February 7, 2023

Euro Zone Economy Shrinks 0.2% in First Quarter

PARIS — The euro zone economy shrank more than expected in the first three months of 2013, official data showed Wednesday, marking a sixth consecutive quarter of decline as France returned to recession and Germany marked time.

The 17-nation euro zone contracted by 0.2 percent from the last three months of 2012, Eurostat, the statistical agency of the European Union, reported from Luxembourg, less than the 0.6 percent decline recorded in the fourth quarter, but more than economists’ expectations of a 0.1 percent fall.

The economy of the overall European Union, made up of 27 nations, shrank by 0.1 percent.

Germany, with the largest economy in Europe, was almost stagnant in the first quarter, managing growth of just 0.1 percent from the prior three months, when it shrank by 0.7 percent, the Federal Statistics Office reported in Wiesbaden.

France, the second-largest economy in Europe, contracted for a second consecutive quarter, meeting the common definition of a recession. The economy shrank by 0.2 percent, the same decline as in the fourth quarter of 2012.

Britain, the third-largest E.U. economy, but not a member of the euro, last month posted 0.3 percent first-quarter growth.

Among the “peripheral” euro nations, Spain’s economy shrank by 0.5 percent, the same as Italy’s. Portugal shrank by 0.3 percent, and Cyprus’s economy, the victim of a financial sector meltdown and bailout, shrank 1.3 percent. Data on Greece were not immediately available.

More than five years after the meltdown of the U.S. housing market set off the global financial crisis, the 27-nation European Union remains in turmoil, buffeted by a lack of confidence in member states’ public finances and demands for budgetary rigor to address those concerns. Unemployment in the euro zone reached a record 12.1 percent in March, and economists do not expect the labor market to turn around before next year, at the earliest.

Despite its troubles, the E.U. market remains the world’s largest, and its weakness is doubly worrying at a time when the rest of the world is not growing strongly enough to take up the slack. Moody’s Investors Service warned Wednesday that the weakness in the euro zone, combined with the mandatory “sequestration” budget cuts in the United States, would weigh on the world economy, with growth in the Group of 20 nations this year of just 1.2 percent, picking up to 1.9 percent in 2014.

In annualized terms, the euro zone economy contracted by about 0.8 percent in the first quarter, lagging far behind the 2.5 percent growth in the United States.

Japan, which reports its first-quarter G.D.P. figure on Thursday, is expected to post an annualized figure of about 2.8 percent. China in April reported 7.7 percent first-quarter growth.

That Germany grew at all was a result of increased household consumption, Germany’s statistics agency said, as exports and investment declined. Jörg Krämer, chief economist at Commerzbank in Frankfurt, estimated in a research note that the unusually cold weather had subtracted as much as 0.2 percentage point from German growth.

Even though Germany eked out a positive figure, it was “really in contractionary territory” in the quarter, Philippe d’Arvisenet, global head of economic research at BNP Paribas, said. He said more recent data showed clear evidence of a German rebound in the second quarter.

Mr. d’Arvisenet estimated that the euro zone economy would shrink this year by about 0.5 percent, following a 0.6 percent contraction in 2012. Growth is likely to return in 2014, he said, “but probably below 1.0 percent.”

Article source: http://www.nytimes.com/2013/05/16/business/global/germany-france-economic-data.html?partner=rss&emc=rss

Europe Heeding International Call to Do More to Spur Growth

Yet in a change, signs suggested that European leaders were starting to agree, with more high-ranking ministers and officials talking up the need to slow the pace of budget cutting and bolster growth on the Continent.

At the outset of the gathering of finance ministers and central bankers last week, the I.M.F. lowered its global growth forecasts, again citing weakness from Europe. And Christine Lagarde, managing director of the fund, separated nations into three groups that might be described as strong, trying and laggards.

In the first group she placed the developing and emerging economies that are the engine of global growth. In the second she put countries that are gaining momentum in their recoveries, like the United States. The third group, she said, contains countries that continue to struggle with their policy response to the crisis — not growing, and hindering global growth. That group includes many countries in high-income Europe, including Britain, Germany and Italy.

At a news conference during the meetings, Ms. Lagarde said such countries should try “anything that works” to create jobs. That starts “with growth and a good policy mix, which relies on not just one policy but a set of policies that will include fiscal consolidation at the right pace,” she said, also citing structural changes and loose monetary policy as necessary.

The debate at the meetings focused on helping to identify that right mix of policies, with officials from the fund and countries including the United States arguing that austerity had sapped too much demand, too soon, from the Continent. In the past, European officials tended to brush off such advice. And some powerful officials continued to do so last week, instead emphasizing budget cutting to soothe financial markets.

“Fiscal and financial sector adjustments remain crucial to regain lost credibility and strengthen confidence,” said Wolfgang Schäuble, the finance minister of Germany and a powerful voice promoting austerity in Europe. “At the current juncture, it is in particular the responsibility of the advanced economies, including Japan and the U.S., to follow through with ambitious fiscal consolidation over the medium term.”

George Osborne, the British chancellor of the Exchequer, echoed that sentiment, even as high-level officials at the fund repeatedly criticized the government of Prime Minister David Cameron for its campaign of budget cuts.

“The priority for most advanced economies is still to restore fiscal sustainability,” Mr. Osborne said in a statement. “Continued consolidation is needed over the medium term, supported by highly accommodative monetary policy.”

But the fund downgraded its growth estimates for several large European economies, including those of France and Germany, last week. Many have re-entered a period of economic contraction, with their unemployment rates continuing to rise. In light of that, other European officials said a renewed focus on growth — by slowing budget cuts, changing deficit targets or taking other measures — might be appropriate.

“They are preaching to the converted,” Olli Rehn, the European commissioner for economic and monetary affairs, was quoted by Reuters.

“In the early phase of the crisis, it was essential to restore the credibility of fiscal policy in Europe because that was fundamentally questioned by market forces,” Mr. Rehn added. “Now, as we have restored the credibility in the short term, that gives us the possibility of having a smoother path of fiscal adjustment in the medium term.”

In a communiqué, the finance ministers and central bank governors of the Group of 20 large economies said: “We have agreed that while progress has been made, further actions are required to make growth strong, sustainable and balanced.”

They urged a closer banking union in the euro zone and for “large surplus economies” to take “further steps to boost domestic sources of growth.”

In her opening remarks, Ms. Lagarde also cited Japan as having continued to struggle with slow growth. But at the spring meetings, Tokyo won plaudits for its ambitious new campaign of fiscal and monetary stimulus to bolster demand and end the deflation that has plagued the economy for more than a decade.

Some finance ministers had questioned the Bank of Japan’s aggressive easing of monetary policy, arguing that it was aimed at pushing down the value of the yen and as a result unfairly favoring Japanese exports. If other countries followed suit to try to devalue their currencies, it could set off a round of “currency wars,” some warned.

But the Group of 20 communiqué stated that “Japan’s recent policy actions are intended to stop deflation and support domestic demand,” a tacit nod to the recent round of easing. And the I.M.F. raised its estimates of Japan’s growth on the back of the government’s new policy moves.

At the meetings, Dr. Jim Yong Kim, the new president of the World Bank, also outlined his policy goals: the effective eradication of extreme poverty in a generation. The world has achieved the Millennium Development Goal of halving extreme poverty by 2015. To cut the rate to 3 percent by 2030, Dr. Kim said, would require strong, inclusive growth.

Article source: http://www.nytimes.com/2013/04/22/business/global/europe-heeding-international-call-to-do-more-to-spur-growth.html?partner=rss&emc=rss

For Hong Kong Markets, Bad Omen in a Movie Premiere

HONG KONG — There are all sorts of reasons for the Hong Kong stock market to have the jitters these days. The Chinese economy remains wobbly. North Korea is threatening nuclear war. And perhaps most worrisome this week, a leading Hong Kong actor has a new movie coming out.

Hong Kong investors call it the Ting Hai effect: whenever the actor Adam Cheng has a new television show or a new movie, the Hang Seng index often takes a dramatic turn for the worse. And in a city where superstitions can guide daily routines, the financial sector is worried.

Mr. Cheng’s new movie, “Saving General Yang,” has its debut in theaters Wednesday, and investors in the Hong Kong market, which has been generally buoyant of late, are on guard, while acknowledging that it is unlikely that a movie opening could drive a major market index.

“Of course, investors need to be wary to an extent,” said Thomas Wong, a Hong Kong banker. “That is part of the job, but they shouldn’t let a movie decide whether the stock market will do well or not. That is not how the market works. People may talk about it, but they are not going to take it seriously.”

The Ting Hai effect has its roots in the 1992 debut of a television series called “The Greed of Man,” which turned a critical eye on members of the city’s investment community and their supposed shady doings, with Mr. Cheng in the role of Ting Hai, who made it rich selling derivatives during a bear market. As the first episode was being broadcast, the Hang Seng dropped an alarming 13 percent at one point.

Investor concerns about his acting appearances were reinforced two years later, when the market took a nearly 14 percent drop with the debut of his television series “Instinct.”

The unpredictability of financial markets has long fed superstitions about stock market behavior. One school of thought suggests that market downturns coincide with the construction of the world’s tallest building: think the Empire State Building in New York in 1930, the Sears Tower in Chicago in 1974 and the Petronas Twin Towers in Kuala Lumpur in 1998. And until recent years, there was a notable correlation between bear markets and teams from the American Football Conference winning the Super Bowl.

In Mr. Cheng’s case, the market has not always become agitated when he starts a new role: in six of his 17 television program debuts, the Hang Seng rose, according to The South China Morning Post. But that has not allayed investors, and now Mr. Cheng has another new movie. “Saving General Yang” has the actor in the lead role of a drama about a general in the pre-derivatives Song Dynasty, 1,100 years ago.

“Hong Kong investors can be very superstitious,” Francis Cheung, an analysts at the brokerage firm CLSA, wrote about the Ting Hai phenomenon. “And Adam Cheng is a very well-known actor with a large following.”

Investors spooked by superstitions already have reason to worry. This is the Year of the Snake, and four of the last five snake years, beginning with 1953, produced down markets, according to CLSA, which publishes a tongue-in-cheek “Feng Shui Index.” Snakes are skin shedders, whose years are associated with major transformations and change — and the Tiananmen crackdown, Pearl Harbor and the onset of the Great Depression, in 1929.

A CLSA report on the Ting Hai effect — again, tongue in cheek — found that the more tragic the story line in an Adam Cheng movie, the worse the impact for the market. While the details of the plot of “Saving General Yang” have not been revealed, in history, the general met a bad fate — dying of starvation after being captured in battle.

Calvin Yang contributed reporting.

Article source: http://www.nytimes.com/2013/04/03/business/global/for-hong-kong-markets-bad-omen-in-a-movie-premiere.html?partner=rss&emc=rss

Europe Rejects Critics of ‘Robin Hood’ Tax

BRUSSELS — E.U. regulators on Thursday defended plans to create the first international tax on financial transactions after business groups in the United States warned that the levy could break international agreements.

The plan, also known as a Robin Hood tax, aims to redistribute money generated by the finance industry, and could raise up to €35 billion, or $47 billion, a year for 11 participating countries, which include Germany and France.

The European authorities have promoted the rules as a way of penalizing the financial sector and returning some of the money that was spent on bank bailouts to citizens squeezed by austerity and the economic slowdown.

But the law is raising concerns in the United States, and in European countries like Britain and Luxembourg that are not participating, because the rules could increase the cost of transactions that involve institutions inside the taxed zone.

This week, the U.S. Chamber of Commerce and four powerful financial services associations warned Algirdas Semeta, the European commissioner drafting the rules, that he was proposing “novel and unilateral theories of tax jurisdiction” that were “both unprecedented and inconsistent with existing norms of international tax law and long-standing treaty commitments.”

In a letter to Mr. Semeta, the groups said “many transactions occurring within the United States that have no direct connection to Europe” would be subject to the tax.

A spokeswoman for the U.S. Treasury said in an e-mail that officials had raised concerns about the rules with their European counterparts. She said the Treasury did “not support the proposed European financial transaction tax, because it would harm U.S. investors in the United States and elsewhere who have purchased affected securities.”

Mr. Semeta said at a news conference on Thursday that the criticism was unfounded and that the rules were “fully compliant with international tax law” and based on principles “widely used in international taxation practice.”

The tax would create a significant new source of income amounting to about 1 percent of the participating countries’ tax revenues without placing a further burden on ordinary citizens, according to E.U. officials.

The levy would be based on a tax of 0.1 percent of the value of stocks and bonds traded, and 0.01 percent of the value of derivatives trades. That could mean revenues of about €100 million each year for small countries like Estonia and up to €10 billion each year for the largest participant, Germany, the officials said.

The officials said the law had been formulated so it did not prompt traders to drastically reduce their activities within the taxed countries or move away entirely. In addition, they said any negative effect on growth and jobs in participating countries would probably be canceled out by the recycling of the revenue back into the economy through projects like building new infrastructure.

But Alexandria Carr, a lawyer in London at Mayer Brown, said it was still possible that “we’ll see banks and businesses trying to challenge the rules, or even see them and governments in countries like Britain and Luxembourg outside the taxed zone take legal action at the European Court of Justice to narrow the scope of the law.”

Ms. Carr also warned that costs could be “passed to pensioners and savers, thereby failing to satisfy one of the main objectives of the proposal, which is to ensure financial institutions contribute to covering the costs of the current crisis.”

The 11 participating European states — two more than the minimum required for legislation to be drafted — still need to give their unanimous approval before the law goes into force, possibly at the beginning of next year, making it likely that lobbying against the tax could continue for months.

Article source: http://www.nytimes.com/2013/02/15/business/global/europe-rejects-critics-of-robin-hood-tax.html?partner=rss&emc=rss

Official Urges Greater Accountability by Euro Members

BRUSSELS — Olli Rehn, the European Union commissioner in charge of the euro currency, on Friday defended the bloc’s austerity policies and urged legislators to pass a law that would let him push countries even harder to shore up their finances.

Signaling little let-up in the need for wrenching adjustments in Europe, Mr. Rehn also issued warnings to a wide range of countries — including some with the region’s largest economies — to keep to the reform path and contribute to overall growth.

France and Finland need to address their declining competitiveness while Germany should do more to open up its services market, Mr. Rehn told a meeting organized by the European Policy Center, a research group.

Meanwhile Cyprus, which is negotiating a European bailout, needs to ease suspicions its financial sector is a hub for money-laundering, he said.

Mr. Rehn acknowledged the value of recent studies by economists at the International Monetary Fund suggesting that damage created by austerity was up to three times more severe than previously thought. But Mr. Rehn also warned those studies may not take sufficient account of the need to restore faith in countries blocked from borrowing money on international markets.

“We have not only the quantifiable effect, which is something that the economists like to emphasize, but we also have the confidence effect,” said Mr. Rehn.

“What would have happened if Italy would have loosened its fiscal policy in November 2011?” he asked, referring to a period when Italy’s borrowing costs were rocketing upwards. That situation threatened “both an economic crisis and political dead-end,” but recent reforms and belt-tightening had helped Italy’s economy to stabilize, he said.

Mr. Rehn said efforts were underway among the European Commission, the I.M.F. and the European Central Bank to reach a consensus on the impact of austerity policies.

Mr. Rehn also highlighted evidence showing that public debt levels in excess of 90 percent of Gross Domestic Product — a level in many parts of Europe — meant that economies were more likely to lack dynamism and to experience low growth lasting many years.

Underscoring the plight of Cyprus, the ratings agency Moody’s on Friday cut the country’s debt rating by three notches because of the capital needs of its banks that were heavily afflicted by an earlier debt write-down in Greece. Cypriot banks had invested heavily in Greek bonds, in large part to make use of money that had flooded into the banks by Russian depositors seeking a non-ruble haven.

In a sign of how difficult it will be to help Cyprus out of its financial black hole, Mr. Rehn gave no indications of when an assistance package would be finished. That package was still “very much a work in progress” and any decision would be made “in due course,” he said.

Cyprus still needed to implement “new laws against money laundering” as a precondition for aid, he said. Once “Cyprus reforms its financial sector in line with European principles, we will work alongside Cyprus as we did in Spain,” said Mr. Rehn. He was apparently referring to an agreement reached last year with the government in Madrid to extend tens of billions of euros in loans to restructure and recapitalize its banking sector.

Mr. Rehn also urged members of the European Parliament to speed up an agreement on fiscal legislation.

Those rules would require member states to present their public finance plans to the European Commission in greater detail, and sooner, than is currently required. The commission could then demand revisions, as deemed necessary. For member states that are already in financial trouble, those rules would let the commission conduct regularly scheduled reviews and require more information about a country’s financial sector than is currently the case.

The rules would give “stronger possibilities of pre-emptive oversight as to national budgets before they are finally presented to national parliaments” in order “to ensure that the member states practice what they preach,” said Mr. Rehn.

Failing to pass the law could invite a rerun of events in the middle of the past decade, when Germany and France essentially ignored their deficit-cap provisions, contributing to the current debt-crisis in Europe, warned Mr. Rehn.

“It’s a very serious issue,” he said.

Article source: http://www.nytimes.com/2013/01/12/business/global/official-urges-greater-accountability-by-euro-members.html?partner=rss&emc=rss

I.M.F. Says Europe Has Made Progress in Addressing Crisis

PARIS — The European Union has made progress in addressing its financial crisis, the International Monetary Fund said Thursday, but warned that member states would have to follow through on their commitments to end uncertainty about the future of the euro and of the bloc itself.

“Significant progress has been made in recent months in laying the groundwork for strengthening the E.U.’s financial sector,” the fund said, summarizing the results of a new study, adding: “the details of the agreed frameworks need to be put in place to avoid delays in reaching consensus on key issues.”

The sovereign debt crisis, which began in late 2009 with Greece’s acknowledgement that it had been fabricating data on its public finances, has cost Europe billions of euros in lost growth and has devastated labor markets in some countries. Soaring financing costs have led Greece, Ireland and Portugal to seek bailouts. Spain and Italy had appeared to be reaching their own crisis points this year before the European Central Bank calmed the market by promising to do whatever was necessary to defend the euro.

At the national level, the response has been to cut spending and to raise taxes. At the European level, member states have begun steps toward greater integration, including through a banking union administered by the E.C.B., with common rules for large institutions. The banking plan, though receiving only lukewarm support from Britain and Sweden, appears to be going forward, at least for members of the 17-nation euro zone.

The agreement last week by European leaders on a single supervisory mechanism for banks under the E.C.B. “is a strong achievement,” the I.M.F. said. “It needs to be followed up with a structure that has as few gaps as possible,” especially with regard to harmonizing national rules with the new regulations.

Additionally, “actions toward a single resolution authority with common backstops, a deposit guarantee scheme, and a single rulebook, will also be essential,” by mid-2013 at the latest, the report found.

In an apparent criticism of European stress tests for banks that gave some institutions clean bills of health in spite of market concerns, the I.M.F. also called for stricter oversight.

“European stress testing needs to go beyond microprudential solvency, and increasingly serve to identify other vulnerabilities, such as liquidity risks and structural weaknesses,” the report said. “Confidence in the results of stress tests can be enhanced by an asset quality review, harmonized definitions of nonperforming loans, and standardized loan classification, while maintaining a high level of disclosure.”

The I.M.F. also called on Europe to take measures to separate bank risk from sovereign risk, including by making the European Stability Mechanism, the new euro zone bailout fund, able to move quickly to recapitalize banks.

And it said the potential cost to the public from bank failures could be reduced by creating banking authorities with the power to impose “bail-ins” on banks — in effect forcing bondholders to share losses in the event of a failure.

Article source: http://www.nytimes.com/2012/12/21/business/global/imf-says-europe-has-made-progress-in-addressing-crisis.html?partner=rss&emc=rss

DealBook: British Panel Urges Sweeping Banking Overhaul

Banks at Canary Wharf in London.Andy Rain, via European Pressphoto AgencyBanks at Canary Wharf in London.

6:47 p.m. | Updated

LONDON — As banks across Europe came under renewed pressure, Britain’s government proposed a radical industry makeover on Monday that could cost the financial firms as much as £7 billion ($11 billion).

On Monday, the government-appointed Independent Commission on Banking called for banks to separate their deposit-taking operations from investment banking services, stopping short of completely breaking up the firms. The panel plans to give banks until 2019 to adapt to new rules intended to make the financial sector more stable, saying an “extended implementation period would be appropriate.”

George Osborne, the chancellor of the Exchequer, said the commission, led by a former Bank of England chief economist, John Vickers, “has done an excellent job.”

“John Vickers himself has set out a timetable and I intend to stick to that timetable,” Mr. Osborne said.

John Vickers, a former Bank of England chief economist, headed a 14-month review of British banks.Leon Neal/Agence France-Presse — Getty ImagesJohn Vickers, a former Bank of England chief economist, headed a 14-month review of British banks.

Jon Pain, a partner at KPMG, called the proposals “game changing” and said they were “a return to a more simple 1940s and ’50s style of retail banking where it is perceived as more of a basic utility.”

The proposals, which go beyond banking reforms in the United States and elsewhere, are expected to lead to extensive lobbying from the banks before any final decisions on new rules are made by the British government.

Under the proposal, British banks would have to separate their businesses taking deposits and lending to consumers and businesses from groups involved in stocks, derivatives and equity and debt underwriting. The two subsidiaries would be separately capitalized, have different boards, different cultures and report results as if they were two different companies, the commission report said. Capital from the investment banking unit could be injected into the retail bank if needed, and the two businesses could share customers and expertise, the commission said.

Some banking executives have argued that the changes would hurt investors, the economy and industry competitions.

Banks with large investment banking operations, including Barclays and Royal Bank of Scotland, may be most affected by the new rules, some analysts have said. The separation could drive up their funding costs if investors and lenders perceived them as riskier. Spokesmen for the two banks declined to comment.

British banking stocks fell on Monday, with Barclays down 1.6 percent and Royal Bank of Scotland more than 3 percent, as markets were unnerved by the nagging prospect of a Greek default.

But the commission has argued that the benefits — particularly a healthier banking industry with less probability of government bailouts — would outweigh the short-term costs.

“Retail subsidiaries would be legally, economically and operationally separate from the rest of the banking groups to which they belonged,” the commission said in its 360-page report. “The improved stability that structural reform would bring to the U.K. economy would be positive for investment both in financial services and the wider economy.”

The 2019 deadline is about four years later than some analysts had expected; the new rules would be adopted after the next general election.

Prime Minister David Cameron has grown increasingly nervous that making major changes now could harm an already weak economic recovery, two government officials said last week. They declined to be identified because no final decision had been made.

Mr. Vickers warned the government that scrapping parts of the proposals or changing them in favor of the banks would be “a great mistake.”

“The too-big-to-fail problem must not be recast as a too-delicate-to-reform problem,” Mr. Vickers said.

“More stress for banks” this year because of Europe’s sovereign debt crisis “underlines that the status quo is not an option,” he said. “Things will need to change.”

Ed Balls, the opposition Labor Party’s candidate for the treasury position, said the commission put forward “a tough and radical proposal” and that “the stalled recovery is not an excuse for ducking reform.”

Article source: http://dealbook.nytimes.com/2011/09/12/britains-i-c-b-recomends-gradual-banking-reform/?partner=rss&emc=rss

DealBook: Alpha Bank and Eurobank of Greece to Merge

Greek bank shares climbed on Monday on news of a merger between Eurobank and Alpha Bank.John Kolesidis/ReutersGreek bank shares climbed on Monday on news of a merger between Eurobank and Alpha Bank.

Two of Greece’s biggest lenders, Alpha Bank and Eurobank, announced plans on Monday to merge, in a move to increase confidence in the country’s beleaguered economy.

The combination will create the largest lender in Greece, with total assets of 146 billion euros ($212 billion). Shares of Alpha Bank and Eurobank rose on the news.

“I am confident that the new combined entity will act as an important agent for the economic development of the country,” Efthymios N. Christodoulou, chairman of Eurobank, said in a statement. “It is also well placed not only to withstand the current economic turbulence but also to create new opportunities and play a pivotal role in the future growth of the region.”

The merger is welcome news for a country in the midst of a sovereign debt crisis.

Owning large swaths of the country’s troubled debt, the Greek banks have found themselves at the center of the mess. As Greek bonds essentially proved worthless as collateral, foreign investors balked at lending to Greek financial firms. With few sources of funds, banks pulled back and credit tightened.

By merging, Alpha Bank and Eurobank are looking to strengthen the capital position of the combined bank and gain necessary heft to weather the crisis. The deal will help bolster the combined bank’s overall capital position, by eventually increasing its buffer to 14 percent. It also signals foreign interest, with the main shareholders including Paramount Services Holding, a prominent family in Qatar.

“This initiative shows that today’s crisis can be an opportunity for structural moves that boost both the financial sector and the real economy,” the Greek finance minister, Evangelos Venizelos, said in a statement on Monday, according to Reuters. “Qatar’s participation sends an international message of confidence in the prospects of the Greek economy.”

The deal, which still has to be approved by regulators, is expected to be completed in mid-December. Citigroup and JPMorgan Chase served as financial advisers to Alpha Bank, while Eurobank worked with Barclays Capital, Goldman Sachs and Rothschild.

Article source: http://dealbook.nytimes.com/2011/08/29/greek-lenders-alpha-bank-and-eurobank-to-merge/?partner=rss&emc=rss

DealBook: Europe Opens Broad Review of Deutsche Borse-NYSE Deal

Joaquín Almunia, the European Union commissioner for competition policy.John Thys/Agence France-Presse — Getty ImagesJoaquín Almunia, the European Union commissioner for competition policy.

7:26 p.m. | Updated

European Union antitrust regulators opened an in-depth review on Thursday of the $9 billion merger between Deutsche Börse of Germany and NYSE Euronext, after complaints from customers and rivals that the stock exchange combination could harm competition.

The approval of the European Commission is the biggest hurdle for the deal, which would create the largest operator of equities and derivatives markets.

The regulators’ main concern is the hold that Deutsche Börse and NYSE Euronext would have on exchange-based futures trading in Europe. In part, they are worried about the overlap between the Eurex derivatives platform, operated by Deutsche Börse, and Liffe, a similar platform operated by NYSE Euronext.

“The proposed merger would remove a strong competitor from the market and would give the merged company by far the leading position in derivatives trading in Europe,” Joaquín Almunia, the European Union’s commissioner for competition policy, said in a statement. “The commission needs to make sure that markets which are at the heart of the financial sector remain competitive and efficiently deliver to users.”

The commission said it had 90 working days, or until Dec. 13, to make a decision on whether to clear or block the deal. It could extend the deadline if the exchanges offer concessions that ease the regulators’ concerns.

Antitrust experts said the exchanges were probably considering appeasements that would not force them to sell parts of their combined derivatives and clearing businesses, which provide a significant source of the deal’s value.

“The key to a green light sometime early 2012 will likely be a creative approach to remedies,” said Kristina Nordlander, a partner in Brussels with the law firm Sidley Austin. The exchanges would be focused on “avoiding the kind of structural divestment remedies that might be a deal-breaker,” said Ms. Nordlander, who does not represent parties involved in the case.

The decision in Europe to give the merger a longer review was widely expected after Mr. Almunia described the merger as a complex case in March. Since then, some groups representing the financial services sector have warned that the combination risked being too powerful in some areas.

The merger “will create an exchange with a near-monopoly in European exchange-traded derivatives,” the FIA European Principal Traders Association said in a policy paper in July. The association has Citadel Securities Europe and Knight Capital Europe among its members.

Officials from NYSE Euronext already made clear that they expected a longer review in Europe. The focus was most likely to be on “what conditions may be placed on us, not on how to make or break the deal,” Duncan L. Niederauer, the chief executive of NYSE Euronext, said this week.

Mr. Niederauer also suggested that some of the loudest complaints were coming from rivals, including the London Stock Exchange and Nasdaq OMX, rather than from customers like banks, funds, traders and brokers.

Article source: http://dealbook.nytimes.com/2011/08/04/antitrust-regulators-to-review-deutsche-boerse-deal-with-nyse/?partner=rss&emc=rss

Wall Street Tries to Maintain Momentum

Corporate earnings have returned to prominence after a period when investors were focusing on other issues, like Japan’s earthquake and tsunami, Europe’s debt crisis and the unrest in the Arab world.

So far, the earnings reports have been generally positive. General Electric and UnitedHealth were among the large companies whose quarterly results beat analysts’ expectations Thursday morning.

Net income for G.E. was $3.4 billion in the first three months of 2011, or 31 cents a share, compared with $1.9 billion and 17 cents in the quarter a year ago. G.E. shares, however, were 2 percent lower.

UnitedHealth, the country’s second-largest health insurer, said its profit rose 13 percent as more employees signed up for coverage. UnitedHealth rose 8.4 percent. In the financial sector, Morgan Stanley, which like its peers is still feeling the aftereffects of the financial crisis, posted first-quarter earnings on Thursday of $736 million, down 48 percent from the period a year earlier. It also recorded a $655 million loss from a Japanese joint venture. Its shares rose 3 percent.

Apple reported results late Wednesday that beat estimates for both sales and profits. Apple rose 2.6 percent.

“In the past couple of days, the U.S. earnings season has enabled investors shrug off the euro woes and budget deficit concerns that dogged the early part of the week,” a senior sales trader at IG Index, Yusuf Heusen, said.

But the gains were tempered slightly by a Labor Department report that the number of people who applied for unemployment benefits fell last week to 403,000. Economists had expected a bigger drop, but applications had unexpectedly climbed to a two-month high the previous week.

In midmorning trading, the Dow Jones industrial average was 13.47 points, or 0.1 percent, higher. The broader Standard Poor’s 500-stock index gained 4.96 points, or 0.4 percent. The technology heavy Nasdaq added 11.88 points, or 0.4 percent. Markets will be closed on Friday for the Easter holiday.

Better earnings from the chip maker Intel and other technology companies sent shares higher on Wednesday and drove the Dow Jones industrial average to a new 2011 high. The Nasdaq composite index gained 57 points, its biggest one-day jump in six months.

In Europe, the FTSE 100 in London was down 0.2 percent, while the DAX in Frankfurt rose 0.6 percent. The CAC 40 in Paris was 0.4 percent higher.

Markets have pushed higher since Monday’s retreat when investors were spooked by Standard Poor’s warning that the United States faces a one-in-three chance of having its triple-A credit rating downgraded.

“Monday is a distant memory and markets have shifted from shunning risk into the upcoming holiday period to assuming as much of it as they can,” said Robert Ryan, a foreign exchange strategist at BNP Paribas.

Earlier in Asia, Japan’s Nikkei 225 index closed up 0.8 percent to 9,685.77 while South Korea’s Kospi index rose 1.3 percent to 2,198.54. Hong Kong’s Hang Seng ended 1 percent higher to 24,138.31, and mainland China’s Shanghai Composite Index rose 0.7 percent to 3,026.67.

In the oil markets, the focus remained on the fighting in Libya. Oil prices have increased 20 percent since the beginning of the year as investors anticipated rising global demand while unrest in North Africa and the Middle East threatened oil fields and shipping lanes vital to world supply.

Benchmark crude for June delivery fell 8 cents to $111.37 a barrel in New York trading. The contract rose $3.17 to settle at $111.45 on Wednesday.

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