socialist government

DealBook: Facing Possible Ban, Santander’s C.E.O. Resigns

April 29, 2013 by NewsMaker Leave a Comment

Juan Carlos Hidalgo/European Pressphoto AgencyAlfredo Sáenz helped transform Banco Santander from a regional lender to an international giant.

8:29 p.m. | Updated

Alfredo Sáenz resigned on Monday as chief executive of Banco Santander, Spain’s largest bank, in a move that ends a period of uncertainty over the bank’s leadership. Mr. Sáenz had been facing a possible ban from banking after a criminal conviction.

Less than a week ago, the bank reported that first-quarter net profit fell 26 percent.

He will be succeeded by Javier Marín, 47, who has worked for Santander for two decades, mainly in its private banking arm, and is the head of its insurance, asset management and private banking operations.

Mr. Sáenz, 70, is departing with a retirement package worth 88 million euros (about $115 million). He was one of Spain’s highest-paid chief executives, earning 8.2 million euros last year despite a pay cut of 29 percent.

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Mr. Sáenz joined Santander in 1994 after the bank acquired a local rival, Banesto. Since then, he helped Santander’s chairman, Emilio Botín, 78, transform the company from a regional lender to an international giant.

Yet Mr. Sáenz also faced a series of legal problems, including his conviction in 2009 for making false accusations in the early 1990s in a case involving Banesto. He was pardoned by Spain’s departing Socialist government in 2011, though the country’s supreme court partly overturned that decision this year, renewing concerns over his tenure.

Santander has been hurt by persistent economic problems in Europe, as well as in emerging markets like Brazil. Last year, Santander set aside provisions totaling $25 billion to cover a rise in delinquent mortgages in Spain and an increase in other troubled loans across its businesses.

In Latin America, where Santander earns more than half of its net income, a slowdown in economic growth is starting to cause problems. First-quarter earnings for the region fell 18 percent, to 988 million euros ($1.3 billion), despite an increase in local lending and customer deposits. Profit from Continental Europe in that period plunged 27 percent, to 307 million euros.

Spain’s supreme court ruled in February that the previous government had gone too far in its pardon of Mr. Sáenz. The court reinstated Mr. Sáenz’s criminal record, casting doubt over whether he could continue as a senior executive at Santander.

The current government passed a law this month that allows bankers with criminal convictions to continue working, but that still left Mr. Sáenz exposed to a final ruling by the Bank of Spain. Analysts said the decision by Mr. Sáenz to step down was an attempt to ease the uncertainty.

Even though Santander described Mr. Sáenz’s decision as voluntary, “maybe it was too risky for Santander to be exposed to an inconvenient decision by the Bank of Spain in the next three or four weeks,” said Robert Tornabell, a professor of banking at the Esade business school in Barcelona.

Shares in Santander closed up 2.6 percent on Monday.

Mr. Sáenz’s successor, Mr. Marín, is credited with negotiating several important insurance alliances for Santander, notably with the Swiss company Zurich, covering its Latin American operations, and with Aegon last year.

Still, Mr. Marín’s appointment came as a surprise, given his relatively low profile.

“He would be relatively unknown to the wider investment community, so I guess it may take him a bit of time to establish a rapport with investors,” said Daragh Quinn, banking analyst at Nomura in London.

The appointment also puts Mr. Marín’s name on the list of candidates to succeed Mr. Botín. That list also includes Mr. Botín’s daughter, Ana Patricia Botín, who is in charge of the bank’s British operations.

Professor Tornabell said that Mr. Botín was maneuvering as “in a chess game,” strengthening his leadership during a decline in earnings before probably appointing his daughter as his replacement. Still, Professor Tornabell said that some institutional investors worried that Mr. Botín was running the bank as “a monarchy dynasty,” despite owning only about 2 percent of its equity.

A spokesman for Santander declined to comment. A representative for Mr. Sáenz was not immediately available to comment.

Article source: http://dealbook.nytimes.com/2013/04/29/santanders-chief-executive-resigns/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: chief executives, hidalgo, socialist government

A Push Against Tax Havens Gains Support in Europe

April 13, 2013 by NewsMaker Leave a Comment

DUBLIN — Europe’s efforts to crack down on tax havens gained momentum on Saturday as finance ministers from nine countries agreed to share more bank information. Ministers from Belgium, the Netherlands and Romania joined their French counterpart in a push for more automatic exchanges of bank records that already had the backing of Britain, Italy, Poland and Spain. For France, the issue has taken on greater urgency since Jérôme Cahuzac, the former budget minister, quit after he acknowledged having foreign holdings in Switzerland that he previously denied.

“The surge in member states’ appetite for progress and action in the fight against evasion is extremely welcome,” Algirdas Semeta, the European Union commissioner for taxation, said at a news conference on Saturday after two days of meetings where ministers discussed adoption of Europe-wide laws modeled on the Foreign Account Tax Compliance Act, a United States initiative to find hidden accounts overseas.

“The tools are already on the table, waiting to be seized,” said Mr. Semeta, referring to plans in Europe to provide greater exchanges of information on interest earned on savings, including from trusts and foundations.

Mr. Semeta said that the European crackdown against tax evasion could eventually extend to dividends, capital gains and royalties, significantly expanding the revenue earned by national treasuries. He also encouraged countries to bring forward a date, currently foreseen for 2017, when those revenues are meant to fall under the microscope. Europe is also being pushed toward greater transparency by the recent release of an investigative report on thousands of offshore bank accounts and shell companies, and by the prospect of a meeting of finance ministers from the Group of 20 leading economies next Thursday in Washington, where tax transparency is expected to be discussed.

In the French case, the Socialist government of François Hollande was deeply embarrassed by the revelations at a time of economic hardship for many citizens, and the French finance minister, Pierre Moscovici, led the calls for reforms at a hastily assembled news conference on Friday evening.

Taking leadership over the issue of tax havens “is very important for ensuring that citizens can trust the efficiency and fairness of our tax systems,” said Mr. Moscovici, who was flanked by Wolfgang Schäuble, the German finance minister, and George Osborne, Britain’s chancellor of the Exchequer, and by ministers from Poland, Spain and Italy.

The initiative should eventually cover “all kinds of revenues,” and would be similar to the American tax compliance act, Mr. Moscovici said.

One European tax haven, Luxembourg, bowed to such pressure on Wednesday and said it would begin forwarding the details of its foreign clients to their home governments.

Standing in the way is Austria, which has resisted agreeing to an automatic exchange of banking information between European Union countries.

Chancellor Werner Faymann of Austria recently suggested that talks were possible, and European officials said they expected Austria eventually would offer concessions. But the country’s finance minister, Maria Fekter, has showed no signs of backing down.

“We will fight for bank secrecy,” Ms. Fekter said on Saturday. “We are no tax haven,” she said. A day earlier she sought to portray Britain as one of the European Union’s biggest tax havens.

Mr. Osborne said at the news conference on Friday evening that he was pushing for more transparency from the Cayman Islands and British Virgin Islands.

“The places that you can hide are getting smaller and smaller and fewer and fewer,” Mr. Osborne said. “We are in advanced stages of discussions with them,” he said of talks with the two territories. “But I think they are in no doubt about what we expect of them,” he said.

More European countries are expected to join the campaign in coming weeks after Herman Van Rompuy, the president of the European Council, said on Friday that the bloc’s 27 leaders would discuss the issue at a summit meeting of leaders next month in Brussels.

David Jolly contributed reporting from Paris.

Article source: http://www.nytimes.com/2013/04/14/business/global/a-push-against-tax-havens-gains-support-in-europe.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: capital gains, european union commissioner, socialist government

Uproar in France on Foreign Bank Accounts Deepens

April 4, 2013 by NewsMaker Leave a Comment

Adding to the president’s difficulties was the revelation on Thursday that a close friend and the co-treasurer of his 2012 election campaign invested in offshore businesses in the Cayman Islands, a well-known tax haven.

The name of Mr. Hollande’s treasurer, Jean-Jacques Augier, appeared on a list of names of investors in two Cayman Islands funds that was leaked to the Washington-based International Consortium of Investigative Journalists.

In an interview with Le Monde, Mr. Augier — a publisher and former classmate of Mr. Hollande’s at the elite École Nationale d’Administration — declared that there was nothing illegal about his Cayman investments, which date to 2005 and 2009, conceding only that “maybe I lacked a bit of caution.”

Mr. Augier denied that he had hidden any income or done anything “incompatible” with the exercise of French presidential power.

At a news conference on Thursday evening in Morocco, Mr. Hollande said that “I knew nothing of these activities, these investments,” and that “if they don’t conform to the fiscal law” he would ask the appropriate authorities to act. He emphasized that the accounts of his campaign were clean.

The right in France, still stung by Mr. Hollande’s presidential victory last May, has leapt with glee on the revelations, suggesting that the Socialist government has not kept Mr. Hollande’s promises to be clean, exemplary and transparent, a supposed contrast to the administration of President Nicolas Sarkozy, who is being investigated for abuses in the financing of his 2007 campaign.

Mr. Hollande has promised to crack down on tax cheats and compel France’s wealthy to pay more in taxes, even though the economy is stagnant and unemployment is hitting record levels.

Given those promises, Mr. Hollande’s real troubles circle around the case of his former budget minister, Jérôme Cahuzac, who stepped down less than a month ago after the Paris prosecutor’s office said it was investigating him for probable tax fraud. Accusations against Mr. Cahuzac surfaced in early December after an investigative Web site, Mediapart, obtained an audio recording that it said was of Mr. Cahuzac and that suggested he had held an account with the Swiss bank UBS for roughly a decade.

Mr. Cahuzac denied the existence of any such account for months — even when confronted by Mr. Hollande himself and his direct boss, Finance Minister Pierre Moscovici. Mr. Cahuzac also denied having the accounts in appearances in Parliament and in the news media. But on Tuesday, he admitted that he had secret bank accounts worth at least 600,000 euros, about $770,000, in Switzerland and Singapore.

With Mr. Hollande on a state visit to Morocco on Thursday, his cabinet ministers were left to respond to reports that the Élysée Palace had been discreetly informed in December by the French intelligence service, the D.C.R.I., of its suspicions that Mr. Cahuzac might indeed have secret accounts.

Manuel Valls, who as interior minister oversees the intelligence service, forcefully denied the reports, saying: “There was no note from the D.C.R.I.” about Mr. Cahuzac. The president’s office also denied speculation that perhaps the intelligence service had passed its concerns to the president’s office in an informal, unsigned note.

Mr. Cahuzac’s former boss, Mr. Moscovici, has come under particularly sharp criticism in the case. In an interview on Thursday in Strasbourg, he spoke emotionally of what he described as an “unforgivable” and personal betrayal.

“I’m the one to whom he lied the most — not once, not 10 times, but much more often,” Mr. Moscovici said. “He told me he had nothing to do with that matter, with enormous energy.”

Mr. Moscovici dismissed the criticisms and suspicions that he might have known of the secret accounts and failed to act, and he said he hoped the uproar would be short-lived.

“I did everything I had to,” Mr. Moscovici said. “I was always proactive in following this case with the powers I had. And I was transparent with justice and the police. No one could say I tried to block any case.”

Mr. Moscovici said he was just an “intermediate target” — the real one being Mr. Hollande, who is being pressured by some in his party to reshuffle his government early.

A government reshuffle would make sense to change policy direction, not simply to respond to public criticism, but “the president controls the clocks,” Mr. Moscovici said.

“Anything can happen in politics,” he said. “It’s very disagreeable to be used as a target when you did everything you could and the only mistake you made was to be victim of a liar who was a colleague and a friend.”

Article source: http://www.nytimes.com/2013/04/05/world/europe/uproar-in-france-on-foreign-bank-accounts-deepens.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: jean jacques, revelation, socialist government

Greece Approves Tough Measures on Economy

June 30, 2011 by NewsMaker Leave a Comment

Markets rallied globally, and European leaders welcomed the passage of one of the most radical overhauls of the Greek economy since democracy was restored in 1974.

But the changes are deeply unpopular in Greece, where street protests continued, and the Socialist government of Prime Minister George A. Papandreou will need to overcome widespread skepticism that it can carry out the budget cuts, layoffs, tax increases and forced asset sales, beginning with a vote Thursday on putting the measures in effect.

Economists also expressed concern that the austerity program demanded by European and international lenders could end up pushing the Greek economy into a deeper slump, making its debt even harder to pay back. More broadly, critics said they doubted that Europe had done more than postpone a day of reckoning for the euro, with Ireland, Portugal and Spain, as well as Greece, all struggling with slow or negative growth and rising debts.

The passage of the measures, a difficult and possibly debilitating feat for a Socialist Party elected on a social welfare platform, ensures that Greece’s foreign lenders will unlock the next installment of $17 billion in aid that the country needs to meet its debt obligations through August. But analysts in Athens predicted that the existing government might not last much longer than that, suggesting that political and financial uncertainty could continue for some time.

“It’s a giant step in terms of conception,” said Theodore Couloumbis, a vice president of the Hellenic Foundation for European and Foreign Policy, in Athens. “But it’s a baby step in terms of realization or implementation.”

European political leaders have pressed Greece for months to commit to a thorough overhaul of its bloated, state-led economy, and they hailed the vote on Wednesday as offering hope that the debt crisis was manageable.

Chancellor Angela Merkel of Germany welcomed the development as “really good news,” while the president of the European Commission, José Manuel Barroso, and the European Council president, Herman Van Rompuy, said in a joint statement that Greece had taken “a vital step back — from the very grave scenario of default.”

They urged Greek lawmakers to pass the second vote on Thursday on carrying out the measures, adding that “it would also allow for work to proceed rapidly on a second package of financial assistance, enabling the country to move forward and restoring hope to the Greek people.” Officials have promised that they will make more money available to help stimulate growth in Greece if it sticks to its austerity pledges.

Europe has much at stake in making the new bailout a success because several other countries that use the euro face similar, if less immediate, problems of high debt, widespread unemployment and little or no growth. Ultimately, many economists say, the sovereign debt of Greece and some other countries will have to be restructured, with their creditors accepting a discount on the debts’ face value. European officials have so far sought to avoid taking that step.

“If Europe comes together with an appropriate framework, that will enable a default to be avoided,” said Joseph E. Stiglitz, the Nobel-winning economist. “But there’s every sign that Europe won’t do that, so the likelihood of a problem down the line is very significant.”

Kenneth S. Rogoff, a former chief economist at the International Monetary Fund, who is now a Harvard professor, said the Greek vote and the infusion of aid would only buy a little time.

“It’s certainly kicking the can down the road,” Professor Rogoff said. “Greece is basically being bribed not to default. But as long as Greece doesn’t grow briskly for a sustained period, it’s in hot water.”

Hope is also in short supply among many Greeks, who said that the first round of austerity imposed after Greece’s first bailout last year had worsened rather than improved their plight, and that the second round demanded even deeper cuts in many areas.

“Of course things will get worse,” said Thimios Vilias, 35, who said his two-year contract at an insurance company would run out soon and who came out to protest on Wednesday. “The measures won’t do any good for Greece. We have more debt, more debt, more debt, and we have no work,” Mr. Vilias added.

Niki Kitsantonis contributed reporting from Athens, and Liz Alderman from Paris.

Article source: http://www.nytimes.com/2011/06/30/world/europe/30greece.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: debt obligations, international lenders, socialist government

Greek Government Struggles to Win Support for More Austerity

May 24, 2011 by NewsMaker Leave a Comment

ATHENS — Despite pressure from lenders for Greece to show a unified front in solving its debt crisis, Prime Minister George Papandreou had little apparent success Tuesday in persuading his political rivals to back additional tax increases and spending cuts.

The Socialist government has sought to respond to charges of foot-dragging by its European partners by announcing new initiatives to raise revenue, in order to secure the next installment of emergency funding from the European Union and International Monetary Fund.

Late Monday, the government said that it would proceed “immediately” with the sale of stakes in the telecommunications operator O.T.E., the country’s main ports of Piraeus and Thessaloniki and the state-owned Hellenic Postbank. The Finance Ministry would not say how much it aimed to raise.

On Tuesday, Mr. Papandreou met with opposition leaders, trying to win support for a broader program of “additional measures,” amounting to €6 billion, or $8.45 billion, to reduce Greece’s budget deficit to 7.5 percent of gross domestic product this year — from 10.5 percent in 2010 — despite double-digit unemployment and a deepening recession.

The Finance Ministry refused to disclose details of the additional measures, saying that they would be final only after Mr. Papandreou’s talks with the opposition and discussions this week with visiting representatives of the E.U. and I.M.F.

They have, however, been the subject of feverish speculation in the Greek press. Among the measures under consideration, according to the reports, are an increase in the road tax; raising the value-added sale tax on certain goods and services that now enjoy a reduced rate; imposing taxes on natural gas and soft drinks; and abolishing additional tax breaks. The introduction of a tax on pensions above a certain level is also believed to be in the cards.

The ruling Socialists have a comfortable six-seat majority in the 300-seat Parliament and should be able to pass the measures without the support of the opposition. But Greece’s creditors have been pressing Mr. Papandreou to seek consensus for the deeply unpopular reforms before presenting them to a Greek public weary of a year of austerity, arguing that some degree of political consensus would make implementation easier.

The European Economic and Monetary Affairs Commissioner Olli Rehn last week held up the example of two other euro-zone countries with debt problems where some cross-party agreement had been reached on austerity packages. “It is possible for Portugal and Ireland, why not Greece?” Mr. Rehn said.

However, Antonis Samaras, the head of New Democracy, the main conservative opposition in Greece, has repeatedly dismissed the government’s proposed reforms as “demonstrably wrong.” Earlier this month, Mr. Samaras presented an alternative fiscal program that calls for lowering taxes but moving faster on privatization, including the sell-off of the country’s biggest electricity producer, P.P.C.

The government has yet to make a move on P.P.C.; the ruling Socialists traditionally have strong ties with its labor union.

After meeting the prime minister on Tuesday, Mr. Samaras said additional tax increases would “suffocate” the sluggish Greek economy.

“We will not back this erroneous economic program,” Mr. Samaras said. “What is needed is a creative shock through the reduction of taxes. We say yes to privatizations but no to measures of fiscal panic.”

The response from leaders of Greece’s leftist parties was even colder. The head of the Communist Party, Aleka Papariga, refused to meet the premier, saying their views were “diametrically opposed.” The leader of the radical left Syriza party, Alexis Tsipras, described the proposed reforms as “a crime against the Greek people” and called for Mr. Papandreou to step down.

As the prime minister continued his meetings, the government spokesman George Petalotis said the ruling party was only interested in “proposals that will reduce the deficit.” He added that the first wave of privatizations would be carried out “soon.”

Greek unions announced plans for another one-day protest strike next month.

Article source: http://feeds.nytimes.com/click.phdo?i=52864d75477d7ed2973139487e58f665

Filed Under: Business News Tagged With: double digit unemployment, socialist government, soft drinks

Political Disputes Cloud Portuguese Bailout Talk

April 12, 2011 by NewsMaker Leave a Comment

LISBON — International creditors started discussing the terms of a bailout for Portugal on Tuesday amid concerns that their initial challenge would be to sort out the country’s political disputes rather than its financial situation.

The negotiators will seek to persuade feuding political parties to bury differences that have intensified in the buildup to a general election on June 5, which was called because of a parliamentary standoff over how to clean up the Portuguese government’s finances.

The creditors are expected to negotiate an assistance program for Portugal worth about 80 billion euros, or $116 billion, that is both broader and more stringent than a package of austerity measures that lawmakers rejected last month.

The rejection led to the resignation of Prime Minister José Sócrates, who remains at the helm of a caretaker Socialist government until the general election.

Officials from the European Commission, the European Central Bank and the International Monetary Fund will also want the terms of such a program to be endorsed by Portuguese opposition parties to ensure that a deal remains binding whatever the outcome of the June 5 vote.

Despite the political wrangling in Lisbon, analysts suggested that Portugal could not afford to delay a bailout deal beyond mid-May, the deadline set by European Union finance ministers last week.

“Political divisions are likely to keep weighing on the drafting of the program,” Tullia Bucco, an economist at UniCredit, wrote in a research report. “But the involvement of I.M.F. and E.U. officials should help ease potential tensions and forge a consensus on the needed measures.”

The bailout talks in Lisbon this week are expected to start with a technical assessment of Portugal’s finances, including the accounts of its banking sector.

To add to the uncertainty, the election might not produce a clear-cut outcome. The main opposition Social Democratic Party is expected to win, but without an absolute majority. The most recent opinion poll, released last week and carried out by the Catholic University of Portugal, showed Mr. Sócrates and his Socialist party narrowing the gap — an outcome that raised the possibility of a hung Parliament.

“Nobody looking at Portugal’s economic and political prospects should rule out Sócrates at this stage, because he has certainly not lost as much support as one might expect in this crisis and is at his strongest when campaigning,” said Cristina Casalinho, chief economist of BPI, a Portuguese bank.

Tough conditions set by international creditors could set off more social unrest and raise protectionist sentiment, playing into the hands of far-left politicians, led by the Communists, who arguably remain more powerful in Portugal than anywhere else in Western Europe.

This week, leftist groups started erecting billboards around Lisbon condemning an anticipated demand by creditors for more privatizations, under the slogan that “With the I.M.F., the one who pays is you.”

Portugal is following Greece and Ireland in requiring international assistance. The concern in Portugal is that tough bailout terms will leave the country with crippling repayment obligations that the country cannot count on economic growth to help it meet. The monetary fund projects that Portugal will remain in recession until 2012.

Political feuding in Lisbon has kept Portugal’s debt yields close to record highs since the rescue request last week. The yield on 10-year Portuguese bonds rose one basis point, or one hundredth of a percentage point, to 8.411 percent on Tuesday.

Portugal’s woes are being watched in Spain, a much larger euro zone economy that has also been in investors’ firing line because of its budget deficit and troubled banking sector. Spain’s borrowing terms have improved in recent weeks, however, after the central government met its 2010 deficit target. The yield on 10-year Spanish bonds fell 5 basis points Tuesday to 5.165 percent.

In a further vote of confidence, the Chinese prime minister, Wen Jiabao, said Tuesday that China would continue buying Spanish bonds, after recently buying about 6 billion euros. His comments followed a meeting in Beijing with Prime Minister José Luis Rodríguez Zapatero.

Having resisted for months the idea of a bailout, the Portuguese authorities now insist some of the rescue financing must be delivered by June. The Portuguese Treasury had a cash balance of 3.3 billion euros at the end of March, which it subsequently strengthened by selling some additional debt — although at high interest rates — to meet 4.5 billion euros in repayments due Friday.

Portugal next faces repayment obligations of about 7 billion euros in June, its toughest refinancing hurdle of the year.

Article source: http://feeds.nytimes.com/click.phdo?i=c2cb7190c10b15b91a00c60e510870d3

Filed Under: Business News Tagged With: banking sector, socialist government, tullia