February 29, 2024

British Study Raises Warning on Scottish Banks

LONDON — An independent Scotland could find its banks too big to rescue in the event of another crisis, according to a British government report that compares the Scottish financial sector to those of debt-laden Iceland and Cyprus.

The document, to be published Monday, is the latest of three studies by the British government meant to sway opinion in Scotland ahead of next year’s planned referendum there on independence.

Last month the British government suggested that an independent Scotland would not be able to keep the pound sterling and would have to either adopt its own currency or embrace the euro.

The new study, a summary of which was made available ahead of publication, highlights the size of Scotland’s banking sector — much of which had to be rescued by British taxpayers after the financial crash — relative to the rest of the Scottish economy. The sector stands at 1,254 percent of Scotland’s gross domestic product, compared with banking assets in Britain worth 492 percent of G.D.P., the Treasury document says.

“By way of comparison, before the crisis that hit Cyprus in March 2013, its banks had amassed assets equivalent to around 700 percent of its G.D.P. — a major contributor to the cause and impact of the financial crisis in Cyprus and the ability of the Cypriot authorities to prevent the systemic effects when it hit,” the study says.

The document adds that by the end of 2007 Icelandic banks had amassed consolidated assets equivalent to 880 percent of Icelandic G.D.P.

It cites the verdict of the Organization for Economic Cooperation and Development, which said that “the banks grew to be too big for the Iceland government to rescue.

“Banking in these circumstances became very dangerous when the global financial crisis deepened,” it said.

The study says that “a serious banking crisis in an independent Scotland could pose a significant risk to Scottish taxpayers,” with the potential economic fallout amounting to about 65,000 pounds ($98,600) per capita.

The paper concludes that Scottish banks could either have to accept higher risks and costs associated with volatility or restructure and diversify their assets.

John Swinney, finance secretary of the Scottish government, which supports independence, dismissed that document as “a discredited, feeble attempt to undermine confidence in Scotland’s ability to be a successful independent country” adding that “it will not work.”

Mr. Swinney said that he had viewed a leaked draft of the paper and that much of it “seems to be based on a flawed, outdated view of the world which takes no account of the substantial banking reforms which have been ongoing across Europe since 2008.”

The Treasury’s study counted Scottish banks as all those registered in Scotland, including the Royal Bank of Scotland — but excluding NatWest, which is part of the group but is registered in London, and excluding assets of RBS’s foreign subsidiaries.

Bank of Scotland, which is part of the Lloyds Banking Group, is included as a Scottish institution as it is registered in Scotland.

Untangling Scotland’s banks from the broader British financial sector would be a highly complex task were Scots to vote for independence, because both RBS and Lloyds Banking Group were bailed out by British taxpayers after the financial crash.

The British government owns 80 percent of RBS and 40 percent of Lloyds, which are both run from London. That would almost inevitably require some changes in ownership in the event of independence.

Nevertheless the Treasury’s study argues that the total support provided to RBS in 2008 would have been the equivalent of 211 percent of Scotland’s G.D.P. By contrast the total British interventions across the whole banking sector were 76 percent of the country’s G.D.P.

The document also adds that any attempt at shared regulatory arrangements between an independent Scotland and the continuing United Kingdom would be “significantly more complex than those that currently exist” and would be likely to increase the costs for firms of complying with this regulation.

Article source: http://www.nytimes.com/2013/05/20/business/global/british-study-raises-warning-on-scottish-banks.html?partner=rss&emc=rss

Media Decoder Blog: CNN Managing Editor Defends Reporting Based on Ambassador’s Journal

Mark Whitaker, the managing editor of CNN Worldwide, appeared on the network Monday morning to defend its use of a journal kept by the United States ambassador to Libya, Christopher Stevens, in its reporting on the attack of the consulate at Benghazi in which Mr. Stevens and three others were killed.

CNN on Saturday came under a withering attack by Philippe Reines, a department spokesman and senior adviser to Secretary of State Hillary Rodham Clinton, who called the network’s actions “indefensible.” He said the network had agreed to abide “by the clear wishes of the Stevens family, and pledged not to use the diary or even allude to its existence until hearing back from the family,” according to a report by The Associated Press.

But four days later, “they just went ahead and used it,” he said.

Mr. Whitaker — appearing on a panel that included Fran Townsend, a former Bush administration official who is a CNN national security contributor, and hosted by Soledad O’Brien — said CNN had spoken with the Stevens family, whose main concerns were “that they wanted the physical copy of the journal back and that they didn’t want personal details from the journal revealed.”

He said the network had talked with the family about “what we could report because we thought that there were a lot of newsworthy issues that were raised, specifically on the issue of what the ambassador thought about possible terror threats and the fact that he might actually be a target of Al Qaeda.”

He said the issues were familiar to journalism:

How do you balance concerns from privacy against the public interest in learning information that is of vital national interest? And when you look at what we did at every step that is exactly the balance we tried to strike. We felt we had an obligation to the family not to talk about the journal or about personal details from the journal, on the other hand, as Fran said, we had not only the right but the obligation to continue to look into this issue of whether there were terror threats in advance, what not only Ambassador Stevens but Washington, the State Department, others in the administration might have known about it.

Article source: http://mediadecoder.blogs.nytimes.com/2012/09/24/cnn-managing-editor-defends-reporting-based-on-ambassadors-journal/?partner=rss&emc=rss

Media Decoder Blog: Reduced Role for Rooney on ‘60 Minutes’

Andy Rooney, whose folksy and often curmudgeonly essays have been a staple of “60 Minutes” for more than three decades, will end his regular weekly appearances on the program, CBS said Tuesday.

Andy Rooney will step back from his weekly appearances on “60 Minutes” this fall.John Filo/CBSAndy Rooney will step back from his weekly appearances on “60 Minutes” this fall.

Mr. Rooney, 92, has delivered 1,096 commentaries to the newsmagazine since becoming a regular contributor in 1978, according to CBS. He will formally announce his reduced role in essay No. 1,097 on Sunday night.

His essay will be “preceded by a segment in which Rooney looks back on his career in an interview with Morley Safer,” the network said in a statement.

“It’s harder for him to do it every week, but he will always have the ability to speak his mind on ‘60 Minutes’ when the urge hits him,” said Jeff Fager, the chairman of CBS News and executive producer of the show.

But people close to Mr. Rooney said it was unlikely that he would make many appearances, if any, in the future. The people, who did not want to be identified, said the plan for him to step away from the program had been in the works for some time. Because of the honored place he has occupied on the show, Mr. Rooney’s move is not being characterized in terms of a formal retirement, they said.

“There’s nobody like Andy and there never will be,” Mr. Fager’s statement said. “He’ll hate hearing this, but he’s an American original.”

Through CBS, Mr. Rooney declined to comment.

Mr. Rooney was noticeably absent when the newsmagazine started a new season on Sunday night, and he was not quoted in the announcement by CBS.

The change was first reported by TVNewser. In an interview with that Web site last year, Mr. Rooney said that he planned to work for “60 Minutes” until he “dropped dead,” and he added, “Until somebody tells me different, I’m not going to quit.”

For many viewers, Mr. Rooney’s weekly observations on the foibles of life, commerce and politics became a favorite feature of the program, which was for years the most watched on television. But even as his popularity soared, he occasionally ran afoul of some groups, including Hispanics, American Indians and gays and lesbians, because of his comments.

A war correspondent during World War II, Mr. Rooney joined the network in 1949 as a writer for a show called “Arthur Godfrey’s Talent Scouts.” In the 1960s he wrote and produced television essays for the correspondent Harry Reasoner, and when CBS established “60 Minutes” in 1968, he produced some of Mr. Reasoner’s segments for the program. Ten years later he became a regular commentator.

“60 Minutes” remains by far the most popular newsmagazine on American television. The show has weathered any number of changes over the years, including the death of the correspondent Ed Bradley in 2006. Another veteran correspondent, Mike Wallace, retired from full-time work that year.

Article source: http://feeds.nytimes.com/click.phdo?i=f3d6cc1e45c41cd0b676470309f8a79d

Merkel Resists Pressure on New Aid for Greece

Debt-ridden Greece wants international lenders to further ease terms of the €110 billion, or roughly $160 billion, bailout granted a year ago by the International Monetary Fund and the European Union, and is likely to need additional financing to plug a €27 billion funding hole next year.

On Tuesday, a day after Standard Poor’s cut Greece’s credit rating again, the country paid almost 4.9 percent to raise €1.62 billion of six-month treasury bills, up from 4.8 percent in April. Local investors bought up the bulk of the auction, Reuters reported from Athens.

The Irish government, in the meantime, is watching to see what concessions Greece might win in order to soften its own €85 billion rescue package.

But Mrs. Merkel, as leader of Europe’s strongest economy and the biggest contributor to the rescue package, gave no indication that Germany would be willing to grant more aid — and certainly not at next week’s meeting of E.U. finance ministers.

She said she would wait until officials from the E.U., the European Central Bank and the International Monetary Fund complete their assessment of Greece’s progress, particularly about how it was implementing its “bold reforms.” That report is due in June.

“First we need to hear what the status is,” Mrs. Merkel told the foreign press corps in Berlin. “Only then can I decide what, if anything, needs to be done. We don’t do Greece any favors by speculating about more aid.”

She added that Greece had made progress over the past year, and that it was always known that “it would be a difficult path.” But she said efforts to improve competitiveness and reduce deficits must continue. “Every country should continue with them,” she said.

Mrs. Merkel faced enormous pressure at home last year not to grant a single euro in aid to Greece until Athens had agreed to implement a tough austerity package and a radical savings program across the public sector.

While such public opposition has subsided, Mrs. Merkel now faces opposition within her own coalition. The Free Democrats, her junior partners, want to push through a motion at its party congress this weekend in Rostock to prevent any more rescue packages for indebted euro states.

Mrs. Merkel brushed aside this opposition, saying she was convinced the Free Democrats would support the overall package.

Indeed, with Philipp Rösler expected this weekend to be elected the new leader of the Free Democrats — replacing the foreign minister, Guido Westerwelle — and also taking over the Economics Ministry, Mrs. Merkel can expect more unity inside the coalition, government officials said Tuesday.

In Athens, there has been fury over reports published last weekend by the German news outlet Spiegel Online that said Greece was threatening to leave the euro as a bargaining chip to gain more leeway in paying back the debt.

“These scenarios are borderline criminal,” Prime Minister George Papandreou of Greece told a conference on the Ionian island of Meganisi on Saturday, Reuters reported. “I call on everyone, especially in the E.U., to leave Greece in peace to do its job.”

The German government denied there were discussions on Greece’s return to the drachma.

“There is no such question and such an issue was never raised for discussion at European level,” a government spokesman said .

Still, a new plan may include pushing back Greece’s budget targets, giving it additional aid and a mild restructuring of its sovereign debt, officials and analysts have said.

Irish officials insist that their country’s debt burden, expected by the I.M.F. to peak at 125 percent of gross domestic product in 2013, is manageable — for now.

A leading Irish economist wrote in The Irish Times newspaper on Saturday that the country’s debt would hit €250 billion by 2014, bringing Ireland’s debt-to-G.D.P. dynamics closer to those of Greece. The academic, Morgan Kelly, who has been dubbed Ireland’s “Doctor Doom” for his gloomy predictions, said the country faced bankruptcy because of the E.U. and I.M.F. bailout.

Mr. Kelly accused Patrick Honohan, Ireland’s central bank governor, of putting the European Central Bank’s interests over those of Ireland, which Mr. Honohan denied.

“The fact of the heavy debt and the growth of that debt is a serious problem and needs to be managed in discussion and in negotiation with our European partners,” Mr. Honohan said in an interview with the state broadcaster RTE.

Pat Rabbitte, the Irish minister for energy, told RTE that the interest rate of 5.8 percent that Ireland is paying on its European loans “must be reduced and in my own view the debt must also be rescheduled.”

Prime Minister Enda Kenny said in Dublin on Tuesday that talks on reducing that rate were under way with Ireland’s European partners.

E.U. finance ministers will take the issue up Monday and Tuesday in Brussels, and Irish officials are hoping for a reduction of one percentage point.

“After the meeting next week we will know whether a conclusion can be reached,” Mr. Kenny said, according to Reuters.

German officials, however, backed by the French, have been seeking some concession from the Irish in return for a reduction like the one given earlier to Greece, particularly regarding Ireland’s relatively low corporate tax rate. The Germans want the Irish to come up with some initiative, like agreeing to work on harmonizing the corporate tax base.

Article source: http://www.nytimes.com/2011/05/11/business/global/11euro.html?partner=rss&emc=rss