FIAT DEALERS GARAGES

By Jed Horowitz and David Henry

July 25 (Reuters) - Sanford "Sandy" Weill, the tycoon who built financial conglomerate Citigroup Inc into a massive U.S. commercial and investment bank, said it is time to split up the biggest banks so they can go back to growing again.

The comments were an astonishing about-face for Weill, who in the late 1990's smashed the U.S. law known as "Glass-Steagall" that divided commercial and investment banking. Riskier investment banking activities should be separated from safer commercial banking, and the government should only have to insure the latter, Weill said.

"The world changes, and the world that we live in is different from the one that we lived in 10 years ago," Weill said in an interview with television network CNBC.

Other long-time Wall Street players were quick to applaud Weill. Said Arthur Levitt, Weill's former business partner in the 1960s and a chairman of the Securities Exchange Commission in the 1990s: "It's a very difficult statement for him to make since he was largely responsible for the repeal of Glass-Steagall, and he's absolutely right. This is a very significant statement."

But even if a growing number of former bank executives are calling for big banks to be broken up, there is little evidence that current bank executives or regulators are listening. Big banks are dieting instead of amputating: they are selling smaller units and laying off staff without completely dismantling themselves.

The closest any banks have come so far is in shrinking their balance sheets. Morgan Stanley, for example, said last week that by the end of 2014 it plans to reduce fixed-income trading assets by about 30 percent from third-quarter 2011 levels. Citigroup has reduced its Citi Holdings unit, which holds assets the bank hopes to shed, to $191 billion from about $650 billion in 2009.

Regulators are putting some limits on big banks, lawyers said. They are blocking them from making big acquisitions, and demanding that "too big to fail" banks fund themselves with more equity capital.

U.S. Treasury Secretary Tim Geithner said on Wednesday that these steps and others the United States has already taken are serious.

"Congress put in place limits on how large they can get and deprived government of the ability to come in and rescue them from their mistakes," he told lawmakers at the House Financial Services Committee hearing.

A "CREATIVE' INVESTMENT BANKING SECTOR

But Weill called for far deeper changes among the major banks, noting that when investment banks are no longer eligible to be bailed out by the U.S. Federal Reserve, they can go back to innovating and growing fast.

"Let's have a creative investment banking system like we have always had, so that the financial industry can once again attract the best and the brightest like they are doing in Silicon Valley," Weill said, referring to the region near San Francisco often seen as the epicenter of the technology sector.

The Glass-Steagall law, known as "The Banking Act of 1933," was passed during the Great Depression to help restore faith in banks. It revamped the financial system, creating, for example, deposit insurance, in addition to separating commercial and investment banking.

Looser regulations in the 1980s and 1990s chipped away at Glass-Steagall. But when Weill's Travelers Group, which included an insurer and the Salomon Brothers investment bank, took over Citicorp in 1998, it needed a special temporary regulatory exemption to operate those businesses together.

Weill lobbied heavily for key provisions of Glass-Steagall to be repealed, a change he won in 1999. Since then, the U.S. banking system has become considerably more concentrated.

A GROWING CHORUS

Other major former bank executives have also called for banks to be split up. Phil Purcell, the former chairman and chief executive officer of Morgan Stanley, wrote in an opinion piece in the Wall Street Journal last month that shareholders would benefit from such moves.

Breaking up the biggest banks could double or triple the value of the companies, Purcell wrote. Purcell long advocated for "financial supermarkets" starting with his work at McKinsey in the 1970s.

John Reed, the former chief executive of Citicorp who worked with Weill on the 1997 merger with Travelers, said in March that he regrets his role and is astounded at the way banks continue to fight regulations to rein in risky activities.

"It wasn't that there was one or two or institutions that, you know, got carried away and did stupid things. It was, we all did ... and then the whole system came down," Reed said on Bill Moyers' public television show.

Former regulators have also argued for break-ups. Sheila Bair, chairman of the Federal Deposit Insurance Corp until last year, wrote in a January column in Fortune that shareholders should press for banks to break themselves up, and that banks' customers would benefit.

Soon after JPMorgan Chase's Chief Executive Jamie Dimon said the bank could lose billions from bad credit derivatives trades in May, Bair wrote another column calling for big banks to be broken up because they are too big to manage effectively.

There is some limited support for breaking up banks in Washington. Senator Sherrod Brown has introduced a law that would limit how big banks can get, for example through limiting how much they can borrow and how big they can be relative to the overall economy.

The Ohio Senator, a Democrat, said in a statement on Wednesday, "Allowing Wall Street megabanks to grow so large and over-leveraged ... isn't fair to taxpayers."

But Brown's bill is seen as a longshot, and Bair noted in her May column that "in Washington, no one is seriously discussing breaking up the big banks."

Many on Wall Street were flabbergasted by Weill's comments. "I think it was a guy with a mask on who looked like Sandy Weill," said Alan "Ace" Greenberg, the former chairman and chief executive of Bears Stearns Cos., who's now an adviser with JPMorgan Chase & Co.

"I've known Sandy for a long time and it didn't sound like him to me," Greenberg added.

* Q2 revenue falls 8.4 pct to C$2.56 bln

* Shares close down 7.28 percent at C$27.27 on TSX

By Julie Gordon and Euan Rocha

TORONTO, July 25 (Reuters) - Teck Resources Inc sees no near-term reprieve from the lower coal and metal prices that dragged its quarterly profit lower, news that sent its shares tumbling on Wednesday.

Vancouver-based Teck, Canada's largest diversified miner, said economic uncertainties in Europe and the United States and ebbing growth in China, India and other emerging markets held back demand and prices for many of its products in the quarter.

Its net profit dropped nearly 65 percent, while adjusted profit missed analyst estimates. Teck shares fell 7.28 percent.

"While we believe that the medium to long-term fundamentals for steelmaking coal, copper and zinc are quite favorable, the recent weakness in these markets may well persist over the near term," the company said in a statement.

Teck's problems reflect mounting worries that a darkening debt outlook in Spain and the euro zone could hit demand for industrial metals, and that the aggressive Chinese growth that drove metal prices to record highs, may be subsiding.

But Teck remained positive on the longer-term outlook for base metals and especially coal, noting that development in China and other emerging nations will require more steel. The metallurgical coal that Teck produces is used in steelmaking.

COST PRESSURES

Teck, which has operations in Canada, the United States, Chile and Peru, said higher operating costs weighed on both its coal and copper divisions in the second quarter.

"Overall, we view the 2Q12 results as disappointing due to the increase in operating costs at the company's major operating divisions," Desjardins Securities analyst John Hughes said in a note to clients.

Coal revenues dropped 7 percent to C$1.36 billion, while coal production fell by some 700,000 tonnes as a nine-day rail strike shut down rail operations from the company's Elk Valley mines in British Columbia. Total operating and transportation costs for the coal division rose some 10 percent.

Teck's copper division produced a record 90,000 tonnes of the red metal in the quarter. But sales fell 2 percent to C$731 million as copper prices fell.

Zinc sales volumes slipped on seasonal fluctuations at the Red Dog mine in Alaska. Zinc accounts for just 11 percent of Teck's business, with copper production weighing in at 32 percent and coal making up the remaining 57 percent.

Teck said the decision to move forward with its Quebrada Blanca Phase 2 copper project in Chile could be delayed, as it wrestles with permitting and financing issues.

Earlier this month, Teck temporarily withdrew the environmental assessment application for the $5.6 billion project. It said on Wednesday it was reviewing comments from regulators and once the requirements are clarified, it would resubmit the application.

The issues are mainly around plans to use ground water during construction, Roger Higgins, senior vice president of copper, said on a conference call with investors.

"How long it will take us to address that is really part of our ongoing discussions with the regulators," he said. "They have made it quite clear that they like the project, they want to see the project proceed."

Quebrada Blanca Phase 2 will more than double output at the Quebrada Blanca copper mine and extend its life by some 30 years. Teck said it was in talks with its partners on financing the development, and could potentially bring in a new partner.

COAL SALES

Teck said it has reached agreements with customers to sell 5 million tonnes of coal in the third quarter and it expects to conclude additional sales during the quarter.

The average price for its premium coal has been settled at $225 per tonne, with average price for all its coal products at just shy of $200 per tonne.

Teck net profit fell to C$268 million ($263 million), or 46 Canadian cents a share, from C$756 million, or C$1.28, a year earlier. Adjusted to exclude one-time items such as asset sales, profit fell 53 percent to C$312 million, or 53 Canadian cents a share. Analysts had expected a profit of 64 Canadian cents a share, according to Thomson Reuters I/B/E/S.

Revenue fell to C$2.56 billion from C$2.80 billion, as coal, copper and zinc prices dropped below year-ago levels.

Teck said its balance sheet remains strong, with C$3.6 billion of cash, which will allow the company to advance its longer-term growth plans.