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ABB stock falls as confidence wanes

Controversy surrounds ABB Keystone

Shares of industrial technology group ABB fell by more than five per cent on Friday as controversy continued to surround the company.

This content was published on February 22, 2002 - 19:23

The shares in the Swiss-Swedish company dropped on the Swiss Stock Exchange as worries over the group's balance sheet and a controversy over bonuses paid to former top managers weighed on investor confidence.

At lunchtime ABB shares were down 11.8 per cent to a five-month low of SFr10.50 ($6.20) in a generally weaker Swiss market, but they rallied to close down 5.5 per cent at SFr11.25.

The steep fall came after Swiss weekly newspaper Cash said earlier this week that the group's finances were weak.

The company rejected the report as "wrong", but traders said it had contributed to negative sentiment about the share.

"The fact is that ABB's balance sheet doesn't look as good as last year," said Daniel Byseth, head of sales at Union Bancaire Privee in Geneva.

Payout backlash

A public outcry over big payout packages to former chief executives of ABB also hurt the shares. "There is a loss of confidence," said Byseth. "You just can't trust them."

The two former executive, Percy Barnevik and Goran Lindahl, received pensions and other benefits worth some SFr233 million ($137.2 million). Both have indicated their willingness to pay back some of the money, an ABB source told British newsagency Reuters on Thursday.

Traders said ABB shares were likely to find a bottom at SFr10 and noted that they would start to look attractive again if they fell beneath the SFr10 level.

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