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London home sellers raised asking prices to a record high this month as they took advantage of a “stock-starved” housing market, Rightmove Plc said.

The average cost of a home in the capital jumped 5 percent to 427,987 pounds ($671,000), the most since records began in 2002, the owner of the U.K.’s biggest property Web site said in a statement today. Average asking prices in England and Wales increased by 3.2 percent, the most since April 2007.

A small apartment in London’s Pimlico district received “astronomical” interest from buyers, real-estate agent James Gubbins said in an interview. The Bank of England said in its quarterly economic forecasts this month that the strength in the housing market may reflect “unusually weak” supply.

“A price jump of 5 percent is more comparable to the pre- credit crunch boom,” Miles Shipside, commercial director of Rightmove, said in the statement. “If sellers return to the market in larger numbers, the current upwards price pressure will not be sustainable with the restricted number of mortgage- strapped buyers.”

London’s Westminster district led gains in the capital, with prices rising 14.9 percent on the month to an average of 1.3 million pounds. The most expensive area is the borough of Kensington and Chelsea, where a 4.6 percent increase pushed up the average value to 1.9 million pounds.

‘Tiny Little Flat’

“The shortage is the main thing that’s cushioning the market,” said Gubbins, an agent at Dauntons in Pimlico, a neighborhood in Westminster. “Last year, buyers were socked to the teeth on the economy and didn’t know what they were going to do, and now they’ve decided to get on with it and stop putting their lives on hold.”

Gubbins said he recently had an “astronomical” number of viewings for a “tiny little flat” in Tachbrook Street in Pimlico, close to the Tate Britain art museum business card. Last year, “it wouldn’t have done at all well.” The one-bedroom property sold close to the asking price of almost 300,000 pounds, he said.

Prices rose 10.3 percent in London from a year earlier. That compares with a 6.1 percent gain in the U.K. as a whole, where prices fell about 12 percent from the peak in May 2008 to the trough in January last year.

Rightmove said a “stock-starved housing market” supported prices across Britain as the average number of properties per real estate agent stayed at a two-year low of 63. The average total for sale at real estate branches fell to 55 in January, the lowest since July 2007, according to a survey by, the National Association of Estate Agents released Feb. 11.

Mortgage Lending

The property market may still falter if mortgage lending weakens. The number of approvals fell to 59,023 in December, the first drop in more than a year and half.

Bank of England policy makers kept the benchmark interest rate at a record low of 0.5 percent this month as they paused their 200 billion-pound emergency stimulus program. Governor Mervyn King said last week it was “far too soon” to say policy makers will make no more purchases as the economy recovers.

“The low interest rate environment is meaning that less people need to sell,” said James Perris of De Villiers Surveyors in London. “If we do see interest rates go up a bit, we may see people more inclined to sell.”

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Editor’s note: This story is part of a special supplement to the Jan. 22 print edition of the Phoenix Business Journal. For more on the print edition: jbertolino@bizjournals.com.

The battle over noise concerns if the new F-35 fighter training mission comes to Luke Air Force Base has placed Glendale and El Mirage in a public relations and political skirmish.

El Mirage worries the F-35 fighter is louder than the F-16 jets that currently fly into and out of Luke. The West Valley suburb wants noise tests done to see how much louder the F-35 might be, and it could sue the U.S. Defense Department over the matter.

“You can ask questions about noise and still support the base. The jet may be noisier, and if it comes, everyone is going to have to deal with it,” said Stacy Pearson, a spokeswoman for El Mirage.

Glendale, where the base is located, has taken the lead in trying to attract the new F-35 fighter to Luke, which is the U.S. Air Force’s main training base for F-16 pilots. The F-35 is replacing the F-16 in the U.S. military arsenal, and Luke is on the short list for F-35 training along with bases in Florida, New Mexico, Idaho and Tucson.

Glendale spokesman Jerry McCoy said community support for Luke could help draw F-35 operations to the base.

“They’re going to base their decisions on what’s best for the national defense. But they also want to be in a community that’s supportive of them,” said McCoy.

Glendale has been garnering political, business and community support for Luke and the F-35. The main concern is that if the Pentagon picks another base for F-35 training, Luke’s mission could end and base could be closed.

The West Valley suburbs are no strangers to conflict. Glendale prevailed in recent court battles with El Mirage regarding decades-old strip annexations. El Mirage officials have hinted that if Glendale turns over some of that land, it could help ease El Mirage’s worries about Luke noise fast cash advance.

Arizona Sen. John McCain has asked the Department of Defense to have an F-35 fly over the region in an effort to determine how much noise will be generated by the new plane if it ends up being based at Luke.

Pearson and McCoy are not strangers, either. Pearson worked as a spokeswoman for the city of Glendale with McCoy before leaving for a post at Rose & Allyn Public Relations. Last year, El Mirage hired Rose & Allyn, headed by Jason Rose, to handle its PR on the F-35 and Luke. Policy Development Group previously handled PR for El Mirage.

Pearson said Glendale’s reaction to El Mirage’s noise concerns is disappointing.

“It’s been juvenile,” she said. “The two cities have not been the friendliest of neighbors. It is time to bury the hatchet and discuss noise.”

In its quest, El Mirage has drawn comparisons to Valparaiso, Fla., which filed a federal lawsuit regarding F-35 noise at Eglin Air Force Base, near Pensacola. Since Eglin held some F-35 test flights, the Florida town has complained about what it believes is an increase in noise compared with the F-16.

McCoy said the noise concerns in Florida may not mirror those at Luke because of the number of and the differences in how flights take off and land at the two bases. Glendale officials point out that El Mirage does not get all of Luke’s flight noise: Some flights follow a path over Goodyear, south of the base, for takeoff and landing. El Mirage is north of Luke.

McCoy said the F-35 issue is not about a rivalry between the two cities.

“We don’t look at it as Glendale-El Mirage,” McCoy said. “This is really a statewide issue.”

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IMPERIAL — John V. Price won’t sell you a house. But he’ll sell you a place to build your dream home.

Price, 62, owns Price Acreage LLC, a family-operated business that has been developing semi-rural and suburban home sites in Jefferson and St. Francois counties.

The company subdivides large tracts of wooded land, extends roads and utilities to the rural site, and then sells individual plots of one to six acres each to buyers who later contract with their own homebuilders.

"The freedom to build what they want when they want to build" attracts buyers, Price said. "The lots are big, and different house styles in that environment don’t clash."

He first got into the real estate business with his father, Homer V. Price, who developed subdivisions and home sites in Jefferson County for nearly 50 years before his death in 2004. Among Homer Price’s developments was Olympian Village during the 1960s. After this father’s death, John Price founded Price Acreage.

John Price’s latest project is the Hollows at Frisco Hill subdivision in the Imperial area.

He said the 48 large, heavily wooded lots at the Hollows were particularly attractive because the development is less than 15 minutes from south St. Louis County.

The access roads and utilities are now in place, and the first lots are being sold.

Five deals have closed on the lots since they went on the market early in December, Price said. He said he expected construction of the first houses in the development to start this month, weather permitting.

"It’s a great, great location," he said. "It’s extremely convenient to everything."

The 90-acre development is just southwest of the intersection of Frisco Hill Road and Ambrose Crossing, along the new Frisco Hollows Road that serves the site.

The lots sell for about $69,000 to more than $140,000 each, depending on the size. The average cost of a lot is about $80,000.

Price said that was a good deal — coupled with housing construction costs of $200,000 or so — for a big house on a big lot near the city.

The Hollows does have some restrictions on construction. Houses must have a minimum of 2,000 square feet of floor space and garages that hold at least two cars.

A large range of home styles is allowed, but also within some restrictions on building materials and designs.

Eventually, a property committee of at least three Hollows property owners will be formed to maintain the subdivision roads. The committee also will collect subdivision assessments to be established for community expenditures, such as electric bills for street lights, common ground maintenance, snow removal and road repairs, Price said.

So far, most of the buyers and prospective buyers he’s worked with already live in the Imperial area, Price said. They know about the convenience of the area and simply want to move up to nicer, more private homes at a reasonable cost, he said.

"Our customers are generally pretty sophisticated, and they know what lots cost here and elsewhere," Price said.

The developers had tried to maintain the natural woods as much as possible in subdividing the site and building access roads, said Jeff Price, 27, who works with his father on the Hollows.

"We build to the land, not through the land," he said. "We strive for quality over quantity."

Jeff Price said the trees that did have to be removed for the development were ground into mulch for use by tract buyers.

"On many construction projects, that would have got hauled off and just thrown away," he said.

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Oil prices rose above $79 a barrel Monday for the first time in four weeks as an extended cold snap triggered an end-of-year rally in energy futures.

Benchmark crude for February delivery added 72 cents to settle at $78.77 a barrel in light, holiday trading on the New York Mercantile Exchange. Prices rose as high as $79.12 earlier in the day, the highest since Nov. 18.

Futures contracts for oil, natural gas and heating oil have all become more expensive this month as snowstorms blanketed parts of the country and a sharp drop in supplies of crude and other fuels surprised traders.

More frigid temperatures are expected, with up to 4 inches of snow forecast for New England, and up to 7 inches of snow along the eastern shores of the Lower Great Lakes.

Spot prices are starting to perk up as a result.

According to the latest data from the Energy Information Administration, natural gas prices jumped earlier in December to the highest levels since January, and heating oil prices climbed during the middle of this month.

Still, the winter chill hasn’t boosted energy demand above last year’s levels. The U.S. is consuming less petroleum than it did at the same time last year, when oil and gas prices were cheaper and the economy was in recession.

American refiners have cut back on oil imports, which has helped reduce supplies and increase prices. But analyst Andrew Lipow said that oil prices also are rising as China and India expand their petroleum imports.

"That oil is finding a buyer somewhere," Lipow said.

At the pump, retail gas prices rose by less then a penny overnight to a new national average of $2.603 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service.

Gas prices have edged up for three consecutive days, albeit slowly, for the first time since the beginning of the month. A gallon of regular unleaded is 2.4 cents cheaper than last month.

In other Nymex trading in January contracts, heating oil climbed 3.79 cents to settle at $2.0735 a gallon while gasoline added 2.88 cents to settle at $2.0184 a gallon. Natural gas increased by 34.7 cents to settle at $5.99 per 1,000 cubic feet.

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One year after he was restructured out of the telecom sector and into unemployment, Bruce Bracken got a full-time job again.

His ordeal started in November 2008, as Canada’s unemployment rate began to rise. It ended in November 2009, when Bracken got one of the 79,100 new jobs Statistics Canada said was created last month across the country, with Toronto and Ontario leading the surge.

The remarkable growth, which one analyst called "stunning," dropped the national unemployment rate down a notch to 8.5 per cent, the federal agency said on Friday, though many predict this number will rise in 2010.

During his year working contracts, spending time with his two children, and volunteering with Habitat For Humanity, Bracken heard it all, including: "If we could hire two, we would hire you."

"I got a lot of silver medals," joked Bracken, 45, from the office of his new employer, Toronto-based Upstream Works Software.

His company’s decision was part of a surge in private sector hiring across the county, which saw 27,000 jobs created in Ontario – 21,000 of them in Toronto.

The bulk of Canada’s new jobs were created in the services sector, the agency said.

"It’s certainly encouraging, an economy can’t live off the government alone," said Avery Shenfeld, chief economist at CIBC World Markets, referring to the government stimulus projects that will likely not last through the next year.

He also cautioned monthly statistics such as these can be misleading and that multiple-month analysis is more accurate. Shenfeld said that after July, Canada has gained a steady 25,000 jobs per month.

By anyone’s calculation, November’s job growth is nowhere close to employing all those who lost jobs during the entire recession.

The country has lost 321,000 jobs since October 2008 payday loans for self employed.

And by Statistics Canada’s calculations, even Ontario’s strong growth was not enough to dent the province’s 9.3 per cent unemployment rate.

Toronto managed to shave 0.1 per cent off its higher unemployment rate, bringing it to 9.5 per cent.

In Ottawa, Transport Minister John Baird said the federal government is pleased with the numbers, but added: "We can’t, you know, pop the champagne corks."

The majority of these jobs – more than 73,000 of them across the country – were in Ontario, Quebec and Alberta, and were mainly in the service sector, particularly education services.

However, this latter point could be what Shenfeld calls "statistical noise," or could reflect one of two things: either this is pickup from September’s academic hiring or it’s hiring to handle the surge of students fleeing the recession in postgraduate studies.

Full-time jobs increased by 39,000 and part-time unemployment grew by more than 40,000, all while the number of the self-employed dropped – which analysts said was positive, considering the self-employed are not as well paid.

On Dec. 1, Statistics Canada recorded third-quarter GDP growth of 0.1 per cent – 0.4 per cent at the annualized rate – which effectively put an end to the recession.

A recession is defined by at least two consecutive quarters of GDP decline.

In September, the Organization for Economic Co-Operation and Development said Canada’s unemployment would only worsen throughout 2010.

With files from Susan Delacourt

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NEW YORK–The nation's retailers suffered miserably through November as a modestly positive start to the holiday shopping season wasn't strong enough to offset weak spending the rest of the month.

After posting two consecutive monthly sales gains after more than a year of declines, merchants collectively posted a surprise 0.3 percent decrease for November, compared with a year ago when business plummeted to historic lows as spooked shoppers clamped down after the financial meltdown. The sales decrease is an ominous sign for an economy in the early stages of a fragile recovery.

Now, the big worry is whether consumers won't go back to the stores until the final hours before Dec. 25 as they wait for even bigger discounts in a season that many analysts had hoped would generate sales that would be unchanged from a year ago.

According to sales results announced Thursday, most stores including department store chains Macy's Inc.,Children's Place Retail Stores Inc., teen merchant Abercrombie & Fitch Co. and discounter Target Corp. posted sales declines. Warehouse club operator Costco Wholesale Corp. posted a sales gain, though it's smaller than expected. Another exception was Limited Brands Inc., which runs Victoria's Secret and Bath & Body Works. It reported a solid sales gain instead of the sales decrease that Wall Street projected.

The figures are based on sales at stores open at least a year and are considered a key indicator of a retailers' health because they exclude the effects of store expansions or closings.

The 0.3 percent drop, according to the International Council of Shopping Centers-Goldman Sachs Index, is far worse than the original 5 to 8 percent growth forecast, which was whittled down to 3 to 4 percent gain earlier this week. The weak results come on top of a 7.7 percent drop a year ago.

"This suggests that consumers are still under a significant amount of pressure from unemployment and job worries," Ken Perkins, president of retail research firm Retail Metrics.

After consumers showed some signs of life in September and October, merchants saw a sales lull throughout November until shoppers crowded stores and malls for the early morning specials for the day after Thanksgiving payday loan lenders.

According to reports, however, shoppers were picky about what they bought for themselves and others, focusing on discounted basics like microwaves, boots and bed sheets over the holiday weekend. The hot areas were electronics and online shopping, which is not reflected in most of Thursday's sales figures.

Economists say that depressed spending could persist for several years amid stubbornly high unemployment – now at 10.2 percent, the highest in 26 years.

Amid a challenging economy, Costco fared well, posting a 6 percent increase; results were less than the 8.1 percent gain that analysts surveyed by Thomson Reuters expected. However, half of that increase results from currency shifts and higher gas prices.

But discounter Target said that strong sales during Thanksgiving weekend were not enough to offset weak business the rest of the month, sending sales in stores open at least a year down 1.5 percent. The drop was bigger than the 0.5 percent drop analysts were expecting and were on top of the 10.4 percent decline in November 2008.

Discount retailer Fred's Inc. posted a 3.3 percent decline, a bigger drop than the 1.6 percent decrease analysts predicted. The retailer said its pharmacy department was strong in the month but discretionary spending by consumers remained weak.

Consumers "utilized layaways to a much greater extent than last year, deferring recognition of those sales until December," said CEO Bruce A. Efird.

Macy's sales in stores open at least a year fell 6.1 percent in November, a bigger than analysts expected.

Macy's said the month was hurt by a shift of a sales event and warm weather. Still, Macy's said it had strong traffic early on Black Friday, the day after Thanksgiving when many Americans go shopping. Analysts had expected a 3.1 percent drop.

Abercrombie & Fitch's woes continued, with sales falling 17 percent, much worse than the 9.3 percent decline analysts predicted.

But Limited posted a 3 percent sales gain, surpassing estimates from analysts who had expected a 2.5 percent decline.

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The U.S. Treasury on Monday set long-awaited guidance on a plan for mortgage companies to speed “short sales” of homes and other loan modification alternatives to stem a rising tide of foreclosures.

The Home Affordable Foreclosure Alternatives Program provides financial incentives and simplifies the procedures for completing short sales, a growing practice in which a lender agrees to accept the sale price of a home to pay off a mortgage even if the price falls short of the amount owed, according to an announcement on the Treasury’s website.

Guidelines address barriers that have often sidelined short sales by setting limits on the time it takes a bank to approve an offer, freeing borrowers from debt and capping claims of subordinate lenders.

The incentives, first announced in May, expand on the government’s Home Affordable Modification Program, known as HAMP, that has seen limited success in lowering payments for distressed homeowners. The Treasury earlier on Monday stepped up pressure on mortgage companies to make permanent the 650,000 trial modifications they have started.

“While HAMP program guidelines are intended to reach a broad range of at-risk borrowers, it is expected that servicers will encounter situations where they are unable to approve” or offer a modification, the Treasury said in its announcement.

Financial incentives for completing short sales or similar deed-in-lieu transactions — in which the deed is simply transferred to the lender — include a $1,000 payment to servicers, and a maximum of $1,000 to go to investors who sign off on payments to subordinate lien holders, the Treasury said. Borrowers would receive $1,500 in relocation expenses.

Short sales are favored by real estate agents and community groups over foreclosure because they can preserve the borrower’s credit rating and leave the property in better condition than when a homeowner is evicted. While primary lenders typically realize steep losses, their recovery is typically far better than under foreclosure.

But short sales have been frustrating for borrowers and real estate agents, often hung up by negotiations with multiple lien holders and mortgage insurance companies. Real estate agents have complained that sales fall through as lenders bicker over the sales price, what they should receive from the proceeds, and whether the borrower will be held accountable for the debt in the future.

Among requirements, mortgage servicers have 10 days to approve or disapprove a request for short sale, and when done the transaction must fully release the borrower from the debt.

It also prohibits mortgage servicing companies from reducing real estate commissions on the sale, a practice that has dissuaded many agents from taking short sale listings.

In one of the most contentious issues gumming up negotiations between lenders, the guidance caps the aggregate proceeds to subordinate lien holders at $3,000.

Second lien holders in recent months have begun demanding more money from the first lender, seller, buyer or agent in exchange for releasing their claim, agents have said. Because primary lenders would face larger losses in a foreclosure, some subordinate lenders have felt empowered, the agents said.

The largest second-lien holders are Bank of America Corp, Wells Fargo & Co, JPMorgan Chase & Co and Citigroup Inc.

Second lien holders may proceed with a short sale outside of the Treasury program, if they felt the cap was too low, a Treasury official said in October.

“If there was a short sale program that didn’t recognize the second lien holder position, it could have pretty damaging consequences for the industry,” Sanjiv Das, chief executive officer of CitiMortgage, said in an interview last week.

(Editing by Leslie Adler)

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Howard Weaver, former vice president for news at The McClatchy Co., has been acting as an adviser for an online news startup by eBay Inc. founder Pierre Omidyar.

Omidyar and Randy Ching, both former eBay executives, established Peer News Inc. in 2008 with the goal of producing original, in-depth reporting and analysis of local issues in Hawaii. The Honolulu-based news service is set to make its debut early next year.

“We’ve been talking to a lot of people in the industry about journalism and how we might be able to have an impact, listening and learning as much as we can,” Omidyar wrote on his Peer News blog. “One of the people who has been a huge help in particular as we began to envision our local news service is longtime industry insider Howard Weaver …”

Peer News has announced it is searching for an editor, and Weaver has said on his blog that he’ll be part of the team looking at candidates. Weaver is not a candidate himself.

Weaver wrote about the startup last week:

“I’m interested for a lot of reasons, but I’d sum it up this way: the new venture intends to demonstrate that a digitally native, technologically fluent Web organization can profitably serve targeted readers who want sophisticated journalism focused on local civic affairs.”

Weaver, who twice led his hometown paper, the Anchorage Daily News, to Pulitzer Prize gold medals, retired from McClatchy (NYSE: MNI) about a year ago. Reached at his home in Sacramento, Weaver said he’s keeping busy in his “next phase” of life. When he’s not advising and blogging, he’s consulting, sitting on a company board of directors, having fun and “trying to write fiction.”

e.Republic takes on ‘Governing’

E.Republic Inc., a Folsom publishing and research company that focuses on government technology news and events for the government and education markets, just made its first acquisition, expanding beyond information technology to government policy.

E.Republic will buy “Governing” magazine from the Times Publishing Co guaranteed approval payday loans. The deal is expected to close Nov. 30. Details were not disclosed.

E.Republic has about 150 employees and continues to grow, unlike many news organizations that have laid off workers during the recession, said Paul Harney, chief operating officer for e.Republic. He said it’s been a tough year for the company’s print publications, except for “Emergency Management.” But e.Republic’s Web sites are “robust” and sponsorships for the company’s 160 events are strong, Harney said.

“People still want to meet face to face and talk business,” he said.

E.Republic also is home to the 10-year-old Center for Digital Government, which provides market research on technology and trends in local and state government.

Harney said e.Republic will be adding staff from “Governing” but it’s unclear yet how many. “Governing” will remain in its Washington, D.C., offices under the leadership of publisher Fred Kuhn.

Harney said the 80,000-circulation publication has been around for 20 years and has a loyal audience.

Extra! Extra! N&R moving

The Sacramento News & Review is finally making its move out of midtown from a rented space at 1015 20th St. to a once-vacant and dilapidated building at 1124/1132 Del Paso Blvd.

The free alternative weekly newspaper’s 60-member staff is set to move Dec. 10.

The newspaper received about $2 million in grants and loans from the Sacramento Housing and Redevelopment Agency to finance the purchase and renovation of the building, and another $2 million from a Small Business Administration loan. The project has been in the works for several years, said Sacramento News & Review president and chief executive officer Jeff vonKaenel.

“We’re very exciting about moving over,” he said.

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The U.K. inflation rate rose more than economists forecast in October, climbing for the first time in eight months as fuel costs and air fares climbed.

Consumer prices gained 1.5 percent from a year earlier, compared with 1.1 percent the previous month, the Office for National Statistics said today in London. The median forecast in a Bloomberg News survey of 30 economists was 1.4 percent. On the month, prices rose 0.2 percent.

Bank of England policy maker Andrew Sentance said in an interview yesterday that there may be “volatility” in inflation, which risks exceeding the 2 percent target after two years. He said it is still too soon to consider tightening policy after the central bank expanded its bond-purchase plan to 200 billion pounds ($336 billion) to combat deflation.

“This is the first of a period of sharp increases in headline inflation over the next few months,” James Knightley, an economist at ING Financial Markets in London, told Bloomberg Television. “Given the spare capacity in the economy, there’s no real need to tighten monetary policy any time soon. Inflation is likely to move quite sharply lower again through the back end of next year.”

The yield on the two-year government bond slipped 1 basis point to 1.32 percent. The pound fell 0.1 percent to $1.6788 as of 11:36 a.m. in London.

Bond Purchases

Policy makers decided this month to increase their program to buy bonds with newly created money by 25 billion pounds as they left they key interest rate at a record low of 0.5 percent. Bank of England Governor Mervyn King said last week that he has an “open mind” on whether to expand it further installment payday loans.

The inflation rate increased as prices of fuels and lubricants fell less this year than they did in the same month a year earlier, the statistics office said. The cost of second- hand cars increased by a record on the month because of a shortage of stock, while air fares climbed this year compared with a drop in 2008.

EasyJet Plc, Europe’s second-biggest discount airline, said today revenue per seat at constant currency, a proxy for ticket prices, rose 4.1 percent in the year ending Sept. 30 as the recession buoyed demand for low-cost carriers.

The Bank of England published new quarterly growth and inflation forecasts Nov. 11 showing the inflation rate won’t return to the 2 percent target until 2012, though will rise above the goal around the turn of the year as a temporary cut in value-added tax expires.

Inflation Pressure

“In the short term, inflation is likely to be below target, though we’re also likely to see a bit of volatility,” Sentance said in an interview with Bloomberg Television. “As the recovery develops, there will be some upward pressures on inflation.”

By contrast, Federal Reserve Chairman Ben S. Bernanke said yesterday that inflation “seems likely to remain subdued for some time” as reduced bank lending and a weak labor market restrain the pace of growth. The Fed’s preferred inflation gauge, which excludes food and energy prices, rose 1.3 percent in September from a year earlier, below the 2 percent goal preferred by the majority of Fed policy makers.

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A senior Citigroup Inc executive said the bank is comfortable with its valuation for an asset that one accounting expert expects to be written down.

Citigroup has a roughly $38 billion deferred tax asset, which essentially represents expected cash flow from future tax benefits. Accounting expert Robert Willens said on a conference call late last month that he expects the bank to write the asset down by about $10 billion in the fourth quarter. That would represent about 7 percent of the bank’s net worth as measured by the reported value of the company’s shareholder equity.

Any writedowns would sting Citigroup, which has taken $45 billion of government help in three separate rescue efforts. Taxpayers now hold about a third of the bank.

Speaking at a conference on Wednesday, Citigroup Vice Chairman Ned Kelly said the bank stands by its deferred tax asset valuation.

“We are comfortable with the valuation,” Kelly said, adding that the bank looks at its deferred tax asset at the end of each quarter quick cash advance. About $16 billion of the deferred tax asset must be realized by around 2016, and the rest has a much longer time frame, Kelly added.

Kelly was chief financial officer at Citigroup but stepped down over the summer soon after he was quoted in The Wall Street Journal describing the Federal Deposit Insurance Corp as the bank’s “tertiary regulator.” The newspaper article described how the FDIC was pushing for new leadership at the bank.

On Wednesday, in response to a question about whether U.S. regulators would be as harsh to banks receiving government aid as European regulators have been, Kelly pointed to Citigroup’s successful efforts to reduce its assets and said the bank is working well with the government.

“I think we have a very constructive relationship with all of (our regulators),” Kelly said.

(Reporting by Dan Wilchins; editing by John Wallace)

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