Search results for

Rarely has a country’s banking system experienced such an overhaul in such a short space of time as Italy’s has over the past 12 months. The urge to merge has made banks team up with local rivals to avoid being gobbled up by a foreign competitor. The foundation ownership system set up in the 1990s is losing its grip. Peter Koh reports from Milan and Rome.

Distressed debt used to be a secondary-market play. Today, it’s a primary-market business. Distressed or stressed companies don’t avoid default by restructuring old debts. They put on new ones supplied by myriad new forced buyers of credit. The product’s already distressed when it goes on the shelf.

Alpha Bank to set up joint venture with Anadolu Group. Alpha Bank, a Greek bank, and Anadolu Group reached an agreement over setting up a 50-50 joint venture. Assets of the new holding company will consist of Alternatifbank and Alternatiflease shares which are currently held by Anadolu Group. Anadolu Group will transfer its stakes in Alternatifbank and Alternatiflease; 94% and 95% respectively, to this holding company. Alpha Bank will acquire a 50% stake in the new holding company for USD 246mn. The joint venture will also own 100% of Alternatif Yatirim, a brokerage house, and 45% of Alternatif Yatirim Ortakligi, an investment fund. The completion of Alpha’s acquisition is subject to finalization of due diligence and regulatory approvals and is expected to be completed in the first quarter of 2007, said a statement released by Alpha. Alpha is the third Greek bank entering the Turkish market. Earlier this year, National Bank of Greece (NBG) acquired Finansbank for USD 2.8bn and EFG Eurobank reached an agreement to buy a 70% stake in Tekfenbank for USD 182mn.

FX/gold reserves grow by USD 1.9bn to USD 278.9bn in Nov 10-17. CBR’s FX/gold reserves posted USD 1.9bn (0.69% w/w) growth to USD 278.9bn over Nov 10-17. The increase was slower than in the previous two weeks when the reserves grew by USD 2.8bn and USD 5.1bn respectively. The reserves are increasing five weeks straight by a total of USD 12.4bn. In ytd terms, total reserves soared by 53.1% as they stood at USD 182.2bn. The RUR/USD rate stood at 26.7 as of Nov 10 and RUR dropped against USD by 8 kopeks on the next day. Starting on Nov 15, the rate started RUR started to strengthen again and the rate made up RUR 26.66 as of Nov 17. EUR appreciated against RUR from 34.11 as of Nov 10 to 34.17 on Nov 17.

Midterm budget programme envisages further tax cuts. Minister of finance Ridvan Bode informed at the 9 th CEI economic summit on Thursday that that the midterm budget programme envisages further reduction of the taxation burden. At the same time, Bode highlighted that the government will make a decision about the details of the new fiscal programme in the middle of next year, and it will depend on the performance of the fiscal administration achieved this year. Bode hinted that the new taxation regime will be targeted towards attracting more foreign investments in the country. In line with the agreement between the government and the IMF, higher budget revenues will be spent on public investment projects (such as infrastructure upgrades) as well as reduction of the government’s internal borrowing and its domestic public debt. It should be noted that the new right-wing government elected in July last year embarked on an ambitious fiscal programme, reducing a number of levies on the corporate sector over the course of this year. While the fiscal loosening could have put a strain on state finances, preliminary data on the budget performance this year is encouraging as the budget deficits generated over the past years were reversed in to surpluses this year. According to the latest statistics of the finance ministry, the general government budget posted a surplus of EUR 50mn in the first ten months of the year. In addition, curbing the informal economy and the improved tax collection capacity of the fiscal authorities made possible the release of a supplementary budget in the middle of the year, which has been earmarked for key public investment projects. Finally, finace minister Bode projected that the general budget revenues will rise to 27.3% of GDP in 2009, compared to about 24.4% of GDP in 2005. While at the same time, public investments in 2009 will account for 7.6% of GDP in 2009, up from 4.6% of GDP in 2005.

MC member Nemenyi warns against monetary over-tightening. The central bank must be very careful to avoid monetary over-tightening, one of the prominent “dovish” members of the Monetary Council Judit Nemenyi said in interview for Reuters . She firmly rejected some interpretations that the Nov 20 “on-hold” decision meant sacrifice of the inflation target because of the Inflation Report ’s projection for 4.1% CPI rise in 2008 (against 3%+/-1pp target). According to Nemenyi, the central bank’s staff overestimated inflation and furthermore noted that monetary policy should take under consideration that inflation would be decelerating in late-2008 and in 2009. The MC member stressed that factors outside the Inflation Report must be also reviewed as “unchanged interest rate level could result in monetary tightening in itself, if the expected interest rate premium on forint assets declines”. Nemenyi also warned against excessive real appreciation due to the combination of high forint rates and too strong HUF , which would lead to further erosion of competitiveness and unnecessary hurt economic growth.

Power Machines to make additional share issue in 2007. Russia’s largest energy equipment producer Power Machines’ BoD approved the plan of floating additional share issue, the company’s press office said. The details of the issue are not set yet, however, the issue is expected in 2007. The funds earned will be used in the company’s investment program which is aimed at doubling its output. Reportedly, the planned issue will amount to USD 300mn (or some 30% of the company’s current market capitalization). Interros holding controls 30.4% in the company, power monopoly RAO UES and Siemens have 25% + one share each and portfolio investors own 19.5% in Power Machines. RAO UES is also the company’s leading client. According to Power Machines representative, each of its three major shareholders will keep a blocking package.

Customs revenue growth accelerates in October. Revenues from import and excise charges collected by the customs authorities increased by 33% y/y in October and 30% y/y in Jan-Oct following some slowdown in the growth rate in Q3 driven by administrative changes mainly. As of July 1 this year, the customs authorities expanded the coverage of their excise tax collection to both imported and locally produced goods. The process has brought some delays in the payment of excise taxes on imported goods but the wider taxation base generates significant one-effects in the customs statistics and their impact will increase in the upcoming months. The total amount of revenues, including VAT, tariffs, fees and other charges on imports as well as excise charges collected by customs offices, has reached BGN 5.68bn (EUR 2.9bn) in Jan-Oct accounting for 94% of the full-year plan and 12.5% of the projected full-year GDP.

FDI inflow improves by 66.7% y/y in H1. The inflows of FDI soared by 66.7% y/y and reached SKK 55.5bn (EUR 1.6bn) in H1, according to the update of the convergence program for the 2006-2010 period. The figure included property participation and reinvested profit and is lower than the SKK 64.8bn, reported by the central bank. The finance ministry explained the solid growth of the foreign investments as a result of the entry of large strategic investors, which draw other projects from subcontractors and associated companies. We should also note that the figure is probably significantly affected by the completion of the privatisation of a 66% state stake in the electricity monopoly SE at the end of April for EUR 839mn. Still, the program underlined that the performance of the foreign investments for the period was somewhat restrained due to the veto on sale of state assets during February-June due to the pending parliamentary elections. The program counts on continued stable inflows of FDIs in the program period, related also to expansion of existing investment projects.

Antitrust agency approves sale of Sofia Business Park to Gramercy. The antitrust commission has approved the request of the US investment fund Gramercy Emerging Market for taking over the country's largest office rent complex Sofia Business Park . The deal will be operated through full-scale acquisitions of two Austrian-registered firms owned by the German construction company Lindner. The price is not officially unveiled but Lindner claims that Gramercy is selected in competition against 55 institutional investors that has probably raised the price far above EUR 1,000 per square metre. The Park has a rent space of 62,000 square metres at present and is expected to reach 116,000 square metres upon completion of all office buildings. Lindner is now running a large residential project in Sofia . Gramercy has already accumulated a big portfolio of equity investments in Bulgaria . In addition to its full control in Business Park Sofia, it has minority stakes in the main landline telecom BTC, the country's second largest drugs maker Sopharma, Bulgarian American Credit Bank, and the country's largest lubricant producer Prista Oil.

Oil and gas company INA’s IPO expected to strengthen kuna, boost credit growth. The second stage of the privatisation of oil and gas company INA, under which up to 17% stake will be sold to the public via IPO, is expected to strengthen the domestic currency and further boost credit activity. The citizens are offered to buy INA shares for a sum up to HRK 38,000 and although the results of the subscription are to be announced on Monday, unofficial estimates show that some HRK 2bn will be paid by Croatians. Some of them will secure the needed funds through credits offered by some domestic banks. The banks credits could thus grow by some HRK 150-200mn in November.

China to encourage micro credit to improve employment. According to a Xinhua report, People's Bank of China's Deputy Governor Wu Xiaoling said that in order to increase employment, the central bank will encourage micro credit. Although China's financial institutions had distributed CNY 7.45bn in micro credit by the end of September, only 27.3% of China's rural households have availed of this facility.