NEWS,25.06.2013

EU to cut payments to large farms

EU negotiators agreed large farms will lose up to 30% of current subsidy payments in a major step towards consensus on reforms to the annual €50bn farm policy, but tough issues such as sugar quotas remain.
Representatives from EU governments, the European Parliament and the European Commission reached provisional agreement on elements of the complex reform to the common agricultural policy (CAP) during the first day of talks in Luxembourg, which ended in the early hours of Tuesday morning.
Negotiators aim to strike a final deal at a second round of talks in Brussels on Wednesday.
"On a lot of the big issues we have an agreement in principle, but I think it is very important to stress that this deal is not done," Irish farm minister Simon Coveney, who represented EU governments in the talks, said.
One of the main objectives is to shift to subsidies that are based on the size of agricultural holdings, replacing the current link between farm payments and historical production levels in many parts of Europe.
The present system disproportionately benefits those who has the largest output in 2000-2002, such as industrial-scale grain producers in France's Paris basin.
Europe's largest farms could have lost up to 40% of their current subsidies in the reforms, but negotiators agreed to give governments an option to set an upper limit at 30%.
"I think it's a fair deal. This is about redistributing in a fair way that doesn't have a significant shock effect on agriculture, in particular the productive side of agriculture," Coveney said.
But critics warned that cutting subsidies to Europe's largest and most efficient farms could harm the bloc's food security.
Steady progress
EU officials involved in the talks said good progress had been made towards a deal, particularly in the area of direct subsidies, which will continue to consume three-quarters of the total farm budget from 2014-2020.
Agreement was reached that 30% of future direct subsidies should be conditional on farmers' taking steps to improve their environmental performance.
That will include leaving 5 percent of their arable land fallow as a haven for wildlife - a share that could potentially increase to 7% from 2017.
Farm groups have warned that forcing farmers to leave large swathes of land out of cultivation could hit European food production.
Provisional agreement was also reached to prevent certain landowners such as airports, golf courses and campsites from claiming EU farm subsidies as they can at present.
Officials said some tricky issues remained, including a disagreement over the deadline for abolishing EU sugar production quotas, which are blamed for pushing up domestic prices and limiting European sugar exports.
The Commission proposed an end to quotas in 2015, while governments would prefer 2017 and the parliament 2020. EU officials involved in the talks say a phase-out in 2017 is the most likely outcome but that a final decision will not be taken before Wednesday.
Governments also oppose the setting of an upper limit on annual payments to individual farms of €300 000, which is backed by the Commission and parliament. To avoid scuppering a deal on CAP reform, the issue is expected to be left to linked talks on the EU's long-term budget.
To offset the impact of shifting subsidies away from some producers, negotiators have agreed to let some governments link up to 15 percent of total subsidies to output, which critics say reverses some of the market liberalisation of recent reforms.
Agriculture will consume nearly 40% of the bloc's €960bn ($1.3trn) budget for 2014-2020 - the period covered by the reform - ensuring it remains the biggest single item of EU expenditure.
Europe's biggest agricultural producer, France, will continue to scoop the largest share of CAP funds at around €8bn a year, followed by Spain and Germany each with about €6bn annually.
If the negotiators strike a deal on Wednesday as expected, it must be rubber-stamped by the full parliament and EU governments before entering force on January 1 next year.

CEO: UK consumers can drive tax change

Britain's consumers, rather than its politicians, are more likely to bring about change in the country's taxation regime, the boss of its third-largest grocer J Sainsbury said on Tuesday.
Several companies, including Google and coffee chain Starbucks have faced criticism from UK tax campaigners over the way they structure their tax affairs, provoking consumer anger and pledges from political leaders to act.
Last week, leaders of the world's eight richest economies said they would take a tougher stance on tax evasion but promised little in the way of specific new action at the end of a two-day summit in Northern Ireland.
"It's much more likely that consumer action will change corporations' attitude than government action because it will be so difficult to move the dial across international borders," Justin King, chief executive of Sainsbury's, told delegates at the British Retail Consortium's (BRC) Retail Symposium 2013.
He said if consumers changed where they shopped tomorrow, corporations would quickly change their attitude to tax.
"The things that bring about most corporations' Damascene conversions is realising that actually it's hurting them in their core franchise," he said.
King said the tax debate in Britain had shifted to two distinct issues.
Firstly there was the "moral issue" of some companies arranging their tax affairs so they do not pay their way but still expect to benefit from what the tax system pays for, such as education, health and roads.
Secondly there was the debate about the unfairness of tax becoming part of the competitive dynamic, with internet players having an advantage over traditional retailers.
"As our industry is changing away from a property-intensive industry to one in which property plays a part but a much lesser part than it has historically, our tax system, that raises local taxes primarily on property, is exposed as an historical anachronism," said King.
"It clearly has to change and is a legitmate debate for us and the BRC to be driving."

Jane Austen to feature on UK banknotes

Author Jane Austen is "waiting in the wings" to become the next famous Briton to be honoured on the country's banknotes, outgoing Bank of England governor Mervyn King said.
The writer of 19th century classics such as "Pride & Prejudice", "Sense & Sensibility" and "Emma" is already a "reserve" figure whose image could be a clear candidate to replace that of naturalist Charles Darwin on the 10-pound note when his time is up, King said on Tuesday.
The announcement potentially defuses criticisms of a future lack of female figures on the currency, which have been levelled at the central bank since it said in April that wartime leader Winston Churchill would feature on the five-pound note from 2016, replacing prison reformer Elizabeth Fry.
Churchill and Darwin will complement economist Adam Smith and steam engine inventors Matthew Boulton and James Watt to complete the all-male line-up - other than the image of Queen Elizabeth on the overleaf.
The monarch is on one side of each of Britain's four denominations of bank notes, while celebrated Britons take their turn for 10 to 20-year stints on the other side.
Austen would be a well-known and likely popular choice. Her novels of romance among the Regency gentry, spiced with sharp social comment, still regularly feature on bestseller and literature course reading lists, and have spawned numerous period-drama TV shows and film adaptations.
Historical women figures should be chosen as individuals rather than for their gender, King said at his final appearance as governor before parliament's Treasury Committee.
"One thing which we are quite determined to avoid is any suggestion that the five pound note in some sense be reserved for women," he said.
The notes featuring Fry would continue to circulate for some time and although the final decision as to the identity of the next figure would be one for the incoming governor, Canadian Mark Carney, it was unlikely that there would be a time when there were no females, King said.
"I think it is extremely unlikely that we should ever find ourselves in the position where there are no women among the historical figures on our banknotes.

ECB not changing rates soon

The European Central Bank has no intention of altering eurozone interest rates for the time being, as economic conditions remain weak, executive board member Benoit Coeure said on Tuesday.
"Let me state quite clearly that I do not intend to drop any hints about a change in the monetary policy stance in the euro area in the near future," Coeure told an investors' conference in London.
"A reversal would not be warranted by current economic conditions," he said.
A copy of his speech was made available by the ECB in Frankfurt.
Area-wide economic growth was projected to remain weak this year and inflation was expected to remain clearly below 2.0 percent.
"The various non-standard measures that have been introduced by the ECB to support monetary policy transmission in certain market segments will stay in place as long as necessary, and there are other measures, standard and non-standard, that we can deploy if warranted," Coeure said.
"Therefore, at the current juncture, there should be no doubts that our 'exit' is distant and our monetary policy is and will remain accommodative," he said.
At its regular policy meeting earlier this month, the ECB held its key rate unchanged at its current record low of 0.50%, and president Mario Draghi insisted the bank stood "ready to act" to give the eurozone's economy a much-needed shot in the arm.

Internet devices grow amid mobile shift

Global sales of Internet devices including PCs, tablets and mobile phones is showing steady growth in 2013, amid a shift to more mobile gadgets, a survey showed on Monday.
The Gartner survey suggests the number of these devices will increase 5.9% in 2013 to 2.35 billion, driven by sales in tablets, smartphones, and to a lesser extent, "ultramobile" PCs.
Traditional desk-based and notebook PC shipments are forecast to drop 10.6% to 305 million units, not including ultramobiles, a new category of PCs which includes smaller computers including convertible tablets.
Tablet shipments are expected to grow 67.9% to 202 million units, while the mobile phone market will grow 4.35 to 1.8 billion.
"Consumers want anytime-anywhere computing that allows them to consume and create content with ease, but also share and access that content from a different portfolio of products," said Carolina Milanesi, research vice president at Gartner.
"Mobility is paramount in both mature and emerging markets."
Sales of ultramobile PCs, which include the Google Chromebook, are expected to double in 2013 but remain at a relatively modest 20 million units, Gartner said.
Gartner said the red-hot growth in tablets and smartphones will taper off as these devices gain longer life cycles. The report said many consumers are opting for "basic" tablets to cut costs.
It said Apple's iPad mini represented 60% of overall Apple tablet sales in the first quarter of 2013.
"The increased availability of lower priced basic tablets, plus the value add shifting to software rather than hardware will result in the lifetimes of premium tablets extending as they remain active in the household for longer," said Gartner's Ranjit Atwal.
Lower-priced smartphones are also impacting the market, it found.
"Volume expectations for 2013 have been brought down as the life cycles lengthen as consumers wait for new models and lower prices to hit the market in the fall and holiday season," Atwal said.
"The challenge in the smartphone market is also that, as penetration moves more and more to the mass market, price points are lowering and in most cases so do margins."
Google's Android is expected to extend its dominance in 2013, accounting for 866 million devices, ahead of Microsoft Windows and Apple's iOS.
But Gartner said Apple is the most "homogeneous" with a large number of products in each segment, while Windows dominates in PCs and Android in smartphones.

NEWS,03.06.2013

Apple e-book price-fixing trial opens

The US government's trial against Apple, accused of leading a conspiracy to fix prices of electronic books, opened in the US on Monday.
The California technology giant is on its own in its fight against the US Justice Department, after five of the world's biggest book publishers named in the suit settled the charges and paid fines.
US antitrust watchdogs say Apple orchestrated a collusive shakeup of the electronic book business in early 2010 that resulted in higher prices.
Attorneys for both sides appeared in the courtroom of Judge Denise Cote, discussing procedural matters ahead of opening arguments.
The civil trial is expected to last three weeks and comes with Apple under pressure for its slumping share price, eroding market share for its iPhones and iPads and accusations in congress it avoided billions in taxes.
Apple chief executive Tim Cook has rejected the idea of a settlement because it would call for the company to sign an admission of wrongdoing.
"We didn't do anything wrong there," Cook told a recent California conference.
"We're going to fight."
Commission
The government's case centres on a period when Amazon dominated the e-book business, offering most bestseller titles for $9.99.
Leaders of the major publishing houses held "CEOs dinners" in "private rooms at upscale restaurants" at which they discussed the threat from Amazon.
Into this environment stepped Apple, which was readying the launch of its iPad.
Rather than following the Amazon "wholesale" pricing model in which the retailer sets the price, Apple favoured the so-called "agency model" where the publishers set the price and the seller - in this case Apple - received a 30% commission.
The result was an increase in price to $12.99 or $14.99 for most books.
Apple throughout the negotiations informed the publishers of the status of its dealings with other publishers. Apple was the "ringmaster" of the "conspiracy," the complaint alleges.
The government is expected to use emails and comments from the late Apple CEO Steve Jobs, which indicated that as part of a deal to force a new pricing model, publishers should "hold back your books from Amazon."
Apple dismisses the "conspiracy" charge and said its negotiations with the publishers were "difficult and contentious."
Among the publishers named in the lawsuit last year, Penguin settled for $75m, while Hachette, Harper Collins and Simon & Schuster created a $69m fund for refunds to consumers and Macmillan settled for $26m.

Global airline profits under pressure

In 2012 the profits made by airlines around the world amounted to $2.54 per passenger. That means airlines make only about R40 profit on every air ticket they sell.

"The global aviation industry registered a combined net post-tax profit of $7.6bn. This was generated on the back of revenues of $680bn globally," said Brian Pearce, chief economist at the International Air Transport Association (Iata).

"The profits are thin and fragile. The numbers seem high but the reality is that the margins are incredibly thin."

Iata has released its latest set of financial forecasts for the industry. The outlook for Africa for 2013 is a profit of $100m for the year.

"The aviation industry is linked to global economic growth. It's clear that the global economy is still under severe pressure," said John Slosar, CEO of Hong Kong-based carrier Cathay Pacific.

Slosar said cargo is still under great pressure, especially in regions such as Europe. "I suppose this is indicative of the economic state of some areas."

Iata is hosting its 69th annual general meeting in Cape Town.

N Korea surrenders to foreign currencies

Chinese currency and US dollars are being used more widely than ever in North Korea instead of the country's own money, a stark illustration of the extent to which the leadership under Kim Jung-un has lost control over the economy.
The use of dollars and Chinese yuan, or renminbi, has accelerated since a disastrous revaluation of the North Korean won in 2009 wiped out the savings of millions of people, said experts on the country, defectors and Chinese border traders.
On the black market the won has shed more than 99% of its value against the dollar since the revaluation, according to exchange rates tracked by Daily NK, a Seoul-based news and information website about North Korea.
North Korea is one of the most closed countries in the world, so it is difficult to determine what impact this could ultimately have on Kim's regime.
But experts said the growing use of foreign currency is making it increasingly difficult for Pyongyang to implement economic policy, resulting in the creation of a private economy outside the reach of the state that only draconian measures could rein in.
For now Pyongyang appeared to be capitulating, rather than trying to stamp out foreign currency use, they said.
Estimates of how much hard currency is in circulation vary, but an analyst at the Samsung Economic Research Institute in Seoul put it at $2bn in an April study, out of an economy worth $21.5bn, according to some assessments. Pyongyang doesn't publish economic data.
The use of dollars and yuan is now so pervasive there is little Pyongyang can do about it, said Marcus Noland, a North Korea expert at the Peterson Institute for International Economics in Washington.
The government would increasingly have to force people to provide goods and services to the state and get paid in won, added Noland, who closely studies the North Korean economy.
"It's been a tug of war for 20 years where the state would like to get control of the economy, to quash the market and to get everyone to use the North Korean won, but it just doesn't have the capacity to do any of those things," he said.
"It just makes it harder and harder for them to govern. Nobody wants what they're selling."
Secret video
In the Chinese town of Changbai in Jilin province, just across the border from the hardscrabble North Korean city of Hyesan, one Chinese trader said North Korean officials he dealt with wanted yuan more than anything else, even food.
The yuan they earned from doing business quickly gets circulated into Hyesan, a city of roughly 190 000 people whose industry-based economy has slumped since the 1990s.
"The only thing they want is foreign currency," said the trader, who sells products including medicine and tea in Changbai. He declined to be identified because he did not want to jeopardise his business or endanger his North Korean partners.
In April, Daily NK posted video it said was shot secretly in February at an open-air market in Hyesan. The shaky footage showed vendors openly quoting prices in yuan for products like gloves and jackets, and one accepting payment in yuan.
Pyongyang has waged periodic campaigns to try to stop the use of foreign currency but with no success.
North Korea made circulating foreign currency a crime punishable by death in September 2012, the Paris-based International Federation for Human Rights said in a report last month.
Another group, Human Rights Watch, recently interviewed more than 90 defectors who had fled North Korea in the past two years about punishment they had received for economic crimes. None said they were penalised for using or holding hard currency.
Nevertheless, ordinary North Koreans are very careful.
"I have heard multiple stories of people hiding foreign money under the floorboards in the house, or burying it up the hill in the woods out back," said one person in northeastern China who has lived in Pyongyang and regularly interacts with North Koreans.
"Nobody puts it in the bank because nobody trusts the government."
The worthless won
Faith in the North Korean won crumbled when Kim's father, Kim Jong-il, ordered the sudden revaluation of the currency in November 2009.
The government chopped two zeroes off banknotes and limited the amount of old money that could be exchanged for new cash. The move, seen as an attack on private market activity at the time, spurred a rush to hold hard currency.
It also quickened inflation and according to South Korea's spy agency, sparked rare civil unrest in one of the world's most entrenched authoritarian states after North Koreans realised the won was not a safe store of value.
The government is widely believed to have executed the economic official who oversaw the revaluation.
Dollars have circulated in North Korea for decades, partly because of the cash siphoned off from official foreign trade.
The rise in the use of yuan is a more recent phenomenon and reflects a surge in trade and smuggling between North Korea and China along their 1,400 km (875 mile) land border, where a lot of the currency changes hands. Official trade with China is worth $6bn annually.
Black market rates illustrate how far the won has fallen since the revaluation. It has plunged from $30 to one US dollar to about 8 500, according to exchange rates tracked by Daily NK. The current official exchange rate is about 130 won per dollar.
Daily NK has sources in North Korea who report every fortnight on rates in Hyesan, the city of Sinuiju opposite the Chinese border city of Dandong and also the capital Pyongyang.
In border areas some 90 percent of transactions occur in hard currency, said Christopher Green, Daily NK's manager of international affairs. Elsewhere, foreign cash accounts for 50 to 80 percent transactions in private markets, he estimated.
North Koreans increasingly did not refer to prices in won, Dong Yong-Sueng, senior fellow at the Samsung Economic Research Institute in Seoul, wrote in the April study on the use of foreign currency in the country.
Prices were marked in US dollars for beer, university preparation courses and apartments, Dong wrote.
South Korea's central bank estimated foreign currency in circulation at $1bn in 2000. Dong reckoned $2bn in foreign cash was now sloshing around the economy. Around half was in US dollars, 40% in yuan and 10% in euros, he told Reuters.
Dollars seeped into the market because trading firms exploited government quotas for exports and imports, making profits when prices diverged from those set by the state, Dong said.
It was not possible to estimate the amount of North Korean won in circulation, Dong added.
He said the North Korean informal economy was now bigger than the formal, state-led economy.
"Without foreign exchange, the economy would stop functioning," Dong said.
US officials have previously accused North Korea of making extremely high-quality counterfeit $100 notes. This money is believed to have been used to raise real cash for the regime abroad rather than get cycled into the economy.
"Juche" in name only
Despite purporting to follow an ideology of "juche", or self-reliance, Pyongyang did not have the will to stop the circulation of hard currency even if it had the means to do so, said Yang Moon-soo, an expert on the North's economy at the University of North Korean Studies in Seoul.
Ordinary North Koreans wanted yuan while the elite preferred dollars, said Yang, who has carried out a study on the use of both currencies based on interviews with North Korean defectors.
One official at a European embassy in Pyongyang, who has been visiting North Korea for more than a decade, said the most noticeable change had been the increased use of yuan. Most shops carried prices in dollars, yuan or euros, said the official.
"People ... pay in yuan at the market for rice and other daily necessities," said Ji Seong-ho, a defector living in South Korea who stays in touch with friends in the North.
An estimated 70% of defectors in South Korea also send cash back to family in North Korea, according to the Organization for One Korea, a South Korean support and research institute on North Korean defectors.
A Reuters report last year showed how this money was getting to North Korea via underground agents in China, mostly Chinese of Korean descent. They use ties on both sides of the border to funnel around $10m into the North each year, usually in yuan given the defectors send money to banks in China where it is collected by agents.
Use of the South Korean won is unheard of in North Korea. Even in the recently closed Kaesong industrial zone between the two Koreas, which employed 53 000 workers from the North, wages were made to a North Korean management committee in US dollars, not the South's legal tender.
There are small signs some in the North Korean government may be coming to grips with the hard currency reality.
In the Rason special economic zone in the far northeast of the country on the border with China, the government-run Golden Triangle Exchange Bank changes yuan into North Korean won.
The rate - according to people who visited the bank recently - was 1 200 won per yuan, or 7 350 won per dollar. That's a long way from the official rate of 130 won for one dollar. 

Australia's minimum wage rises

The minimum wage in Australia was raised 2.6% Monday, pushing the lowest weekly wage to AU$622 ($597)
The decision by The Fair Work Commission affects 1.5 million people and will take effect July 1.
It was half the increase unions wanted but three times higher than the level employers wanted.
Commission president Iain Ross said an expected increase in unemployment and a steady inflation rate led to the decision.
"If not addressed these trends may have broader implications both for our economy and for the maintenance of social cohesion in Australia," Ross said.
Australian Chamber of Commerce and Industry chief executive Peter Anderson called it a blow for small businesses.
"This is $1.5bn of increased wages that have to be funded by Australia's small and medium business community," Anderson told the Australian Broadcasting Corporation.

US shale poses challenge to Opec output

The Organisation of the Petroleum Exporting Countries' (Opec's) halcyon days of high prices and high production may be drawing to a close as soaring US output opens a new era for world oil markets.
After a comfortable ride since the 2008 price crash and record revenue of $1 trillion last year, it may have to be more proactive on output policy.
The rise of US shale oil and slack demand will eventually force Opec either to support oil at $100 a barrel by cutting output - offering higher price support to rival producers - or protect market share by keeping the taps open and allowing prices to fall.
Opec's Friday meeting was content to simply agree, as expected, to retain the group's 30 million barrels per day (bpd) output target for the rest of the year.
It will meet again on December 4. Ministers also agreed to set up a committee to investigate the impact of shale.
Oil is just above the $100 level favoured by the group that pumps a third of the world's oil. Opec's leading producer Saudi Arabia says the world oil market is in "good shape".
For now, maybe. But Opec has little room to pump more due to the US oil boom that has shifted the existing competition for marketshare once and for all to Asia, and intensified a rivalry between Opec's top two producers Saudi Arabia and Iraq there.
Core Gulf producers think Opec will still be able to pump at least 30 million bpd, provided US shale grows at a moderate pace. While that does not leave much room for growth, it implies that Opec will not need to scale back significantly.
"This is not the first time new sources of oil are discovered, don't forget history," said the influential Saudi Oil Minister Ali al-Naimi. "There was oil from the North Sea and Brazil, so why is there so much talk about shale oil now?"
There has not been such a surge in flows from outside Opec in decades and that has rung the alarm with some members - particularly Nigeria and Algeria - that feel squeezed.
"The rapid ramp up in US shale bears a striking resemblance to the situation in the early 1980s when North Sea oil production from the UK and Norway was rising very quickly," said Neil Atkinson, director of energy research at Datamonitor.
"This presented Opec with an enormous challenge because at the time demand growth was very weak. Nobody's saying that will happen again, but all the ingredients in that brew are starting to come into place."
Oil above $100 has freed vast quantities of US shale oil in North Dakota and Texas that helped boost US output by 850 000 bpd by the end of 2012.
That is more than each of Opec's two smallest producers, Qatar and Ecuador, pump in total. Light, low sulphur shale poses no threat to Opec's Gulf members that sell heavier crude - but is a headache for Nigeria and Algeria, which produce oil of similar quality.
The surge may even push the United States closer to the Saudi mindset, thinking more like a producer than a consumer keen to keep oil cheap.
Levels of price pain
Last year's surge in US output came with a hefty price tag as the rush to produce drove the cost of pumping marginal crude to $114 a barrel, according to a Bernstein Research report.
While Riyadh welcomes the rise of US shale, the Saudi oil minister himself has said the kingdom would be lucky to go beyond current production rates of about 9 million bpd by 2020 due to new global supplies.
But during that period, Iraq's production will have doubled from current rates of around 3 million bpd, if all goes to plan - a concern for Riyadh.
At some stage, Saudi Arabia may decide to open the taps to shut in the marginal barrel and make Iraq feel some pain, said analysts. The kingdom has done this before - early last decade it let the price fall to punish non-Opec producers. There are no signs of that now.
Oil at $70-$80 could start to impact the economics of some shale oil plays. Iraq's breakeven budget price is well above $100 a barrel.
With no pressure on its budget, analysts say Saudi Arabia could easily pump 8 million bpd at $80 without breaking sweat. After pumping 10 million bpd with oil at $110 last year and 9 million bpd with oil at $110 this year, it has built up formidable financial reserves.
Analysts' estimates for Saudi Arabia's break-even oil price this year vary from around $65 a barrel to $85, depending on projections for its spending.
"For Saudi Arabia, there's plenty of room on the downside in terms of price and quantity before they start to panic," said Yasser Elguindi of Medley Global Advisors.
"North Dakota will cut before anyone in Opec if oil falls to $70."
Others in Opec - including Iran, whose revenue has been sunk by Western sanctions directed against its nuclear programme, Iraq and Algeria - need oil well into triple digits to balance budgets.
This may lead them to call on Saudi Arabia to cut supply in order to support prices. But Riyadh may be thinking counter-intuitively.
"Saudi Arabia's challenge will be to convince Nigeria and Algeria that higher prices will encourage the economics (of US shale) that are their undoing," said Elguindi.
The group will choose its next secretary general when it meets again in December, said the Saudi oil minister. The issue has stalled on competing candidates from Iran, Iraq and Saudi Arabia.
Friday's meeting continued to adjust the criteria for prospective candidates to come forward.

Indian banks to get tough on defaulters

Fed up with a profitable textile company's failure to repay its loan, India's UCO Bank has taken its grievance public, placing newspaper ads last month that brand the industrialist owner of S Kumar's Nationwide Ltd a defaulter.
State Bank of India (SBI), Bank of India  and Bank of Baroda are also preparing to name and shame corporate borrowers which are not paying them back, bank executives told Reuters.
This aggressive tactic for dealing with bad debt marks a major departure from the traditional laid-back approach of Indian state lenders.
Weighed down by stressed loans of nearly $150bn equivalent to more than 10% of bank assets in the country and against a backdrop of the slowest economic growth in a decade, Indian banks are bringing an unprecedented intensity to their recovery efforts.
"We are going hammer and tongs to recover loans," said M S Raghavan, executive director at Bank of India, which last year began opening debt recovery branches to pursue defaulting borrowers.
In the banks' arsenal of debt recovery tools are the power to seize and sell assets, take deadbeat borrowers to court, sell loans to investors, and beef up debt recovery teams, although a slow-moving legal system and the lack of a bankruptcy process limit their effectiveness.
Officials at state banks, which account for about three-quarters of lending in India, expect the push will cut bad loan ratios by at least 1 percentage point.
Bank of India's non-performing loan (NPL) ratio improved slightly to 2.99% of total assets at end-March from 3.08% at end-December.
"If we don't intensify, nothing is going to come to us," Raghavan said.
Traditionally Indian lenders, especially those controlled by the government, have tried to nurse customers through tough times by easing terms or "evergreening" loans - giving new loans to pay old ones  an unlawful practice that many in the industry say is common.
In a country where businesses thrive on personal relationships, Indian banks have typically avoided involving the courts or liquidating assets - time-consuming efforts which often yield only minor results.
Even the so-called fast-track courts for banks, formed in the last decade, can take more than two years to resolve a case.
The central bank has called for better management of bad debts, and wants to strengthen oversight by lenders.
Indian banks tried to recover on $10.9bn in bad loans but managed just a quarter of that through liquidation and lawsuits in the year ended March 2012, the latest data from the central bank shows.
Banks are particularly needled by business chiefs who sit on huge personal fortunes, but whose companies fail to repay loans.
In March, Finance Minister P Chidambaram asked state banks to move against rich "promoters" to recover loans from failing companies after a $1.4bn default by Kingfisher Airlines, controlled by liquor baron Vijay Mallya.
Targets and texts
S Kumars and its Reid & Taylor clothing brand, well-known in India thanks to its endorsement by Bollywood superstar Amitabh Bachchan, owes $19m to UCO Bank, according to the Kolkata-based lender's newspaper ad.
Another lender, SBI, in May sent a liquidation notice to S Kumars and Reid & Taylor, said Soundara Kumar, head of the bank's stressed assets management division.
S. Kumars and Reid & Taylor founder Nitin Kasliwal did not respond to several phone calls from Reuters.
S Kumars earned net profit of 865m rupees ($15.47m) in the nine months to December, according to a stock exchange filing.
"What we are now beginning to see is incidents of such prosperous promoters and sick companies are increasing.
"What we have tried to do is simply send a message across," said a senior executive at UCO in Mumbai, speaking on condition of anonymity because they were not permitted to talk to the media.
There is some evidence that public outing as debt dodgers can goad a company into action.
United Bank of India took out a newspaper ad in April to say pharmaceutical packaging firm Bilcare's outstanding 515m rupees loan was in default. Bilcare later said in a stock exchange statement that it was in touch with lenders and was trying to restructure its loan.
Such methods are likely to become more popular, given the absence of a formal bankruptcy law, and the great time and cost of pursuing collection in court.
"Our legal systems move very slowly. We have such a huge number of pending cases in the courts that we are unable to lay our hands on assets that we can recover from," said Shubhalakshmi Panse, chairperson of state-run Allahabad Bank .
Bankers say errant borrowers often manage to get stay orders from various courts, slowing down the recovery process, and most cases take over two years to be resolved.
Panse said she has given daily loan recovery targets to bank officers and branch managers across India. They send her a text message each day apprising her of the status of those targets.
If borrowers want to stay out of court, they can try the Corporate Debt Restructuring (CDR) Cell, where banks sought to restructure a record $16.6bn in loans in the year that ended in March 2013, an increase of 38% year-on-year.
Worried that CDR enables both borrowers and banks to escape from bad loans too lightly, the central bank has asked lenders to set aside more money in reserve against restructured loans and begin classifying them as bad, starting in 2015.
In a rare case, lenders recently rejected a proposal by outsourcing firm Spanco to restructure a 13bn rupee loan through CDR.
Even the powerful Vijay Mallya could not hold Kingfisher's creditors at bay forever. After threatening to do so for months, banks began liquidating collateral for the airline's loans in March, more than a year after its initial default.
"Trying to be tough is a good step given that whatever they have been doing in the past has not been working," said Ismael Pili, banking analyst at Macquarie Securities in Hong Kong. ($1 = 55.9250 Indian rupees)

NEWS,23.05.2013

Eurozone slump eases in May

The downturn across eurozone businesses eased slightly this month, although a dearth of new orders means the bloc's economy is likely to contract again in the second quarter, business surveys showed on Thursday.

Markit's flash eurozone Services PMI, which surveys around 2 000 companies ranging from major banks to caterers, rose in May to 47.5, a three-month high, from 47.0 in April.

While that was a little better than economists polled expected, the PMI has now spent 16 straight months below the 50 mark that divides growth and contraction.

French companies continued to fare poorly this month, while activity in German firms effectively stagnated.

Overall, survey compiler Markit said the surveys pointed to a similar economic performance in the second quarter as the 0.3% contraction the eurozone logged in the January-March period.

"There are signs the rate of decline is easing, which does suggest we may be moving into a period of stabilisation, but it's taking a lot longer than most people anticipated," said Chris Williamson, chief economist at Markit.

"It's looking more like the end of the year (until) we're going to see the numbers start to show signs of stabilising."

The new orders services index fell to 45.3 from 46.2, meaning a big upturn in the PMI next month looks unlikely. 

Williamson said there were signs that the rate of decline eased this month in the "peripheral" eurozone countries outside Germany and France.

"But against that we've seen a worrying steep deterioration in service sector expectations for the year ahead."

Although business expectations for the year ahead hit an 11-month high in April, it plummeted in May to its lowest point since December.

The PMI for the manufacturing sector rose to 47.8 this month from 46.7 in April, while showing new orders and output declined at a slower pace, comfortably beating expectations of 47.0 predicted by economists.

Combining both the services and manufacturing reports, the composite PMI hit a three-month high of 47.7 in May, compared with April's 46.9, while showing continuing job losses.

Both the input and output prices index stayed below the 50 mark this month, indicating deflationary pressures.

"The European Central Bank doesn't have anything to worry about in relation to inflation," said Williamson. 

"More likely, it's going to find it difficult to get inflation up to the level it wants," he added, referring to the central bank's target of close to 2%.

Bernanke: No Fed stimulus pullback yet

The Federal Reserve's monetary stimulus is helping the US economy recover but the central bank needs to see further signs of traction before taking its foot off the gas pedal, Fed Chairperson Ben Bernanke said on Wednesday.
A decision to scale back the $85bn in bonds the Fed is buying each month could come at one of the central bank's "next few meetings" if the economy looked set to maintain momentum, Bernanke told Congress.
But minutes from the Fed's most recent meeting released on Wednesday showed the bar was still relatively high.
"Many participants indicated that continued (job market) progress, more confidence in the outlook, or diminished downside risks would be required before slowing the pace of purchases," according to minutes from the April 30-May 1 meeting.
In testimony that showed little immediate desire to retreat from the Fed's third and latest round of bond buying, Bernanke emphasized the high costs of both unemployment and inflation, which respectively continue to run above and below the Fed's targets.
"Monetary policy is providing significant benefits," he told the congressional Joint Economic Committee, citing strong consumer spending on autos and housing, as well as increases in household wealth.
"Monetary policy has also helped offset incipient deflationary pressures and kept inflation from falling even further below the (Fed's) 2% longer-run objective."
Still, financial markets focused on the possibility that Fed purchases will be scaled back later this year. The S&P 500 closed 0.8% lower, the dollar hit a near three-year peak against a broad basket of currencies, and the bond market sold off sharply. Yields on 10-year Treasury notes jumped back above 2% to their highest levels since mid-March.
The central bank is currently buying $45bn in Treasury bonds and $40bn in mortgage-backed debt each month to keep borrowing costs low and encourage investment, hiring and economic growth. It is the third round of asset purchases, or quantitative easing, since the Fed drove interest rates to near zero in late 2008.
"I believe the Fed, while feeling more confident in the economy bottoming, is not yet comfortable with ending QE and the US economic crutch it offers," said Douglas Borthwick, managing director of Chapdelaine Foreign Exchange in New York.
Missing the target
Bernanke noted that the main inflation gauge the Fed monitors rose just 1% in the 12 months through March, just half the central bank's 2% target.
Part of the reason, he said, was a decline in energy prices. But there were also indications of more broad-based disinflation, Bernanke said.
He said the Fed was prepared either to increase or reduce the pace of its bond buys depending on economic conditions, as the central bank stated on May 1 after its last policy meeting.
"If we see continued improvement and we have confidence that that's going to be sustained then we could in the next few meetings ... take a step down in our pace of purchases," he said.
"If we do that it would not mean that we are automatically aiming toward a complete wind down. Rather, we would be looking beyond that to see how the economy evolves and we could either raise or lower our pace of purchases going forward."
US economic growth rose to a 2.5% annual rate in the first quarter following an anemic end to 2012. The unemployment rate has fallen to 7.5% from a peak of 10%, but remains, as Bernanke put it, "well above its longer-run normal level."
Recent economic data have been mixed. Job growth, retail sales and housing have all shown some vigor, but factory output has been contracting.
Bernanke said some headwinds facing the economy, including the debt crisis in Europe, have been dissipating. But he said a sharp tightening of the US government's budget had become too big of a drag on growth for the central bank to offset fully.
Bernanke told the committee the Fed was aware of the risk that keeping monetary policy too easy for too long could fuel asset price bubbles. However, he said the central bank believed major asset prices were justified by the economy's fundamentals.
Further, he warned of the risks to pulling back on stimulus too early.
"A premature tightening of monetary policy could lead interest rates to rise temporarily but would also carry a substantial risk of slowing or ending the economic recovery and causing inflation to fall further," Bernanke said.
He also suggested the Fed could refrain from selling off some of the mortgage-backed securities it has acquired when the time finally came to tighten monetary policy. "I personally believe that we could exit without selling any MBS," he said.
Too soon to taper
In separate remarks, New York Fed President William Dudley stressed that uncertain economic conditions meant it was too early to determine whether to taper the Fed's bond purchases.
"I think three or four months from now you'll have a much better sense of 'Is the economy healthy enough to overcome the fiscal drag or not?'" Dudley said in a Bloomberg TV interview that took place on Tuesday but aired on Wednesday.
Dudley added that it would be possible to dial down the program by the fall "if the economy does better and if the labor market continues to improve."
The minutes of the last Fed meeting said a number of officials expressed a willingness to taper bond purchases as early as the upcoming meeting on June 18-19 if there were signs of "sufficiently strong and sustained growth." But views differed both on how to gauge progress and on how likely it was that that threshold would be met.
Asked whether the Fed would curtail the pace of its bond purchases by the September 2 Labour Day holiday, Bernanke said simply: "I don't know."

US shares recover, but dollar extends losses

US stocks and bonds were little changed on Thursday, with equities rebounding from what traders considered an excessive drop on Wednesday, though concerns remained over the pace of global economic growth.
The midday strength in US equities bucked a worldwide trend of weakness. European shares ended down 2 percent while Japan plummeted 7.2 percent on weak data from China and Europe.
US shares opened sharply lower, extending a sharp decline on Wednesday that came after Federal Reserve chief Ben Bernanke broached the possibility of reducing stimulus if economic conditions improve.
While Fed officials stressed that no action was likely for months, investors are anxious about the timing to any change in monetary policy, which is widely credited with fueling massive gains in stocks and high-yield corporate bonds this year.
"The commentary was very benign and wasn't anything unexpected, the sell-off came because we were looking for an excuse to correct after the big moves this year," said Eric Green, senior portfolio manager at Penn Capital Management in Philadelphia.
The Dow Jones industrial average was up 2.64 points, or 0.02 percent, at 15,309.81. The Standard & Poor's 500 Index was down 4.45 points, or 0.27 percent, at 1,650.90. The Nasdaq Composite Index was down 4.24 points, or 0.12 percent, at 3,459.06.
Thursday's equity rebound continued a recent trend of investors using any market decline as a buying opportunity. A rally in Hewlett-Packard Co, which jumped 14 percent to $24.18 a day after raising its profit outlook, helped limit losses and keep the Dow in mildly positive territory.

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Still, overseas markets were sharply lower, driving investors to safe-haven currencies. At the session peak, the yen rose more than 2 percent against the dollar and the euro, which both lost 1 percent against the Swiss franc , also seen as a safe haven.
Chinese factory activity shrank for the first time in seven months, adding to concerns that the world's second-biggest economy had stalled. European factory sentiment dropped, suggested that the euro zone's economy was likely to contract again in the second quarter.
Japanese shares were hit hardest in overnight action, with the Nikkei losing 7.3 percent, its biggest one-day fall in two years. European shares ended 2.1 percent lower and MSCI's world equity index lost 1.3 percent.
"Even though we were overdue for a correction, the Chinese data certainly didn't help things. If it proves to be part of a trend, that's very concerning for the global economy," said Green, who helps oversee $7 billion in funds.
US light crude oil, which is closely tied to the pace of economic growth, fell 0.5 percent. The U.S. dollar index fell 0.8 percent.
The Euro STOXX 50 Volatility Index, Europe's widely used measure of investor risk aversion, surged nearly 15 percent to a three-week high. The CBOE Volatility Index rose 3 percent.
Concern the Fed will wind down its stimulus initially took its toll on bonds, but investors' sales of equities caused money to flow into safer government debt, leaving yields on US Treasuries and German Bunds down from their highs. The benchmark 10-year U.S. Treasury note was down 2/32 in price, the yield at 2.0281 percent.
Investors expect the bond market will adjust to changing Fed policy, and that suggests higher yields in the coming months.
Demand for riskier euro zone debt softened, although bonds remained underpinned by expectations the European Central Bank may yet ease monetary policy further. That would contrast with any tightening by the Fed but follow a massive stimulus package launched by the Bank of Japan.

Apple has enjoyed Irish tax holiday since 80s

Apple has operated almost tax-free in Ireland since 1980, welcomed by a government keen to bring jobs to what was then one of Europe's poorest countries, former company executives and Irish officials have said.
Chief Executive Tim Cook faced criticism from a Senate subcommittee in Washington over the iPad and iPhone maker's tax practices, which had been shrouded from full view behind secretive tax-exempt Irish-based corporate entities.
Apple, one of Ireland's top multinational employers, denied avoiding billions of dollars in US taxes and said its arrangements helped fund research jobs in the United States.
The committee revealed that Apple's Irish companies, some of which are not tax resident in any jurisdiction, allowed the group to pay no tax on much of its overseas earnings in recent years.
Senator Carl Levin, chairman of the subcommittee, said Apple had sought "the Holy Grail of tax avoidance".
A former company executive and Irish officials the almost tax-free status dates all the way back to Apple's arrival in County Cork 32 years ago.
Apple must have seemed attractive to Ireland and to Cork. Amid a generally moribund Irish economy, Cork had been hard hit by the closure of its shipyards and a Ford car plant, and in 1986 nearly one in four were out of work in the city.
In the early days, Apple's staff sat down to meals together. Now the company employs 4,000 in Ireland and is the country's biggest multinational employer.
"There were tax concessions for us to go there," said Del Yocam, who was Vice President of manufacturing at Apple in the early 1980s.

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"It was a big concession."
In fact, the deal was about as good as a company can get.
"We had a tax holiday for the first 10 years in Ireland. We paid no taxes to the Irish government," one former finance executive, who asked not to be named, said.
Apple wasn't an exception, although it was among the last to enjoy such favourable treatment.
From 1956 to 1980, Ireland attracted foreign companies by offering a zero rate of tax, according to the Irish government's website. Eligible companies arriving in 1980 were given holidays until 1990.
"Any multinational attracted into Ireland that was focusing on the export market paid zero percent corporation tax," said Barry O'Leary, CEO of IDA Ireland, which is charged with attracting investment into Ireland.
Apple said it pays all the tax due in every country where it operates. It declined to comment on the tax treatment it received in the 1980s.
As part of Ireland's accession to the European Economic Community, precursor to the European Union, in 1973, it was forced to stop offering tax holidays to exporters.
From 1981, companies arriving in Ireland had to pay tax, albeit at a low 10 percent rate, providing they qualified for manufacturing status.
Economic coup
Apple's investment was a major coup for Ireland. At the time, the country was struggling with high and rising unemployment, double-digit inflation and a brain drain of the young and educated through emigration.
"We were the first technology company to establish a manufacturing operation in Ireland," recalled John Sculley, Apple's CEO from 1983 to 1993.
He said government subsidies had also played a role in deciding to set up a base in Ireland.
Ireland also offered low wage rates - a big attraction when it came to hiring hundreds of people for the relatively low-skilled work of assembling electronic equipment.
Apple told the subcommittee it could not answer questions about why it chose Ireland as a base since it had lost the paperwork from the period.
The operation in Cork built the company's Apple II computer and would later build disc drives, 'Mac' computers and others. These would be sold in Europe, the Middle East, Africa and Asia.
But having a tax holiday in Ireland would not, in itself, have allowed Apple to operate tax free in these markets.
Equipment assembly is not the kind of activity that economists or tax authorities usually credit with generating a large share of a technology company's profits.
More value has been associated with generating the intellectual property behind the technology - which Apple did in the United States - and with the selling of goods, which was to be done on the ground in France, Britain and India.
But none of these countries offered the tax advantages Ireland did. The key to minimising Apple's tax bill was maximising the amount of profit that could be ascribed to Apple's Irish operations.
Holiday over
In 1990, Apple's tax holiday came to an end, and in that year, the Irish operation's tax rate hit 4 percent, accounts from the period show.
At the same time, Apple's Irish manufacturing activities came under question as the company looked to cut costs by outsourcing.
In 1992, the company announced plans to cut hundreds of jobs after deciding to shift some work to Singapore, which at this time was attracting increasing investment by offering tax holidays.
"They nearly left Ireland altogether," O'Leary said.
By this stage, the European Community had banned tax holidays of the kind given to Apple, so the company and Dublin negotiated an arrangement which had a similar outcome but fell within European rules.

Cautious calm returns to Wall Street

Wall Street has been had mixed trading today, paring sharp early losses after disappointing data from China and a slump in Japanese stocks outweighed better-than-expected reports on US jobs and housing.
In China, the preliminary reading for a Purchasing Managers' Index of manufacturing was 49.6 in May, according to HSBC and Markit Economics data. In Japan, the Topix plunged 6.9%.
Yesterday's comments by US Federal Reserve Chairman Ben Bernanke suggested the central bank might ease back its bond-buying programme as soon as at its next meeting, while also stressing the risk of withdrawing stimulus measures too soon.
Fed officials today sought to soothe investors' concerns. James Bullard, president of the St Louis Fed, said he did not think the bank's policy committee was "that close" to tapering bond purchases and when it did start to pull back it would be slowly.
"The market is struggling with conflicting language from Fed officials as to the timing of potential tapering of asset purchases, slowing growth in China and after Japan's decline in equities," Ryan Larson, the Chicago-based head of US equity trading at RBC Global Asset Management, told Bloomberg News.
In late afternoon trading in New York, the Dow Jones Industrial Average gained 0.18%, while the Standard & Poor's 500 Index fell 0.22% and the Nasdaq Composite Index edged up 0.04%.
US economic data released today were better than anticipated, though failed to brighten the mood. Initial claims for state unemployment benefits fell 23,000 to a seasonally adjusted 340,000 last week, according to Labor Department data.

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New single family home sales increased 2.3% in April to a 454,000-unit pace, while the median sales price for a new home rose 14.9% from a year ago to a record US$271,600.
"All the eggs are in housing and the consumers' baskets this quarter. Outside that, there is going to be little support to growth," Ryan Sweet, a senior economist at Moody's Analytics in West Chester, Pennsylvania.
Bucking the trend today, shares of Hewlett-Packard jumped, last up 14.7%, after the computer maker lifted its 2013 earnings outlook.
"She [Chief Executive Officer Meg Whitman] clearly has the company focused on profit and cash flow and that's coming through in the earnings," Shannon Cross, an analyst at Cross Research in Millburn, New Jersey, who rates the stock a hold, told Bloomberg. "It shows they're able to drive margin at businesses that are under significant revenue pressure."
Europe's benchmark Stoxx 600 Index shed 2.1%. Yesterday European shares had closed higher, ending the session before Bernanke suggested the US central bank could taper its bond-buying as soon as next month.
The UK's FTSE 100, France's CAC 40 and Germany's DAX each also closed with declines of 2.1%.