7 per cent stake in easyJet, the low-cost airline.

JP Morgan bought 67.9 million easyJet shares for 338p each from a client, the Icelandic investment company FL Group. It had intended to sell them on to other investors at between 340p and 343p each and pocket the difference.

However, details of the planned sale emerged before trading began and the easyJet share price fell sharply. That left JP Morgan Cazenove, a joint venture between the bank and the blue-blooded stockbroker Cazenove, struggling to find a home for the shares at the price it wanted.

It was eventually forced to accept about 320.5p per share, leaving JP Morgan well down on the deal. EasyJet shares closed 31p lower at 327p.

Separately, the sale by FL fuelled mounting concerns within the City that other Icelandic investors may be under pressure to divest some of their UK interests. In recent years, acquisitive Icelandic investors, flush with foreign capital, have bought or taken sizeable stakes in a wealth of UK companies as diverse as supermarkets, jewellers, clothes shops, shoe shops, stockbrokers, property groups and toy sellers.

But many professional investors - who had borrowed cheaply to deposit in Iceland, where interest rates stand above 10 per cent - are pulling out their money. This so-called "carry trade" has reversed after steep falls in the krona outweighed rising interest rates there, making investing in Iceland increasingly less attractive to foreigners.

Iceland's banks and other investment groups, it is feared, may be forced to sell foreign assets to meet withdrawal demands from depositors.

On Tuesday, the Icelandic stock market suffered its worst one-day fall since 1993 because of fresh concerns about the country's three commercial banks. Landsbanki, Kaupthing and Glitnir led the market lower after the credit-rating agency Moody's Investor Services warned that they faced tougher times.

Richard Thomas, an analyst at Merrill Lynch, said: "We are only at the beginning of the Icelandic banks' problems. There is read-through from FL. The party's over."

The Icelanders tried to soothe concerns. A spokesman for Landsbanki said: "The banks themselves have strong capital positions. There is no need for them to sell anything."

Earlier this week, Landsbanki raised $300m (£171m) from American investors.

Heat on Icelandic owners

BAUGUR owns:

Iceland (frozen food),

Hamley's (toy shop),

Mosaic Fashions (owns Karen Millen, Oasis, Whistles, Coast), Goldsmiths (jeweller),

Mappin & Webb (jeweller), Whittard of Chelsea (tea), Booker (wholesaler),

Jane Norman (womenswear), Shoe Studio Group (shoes),

MK One (teen fashion),

Julian Graves (snacks),

Woodward (catering services), LXB II (property),

Woolworths (retailer, 10%), French Connection (fashion, 16%)

BAKKAVOR GROUP owns:

Geest (food)

LANDSBANKI ISLANDS owns:

Teather & Greenwood (stockbroker),

Heritable Bank (lender)

KAUPTHING BANK owns:

Singer & Friedlander (investment bank)

AVION GROUP owns:

Really Great Holiday Company (travel)

Excel Airways (airline and leisure)

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