SAN FRANCISCO (Reuters) – Marin Software, a startup that publishes applications used to manage online advertising campaigns, has raised $30 million in a new investment round led by Singaporean sovereign wealth fund Temasek Holdings.
Temasek was joined by SAP Ventures, the investment arm of SAP AG, Europe’s largest enterprise software firm, as well as previous investors including Benchmark Capital, Crosslink Capital and DAG Ventures.
The San Francisco-based company also announced on Monday that it has added Frank van Veenendaal, a top global sales executive at Salesforce.com, to its board.
The latest moves are meant to help Marin acquire new customers, especially in Asia, where the company looks to focus its expansion, Chris Lien, Marin’s chief executive officer, said in an interview.
Temasek will help Marin “with potential customer introductions and local market knowledge,” Lien said.
“They’ve been operating in these emerging markets for years and years.”
Marin’s products have been adopted by clients like Hotels.com, Macy’s and the University of Phoenix. The company is still focused on managing ads across search engines like Google and Yahoo, but Lien said his company is beginning to incorporate into its platform tools to manage campaigns on social media sites like Twitter, Facebook and LinkedIn.
(Reporting by Gerry Shih; Editing by Richard Pullin)
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2012年2月13日星期一
China tells banks to roll over local govt loans – FT
SYDNEY (Reuters) – China has told its banks to start a huge roll-over of loans to local governments, the Financial Times reported, aiming to give itself more time to deal with a $1.7 trillion debt hangover from the global financial crisis.
The move underscores China’s determination to contain its 10.7 trillion yuan debt mess and forestall a potential loan crisis in the world’s No. 2 economy, analysts say.
As early as June 2011, the Chinese government had vowed to clean up its local debt either by shifting 2-3 trillion yuan of debt off local governments, forcing state banks to take some bad debt losses and selling select projects to private investors, sources told Reuters earlier.
Investors worry that China’s banks would suffer billions of bad loan losses and hobble the world’s growth engine at a time of anaemic global economic growth.
China’s mountain of local debt piled up after the 2008-09 financial crisis when Beijing ordered local governments to spend massively on infrastructure projects to buoy economic growth, which they did by borrowing heavily.
Analysts say Chinese banks are already rolling over or restructuring troubled loans to cash-strapped local governments unable to repay their debt. But the amount of loans being rolled over is not known as banks — and Beijing — are tight-lipped.
Worse, analysts say Chinese banks are hiding troubled loans by adamantly refusing to mark them as non-performing loans in financial statements before restructuring them, as per global best practice.
“This is bad regulation but I don’t think we are going to get a bank crisis,” said a bank analyst in Hong Kong.
In some cases, loans are being restructured by extending their maturities by as much as four years, the Financial Times said, citing bankers and analysts familiar with the matter.
Not all local government loans would be rolled over, the paper said, citing a person with knowledge of the plan.
Banks would determine if there was real demand for the investment. Continued funding for the construction of highways would be approved but less important projects, like massive city squares, might be cut off.
Banks would also consider whether investments were consistent with the government’s five-year plan for industrial upgrading and cleaner growth.
China has said that about half of the 10.7 trillion yuan of loans will mature over the next three years.
(Reporting by Richard Pullin in MELBOURNE and Koh Gui Qing in SINGAPORE, Editing by Dean Yates & Kim Coghill)
http://tourism9.cm/ http://vkins.com/
The move underscores China’s determination to contain its 10.7 trillion yuan debt mess and forestall a potential loan crisis in the world’s No. 2 economy, analysts say.
As early as June 2011, the Chinese government had vowed to clean up its local debt either by shifting 2-3 trillion yuan of debt off local governments, forcing state banks to take some bad debt losses and selling select projects to private investors, sources told Reuters earlier.
Investors worry that China’s banks would suffer billions of bad loan losses and hobble the world’s growth engine at a time of anaemic global economic growth.
China’s mountain of local debt piled up after the 2008-09 financial crisis when Beijing ordered local governments to spend massively on infrastructure projects to buoy economic growth, which they did by borrowing heavily.
Analysts say Chinese banks are already rolling over or restructuring troubled loans to cash-strapped local governments unable to repay their debt. But the amount of loans being rolled over is not known as banks — and Beijing — are tight-lipped.
Worse, analysts say Chinese banks are hiding troubled loans by adamantly refusing to mark them as non-performing loans in financial statements before restructuring them, as per global best practice.
“This is bad regulation but I don’t think we are going to get a bank crisis,” said a bank analyst in Hong Kong.
In some cases, loans are being restructured by extending their maturities by as much as four years, the Financial Times said, citing bankers and analysts familiar with the matter.
Not all local government loans would be rolled over, the paper said, citing a person with knowledge of the plan.
Banks would determine if there was real demand for the investment. Continued funding for the construction of highways would be approved but less important projects, like massive city squares, might be cut off.
Banks would also consider whether investments were consistent with the government’s five-year plan for industrial upgrading and cleaner growth.
China has said that about half of the 10.7 trillion yuan of loans will mature over the next three years.
(Reporting by Richard Pullin in MELBOURNE and Koh Gui Qing in SINGAPORE, Editing by Dean Yates & Kim Coghill)
http://tourism9.cm/ http://vkins.com/
China tells banks to roll over local govt loans: report
SYDNEY (Reuters) – China has told its banks to start a huge roll-over of loans to local governments, the Financial Times reported, aiming to give itself more time to deal with a $1.7 trillion debt hangover from the global financial crisis.
The move underscores China’s determination to contain its 10.7 trillion yuan debt mess and forestall a potential loan crisis in the world’s No. 2 economy, analysts say.
As early as June 2011, the Chinese government had vowed to clean up its local debt either by shifting 2-3 trillion yuan of debt off local governments, forcing state banks to take some bad debt losses and selling select projects to private investors, sources told Reuters earlier.
Investors worry that China’s banks would suffer billions of bad loan losses and hobble the world’s growth engine at a time of anaemic global economic growth.
China’s mountain of local debt piled up after the 2008-09 financial crisis when Beijing ordered local governments to spend massively on infrastructure projects to buoy economic growth, which they did by borrowing heavily.
Analysts say Chinese banks are already rolling over or restructuring troubled loans to cash-strapped local governments unable to repay their debt. But the amount of loans being rolled over is not known as banks — and Beijing — are tight-lipped.
Worse, analysts say Chinese banks are hiding troubled loans by adamantly refusing to mark them as non-performing loans in financial statements before restructuring them, as per global best practice.
“This is bad regulation but I don’t think we are going to get a bank crisis,” said a bank analyst in Hong Kong.
In some cases, loans are being restructured by extending their maturities by as much as four years, the Financial Times said, citing bankers and analysts familiar with the matter.
Not all local government loans would be rolled over, the paper said, citing a person with knowledge of the plan.
Banks would determine if there was real demand for the investment. Continued funding for the construction of highways would be approved but less important projects, like massive city squares, might be cut off.
Banks would also consider whether investments were consistent with the government’s five-year plan for industrial upgrading and cleaner growth.
China has said that about half of the 10.7 trillion yuan of loans will mature over the next three years.
(Reporting by Richard Pullin in MELBOURNE and Koh Gui Qing in SINGAPORE, Editing by Dean Yates & Kim Coghill)
http://tourism9.cm/ http://vkins.com/
The move underscores China’s determination to contain its 10.7 trillion yuan debt mess and forestall a potential loan crisis in the world’s No. 2 economy, analysts say.
As early as June 2011, the Chinese government had vowed to clean up its local debt either by shifting 2-3 trillion yuan of debt off local governments, forcing state banks to take some bad debt losses and selling select projects to private investors, sources told Reuters earlier.
Investors worry that China’s banks would suffer billions of bad loan losses and hobble the world’s growth engine at a time of anaemic global economic growth.
China’s mountain of local debt piled up after the 2008-09 financial crisis when Beijing ordered local governments to spend massively on infrastructure projects to buoy economic growth, which they did by borrowing heavily.
Analysts say Chinese banks are already rolling over or restructuring troubled loans to cash-strapped local governments unable to repay their debt. But the amount of loans being rolled over is not known as banks — and Beijing — are tight-lipped.
Worse, analysts say Chinese banks are hiding troubled loans by adamantly refusing to mark them as non-performing loans in financial statements before restructuring them, as per global best practice.
“This is bad regulation but I don’t think we are going to get a bank crisis,” said a bank analyst in Hong Kong.
In some cases, loans are being restructured by extending their maturities by as much as four years, the Financial Times said, citing bankers and analysts familiar with the matter.
Not all local government loans would be rolled over, the paper said, citing a person with knowledge of the plan.
Banks would determine if there was real demand for the investment. Continued funding for the construction of highways would be approved but less important projects, like massive city squares, might be cut off.
Banks would also consider whether investments were consistent with the government’s five-year plan for industrial upgrading and cleaner growth.
China has said that about half of the 10.7 trillion yuan of loans will mature over the next three years.
(Reporting by Richard Pullin in MELBOURNE and Koh Gui Qing in SINGAPORE, Editing by Dean Yates & Kim Coghill)
http://tourism9.cm/ http://vkins.com/
2012年2月6日星期一
Bank lending to shrink in 2012 – Ernst & Young
LONDON (Reuters) – Total bank lending in Britain is set to shrink for the first time since 2009 this year, and the lack of credit from mainstream banks will help payday loan firms grow further, a survey by the Ernst & Young ITEM club said on Monday.
The E&Y ITEM club forecast that total UK bank loans would shrink by 2.2 percent in 2012, having risen by an estimated 4.3 percent in 2011.
“We have been warning about the impact bank deleveraging could have on the economy for some time, but this is the first time there will be an annual contraction in total loans since 2009, when the UK economy was still suffering from the immediate effects of the global financial crisis,” said Neil Blake, senior economic adviser to the Ernst & Young ITEM Club.
Last year, Britain’s top banks, including the “Big Four” of Barclays, HSBC and part-nationalised lenders Lloyds and Royal Bank of Scotland, stuck a deal with the government in which they pledged to lend more to businesses in return for legislative restraint.
However, many small firms have said they are still not getting enough credit following the deal, known as “Project Merlin.”
As a result, both small businesses and consumers are turning increasingly to alternative lenders, such as firms that typically lend a few hundred pounds to clients for a week or two to tide them over until their next pay cheque.
Last month, payday loan companies Ferratum and Cash Converters both told Reuters they expected more growth this year, and the E&Y ITEM club said this sector was set to expand in 2012.
“Households that fall outside of the credit terms of traditional lenders are increasingly looking toward other credit providers, regardless of the cost. With banks expected to further tighten lending conditions, we expect the shift towards alternative lenders to continue unabated,” said Blake.
(Reporting by Sudip Kar-Gupta; Editing by Will Waterman)
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The E&Y ITEM club forecast that total UK bank loans would shrink by 2.2 percent in 2012, having risen by an estimated 4.3 percent in 2011.
“We have been warning about the impact bank deleveraging could have on the economy for some time, but this is the first time there will be an annual contraction in total loans since 2009, when the UK economy was still suffering from the immediate effects of the global financial crisis,” said Neil Blake, senior economic adviser to the Ernst & Young ITEM Club.
Last year, Britain’s top banks, including the “Big Four” of Barclays, HSBC and part-nationalised lenders Lloyds and Royal Bank of Scotland, stuck a deal with the government in which they pledged to lend more to businesses in return for legislative restraint.
However, many small firms have said they are still not getting enough credit following the deal, known as “Project Merlin.”
As a result, both small businesses and consumers are turning increasingly to alternative lenders, such as firms that typically lend a few hundred pounds to clients for a week or two to tide them over until their next pay cheque.
Last month, payday loan companies Ferratum and Cash Converters both told Reuters they expected more growth this year, and the E&Y ITEM club said this sector was set to expand in 2012.
“Households that fall outside of the credit terms of traditional lenders are increasingly looking toward other credit providers, regardless of the cost. With banks expected to further tighten lending conditions, we expect the shift towards alternative lenders to continue unabated,” said Blake.
(Reporting by Sudip Kar-Gupta; Editing by Will Waterman)
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2012年2月1日星期三
Spain tries again to clean up troubled banks
MADRID (Reuters) – Spain’s government will force its banks to recognize some 50 billion euros (41.3 billion pounds) in losses on bad loans to builders in a fresh financial sector reform on Friday, but doubts will still linger over the worthless property on the banks’ books.
The aim is to trigger a fresh wave of mergers to create stronger new banks four years after a property boom went bust and restore confidence to Spain, which has yet to shake off the euro zone debt crisis.
The new centre-right government has pledged to straighten out the banks once and for all, but officials are worried the reform will put great strain on Bankia, Spain’s fourth-biggest bank by market value, which is particularly exposed to real estate.
The reform will give newly merged banks up to two years to write down toxic assets by setting aside provisions on their books, other banks will get one year, said several sources close to the negotiations on the new rules.
The government will also lend funds to banks that struggle to meet the steep new provisions, through 5-year preferential shares bearing an 8 percent coupon in exchange for curbs on bank executives’ pay and bonuses, the sources said.
Spanish banks underwent a round of mergers and recapitalization under the former Socialist government. At that time banks boosted provisions against problem loans and property losses to about 30 percent. That will rise to 50 percent or higher with another 50 billion euros in coverage.
With the deeper reform the new government hopes to revive international interbank lending, mostly closed to Spain’s banks since the first Greek bailout in 2010, so that they can restart lending at home.
Bank lending continues to be stagnant as Spain heads into a second recession in four years and unemployment soars to 23 percent. The bank reform, as well as labour market reform and austerity measures are all part of Prime Minister Mariano Rajoy’s efforts to prove to investors that Spain is solvent.
But the banks’ potential losses are so deep — total exposure is some 176 billion euros or 18 percent of Spain’s economic output — markets may still be wary.
“We’ve got to be aware that investors could still ask for more provisioning after this. You can’t say categorically that doubling provisions means the uncertainty is over,” said a source in the financial sector.
BOOKING LOSSES
The new measures to be decreed by the cabinet on Friday will break down what losses banks must recognize on assets linked to real estate — foreclosed property, unrecoverable loans and substandard loans.
“What is key is what assets are priced and how they are priced,” said Carmen Munoz, senior director at Fitch Ratings.
The system will need an additional 64 billion euros if foreclosed property assets are marked down by 65 percent, bad loans with housebuilders at 80 percent and substandard loans at 50 percent, says Bank of America Merrill Lynch.
Total potential additional capital needed is equivalent to 79 percent of the system’s two-year pre-provision profit, the bank says. However, this rises to 248 percent if profits from Spain’s two biggest banks Santander and BBVA are removed.
INDISCRIMINATE LENDING
Spanish lenders lent indiscriminately to developers over a decade-long property bubble. When developers went bust, many creditor banks took on their land and unfinished housing blocks, booking them on their balance sheets at unrealistic prices.
Land classified for building has practically no resale value in Spain since there are between 700,000 and a million unsold homes and no appetite to build more.
The government hopes the most highly exposed banks get folded into stronger ones.
Particularly in focus is Bankia, the result of a merger between seven regional banks. Bankia has more customers than any other bank in Spain and is defined as a systemic bank that could drag down other lenders if it had trouble.
“The real problem they have is Bankia. The rest is minor,” said one Madrid-based banker.
Nomura estimates Bankia will need 5 billion euros in extra provisions — 12 times its estimated 2011 pre-tax profit. This compares with 4 billion for Santander at 0.3 times 2011 pre-tax profit and 3.3 billion euros for BBVA at 0.5 times profit.
Bankia, which has already received 4.5 billion euros in public money, has 41 billion euros in developer loans and 11 billion euros in foreclosed property on its books.
Finding a partner to take it on could be difficult, seeing as a stronger bank would only take it on if given generous guarantees by the government.
“At the end of the day, it will cost the government more to pay a private bank to take over Bankia than bail it out themselves, because buyers are only going to step in if it comes with a whopping big cheque from the state,” said one banking analyst.
WHERE WILL THE MONEY COME FROM?
Spain’s government, unwilling to swell state debt as the euro zone crisis has forced up borrowing costs, will probably have to raise some 10 billion to 12 billion euros to loan to the most troubled banks.
One source close to the deal said that since the loans will be at a market rate they will not count towards the public deficit, which Spain must reduce this year under European Union rules.
European help looks unlikely, as it will come attached with conditions and will be politically negative for the government.
“I don’t think appealing to the European rescue fund will be an option for bank restructuring in Spain,” said Santander Chief Executive Alfredo Saenz on Tuesday.
(Additional reporting by Andres Gonzalez, Carlos Ruano and Jesus Aguado; Editing by Mike Nesbit)
The aim is to trigger a fresh wave of mergers to create stronger new banks four years after a property boom went bust and restore confidence to Spain, which has yet to shake off the euro zone debt crisis.
The new centre-right government has pledged to straighten out the banks once and for all, but officials are worried the reform will put great strain on Bankia, Spain’s fourth-biggest bank by market value, which is particularly exposed to real estate.
The reform will give newly merged banks up to two years to write down toxic assets by setting aside provisions on their books, other banks will get one year, said several sources close to the negotiations on the new rules.
The government will also lend funds to banks that struggle to meet the steep new provisions, through 5-year preferential shares bearing an 8 percent coupon in exchange for curbs on bank executives’ pay and bonuses, the sources said.
Spanish banks underwent a round of mergers and recapitalization under the former Socialist government. At that time banks boosted provisions against problem loans and property losses to about 30 percent. That will rise to 50 percent or higher with another 50 billion euros in coverage.
With the deeper reform the new government hopes to revive international interbank lending, mostly closed to Spain’s banks since the first Greek bailout in 2010, so that they can restart lending at home.
Bank lending continues to be stagnant as Spain heads into a second recession in four years and unemployment soars to 23 percent. The bank reform, as well as labour market reform and austerity measures are all part of Prime Minister Mariano Rajoy’s efforts to prove to investors that Spain is solvent.
But the banks’ potential losses are so deep — total exposure is some 176 billion euros or 18 percent of Spain’s economic output — markets may still be wary.
“We’ve got to be aware that investors could still ask for more provisioning after this. You can’t say categorically that doubling provisions means the uncertainty is over,” said a source in the financial sector.
BOOKING LOSSES
The new measures to be decreed by the cabinet on Friday will break down what losses banks must recognize on assets linked to real estate — foreclosed property, unrecoverable loans and substandard loans.
“What is key is what assets are priced and how they are priced,” said Carmen Munoz, senior director at Fitch Ratings.
The system will need an additional 64 billion euros if foreclosed property assets are marked down by 65 percent, bad loans with housebuilders at 80 percent and substandard loans at 50 percent, says Bank of America Merrill Lynch.
Total potential additional capital needed is equivalent to 79 percent of the system’s two-year pre-provision profit, the bank says. However, this rises to 248 percent if profits from Spain’s two biggest banks Santander and BBVA are removed.
INDISCRIMINATE LENDING
Spanish lenders lent indiscriminately to developers over a decade-long property bubble. When developers went bust, many creditor banks took on their land and unfinished housing blocks, booking them on their balance sheets at unrealistic prices.
Land classified for building has practically no resale value in Spain since there are between 700,000 and a million unsold homes and no appetite to build more.
The government hopes the most highly exposed banks get folded into stronger ones.
Particularly in focus is Bankia, the result of a merger between seven regional banks. Bankia has more customers than any other bank in Spain and is defined as a systemic bank that could drag down other lenders if it had trouble.
“The real problem they have is Bankia. The rest is minor,” said one Madrid-based banker.
Nomura estimates Bankia will need 5 billion euros in extra provisions — 12 times its estimated 2011 pre-tax profit. This compares with 4 billion for Santander at 0.3 times 2011 pre-tax profit and 3.3 billion euros for BBVA at 0.5 times profit.
Bankia, which has already received 4.5 billion euros in public money, has 41 billion euros in developer loans and 11 billion euros in foreclosed property on its books.
Finding a partner to take it on could be difficult, seeing as a stronger bank would only take it on if given generous guarantees by the government.
“At the end of the day, it will cost the government more to pay a private bank to take over Bankia than bail it out themselves, because buyers are only going to step in if it comes with a whopping big cheque from the state,” said one banking analyst.
WHERE WILL THE MONEY COME FROM?
Spain’s government, unwilling to swell state debt as the euro zone crisis has forced up borrowing costs, will probably have to raise some 10 billion to 12 billion euros to loan to the most troubled banks.
One source close to the deal said that since the loans will be at a market rate they will not count towards the public deficit, which Spain must reduce this year under European Union rules.
European help looks unlikely, as it will come attached with conditions and will be politically negative for the government.
“I don’t think appealing to the European rescue fund will be an option for bank restructuring in Spain,” said Santander Chief Executive Alfredo Saenz on Tuesday.
(Additional reporting by Andres Gonzalez, Carlos Ruano and Jesus Aguado; Editing by Mike Nesbit)
2012年1月30日星期一
Founder family seeks 3 bln rupees in Milestone sale – report
MUMBAI (Reuters) – The family of late Ved Prakash Arya, founder of Indian private equity fund Milestone Capital, has sought 3 billion rupees from prospective buyers of the company, the Financial Express newspaper reported citing an unnamed source with direct knowledge.
Edelweiss Financial Services (EDEL.NS), Ashmore Investment Management, Arth Veda Capital, a unit of Dewan Housing Finance (DWNH.NS) and L&T Finance (LTFH.NS) are interested in the assets, the report said.
Standard Chartered Plc (STAN.L) is advising Milestone on the sale.
The family put Milestone on the block after its founder and chief executive Ved Prakash Arya died last year.
The fund currently manages about 36 billion rupees, the report said.
(Reporting by Indulal PM; Editing by Rajesh Pandathil)
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Edelweiss Financial Services (EDEL.NS), Ashmore Investment Management, Arth Veda Capital, a unit of Dewan Housing Finance (DWNH.NS) and L&T Finance (LTFH.NS) are interested in the assets, the report said.
Standard Chartered Plc (STAN.L) is advising Milestone on the sale.
The family put Milestone on the block after its founder and chief executive Ved Prakash Arya died last year.
The fund currently manages about 36 billion rupees, the report said.
(Reporting by Indulal PM; Editing by Rajesh Pandathil)
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2012年1月19日星期四
China property, other data, add to slowdown worries
BEIJING (Reuters) – China’s course through the most testing economic conditions since the global financial crisis is getting bumpier, as data on Wednesday showed stuttering investment flows, tight credit and falling home prices coinciding with a difficult trade outlook.
The final rush of indicators ahead of the Lunar New Year holiday reinforced the view that economic growth will slowdown further in the first three months of 2012, a trend that gathered momentum at the end of 2011 and resulted in the slackest quarter of expansion in 2- years.
Pro-growth government policies applied so far should help avoid an outright hard landing, but the risk remains that the scale of the slowdown engineered domestically in the once-rocketing real estate sector and the size of the drop-off in external demand from debt-ridden Europe have been underestimated.
“Headline GDP growth shows a soft landing definitely, but if you look at some of the underlying sectors — particularly real estate investment — we see lots of vulnerabilities. It could be a pretty rough ride,” said Ren Xianfang, senior China analyst at IHS Global Insight in Beijing.
“By the final quarter of last year I think the government started to lose its grip on the pace of the slowdown and that’s largely because of the external shock,” she added.
That shock has come in the form of both slower exports growth — which ended December at roughly a third of the year-on-year level seen in January — and capital outflows, which ended the year with the first quarterly outflow since 1998, calculations by Nomura analysts show.
Still, while trade and capital flows including foreign direct investment might be sagging, they are doing so from record highs.
Even so, the Ministry of Commerce warned in a regular news conference on Wednesday that the near-term outlook was difficult and that only a modest growth in trade was anticipated in the first quarter.
REAL ESTATE SCRUTINY
A number of indicators this week showed China’s economic growth weakened in the fourth quarter, but it is the real estate sector that economists are scrutinising most carefully to assess the scale of the domestic slowdown.
With Europe in danger of slipping into a recession and U.S. growth looking lacklustre, China’s role in the global economy is magnified — particularly its ability to generate domestic demand that could absorb exports from struggling developed nations.
Real estate is the backbone of China’s domestic growth story. Property investment was worth 13 percent of total output in 2011 and it links some 40 major industrial sectors.
Data on Wednesday showed China’s new home prices fell for the third straight month in December and may drop further as Beijing sticks to its campaign to bring housing costs back to levels that the government considers reasonable.
That followed data on Tuesday showing annual growth in China’s real estate investment slowed in December to its weakest pace in a year.
“Today’s report is consistent with the unambiguously deteriorating trends seen in property sales, construction, starts, and investments. The data just turned from bad to worse,” Yao Wei, China economist at Societe Generale in Hong Kong wrote in a note to clients.
“The economy as a whole has not felt much chill yet, but H1 2012 is going to be difficult not just for property developers. Contraction in sales and sharp deceleration in investments will send shockwaves along the industry chain, which is expected to drag overall growth below the 8 percent mark in H1,” she said.
Intriguingly, tight monetary conditions revealed by the central bank’s total social financing aggregate — the measure it developed to offer a clearer picture of money supply than simple M2 — underline credit constraints in the real economy.
Total social financing fell to 12.8 trillion yuan (1 trillion pounds) in 2011 from 13.9 trillion in 2010, even as an estimated 350 billion yuan was injected into the financial system after November’s cut of 50 basis points to the ratio of deposits banks must hold as reserves.
BATTLE OF THE BUBBLE
China tightened policy to deflate the twin bubbles created in real estate and local government borrowing by the 4 trillion yuan stimulus package launched in 2008 to help the country through the global financial crisis.
The battle to bring those bubbles back under control is still being fought, even as the government faces another downturn that delivered a fourth successive quarter of slowing growth in October to December.
That battle is a key factor uniting economists in the view that even though China’s economy will decelerate further in the months ahead, a cut to policy lending rates by the People’s Bank of China is not on the cards.
“China started a deflating cycle last year and it will be very dangerous, very risky for them to end it prematurely because if they end it too early it will be an even larger macro economic risk for China going forward,” said Ren of IHS.
Up to 200 basis points of bank reserve cuts are expected in 2012 by analysts polled recently by Reuters, as that helps keep money supply growth stable in the face of capital outflows.
Beijing is likely to stick to what Premier Wen Jiabao has called “fine-tuning” of economic policy settings to counter the downturn for now, rather than adopting more aggressive measures such as a interest rate cuts.
That leaves the main area of uncertainty for economists the question of how sharp the slowdown in GDP growth will be in the first quarter of 2012. Many expect the next 12 months to be the most sluggish growth for China in a decade.
The most bearish call in the latest Reuters poll is Deutsche Bank’s 7.3 percent. That’s too steep for many and an unfathomable call to the likes of Ting Lu, Hong Kong-based China economist at Bank of America/Merrill Lynch.
A fall to there from 8.9 percent in the fourth quarter implies a decline wiping some 6 percentage points off growth at an annualised rate that would leave the economy expanding at barely 3 percent.
“That’s just not going to happen,” Lu said. “I think the chance of growth slowing to below 8 percent in the first quarter is very low. Calls below that are just too pessimistic. There’s a slowdown yes, but not that dramatic.”
(Additional reporting by Zhou Xin and Langi Chiang; Editing by Neil Fullick)
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The final rush of indicators ahead of the Lunar New Year holiday reinforced the view that economic growth will slowdown further in the first three months of 2012, a trend that gathered momentum at the end of 2011 and resulted in the slackest quarter of expansion in 2- years.
Pro-growth government policies applied so far should help avoid an outright hard landing, but the risk remains that the scale of the slowdown engineered domestically in the once-rocketing real estate sector and the size of the drop-off in external demand from debt-ridden Europe have been underestimated.
“Headline GDP growth shows a soft landing definitely, but if you look at some of the underlying sectors — particularly real estate investment — we see lots of vulnerabilities. It could be a pretty rough ride,” said Ren Xianfang, senior China analyst at IHS Global Insight in Beijing.
“By the final quarter of last year I think the government started to lose its grip on the pace of the slowdown and that’s largely because of the external shock,” she added.
That shock has come in the form of both slower exports growth — which ended December at roughly a third of the year-on-year level seen in January — and capital outflows, which ended the year with the first quarterly outflow since 1998, calculations by Nomura analysts show.
Still, while trade and capital flows including foreign direct investment might be sagging, they are doing so from record highs.
Even so, the Ministry of Commerce warned in a regular news conference on Wednesday that the near-term outlook was difficult and that only a modest growth in trade was anticipated in the first quarter.
REAL ESTATE SCRUTINY
A number of indicators this week showed China’s economic growth weakened in the fourth quarter, but it is the real estate sector that economists are scrutinising most carefully to assess the scale of the domestic slowdown.
With Europe in danger of slipping into a recession and U.S. growth looking lacklustre, China’s role in the global economy is magnified — particularly its ability to generate domestic demand that could absorb exports from struggling developed nations.
Real estate is the backbone of China’s domestic growth story. Property investment was worth 13 percent of total output in 2011 and it links some 40 major industrial sectors.
Data on Wednesday showed China’s new home prices fell for the third straight month in December and may drop further as Beijing sticks to its campaign to bring housing costs back to levels that the government considers reasonable.
That followed data on Tuesday showing annual growth in China’s real estate investment slowed in December to its weakest pace in a year.
“Today’s report is consistent with the unambiguously deteriorating trends seen in property sales, construction, starts, and investments. The data just turned from bad to worse,” Yao Wei, China economist at Societe Generale in Hong Kong wrote in a note to clients.
“The economy as a whole has not felt much chill yet, but H1 2012 is going to be difficult not just for property developers. Contraction in sales and sharp deceleration in investments will send shockwaves along the industry chain, which is expected to drag overall growth below the 8 percent mark in H1,” she said.
Intriguingly, tight monetary conditions revealed by the central bank’s total social financing aggregate — the measure it developed to offer a clearer picture of money supply than simple M2 — underline credit constraints in the real economy.
Total social financing fell to 12.8 trillion yuan (1 trillion pounds) in 2011 from 13.9 trillion in 2010, even as an estimated 350 billion yuan was injected into the financial system after November’s cut of 50 basis points to the ratio of deposits banks must hold as reserves.
BATTLE OF THE BUBBLE
China tightened policy to deflate the twin bubbles created in real estate and local government borrowing by the 4 trillion yuan stimulus package launched in 2008 to help the country through the global financial crisis.
The battle to bring those bubbles back under control is still being fought, even as the government faces another downturn that delivered a fourth successive quarter of slowing growth in October to December.
That battle is a key factor uniting economists in the view that even though China’s economy will decelerate further in the months ahead, a cut to policy lending rates by the People’s Bank of China is not on the cards.
“China started a deflating cycle last year and it will be very dangerous, very risky for them to end it prematurely because if they end it too early it will be an even larger macro economic risk for China going forward,” said Ren of IHS.
Up to 200 basis points of bank reserve cuts are expected in 2012 by analysts polled recently by Reuters, as that helps keep money supply growth stable in the face of capital outflows.
Beijing is likely to stick to what Premier Wen Jiabao has called “fine-tuning” of economic policy settings to counter the downturn for now, rather than adopting more aggressive measures such as a interest rate cuts.
That leaves the main area of uncertainty for economists the question of how sharp the slowdown in GDP growth will be in the first quarter of 2012. Many expect the next 12 months to be the most sluggish growth for China in a decade.
The most bearish call in the latest Reuters poll is Deutsche Bank’s 7.3 percent. That’s too steep for many and an unfathomable call to the likes of Ting Lu, Hong Kong-based China economist at Bank of America/Merrill Lynch.
A fall to there from 8.9 percent in the fourth quarter implies a decline wiping some 6 percentage points off growth at an annualised rate that would leave the economy expanding at barely 3 percent.
“That’s just not going to happen,” Lu said. “I think the chance of growth slowing to below 8 percent in the first quarter is very low. Calls below that are just too pessimistic. There’s a slowdown yes, but not that dramatic.”
(Additional reporting by Zhou Xin and Langi Chiang; Editing by Neil Fullick)
http://tourism9.com/ http://vkins.com/
2012年1月17日星期二
China's bad debt risks expose systemic shortcomings
BEIJING (Reuters) – Bad debts in China’s banks painfully expose the shortcomings of an archaic financial system geared to lend to the beck and call of government economic policy, rather than when it is profitable.
The crux of the problem is rising distrust of official appraisals of China’s 10.7 trillion yuan local government loans, which surged on the orders of government as it rolled out a 4 trillion yuan economic stimulus programme at the end of 2008.
Banks say less than 1 percent of the loans are in trouble, a number some investors say is too low to be real as lending unleashed to spur economic growth at its weakest point implies a rising risk of bad debt as the economy slows again.
“I talk to so many people and they say the same thing: they do not trust the data coming from Chinese banks,” said James Antos, a bank analyst at Mizuho Securities Asia in Hong Kong.
China’s state audit office said earlier this month it had uncovered 530 billion yuan worth of irregularities with local government debt, leaving investors wondering how much clean-up work remains to be done.
Lacking information, investors are jumping to conclusions. Some think all local government loans are bad. More sober guesstimates assume 2-3 trillion are sour and banks’ non-performing ratios may quadruple to 5 percent, from an average 1.1 percent.
Investors’ worst fears are a cover-up that threatens financial stability in the world’s No. 2 economy.
This is especially so if Beijing orders banks to lend aggressively this year to support the economy and counter Europe’s slowdown, fuelling a vicious cycle of state-directed lending with poor credit judgment that leads to bad loans.
More immediately, the risk is that rising loan losses hit banks’ net profits and capital bases, forcing another government-led bailout like that a decade ago when Beijing spent billions on capital injections to shore up state-backed lenders.
OPTIMISTS EYE REPAYMENT
Optimists say Beijing will pay the debt, or let local governments sell bonds to repay loans used mainly for building infrastructure. Investors like the former option as it is clean and fast, but Beijing is non-committal.
Markets hate that uncertainty, which is one reason why Chinese bank shares have underperformed.
Their average price-to-book ratio of 1.3 is half that of Indonesian banks, according to Reuters data, after the Shanghai financial index plunged some 37 percent in the last two years.
“Certainly a good number of loans made in the last three years will go bad,” said David Madden, a managing partner at DAC Financial Management, a $425 million private equity firm in Hong Kong focused on trading Chinese bad debt.
“They weren’t necessarily made with the highest levels of credit analysis.”
China’s cumulative loan growth is the second fastest in the world’s emerging economies at around 55 percent, after Belarus, and a third faster than India’s 40 percent, Fitch Ratings said.
Yet Chinese banks insist bad loans are falling, not rising.
Their weighted-average non-performing loan ratio dipped 0.1 percent in the third quarter from the previous three months, Citi data showed. In contrast, Indian banks’ weighted-average ratio rose 7.5 percent, hurt in part by a falling rupee.
Non-performing loans are those where borrowers have not made payments for at least 90 days and are in or close to default.
Investors suspect banks are concealing bad loans by adamantly refusing to label them as non-performing when cash-strapped governments cannot repay.
Instead, analysts say banks have — or will — quietly restructure loans by extending maturities, violating best practice where loans are marked non-performing before being restructured.
China’s top state-owned banks declined to comment.
CONSTRAINED BY ACCOUNTING RULES
“The market does not like the fact that you are trying to hide loans which do not meet current terms,” said an analyst at a foreign bank in Hong Kong who declined to be identified.
That Chinese banks are concealing bad debt would be even more apparent if they continue to report enviably low non-performing loans in their 2011 results in March, analysts said, since a fifth of all local government loans matured last year.
In banks’ defence, they could argue their provision coverage of 190 percent is among the highest in Asia, meaning they have put aside 1.9 yuan for every yuan of dud loan — although this ratio looks good when banks recognise lower levels of bad debt.
Margarita Ho at PricewaterhouseCoopers in Beijing said banks are also constrained by China’s accounting rules.
“The accounting rules do not permit banks to provide reserves for losses based on future events, regardless of how probable they are,” she said.
But some investors argue the economic reality is that China has more bad loans than it is admitting to, especially with its economy now slowing, and so its financial stability is at stake if Beijing does not act more forcefully.
“You kind of let the bad news ride until you are forced to accept it,” said Madden from DAC. “But I don’t think kicking the can down the road is, ultimately, a smart thing to do.”
(Reporting by Koh Gui Qing; Editing by Nick Edwards & Kim Coghill)
http://tourism9.cm/ http://vkins.com/
The crux of the problem is rising distrust of official appraisals of China’s 10.7 trillion yuan local government loans, which surged on the orders of government as it rolled out a 4 trillion yuan economic stimulus programme at the end of 2008.
Banks say less than 1 percent of the loans are in trouble, a number some investors say is too low to be real as lending unleashed to spur economic growth at its weakest point implies a rising risk of bad debt as the economy slows again.
“I talk to so many people and they say the same thing: they do not trust the data coming from Chinese banks,” said James Antos, a bank analyst at Mizuho Securities Asia in Hong Kong.
China’s state audit office said earlier this month it had uncovered 530 billion yuan worth of irregularities with local government debt, leaving investors wondering how much clean-up work remains to be done.
Lacking information, investors are jumping to conclusions. Some think all local government loans are bad. More sober guesstimates assume 2-3 trillion are sour and banks’ non-performing ratios may quadruple to 5 percent, from an average 1.1 percent.
Investors’ worst fears are a cover-up that threatens financial stability in the world’s No. 2 economy.
This is especially so if Beijing orders banks to lend aggressively this year to support the economy and counter Europe’s slowdown, fuelling a vicious cycle of state-directed lending with poor credit judgment that leads to bad loans.
More immediately, the risk is that rising loan losses hit banks’ net profits and capital bases, forcing another government-led bailout like that a decade ago when Beijing spent billions on capital injections to shore up state-backed lenders.
OPTIMISTS EYE REPAYMENT
Optimists say Beijing will pay the debt, or let local governments sell bonds to repay loans used mainly for building infrastructure. Investors like the former option as it is clean and fast, but Beijing is non-committal.
Markets hate that uncertainty, which is one reason why Chinese bank shares have underperformed.
Their average price-to-book ratio of 1.3 is half that of Indonesian banks, according to Reuters data, after the Shanghai financial index plunged some 37 percent in the last two years.
“Certainly a good number of loans made in the last three years will go bad,” said David Madden, a managing partner at DAC Financial Management, a $425 million private equity firm in Hong Kong focused on trading Chinese bad debt.
“They weren’t necessarily made with the highest levels of credit analysis.”
China’s cumulative loan growth is the second fastest in the world’s emerging economies at around 55 percent, after Belarus, and a third faster than India’s 40 percent, Fitch Ratings said.
Yet Chinese banks insist bad loans are falling, not rising.
Their weighted-average non-performing loan ratio dipped 0.1 percent in the third quarter from the previous three months, Citi data showed. In contrast, Indian banks’ weighted-average ratio rose 7.5 percent, hurt in part by a falling rupee.
Non-performing loans are those where borrowers have not made payments for at least 90 days and are in or close to default.
Investors suspect banks are concealing bad loans by adamantly refusing to label them as non-performing when cash-strapped governments cannot repay.
Instead, analysts say banks have — or will — quietly restructure loans by extending maturities, violating best practice where loans are marked non-performing before being restructured.
China’s top state-owned banks declined to comment.
CONSTRAINED BY ACCOUNTING RULES
“The market does not like the fact that you are trying to hide loans which do not meet current terms,” said an analyst at a foreign bank in Hong Kong who declined to be identified.
That Chinese banks are concealing bad debt would be even more apparent if they continue to report enviably low non-performing loans in their 2011 results in March, analysts said, since a fifth of all local government loans matured last year.
In banks’ defence, they could argue their provision coverage of 190 percent is among the highest in Asia, meaning they have put aside 1.9 yuan for every yuan of dud loan — although this ratio looks good when banks recognise lower levels of bad debt.
Margarita Ho at PricewaterhouseCoopers in Beijing said banks are also constrained by China’s accounting rules.
“The accounting rules do not permit banks to provide reserves for losses based on future events, regardless of how probable they are,” she said.
But some investors argue the economic reality is that China has more bad loans than it is admitting to, especially with its economy now slowing, and so its financial stability is at stake if Beijing does not act more forcefully.
“You kind of let the bad news ride until you are forced to accept it,” said Madden from DAC. “But I don’t think kicking the can down the road is, ultimately, a smart thing to do.”
(Reporting by Koh Gui Qing; Editing by Nick Edwards & Kim Coghill)
http://tourism9.cm/ http://vkins.com/
Analysis: China's bad debt risks expose systemic shortcomings
BEIJING (Reuters) – Bad debts in China’s banks painfully expose the shortcomings of an archaic financial system geared to lend to the beck and call of government economic policy, rather than when it is profitable.
The crux of the problem is rising distrust of official appraisals of China’s 10.7 trillion yuan ($1.7 trillion) local government loans, which surged on the orders of government as it rolled out a 4 trillion yuan economic stimulus program at the end of 2008.
Banks say less than 1 percent of the loans are in trouble, a number some investors say is too low to be real as lending unleashed to spur economic growth at its weakest point implies a rising risk of bad debt as the economy slows again.
“I talk to so many people and they say the same thing: they do not trust the data coming from Chinese banks,” said James Antos, a bank analyst at Mizuho Securities Asia in Hong Kong.
China’s state audit office said earlier this month it had uncovered 530 billion yuan worth of irregularities with local government debt, leaving investors wondering how much clean-up work remains to be done.
Lacking information, investors are jumping to conclusions. Some think all local government loans are bad. More sober guesstimates assume 2-3 trillion are sour and banks’ non-performing ratios may quadruple to 5 percent, from an average 1.1 percent.
Investors’ worst fears are a cover-up that threatens financial stability in the world’s No. 2 economy.
This is especially so if Beijing orders banks to lend aggressively this year to support the economy and counter Europe’s slowdown, fuelling a vicious cycle of state-directed lending with poor credit judgment that leads to bad loans.
More immediately, the risk is that rising loan losses hit banks’ net profits and capital bases, forcing another government-led bailout like that a decade ago when Beijing spent billions on capital injections to shore up state-backed lenders.
OPTIMISTS EYE REPAYMENT
Optimists say Beijing will pay the debt, or let local governments sell bonds to repay loans used mainly for building infrastructure. Investors like the former option as it is clean and fast, but Beijing is non-committal.
Markets hate that uncertainty, which is one reason why Chinese bank shares have underperformed.
Their average price-to-book ratio of 1.3 is half that of Indonesian banks, according to Reuters data, after the Shanghai financial index plunged some 37 percent in the last two years.
“Certainly a good number of loans made in the last three years will go bad,” said David Madden, a managing partner at DAC Financial Management, a $425 million private equity firm in Hong Kong focused on trading Chinese bad debt.
“They weren’t necessarily made with the highest levels of credit analysis.”
China’s cumulative loan growth is the second fastest in the world’s emerging economies at around 55 percent, after Belarus, and a third faster than India’s 40 percent, Fitch Ratings said.
Yet Chinese banks insist bad loans are falling, not rising.
Their weighted-average non-performing loan ratio dipped 0.1 percent in the third quarter from the previous three months, Citi data showed. In contrast, Indian banks’ weighted-average ratio rose 7.5 percent, hurt in part by a falling rupee.
Non-performing loans are those where borrowers have not made payments for at least 90 days and are in or close to default.
Investors suspect banks are concealing bad loans by adamantly refusing to label them as non-performing when cash-strapped governments cannot repay.
Instead, analysts say banks have — or will — quietly restructure loans by extending maturities, violating best practice where loans are marked non-performing before being restructured.
China’s top state-owned banks declined to comment.
CONSTRAINED BY ACCOUNTING RULES
“The market does not like the fact that you are trying to hide loans which do not meet current terms,” said an analyst at a foreign bank in Hong Kong who declined to be identified.
That Chinese banks are concealing bad debt would be even more apparent if they continue to report enviably low non-performing loans in their 2011 results in March, analysts said, since a fifth of all local government loans matured last year.
In banks’ defense, they could argue their provision coverage of 190 percent is among the highest in Asia, meaning they have put aside 1.9 yuan for every yuan of dud loan — although this ratio looks good when banks recognize lower levels of bad debt.
Margarita Ho at PricewaterhouseCoopers in Beijing said banks are also constrained by China’s accounting rules.
“The accounting rules do not permit banks to provide reserves for losses based on future events, regardless of how probable they are,” she said.
But some investors argue the economic reality is that China has more bad loans than it is admitting to, especially with its economy now slowing, and so its financial stability is at stake if Beijing does not act more forcefully.
“You kind of let the bad news ride until you are forced to accept it,” said Madden from DAC. “But I don’t think kicking the can down the road is, ultimately, a smart thing to do.” ($1 = 6.3095 Chinese yuan)
(Reporting by Koh Gui Qing; Editing by Nick Edwards & Kim Coghill)
http://tourism9.cm/ http://vkins.com/
The crux of the problem is rising distrust of official appraisals of China’s 10.7 trillion yuan ($1.7 trillion) local government loans, which surged on the orders of government as it rolled out a 4 trillion yuan economic stimulus program at the end of 2008.
Banks say less than 1 percent of the loans are in trouble, a number some investors say is too low to be real as lending unleashed to spur economic growth at its weakest point implies a rising risk of bad debt as the economy slows again.
“I talk to so many people and they say the same thing: they do not trust the data coming from Chinese banks,” said James Antos, a bank analyst at Mizuho Securities Asia in Hong Kong.
China’s state audit office said earlier this month it had uncovered 530 billion yuan worth of irregularities with local government debt, leaving investors wondering how much clean-up work remains to be done.
Lacking information, investors are jumping to conclusions. Some think all local government loans are bad. More sober guesstimates assume 2-3 trillion are sour and banks’ non-performing ratios may quadruple to 5 percent, from an average 1.1 percent.
Investors’ worst fears are a cover-up that threatens financial stability in the world’s No. 2 economy.
This is especially so if Beijing orders banks to lend aggressively this year to support the economy and counter Europe’s slowdown, fuelling a vicious cycle of state-directed lending with poor credit judgment that leads to bad loans.
More immediately, the risk is that rising loan losses hit banks’ net profits and capital bases, forcing another government-led bailout like that a decade ago when Beijing spent billions on capital injections to shore up state-backed lenders.
OPTIMISTS EYE REPAYMENT
Optimists say Beijing will pay the debt, or let local governments sell bonds to repay loans used mainly for building infrastructure. Investors like the former option as it is clean and fast, but Beijing is non-committal.
Markets hate that uncertainty, which is one reason why Chinese bank shares have underperformed.
Their average price-to-book ratio of 1.3 is half that of Indonesian banks, according to Reuters data, after the Shanghai financial index plunged some 37 percent in the last two years.
“Certainly a good number of loans made in the last three years will go bad,” said David Madden, a managing partner at DAC Financial Management, a $425 million private equity firm in Hong Kong focused on trading Chinese bad debt.
“They weren’t necessarily made with the highest levels of credit analysis.”
China’s cumulative loan growth is the second fastest in the world’s emerging economies at around 55 percent, after Belarus, and a third faster than India’s 40 percent, Fitch Ratings said.
Yet Chinese banks insist bad loans are falling, not rising.
Their weighted-average non-performing loan ratio dipped 0.1 percent in the third quarter from the previous three months, Citi data showed. In contrast, Indian banks’ weighted-average ratio rose 7.5 percent, hurt in part by a falling rupee.
Non-performing loans are those where borrowers have not made payments for at least 90 days and are in or close to default.
Investors suspect banks are concealing bad loans by adamantly refusing to label them as non-performing when cash-strapped governments cannot repay.
Instead, analysts say banks have — or will — quietly restructure loans by extending maturities, violating best practice where loans are marked non-performing before being restructured.
China’s top state-owned banks declined to comment.
CONSTRAINED BY ACCOUNTING RULES
“The market does not like the fact that you are trying to hide loans which do not meet current terms,” said an analyst at a foreign bank in Hong Kong who declined to be identified.
That Chinese banks are concealing bad debt would be even more apparent if they continue to report enviably low non-performing loans in their 2011 results in March, analysts said, since a fifth of all local government loans matured last year.
In banks’ defense, they could argue their provision coverage of 190 percent is among the highest in Asia, meaning they have put aside 1.9 yuan for every yuan of dud loan — although this ratio looks good when banks recognize lower levels of bad debt.
Margarita Ho at PricewaterhouseCoopers in Beijing said banks are also constrained by China’s accounting rules.
“The accounting rules do not permit banks to provide reserves for losses based on future events, regardless of how probable they are,” she said.
But some investors argue the economic reality is that China has more bad loans than it is admitting to, especially with its economy now slowing, and so its financial stability is at stake if Beijing does not act more forcefully.
“You kind of let the bad news ride until you are forced to accept it,” said Madden from DAC. “But I don’t think kicking the can down the road is, ultimately, a smart thing to do.” ($1 = 6.3095 Chinese yuan)
(Reporting by Koh Gui Qing; Editing by Nick Edwards & Kim Coghill)
http://tourism9.cm/ http://vkins.com/
2012年1月16日星期一
Analysis: China developers launch funds to bridge finance gap
BEIJING (Reuters) – China’s fledgling real estate investment fund market could see a surge of activity in 2012 as property developers launch their own vehicles in a desperate bid to bridge an estimated $111 billion financing gap in the year ahead.
A government-led clampdown on bank, bond, equity and trust market financing for real estate has left developers with little choice other than to set up their own funds, which have raised barely 10 percent of the sum in the past two years that needs to be found to refinance maturing debt in 2012.
On the upside, China‘s high net-wealth families still favor property investment and funds give them an alternative to buying the physical asset while retaining exposure to the sector.
“Of course, it will take time, but in the next decade, you will see the Chinese property market become more institutionalized,” Frank Marriott, Savills’senior director of real estate capital markets for the Asia-Pacific, told Reuters.
Time is not on the developers’ side. Slowing sales and falling prices are hitting just as refinancing pressures are soaring. Analysts widely expect industry consolidation to accelerate in 2012 and some players, even big ones, will have to sell assets and quit the market.
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Reuters China Property Watch http://r.reuters.com/deh85s
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
About $2.2 billion of syndicated property loans and club deals will become due this year, according to Thomson Reuters data, while a further 117 billion yuan ($18.6 billion) needs to be found to repay maturing real estate trusts.
Add in the other credit lines that need repaying and developers need to find over 700 billion yuan this year, according to Hua Xia Times, a Chinese business newspaper in Beijing.
Major developers such as China Overseas Land & Investment , Gemdale Corp and Forte, are among the first firms to have launched their own funds.
Others including China Vanke , the country’s biggest listed property firm by sales, chose to set up funds jointly with their peers to help each other survive tough times.
And more will follow.
“We must make more friends and widen our financing sources. That will help our future growth,” Zhu Tong, chairman of Sun Real Estate, a mid-sized developer in Beijing, told an industry forum in Beijing last week.
A total of 29 property funds raised $4.1 billion in 2011, a big improvement on the $2.9 billion raised by 28 vehicles in 2010, according to consultancy Zero2IPO.
Industry analysts expect more than $6 billion will be raised in 2012 and that the property fund market will expand at an annual rate of 40-50 percent over the next few years.
The funds target wealthy entrepreneurs, with an investment threshold of 10 million yuan and above and are expected to offer annual returns of at least 25 percent, said Fu Zhe, a Zero2IPO analyst in Beijing.
“Private investors still have a strong interest in the property sector as there are really not many other options for them,” Su Xin, chairman of Go-high Investment, which invests in commercial real estate, told an industry forum last week.
His company’s recent survey in Wenzhou, Ordos and some coal-rich cities in northwestern Shaanxi province — places with some of the biggest speculative property bubbles in the last decade — shows that investment interest in property remains robust.
FUNDING CONSTRAINTS
That’s lucky for Chinese developers given the funding constraints in the wake of government pledges to pull home prices back to a reasonable level after a decade of rocketing real estate inflation that saw prices surge 10-fold in 10 years in key cities across China.
Not only have the major state-backed banks been told to cut credit lines, the government has also halted all financial innovations to channel money into its targeted property sector. These include non-public trust funds launched by Chinese trust firms in private placements to channel funds to the sector and the long-awaited exchange-traded real estate investment trusts (REITs).
But it’s going to take more than luck for developers to survive the financing drought.
Banks have prolonged mortgage loan approvals, forcing developers into a hand-to-mouth existence of surviving on downpayments and then seeing the bulk of the cash from sales going directly to the accounts of contractors and suppliers.
“That means even after you’ve sold residential units at a cheaper price, the cash in your hand still does not increase,” Ren Zhiqiang, the outspoken chairman of Huayuan Property , told a forum last week.
As a result, the balance sheets of many Chinese developers deteriorated in 2011. Greentown China , a major player in eastern China, is now struggling to survive and having to sell assets to do so.
Developers are compelled to dig deep into internal reserves for working capital. Internal funding, including new property funds raised, was 41 percent of total financing in the industry in the first 11 months of 2011, up from 38 percent and 33 percent in the same period of 2010 and 2009 respectively, according to the National Bureau of Statistics.
New loans to the property sector accounted for only 17.5 percent of banks’ total new local-currency lending in the first three quarters of 2011, down from 31.1 percent in the year 2007, according to data from the People’s Bank of China.
With Beijing showing no mercy in cracking down on property speculation, developers like Greentown China that expanded rapidly in the past few years and have the high gearings to prove it, will have to sell land and half-built projects to repay debt.
That is why the real estate fund route is considered to have so much potential. It helps developers keep control of their assets and gain control of their finances.
Cao Shaoshan, chairman of Orizon Capital, is excited about the outlook of Chinese property funds.
He believes China’s maturing real estate market means developers will specialize more on construction while outsourcing fundraising. But it won’t happen fast enough for many struggling developers.
“The Chinese property fund sector is still at an infancy stage,” Cao said. “It’s unable to change the financing landscape a lot in the short term.”
(Reporting by Langi Chiang and Nick Edwards; Editing by Matt Driskill)
http://tourism9.com/
A government-led clampdown on bank, bond, equity and trust market financing for real estate has left developers with little choice other than to set up their own funds, which have raised barely 10 percent of the sum in the past two years that needs to be found to refinance maturing debt in 2012.
On the upside, China‘s high net-wealth families still favor property investment and funds give them an alternative to buying the physical asset while retaining exposure to the sector.
“Of course, it will take time, but in the next decade, you will see the Chinese property market become more institutionalized,” Frank Marriott, Savills’
Time is not on the developers’ side. Slowing sales and falling prices are hitting just as refinancing pressures are soaring. Analysts widely expect industry consolidation to accelerate in 2012 and some players, even big ones, will have to sell assets and quit the market.
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Reuters China Property Watch http://r.reuters.com/deh85s
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
About $2.2 billion of syndicated property loans and club deals will become due this year, according to Thomson Reuters data, while a further 117 billion yuan ($18.6 billion) needs to be found to repay maturing real estate trusts.
Add in the other credit lines that need repaying and developers need to find over 700 billion yuan this year, according to Hua Xia Times, a Chinese business newspaper in Beijing.
Major developers such as China Overseas Land & Investment , Gemdale Corp and Forte, are among the first firms to have launched their own funds.
Others including China Vanke , the country’s biggest listed property firm by sales, chose to set up funds jointly with their peers to help each other survive tough times.
And more will follow.
“We must make more friends and widen our financing sources. That will help our future growth,” Zhu Tong, chairman of Sun Real Estate, a mid-sized developer in Beijing, told an industry forum in Beijing last week.
A total of 29 property funds raised $4.1 billion in 2011, a big improvement on the $2.9 billion raised by 28 vehicles in 2010, according to consultancy Zero2IPO.
Industry analysts expect more than $6 billion will be raised in 2012 and that the property fund market will expand at an annual rate of 40-50 percent over the next few years.
The funds target wealthy entrepreneurs, with an investment threshold of 10 million yuan and above and are expected to offer annual returns of at least 25 percent, said Fu Zhe, a Zero2IPO analyst in Beijing.
“Private investors still have a strong interest in the property sector as there are really not many other options for them,” Su Xin, chairman of Go-high Investment, which invests in commercial real estate, told an industry forum last week.
His company’s recent survey in Wenzhou, Ordos and some coal-rich cities in northwestern Shaanxi province — places with some of the biggest speculative property bubbles in the last decade — shows that investment interest in property remains robust.
FUNDING CONSTRAINTS
That’s lucky for Chinese developers given the funding constraints in the wake of government pledges to pull home prices back to a reasonable level after a decade of rocketing real estate inflation that saw prices surge 10-fold in 10 years in key cities across China.
Not only have the major state-backed banks been told to cut credit lines, the government has also halted all financial innovations to channel money into its targeted property sector. These include non-public trust funds launched by Chinese trust firms in private placements to channel funds to the sector and the long-awaited exchange-traded real estate investment trusts (REITs).
But it’s going to take more than luck for developers to survive the financing drought.
Banks have prolonged mortgage loan approvals, forcing developers into a hand-to-mouth existence of surviving on downpayments and then seeing the bulk of the cash from sales going directly to the accounts of contractors and suppliers.
“That means even after you’ve sold residential units at a cheaper price, the cash in your hand still does not increase,” Ren Zhiqiang, the outspoken chairman of Huayuan Property , told a forum last week.
As a result, the balance sheets of many Chinese developers deteriorated in 2011. Greentown China , a major player in eastern China, is now struggling to survive and having to sell assets to do so.
Developers are compelled to dig deep into internal reserves for working capital. Internal funding, including new property funds raised, was 41 percent of total financing in the industry in the first 11 months of 2011, up from 38 percent and 33 percent in the same period of 2010 and 2009 respectively, according to the National Bureau of Statistics.
New loans to the property sector accounted for only 17.5 percent of banks’ total new local-currency lending in the first three quarters of 2011, down from 31.1 percent in the year 2007, according to data from the People’s Bank of China.
With Beijing showing no mercy in cracking down on property speculation, developers like Greentown China that expanded rapidly in the past few years and have the high gearings to prove it, will have to sell land and half-built projects to repay debt.
That is why the real estate fund route is considered to have so much potential. It helps developers keep control of their assets and gain control of their finances.
Cao Shaoshan, chairman of Orizon Capital, is excited about the outlook of Chinese property funds.
He believes China’s maturing real estate market means developers will specialize more on construction while outsourcing fundraising. But it won’t happen fast enough for many struggling developers.
“The Chinese property fund sector is still at an infancy stage,” Cao said. “It’s unable to change the financing landscape a lot in the short term.”
(Reporting by Langi Chiang and Nick Edwards; Editing by Matt Driskill)
http://tourism9.com/
2012年1月10日星期二
BofA prunes senior ranks in Asia investment banking: sources
HONG KONG (Reuters) – Bank of America-Merrill Lynch , the second-largest U.S. bank by assets, is cutting around a fifth of its managing directors across its Asia investment banking division, sources said on Monday, in a bid to cut costs as the outlook sours in a once-booming region.
Foreign banks in Asia stepped up their cost cutting in the latter part of last year and are now moving up the experience chain to prune positions and units seen as too expensive in the current environment.
Some 15 of BofA‘s 75 Asia managing directors in that unit will be gone by end-March through early retirement, transfer or the standard pink slip, according to three sources with direct knowledge of the matter. Among the departures is managing director Michael Cho, a veteran Merrill Lynch Asia M&A banker.
Headhunters interviewed by Reuters said the bank’s reduction in its ranks of managing directors in Asia was a deeper-than-usual cull of senior bankers, but reflects the broad challenges the investment banking industry faces.
“That sounds like carnage,” said Richard Broadhurst, who runs Hong Kong-based Initiative Recruitment.
TOP TITLE
Cho was the co-head of mergers and acquisitions in Asia ex-Japan, Australia and India and was appointed to the role in May 2009. His departure would represent one of the most senior Asia Pacific investment bankers to leave his post since the region wide cuts began in the fall.
Dow Jones first reported Cho’s departure on Monday.
Cho could not immediately be reached for comment. Cho’s co-head, Zhang Xiuping, will remain with BofA, the source said.
In a unique move, BofA is putting some of its analysts and associates – typically the youngest and newest members of a bank – into a general pool rather than assign them to a specific team, the sources said. This would allow the bank to set these younger bankers to any urgent and fee-producing work for any part of the business, rather than have them wait for their unit to see better demand.
Managing director is the top title attained at most investment banks, and in good years guarantees pay of $1-$3 million, including bonus. The title is earned for years of hard work or a shorter period of significant fee in-take.
But in leaner times or during a business restructuring or repositioning, MDs are targeted as the most expensive employees and the quickest way to reduce a significant cost. MDs who are not directly involved with client relationships that bring in revenue are usually the first to go.
BofA began its round of investment banking cuts in Asia on Monday, said the sources, who did not want to be identified as they were not authorized to speak publicly about the matter.
The move is consistent with what BofA is doing globally as it aims to streamline the corporate and investment banking businesses and reduce costs wherever it can. The cost cutting initiative, known as “New BAC”, targets the reduction of 30,000 jobs, the bank has previously disclosed.
Asia’s rapid economic growth allowed the region to avoid some of the large lay-off rounds triggered in the United States and Europe by the financial crisis. The region now, though, has shown that it’s no longer spared from such moves.
Large banks across the world have outlined plans to cut more than 125,000 jobs this year, according to a Reuters tally.
Deutsche Bankand Morgan Stanley fired analysts and brokers at their Australian operations on Monday as part of global job cuts, said two sources with direct knowledge of the cuts.
BofA kicked off its Asia cost cutting late last year, focusing on its Global Banking and Markets division, laying off bankers in the sales and trading, fixed income and commodities trading desks.
The latest round targets the investment banking business in the region, or mergers and acquisitions, equity and debt capital markets, said the sources.
Bank of America, which has around 6,000 employees across Asia, declined to comment.
BofA shares have slumped to around $6 each from more than $15 a year ago and almost $55 five years ago.
Separately, the bank has named Graham Seaton as head of its Asia Pacific prime brokerage, according to an internal memo seen by Reuters and confirmed by BofA spokesman Mark Tsang.
Seaton, who joined BofA in 1999, will be based in Hong Kong and report to Brian Canniffe, head of Asia Pacific Financing and Futures, and Soofian Zuberi, head of Asia Pacific Global Markets Sales & Structuring.
(Additional reporting by Saeed Azhar in SINGAPORE, Nishant Kumar and Denny Thomas in HONG KONG, Editing by Ian Geoghegan and Matt Driskill)
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Foreign banks in Asia stepped up their cost cutting in the latter part of last year and are now moving up the experience chain to prune positions and units seen as too expensive in the current environment.
Some 15 of BofA‘s 75 Asia managing directors in that unit will be gone by end-March through early retirement, transfer or the standard pink slip, according to three sources with direct knowledge of the matter. Among the departures is managing director Michael Cho, a veteran Merrill Lynch Asia M&A banker.
Headhunters interviewed by Reuters said the bank’s reduction in its ranks of managing directors in Asia was a deeper-than-usual cull of senior bankers, but reflects the broad challenges the investment banking industry faces.
“That sounds like carnage,” said Richard Broadhurst, who runs Hong Kong-based Initiative Recruitment.
TOP TITLE
Cho was the co-head of mergers and acquisitions in Asia ex-Japan, Australia and India and was appointed to the role in May 2009. His departure would represent one of the most senior Asia Pacific investment bankers to leave his post since the region wide cuts began in the fall.
Dow Jones first reported Cho’s departure on Monday.
Cho could not immediately be reached for comment. Cho’s co-head, Zhang Xiuping, will remain with BofA, the source said.
In a unique move, BofA is putting some of its analysts and associates – typically the youngest and newest members of a bank – into a general pool rather than assign them to a specific team, the sources said. This would allow the bank to set these younger bankers to any urgent and fee-producing work for any part of the business, rather than have them wait for their unit to see better demand.
Managing director is the top title attained at most investment banks, and in good years guarantees pay of $1-$3 million, including bonus. The title is earned for years of hard work or a shorter period of significant fee in-take.
But in leaner times or during a business restructuring or repositioning, MDs are targeted as the most expensive employees and the quickest way to reduce a significant cost. MDs who are not directly involved with client relationships that bring in revenue are usually the first to go.
BofA began its round of investment banking cuts in Asia on Monday, said the sources, who did not want to be identified as they were not authorized to speak publicly about the matter.
The move is consistent with what BofA is doing globally as it aims to streamline the corporate and investment banking businesses and reduce costs wherever it can. The cost cutting initiative, known as “New BAC”, targets the reduction of 30,000 jobs, the bank has previously disclosed.
Asia’s rapid economic growth allowed the region to avoid some of the large lay-off rounds triggered in the United States and Europe by the financial crisis. The region now, though, has shown that it’s no longer spared from such moves.
Large banks across the world have outlined plans to cut more than 125,000 jobs this year, according to a Reuters tally.
Deutsche Bank
BofA kicked off its Asia cost cutting late last year, focusing on its Global Banking and Markets division, laying off bankers in the sales and trading, fixed income and commodities trading desks.
The latest round targets the investment banking business in the region, or mergers and acquisitions, equity and debt capital markets, said the sources.
Bank of America, which has around 6,000 employees across Asia, declined to comment.
BofA shares have slumped to around $6 each from more than $15 a year ago and almost $55 five years ago.
Separately, the bank has named Graham Seaton as head of its Asia Pacific prime brokerage, according to an internal memo seen by Reuters and confirmed by BofA spokesman Mark Tsang.
Seaton, who joined BofA in 1999, will be based in Hong Kong and report to Brian Canniffe, head of Asia Pacific Financing and Futures, and Soofian Zuberi, head of Asia Pacific Global Markets Sales & Structuring.
(Additional reporting by Saeed Azhar in SINGAPORE, Nishant Kumar and Denny Thomas in HONG KONG, Editing by Ian Geoghegan and Matt Driskill)
http://tourism9.com/
2012年1月9日星期一
For euro zone, the heat is on again
BERLIN (Reuters) – The euro zone crisis seemed to vanish from the headlines for a brief moment as 2011 ticked over into 2012, but it is about to return with a vengeance.
The coming months will be decisive in determining whether European leaders can hold their increasingly fragile currency bloc together or will stumble in the face of a daunting set of political, economic and financial obstacles lined up in their path at the start of the new year.
In Greece, where the crisis started over two years ago, the government is in a race against time to agree a bond-swap deal with banks that is crucial to a new 130 billion euro bailout package from European partners and the International Monetary Fund (IMF).
Without that package, Athens faces the threat of a debt default in March.
But talks with the banks and investment funds that are being asked to accept 50 percent losses on their Greek bonds to help pay for the bailout have dragged on for weeks, sowing doubts about whether Athens can really deliver.
“The risk of a disorderly Greek default is once again on the rise, with the threat of contagion to Italy and others,” economists at Barclays Capital said last week.
Compounding the challenge, both Greece and France face elections within months that could complicate decision-making at the national level in two key states and thwart the broader bloc’s ability to act swiftly at a time when pressure is high to bed down agreements sealed at an EU summit last month.
A key element of the summit package was a deal to funnel 200 billion euros to the IMF, money that could be used to offer precautionary credit programmes to Italy and possibly Spain.
But the euro zone is struggling to get the 50 billion euros it needs from nations outside the currency bloc to meet its goal. A senior German official told Reuters on condition of anonymity that securing the participation of Britain, which has shown no inclination to contribute, was absolutely crucial.
Even if those funds are secured, neither Italy nor Spain have shown any willingness to accept aid — and the stigma and greater fiscal oversight that would come with it.
Italian 10-year bond yields have pushed back above the 7 percent mark over the past week, approaching record euro-era highs, and both Rome and Madrid must sell bonds this week in the first major market tests of 2012 for the euro zone’s third and fourth biggest economies.
END OF MERKOZY
The Greek election, expected by the end of March, seems unlikely to produce an outright winner, meaning coalition talks could drag out and prolong uncertainty.
In France, polls suggest there is a good chance President Nicolas Sarkozy, who has steered Europe‘s crisis response along with German Chancellor Angela Merkel, could be pushed out of office by his Socialist challenger Francois Hollande.
While Merkel and Sarkozy have polar-opposite temperaments and clashed frequently when the Frenchman first took power in 2007, they are both conservatives, born just half a year apart, and have developed an effective, even close, partnership after years of high-pressure crisis summits.
And after years of frustration with the French president’s shoot-from-the-hip style, government officials in Berlin say they are now worried about the end of “Merkozy”, the most important relationship in Europe, in the middle of the crisis.
A cut in France’s triple-A credit rating in the weeks ahead could also upset the delicate Franco-German balance, although some economists believe it could force the French to accept more far-reaching fiscal reforms, regardless of who wins the two-round election in April and May.
“It won’t be Merkozy anymore. It will be Angela Merkel and (IMF chief) Christine Lagarde dictating policy in Europe,” said French economist Jacques Delpla.
“The next French president, whether its Hollande or Sarkozy, won’t have many options. The deficit will need to be cut, taxes increased and spending cut.”
RECESSION RISK
Fittingly, Merkel and Sarkozy kick off 2012 with a Monday meeting in Berlin to prepare an EU summit scheduled for January 30 that is expected to focus on efforts to boost growth.
That is perhaps the biggest challenge of all for the bloc. After several years of fiscal consolidation to push down debts and deficits swollen by the global financial crisis of 2008/09, the euro zone is headed for recession — a factor that has pushed the euro down to 16-month lows against the dollar.
Even the bloc’s economic powerhouse Germany is at risk of recession. Greece is entering its fifth straight year of contraction, with no hope of paying down its massive debt.
But restoring market confidence in the finances of struggling euro area countries and getting their economies working again seem like contradictory goals at this point.
“In the current market environment there is no room for using a Keynesian-type expansionary fiscal policy to boost demand in countries with low growth – the markets will simply not accept such a strategy,” Deutsche Bank said in a confidential note on the crisis prepared for the German government late last year.
One bright spot is the European Central Bank (ECB), which is showing greater flexibility under its new President Mario Draghi, euro zone officials say.
The ECB’s decision last month to provide cheap long-term loans to banks has helped assuage fears about the financial sector and could support sovereign debt sales going forward.
“We’re already seeing that Draghi is more flexible than Trichet,” the senior German official said, referring to the Italian’s French predecessor Jean-Claude Trichet. “He won’t put a bazooka in the window for everyone to see but he’ll do what it takes.”
The big question is whether this buys Europe’s leaders the time they need to overcome the formidable challenges they face in the new year.
(Reporting by Noah Barkin; Editing by Rosalind Russell)
http://tourism9.com/
The coming months will be decisive in determining whether European leaders can hold their increasingly fragile currency bloc together or will stumble in the face of a daunting set of political, economic and financial obstacles lined up in their path at the start of the new year.
In Greece, where the crisis started over two years ago, the government is in a race against time to agree a bond-swap deal with banks that is crucial to a new 130 billion euro bailout package from European partners and the International Monetary Fund (IMF).
Without that package, Athens faces the threat of a debt default in March.
But talks with the banks and investment funds that are being asked to accept 50 percent losses on their Greek bonds to help pay for the bailout have dragged on for weeks, sowing doubts about whether Athens can really deliver.
“The risk of a disorderly Greek default is once again on the rise, with the threat of contagion to Italy and others,” economists at Barclays Capital said last week.
Compounding the challenge, both Greece and France face elections within months that could complicate decision-making at the national level in two key states and thwart the broader bloc’s ability to act swiftly at a time when pressure is high to bed down agreements sealed at an EU summit last month.
A key element of the summit package was a deal to funnel 200 billion euros to the IMF, money that could be used to offer precautionary credit programmes to Italy and possibly Spain.
But the euro zone is struggling to get the 50 billion euros it needs from nations outside the currency bloc to meet its goal. A senior German official told Reuters on condition of anonymity that securing the participation of Britain, which has shown no inclination to contribute, was absolutely crucial.
Even if those funds are secured, neither Italy nor Spain have shown any willingness to accept aid — and the stigma and greater fiscal oversight that would come with it.
Italian 10-year bond yields have pushed back above the 7 percent mark over the past week, approaching record euro-era highs, and both Rome and Madrid must sell bonds this week in the first major market tests of 2012 for the euro zone’s third and fourth biggest economies.
END OF MERKOZY
The Greek election, expected by the end of March, seems unlikely to produce an outright winner, meaning coalition talks could drag out and prolong uncertainty.
In France, polls suggest there is a good chance President Nicolas Sarkozy, who has steered Europe‘s crisis response along with German Chancellor Angela Merkel, could be pushed out of office by his Socialist challenger Francois Hollande.
While Merkel and Sarkozy have polar-opposite temperaments and clashed frequently when the Frenchman first took power in 2007, they are both conservatives, born just half a year apart, and have developed an effective, even close, partnership after years of high-pressure crisis summits.
And after years of frustration with the French president’s shoot-from-the-hip style, government officials in Berlin say they are now worried about the end of “Merkozy”, the most important relationship in Europe, in the middle of the crisis.
A cut in France’s triple-A credit rating in the weeks ahead could also upset the delicate Franco-German balance, although some economists believe it could force the French to accept more far-reaching fiscal reforms, regardless of who wins the two-round election in April and May.
“It won’t be Merkozy anymore. It will be Angela Merkel and (IMF chief) Christine Lagarde dictating policy in Europe,” said French economist Jacques Delpla.
“The next French president, whether its Hollande or Sarkozy, won’t have many options. The deficit will need to be cut, taxes increased and spending cut.”
RECESSION RISK
Fittingly, Merkel and Sarkozy kick off 2012 with a Monday meeting in Berlin to prepare an EU summit scheduled for January 30 that is expected to focus on efforts to boost growth.
That is perhaps the biggest challenge of all for the bloc. After several years of fiscal consolidation to push down debts and deficits swollen by the global financial crisis of 2008/09, the euro zone is headed for recession — a factor that has pushed the euro down to 16-month lows against the dollar.
Even the bloc’s economic powerhouse Germany is at risk of recession. Greece is entering its fifth straight year of contraction, with no hope of paying down its massive debt.
But restoring market confidence in the finances of struggling euro area countries and getting their economies working again seem like contradictory goals at this point.
“In the current market environment there is no room for using a Keynesian-type expansionary fiscal policy to boost demand in countries with low growth – the markets will simply not accept such a strategy,” Deutsche Bank said in a confidential note on the crisis prepared for the German government late last year.
One bright spot is the European Central Bank (ECB), which is showing greater flexibility under its new President Mario Draghi, euro zone officials say.
The ECB’s decision last month to provide cheap long-term loans to banks has helped assuage fears about the financial sector and could support sovereign debt sales going forward.
“We’re already seeing that Draghi is more flexible than Trichet,” the senior German official said, referring to the Italian’s French predecessor Jean-Claude Trichet. “He won’t put a bazooka in the window for everyone to see but he’ll do what it takes.”
The big question is whether this buys Europe’s leaders the time they need to overcome the formidable challenges they face in the new year.
(Reporting by Noah Barkin; Editing by Rosalind Russell)
http://tourism9.com/
2012年1月2日星期一
Rockin’, shocking: the market’s hits, hype and horrors
CBD awards 2011
Most understated $3.335 billion record half-year cash net profit … Ralph Norris, Commonwealth Bank. Illustration: John ShakespeareBest remuneration package for a company valued below $100 million: JEREMY PHILIPS
The incredibly shrinking marketing company Photon Group did not let its $59.7 million full-year loss inhibit its ability to pay its chief executive $3.97 million in total remuneration for the year to June 30. Not bad for a chief executive of a company not big enough to get inside the the ASX 300.Advertisement: Story continues below
Most understated $3.335 billion record half-year cash net profit: COMMONWEALTH BANK
”Yes, we are a profitable organisation but not excessively so,” the bank’s former chief executive, Ralph Norris, right, said in February. The bank went on to report a $6.8 billion full-year cash net profit.Most sensitive announcement of the year: BLUESCOPE STEEL
The steelmaker announced plans to lay off 1000 workers in Australia the same day it reported a $1.05 billion loss and disclosed its senior executives – including managing director Paul O’Malley – were paid $3 million in cash bonuses.The non-float of the year: NINE ENTERTAINMENT
It was meant to be the blockbuster listing of the year. But it turned out to be a turkey. The advisers of the CVC Asia Pacific-owned television and magazine company went from putting out feelers on a hypothetical $5 billion listing to entering frantic negotiations on the group’s mountain of debt.The makeover of the year: NATHAN TINKLER
The billionaire electrician and coal baron shed his goatie and about 40 kilograms as part of his moves to streamline his operations. Following a management reshuffle at his part-owned Aston Resources, Tinkler’s media minders were also keen to circulate a more corporate-looking Tinkler wearing a suit and tie.Most timely share sale of the year: ALAN ROBERTSON
The chief executive of the biotech Pharmaxis sold half of his shareholding in the company just days before its shares plunged 74 per cent in one day.Just after Robertson disclosed he had offloaded 500,000 shares for $1.48 million, Pharmaxis announced that it received a ”negative trend vote” over its application for its cystic fibrosis treatment in the European Union.
”Although this is not the final stage in the application process, we are clearly disappointed with the outcome of this trend vote,” Robertson said in a statement.
Most logical argument for the non-disclosure of executive pay packets: GRAHAM BRADLEY
The former president of the Business Council of Australia (aka CEOs Union) warned that the disclosure of executive salaries in annual reports was pushing up wages. ”The inflation of executive salaries has got to do with the fact that everybody has got that information. That reduces the leverage of boards,” Bradley explained. ”I think it has caused inflation,” said Bradley, who has saw his own fees as the chairman of Stockland jump from $325,000 to $500,000 since late 2005.Most unconvincing ‘grassroots’ campaign: CASH CONVERTERS
The ASX-listed pawn-shop chain declared the ”grassroots action has only just begun” when it issued a press release in September complaining about the federal government’s plans to cap fees charged on pay-day loans. ”We know this misguided legislation has hit a raw nerve with all consumers who deal with regulated and reputable lenders around Australia,” Cash Converters’ managing director, Peter Cumins, said as the company launched the website nocap.com.au.Most humble comment of the year: RUPERT MURDOCH
”This is the most humble day of my life,” the News Corporation executive chairman told a British parliamentary inquiry into his company’s involvement in a phone-hacking scandal.Slap down of the year: WENDI MURDOCH
Rupert Murdoch’s wife showed she had far quicker reflexes than anyone else – including the police – who attended the same British parliamentary inquiry into the phone-hacking scandal. ”Mr Murdoch, your wife has a very good left hook,” the Labour MP Tom Watson said after Mrs Murdoch slapped down an intruder who attacked her husband with a shaving foam pie.Most unorthodox use of an Australian punk song: GUY DEBELLE
The Reserve Bank of Australia head guitarist and assistant governor urged investors to check out the lyrics of a song by the Saints.”Investors need to heed the seminal words of the Saints’ Know Your Product and do the necessary due diligence,” Debelle, right, told the Australian Securitisation Forum at the Sydney Hilton last month.
The lyrics to the song include: ”Cheap advertising, you’re lying. Never gonna get me what I want. I said, smooth talking, brain washing. Ain’t never gonna get me what I need.”
Best typo by a mining explorer: AMPELLA MINING
The mining explorer issued an update to the market in February where it failed to remove one sentence from the editing process. Next to the section of the update where it discussed a four-kilometre gold anomaly was the comment in brackets: ”Can you please fix this up to make it sound technical.”Best use of a word count: OM Holdings
The manganese miner rebuffed a requisition of meeting – seeking to install former NSW Liberal leader Peter Debnam and the investment banker Malcolm McComas as directors – on technical grounds. The Bermuda-domiciled OM said the requisition of meeting lodged by the Ukrainian billionaire Gennady Bogolyubov’s Consolidated Minerals was ”technically not compliant” with Bermudan law. It claimed the notice of meeting broke Section 79-1b of the Bermudan Companies Act, which states that notices of meeting cannot be ”more than 1000 words with respect to the matter referred to in any proposed resolution or the business to be dealt with at that meeting”.Most impressive use of benchmarking: PACIFIC BRANDS
The Pacific Brands chairman, James MacKenzie, explained why the salary of his chief executive, Sue Morphet, below, was benchmarked against two companies (Myer and David Jones) that each had market capitalisations three times the size of the struggling underpants and singlet company.”It is acknowledged that the current market capitalisations of some of those companies are higher than Pacific Brands, but your board’s view is that they represent the most comparable organisations and the ones against which Pacific Brands would have to [and does] compete for talent,” he explained. Morphet received $2.75 million in remuneration last financial year.
Most underwhelming sharemarket debut of the year: ALTIUS MINING
The gold explorer’s first day as a public company was one its chief executive, Alexander King, would like to forget. Its shares went from 20¢ to 8.8¢ on their first day of trading.Most defiant comments made to an annual meeting: REG KERMODE
The 85-year-old Cabcharge executive chairman said he had no plans to retire at the company’s annual meeting where a strong vote was recorded against the remuneration report. ”I know everybody wants me to die,” Kermode, below, told the meeting. ”I have no intention to die at the present time – some of you can keep on wishing.”Most self-complimentary send-off: TONY D’ALOISIO
The former Australian Securities and Investments Commission chairman crowed in the year of his departure about how the recent spate of corporate collapses was only slightly more damaging than the collapses after the 1987 sharemarket crash.”These totalled [about] $66 billion [between 2007 and mid-2009], representing a slightly greater proportion of GDP than the $20 billion lost in the major collapses during the turmoil of the late 1980s,” he said.
Most holy acquisition: NEWS CORPORATION
The Rupert Murdoch-led media organisation bought the Nashville Bible publisher Thomas Nelson for an estimated $200 million. ”We want our products to be a means by which God breathes new life into His world,” notes the publisher on its website.Non-comeback of the year: PHIL SULLIVAN
The former chief executive of the collapsed Gold Coast financial concern City Pacific re-emerged from a three-year hibernation to offer ”unpaid assistance” to an unnamed group of investors seeking to topple the managers who toppled City Pacific as the managers of Sullivan’s former flagship mortgage fund in 2009. Sullivan, above, marked his return by explaining that he was not responsible for the collapse of his old firm nor the problems related to the still frozen First Mortgage Fund. ”Only when the world’s finances and banking system hit the wall with the onset of the banking credit squeeze and the global financial crisis did City Pacific see rough water, along with every other mortgage and property-based fund worldwide,” he said. Sullivan later said he was in no way involved in a proposal to install the Taree firm Stacks as the managers of the fund. By November, Stacks dropped its bid and Sullivan was nowhere to be seen.Most spirited attack on a big bank: JOHN TRIMBLE
The chief executive and chairman of the Australia’s only listed exotic dancing company, Planet Platinum, pulled no punches when describing his relationship with the NAB.”They are just disgusting,” said Trimble. ”You wouldn’t believe the charges they hit us with. I could have gone to a loan shark and got 25 per cent.”
The Showgirls Bar 20 owner officially launched a national search for a ”bank with an entrepreneurial attitude that conforms with commercial reality and negotiations, enabling our enterprises to operate in a normal business-like manner”.
Best country song about an Australian airline: TIGER AIRWAYS AND ITS WE DON’T CARE-WAYS
The Singapore Airlines-backed budget airline inspired the Texas country musician Dale Watson, above, to write a new song about its customer service standards. Watson was charged $500 excess baggage for a crate of CDs that Tiger ended up losing. The song came out just in time for Tiger’s mid-year grounding by the aviation safety regulator.Best PowerPoint presentation: ARUN JAGATRAMKA
The Gujarat NRE Coking Coal chairman picked up the award for a second year running thanks to a presentation he gave at the open day of his Russell Vale operations in October.Jagatramka covered ”the story of five extraordinary women and the wars that paid tribute to their love”. One was the women was Eva Braun (aka Mrs Adolf Hitler). ”Married in a bunker, she died by taking cyanide, but kept her love alive … for a man the world hates.”
Jagatramka’s presentation also warned of the potential consequences if society was forced off coal. ”Global climate change is a truth that we all must face, but we need to ensure that facts and figures are not used to forcefully slaughter the human civilisation in a fashion similar to the Y2K scare at the beginning of this millennium, which turned out to be one of the biggest hoax calls in the modern era,” it said.
Catfight of the year: PAUL ZAHRA and MARK McINNES
The former David Jones chief executive and his replacement engaged in a war of words over who was to blame for the retailer’s recent poor performance. ”I gave 15 years to the company and it was a large part of my career – as a shareholder I’ve lost 30 per cent of my investment since Paul became CEO,” McInnes moaned to The Australian Financial Review. Zahra had earlier expressed his dismay over the closure of DJs online retailing website in 2003, when McInnes was in charge.Most straightforward profit update: NICK MOORE
”Subject to market conditions continuing to return to more normal levels, as well as other factors including the timing of completion on transactions and normal year-end procedures, we currently anticipate the second-half result to be approximately 35 per cent up on the subdued first half and the second-half result to be approximately 5 per cent down on the previous corresponding period,” the Macquarie chief executive said in February.Most excuse-laden profit downgrade: REDHILL EDUCATION
The newly-listed English school operator saw its shares crash in February when it blamed several factors for the slashing of its prospectus forecasts.They included the ”deepening impact of restrictive federal government international student policy changes”, the ”increasingly negative reputation of Australia” and the ”continued and sustained increase in the Australian dollar”. It also noted: ”The government had been expected to address the adverse impact of its policies on the international student sector but this has not occurred.”
Recipient of the biggest attack from the banana industry: SAUL ESLAKE
The Grattan Institute economist felt the fury of the banana industry after suggesting that the rise in fruit and vegetable prices early in the year would go to growers unaffected by the floods and cyclones.”His comments prove that he has a clear lack of knowledge of the banana industry and the devastating effects that imports would have on our industry,” said the Australian Banana Growers Council chairman, Patrick Leahy, in a statement entitled ”Economist’s attack on bananas unwarranted and ill-informed.”
Most savvy attempt to stay in the job: NICK COLLISHAW
The Mirvac chief executive headed off calls for him to be replaced after agreeing to cut his base pay from a hefty $2 million to a still reasonably hefty $1.5 million. ”In response to concerns about executive remuneration in our sector and particularly around the Mirvac Group and the alignment of employee interests with securityholder returns, I initiated discussions with the Mirvac board around amending the employment contract that I entered into in August 2008,” said Collishaw when he unveiled a first-half loss of $12.7 million in February.Best new term: PLATYPUS MOMENT
The Reserve Bank’s head of financial stability, Luci Ellis, said the term concocted by Nassim Nicholas Taleb to describe unforeseen and freakish events – Black Swan – was not the best phrase on which to test financial stability.”You can’t imagine scenarios that are by definition unimaginable,” she said. Ellis picked a far more freakish (to European eyes) Australian creature to describe her new phrase.
Ellis said it was behaviour that appeared ”too ridiculous to be true, and yet it is true” that policymakers needed to be on the lookout for.
”When you have that feeling, you are having what I have come to describe as a Platypus Moment.”
Tree battle of the year: PHILIP SALTER and PETER MATTICK
The founders of the junkmail company Salmat faced protests over their Taphouse pub group’s plans to prune a historic fig in the car park of the Chinderah Tavern in northern NSW. ”Specialist veteran tree experts have advised the extensive pruning planned would be an indirect death knell,” warned Tweed Shire Council’s Greens councillor Katie Milne ahead of a protest at the tree.Proposed personal insolvency agreement of the year: BILL IRELAND
The founder of Challenger and the capsized Mariner Corp failed in his attempt to get his creditors to agree to a proposed personal insolvency agreement where he would pay back his creditors at least 0.25¢ in the dollar. ”I envisage an optimistic market for 2011 and consider that my capacity to earn income under a PIA will be greater than under bankruptcy,” explained Ireland about his proposal to repay at least $150,000 of his $72.9 million in personal debts. He also proposed to divert half of his income over the next three years to his creditors.Best attempt to avoid and Irish accent being mistranslated: ALAN JOYCE
The Qantas chief in February added the word ”fokker” to his blacklist of words (which already includes ”third”) when he discussed the airline’s purchase of 10 F100 (aka Fokker 100) aircraft.http://tourism9.com/
Credit Agricole quits commodity trade as crisis bites
(Reuters) – Credit Agricole will stop trading commodities and will also slash its financing of the multi-billion-dollar market, the most sweeping commodity cuts yet among European banks strained by the euro zone crisis.
Credit Agricole, the formerly farm-focused bank that had boosted its energy trading in recent years, warned on Wednesday of losses and write-downs as it struggles to cope with the credit crunch. The cuts come just weeks after rival Societe Generaleshut down its year-old U.S. gas and power trading desk, and leader BNP Paribas consolidated.
The deepening euro zone debt crisis has hit French banks hard as traditional sources of dollar funding have evaporated and as they face pressure to meet tougher capital requirements.
Volatile commodity prices, dimmer growth prospects and tougher regulation are also forcing some firms to question the outlook for the decade-long boom in trading raw materials.
Cargill Inc., which has voiced a bleaker economic outlook for next year than most of its peers, is cutting 125 jobs worldwide from its energy, transportation and metals operations as part of plans to reduce 2,000 or 1.4 percent of its global workforce over the next six months.
Trade sources said more companies may follow.
“What is happening with Credit Agricole is certainly a major trend across banking where the entire commodities trading business is shrinking,” said a senior commodities trader who recently left a major bank for an independent trading house.
“It is happening because of regulations, as proprietary trading is not allowed any more and because people have overspeculated in the past years and got badly burnt.”
Credit Agricole’s commodities trading employs around 100 staff globally, including traders, analysts, marketing teams and technical staff, sources close to Credit Agricole said.
A source in the bank said many employees had only learned of the closure of the commodities trading unit on Wednesday:
“It has all happened very quickly. It is a shock.”
CREDIT PRESSURE
On Wednesday, Credit Agricole Chief Executive Jean-Paul Chifflet said the bank was pulling out of commodities because it had less expertise in the field than other core areas:
“We preferred to stop it completely and devote our energy to other activities,” he said.
But Chifflet told Les Echos newspaper the bank would not sell its holding in Newedge, a commodities futures and clearing brokerage it co-owns with Societe Generale.
Last year, the head of Credit Agricole’s commodities trading division, Martin Fraenkel, told Reuters energy was a key growth area because “clients of the bank have ever more need for hedging services in these markets”. The bank had just secured a potentially potent tie-up with power trading giant ETF Trading.
But nearly two years on, European banks are under enormous pressure in credit markets and only very large banks have scope to expand. Credit Agricole may be the first of several banks to drop commodities trading, said the senior commodities trader:
“The major players – Goldman Sachs, Morgan Stanley, Merrill Lynch, Deutsche Bank – are still hiring to replace people who leave to funds and trading houses. But small and medium-sized banks are just shutting everything down.”
Morgan Stanley said on Wednesday it would cut 1,600 employees in the first quarter; it did not say how many, if any, would be in its commodities division, which ranks with Goldman Sachs and JP Morgan as one of the three largest in the world.
A senior oil trader at a major European bank said only very large players could now survive in commodities: “They (Credit Agricole) wanted to have a commodities arm but the appetite for risk was so small it was impossible to do big deals.”
Credit Agricole, which has expanded from its agricultural origins in recent years, said on Wednesday it would cut 2,350 jobs and exit 21 of the 55 countries where it operates and shutter entire businesses including equity derivatives.
BNP Paribas, Europe’s trade finance leader in commodities, has been cutting its trade finance portfolio, drastically reducing exposure to small and medium sized oil and metals firms and reselling part of that exposure, bankers say. A spokeswoman declined to comment.
In November, traders said the bank would close its Houston energy trading office and move some of the team to New York. It has also lost a senior metals trader.
Last week, Societe Generaletold employees it would shut down its Stamford, Connecticut-based physical gas and power operation and lay off most of the 140 or so employees at the trading unit it bought less than a year earlier from RBS Sempra.
“VERY, VERY STRONG REDUCTION”
Many details of the changes only emerged on Thursday.
The bank’s commodities derivatives business, trading oil, gas, metals and softs, is based in London and Hong Kong. It also has market representatives in Tokyo, Singapore and New York.
Credit Agricole has been active in oil hedging, traders said, and does not have a reputation for taking on major risk.
“It was very flow-based, rather than proprietary,” said a London-based trader with a bank. He said the bank hedged oil positions for airlines, taking positions on over-the-counter jet fuel derivatives and gas oil on the IntercontinentalExchange.
Sources close to Credit Agricole say the bank also plans to cut dramatically its commodities trade financing, which involve commitments of tens of billions of euros, but the exact scale of the retrenchment was unclear.
“In terms of commodities financing, they plan a very, very strong reduction in their activities,” a source close to Credit Agricole said, adding the full array of short-term and longer-term letters of credit and export credit would be affected.
The bank’s Geneva-based trade finance activities have about 120 people spread around the world, according to a former head of a commodities unit at Credit Agricole Corporate and Investment Banking who left the company just months ago.
Credit Agricole’s commodities financing activities concern around 600 people, of which at least half are in France, and involve commitments of tens of billions of euros.
TOUGH MARKETS
Cargill is not alone among trading houses responding to a disappointing 2011 performance, Swiss-based coal traders said.
Coal has been a particularly tough market for traders this year because prices have been largely stagnant and liquidity has been lower. Without liquidity and volatility, trading profits have been hard to come by.
“We can confirm that as a result of the internal structural changes there have been some personnel changes which will affect around 125 employees in our Energy, Transportation and Metals operations around the world,” a Cargill spokesman said.
Cargill has 600 employees in its Geneva office and around 1,100 worldwide in the non-oil Energy Transportation Industrial (ETI) business group.
Cargill will keep the split in its energy business between oil and non-oil with a global non-oil division made up of coal, gas, power and carbon trading and headed by Frank Rivendal, formerly head of power and gas in the U.S. for Cargill.
“Broadly speaking, the big changes are over and very few have been fired so far but there may be a few more job cuts,” one source said.
“In 2008-2009 everybody made money because prices were so volatile but this year prices have been stagnant and for the first time in a decade, even the big trading houses are facing a downturn in earnings,” he added.
Last month Cargill former head of coal based in Geneva, Patrick Bracken, left to return to the U.S. and Peter Biston, Geneva-based head of power and gas, a junior gas trader and a power trader lost their jobs.
Cargill Ferrous International in November shut its physical steel trading desks in Hong Kong and Geneva and its top sugar trader, Jonathan Drake, left in early December.
“That (restructuring) makes sense. In the previous structure oil made a lot of money and they couldn’t bonus traders as power and gas were down. Now oil can live or die by its own performance,” said Peter Henry, senior consultant with Commodity Search Partners.
(Additional reporting By Jonathan Leff; Editing by David Gregorio)
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Credit Agricole, the formerly farm-focused bank that had boosted its energy trading in recent years, warned on Wednesday of losses and write-downs as it struggles to cope with the credit crunch. The cuts come just weeks after rival Societe Generale
The deepening euro zone debt crisis has hit French banks hard as traditional sources of dollar funding have evaporated and as they face pressure to meet tougher capital requirements.
Volatile commodity prices, dimmer growth prospects and tougher regulation are also forcing some firms to question the outlook for the decade-long boom in trading raw materials.
Cargill Inc.
Trade sources said more companies may follow.
“What is happening with Credit Agricole is certainly a major trend across banking where the entire commodities trading business is shrinking,” said a senior commodities trader who recently left a major bank for an independent trading house.
“It is happening because of regulations, as proprietary trading is not allowed any more and because people have overspeculated in the past years and got badly burnt.”
Credit Agricole’s commodities trading employs around 100 staff globally, including traders, analysts, marketing teams and technical staff, sources close to Credit Agricole said.
A source in the bank said many employees had only learned of the closure of the commodities trading unit on Wednesday:
“It has all happened very quickly. It is a shock.”
CREDIT PRESSURE
On Wednesday, Credit Agricole Chief Executive Jean-Paul Chifflet said the bank was pulling out of commodities because it had less expertise in the field than other core areas:
“We preferred to stop it completely and devote our energy to other activities,” he said.
But Chifflet told Les Echos newspaper the bank would not sell its holding in Newedge, a commodities futures and clearing brokerage it co-owns with Societe Generale
Last year, the head of Credit Agricole’s commodities trading division, Martin Fraenkel, told Reuters energy was a key growth area because “clients of the bank have ever more need for hedging services in these markets”. The bank had just secured a potentially potent tie-up with power trading giant ETF Trading.
But nearly two years on, European banks are under enormous pressure in credit markets and only very large banks have scope to expand. Credit Agricole may be the first of several banks to drop commodities trading, said the senior commodities trader:
“The major players – Goldman Sachs, Morgan Stanley, Merrill Lynch, Deutsche Bank – are still hiring to replace people who leave to funds and trading houses. But small and medium-sized banks are just shutting everything down.”
Morgan Stanley said on Wednesday it would cut 1,600 employees in the first quarter; it did not say how many, if any, would be in its commodities division, which ranks with Goldman Sachs and JP Morgan as one of the three largest in the world.
A senior oil trader at a major European bank said only very large players could now survive in commodities: “They (Credit Agricole) wanted to have a commodities arm but the appetite for risk was so small it was impossible to do big deals.”
Credit Agricole, which has expanded from its agricultural origins in recent years, said on Wednesday it would cut 2,350 jobs and exit 21 of the 55 countries where it operates and shutter entire businesses including equity derivatives.
BNP Paribas, Europe’s trade finance leader in commodities, has been cutting its trade finance portfolio, drastically reducing exposure to small and medium sized oil and metals firms and reselling part of that exposure, bankers say. A spokeswoman declined to comment.
In November, traders said the bank would close its Houston energy trading office and move some of the team to New York. It has also lost a senior metals trader.
Last week, Societe Generale
“VERY, VERY STRONG REDUCTION”
Many details of the changes only emerged on Thursday.
The bank’s commodities derivatives business, trading oil, gas, metals and softs, is based in London and Hong Kong. It also has market representatives in Tokyo, Singapore and New York.
Credit Agricole has been active in oil hedging, traders said, and does not have a reputation for taking on major risk.
“It was very flow-based, rather than proprietary,” said a London-based trader with a bank. He said the bank hedged oil positions for airlines, taking positions on over-the-counter jet fuel derivatives and gas oil on the IntercontinentalExchange.
Sources close to Credit Agricole say the bank also plans to cut dramatically its commodities trade financing, which involve commitments of tens of billions of euros, but the exact scale of the retrenchment was unclear.
“In terms of commodities financing, they plan a very, very strong reduction in their activities,” a source close to Credit Agricole said, adding the full array of short-term and longer-term letters of credit and export credit would be affected.
The bank’s Geneva-based trade finance activities have about 120 people spread around the world, according to a former head of a commodities unit at Credit Agricole Corporate and Investment Banking who left the company just months ago.
Credit Agricole’s commodities financing activities concern around 600 people, of which at least half are in France, and involve commitments of tens of billions of euros.
TOUGH MARKETS
Cargill is not alone among trading houses responding to a disappointing 2011 performance, Swiss-based coal traders said.
Coal has been a particularly tough market for traders this year because prices have been largely stagnant and liquidity has been lower. Without liquidity and volatility, trading profits have been hard to come by.
“We can confirm that as a result of the internal structural changes there have been some personnel changes which will affect around 125 employees in our Energy, Transportation and Metals operations around the world,” a Cargill spokesman said.
Cargill has 600 employees in its Geneva office and around 1,100 worldwide in the non-oil Energy Transportation Industrial (ETI) business group.
Cargill will keep the split in its energy business between oil and non-oil with a global non-oil division made up of coal, gas, power and carbon trading and headed by Frank Rivendal, formerly head of power and gas in the U.S. for Cargill.
“Broadly speaking, the big changes are over and very few have been fired so far but there may be a few more job cuts,” one source said.
“In 2008-2009 everybody made money because prices were so volatile but this year prices have been stagnant and for the first time in a decade, even the big trading houses are facing a downturn in earnings,” he added.
Last month Cargill former head of coal based in Geneva, Patrick Bracken, left to return to the U.S. and Peter Biston, Geneva-based head of power and gas, a junior gas trader and a power trader lost their jobs.
Cargill Ferrous International in November shut its physical steel trading desks in Hong Kong and Geneva and its top sugar trader, Jonathan Drake, left in early December.
“That (restructuring) makes sense. In the previous structure oil made a lot of money and they couldn’t bonus traders as power and gas were down. Now oil can live or die by its own performance,” said Peter Henry, senior consultant with Commodity Search Partners.
(Additional reporting By Jonathan Leff; Editing by David Gregorio)
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Credit Agricole to cut 2,350 jobs: union source
PARIS (Reuters) – Credit Agricole is to cut 2,350 jobs, primarily in investment banking, a union source told Reuters Wednesday, as the French bank slashes costs and ploughs ahead with a back-to-basics strategy sped up by the eurozone debt crisis.
The job losses include 1,750 at Credit Agricole‘s corporate and investment bank, which employs 13,000 people, the source said, and 600 job at its factoring and consumer finance arms.
The source added 500 of the corporate and investment banking jobs would be shed in France.
A second trade union source confirmed the 1,750 figure.
A Credit Agricole spokeswoman declined to comment.
Banking sources have said the bank may exit up to 20 of the 50 countries where its corporate and investment bank is present.
The bank is following in the footsteps of larger domestic rivals BNP Paribasand Societe Generale , which have announced job cuts primarily in investment banking as they seek to cut debt and wean themselves off funding markets frozen by the economic slump.
Shares of Credit Agricole were down 1.7 percent, at 4.45 euros, at 1126 GMT, underperforming a 0.94 percent drop in the STOXX Europe bank index <.sx7p>. Its stock price has fallen 52.4 percent year to date, against a 34.2 percent drop in the sector.
More than six months of intense market turmoil sparked by the euro zone debt crisis is pummeling investment banks globally, denting their bond and stock trading income and sparking a wave of layoffs in Asia, the U.S. and Europe.
Citigroup was last week among the latest to press ahead with job cuts, while banks in some of the crisis hotspots — such as Italy’s UniCreditand Intesa Sanpaolo — are also laying off thousands of people.
More than 120,000 job losses have been announced this year, and many in the industry fear the tally will be greater than at the height of the financial crisis in 2008, as redundancies continue into 2012.
Like its French rivals, Credit Agricole is primarily pulling back in certain financing businesses, such as those in dollars, which have become harder for it to access, and will cut staff accordingly.
It also has a European equity broker, Chevreux, and a majority stake in Asian brokerage CLSA. But the bulk of cuts are likely to fall in fixed-income, which houses its rates and credit divisions, analysts said.
Credit trading in particular has come under pressure at all banks this year as wary investors shy away from the market and new regulation bites.
Credit Agricole’s strategy under new Chief Executive Jean-Paul Chifflet, who has espoused a back-to-basics focus on retail banking in France and Europe, is a retreat from previous management ambitions of being a global player in financial markets.
The bank is deeply sensitive to ongoing turmoil in the eurozone economy, not just because it holds a substantial amount of Italian government debt but also because it owns local bank subsidiaries in crisis-wracked Greece and Italy.
Chifflet’s team is mulling various ways of bolstering the bank’s balance sheet, banking sources say, even though Credit Agricole’s robust parent network of regional banks has provided a cushion that has made raising additional capital unnecessary.
This may include more deal-making. The bank is close to announcing the sale of its private-equity activities, while it has also struck a $374 million deal to sell minority stakes in its CLSA and Cheuvreux brokerage brands to Chinese brokerage Citic Securities .
While Credit Agricole would be open to letting Citic increase its stake in the ventures — now at 19.9 percent — it aims to at least keep majority control, according to a person familiar with the bank’s thinking.
(Additional reporting by Sarah White in London; Editing by Jodie Ginsberg and David Hulmes)
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The job losses include 1,750 at Credit Agricole‘s corporate and investment bank, which employs 13,000 people, the source said, and 600 job at its factoring and consumer finance arms.
The source added 500 of the corporate and investment banking jobs would be shed in France.
A second trade union source confirmed the 1,750 figure.
A Credit Agricole spokeswoman declined to comment.
Banking sources have said the bank may exit up to 20 of the 50 countries where its corporate and investment bank is present.
The bank is following in the footsteps of larger domestic rivals BNP Paribas
Shares of Credit Agricole were down 1.7 percent, at 4.45 euros, at 1126 GMT, underperforming a 0.94 percent drop in the STOXX Europe bank index <.sx7p>. Its stock price has fallen 52.4 percent year to date, against a 34.2 percent drop in the sector.
More than six months of intense market turmoil sparked by the euro zone debt crisis is pummeling investment banks globally, denting their bond and stock trading income and sparking a wave of layoffs in Asia, the U.S. and Europe.
Citigroup was last week among the latest to press ahead with job cuts, while banks in some of the crisis hotspots — such as Italy’s UniCredit
More than 120,000 job losses have been announced this year, and many in the industry fear the tally will be greater than at the height of the financial crisis in 2008, as redundancies continue into 2012.
Like its French rivals, Credit Agricole is primarily pulling back in certain financing businesses, such as those in dollars, which have become harder for it to access, and will cut staff accordingly.
It also has a European equity broker, Chevreux, and a majority stake in Asian brokerage CLSA. But the bulk of cuts are likely to fall in fixed-income, which houses its rates and credit divisions, analysts said.
Credit trading in particular has come under pressure at all banks this year as wary investors shy away from the market and new regulation bites.
Credit Agricole’s strategy under new Chief Executive Jean-Paul Chifflet, who has espoused a back-to-basics focus on retail banking in France and Europe, is a retreat from previous management ambitions of being a global player in financial markets.
The bank is deeply sensitive to ongoing turmoil in the eurozone economy, not just because it holds a substantial amount of Italian government debt but also because it owns local bank subsidiaries in crisis-wracked Greece and Italy.
Chifflet’s team is mulling various ways of bolstering the bank’s balance sheet, banking sources say, even though Credit Agricole’s robust parent network of regional banks has provided a cushion that has made raising additional capital unnecessary.
This may include more deal-making. The bank is close to announcing the sale of its private-equity activities, while it has also struck a $374 million deal to sell minority stakes in its CLSA and Cheuvreux brokerage brands to Chinese brokerage Citic Securities .
While Credit Agricole would be open to letting Citic increase its stake in the ventures — now at 19.9 percent — it aims to at least keep majority control, according to a person familiar with the bank’s thinking.
(Additional reporting by Sarah White in London; Editing by Jodie Ginsberg and David Hulmes)
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