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Cyprus’s Bailout Plan Meets With Skepticism

March 23, 2013 by Leave a Comment

The Parliament put off until later this weekend a vote on a crucial new proposal that would confiscate 22 to 25 percent of uninsured deposits above 100,000 euros through a new tax on account holders in one of the nation’s most troubled banks.

So with a deadline imposed by the European Central Bank looming on Monday, it appeared there was still no immediate path to a lifeline of 10 billion euros, or $13 billion, that Cyprus needs to keep its banks from collapsing.

Cyprus’s so-called troika of lenders — the International Monetary Fund, the European Commission and the European Central Bank — must still approve any plan. President Nicos Anastasiades was scheduled to fly to Brussels on Saturday to meet with European Union leaders, a spokesman said.

Monday is a national holiday in Cyprus, but banks are supposed to reopen on Tuesday for the first time in more than a week. There is widespread fear of a classic bank run.

On Friday, Cypriots jammed into supermarkets after lining up all day Thursday at automated teller machines to withdraw as much cash as possible. Gas stations were taking cash only, and some retailers reported that they would no longer accept credit.

One of the provisions Parliament approved Friday would impose new restrictions on withdrawing cash or moving money out of the country when the banks reopen. These new capital controls would prohibit or restrict check-cashing and bar “premature” account closings or any other transaction the authorities deemed unwarranted.

Lawmakers also voted to restructure the nation’s largest and most troubled bank, Laiki Bank, by splitting off its troubled assets into a so-called bad bank. Accounts with no problem would be transferred to the nation’s largest financial institution, the Bank of Cyprus. Lawmakers also voted to require that any bank on the verge of bankruptcy be split apart in the same way.

By effectively shutting down one of the banks needing support, the government could lower the 5.8-billion-euro sum that international lenders are demanding in exchange for a bailout. The consolidation of Laiki, also known as Cyprus Popular Bank, effectively relieves the government of a large expense of supporting the banking system, which is on the verge of collapsing under a mountain of souring loans to Greek businesses and individuals.

Still to be voted on is the measure to impose a tax of 22 to 25 percent on uninsured deposits at the Bank of Cyprus. That proposal was made after lawmakers rejected a plan earlier in the week to tax insured deposits to help raise the amount needed to secure the bailout. The Parliament appears to be trying to make up the difference in part by shifting the burden to large account holders.

When euro zone finance ministers negotiated the original bailout terms last weekend, Cypriot officials had resisted limiting the tax to large accounts, evidently to avoid damaging the country’s reputation as a haven for wealthy banking clients. Many of the wealthiest citizens of Russia have euro-denominated bank accounts in Cyprus, which is one reason that euro zone finance ministers have taken such a hard line.

The decision to tax uninsured deposits came after Cyprus proposed nationalizing the pension funds of state-owned Cypriot companies.

Lawmakers approved the pension takeover on Friday, but the move was denounced in Germany, whose political and financial influence in the euro zone tends to dictate policy.

  “When you consider that there was massive resistance against involving the savings, then it is not easy to see how tapping the pension funds, which we view as socially a much more drastic step, is a very good idea,” Steffen Seibert, a spokesman for the German chancellor, Angela Merkel, told reporters.

The suggestion of tapping pension funds touches off a visceral response in Germany, where history has proved the dangers of such ideas. German pensions were tapped to finance both world wars, and the idea remains anathema to German leaders today.

Contributing reporting were Melissa Eddy in Berlin, James Kanter in Brussels, David M. Herszenhorn in Moscow, Niki Kitsantonis in Athens and Andreas Riris in Nicosia.

Article source: http://www.nytimes.com/2013/03/23/business/global/cyprus-bailout-vote.html?partner=rss&emc=rss

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The Boss: Chris Neugent of Malt-O-Meal, on Teamwork

October 9, 2011 by Leave a Comment

MY parents were a big inspiration. My mom started college in her 40s and graduated magna cum laude at 50. My dad became a route sales driver for a bread company at 18 and rose to vice president for the largest commercial baker in Texas before he retired.

I learned the fundamentals of the food business from my father. I remember visiting stores with him when I was a kid and helping him straighten the loaves of bread on the rack. He taught me the importance of having the best-tasting food on the shelf.

I had several jobs for his company growing up. My first was mowing the lawn, and through high school and college I drove bread trucks.

Attending college in the East — at Princeton — was a huge change. The only other time I had been out of Texas was on a weekend trip to Arkansas. I was naïve as a kid could be, and the guys I lived with taught me a lot. After graduating with an economics degree in 1983, I sold investments in Dallas for five years. It wasn’t a great fit, but it was a good learning experience. Next I joined Frito-Lay as an analyst. After three years as a numbers guy, I decided to return to sales. That put me back in a frontline position, driving a truck again, selling and servicing supermarkets and convenience stores. I tell my son that I’ve been selling food in a bag ever since.

I recall visiting a store in Terrell, Tex., one Fourth of July. Chips and that holiday go together somehow, so I was able to empty my truck there that day. But the retail business can be tough. One of the hardest-selling environments I ever experienced was Houston.

Frito-Lay had 70 percent market share there, but my group still had the same sales growth targets as our colleagues across the country. Convincing one of the convenience store chains to give us 12 displays in each of its several hundred stores was probably the most difficult sale my team ever made. These were small stores, and we already had 10 displays in each one, so we were pushing the envelope. But it worked out well. In the food business, you don’t want to try to force a product on retailers and have them regret the purchase.

I stayed at Frito-Lay 12 years and rose to be a vice president for marketing. I felt it was time for a change, so when a recruiter called about Malt-O-Meal in 2001, I was intrigued. This is a family-owned, entrepreneurial company like the one my dad worked for, which is what I was looking for. I started as vice president for sales and marketing, was promoted to chief operating officer in 2004, and to C.E.O. in 2008.

We’re challenging the legacy cereal brands. To compete, we have to keep our prices low for consumers and give retailers a good margin. It’s a challenge. Everyone has to work shoulder to shoulder here. I played football and rugby in school, and I don’t have a lot of patience for prima donnas. Companies are only as good as their people.

I like to say the office is a dangerous place from which to view the world. I often travel to stores with the other senior executives. That’s where the customers are, and the senior team has to be there to understand them.

We discovered, in forgoing cereal boxes, that bags alone are more environmentally friendly. We made that decision to save money, but when we realized the benefit to the environment, it made us cast a wider net and look for other ways to be more sustainable.

Every summer, a friend and I take our teenage sons fishing for a week in the Canadian wilderness. An outfitter drops us off and we’re on our own. The boys prepare the potatoes, and I clean and cook the fish we catch. Because I’m in the food business, I’m the cook.

As told to Patricia R. Olsen.

Article source: http://feeds.nytimes.com/click.phdo?i=17ea99afadd5432367706c3879352dda

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Preoccupations: Retired, but Doing the Work You Love

May 29, 2011 by Leave a Comment

I NEVER planned on retiring early. I was deputy chief of operations for the Community Redevelopment Agency of the City of Los Angeles, and I felt I was doing important work. The agency enters communities where residents suffer from high levels of unemployment, overcrowding and crime. It acquires and demolishes unsafe buildings; finances, builds and rehabilitates housing; brings in commercial services like supermarkets; and provides jobs for local residents. I wasn’t prepared to walk away from that career.

The C.R.A. is financed by a share of property taxes from the communities in which it works, and tax revenues declined significantly because of the recession. Last year, the agency announced that it was reducing head count by 20 percent.

Retirement packages were offered according to people’s age and how long they had worked there. At 66, with 28 years in, I qualified. I would also receive my pension, and I had saved over the years.

The proposals to retire early were extremely generous, and if enough people didn’t take the offer, the agency was going to lay people off. I was fairly sure I wouldn’t be in that group if I stayed, but I didn’t want to take a chance.

I retired in December, but I wasn’t happy about it. I had planned to work longer. If you don’t like your job or are tired of working, it’s one thing. But if you’re passionate about what you do, the thought of leaving can be upsetting even if it makes the best sense financially. I talked with management about returning as a consultant, but I wasn’t offered anything definite before the retirement date.

As soon as I left, I started investigating other kinds of work. I developed a syllabus for a graduate class on urban planning and economic development that I might offer to a local university, and I looked into volunteering.

People facing retirement are dealing with a big life change. It’s helpful to have time before you retire to think about the future and what you will do. I found the decision difficult because I didn’t have that time.

About three weeks after I retired, the C.R.A. chief executive called and offered me a contract to return as a consultant for a year. Just over 40 employees had left the organization in December, and there hadn’t been enough time to train people in their new duties. The people who are left are highly skilled, but they don’t have the knowledge or the contacts in other departments and agencies that many of the retirees do. I’m helping to reorganize the remaining staff and to record the organization’s procedures for those who remain.

There are undoubtedly other organizations like mine that found it necessary to reduce head count but didn’t have time for a knowledge transfer. I doubt it’s intentional; I think time gets away from them.

Employees look at me differently since I’ve returned. For one thing, I can’t give directions to staff anymore. I still review documents that require approval from the agency’s board of commissioners, the city council or other city staff, just as I used to do. I ensure that they’re properly written so that they clearly and accurately reflect the agency’s intent and are legally and operationally sound. When I was on staff, I could just tell people what changes to make. Now I have to say, “Here are some suggestions about how this could be a better memo.”

Initially I had some trepidation about how I would feel returning to the organization in this capacity, and even after I started I wasn’t sure how I felt. But now that some time has passed, I like the freedom and the flexibility more than I thought I might.

I work 15 to 20 hours a week and can largely decide my own schedule. I’ve begun volunteering with the Los Angeles River Revitalization Corporation, an organization I helped create in 2009. I’m also talking to a community group that deals with environmental justice in Los Angeles about working with them either as a volunteer or a paid consultant.

IF I could return full time to my staff job, at this point I’m not sure I would. I’d have to think about it. I ended up having the best of both worlds — I can work part time at a job that helps the community and do similar work as a volunteer in my free time. That was my primary concern about leaving — whether I would be able to continue doing this type of work outside this agency.

The way it has worked out goes to show that you shouldn’t look at change as necessarily negative. You may find opportunities you weren’t expecting.

I don’t know what will happen when my contract is finished. I’d love to have another contract with the agency and to continue with my outside activities. The worst case would be to have neither. If I couldn’t be of service to communities, I’d feel I was left out in the cold.

As told to Patricia R. Olsen.
E-mail: preoccupations@nytimes.com.

Article source: http://feeds.nytimes.com/click.phdo?i=391d0d7a447d27b9c27ebe5bb612c2c7

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