Archive for January, 2011

Warehouse center owners AMB, ProLogis to merge

Monday, January 31st, 2011 | Finance News

NEW YORK (Reuters) – Warehouse and distribution center owner AMB Property Corp and rival ProLogis said they would merge, one of the biggest real estate deals since the financial crisis.

The combined company would have a stock market value of about $14 billion, AMB and ProLogis said in a statement on Monday.

Under the terms of the all-stock deal, each ProLogis common share will be converted into 0.4464 of a newly issued AMB common share, the companies said. The deal is expected to close in the second quarter, and the new company is to be named ProLogis.

(Reporting by Martha Graybow; Editing by Derek Caney)

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Support grows for lengthening Greek debt payback

Monday, January 31st, 2011 | Finance News

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PARIS/ATHENS (Reuters) – Support is gaining ground in the euro zone for giving Greece more time to pay back its EU bailout to avoid default and ease the worst-indebted EU state's debt burden, although details still have to be pinned down.

German Finance Minister Wolfgang Schaeuble, whose country is pivotal to any solution as Europe's strongest economy, did not rule out a radical reprofiling of Greek debt in a television interview broadcast on Sunday evening.

"Most market participants expect this problem to be tackled in a responsible way," Schauble said when asked whether Athens would be forced to restructure its debt.

Reuters reported on Friday that German central bank chief Axel Weber, frontrunner to be the next president of the European Central Bank, has suggested transforming international rescue lending to Greece and Ireland into 30-year loans in a bid to draw a line under the euro area's debt crisis.

Weber floated his idea in closed-door talks with finance ministers, central bankers and private bankers at the World Economic Forum in Davos, two euro zone sources said.

One participant in that session, speaking on condition of anonymity because of the sensitivity of the talks, said it was not clear whether Weber had German government backing.

But Schaeuble's comment suggested Berlin was open to a pragmatic solution, provided it achieves its own demands for stricter budget discipline and greater convergence of euro zone retirement and unemployment systems toward Germany's model.

THREE-STAGE SOLUTION

Greek newspaper To Vima published more details of what it said was Weber's plan, resembling the so-called Brady bonds which rescued Latin America from bankruptcy in the 1980s.

Under the three-stage plan, Greece would borrow from the euro zone's new rescue fund to buy back its own bonds from the ECB and private bondholders at about 75 percent of face value, the paper quoted a senior banker with knowledge of the talks as saying.

The EU and the International Monetary Fund would extend the maturity of bailout loans to 30 from three years and private lenders who own more than 100 billion euros of Greek bonds would be invited to extend their maturity to between 15 and 20 years.

All these measures would result in the reprofiling of about two-thirds of Greece's total debt by the end of this year, To Vima said.

Athens' debt is projected to peak at 158 percent of gross domestic product in 2013 according to the 110 billion euro EU/IMF adjustment program, a level many in financial markets regard as unsustainable.

Private bondholders' acceptance of any voluntary buy-back or swap of Greek bonds is uncertain since an EU source says banks are currently holding 80 percent of Greek debt to maturity to avoid declaring losses, and only 20 percent on trading books at a discounted "fair value."

Greek Finance Minister George Papaconstantinou said in a newspaper interview on Monday that, while there was no official proposal on the table, "It is clear, however, that there are thoughts on how to improve the debt sustainability of countries like Greece with a longer repayment period.

Both his comments and Schaeuble's contrasted with past flat denials that any debt rescheduling was being considered.

AMBITIOUS RESCHEDULING?

European finance ministers agreed in principle in December to align Greece's bailout loans with the seven-year maturity agreed in Ireland's 80 billion euro rescue package.

"Right now, Greece is holding talks on extending repayment of the EU/IMF bailout loan modeled after Ireland. This is the proposal we have and this is what we are discussing," a Greek finance ministry official told Reuters on Monday.

However, it is now clear that a significantly more ambitious rescheduling is under at least unofficial discussion among key ministers, central bankers and private bankers.

Hopes of a solution extending bailout loans to Greece and Ireland supported peripheral euro zone bonds amid nervous trading on Monday dominated by concern about turmoil in Egypt.

The risk premium investors charge to hold Spanish rather than benchmark German 10-year bonds narrowed slightly to 218 basis points, while the equivalent Italian spread was steady at 162 basis points.

The EU is looking for a way to stop the crisis engulfing further euro zone states, with Portugal seen as next in the firing line, followed possibly by Spain, the currency zone's fourth biggest economy.

Madrid has announced a raft of measures including a deal to raise the retirement age, labor market reform, budget cuts and privatizations, and a plan to recapitalize its ailing savings banks in a drive to convince markets it is not in danger.

On Monday, the Spanish government said it would offer state funds to restructured savings banks as early as March rather than waiting until September to see if they find sufficient private financing.

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Italians ‘dodged tax’ on ?50 bln of income in 2010

Monday, January 31st, 2011 | Finance News

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MILAN (AFP) – Close to 50 billion euros (68 billion dollars) in income went undeclared in Italy in 2010, a rise of 46 percent on the previous year, according to a financial police report Monday on the fight against tax evasion.

Out of over 49 billion euros unreported last year, 20 billion euros belonged to 8,850 people in employment while over 10 billion euros was sent abroad to avoid tax.

Twenty-six percent of the funds shipped abroad went to Luxembourg and 25 percent to Switzerland.

Another seven percent ended up in Britain while six percent went to Panama, the report said.

Italy has stepped up the fight against tax evasion and the underground economy in order to boost government coffers and help reduce the country's high public deficit.

In May, Prime Minister Silvio Berlusconi disclosed that nearly a quarter of the Italian economy goes untaxed, representing a loss to the state of 120 billion euros (148 billion dollars) a year.

The push to recover funds has already led to the regulation of 104.5 billion euros and has brought in 5.6 billion for the state.

According to the report, financial police also unmasked close to 4,500 people last year who were illegally claiming invalidity or poverty benefits, and seized over 110 million counterfeit products.

In the fight against organised crime, three billion euros worth of mafia-owned assets were confiscated in 2010, a rise of 30 percent compared to the previous year, while 20.5 tonnes of drugs were seized.

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