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CORRECT: Sector falls for second day

Mar 31, 2008 Market Outlook

Sector falls for second day

By Alistair Barr, MarketWatch

Last Update: 5:08 PM ET Mar 28, 2008

Editors Note: The previous version gave an incorrect ticker and identification
for Fidelity National Information Service. The story has been corrected.

SAN FRANCISCO (MarketWatch) — Financial-services stocks fell for a second day on
Friday.

The Amex Securities Broker/Dealer Index (XBD) declined 2.5%, while the KBW Bank
Index (BKX) gained 2.3%. The Financial Select Sector SPDR (XLF), an ETF that
tracks the financial stocks in the S&P 500, fell 1.9%

Fremont General shares dropped 13% to 53 cents. The Federal Deposit Insurance
Corporation (FDIC) told the company that its bank unit doesn’t have enough
capital. Fremont (FMT) has to raise more capital within 60 days, either by
selling new shares, being taken over or selling the banking business, the FDIC
said.

National City Corp. (NCC) declined 13% to $10.15.

Fidelity National Information Services Inc. slipped 1.2% to $37.98. The financial
data processing company said Friday that new government regulations that prohibit
lenders from using in-house appraisals when assessing loan values could
substantially harm its business. The Jacksonville, Fla.-based firm (FIS) said in
a filing with the Securities and Exchange Commission that increasing government
scrutiny into the mortgage business “could have adverse consequences that could
affect our business.”

XL Capital declined 1.7% to $29.48. The Bermuda-based insurer (XL) may be too
intertwined with troubled bond insurer Security Capital Assurance (SCA), Goldman
Sachs analyst Thomas Cholnoky wrote in a note to clients on Friday. He cut his
price target on XL shares to $38 from $55.

“The issue of whether XL will ultimately be responsible for certain of Security
Capital’s liabilities appears to be the main concern for potential XL investors,
a possibility that could result in the assumption of $75 billion in guarantees
and a corresponding capital raise to support such guarantees,” the analyst said.
“Investors should remain on the sidelines given the magnitude of the
uncertainties and unknowns surrounding Security Capital.”

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