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Op-Ed: Boko Haram Is Not the Problem
In Nigeria, designating Boko Haram as a foreign terrorist group will only inflame anti-Americanism among Muslims.
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DealBook: Lloyds Banking Group Chief Executive António Horta-Osório Takes Medical Leave For Exhaustion
November 2, 2011 by Leave a Comment
Chris Ratcliffe/Bloomberg NewsAntónio Horta-Osório, chief executive of Lloyds Banking Group.
9:36 a.m. | Updated LONDON — The Lloyds Banking Group, partly owned by the British government, said on Wednesday that its chief executive would take a leave of absence for several weeks because of exhaustion.
António Horta-Osório, 47, who took over as chief of Lloyds in March, consulted physicians after experiencing “extreme fatigue,” a spokeswoman said.
Mr. Horta-Osório, a Portuguese national who ran the British operations of Banco Santander of Spain before joining Lloyds, is expected to return to his post before the end of the year, the bank said. Tim Tookey, the departing chief financial officer, is taking over as interim chief executive until Mr. Horta-Osório returns, Lloyds said.
“He inherited a very difficult situation and clearly had put everything into it,” Bruce Packard, an analyst at Seymour Pierce, said.“He has taken on quite a lot, and there were quite high expectations which maybe weren’t helpful either.”
Mr. Horta-Osório joined Lloyds with great support from investors, many hoping that the new chief executive would help turn around the struggling bank and wean it off government support. The Lloyds board lured Mr. Horta-Osório from Santander, where he had a good track record of increasing the bank’s presence in Britain, expanding market share and increasing earnings.
Within four months of taking over, Mr. Horta-Osório had toured the country to visit Lloyds branches, talk to employees from bank clerks to managers and announced a plan to achieve £1.5 billion ($2.4 billion) in annual savings by 2014. In June, he said the bank would eliminate 15,000 jobs, or 14 percent of its work force.
Mr. Horta-Osório had also reshuffled the bank’s top management, bringing in some former colleagues from Santander. Recently, he had been working on finding a buyer for about 600 bank branches before the end of the year. Lloyds is selling the branches as part of its merger with the mortgage lender HBOS.
His turnaround efforts have been made more difficult because economic growth in Britain has remained sluggish and financial markets have been turbulent.
Last month, Moody’s Investors Service cut the senior debt ratings of Lloyds and 11 other British lenders, including Santander’s British business. The ratings agency said the government would be less likely to bail out the banks if they ran into troubles.
Lloyds shares fell 5 percent around midday in London on Wednesday after the announcement of Mr. Horta-Osório’s leave.
The Lloyds board met on Wednesday morning to discuss the situation, agreeing that Mr. Tookey would take over as interim chief executive until Mr. Horta-Osório’s return.
Mr. Tookey had been expected to leave Lloyds early next year, having handed in his resignation this year to join Friends Life, another British financial services company.
Lloyds, which has about 30 million customers, is due to report its third-quarter results on Tuesday. In August, the bank reported pretax profit of £1.1 billion in the first half of the year, down 31 percent from £1.6 billion in the period a year earlier. Mr. Horta-Osório said then that the bank was “well positioned” because of the “series of rapid, focused actions we have taken since March.”
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Surveys Show Manufacturing Slowing Worldwide
September 3, 2011 by Leave a Comment
In the euro area, the purchasing managers’ indexes showed that manufacturing contracted for the first time in almost two years in August, echoing earlier data from South Korea and Taiwan, where new export orders fell sharply.
Britain’s manufacturing sector shrank at its fastest pace in more than two years, hurt by a sharp decline in demand for exports.
The pace of growth in the U.S. manufacturing sector slowed to a crawl but fared better than economists had forecast.
The Institute for Supply Management said its index of national factory activity edged down to 50.6 from 50.9 the month before. The reading topped expectations of 48.5, which would have signaled a contraction, according to a Reuters poll of economists.
And although China’s official P.M.I. rose slightly, its first increase since March, it also showed the effects of slowing demand in Europe and the United States.
A P.M.I. figure for China compiled by HSBC, which relies more heavily on private companies than the large state-owned enterprises that dominate the government’s P.M.I. report, showed that growth in factory activity, while still rapid, was slowing.
“The key thing they show is that we are not out of the woods,” said Jeavon Lolay at Lloyds Banking Group. “The economies are very vulnerable to any shock, which at this moment in time there are a few of. What is happening in the euro zone is very important, and in the U.S., growth has weakened markedly in the last two quarters. There is a risk of a return to recession.”
Markit’s Eurozone Manufacturing P.M.I. fell to 49 in August from 50.4 in July, revised down from a preliminary 49.7. It is the first time since September 2009 that the index for the sector, which drove a large part of the bloc’s recovery, has fallen below the 50 mark that divides growth from contraction.
In a worrying sign for policy makers, the slowdown appears to be spreading. German factories, which have been supporting growth in the bloc, eased off the accelerator, and French manufacturing contracted for the first time since July 2009.
The German economy grew just 0.1 percent in the second quarter, far slower than the 1.3 percent growth seen in the first three months of the year, figures released Thursday showed, adding to evidence that the outlook for its economy, Europe’s largest, was darkening.
New export orders in the euro zone fell for the third straight month. The subindex declined to 46, down from the preliminary 46.9 reading and much lower than the 47.6 in July.
Switzerland, which is outside the 17-nation euro zone, said Thursday that its economy grew at its slowest pace since 2009, as a record-strong Swiss franc hurt exports.
“The West’s deteriorating growth outlook is becoming an increasingly heavy burden to bear,” said Donna Kwok, an economist with HSBC, which sponsors P.M.I. reports in many Asian countries.
Weak growth in the United States and Europe has revived worries that they will slip back into recession, which would deal a heavy blow to Asia’s export-driven economies.
Most advanced economies have already cut interest rates to near zero, and with government finances constrained, policy makers have limited options for spurring stronger growth.
The European Central Bank, the U.S. Federal Reserve and the Bank of England are all expected to retain their ultra-loose monetary policy for at least another year.
That leaves the big emerging economies as the best hope for propping up global growth, but they are also struggling.
While HSBC’s China P.M.I. rose to 49.9 last month, it still pointed to slower growth, and Taiwan’s dropped to 45.2, the lowest reading since January 2009, in the middle of the global financial crisis that crushed world trade.
“Asian growth is set to slow more sharply than most expect over the coming months,” a Credit Suisse economist, Robert Prior-Wandesforde, wrote in a note to clients.
China’s index for new export orders dropped to 48.3 from July’s 50.4, and Beijing attributed the decline at least partly to the debt crises in advanced economies. The National Bureau of Statistics said the export sector was “facing challenges.”
Taiwan had a sharp decrease in new export orders, particularly from Europe, while in South Korea the subindex fell to a seasonally adjusted 48.86 from 52.13, dropping below the neutral point for the first time since October last year.
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