Archive for May, 2011

EU-IMF to conclude Greece audit this week: finance minister

Monday, May 30th, 2011 | Finance News

ATHENS (AFP) – A critical audit of Greek finances to enable the debt-hit eurozone country to access a badly-needed slice of EU-IMF funds will conclude this week, the Greek finance minister said on Monday.

"We are concluding the negotiations and I hope they will be finished ... by Wednesday," Finance Minister George Papaconstantinou told Antenna TV.

The talks with auditors from the EU, the International Monetary Fund and the European Central Bank -- the 'troika' of creditors that bailed out Greece last year -- have dragged into an unprecedented fourth week and Athens' ongoing debt woes are causing friction in European capitals and market concern.

A German finance ministry source said the findings would be handed over "probably at the end of the week."

The head policymaker of eurozone finance ministers, Luxembourg Prime Minister Jean-Claude Juncker, said Monday he was "rather optimistic" on the outcome of the Greek debt puzzle, adding that European leaders would work on a solution by the end of June.

"We will try to resolve the Greek problem by the end of the month of June," he told reporters after a meeting with French President Nicolas Sarkozy in Paris.

European heads of state are to hold a summit on June 23-24 in Brussels with Greece expected to be high on the agenda. There have also been reports that eurozone finance ministers will meet on the issue earlier in the month.

Greece has warned that it needs the next EU-IMF loan injection of 12 billion euros ($17 billion) to pay its bills or it will run out of money in July.

But some of Athens' eurozone peers have expressed reluctance to extend fresh funds and the IMF has warned that it too could withhold its share of the May 2010 110-billion-euro bailout if the country cannot find financing from other sources.

Prime Minister George Papandreou has struggled to build a broader consensus around the unpopular austerity measures which he insists are necessary to save the country.

Papaconstantinou disclosed on Monday that the prime minister had offered to cooperate with the opposition conservatives to "jointly negotiate" with the EU and IMF and agree on the appointment of experts to help reduce the deficit.

But the conservatives, who were in power until 2009 and are blamed by many for the debt problem in the first place, have refused to work with the government.

However, the talks with the troika would conclude "favourably" and Greece will receive the loan instalment, the minister said.

Despite Greece's assurances, doubts over on even more unpopular measures needed to stabilise its finances have been growing in recent weeks alongside fears that some kind of debt restructuring or rescheduling will be necessary.

Thousands of people have occupied central Syntagma Square in Athens since last week in a peaceful protest against the government's austerity policies.

With interest rates demanded by investors to lend to Greece still painfully high, Athens will likely fail to return to the markets next year to finance debt coming due and may need a second bailout of up to 60 billion euros.

Dutch Finance Minister Jan Kees de Jager on Saturday warned that his country would refuse additional disbursement under the current bailout, as would Germany and Finland, if Greece cannot meet the IMF's terms.

On Monday, Slovak Prime Minister Iveta Radicova said Greece's 350-billion-euro debt should be restructured, a notion dismissed by Belgium's finance minister, who called for a joint eurozone bond instead to help Athens overcome its crisis.

Greece has been pressed to deliver on a huge privatisation drive of state assets designed to bring in some 50 billion euros in debt relief but the country's powerful unions have pledged to oppose the initiative.


NYSE Euronext plans dual clearing venues with LCH

Monday, May 30th, 2011 | Finance News

LONDON (Reuters) – Exchange giant NYSE Euronext (NYX.N) is looking to set up two parallel clearing services if it seals its proposed deal to buy Anglo-French clearing house LCH.Clearnet as well as merging with Deutsche Boerse (DB1Gn.DE).

NYSE Euronext, which agreed a $10.2 billion combination with its German peer on February 9, has partnered with data vendor Markit in early talks about a possible joint takeover of LCH.Clearnet, a source close to the talks said on Monday.

Deutsche Boerse already owns and operates the Eurex Clearing business, which handles trades on both its Eurex futures market and the boerse's Xetra share market.

"NYSE Euronext would be looking to keep its existing plans to move listed derivatives to Eurex Clearing," the source told Reuters on Monday.

"If successful (this) would provide the group with an option to create more customer synergies between the listed and over-the-counter (OTC) markets," the source said.

The plan is for Eurex Clearing to act as the clearer of choice for instruments traded on an exchange, while LCH.Clearnet will become the venue for the far larger off-exchange or OTC markets, the source said.

Details of the NYSE Euronext plan emerged after media reports on Friday said that the transatlantic exchange operator, along with its rival Nasdaq OMX (NDAQ.O) and the London Stock Exchange (LSE.L) have all made bids for LCH.Clearnet, which is based in London and Paris.

This prompted LCH.Clearnet to confirm on Saturday that it had received a number of offers from exchange operators about a possible tie-up, declining to comment further.

However, the LSE said on Sunday it is not currently in talks with the clearing house.

Clearing, which has been thrust into the spotlight since the collapse of Lehman Brothers in late 2008, provides trading counterparties with a guarantee against the other party defaulting on its obligations.

The sector has been given a huge boost by regulators in Europe and the United States who are planning to pass into law new rules to force large swathes of the $600 trillion OTC market in derivatives, such as interest rate and credit default swaps, to use clearing houses.

This has prompted many of the world's largest exchange operators, some of which own there own clearing providers while others use third party specialists like LCH.Clearnet, to review their clearing strategies.

NYSE Euronext, which along with the LSE uses LCH.Clearnet, said last year it will set up in 2012 its own European clearing services and move business off LCH -- a model used by Deutsche Boerse.

"NYSE Euronext wants to in-source its clearing in Europe and LCH.Clearnet would present a ready-made clearing solution for them, as well as complementing their clearing presence in the U.S.," said Herbie Skeete, managing director at exchange consultancy Mondo Visione.

NYSE Euronext also launched in March this year New York Portfolio Clearing, the exchange's joint venture with U.S. clearing giant the Depository Trust & Clearing Corporation, to handle interest rate futures trading in the United States.

NYSE Euronext is the largest shareholder in LCH.Clearnet, with about 9 percent of the firm's stock, while the next largest owner is the London Metal Exchange with 8 percent.

The remaining 83 percent is owned by LCH.Clearnet's largest banking and brokerage clients, most of whom would need to approve any takeover of the firm.

(Editing by Douwe Miedema and Greg Mahlich)


India’s RCom quarterly profit plummets

Monday, May 30th, 2011 | Finance News

MUMBAI (AFP) – Indian telecoms firm Reliance Communications on Monday showed a worse-than-expected drop in quarterly net profit -- its seventh straight quarterly fall -- as costs outpaced revenues.

Net profits at RCom, controlled by billionaire Anil Ambani, slid nearly 87 percent to 1.69 billion rupees ($37 million) for the three months ended March from 12.2 billion rupees last year, a statement showed.

Revenues for the fiscal final quarter fell 65 percent to 78.76 billion rupees.

Analysts had expected RCom to show a profit of three billion rupees.

RCom shares rose 2.94 percent or 2.5 rupees to 87.5 rupees on the benchmark Sensex index at the Bombay Stock Exchange before its earnings on bargain hunting, after being battered in recent months.

Investors have been offloading shares in the group since news emerged that Ambani met federal police in April, who were investigating alleged irregularities in the awarding of second-generation (2G) mobile phone licences.

Three senior officials from group subsidiary Reliance Telecom face charges of cheating, forgery and criminal conspiracy in the 2G fraud case, which the national auditor estimates cost the country nearly $40 billion.

The 2008 sale has also led to the arrest of former telecoms minister A. Raja, a number of his close aides and a property tycoon.

Both Ambani, India's eighth-richest man with an estimated $8.8 billion fortune, according to Forbes, and the group have denied any wrongdoing.

RCom is one of several Indian cellular firms that compete intensely in a fast-growing sector.

India is the world's fastest-growing cellular market and has more than a dozen operators, compared with just two state-owned telecom firms a decade ago.

The flood of new players has unleashed a cut-throat price war, affecting the profits of most local telecom firms, with calls now costing less than a cent a minute in India.

For the full year, RCom's net profit fell 71 percent to 13.46 billion rupees, from 46.55 billion rupees, the company said.