NEWS,04.03.2013

EU looks to hi-tech sector for jobs

Even with unemployment at record highs, there are hundreds of thousands of jobs available in information technology that governments and companies must work together to fill, the European Commission said Monday.Launching a 'Grand Digital Coalition', Commission President Jose Manuel Barroso said there would be 900 000 vacancies in Europe's Information and Communication Technologies industry between now and 2015 but the number of fresh ICT graduates and skilled workers is simply not keeping up."The Grand Coalition we launch today is an essential part of getting Europe's economy back on track and finding jobs for some of Europe's 26 million unemployed," Barroso said. Filling these jobs will have an impact across the whole economy, he said, and prepare "Europeans to fill the jobs that will drive the next ICT revolution".Among the larger companies signing up for the programme to provide among other things jobs, training and start-up funding are Spanish telecom's giant Telefonica, Cisco of the United States and Germany's SAP.

Record number of billionaires in 2013

Forbes's 2013 list of the world's richest people includes 1 426 billionaires, a record number, with a total net worth of $5.4 trillion, up from $4.6 trillion in the previous ranking. Following are key facts from the ranking. There are 210 new billionaires from 42 countries, including 27 from the United States. The average net worth of those on full list has risen to $3.8bn from $3.7bn. Sixty people have dropped off the list and eight have died. The Asia-Pacific region saw the biggest number fall off the list with 29, followed by the United States, which lost 16. Most of the billionaires are self-made, 961, while 184 inherited their wealth and 281 inherited part of it and are increasing it. The oldest billionaires, on average, are in the Americas, with an average age of 67, with those in the United States slightly younger at 65. The United States had the most billionaires with 442, followed by Asia-Pacific with 386, Europe with 366, Middle East and Africa with 103 and the Americas, excluding the United States, with 129. The number of women billionaires rose to 138 from 104. The United States has 50 female billionaires, followed by 35 in Europe and 22 in Asia-Pacific. Saudi Arabia's 93-year-old Sulaiman Al Rajhi, the chairperson of the Al Rajhi Bank, who’s estimated net worth is $6bn, is tied for having the most children of those on the list with 23. Roman Avdeev, the owner of the Credit Bank of Moscow, also has 23 children, 19 of whom are adopted. The 45-year-old's fortune is valued at $1.4bn. 

Global 'petrol pain' indicator

The Bloomberg Gas Price Ranking sorts 60 countries by average price at the pump and by "pain at the pump", which is measured by the percentage of average daily income needed to buy a gallon of fuel.

See where different countries of the world stack up.

$9.89....Turkey........................  .#7
$9.63....Norway.....................  .#51
$9.09....Netherlands...............  #40
$8.87....Italy............................#31
$8.82....Portugal.....................#17
$8.62....Greece.......................#21
$8.50....Sweden......................#46
$8.41....Belgium..................... #41
$8.38....France....................... #37
$8.22....Denmark.................. .#48
$8.15....Hong Kong.................#36
$8.12....Finland.......................#44
$8.06....United Kingdom......... #39
$8.05....Ireland........................#43
$7.96....Germany.................... #42
$7.67....Israel.......................... #34
$7.61....Slovakia..................... #18
$7.60....Slovenia..................... #27
$7.44....Malta..........................#24
$7.21....Hungary..................... #13
$7.19....Switzerland................ #52
$7.06....Spain........................ #33
$7.03....Austria.......................#47
$6.97....Czech Republic.........  #23
$6.94....Lithuania....................#14
$6.88....Cyprus.......................#30
$6.83....Latvia.........................#16
$6.81....Luxembourg..............#55
$6.77....South Korea..............#32
$6.73....New Zealand............ #44
$6.70....Estonia......................#22
$6.70....Japan.........................#49
$6.70....Romania.....................#8
$6.67....Poland.......................#15
$6.53....Bulgaria......................#5
$6.31....Australia.....................#54
$6.29....Singapore...................#50
$6.20....Chile...........................#25
$5.40....Brazil..........................#20
$5.19....Argentina....................#19
$5.06....South Africa............... #11
$5.00....India............................#2
$4.87....Philippines..................  #3
$4.76....Canada......................  #53
$4.74....China...........................  #9
$4.72....Colombia.................... #12
$4.42....Thailand.....................  #10
$3.98....Pakistan.......................  #1
$3.68....Indonesia....................  #6
$3.47....Russia.......................  #35
$3.29....United States.............  #56
$3.22....Mexico........................  #29
$2.36....Malaysia.....................  #38
$2.34....Nigeria.........................   #4
$2.15....Iran............................. #28
$1.77....United Arab Emirates..   #57
$1.14....Egypt.......................... #26
$0.81....Kuwait........................ #59
$0.45....Saudi Arabia..............  #58
$0.06....Venezuela..................  #60

Global unrest fuels armoured car demand

In a workshop in a dusty industrial area on the outskirts of Dubai, engineers are stripping down a Toyota Land Cruiser to install armoured plating, bullet resistant glass and run-flat tyres.In the aftermath of the Arab spring revolts and with the wealth gap and social unrest rising in many parts of the world, there is no shortage of rich individuals and governments who suddenly feel they need a little extra protection.For companies such as Canada's INKAS, Britain's Jankel and Germany's Transeco, it has been a lucrative decade. Even with the Iraq and Afghan wars the conflicts on which the industry grew winding down, there are still deals to be done.Newer entrant Ares Security Vehicles  founded in 2010 but largely staffed by industry veterans says it has a strong and growing order book."This batch of vehicles is going to Iraq," says Marc Rouelle, a Belgian engineer now chief executive officer of the Dubai-based firm. " And the one behind is going to Russia. We are awaiting delivery tomorrow of 30 ... destined for Libya."With spending cuts around the world, industry consultancy IHS Jane's says the market for conventional military vehicles is contracting by more than four percent a year. But the demand for armoured sports utility vehicles and limousines - visually indistinguishable from regular civilian vehicles but protected against small arms fire and grenades is on the up.The gold standard, perhaps unsurprisingly, is set by the US president. Barack Obama's Cadillac limousine dubbed "the beast" by the US media and Secret Service is believed to weigh several tonnes and include its own defensive weaponry and air supply in the event of chemical attack.Several major carmakers, including Mercedes-Benz, BMW and Jaguar Land Rover, produce their own armoured versions of key brands.Most of the industry, however, is made up of companies who fit armour to regular new or second hand vehicles. Not only are they often considerably cheaper, but sales of vehicles built outside Western Europe and the United States can be less constrained by complex export regulations.The conversion trade is far from new. Britain's Jankel which also builds armoured riot control vehicles for police and militaries has been fitting armour and rebuilding limousines for heads of state and other clients since the 1980s.But the scale and breadth of demand in recent years, industry watchers say, has been entirely new. Particularly in those countries affected by the "Arab spring" analysts say demand from government, individuals and firms is sharply up."It's a murky market and it's hard to get any exact figures," says Jon Hawkes, senior analyst for military vehicles at IHS Jane's. "But companies are talking about a 30%-40% increase in sales in the last four or five years. The big auto manufacturers are increasingly realising there is money to be made but the main area of growth is probably at the other end of the spectrum."Prices vary, but an armoured Land Cruiser can sell for $150 000 or more, more than three times the cost of a non-armoured vehicle. In the entrance of its Dubai workshop, Ares proudly displays one of its most heavily tested vehicles a Land Cruiser subjected to heavy gunfire on a test range in Germany. Given enough time, the company says it can convert almost any vehicle - but the Toyota Land Cruiser has emerged as far and away the favourite. The Dubai plant now produces two such vehicles a day, CEO Rouelle says, still primarily for shipment to Iraq and Afghanistan but increasingly also to other buyers elsewhere. The Middle East emerged as a major centre of the industry because of its proximity to those two war zones and other markets. At the height of the Iraqi and Afghan wars, more than a dozen companies were operating in the United Arab Emirates alone producing what industry insiders said could be 400 vehicles a month. That demand, industry insiders say, has fallen off somewhat lately. In part, the drawdown of Western troops has meant fewer foreign personnel on the ground. At the same time, workshops have sprung up in both Iraq and Afghanistan capable of doing their own conversions to add armour. Several companies, including Ares, have set up operations elsewhere. Jordan, with its land border with Iraq, is a particular favourite. For Rouelle, however, Dubai, still offers an appealing base. As well as an easily tapped migrant workforce, it charges little tax and is well located for the other growing markets of the Middle East, Africa and Asia. "The UAE is an attractive base for our main operations," he says. "European engineering, tested and certified in Germany, made in Dubai. "Multinational companies, particularly oil firms, are big buyers, finding such vehicles a useful tool to bring down rising insurance premiums. Rich people in emerging economies hope they will offer protection from kidnapping and street violence. But the real money, those in the industry say, still lies with large government contracts. At last week's IDEX arms fair in Abu Dhabi, Ares and several other companies exhibited their wares alongside more conventional defence suppliers. The bullet-riddled Land Cruiser, they say, attracted more than a little attention. "We've had a lot of interest," says John Lashmar, director of marketing and business development at Ares. "Interior ministries, presidential protection details, companies and individuals in the Gulf and beyond. "In the Middle East and North Africa in particular, secret police and government security forces have ramped up their resources. Saudi Arabia, one source said, had bought several dozen armoured land cruiser-type vehicles recently as it worries over potential trouble along its border with Yemen and minority Shi'ite dominated areas in its oil-rich east. Qatar had bought a similar number, suspected to be for delivery to rebels in Syria. Some manufacturers are also expanding into military-style riot control vehicles, another growing market where they believe they can compete with larger, established defence companies. With many nations seeing an uptick in riots and unrest since the financial crisis, such vehicles are in mounting demand. Jankel's armoured police vehicles were credited with helping restore order in London after its 2011 riots.The strangest request he has had so far, Rouelle said, was from somebody looking to armour a Porsche sports car. He declined, preferring to concentrate on the firm's existing strengths.Other firms, however, will offer just that service. One US-firm, Lasco Group, says it will armour a Ferrari for $100 000 plus the original cost of the vehicle. Its armoured aluminium, however, would only be proof against handguns."Sometimes it can be seen as a lifestyle item," says Hawkes at IHS. "These buyers are much less concerned about exactly how bullet-proof a vehicle might be."

 

Economic gloom overshadows EU meeting

Eurozone finance ministers meet on Monday against the backdrop of a weak economy and increased political uncertainty after inconclusive polls in Italy, the group's third largest economy.If there has been some relief as the debt crisis eased in recent months, the political impasse in Italy "will colour the perception of what ministers will be discussing," an EU official told a briefing.Data Friday showed eurozone unemployment at record highs and consumer demand in the doldrums, meaning the 17 euro nations will be anxious to know what damage has been done to the efforts to cut debt and stabilise public finances.There will be "a lively debate" on the economic outlook as the budget deficit numbers come in, the official said, with most attention focused on France and whether it will get another year from the EU to put its fiscal books in order."The issue will be in the back of many peoples' mind," the official said, stressing that the meeting was unlikely to make any immediate decision on this issue or the rest of the agenda. A mooted bailout for Cyprus would be left to allow its newly-elected president and ministers see what the position is on the key sticking points - debt sustainability, privatisation and anti-money laundering measures. Athens meanwhile has officials from the EU, International Monetary Fund and European Central Bank officials the 'Troika' reviewing its bailout programme while Ireland and Portugal want adjustments to their rescue loan packages.Ministers will also look at how the restructuring of Spain's struggling banks is progressing and discuss the criteria to apply from next year when member states can call on the new eurozone back-stop, the European Stability Mechanism, to directly inject money into failing lenders.They may also want to discuss last week's controversial accord in principle on new bank capital requirements and capping banker bonuses but they will have to wait until Tuesday when their 10 non-euro colleagues join them for a full EU meeting.Tuesday's gathering of all 27 European Union finance ministers promises to be livelier than usual given the hostile reaction in London to the plan to cap bank bonuses, an additional issue to pit an increasingly eurosceptic Britain against the rest.Another EU official recognised how important the City of London financial centre is to Britain but with the other 26 member states in favour of the accord, cautioned "we do not know what the British government is ready to accept."

Obama 'not bluffing' against Iran

US Vice President Joe Biden says President Barack Obama isn't bluffing when he says he'll use military action if ultimately necessary to prevent Iran from acquiring a nuclear weapon. Biden told a powerful pro-Israel lobby's annual conference on Monday that protecting Israel is in the United States' interest. Biden says the US still prefers a diplomatic option on Iran but that the window for that is closing.Biden is cautioning against acting too hastily. He says every other option must be exhausted to ensure the world community will be supportive if there's a need for a military intervention.Biden says efforts to delegitimise Israel as a Jewish state are the most dangerous change he's seen as it related to Israel's security. He says Israel's legitimacy is non-negotiable for the US

NEWS,04.07.2012

Monti: Italy does not need a bailout

• German Chancellor Angela Merkel and Italian Premier Mario Monti arrive for a bilateral meeting at Villa Madama in Rome, Wednesday, July 4, 2012. Merkel is traveling to Rome for a regular meeting of the senior officials from the two countries along with several of her top ministers, including the economy and finance ministers

Italian Premier Mario Monti insisted Wednesday the country doesn't need a European bailout because its public finances will improve, but acknowledges work still needs to be done to cut government spending, boost economic growth and create jobs.Monti spoke at a press conference with German Chancellor Angela Merkel after meeting about Europe's debt crisis. It was their first encounter since European leaders in Brussels last week agreed to use the continent's bailout fund to funnel money directly to struggling banks and let countries following budget rules apply for financial aid without stringent conditions attached.Monti, who had pressed for such a deal, insisted Italy didn't need a bailout to help it pay its government debt because its budget deficit was low compared with many other European countries and forecast to improve.As of the end of 2011, official European statistics put Italy's deficit at 3.9 percent, just above the EU limit of 3 percent. Spain's, by contrast, was much higher at 8.5 percent.Italy's big problem is the economy is in recession and it has a high public debt load equivalent to 120 percent of GDP. Investors fearing Italy may have trouble repaying that debt have been asking for high interest rates to lend to the country.The measures announced by European leaders last week have helped relieve the fear that Italy may default. In particular, making it easier for countries to access European bailout funds has convinced investors that Italy has a credible financial backstop should it run into trouble financing itself.Agreeing to loosen the conditions for bailouts was not easy, however, and was the source of heated debated between Monti and Merkel in recent weeks and at the summit.Going into the summit, Monti had issued a thinly-veiled jab at Merkel over her opposition to allowing European governments to share debt obligations. Sharing debt is another way to spread individual countries' debt risk across Europe, but Merkel continued to oppose them at the summit.With debt-sharing ruled out, Monti pushed for the European leaders at the summit to agree to other measures that might increase confidence in Italy's finances. Easing conditions for countries to take bailouts was one of them.Monti has lamented that Italians have endured the effects of government spending cuts and tax hikes, but that Italy's government borrowing rates remained high in financial markets.By Wednesday, the two leaders were downright chummy, with Monti calling Merkel by her first name and emphasizing their "excellent" relations.Merkel, for her part, praised the speed with which Monti's government has pushed through structural reforms and insisted that it was in Germany's interest to keep Italy from failing."If our neighbors in Europe aren't well, eventually we Germans won't be in good shape," she said.Monti nevertheless acknowledged a rough road ahead: the government is embarking on a program of public spending cuts after having pushed divisive labor market reforms through parliament last week.And new unemployment figures have made clear that the recession and the impact of austerity measures are hitting home: Monti termed "unacceptable" that youth unemployment had now hit 36 percent."Reducing the weight of the public sector in the markets, including the financial markets, will give us greater possibilities for productivity and work for young people," he said when asked how much more austerity Italians can take before growth measures kick in.Both leaders stressed the need for Italian and German companies to collaborate more, particularly in manufacturing, to boost economic growth.

 

Big Banks Release 'Living Wills,' Say They Can Be Broken Up Without Bailouts

Nine of the largest global banks on Tuesday expressed confidence they can be salvaged or dismantled without taxpayer bailouts if they became insolvent, as U.S. regulators released public portions of these banks' "living wills".The documents, required by the 2010 Dodd-Frank financial reform law, aim to end too-big-to-fail bailouts by mapping out ways that, in theory, mortally-wounded banks could go out of business without wrecking the financial system.If regulators find that the resolution plans are not credible, they could force the banks to sell off business lines and restructure to become less complex.But some experts doubt how hard regulators will push the banks for changes or how useful hypothetical resolution plans will be in major financial crisis.The public portions released on Tuesday and are a few dozen pages per bank summarizing thousands of pages submitted confidentially to regulators.The banks argued in the public documents that their resolution plans will work, with no cost to taxpayers or great consequence to the financial system. They used technical generalities in their conclusions without specifically addressing the unpredictable and vicious nature of a credit crisis.Bank of America Corp, for example, said in its plan that "certain assets and liabilities would be transferred to a bridge bank that would, subject to certain assumptions, emerge from resolution as a viable going concern."JPMorgan Chase & Co concluded that its plan "would not require extraordinary government support, and would not result in losses being borne by the US government." And, Goldman Sachs Group Inc said it would find a broad range of potential buyers for its assets, including global financial institutions, private equity funds, insurance companies or sovereign wealth funds.The other banks which submitted wills were Barclays , Citigroup, Credit Suisse, Deutsche Bank, Morgan Stanley and UBS.The Federal Reserve and Federal Deposit Insurance Corp released the plans without commenting on them.Other large banks will have until July and December of next year to hand in their plans, according to the FDIC. Eventually about 125 banks are expected to submit plans.The first plans come almost four years after the financial crisis unleashed a panic in which no institution seemed safe from a bank run and markets withdrew credit in what appeared to be inexplicable fashion. The U.S. government, in quick order, arranged a fire sale of investment bank Bear Stearns to JPMorgan and then allowed Lehman Brothers to fail, touching off a global market meltdown. Blanket government guarantees for the financial system and a $700 billion taxpayer bailout followed to ease the panic.The disclosures on Tuesday give a glimpse of the kind of the kind of interconnections and complicated corporate structures that could still make governments fear letting big banks fail.JPMorgan named 25 "material" legal entities and 30 "core business lines," as required by Dodd-Frank and listed 18 clearing or financial settlement systems in which it is a member or participant, half of which are outside of the United States.The full-length plans are believed to include the most comprehensive maps of the insides of bank holding companies ever created. They are intended to give regulators confidence that they understand enough of the consequences of bank failures to allow more to happen.WOULD PLANS WORK?Bert Ely, a banking consultant in Alexandria, Virginia, said he is skeptical that the overall process could work because there would likely be a lot of turmoil in the markets when the plans were needed, raising doubt about who might buy any assets."The presumption of a one-off event is not realistically valid," he said. "You can have one company blow itself up, but more often than not there are systemic problems."Banks emphasized that they did not believe the resolution plans would ever have to be used. Morgan Stanley said that its "hypothetical failure" would have to be caused by "an idiosyncratic stress" that might occur while the economy and financial markets are under severe stress.Guggenheim Partners financial policy analyst Jaret Seiberg said he doubts regulators will use their reviews of the plans to force big changes on the institutions."Our initial review suggests there is little real risk that regulators could reject one of these plans," Seiberg said in a note. "That is important because regulators could break up a financial firm that fails to submit a credible plan."The regulators plan to give feedback to the banks on the initial plans by September.Congress called for the plans in Dodd-Frank to ease concerns that some banks are so big and interconnected that taxpayers will inevitably bail them out to avoid a threat to global markets.The FDIC gained new powers in Dodd-Frank to use the plans to dismantle failing financial giants if the bankruptcy process would not work.Citigroup found a special reason to argue that its resolution planning would work: its wrenching experience in the 2007-2009 financial crisis.To recover from the crisis, Citigroup separated businesses to be sold or gradually liquidated from those it is keeping as its "core" pursuits. The company said that process meant its "personnel would be well equipped to assist regulators" if the company had to be divided up into pieces to be sold or closed."Citi is today a fundamentally different institution than it was before the crisis: smaller, leaner, safer, sounder, and completely focused on our core mission," it said in the summary of its resolution plan.Bank of America, used its 42-page public document to emphasize steps it has taken in recent years to streamline the company, build capital and improve risk management."Bank of America has strengthened its risk culture as evidenced by improvements in consumer and commercial credit quality and decreases in market and counterparty risk," it said.Bank of America has lagged its rivals in recovering from the financial crisis, largely due to mortgage losses tied to its 2008 Countrywide Financial purchase.INTERNATIONAL FRAMEWORKSome of the foreign banks outlined resolution strategies for both home and U.S.-based regulators.Deutsche Bank imagined high levels of international cooperation, noting it could be dismantled "in an orderly manner with minimal systemic disruptions, and that any cross-border issues arising from financial, operational or other interconnections could be adequately addressed without significant difficulties," it said.Barclays said effective resolution plans are "an integral component of eradicating 'too big to fail' for the largest global financial institutions."It also noted how critical cooperation will be among international regulators.Barclays submission, dated July 2012, was already out of date. It listed Marcus Agius as chairman and Robert Diamond as CEO. Both have resigned in response to a Libor interest rate rigging scandal.Mitchell Glassman, a director at Deloitte Consulting who has worked with big banks on the living will issue, said he was impressed how much senior executives and directors were involved in preparing the plans. Still, he said, the question remains whether the plans on paper would work effectively in real-life."Will this help Main Street? Will we be better off with this approach than we were in the last crisis?" Glassman said.

 

NEWS,24.06.2012

Greece outlines plan to ease bailout burden

 

Greece wants tax cuts, extra help for the poor and unemployed, a freeze on public sector lay-offs and more time to cut its deficit under a plan likely to run into strong opposition at a European Union summit next week.The new coalition government's programme, reflected public pressure to ease the terms of a 130 billion euro bailout saving Greece from bankruptcy but only at the cost of harsh economic suffering.If implemented in full, the new programme would undo many austerity measures the country agreed in February to clinch the bailout package, its second since 2010.Euro zone partners have offered adjustments but no radical rewrite of the bailout conditions, with paymaster Germany particularly resistant to Greek calls for leniency.Greece's programme includes a call for the recapitalisation of the country's fifth-largest lender, ATEbank - a state-owned agricultural bank that EU sources said this month was among several lenders the European Commission wanted to be wound down. The finance ministry has denied that report.The programme, agreed by leaders of the three-party coalition after a June 17 election, faces its first test at a two-day EU summit starting next Thursday and sure to be dominated by the debt crisis that started in Greece and is now threatening to engulf Italy and Spain, the euro zone's third and fourth-largest economies, respectively.Inspectors from Greece's "troika" of lenders  the EU, European Central Bank and International Monetary Fund  were due in Athens on Monday Tuesday  to review the country's progress.Euro zone officials have said the bailout package should be revised only to reflect time lost on two elections since early May and a deeper than expected recession."The general target is for there to be no further reductions in wages or pensions and no more taxes," the Greek government programme said.It called for a cut in the 23-percent value-added tax (sales tax) rate for restaurants and farmers, a freeze on lay-offs in the bloated public sector and for unemployment benefit to be paid for two years rather than one.The government will also ask for two more years, until 2016, to cut its budget deficit to 2.1% of national economic output from 9.3% in 2011, an extension that would require extra foreign funding.The lowest income tax threshold should be raised, the document said, and the minimum wage  cut by 22 percent in February  revised in line with agreements between employers and workers.The programme also calls for the accelerated payment of 6 billion euros of government debt to suppliers.The coalition brings together the conservative New Democracy, Socialist PASOK and Democratic Left in an alliance that will face constant pressure from an opposition led by the radical leftist Syriza bloc.Led by charismatic ex-communist Alexis Tsipras, Syriza surged into second place in the election on a vow to tear up the terms of the bailout.Conservative Prime Minister Antonis Samaras, a Harvard-educated economist who switched from opposing the first bailout to reluctantly supporting the second, has promised to soften the terms without jeopardising Greece's place in the euro zone."Though the troika will be in Athens on Tuesday, the crunch test will be Thursday's EU summit," the centre-left Ethnos daily wrote in an editorial on Saturday.

Greece aims to stem layoffs - policy plan

 

Greece's new coalition government will seek to stem layoffs and extend by two years the application period of a tough recovery plan imposed in return for EU-IMF loans, an official document said on Saturday.The policy document released by the conservative-led coalition government said an upcoming effort to "revise" Greece's EU-IMF bailout deal in talks with creditors includes "the extension of the fiscal adjustment by at least two years" to 2016.The aim would be to meet fiscal goals "without further cuts to salaries, pensions and public investment," it said, announcing a freeze on further civil service layoffs and a boost to unemployment benefits."The aim is to avoid layoffs of permanent staff, but to economise a serious amount through non-salary operational costs and less bureaucracy," the document said.The new government said it wanted to review minimum wage cuts and measures taken earlier this year to facilitate private-sector layoffs, arguing that collective labour agreements would "return to the level defined by European social law" and what Europeans have agreed on.It said employers and unions should be allowed to set the private sector minimum wage, which was cut by 22 percent to 586 euros ($736) in February among additional austerity measures taken to clinch a new rescue deal.Greece remains under intense international pressure to implement the terms of the EU-IMF bailout package that has kept the indebted country's economy afloat for two years.European Commission, IMF and European Central Bank inspectors return to Athens on Monday to resume discussions suspended because of Greece's two-month political deadlock brought to an end by elections last Sunday.

NEWS,21.06.2012

Auditors: Spanish banks need up to $78BN

Spain's troubled banks could need as much as (EURO)62 billion ($78.76 billion) in new capital to protect themselves from economic shocks, according to independent auditors hired by the government to assess the country's struggling financial sector.The Spanish government will use the auditors' report as the basis for their application for a bailout loan from the 17 countries that use the euro.Announcing the reports' findings Thursday, Deputy Bank of Spain Governor Fernando Restoy noted that this worst-case scenario was far below the (EURO)100 billion ($127.04 billion) loan offered by eurozone finance ministers two weeks ago.Spain's banking sector is struggling under toxic loans and assets from the collapse of the country's property market in 2008. Concerns that Spain's economy is so weak that it could not afford the cost of propping up its banks has sent its borrowing costs soaring to levels not seen since it joined the European single currency in 1999. The worry is that Spain could soon find itself unable to finance its debts by itself and join Greece, Ireland and Portugal in seeking a rescue loan for not just the banks but the whole country.The stakes are huge: Spain is the eurozone's fourth-largest economy and would seriously hit the bloc's finances should it need bailing out. The country is struggling through a recession with a 24.4 percent jobless rate. On top of this, government's main customers at its debt auctions are Spanish banks  the sector now being bailed out. In a sign of how reluctant the markets are to invest in Spain, the country had to pay sharply higher interest rates to raise (EURO)2.2 billion ($2.8 billion) in a bond auction Thursday.The audits of Spain's lenders, carried out by consultancies Roland Berger and Oliver Wyman, covered 14 banking groups that account for 90 percent of the sector in Spain. The country will use the reports' findings to decide how big a bailout loan to ask for.Restoy and Deputy Economy Minister Fernando Jimenez Latorre declined to outline individual banks' needs.In the auditors' stress test for the worst-case economic scenario  a fall in gross domestic product of 6.5 percent over the period 2012-2014  most of the banks were deemed to be in a "comfortable" position, Restoy said."We're not talking about the imperative capital necessities of the banks. We're not talking about someone urgently needing such and such an amount of capital to deal with their obligations," said Restoy. "We're talking about the capital that would be needed if we were to see a situation of extreme tension which is very unlikely to come about.""We should keep in mind we are not talking about how much capital an entity needs to survive. We're talking about how much capital an entity will need to confront a situation of extreme stress," he added.Economy Minister Luis de Guindos, in Luxembourg with eurozone colleagues to discuss Spain's aid request, said a formal petition would be made within few days. Eurozone finance ministers offered Spain a bailout loan of up to (EURO)100 billion on June 9. The terms of the loan  for which Spain, rather than banks, will ultimately be responsible for  still have to be negotiated.A more thorough series of audits by four other companies is scheduled to be completed by the end of July.Oliver Wyman Inc, gave a worst-case range of (EURO)51 billion-(EURO)62 billion in new capital needs while Roland Berger Strategy Consultants GmbH gave a single figure of (EURO)51 billion.The release of the audits Thursday will probably not eliminate market nervousness about Spain because more thorough audits of the nation's banks are now being conducted and those results are not expected until September, said Mark Miller, an analyst with Capital Economics in London."At face value it looks as if there is a reasonable safety margin given that up to (EURO)100 billion is potentially available," he said. "Having said that, the extent of the economic situation in Spain could even deteriorate beyond what is being described as an adverse scenario."Some investors will likely still be nervous over whether the auditors' reports discovered most if not all of the toxic assets on the balance sheets of Spain's banks, Miller said. And their fears are compounded by concerns that Greece might still end up having to leave the single currency, further destabilizing the eurozone and especially Spain.The results of the audits are good news for Spain because both companies came up with similar numbers and the overall figures were lower than some estimates of the banking sector's recapitalization needs, said Gayle Allard, an economist with Madrid's IE Business School."I think it's a fantastic result because there was talk of needs of (EURO)70 billion to (EURO)80 billion and that the loan could have been for (EURO)100 billion," she said.Investors could still easily find something to scare them about the results, Allard said, "but I don't think there's any reason to do so."She added: "The audits have come in better than anyone has expected, there's still some uncertainty, but if both of them are coming to the conclusion of those numbers we've got to be in the ballpark."

Eurozone Crisis Causing 'Deeper And More Broad-Based' Economic Downturn

The downturn in the euro zone's private sector is becoming entrenched, business surveys showed on Thursday, as falling new orders and employment levels dent confidence.June is the fifth consecutive month activity across the 17-nation bloc has declined, dragging down heavyweights Germany and France and likely increasing calls for the European Central Bank to take action to support the economy.Markit's Eurozone Composite Purchasing Managers' Index, a combination of the services and manufacturing sectors and seen as a guide to growth, held steady at 46.0 this month, the lowest since June 2009 when the bloc was mired in a deep recession.That was better than a slide to 45.5 predicted by economists but the index has been below the 50 mark that divides growth from contraction in all but one of the last 10 months."It is a worryingly steep downturn we are seeing and it is spreading from the periphery, which has been falling at an increased rate, through to Germany. It is becoming deeper and more broad-based," said Chris Williamson, chief economist at Markit.The data pointed towards a second quarter contraction of around 0.6 percent, Markit said.Having held steady at the start of the year, the bloc's economy will contract 0.2 percent in the current quarter and narrowly escape recession by stagnating again in the next, according to economists.While the ECB is not seen cutting interest rates from their record low of 1.0 percent anytime soon, a growing and significant minority are saying the bank will be forced to act as the outlook worsens.The danger of Greece crashing out of the euro zone eased after pro-bailout parties won weekend elections, but risks are mounting that Spain, the euro zone's fourth-largest economy, will need a full-blown international rescue.The two-and-a-half year old crisis has hobbled the global economy, and world leaders meeting in Mexico piled pressure on the euro zone to move towards a fiscal and banking union to fix the crisis that now threatens to engulf Spain.With uncertainty reigning, optimism among survey participants dwindled to its lowest level since March 2009. The business expectations index for services firms slumped to 50.8 from May's 57.4, the biggest one month drop since the aftermath of the Lehman Brothers collapse in late 2008."Companies are getting increasingly rattled by the crisis that is engulfing the region, and there are clear knock-on effects for the real economy," Williamson said.COUNTING THE COSTThe PMI for the dominant service sector nudged up to 46.8 from May's 46.7, beating expectations for 46.4, but chalking up a fifth straight sub-50 reading.It was a similar picture in the manufacturing sector, which drove a large part of the bloc's recovery from the last recession, where activity declined for the 11th straight month.Its 44.8 reading was the lowest since June 2009 and missed the 44.9 forecast. The output index for the sector fell to 44.4 from 44.6, the lowest since May 2009.And things are unlikely to improve anytime soon as composite new business declined for the 11th month, with the index coming in at 45.2, just up from May's 44.6. The survey also showed that firms have been running down old orders for a year.To reduce costs, and giving an indication of their prospects, factories reduced headcount for the fifth month, with the employment sub-index falling to 46.5 from 47.1, its lowest since January 2010."It's a sign that companies are expecting things to get worse and not better," Williamson said.Earlier data from Germany, Europe's largest economy, showed its manufacturing sector contracted at its fastest pace since June 2009 while its service sector barely expanded, posting its lowest reading in seven months.In neighbouring France activity declined in both sectors, albeit it at a more moderate pace than last month.