January 24, 2022

As Bailout Deadline Approaches, Cyprus Scrambles to Find Funds

The proposals are meant to sharply reduce the amount of money that would be raised by a controversial tax on bank deposits, as originally planned in an international bailout package totaling €10 billion, or about $13 billion, that the Cypriot Parliament rejected the night before.

But even the revised plan contains a bank tax that, while much smaller than originally proposed, might still not be palatable to Parliament. Under the new plan, all Cypriot bank deposits of up to €100,000 would be hit by a one-time tax of 2 percent. Deposits above that threshold would be subject to a 5 percent levy.

The fallback was being cobbled together as Cyprus’s finance minister pressed his case in Moscow on Wednesday in hopes of securing additional aid from Russia, many of whose wealthiest citizens have big deposits in Cypriot banks.

At the same time, the Cypriot government decided to keep banks closed through the end of the week in an effort to prevent a run on Cyprus’s financial institutions. Banks, which would reopen Tuesday after a national holiday on Monday, have frozen all accounts in a financial crisis here that risks tipping the country into default and sowing turmoil across the euro zone.

Banks have been closed since Saturday, and the authorities have ordered banks to keep automated bank machines filled with cash as long as their doors remain shut. But that has been of little help to the thousands of international companies who do banking in Cyprus, which cannot transfer money in and out of those accounts to conduct business.

The extended bank holiday is designed to buy time for the Cypriot authorities to reach an agreement with the so-called troika of rescuers — the International Monetary Fund, the European Central Bank and the European Commission — whose representatives were in Nicosia on Wednesday but were not certain to sign off on Cyprus’s latest plan.

Three banks dominate the economy, and each is edging close to collapse. The government was also making tentative plans to merge at least two of them — Cyprus Popular Bank and Bank of Cyprus — and place the healthy assets into a one entity, while moving troubled assets into a so-called bad bank.

With all sides fearing that a crisis is imminent, even the Church of Cyprus, one of this Mediterranean island’s biggest investors, was offering to throw its considerable wealth behind the rescue effort.

European officials, and especially the European Central Bank, are watching the situation with alarm, said a person close to the discussions who was not authorized to speak publicly. Right now, Cypriot banks, crippled by their heavy exposure to Greece’s collapsed economy, are heavily dependent on low-interest financing from the E.C.B., which could be cut off if the banks do not remain solvent.

If Cyprus does not soon receive a financial lifeline, European officials fear that “the damage would be enormous, and the country itself would be at risk of collapse,” the person close to the discussions said. Officials are concerned about the risk that Cyprus might need to leave the euro currency union, creating “a painful situation that would spur chaos,” this person said.

On Wednesday morning, the finance minister of Cyprus, Michalis Sarris, met with his Russian counterpart, Anton G. Siluanov, at the Russian Finance Ministry. In the afternoon Mr. Sarris met for about 90 minutes with a deputy prime minister, Igor I. Shuvalov, at the main government offices in the Russian White House.

Cypriot banks racked up huge losses in the past several years by issuing loans to businesses in Greece that are now virtually worthless as that country grapples with the fourth year of a severe recession. The banks also took huge financial losses on large holdings of Greek government debt, which they bought when times were good in order to profit from attractive interest rates. The bailout crisis has outraged average Cypriots, many of whom oppose the government’s skimming their accounts to pay for the banks’ mistakes.

This article has been revised to reflect the following correction:

Correction: March 20, 2013

An earlier version of this article incorrectly described the days the banks would be closed. They were scheduled to reopen on Tuesday.

Article source: http://www.nytimes.com/2013/03/21/business/global/after-deal-is-rejected-cyprus-scrambles-to-find-funds.html?partner=rss&emc=rss

You’re the Boss Blog: What I Took Home in 2012

Staying Alive

The struggles of a business trying to survive.

A year ago I wrote a series of posts that dissected my company’s finances and culminated with a detailed accounting of how much money I made in 2011 — $246,626, generated from revenue of $2,155,193. The event that prompted the analysis, writing an application for college financial aid, just happened again this weekend. So I’m going to give you an update on how 2012 went and whether I was able to match what was by far my most rewarding year.

For those who have not read my posts regularly, let me start with a little context. Manufacturing custom furniture is not known as an lucrative profession, and it isn’t. To give you some idea of what I’m talking about, let’s take a look at how my company performed from 2003 to 2012 (I don’t have great records from before then). Sales for that period totaled $16,352,367. The profits? The total for that period is negative.

The vast majority of those losses happened in the years leading up to the crash in 2008 when The Partner and I were doing a very bad job of trying to grow the company. From 2003 to 2008, our losses totaled $1,086,648. The Partner ate much of that when he left the business. The remaining partners — my father, my brother, and me — are owed a large amount of money by the company: $526,754.

Since 2009, I have managed to stop the bleeding, and the company has made profits totaling $401,935. That still leaves an accumulated loss of $684,713. But I have managed, during some very rocky years, to pay my bills. First and foremost, all of the employees who have worked for me got paid, on time and in full. All of the taxes were paid, on time and in full. All of the vendors, and my landlord, were paid in full (not necessarily on time). While the company owes my partners and me a pretty good pile of cheddar, it owes nobody else.

Between 2003 and 2010, my annual salary averaged $78,484, and I loaned, on average, $29,363 of that back to the company (after I had paid taxes on it). That left me an average of $49,121 a year, and I have the lifestyle to match. Aside from a house in a decent neighborhood, my wife and I live modestly.

My 2011 windfall came right on time. My oldest son was supposed to start college in the fall of 2012, and my wife, in preparation for the empty-nest experience, had started a two-year graduate school program. She would need the Master’s in order to get a job teaching. So, 2012 promised some large tuition bills — hence my relief at the outstanding financial results of 2011.

I had no money saved for college. There had been a small amount set aside, but I took that in 2009 and spent it on a new Web site. The big bump in 2011 income allowed me to set aside enough cash to cover both of the tuition bills, which was a good thing, because, as it turned out, that income also disqualified us from receiving any financial aid. I would need more than $80,000 for education.

A boss is supposed to be a competent financial manager, considering the ebbs and flows of money within the company and making financial decisions for the stakeholders with perfect objectivity. My own experience has been that the needs of my family and my own fears for the future have a powerful influence on decisions I make about the company’s money. As a small-business owner, there is little boundary between my company’s financial health and my own. I have, on multiple occasions, signed personal guarantees for company expenditures. In order to get company credit cards, in order to establish a line of credit (since closed), and in order to lease my space, I have been required to pledge my assets. If the situation gets out of control, everything I own is at risk.

Last year started well. I decided that rather than wait to see how much money I would have at the end of 2012, I would pay myself a reasonable salary, which would ensure that I would have enough money for the following year’s tuition. But sales started to slump after two months, and I ended up stopping my salary in April. I did continue to pay interest on the loans I had made to the company, but my pay shrank from $15,000 a month to $3,225 a month. This took me from a position of adding to my savings every month to draining them. In May, the wheel of fortune turned again. Both of my cars (a 1999 Odyssey and a 1993 Camry wagon) died in one weekend: blown head gasket and bad transmission. Meanwhile, sales continued to slump, to the point where I wondered whether I would have to lay off workers.

By the end of June, sales were dropping by 50 percent every month, and our order backlog was shrinking fast. I had run through two thirds of the working capital I had on hand at the beginning of the year, and we were down to a week’s worth of cash. I hadn’t seen a paycheck in two months. As it turned out, the problem was a mistake I made in my AdWords campaign. (I wrote a series about how I figured this out last fall). Part of the solution, aside from rejiggering the campaign, was to hire an expensive sales consultant to maximize the effectiveness of our salespeople.

My personal situation had evolved as well. My son decided to take a gap year instead of starting school. He is a talented programmer, and he was able to find a full-time job in San Francisco and support himself. So now I had another year to worry about his tuition. (He’ll be starting his studies at M.I.T. in September.) My wife suffered an injury to her rotator cuff, which was very slow to heal. So she ended up postponing her second year of graduate school. That freed up enough money to replace the two cars.

Over the summer, the company’s sales came back from the dead, revived by both the training that the salesmen had received and the repaired AdWords campaign. Over the course of the fall and into the last quarter, our working capital crept back to where it had been at the beginning of the year. But I did not restore my salary. I wanted to make sure that we could show at least a small profit and to start 2013 with a decent amount of working capital.

In the end, the company was able to show a profit of $27,530 on revenue of $2,077,770. My share of that, as owner of 40 percent of the company stock, is $11,812. My salary for the year was $66,090. And the company paid interest on the debt it owes to me totaling $35,484. That all adds up to $113,386. Not terrible, I suppose, and certainly nothing to complain about. Many, many people get by with a lot less. But a rather large drop from the previous year. I was just glad that it wasn’t worse.

So, what is the moral of this story? I think it’s that, especially for the owner of a small business, nothing is certain. What do you think?

Paul Downs founded Paul Downs Cabinetmakers in 1986. It is based outside Philadelphia.

Article source: http://boss.blogs.nytimes.com/2013/02/20/what-i-took-home-in-2012/?partner=rss&emc=rss

DealBook: China Hints at Far Wider Welcome to Overseas Investors

HONG KONG — In what would be a drastic liberalization of China’s huge but still cloistered capital markets, the country’s top securities regulator said Monday that foreign investment could be allowed to rise as much as tenfold.

Citing the still-nascent levels of overseas participation in domestic stock markets — despite recent actions more than doubling the amount of money that foreign funds can invest there — Guo Shuqing, the regulator, hinted that 2013 could bring sweeping new measures to open financial markets in China, which has the world’s second-biggest economy, after that of the United States.

‘‘For our capital markets to mature, they must open more in the future,’’ Mr. Guo, the chairman of the China Securities Regulatory Commission, said Monday at a financial forum in Hong Kong. ‘‘Our goal is to make it easier for nonresidents to issue and trade securities in the domestic markets.’’

Shares in Shanghai leaped 3.1 percent Monday after Mr. Guo’s comments, as investors speculated that a wave of foreign cash could be set to hit the mainland stock markets. That added to a monthlong rally in which the benchmark Shanghai share index has rebounded 18 percent from early December, when it hit its lowest levels in more than three years.

With a total capitalization of about 20 trillion renminbi, or $3.2 trillion, China’s domestic stock market ranks as one of the biggest in the world, but it is also one of the most restricted among major economies.

Mr. Guo has been pushing hard to remove some of these investment barriers. In his comments Monday, Mr. Guo said that foreign investors hold only about 1.5 percent of the domestic share market by value. ‘‘I think at least we can increase that 10 times,’’ he said.

Some observers expressed deep skepticism at the remarks. ‘‘This is great headline stuff, but I don’t think it is particularly constructive, because you are not going to simply take the lid off and increase everything by 10 times,’’ said Fraser Howie, the co-author of ‘‘Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise.’’

‘‘I would like to see proper, sensible moves to break down some of the barriers to entry and the actual movement of money,’’ Mr. Howie said.

A former chief foreign exchange regulator and former chairman of China Construction Bank who took the helm at the securities regulator in October 2011, Mr. Guo spearheaded a move last April that more than doubled the amount of Chinese shares that foreign investors could own, increasing the quota for so-called qualified foreign institutional investors to $80 billion from $30 billion.

However, by the end of December, only $37.4 billion of that quota had been actually allocated to investors, spread among 169 banks, brokerage firms and other financial institutions, according to a statement released Friday by the State Administration of Foreign Exchange.

Mr. Guo did not give specific details Monday of how China might raise foreign investment by such a large factor. But he hinted at one potential new program that is under discussion: letting in ordinary retail investors, most likely those from Hong Kong.

At present, China’s markets are open only to funds managed by brokerage firms, banks and other institutions. But Mr. Guo said he had been in talks during the weekend with several unidentified financial industry groups in Hong Kong about introducing a quota for so-called qualified foreign individual investors.

Details were sparse. But analysts said the general tone of the remarks was consistent with similar indications made recently by the central bank that support was growing for financial changes.

‘‘Clearly this demonstrates the resolve to accelerate financial sector reform, and part of the puzzle is to further liberalize the capital account,’’ said Steven Sun, the head of China equity strategy at HSBC in Hong Kong.

Article source: http://dealbook.nytimes.com/2013/01/14/china-hints-at-far-wider-welcome-to-overseas-investors/?partner=rss&emc=rss

Bucks Blog: BrightScope Lists Its Top 401(k) Plans

The financial research firm BrightScope on Tuesday released its annual list of the 30 top 401(k) plans and found that target-date funds are making inroads in highly rated plans.

The average plan on this year’s list had 4.9 percent of its assets in target-date funds, up from 3.6 percent in 2010. (This year’s list reflects plan data as of the end of 2011.) There has been a large flow of money into target-date funds because they are often the default enrollment option for employees, said Dan Weeks, BrightScope’s co-founder. The funds automatically reallocate investments, reducing exposure to stocks as retirement nears.

Index funds, meanwhile, represent 29.5 percent of assets in the top 30 plans, up from 25.4 percent in 2010.

Brokerage windows — a self-directed option, in which employees can choose their own mutual fund investments — are also becoming somewhat more popular: they represent 3.8 percent of 401(k) assets in this year’s list, up from 2.8 percent in 2010.

The list represents the top 30 of more than 400 retirement plans with $1 billion in assets, as rated by BrightScope. (Some companies offer more than one plan.) BrightScope bases its ratings on about 200 different factors, and boils down the information to a single rating number.

Criteria include the amount of money flowing into the plan from the employer, the participation rate of employees, the total cost of the plan and the investment choices it offers. In a nutshell, the sooner a plan allows employees to retire, the more highly it ranks. The company uses information gleaned from public filings with the Department of Labor and the Securities and Exchange Commission, combined with information from the plans themselves. [Read more…]

Article source: http://bucks.blogs.nytimes.com/2012/12/12/brightscope-lists-its-top-401k-plans/?partner=rss&emc=rss

You’re the Boss Blog: Something in My Last Post Didn’t Add Up

Staying Alive

The struggles of a business trying to survive.

Well, commenters to my last post quickly revealed why I am not a wealthy and successful businessman.

My calculations of the cash cost of training “Bill,” our theoretical new engineer, were faulty. In my desire to make a point, I included the wage cost of both workers involved as additional expense of training, when I should have been sufficiently appalled by the value of the lost production. As Arend from Europe pointed out, the real cost of training, during the period when the engineer is fully occupied in training the newbie, is $170 per hour, or $6,800. The cost of the ramp-up period, 13 weeks, is the cost of the lost shop output ($80) less the output of an engineer at 50 percent efficiency ($45), which equals a cost of $35 per hour, for an additional expense of $18,200. The total cost is $25,000, not $43,720. But I stand by my original thesis: Training is expensive.

Many commenters objected to the concept that training a worker should be considered a cost, emphasizing that the additional engineering capacity would provide for more output, and presumably more profit, at some point in the future. I have no beef with this thinking, but that’s not what I was writing about. I stopped my analysis at the consideration of the amount of money involved in training, because that in itself is a huge problem for a struggling business. You can’t reap the rewards if you can’t afford the investment. Twenty-five thousand dollars is a quarter of my average working capital this year. I would think long and hard about whether spending it makes me vulnerable to some unexpected event.

If I do make this change in my own shop floor, my bank balance isn’t the only place where I will take a hit. I will also need to add in the expense of finding and training a replacement for Bill. Putting a new guy out on the floor means that the shop foreman is subjected to the same kind of distraction that my engineer was. No one starts a new job and operates at 100 percent efficiency on Day 1, at least not in a highly skilled shop like ours. So there’s a ripple effect from new hires and lateral promotions that inevitably affects our shipping schedule, and that means further cash flow disruption, as well as the potential for issues with unhappy clients.

If my business had extra cash on hand, and the engineer had a bunch of extra time available, then I would feel much more comfortable about starting training. Unfortunately, we are still recovering from a slow spring, and I need the second guy only because the first one is tapped out. This is what stinks about being small. You just don’t have extra capacity. The leap from one engineer to two is hard, which is why I found this comment from HT to be so unrealistic. Here’s the meat of HT’s thesis:

1) You are operating below 100 percent capacity, so Bill has some downtime when he’s not doing billable bench labor, and he can fill that time with training.
2) There are other workers who also have downtime during which they can pick up some of Bill’s work, so even some of Bill’s “lost billable hours” are compensated for.
3) Bill will be willing to put in extra hours during this training, so even if you are paying him hourly, these extra hours are not “lost billable hours” since he wouldn’t have worked those hours before the training.
4) A full-time employee with benefits like Bill may be salaried, in which case you could ask him to put in a significant amount of extra hours during the training period, costing you $0 per hour and further mitigating Bill’s reduced billable hour output.

HT, I appreciate your contribution, but none of that applies to us. There is no such thing as downtime. There is time spent doing things we are paid for, and there is all of the other time. As long as we have a backlog of work, and we always do, time spent on any other activity is a cost. It’s not just the value of the work we didn’t do, but there are also the fixed costs: rent, electricity, heat, insurance, etc. They never stop. Ideally, neither would my workers. If they are willing to work extra hours, I want that time devoted to paid work.

In my last post, I tossed in my observations on using specialized drafting software — and its implications for hiring — as a kind of afterthought. I was surprised at the lively discussion that resulted. Many people wondered why I don’t hire workers fresh out of community college to fill the engineering position. They correctly observed that this shifts the costs away from me and onto an institution that can deliver training more efficiently.

I should tell you that I made my only engineering hire in 1997, so it’s been 15 years since I last encountered this problem. My engineer started on the shop floor, and worked there for two years before I moved him into the office. The world has changed since he started. Graduates these days do have computer skills, but they tend to be entirely divorced from the experience of making physical objects. Shop class and apprenticeships are gone. I discussed this with my engineer and my shop foreman today, and we all agreed that the lack of shop-floor experience would be a crippling impediment for the next engineer.

College courses do provide a good introduction to how to use a computer program, but the real issue is knowing what to draw. Manufacturing any physical object is complicated. Our primary material, wood, is more difficult than most. And our procedures on the shop floor are varied and subtle. It took years of close collaboration between my engineer and my shop floor guys to develop programming that works for us. A designer who doesn’t know the shop floor in his bones will cause more trouble than he’s worth. (I don’t mean to be sexist, but the vast majority of cabinetmakers are guys.) I’ll stick with my plan to move an experienced bench hand into the office as the second engineer.

I should also add that I made the decision to use PowerCADD in 1996, when I was new to computers. Autocad didn’t have quite the dominant position then that it has today, so it wasn’t obvious that my choice would cause problems 16 years later. This was also before I had access to the Internet, so I wasn’t able to solicit a wide range of opinions about which program to choose.  An architect I knew was using PowerCADD, he loved it, and that was good enough for me. And, to be honest, it really hasn’t been an issue in day-to-day operations. We don’t need to exchange drawings with architects very often. We did do more work with architects in 2007 and 2008, so we bought a copy of Autocad and my engineer learned to do basic work with it. Every now and then we fire it up to read or translate a drawing. That’s been fine.

Every program can read pdf formats these days, so that’s how we share drawings when we need to. Also, Autocad and PowerCADD are conceptually quite different. PowerCADD is much better at making the proposals that we show clients. In my mind this is a classic “ain’t broke, don’t fix it” situation. There’s never been a day when switching to Autocad was the best use of our time, and I don’t see that day arriving anytime soon. We’ll keep things as they are as long as my computers will run PowerCADD.

Thanks to all of the commenters. I always appreciate the effort people put into them, even when my own shortcomings are exposed. I have never claimed to be a genius, and I offer my own failures for their educational value. If they help another small-business owner avoid a fatal error, we’ve done some good.

Paul Downs founded Paul Downs Cabinetmakers in 1986. It is based outside Philadelphia.

Article source: http://boss.blogs.nytimes.com/2012/12/10/something-in-my-last-post-didnt-add-up/?partner=rss&emc=rss

Natural Gas Discovery Promises a Boon for Eni and Mozambique

Four of the five largest oil and gas discoveries in the world this year have been made off Mozambique, including three earlier finds by Eni, according to the consultants Wood Mackenzie in Edinburgh. These discoveries have the potential to put Mozambique, which previously had little oil and gas production, in the gas-exporting big leagues with countries like Qatar and Australia.

Although Eni is ranked about eighth among Western oil companies in terms of output, with about 1.7 million barrels a day — about half the size of BP or Royal Dutch Shell — the company is a big natural gas player in Europe. And Eni is emerging as a leader in Mozambique exploration.

The newest finds, from the sixth and seventh wells that Eni has drilled there, add an additional six trillion cubic feet of gas to what the Italian company has already found. That is a large amount of gas but relatively incremental. It raises the total to 68 trillion cubic feet that Eni now says it has found in its Mozambique exploration concession, called Area 4, where Eni has a 70 percent shareholding.

Three other shareholders — Galp Energia of Portugal, Kogas of South Korea and ENH, Mozambique’s national oil company — each hold 10 percent.

The total amount discovered is equivalent to about 12 billion barrels of oil. A high proportion of the gas is likely to be recoverable, Eni said.

According to Eni’s estimates, its share of the Mozambique discoveries so far could be worth around $15 billion.

The Eni finds coincide with an effort by the company’s chief executive, Paolo Scaroni, to focus more on exploration and production, and less on transmission of natural gas in Italy. When a company makes a business of exploration and is successful, he said, “you make a huge amount of money.”

Eni first found gas in Mozambique last year, not long after a discovery by Anadarko Petroleum of the United States, which is now Eni’s main competitor in the region.

The two companies are negotiating with the government on a development plan.

The most profitable market for the Mozambique gas is likely to be exports to Asia as supercooled liquefied natural gas, or L.N.G., on special ships. The Web site of the Instituto Nacional de Petróleo, the country’s energy regulator, has a presentation that indicates that as many as 10 L.N.G. conversion plants could be built, which would make Mozambique a significant player in the world gas market.

Mr. Scaroni said there could also be a role for an offshore floating conversion plant, a technology that Royal Dutch Shell is now developing for use off Western Australia. Shell recently tried to buy Cove Energy, which had a small position in the Mozambique discoveries, but was outbid by PTT Exploration and Production of Thailand.

Eni is not a big player in liquefied natural gas and may need help with the huge capital costs for developing the gas, which Mr. Scaroni put in the “tens of billions” of dollars.

Because Anadarko is not a liquefied natural gas specialist either, it is widely thought in the industry that both companies will bring in partners.

Mr. Scaroni said he had been talking to potential partners “but we are fairly reluctant to strike a deal with anybody until we finish our exploration.”

A recent report by Bernstein Research says that Mozambique would be “Eni’s most significant project, although we do not expect production until 2019 at the earliest.”

The gas discoveries off Mozambique are contained in sandstone deposits in what were ancient river canyons, similar to those off West Africa and elsewhere.

What makes the Mozambique discoveries particularly rich is that the sandstone layers containing the gas are thick — as much as 300 meters, or nearly 1,000 feet — indicating sizable reserves.

“Mozambique is a very positive exploration story,” Mansur Mohammed, a Wood Mackenzie analyst, said. “We are talking about an unprecedented high exploration success rate that transformed the outlook for the region.”

This article has been revised to reflect the following correction:

Correction: December 5, 2012

An earlier version of this article misspelled the first name of ENI’s chief executive. He is Paolo Scaroni, not Paulo.

Article source: http://www.nytimes.com/2012/12/06/business/energy-environment/eni-announces-major-gas-find-off-mozambique.html?partner=rss&emc=rss

Bucks Blog: A New Bank Lets You Choose Charity for Rewards

A new online bank is hoping that better-than-average savings rates, and the lure of charitable giving, will attract new deposits.

The bank, ableBanking, is offering those who open a new account a donation of $25 to the charity of the customer’s choice — any 501c(3) organization will do. Then, each year on the anniversary of the account’s opening, the bank will donate the equivalent of 0.25 percent annual percentage yield (25 basis points) of the account’s average balance to that charity.

The bank’s money market savings account, for instance, is currently paying a 0.96 percent annual percentage yield. So if an account has an average balance of $10,000, at the end of the first year the customer will have earned $96 in interest, and the bank will donate another $25 to the charity, for a total of $50 donated. (A minimum deposit of $1,000 is necessary to open an eligible account).

So why not just find an account paying an extra 25 basis points over ableBanking’s offerings, and then make a charitable donation yourself?

AbleBanking’s founders say that is not easy to do, because its savings rates are competitive with those offered by other, similar banks, based on rates listed at Bankrate.com. And the idea here is to encourage group efforts to maximize the amount of money donated to a cause. For instance, supporters of a specific charity — say, a local food bank, or even a Little League baseball team — could all agree to open accounts and direct the donations to that recipient. If 10 people opened accounts and selected the food bank, that would be at least $250 going to the charity.

“The attractiveness is the power of collective giving,” said Richard Wayne, the bank’s co-founder and chief executive.

The bank’s interest rates are not “teaser” rates (although they are subject to change, as are any bank’s rates), nor is the charitable donation a temporary offer, he said. “The very heart of the product is the charitable component,” he said.

The money for donation to charity comes in lieu of expensive marketing, the founders said. AbleBanking is focusing its efforts mostly online, forgoing expensive options like billboards and television ads.

When customers create accounts, they can select their charities in several ways. They can choose one of ableBanking’s partner charities, listed on the Web site; these are based in Boston, since the site began as a pilot program there. They can also search for charities in their communities by ZIP code or search a list of national charities.

AbleBanking is a division of Northeast Bank, a community bank based in Lewiston, Me., with 10 branches. The bank’s parent, Northeast Bancorp, is publicly traded (Nasdaq: NBN). While ableBanking has no brick-and-mortar branches, it does have customer service available seven days a week through Northeast Bank’s call center in Maine.

The bank isn’t aiming to replace your traditional checking account; it’s meant just for savings, says Heather Campion, the bank’s chief administrative officer. But as with other direct banks, regular deposits can be set up from a checking account into ableBanking.

What do you think of ableBanking’s concept? Would you open an account there to help a charity?

Article source: http://bucks.blogs.nytimes.com/2012/10/29/a-new-bank-lets-you-choose-charity-for-rewards/?partner=rss&emc=rss

Advertisers Refine Mobile Pitches for Phones and Tablets

And just like that, Google made money. That icon was a so-called click-to-call ad, and the hotel paid Google for it when you called.

As more of us have access to the Internet and apps through our cellphones and tablets, advertisers are looking for new ways to reach us there.

Some mobile ads remain just miniature versions of ads on Web sites, an echo of the early days of the Internet, when advertisers essentially slapped print ads online. But increasingly, advertisers are tailoring ads to phones by taking advantage of elements like their ability to track location, make a call, show maps with directions and add calendar alerts.

The stakes are significant for an industry that is still finding its way in the mobile world. Advertisers will spend a relatively small amount of money on ads on phones and tablets this year — $2.6 billion, according to eMarketer, less than 2 percent of the amount they will spend over all. Yet that is more than triple what they spent in 2010.

“An ever-growing percentage of our ad buy is mobile because that’s where the consumer is,” said Chris McCann, president of 1-800-Flowers.com, which has run mobile ads urging people to call or walk into a nearby store. “It’s the future for us.”

Coming up with ads that exploit the smaller mobile screen requires inventiveness from many parties — advertisers; digital publishers like Google, Apple and Facebook that sell ad space; and mobile ad networks like Millennial Media.

“What we’re trying to do is think about the on-the-go user,” said Jason Spero, leader of global mobile sales and strategy at Google, which dominates advertising online and is far and away the leader in mobile advertising. “What does that user want when she’s sitting in a cafe or walking down the street?”

A big challenge for the tech companies is that advertisers pay less for mobile ads than for those online, largely because consumers are less likely to make a purchase on their phones. Though people click on mobile ads more than on desktop ads, advertisers wonder whether that is because of what they call the “fat finger effect” — accidental clicks on tiny touch screens.

And while users’ actions can be tracked across Web sites online, it is hard to know whether someone sees a cellphone ad for an offline business and then walks in — so it is difficult for advertisers to judge how effectively they are spending their money.

As Google sells more mobile ads, the average amount it earns from each ad has dived. Facebook’s value on Wall Street was halved on fears that it was not making enough money on its mobile users. Apple’s mobile ad network, iAd, has been slow to gain traction.

Despite the problems, though, there is evidence that mobile advertising is becoming a meaningful business, and in some cases a bigger business than online advertising.

Facebook executives said last week that in the third quarter, the company earned $150 million from mobile ads, 14 percent of its total revenue. Pandora reported that in the second quarter that ended in July 58 percent of its revenue, or $59 million, came from mobile ads. Twitter executives have said that on certain days, the social network earns a majority of its daily revenue from mobile ads.

Mobile ad networks, which show ads across mobile apps and Web sites, have created new and thriving businesses. The biggest are Millennial Media, Google’s AdMob and Apple’s iAd.

Google earns 56 percent of all mobile ad dollars and 96 percent of mobile search ad dollars, according to eMarketer. The company said it is on track to earn $8 billion in the coming year from mobile sales, which includes ads as well as apps, music and movies it sells in its Google Play store. But the vast majority of that money comes from ads, it said.

“Whoever does mobile best, they’re going to be the next Google, so people are asking, ‘Is Google going to be the next Google?’ ” said Chris Winfield, co-founder of BlueGlass Interactive, a digital advertising agency. “It still is Google’s to lose.”

Article source: http://www.nytimes.com/2012/10/29/technology/advertisers-refine-mobile-pitches-for-phones-and-tablets.html?partner=rss&emc=rss

Chinese Carmakers Agree to Buy Saab, Pulling It Back From the Brink

Zhejiang Youngman Lotus Automobile and Pang Da Automobile Trade have agreed to pay €100 million, or $140 million, for Saab and its British unit, said Swedish Automobile, the parent company.

The deal remains dependent on the Chinese companies’ winning the approval of the authorities in Beijing, a requirement that torpedoed the efforts of a previous would-be rescuer, Hawtai Motor Group. But there have been hints that officials will look favorably on this effort.

The companies hope the commitment of new funds will provide Saab Automobile with the long-term funding it needs to update its product lineup and become competitive again.

Martin Skold, a scholar at the Swedish School of Economics in Stockholm who follows the auto industry, said it was too early to say Saab was saved.

“Saab is in great need of an enormous amount of money,” he said, estimating that it would take at least $800 million and possibly as much as $1.5 billion to turn it around. “We’ll have to wait to see how much the Chinese are willing to invest in it,” he added.

Saab was acquired from General Motors by Victor R. Muller, the Dutch entrepreneur behind Spyker cars and Swedish Automobile. But Saab, which has a long-established base of dedicated customers, has so far not been able to turn around its fortunes. Suppliers began cutting off credit in March, and Saab’s main factory in Trollhattan, Sweden, has not produced a car since the spring.

Youngman and Pang Da had previously agreed to invest a combined €245 million for a 54 percent stake, but negotiations dragged on, leaving Saab in an increasingly precarious state.

With employees unpaid for months, Saab’s unions began legal proceedings in September that could have put the company into bankruptcy. Mr. Muller sought and received court protection from creditors to gain time to complete the Chinese investments.

By the past week, it appeared that the final countdown had begun for Saab. The administrator in charge of the voluntary reorganization, Guy Lofalk, recommended to the court overseeing the case that the reorganization be halted.

Saab said Friday that Mr. Lofalk had “withdrawn his application to exit reorganization.” The agreement with the two Chinese companies is valid until Nov. 15, Saab said, provided the reorganization continues.

A woman answering the phone at the general manager’s office of Pang Da confirmed Friday that an agreement had been reached with Saab, but she had no comment on the details. A woman answering the phone at the general manager’s office of Youngman said that she had no information and that all senior people in the office were traveling and could not be reached for comment.

The Chinese authorities have said little publicly about their thoughts regarding the Saab negotiations. Reuters cited the Pang Da chairman, Pang Qinghua, as saying this month that he had received positive feedback from the authorities regarding the investment.

Another deal, General Motors’ planned 2010 sale of its Hummer unit to Sichuan Tengzhong Heavy Industrial Machines, failed after the Chinese Commerce Ministry, which must approve large overseas investments, refused to bless the deal. Hummer eventually shut down.

Keith Bradsher and Hilda Wang contributed reporting from Hong Kong.

Article source: http://feeds.nytimes.com/click.phdo?i=9459e1aec572df590ebc5b80c1bfaad5

Bucks Blog: New Site Seeks to Analyze Investors’ Appetite for Risk

Would you rather be guaranteed that you’ll lose $489 on a $1,000 investment? Or, would you prefer a 50-50 chance of either losing all of it, or gaining $1,500?

Those are the kinds of questions posed to users of Riskalyze, a new financial site aimed at helping you select an investment portfolio that is in tune with your tolerance for risk. The site entered its live beta mode last week.

For all the advances the Internet has brought to the world of finance, said Aaron Klein, the site’s chief executive, people still tend to make investment choices the same old way. “We gather information, run it through a subjective filter in our head or gut and say, ‘Is this good for me?’”

Riskalyze, he says, uses technology to help pinpoint an investor’s comfort with risk and to calculate an “optimal mix” of investments — a portfolio that will allow you to sleep at night.

The site doesn’t actually allow you to invest money (although it aims to partner with investment sites in the future or perhaps make fees from referring you to brokerage firms if you need one, down the road). Rather, it suggests a list of investments — or invites you to suggest one — and takes you through three steps to decide how much of your money to put into each category. It requires you to register (more about that later), but it doesn’t charge a fee.

First, the site asks how much money you have to invest and then suggests a list of investments — say, the Dow 30 stocks. Then, it takes your Risk Fingerprint. The tool, Mr. Klein said, differentiates Riskalyze from other risk-analysis tools on the Web, which tend to use simple slider tools.

The Risk Fingerprint tool poses a dozen questions that make you choose repeatedly between Option A — losing or earning a fixed amount of money — and Option B, which involves an equal chance of losing money (the amounts vary) or earning more money (ditto) on your investment.

Your answer to each question determines the details of the subsequent question, so there is a myriad of combinations that can arise. “We’re asking the user 12 times to make a decision between certainty and risk,” Mr. Klein said.

Based on your responses, the tool puts you in various categories — like, Mountain Climber, which means you have “lofty goals” but are willing to take “reasonable risks” to reach them — and recommends an investment allocation.

I tried the tool this week. (It sort of reminded me of a game my husband likes to play with our children. He starts off by saying, “Would you rather,” and then adds two equally preposterous options like “run down Main Street naked or eat live worms?” When they say, “neither!” he adds, “But what if I gave you a thousand dollars?”)

The options on Riskalyze aren’t quite as entertaining, but they do force you to make a calculation about how much stress you’ll accept to earn the chance of a payoff. I hypothesized that I had $1,000 to invest in Dow 30 stocks, including 3M Company, Alcoa, American Express, etc. The tool assumes you’re investing over a six-month period. You can re-assess your risk tolerance periodically, as circumstances change.

Question 1 gave me two options: A, a guaranteed loss of $42; or B, an equal chance of losing $1,000, or gaining $1,500. I chose B. (No risk, no reward, right?)

Eleven questions later, the tool categorized me as an Astronaut (“You’ve got the risk tolerance to shoot for the stars.”).

It then proposed putting 100 percent of my money into stocks ($100 allocated to each of 10 different companies) and zero in bonds. Suddenly, solid ground seemed more attractive to me than outer space. When I looked at it that way — everything in stocks — I wasn’t sure I really was such a risk-taker.

The tool also applies your market outlook to your portfolio. You can apply the tool’s default setting — a historical six-month average, in which stocks rise 5.4 percent and bonds rise 2.5 percent, based on the SP 500 Index for stocks and the Barclays Capital U.S. Aggregate Bond Index. That might work best for long-term investors. Or you can choose a much more pessimistic outlook, in which stocks fall 9.64 percent and bonds fall 3.02 percent, or enter your own predictions. The tool then tells you the probability of hitting a specific maximum gain or maximum loss, so you decide if you want to take that risk. (The stocks the tool pulls for your suggested portfolio change, depending in part on your economic outlook).

One caveat to using Riskalyze comes before you even get to the cool stuff, during the registration process. The site requires you to have either a Facebook or a Twitter account and to register using those sites. That gave me pause, given the ongoing debate over Facebook’s privacy settings.

Mr. Klein said that after much debate, Riskalyze decided it was easier to have users log on through an existing social media site, saving them from having to remember yet another password. It also gives users the option of quickly soliciting opinions about your investment allocations from others online. To do that, you have to agree to let Riskalyze “post to Facebook as me.” But nothing gets posted without your say so, Mr. Klein said.

“We also discovered during our beta program that most users really like to tap the wisdom of their friends to improve their list of investment choices or adjust their portfolio to a more specific economic prediction,” he said in an e-mail. “By authenticating with Facebook and Twitter, getting that feedback is just one click away for the user.”

To reassure users, he said, “We specifically promise to never use those social sharing permissions until you decide you want to.”

Further, any dollar amounts entered onto Riskalyze, the site’s privacy policy says, are private. They aren’t shared with any third party.

What do you think? Is linking to Facebook or Twitter worth it to gain access to helpful risk analysis?

Article source: http://feeds.nytimes.com/click.phdo?i=08fa842f6d82c166fc6b8fc3e9e5b939