credit-agricole

France Pushed For AIG-Fed Deal To Pay Banks In Full With US Money

January 20, 2010

The Federal Reserve Bank of New York paid French banks 100 cents on the dollar to settle trades with American International Group Inc. in November 2008, the same month an AIG competitor negotiated payments of less than a third of that to retire similar bets. The decision to pay in full came after France’s bank regulator insisted that Societe Generale SA and Credit Agricole SA’s Calyon unit would be violating French law if they accepted less than they were owed…

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Agricultural Bank Said to Consider Shunning Foreign Investment Before IPO

January 14, 2010

By Cathy Chan Jan. 15 (Bloomberg) — Agricultural Bank of China , the country’s third-biggest by assets, may exclude foreign investors from buying shares before an initial public offering scheduled for this year, three people familiar with the matter said. The Beijing-based lender had previously held talks with European banks including Credit Agricole SA and Rabobank Nederland NV about investing before the IPO, one of the people said, declining to be identified because the discussions were private. The offering may raise as much as 200 billion yuan ($29.3 billion), according to reports in Chinese newspapers. That would make it the biggest first-time sale ever. Agricultural Bank would be the only one among China’s four largest lenders not to accept foreign investment before its IPO. Goldman Sachs Group Inc. and Bank of America Corp. are among firms that reaped multibillion-dollar profits investing in three Chinese state-owned banks before IPOs in 2005 and 2006 and selling part of their stakes last year. “History has shown that many of these so-called strategic investors are more like common financial investors seeking quick returns as they want to benefit from China’s economic growth,” said CSC Securities HK Ltd. analyst Li Qing . Agricultural Bank, which mainly serves China’s 700 million rural dwellers, may raise between 100 billion yuan and 200 billion yuan selling shares this year, Li Fuan , head of the China Banking Regulatory Commission’s banking innovation department, said last month, according to the Securities Times. ‘Strategic’ Investors A spokesperson for Agricultural Bank, who asked not to be identified citing company policy, declined to comment. Credit Agricole spokesman Stephane Petibon and Rene Loman , a spokesman for Utrecht, Netherlands-based Rabobank Groep NV, declined to comment. Industrial & Commercial Bank of China Ltd. , China Construction Bank Corp. and Bank of China Ltd. sold shares in 2005 and 2006 just as China was finishing a decade-long effort to clean up its banking system. They brought in foreign banks as investors, aiming to tap their expertise in risk management, product innovation and technical support, executives at ICBC and Construction Bank have said. While foreign banks such as Royal Bank of Scotland Group Plc touted the “strategic” nature of their purchases, the need to salvage finances hobbled by the global financial crisis led them to sell part of their holdings after lockup periods ended last year. RBS, the lender bailed out by the U.K. government, bought a $1.6 billion stake in Bank of China in 2005, before the bank’s June 2006 IPO . The Edinburgh-based lender sold its stake for $2.3 billion in January 2009 to replenish capital. Goldman’s Paper Profit New York-based Goldman Sachs , the most profitable securities firm in Wall Street history, made a paper profit of almost $4 billion on its then six-month old investment in ICBC when the lender went public in October 2006. Goldman Sachs sold part of its stake in June for about $1.9 billion, and its remaining holding is worth $10.4 billion. Agricultural Bank, which received a $19 billion cash injection from the government and removed 800 billion yuan of non-performing loans from its balance sheet in 2008, expects to lure buyers to its IPO even without the cachet of having a foreign investor, said one of the people. “Agricultural Bank’s IPO won’t be a flop” because of a lack of foreign strategic investors, said Li. “That said, the bank could still improve its management ability with some help from foreign competitors.” China plans to increase the lockup period on new foreign investment in its commercial banks to five years from three, the Securities Times reported in April last year, citing Liu Mingkang , chairman of the banking regulator. Most Profitable ICBC, Construction Bank and Bank of China now rank among the world’s 10 largest lenders by market value, after China’s economic boom and improved risk management helped them boost profit. ICBC ranks No. 1 both by profit and market capitalization. China’s Ministry of Finance and Central Huijin Investment Co., a unit of the nation’s sovereign wealth fund, each hold 50 percent of Agricultural Bank. The National Council for Social Security Fund, China’s national pension fund, said in February last year that it won cabinet approval to invest in Agricultural Bank before its IPO. Agricultural Bank had 8.6 trillion yuan of assets as of Sept. 30, making it China’s third-largest by that measure, trailing market leader ICBC and Construction Bank. The lender operates more than 24,000 branches nationwide and employs almost half a million people. — Luo Jun , Zhang Dingmin . With assistance from Fabio Benedetti- Valentini in Paris and Martijn van der Starre in Amsterdam. Editors: Philip Lagerkranser , Joost Akkermans To contact the reporter on this story: Cathy Chan in Hong Kong at kchan14@bloomberg.net .

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SocGen to Post `Slight’ Profit After $2 Billion of Writedowns, Provisions

January 13, 2010

By Fabio Benedetti-Valentini Jan. 13 (Bloomberg) — Societe Generale SA , France’s second-largest bank, said it had a “slight profit” in the fourth quarter after about 1.4 billion euros ($2.03 billion) of writedowns and provisions. The shares dropped. The Paris-based company, which didn’t provide a specific profit figure in its statement today, earned 87 million euros in the same period of 2008. Analysts expected fourth-quarter net income of 850 million euros, based on the median of six estimates compiled by Bloomberg. Societe Generale , which had a record trading loss two years ago that it blamed on unauthorized positions amassed by former trader Jerome Kerviel , has lagged BNP Paribas SA during the financial crisis as its French competitor became Europe’s biggest bank by deposits with the purchase of Fortis units last year. Societe Generale posted 457 million euros in net income for the first nine months of 2009, while BNP Paribas had a 4.47 billion-euro profit in the same period. “We still expect more markdowns” at Societe Generale, Jaap Meijer , a London-based analyst at Evolution Securities Ltd., said by e-mail. The bank may have potential pretax losses of 6.3 billion euros from risky assets after the writedowns and provisions it announced today, he said. Subprime Losses Societe Generale dropped as much as 3.07 euros, or 5.9 percent, to 48.60 and traded at 49.57 euros by 10:04 a.m. in Paris, valuing the bank at 36.7 billion euros. It has risen 44 percent in the past year, compared with the 75 percent increase of BNP Paribas. Societe Generale marked down mortgage-related securities in the fourth quarter because of an increase in estimated loss rates on U.S. subprime and prime loans, the bank said. “We hardened our assumptions in valuing risky assets,” Chief Financial Officer Didier Valet said on a conference call with reporters. “We’re in a position to confidently tackle 2010.” The bank, which had about 10 billion euros in markdowns and provisions stemming from the global financial crisis through September, said last week it plans to isolate risky assets in a separate unit. The company had assets at risk with an accounting value of about 37 billion euros at the end of 2009 from holdings including asset-backed securities and debt backed by U.S. bond insurers. Amundi Venture The bank said fourth-quarter revenue at the corporate- and investment-banking unit , especially in fixed income, was below third-quarter levels, “reflecting lower investor activity as of November and less favorable market conditions.” In the third quarter, the division’s revenue rose 43 percent to 2.52 billion euros, excluding writedowns. Societe Generale benefitted from a gain of about 600 million euros in the fourth quarter from the creation of Amundi, the asset-management venture it formed with Credit Agricole SA , France’s No. 3 bank by market value. Societe Generale also booked in the fourth quarter about 100 million euros in markdowns linked to credit-default swaps, the bank said. To contact the reporter on this story: Fabio Benedetti-Valentini in Paris at fabiobv@bloomberg.net .

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SocGen to Post `Slight’ Profit After $2 Billion of Writedowns, Provisions

January 13, 2010

By Fabio Benedetti-Valentini Jan. 13 (Bloomberg) — Societe Generale SA , France’s second-largest bank, said it had a “slight profit” in the fourth quarter after about 1.4 billion euros ($2.03 billion) of writedowns and provisions. The shares dropped. The Paris-based company, which didn’t provide a specific profit figure in its statement today, earned 87 million euros in the same period of 2008. Analysts expected fourth-quarter net income of 850 million euros, based on the median of six estimates compiled by Bloomberg. Societe Generale , which had a record trading loss two years ago that it blamed on unauthorized positions amassed by former trader Jerome Kerviel , has lagged BNP Paribas SA during the financial crisis as its French competitor became Europe’s biggest bank by deposits with the purchase of Fortis units last year. Societe Generale posted 457 million euros in net income for the first nine months of 2009, while BNP Paribas had a 4.47 billion-euro profit in the same period. “We still expect more markdowns” at Societe Generale, Jaap Meijer , a London-based analyst at Evolution Securities Ltd., said by e-mail. The bank may have potential pretax losses of 6.3 billion euros from risky assets after the writedowns and provisions it announced today, he said. Subprime Losses Societe Generale dropped as much as 3.07 euros, or 5.9 percent, to 48.60 and traded at 49.57 euros by 10:04 a.m. in Paris, valuing the bank at 36.7 billion euros. It has risen 44 percent in the past year, compared with the 75 percent increase of BNP Paribas. Societe Generale marked down mortgage-related securities in the fourth quarter because of an increase in estimated loss rates on U.S. subprime and prime loans, the bank said. “We hardened our assumptions in valuing risky assets,” Chief Financial Officer Didier Valet said on a conference call with reporters. “We’re in a position to confidently tackle 2010.” The bank, which had about 10 billion euros in markdowns and provisions stemming from the global financial crisis through September, said last week it plans to isolate risky assets in a separate unit. The company had assets at risk with an accounting value of about 37 billion euros at the end of 2009 from holdings including asset-backed securities and debt backed by U.S. bond insurers. Amundi Venture The bank said fourth-quarter revenue at the corporate- and investment-banking unit , especially in fixed income, was below third-quarter levels, “reflecting lower investor activity as of November and less favorable market conditions.” In the third quarter, the division’s revenue rose 43 percent to 2.52 billion euros, excluding writedowns. Societe Generale benefitted from a gain of about 600 million euros in the fourth quarter from the creation of Amundi, the asset-management venture it formed with Credit Agricole SA , France’s No. 3 bank by market value. Societe Generale also booked in the fourth quarter about 100 million euros in markdowns linked to credit-default swaps, the bank said. To contact the reporter on this story: Fabio Benedetti-Valentini in Paris at fabiobv@bloomberg.net .

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Calyon Is Expanding Commodities Team, May Introduce Exchange-Traded Funds

November 12, 2009

By Chanyaporn Chanjaroen Nov. 12 (Bloomberg) — Calyon , the investment-banking arm of Credit Agricole SA, is expanding its commodities group and may introduce exchange-traded funds as investor demand for raw materials strengthens. The commodities team has 70 so-called front office workers, which includes traders, analysts and sales people, said Martin Fraenkel , global head of commodities. He didn’t say how many the bank would hire. A venture with EDF Trading Ltd., which started this month, is adding 12 people by the end of the year, he said. “We look to grow the business in all areas next year,” Fraenkel said in an interview in London yesterday. The S&P GSCI Index of 24 raw materials rose 47 percent this year, spurring investors to allocate more to commodities. Hedge funds and other speculators boosted their “net-long” position, or bets on higher U.S. commodity futures prices, to the most since July 2008. Exchange-traded products attracted $27.4 billion this year, Barclays Capital said Nov. 4. “There is an interest across the range of commodities,” Fraenkel said, referring to ETFs. “Logistically, physically backed precious metals ETFs are much easier to arrange.” Gold in 16 exchange-traded products tracked by Barclays Capital jumped 47 percent to 56 million ounces this year. That’s more than the official reserves of Switzerland and Japan. Silver holding in ETPs monitored by Barclays rose 34 percent to a record 357 million ounces, equal to more than half of global annual mine production . Credit Suisse started gold ETFs last month and said industrial metals will be the “next step.” Commodities Financing Calyon provides commodities financing and hedging to producers, consumers and traders. It also has hedge-fund and other investor clients and will start providing access to existing commodity indexes by the end of this year, said Fraenkel, who began metals trading at Philipp Brothers in New York in 1984. Calyon’s venture with EDF Trading covers coal and European natural gas and power. Credit Agricole, France’s largest bank by branches, said yesterday that nine-month revenue in fixed income, which includes commodities, was 2.03 billion euros ($3.03 billion), 68 percent more than a year earlier. The rebound in commodity prices and improving credit availability are making it easier for producers to secure financing, Fraenkel said. Consumers bought commodity futures in the first half of the year to lock in prices and are now buying less after the rally, he said. “Normally we would expect consumers to be locking in budgets for the upcoming year for 2010 in the fourth quarter of 2009,” Fraenkel said. “Consumers are rather nervous about whether prices are going to be sustainable or not in 2010.” Fraenkel, 49, joined Calyon from Dresdner Kleinwort, where he headed the global commodities team. He also worked at NM Rothschild & Sons Ltd. and JPMorgan Chase & Co. To contact the reporter responsible for this story: Chanyaporn Chanjaroen in London at cchanjaroen@bloomberg.net

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Stocks, Commodities Advance on China Economy; Gold Climbs to Record Level

November 11, 2009

By Michael Patterson Nov. 11 (Bloomberg) — Stocks rose, sending the benchmark index for emerging markets to its biggest six-day rally since July, and commodities gained after China’s industrial production and Japan’s machinery orders climbed. Gold advanced to a record. The MSCI Emerging Markets Index added 1 percent at 10:18 a.m. in London, boosting its six-day increase to 7.7 percent. Futures on the Standard & Poor’s 500 Index were 0.8 percent higher. Gold rallied as much as 1.5 percent to $1,117.33 an ounce in London, while copper rose 1.7 percent. China’s industrial production soared 16.1 percent from a year ago and orders for Japanese machinery surged 10.4 percent from the previous month, signaling the recovery is accelerating in the world’s second- and third-biggest economies. Earnings from Paris-based bank Credit Agricole SA and Swiss cement-maker Holcim Ltd. beat analysts’ estimates. A record 80 percent of S&P 500 companies have topped third-quarter projections, according to Bloomberg data going back to 1993. “Money that has been sitting on the sidelines is coming into emerging markets and driving stock markets up,” said Dmitry Gourov , an emerging-markets economist at UniCredit SpA in Vienna. “There is a very robust recovery story.” The MSCI China Index of Hong Kong-traded shares jumped 1.1 percent to the highest level since June 2008. South Korea’s Kospi Index added 0.8 percent after the nation’s unemployment rate fell to a nine-month low. China’s Shanghai Composite Index of mainland-traded shares slipped 0.1 percent as a slowdown in the nation’s lending growth sent developers and banks lower. Russia, Turkey Russia’s Micex index increased 0.9 percent and Turkey’s ISE National 100 Index advanced 1.7 percent after ING Groep NV strategists said credit expansion may drive equity gains. Gold rose as the dollar fell for a third day, spurring demand for the metal. Copper for delivery in three months climbed to $6,638 a metric ton on the London Metal Exchange, extending its gain this year to 116 percent. Crude oil added 0.5 percent to $79.42 a barrel in New York. Nickel, zinc and lead also gained. Raw-material producers led the advance in the MSCI World Index of 23 developed nations, which added 0.5 percent. BHP Billiton Ltd., the world’s largest mining company, climbed 3.2 percent in London. Europe’s Dow Jones Stoxx 600 Index advanced for the fifth time in six days, rising 1 percent. Better Earnings Credit Agricole surged 5.2 percent in Paris after posting third-quarter profit of 289 million euros ($435 million), beating the 128 million-euro median estimate of seven analysts surveyed by Bloomberg. France’s third-largest bank by market value said Chief Executive Officer Georges Pauget will step down. Holcim, the world’s second-biggest cement maker, added 5.5 percent after saying it will exceed a 600 million Swiss-franc ($595 million) savings target for this year. ING rallied 5.2 percent in Amsterdam. The Dutch financial-services company that plans to sell its insurance business reported a third-quarter profit as improved markets limited writedowns. The pound rose 0.2 percent to $1.6771 after a report showed U.K. unemployment climbed at the slowest pace in 18 months in October. Sterling also gained against the yen. The yield on the 10-year gilt climbed 3 basis points to 3.82 percent before the Bank of England gives its quarterly forecasts for economic growth and inflation. The dollar weakened 0.3 percent to $1.5037 per euro and the Dollar Index dropped 0.3 percent to 74.823, the lowest level since August 2008. Federal Reserve officials including San Francisco Fed Bank President Janet Yellen and Dennis Lockhart , who heads the Atlanta Fed, said the U.S. economy will be slow to recover from the recession. The cost of protecting European corporate bonds from default fell, with credit-default swaps on the high-yield Markit iTraxx Crossover Index dropping 11.5 basis points to 502, according to JPMorgan Chase & Co., signaling an improvement in investor perceptions of credit quality. To contact the reporter on this story: Michael Patterson in London at mpatterson10@bloomberg.net

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Treasuries Rise a Third Day Before Record $25 Billion 10-Year Note Auction

November 10, 2009

By Cordell Eddings and Lukanyo Mnyanda Nov. 10 (Bloomberg) — Treasury 10-year notes rose for a third straight day as the government prepared to sell a record $25 billion of the debt, the second of three sales of a total $81 billion in notes and bonds this week. The 10-year securities headed for the longest winning run in more than a month as futures on the Standard & Poor’s 500 Index declined. Five Federal Reserve officials — Dennis Lockhart, Janet Yellen, Eric Rosengren, Daniel Tarullo and Richard Fisher — are scheduled to make speeches today. “Investors were too bearish and complacent going into yesterday’s auction, so we are seeing some retracement from that, helped by the weakness in equities,” said Paul Horrmann , a broker in Jersey City, New Jersey, at ICAP Plc, the world’s largest inter-dealer broker. “Today is all about the auction and the several Fed speakers. Whether the auction can come down without a struggle at these yield levels remains to be seen.” The yield on the 10-year note fell five basis points, or 0.05 percentage point, to 3.44 percent at 8:55 a.m. in New York, according to BGCantor Market Data. The 3.625 percent security maturing in August 2019 gained 3/8, or $3.75 per $1,000 face amount, to 101 1/2. Ten-year yields will rise to 3.82 percent by the middle of next year, according to a Bloomberg survey of banks and securities companies, with the most recent forecasts given the heaviest weightings. Futures on the S&P 500 Index expiring in December declined 0.3 percent. Europe’s Dow Jones Stoxx 600 Index lost as much as 0.4 percent. Record Amounts Bonds were little changed earlier as some traders bet the government will struggle to find buyers for record amounts of U.S. debt as the economy shows signs of recovering and investors switch to higher-yielding assets. A rebound in stocks is “re- liquefying” the economy, former Fed Chairman Alan Greenspan said. The 10-year yield may rise to 4 percent by year-end, according to Peter Chatwell , a fixed-income strategist in London at Calyon, the investment-banking unit of Credit Agricole SA. “Supply is going to have more of an impact, on the 10-year at least,” Chatwell said. “Now that the New York Fed is no longer executing asset purchases, we think Treasuries are going to be under pressure.” The U.S. sold $40 billion in three-year securities yesterday and is scheduled to auction $16 billion of 30-year bonds on Nov. 12. ‘Very Fortunate’ The Treasury Department is selling unprecedented amounts of debt as President Barack Obama borrows to fund his stimulus programs. U.S. marketable debt stands at $6.95 trillion and reached a record $7.01 trillion in September. “We have been very fortunate that the stock markets moved back” and are “re-liquefying the whole process,” Greenspan said yesterday at an event in Edmonton, Alberta, presented by Abu Dhabi National Energy Co., the state-controlled energy producer. Treasuries have handed investors a 2.7 percent loss in 2009, according to indexes compiled by Bank of America Corp.’s Merrill Lynch unit. German notes earned 1.6 percent in the same period, Merrill’s indexes show. The Fed said U.S. banks kept tightening lending standards for companies and consumers last quarter, reinforcing the central bank’s decision to leave its benchmark interest rates at record lows for a long time. At the same time, the number of banks making it tougher to borrow diminished, the Fed said yesterday in its quarterly Senior Loan Officer survey. Demand for most types of loans weakened at a smaller number of banks than in the second quarter, the survey showed. German Confidence Fitch Ratings said there is no near-term risk to the U.S.’s top-level AAA debt ranking, according to a report by Reuters published on the Guardian newspaper’s Web site . The rating may come under pressure if the U.S. fiscal position does not stabilize in the next few years, according to the report, citing David Riley , co-head of sovereign global ratings. German investor confidence declined more than economists forecast in November as the prospect of expiring government stimulus programs and rising unemployment tempered expectations for economic growth. The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict developments six months ahead, dropped to 51.1 from 56 in October. The median forecast in a Bloomberg News survey of 39 economists was for a decline to 55. To contact the reporters on this story: Cordell Eddings in New York at ceddings@bloomberg.net ; Lukanyo Mnyanda in London at lmnyanda@bloomberg.net

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Russia’s Warning Against Speculative Inflows May Fall Victim to Oil Prices

October 30, 2009

By Alex Nicholson and Paul Abelsky Oct. 30 (Bloomberg) — The Russian central bank’s warning that it will use rate reductions to keep out speculative capital will probably fall victim to high oil prices, economists said. The bank yesterday cut the refinancing rate half a point to a record low 9.5 percent, partly aimed at “reducing the difference between short-term interest rates on the internal and external markets” to diminish “the attractiveness of short- term investments in Russian assets and stop the accumulation of risk on the stock and currency markets,” it said. Moscow-based Bank Rossii is struggling to stabilize the ruble and stem an appreciation that threatens to hurt exporters and stall economic recovery in the world’s biggest energy supplier. The bank bought more than $11 billion of currency this month, First Deputy Chairman Alexei Ulyukayev said on Oct. 23. Russia’s currency reserves , the world’s third-biggest stockpile, rose to $429.3 billion this week, the highest this year. The bank’s warning “will keep investors wary, but in the case of Russia, if oil rests this side of $60 a barrel, which isn’t difficult to envisage, then obviously we will see continued capital inflow,” said Simon Quijano-Evans , head of emerging-markets strategy at Credit Agricole Cheuvreux in Vienna. “It’s the first warning that they don’t want to see massive inflows of short-term portfolio investments occurring.” Risk Appetite Urals crude, Russia’s key export, has gained more than 80 percent this year and was trading at $77.09 a barrel yesterday. Oil makes up 30 percent of gross domestic product. The central bank uses foreign exchange transactions to steer the ruble against a basket of dollars and euros. Prime Minister Vladimir Putin said last month preventing a ruble appreciation remains one of the government’s objectives. Even so, the ruble is the fifth-best performer against the euro and the dollar since the end of June of the 26 emerging market currencies tracked by Bloomberg. It’s gained 7.2 percent against the dollar and 1.4 percent against the euro in the period. The Russian currency gained 0.5 percent to 29.0700 per dollar at the start of trading in Moscow today and was little changed against the euro. Rising crude prices coupled with “a renewed inclination of investors to take risks” required currency purchases to prevent “a sharp strengthening of the ruble,” the central bank said. “Clearly the currency is more influenced by things like the oil price and global capital flows and global risk aversion,” said Vladimir Osakovsky an economist at UniCredit Spa in Moscow. Carry Trades The ruble is appreciating as investor appetite for emerging market assets returns. “Currency appreciation in emerging markets has been particularly strong this year,” Nouriel Roubini , professor at the Stern Business School at New York University, wrote in an opinion piece about Latin American markets published on Forbes Magazine’s Web site yesterday. “Policy makers need to figure out how to avoid losing international competitiveness.” Emerging market equity funds drew in a net $2.2 billion in the week ended Oct. 28, EPFR Global said. Gains this week took the total inflows for the year to a record $64 billion, according to estimates by Morgan Stanley. Even so, this week’s emerging capital flows suggest investors are less keen to pursue high-yielding assets than they were a week earlier. Carry Trades Russian equity funds posted net outflows of $43 million in the seven days to Oct. 28 after drawing a record $450 million a week earlier, the most since EPFR began tracking data in the first quarter of 2002. “The recent bout of risk aversion, if prolonged, will also help calm the Russian central bank’s fears about the speculative inflows build-up,” Goldman Sachs Group Inc. economist Anna Zadornova said in an e-mailed note. As a carry trade, in which investors borrow funds in a country with low interest rates and invest where rates are higher, the ruble is still attractive, said Peter Westin , chief strategist at Moscow-based brokerage Aton LLC. “Russia has one of the highest differences if you look at policy rates related, for example, to the U.S.,” Westin said. “Some central banks have started to introduce capital controls to stem inflows in the light of currency strengthening.” Russia’s central bank and government seem “to be reluctant to impose capital controls again but at the same time we should probably expect to see continued rate cuts in an effort to make inflows less attractive.” 1,000% Inflation The bank wants to stabilize the currency to allow it to move toward an inflation target by 2011. That goal will be difficult to achieve as long as the economy fails to wean itself off its commodity reliance, economists said. Inflation eased to an annual 10.7 percent in September from 11.6 percent in August. Slowing price growth marks a reversal for Russia, which is haunted by inflation rates in excess of 100 percent after its 1998 default and more than 1,000 percent after it abandoned central planning for market prices in the early 1990s. While the central bank’s ability to prevent the ruble’s ascent is limited as long as demand for oil mounts, Russian authorities have no choice but to signal their readiness to act, economists said. Message Needed “They really needed to convey some verbal messages and be more explicit about this,” said Osakovsky. President Dmitry Medvedev has called Russia’s oil dependence “humiliating” and has said he envisages a diversified economy in 15 years. Even so, with a global recovery driving up commodity demand , Russia may find it hard to stay committed to its goal of diversification. “I don’t think they’ll be against a relatively strong ruble,” said Credit Agricole’s Quijano-Evans. “The ruble has actually underperformed all other currencies in the region, except perhaps the Romanian leu now. So there’s potential for the ruble to appreciate from this level, and that’s independent of the central bank’s refinancing rate.” To contact the reporter on this story: Paul Abelsky in Moscow at pabelsky@bloomberg.net . Alex Nicholson in Moscow at anicholson6@bloomberg.net .

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Russia’s Warning Against Speculative Inflows May Fall Victim to Oil Price

October 30, 2009

By Alex Nicholson and Paul Abelsky Oct. 30 (Bloomberg) — The Russian central bank’s warning that it will use rate reductions to keep out speculative capital will probably fall victim to high oil prices, economists said. The bank yesterday cut the refinancing rate half a point to a record low 9.5 percent, partly aimed at “reducing the difference between short-term interest rates on the internal and external markets” to diminish “the attractiveness of short- term investments in Russian assets and stop the accumulation of risk on the stock and currency markets,” it said. Moscow-based Bank Rossii is struggling to stabilize the ruble and stem an appreciation that threatens to hurt exporters and stall economic recovery in the world’s biggest energy supplier. The bank bought more than $11 billion of currency this month, First Deputy Chairman Alexei Ulyukayev said on Oct. 23. Russia’s currency reserves , the world’s third-biggest stockpile, rose to $429.3 billion this week, the highest this year. The bank’s warning “will keep investors wary, but in the case of Russia, if oil rests this side of $60 a barrel, which isn’t difficult to envisage, then obviously we will see continued capital inflow,” said Simon Quijano-Evans , head of emerging-markets strategy at Credit Agricole Cheuvreux in Vienna. “It’s the first warning that they don’t want to see massive inflows of short-term portfolio investments occurring.” Risk Appetite Urals crude, Russia’s key export, has gained more than 80 percent this year and was trading at $77.09 a barrel yesterday. Oil makes up 30 percent of gross domestic product. The central bank uses foreign exchange transactions to steer the ruble against a basket of dollars and euros. Prime Minister Vladimir Putin said last month preventing a ruble appreciation remains one of the government’s objectives. Even so, the ruble is the fifth-best performer against the euro and the dollar since the end of June of the 26 emerging market currencies tracked by Bloomberg. It’s gained 7.2 percent against the dollar and 1.4 percent against the euro in the period. The Russian currency gained 0.5 percent to 29.0700 per dollar at the start of trading in Moscow today and was little changed against the euro. Rising crude prices coupled with “a renewed inclination of investors to take risks” required currency purchases to prevent “a sharp strengthening of the ruble,” the central bank said. “Clearly the currency is more influenced by things like the oil price and global capital flows and global risk aversion,” said Vladimir Osakovsky an economist at UniCredit Spa in Moscow. Carry Trades The ruble is appreciating as investor appetite for emerging market assets returns. “Currency appreciation in emerging markets has been particularly strong this year,” Nouriel Roubini , professor at the Stern Business School at New York University, wrote in an opinion piece about Latin American markets published on Forbes Magazine’s Web site yesterday. “Policy makers need to figure out how to avoid losing international competitiveness.” Emerging market equity funds drew in a net $2.2 billion in the week ended Oct. 28, EPFR Global said. Gains this week took the total inflows for the year to a record $64 billion, according to estimates by Morgan Stanley. Even so, this week’s emerging capital flows suggest investors are less keen to pursue high-yielding assets than they were a week earlier. Carry Trades Russian equity funds posted net outflows of $43 million in the seven days to Oct. 28 after drawing a record $450 million a week earlier, the most since EPFR began tracking data in the first quarter of 2002. “The recent bout of risk aversion, if prolonged, will also help calm the Russian central bank’s fears about the speculative inflows build-up,” Goldman Sachs Group Inc. economist Anna Zadornova said in an e-mailed note. As a carry trade, in which investors borrow funds in a country with low interest rates and invest where rates are higher, the ruble is still attractive, said Peter Westin , chief strategist at Moscow-based brokerage Aton LLC. “Russia has one of the highest differences if you look at policy rates related, for example, to the U.S.,” Westin said. “Some central banks have started to introduce capital controls to stem inflows in the light of currency strengthening.” Russia’s central bank and government seem “to be reluctant to impose capital controls again but at the same time we should probably expect to see continued rate cuts in an effort to make inflows less attractive.” 1,000% Inflation The bank wants to stabilize the currency to allow it to move toward an inflation target by 2011. That goal will be difficult to achieve as long as the economy fails to wean itself off its commodity reliance, economists said. Inflation eased to an annual 10.7 percent in September from 11.6 percent in August. Slowing price growth marks a reversal for Russia, which is haunted by inflation rates in excess of 100 percent after its 1998 default and more than 1,000 percent after it abandoned central planning for market prices in the early 1990s. While the central bank’s ability to prevent the ruble’s ascent is limited as long as demand for oil mounts, Russian authorities have no choice but to signal their readiness to act, economists said. Message Needed “They really needed to convey some verbal messages and be more explicit about this,” said Osakovsky. President Dmitry Medvedev has called Russia’s oil dependence “humiliating” and has said he envisages a diversified economy in 15 years. Even so, with a global recovery driving up commodity demand , Russia may find it hard to stay committed to its goal of diversification. “I don’t think they’ll be against a relatively strong ruble,” said Credit Agricole’s Quijano-Evans. “The ruble has actually underperformed all other currencies in the region, except perhaps the Romanian leu now. So there’s potential for the ruble to appreciate from this level, and that’s independent of the central bank’s refinancing rate.” To contact the reporter on this story: Paul Abelsky in Moscow at pabelsky@bloomberg.net . Alex Nicholson in Moscow at anicholson6@bloomberg.net .

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Russia’s Warning Against Speculative Inflows May Fall Victim to Oil Price

October 30, 2009

By Alex Nicholson and Paul Abelsky Oct. 30 (Bloomberg) — The Russian central bank’s warning that it will use rate reductions to keep out speculative capital will probably fall victim to high oil prices, economists said. The bank yesterday cut the refinancing rate half a point to a record low 9.5 percent, partly aimed at “reducing the difference between short-term interest rates on the internal and external markets” to diminish “the attractiveness of short- term investments in Russian assets and stop the accumulation of risk on the stock and currency markets,” it said. Moscow-based Bank Rossii is struggling to stabilize the ruble and stem an appreciation that threatens to hurt exporters and stall economic recovery in the world’s biggest energy supplier. The bank bought more than $11 billion of currency this month, First Deputy Chairman Alexei Ulyukayev said on Oct. 23. Russia’s currency reserves , the world’s third-biggest stockpile, rose to $429.3 billion this week, the highest this year. The bank’s warning “will keep investors wary, but in the case of Russia, if oil rests this side of $60 a barrel, which isn’t difficult to envisage, then obviously we will see continued capital inflow,” said Simon Quijano-Evans , head of emerging-markets strategy at Credit Agricole Cheuvreux in Vienna. “It’s the first warning that they don’t want to see massive inflows of short-term portfolio investments occurring.” Risk Appetite Urals crude, Russia’s key export, has gained more than 80 percent this year and was trading at $77.09 a barrel yesterday. Oil makes up 30 percent of gross domestic product. The central bank uses foreign exchange transactions to steer the ruble against a basket of dollars and euros. Prime Minister Vladimir Putin said last month preventing a ruble appreciation remains one of the government’s objectives. Even so, the ruble is the fifth-best performer against the euro and the dollar since the end of June of the 26 emerging market currencies tracked by Bloomberg. It’s gained 7.2 percent against the dollar and 1.4 percent against the euro in the period. The Russian currency gained 0.5 percent to 29.0700 per dollar at the start of trading in Moscow today and was little changed against the euro. Rising crude prices coupled with “a renewed inclination of investors to take risks” required currency purchases to prevent “a sharp strengthening of the ruble,” the central bank said. “Clearly the currency is more influenced by things like the oil price and global capital flows and global risk aversion,” said Vladimir Osakovsky an economist at UniCredit Spa in Moscow. Carry Trades The ruble is appreciating as investor appetite for emerging market assets returns. “Currency appreciation in emerging markets has been particularly strong this year,” Nouriel Roubini , professor at the Stern Business School at New York University, wrote in an opinion piece about Latin American markets published on Forbes Magazine’s Web site yesterday. “Policy makers need to figure out how to avoid losing international competitiveness.” Emerging market equity funds drew in a net $2.2 billion in the week ended Oct. 28, EPFR Global said. Gains this week took the total inflows for the year to a record $64 billion, according to estimates by Morgan Stanley. Even so, this week’s emerging capital flows suggest investors are less keen to pursue high-yielding assets than they were a week earlier. Carry Trades Russian equity funds posted net outflows of $43 million in the seven days to Oct. 28 after drawing a record $450 million a week earlier, the most since EPFR began tracking data in the first quarter of 2002. “The recent bout of risk aversion, if prolonged, will also help calm the Russian central bank’s fears about the speculative inflows build-up,” Goldman Sachs Group Inc. economist Anna Zadornova said in an e-mailed note. As a carry trade, in which investors borrow funds in a country with low interest rates and invest where rates are higher, the ruble is still attractive, said Peter Westin , chief strategist at Moscow-based brokerage Aton LLC. “Russia has one of the highest differences if you look at policy rates related, for example, to the U.S.,” Westin said. “Some central banks have started to introduce capital controls to stem inflows in the light of currency strengthening.” Russia’s central bank and government seem “to be reluctant to impose capital controls again but at the same time we should probably expect to see continued rate cuts in an effort to make inflows less attractive.” 1,000% Inflation The bank wants to stabilize the currency to allow it to move toward an inflation target by 2011. That goal will be difficult to achieve as long as the economy fails to wean itself off its commodity reliance, economists said. Inflation eased to an annual 10.7 percent in September from 11.6 percent in August. Slowing price growth marks a reversal for Russia, which is haunted by inflation rates in excess of 100 percent after its 1998 default and more than 1,000 percent after it abandoned central planning for market prices in the early 1990s. While the central bank’s ability to prevent the ruble’s ascent is limited as long as demand for oil mounts, Russian authorities have no choice but to signal their readiness to act, economists said. Message Needed “They really needed to convey some verbal messages and be more explicit about this,” said Osakovsky. President Dmitry Medvedev has called Russia’s oil dependence “humiliating” and has said he envisages a diversified economy in 15 years. Even so, with a global recovery driving up commodity demand , Russia may find it hard to stay committed to its goal of diversification. “I don’t think they’ll be against a relatively strong ruble,” said Credit Agricole’s Quijano-Evans. “The ruble has actually underperformed all other currencies in the region, except perhaps the Romanian leu now. So there’s potential for the ruble to appreciate from this level, and that’s independent of the central bank’s refinancing rate.” To contact the reporter on this story: Paul Abelsky in Moscow at pabelsky@bloomberg.net . Alex Nicholson in Moscow at anicholson6@bloomberg.net .

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Russia’s Warning Against Speculative Inflows May Fall Victim to Oil Price

October 30, 2009

By Alex Nicholson and Paul Abelsky Oct. 30 (Bloomberg) — The Russian central bank’s warning that it will use rate reductions to keep out speculative capital will probably fall victim to high oil prices, economists said. The bank yesterday cut the refinancing rate half a point to a record low 9.5 percent, partly aimed at “reducing the difference between short-term interest rates on the internal and external markets” to diminish “the attractiveness of short- term investments in Russian assets and stop the accumulation of risk on the stock and currency markets,” it said. Moscow-based Bank Rossii is struggling to stabilize the ruble and stem an appreciation that threatens to hurt exporters and stall economic recovery in the world’s biggest energy supplier. The bank bought more than $11 billion of currency this month, First Deputy Chairman Alexei Ulyukayev said on Oct. 23. Russia’s currency reserves , the world’s third-biggest stockpile, rose to $429.3 billion this week, the highest this year. The bank’s warning “will keep investors wary, but in the case of Russia, if oil rests this side of $60 a barrel, which isn’t difficult to envisage, then obviously we will see continued capital inflow,” said Simon Quijano-Evans , head of emerging-markets strategy at Credit Agricole Cheuvreux in Vienna. “It’s the first warning that they don’t want to see massive inflows of short-term portfolio investments occurring.” Risk Appetite Urals crude, Russia’s key export, has gained more than 80 percent this year and was trading at $77.09 a barrel yesterday. Oil makes up 30 percent of gross domestic product. The central bank uses foreign exchange transactions to steer the ruble against a basket of dollars and euros. Prime Minister Vladimir Putin said last month preventing a ruble appreciation remains one of the government’s objectives. Even so, the ruble is the fifth-best performer against the euro and the dollar since the end of June of the 26 emerging market currencies tracked by Bloomberg. It’s gained 7.2 percent against the dollar and 1.4 percent against the euro in the period. The Russian currency gained 0.5 percent to 29.0700 per dollar at the start of trading in Moscow today and was little changed against the euro. Rising crude prices coupled with “a renewed inclination of investors to take risks” required currency purchases to prevent “a sharp strengthening of the ruble,” the central bank said. “Clearly the currency is more influenced by things like the oil price and global capital flows and global risk aversion,” said Vladimir Osakovsky an economist at UniCredit Spa in Moscow. Carry Trades The ruble is appreciating as investor appetite for emerging market assets returns. “Currency appreciation in emerging markets has been particularly strong this year,” Nouriel Roubini , professor at the Stern Business School at New York University, wrote in an opinion piece about Latin American markets published on Forbes Magazine’s Web site yesterday. “Policy makers need to figure out how to avoid losing international competitiveness.” Emerging market equity funds drew in a net $2.2 billion in the week ended Oct. 28, EPFR Global said. Gains this week took the total inflows for the year to a record $64 billion, according to estimates by Morgan Stanley. Even so, this week’s emerging capital flows suggest investors are less keen to pursue high-yielding assets than they were a week earlier. Carry Trades Russian equity funds posted net outflows of $43 million in the seven days to Oct. 28 after drawing a record $450 million a week earlier, the most since EPFR began tracking data in the first quarter of 2002. “The recent bout of risk aversion, if prolonged, will also help calm the Russian central bank’s fears about the speculative inflows build-up,” Goldman Sachs Group Inc. economist Anna Zadornova said in an e-mailed note. As a carry trade, in which investors borrow funds in a country with low interest rates and invest where rates are higher, the ruble is still attractive, said Peter Westin , chief strategist at Moscow-based brokerage Aton LLC. “Russia has one of the highest differences if you look at policy rates related, for example, to the U.S.,” Westin said. “Some central banks have started to introduce capital controls to stem inflows in the light of currency strengthening.” Russia’s central bank and government seem “to be reluctant to impose capital controls again but at the same time we should probably expect to see continued rate cuts in an effort to make inflows less attractive.” 1,000% Inflation The bank wants to stabilize the currency to allow it to move toward an inflation target by 2011. That goal will be difficult to achieve as long as the economy fails to wean itself off its commodity reliance, economists said. Inflation eased to an annual 10.7 percent in September from 11.6 percent in August. Slowing price growth marks a reversal for Russia, which is haunted by inflation rates in excess of 100 percent after its 1998 default and more than 1,000 percent after it abandoned central planning for market prices in the early 1990s. While the central bank’s ability to prevent the ruble’s ascent is limited as long as demand for oil mounts, Russian authorities have no choice but to signal their readiness to act, economists said. Message Needed “They really needed to convey some verbal messages and be more explicit about this,” said Osakovsky. President Dmitry Medvedev has called Russia’s oil dependence “humiliating” and has said he envisages a diversified economy in 15 years. Even so, with a global recovery driving up commodity demand , Russia may find it hard to stay committed to its goal of diversification. “I don’t think they’ll be against a relatively strong ruble,” said Credit Agricole’s Quijano-Evans. “The ruble has actually underperformed all other currencies in the region, except perhaps the Romanian leu now. So there’s potential for the ruble to appreciate from this level, and that’s independent of the central bank’s refinancing rate.” To contact the reporter on this story: Paul Abelsky in Moscow at pabelsky@bloomberg.net . Alex Nicholson in Moscow at anicholson6@bloomberg.net .

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Russia’s Warning Against Speculative Inflows May Fall Victim to Oil Price

October 30, 2009

By Alex Nicholson and Paul Abelsky Oct. 30 (Bloomberg) — The Russian central bank’s warning that it will use rate reductions to keep out speculative capital will probably fall victim to high oil prices, economists said. The bank yesterday cut the refinancing rate half a point to a record low 9.5 percent, partly aimed at “reducing the difference between short-term interest rates on the internal and external markets” to diminish “the attractiveness of short- term investments in Russian assets and stop the accumulation of risk on the stock and currency markets,” it said. Moscow-based Bank Rossii is struggling to stabilize the ruble and stem an appreciation that threatens to hurt exporters and stall economic recovery in the world’s biggest energy supplier. The bank bought more than $11 billion of currency this month, First Deputy Chairman Alexei Ulyukayev said on Oct. 23. Russia’s currency reserves , the world’s third-biggest stockpile, rose to $429.3 billion this week, the highest this year. The bank’s warning “will keep investors wary, but in the case of Russia, if oil rests this side of $60 a barrel, which isn’t difficult to envisage, then obviously we will see continued capital inflow,” said Simon Quijano-Evans , head of emerging-markets strategy at Credit Agricole Cheuvreux in Vienna. “It’s the first warning that they don’t want to see massive inflows of short-term portfolio investments occurring.” Risk Appetite Urals crude, Russia’s key export, has gained more than 80 percent this year and was trading at $77.09 a barrel yesterday. Oil makes up 30 percent of gross domestic product. The central bank uses foreign exchange transactions to steer the ruble against a basket of dollars and euros. Prime Minister Vladimir Putin said last month preventing a ruble appreciation remains one of the government’s objectives. Even so, the ruble is the fifth-best performer against the euro and the dollar since the end of June of the 26 emerging market currencies tracked by Bloomberg. It’s gained 7.2 percent against the dollar and 1.4 percent against the euro in the period. The Russian currency gained 0.5 percent to 29.0700 per dollar at the start of trading in Moscow today and was little changed against the euro. Rising crude prices coupled with “a renewed inclination of investors to take risks” required currency purchases to prevent “a sharp strengthening of the ruble,” the central bank said. “Clearly the currency is more influenced by things like the oil price and global capital flows and global risk aversion,” said Vladimir Osakovsky an economist at UniCredit Spa in Moscow. Carry Trades The ruble is appreciating as investor appetite for emerging market assets returns. “Currency appreciation in emerging markets has been particularly strong this year,” Nouriel Roubini , professor at the Stern Business School at New York University, wrote in an opinion piece about Latin American markets published on Forbes Magazine’s Web site yesterday. “Policy makers need to figure out how to avoid losing international competitiveness.” Emerging market equity funds drew in a net $2.2 billion in the week ended Oct. 28, EPFR Global said. Gains this week took the total inflows for the year to a record $64 billion, according to estimates by Morgan Stanley. Even so, this week’s emerging capital flows suggest investors are less keen to pursue high-yielding assets than they were a week earlier. Carry Trades Russian equity funds posted net outflows of $43 million in the seven days to Oct. 28 after drawing a record $450 million a week earlier, the most since EPFR began tracking data in the first quarter of 2002. “The recent bout of risk aversion, if prolonged, will also help calm the Russian central bank’s fears about the speculative inflows build-up,” Goldman Sachs Group Inc. economist Anna Zadornova said in an e-mailed note. As a carry trade, in which investors borrow funds in a country with low interest rates and invest where rates are higher, the ruble is still attractive, said Peter Westin , chief strategist at Moscow-based brokerage Aton LLC. “Russia has one of the highest differences if you look at policy rates related, for example, to the U.S.,” Westin said. “Some central banks have started to introduce capital controls to stem inflows in the light of currency strengthening.” Russia’s central bank and government seem “to be reluctant to impose capital controls again but at the same time we should probably expect to see continued rate cuts in an effort to make inflows less attractive.” 1,000% Inflation The bank wants to stabilize the currency to allow it to move toward an inflation target by 2011. That goal will be difficult to achieve as long as the economy fails to wean itself off its commodity reliance, economists said. Inflation eased to an annual 10.7 percent in September from 11.6 percent in August. Slowing price growth marks a reversal for Russia, which is haunted by inflation rates in excess of 100 percent after its 1998 default and more than 1,000 percent after it abandoned central planning for market prices in the early 1990s. While the central bank’s ability to prevent the ruble’s ascent is limited as long as demand for oil mounts, Russian authorities have no choice but to signal their readiness to act, economists said. Message Needed “They really needed to convey some verbal messages and be more explicit about this,” said Osakovsky. President Dmitry Medvedev has called Russia’s oil dependence “humiliating” and has said he envisages a diversified economy in 15 years. Even so, with a global recovery driving up commodity demand , Russia may find it hard to stay committed to its goal of diversification. “I don’t think they’ll be against a relatively strong ruble,” said Credit Agricole’s Quijano-Evans. “The ruble has actually underperformed all other currencies in the region, except perhaps the Romanian leu now. So there’s potential for the ruble to appreciate from this level, and that’s independent of the central bank’s refinancing rate.” To contact the reporter on this story: Paul Abelsky in Moscow at pabelsky@bloomberg.net . Alex Nicholson in Moscow at anicholson6@bloomberg.net .

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European Stocks, U.S. Index Futures Rise; National Express, Philips Gain

October 19, 2009

By Adam Haigh Oct. 19 (Bloomberg) — European stock-index futures rose after National Express Group Plc said it received a 1.7 billion- pound ($2.8 billion) merger bid. U.S. futures advanced, while Asian shares fluctuated. National Express will probably gain after saying it received a “highly preliminary” proposal from Stagecoach Group Plc for an all-share transaction. Nestle SA may increase after UBS AG recommended the world’s largest food company. ABB Ltd. might be active after the world’s biggest supplier of power grids reported third-quarter net income of about $1 billion. Futures on the Dow Jones Euro Stoxx 50 added 0.2 percent at 7:48 a.m. in London. The U.K.’s FTSE 100 Index is set to open 14 points higher, according to BGC Partners. Standard & Poor’s 500 Index futures gained 0.2 percent. The Stoxx 600 index climbed 1.2 percent last week, extending its gain since March 9 to 55 percent as Royal Philips Electronics NV reported an unexpected third-quarter profit and results from Intel Corp., JPMorgan Chase & Co. and Google Inc. beat analysts’ estimates. The rally has pushed valuations on the index to 48.9 times earnings, near the most expensive level since July 2003, Bloomberg data show. Asian shares fluctuated as a rally in energy producers offset slumps by Casio Computer Co. and Yaskawa Electric Corp. after the companies reported losses. The MSCI Asia Pacific Index added 0.4 percent after falling 0.9 percent. National Express, Nestle National Express will probably rise as it said it received a “highly preliminary” proposal from Stagecoach for an all- share transaction in which National Express shareholders would hold no more than 40 percent of the enlarged group. National Express will “carefully consider” the proposal while continuing to progress with its plans for an equity fund raising, it said in an e-mailed statement yesterday. Stagecoach said in a separate statement that at the invitation of National Express it submitted a letter to the board indicating the terms under which it would hold talks on a “possible combination.” Nestle may gain as UBS raised its recommendation on the shares to “buy” from “ neutral .” ABB may be active after saying it will adjust provisions the company had built up to cover for cartel investigations by about $380 million. The reserves included provisions for the European Commission’s investigation of the market for electric- power transformers, which led to a 33.75 million-euro fine ($50.3 million) for ABB on Oct. 7. Black Monday Credit Agricole SA may be active. The bank is aiming for sales and earnings growth of between 7 percent and 10 percent a year to 2012 in its insurance activities, La Tribune reported, citing Bernard Michel , head of Credit Agricole’s insurance unit. Today is the 22nd anniversary of “Black Monday,” when an increase in U.S. interest rates and slowing economic growth sparked a slump that sent the Dow Jones Industrial Average down 23 percent and the S&P 500 20 percent lower in one day. To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net

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European, Asian Stocks Advance; U.S. Index Futures Rise After Intel Report

October 14, 2009

By Adria Cimino Oct. 14 (Bloomberg) — European and Asian shares gained and U.S. stock-index futures advanced after Intel Corp.’s sales forecast beat analysts’ estimates and the decline in China’s exports slowed. STMicroelectronics NV and Infineon Technologies AG, Europe’s two biggest computer-chip makers, rallied more than 3 percent after Intel forecast sales that surpassed projections by as much as $1 billion. ASML Holding NV, Europe’s largest maker of semiconductor equipment, surged 3.4 percent after reporting its first profit in four quarters. Rio Tinto Group led mining companies higher after its third-quarter iron ore production increased to a record. Europe’s Dow Jones Stoxx 600 Index increased 1.4 percent to 245.21 as of 8:20 a.m. in London. The measure has jumped 55 percent since March 9 as companies from Royal Philips Electronics NV to Alcoa Inc. reported earnings that beat analysts’ estimates. The rally pushed the index’s valuation to 46.9 times earnings, near the most expensive level since 2003, weekly data compiled by Bloomberg show. Intel’s “better-than-expected numbers show one of the first major companies to report a more sustainable recovery instead of heavily cutting costs,” James Hughes , a market analyst at CMC Markets in London, wrote before the start of trading in Europe. Standard & Poor’s 500 Index futures added 1 percent today, while the MSCI Asia Pacific Index advanced 1 percent to a 13- month high as consumer sentiment jumped in Australia. China’s Exports China’s Shanghai Composite Index climbed 1.6 percent after the nation’s exports declined at the slowest pace in nine months in September. Shipments dropped 15.2 percent to $115.9 billion from a year earlier, the customs bureau said. The median estimate of 23 economists surveyed by Bloomberg News was for a 21 percent decline. In August, exports slid 23.4 percent. STMicroelectronics, Europe’s biggest chipmaker, advanced 4.8 percent to 6.98 euros and Infineon, the second-largest, gained 3.2 percent to 3.99 euros. Intel increased 4.3 percent to $21.37 in German trading after predicting fourth-quarter revenue of as much as $10.5 billion, topping the $9.5 billion average estimate in a Bloomberg survey. The company’s gross margin — a measure of profitability — may reach the highest level this decade. ASML climbed 3.4 percent to 22.34 euros after reporting a profit as chipmakers resumed buying its machines after an industry slump. Third-quarter net income was 19.7 million euros ($29.3 million), or 5 cents a share. That beat the 10.6 million- euro average of seven analysts’ estimates compiled by Bloomberg. Rio Tinto, BP Rio Tinto added 3.3 percent to 2,942 pence in London. The world’s third-largest mining company said iron-ore production rose on demand from steelmakers in China. Production of iron ore, the biggest contributor to earnings in the first half, climbed 12 percent to 47.5 million metric tons in the three months to Sept. 30, from 42.4 million tons a year earlier. BP Plc, Europe’s second-largest oil company, climbed 1.4 percent to 554.5 pence as crude rose to a one-year high in New York on optimism the global economic recovery will boost energy demand. Royal Dutch Shell Plc, the region’s biggest oil company, advanced 1.2 percent to 1,845 pence. Credit Agricole SA rose 3.2 percent to 14.89 euros after saying it will repay 3 billion euros to the French state. Retail sales in the U.S. probably fell in September after the “cash for clunkers” plan expired, economists said before a report from the Commerce Department at 8:30 a.m. in Washington. At 2 p.m., the Federal Reserve will release minutes of its Federal Open Market Committee meeting in September. To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net .

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CLSA Will Add 200 People, Compensate Staff for 2009 Wage Cuts, Slone Says

September 13, 2009

By Cathy Chan and Susan Li Sept. 14 (Bloomberg) — CLSA Asia-Pacific Markets plans to expand its workforce by about 15 percent in 2010 and compensate more than a third of its workers for salary cuts made this year as markets recover, Chief Executive Officer Jonathan Slone said. The regional brokerage unit of Credit Agricole SA will add about 200 people globally in 2010 to tap growth in equity commissions and advisory business, Slone said in an interview on Sept. 11 in Hong Kong. At the end of this month, CLSA will pay about 500 senior staff the wages they lost following salary cuts made during the financial crisis, he said. The MSCI AC Asia ex-Japan Index gained 55 percent this year as economies in the region began to recover from the first global recession since World War II. Barclays Plc and Deutsche Bank AG are among firms that have boosted headcount this year, after slashing jobs in 2008 to survive the crisis that led to the bankruptcy filing of Lehman Brothers Holdings Inc. “We’re very close to where we were before, and in fact, we’re ahead of budget this year,” Slone said in an interview with Bloomberg TV. “So we’re in a happy place right now.” CLSA asked 500 senior bankers and executives in October to accept pay cuts of as much as 25 percent starting January this year. The participating employees were promised compensation for the salaries they forgo when profit meets certain targets, Slone said at the time. Incentive Plan The company, which cut about 90 jobs in March, aims to introduce a new 12-month incentive plan starting Oct. 1 that will pay staff a monthly bonus based on performance, Slone said. CLSA’s 1,350 staff will receive a 10 percent increase on their monthly salary when the company’s cost to income ratio reaches 70 percent or less. The employees can receive up to 25 percent increase should the ratio fall to 55 percent or below, said Hong Kong spokeswoman Simone Wheeler . The additional salary can be taken in cash or in equity through CLSA’s depository receipt scheme. The new incentive plan will begin October till 30 September next year and staff need to repay the additional salary should they leave the company during this period, she said. To contact the reporter on this story: Cathy Chan in Hong Kong at kchan14@bloomberg.net

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Natixis Parent Will Guarantee $50 Billion of Riskiest Assets; Shares Soar

August 26, 2009

By Fabio Benedetti-Valentini Aug. 26 (Bloomberg) — Natixis SA received a guarantee from its parent covering about 35 billion euros ($50 billion) of risky assets and said it may return to profit in the third quarter, driving the stock up as much as 43 percent. BPCE, which controls 72 percent of the Paris-based bank, agreed to absorb most of the losses that might stem from its structured credit holdings in exchange for a premium that will cost Natixis about 48 million euros a year over 10 years, Natixis Chief Executive Officer Laurent Mignon told journalists on a conference call today. Mignon also said Natixis may return to profit in the current quarter following five straight losses . “When you look at the operational performance in the second quarter, it’s not an unrealistic objective,” he said on the call. The bank’s main shareholders, Groupe Banque Populaire and Groupe Caisse d’Epargne, completed a merger in July, creating BPCE, France’s second-biggest retail banking network by branches behind Credit Agricole SA . The merger was also aimed at helping shore up Natixis, which has reported the biggest net losses of any French bank from the global financial crisis. Natixis had an 883 million-euro loss in the second quarter, compared with a 1.02 billion-euro loss a year earlier, the bank said in a statement today. Natixis was up 73 cents, or 31 percent, to 3.04 euros by 9:44 a.m. in Paris trading, bringing the gain this year to 142 percent. The company first sold shares to the public in December 2006 at 19.55 euros apiece. No More Aid Francois Perol , French President Nicolas Sarkozy ’s appointee to head the combined bank, became Natixis’s chairman in April. Perol picked Mignon, formerly a managing partner at Oddo & Cie., to replace Dominique Ferrero as CEO in May. BPCE received a total 7 billion euros from the state, more than any other French bank. BPCE may start to reimburse the government funds at the end of 2010, Chairman Perol said. Potential losses on the Natixis holdings that BPCE has agreed to guarantee don’t threaten the bank, he said. “The loss in value estimated in a hyper-stress scenario wouldn’t call into question BPCE’s solvency,” Perol said. BPCE has no need for additional funds from the government, he said. Natixis has reported about 6 billion euros of net losses over the past 24 months, according to company data. To contact the reporter on this story: Fabio Benedetti-Valentini in Paris at fabiobv@bloomberg.net .

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Natixis Parent Will Guarantee $50 Billion of Riskiest Assets; Shares Soar

August 26, 2009

By Fabio Benedetti-Valentini Aug. 26 (Bloomberg) — Natixis SA received a guarantee from its parent covering about 35 billion euros ($50 billion) of risky assets and said it may return to profit in the third quarter, driving the stock up as much as 43 percent. BPCE, which controls 72 percent of the Paris-based bank, agreed to absorb most of the losses that might stem from its structured credit holdings in exchange for a premium that will cost Natixis about 48 million euros a year over 10 years, Natixis Chief Executive Officer Laurent Mignon told journalists on a conference call today. Mignon also said Natixis may return to profit in the current quarter following five straight losses . “When you look at the operational performance in the second quarter, it’s not an unrealistic objective,” he said on the call. The bank’s main shareholders, Groupe Banque Populaire and Groupe Caisse d’Epargne, completed a merger in July, creating BPCE, France’s second-biggest retail banking network by branches behind Credit Agricole SA . The merger was also aimed at helping shore up Natixis, which has reported the biggest net losses of any French bank from the global financial crisis. Natixis had an 883 million-euro loss in the second quarter, compared with a 1.02 billion-euro loss a year earlier, the bank said in a statement today. Natixis was up 73 cents, or 31 percent, to 3.04 euros by 9:44 a.m. in Paris trading, bringing the gain this year to 142 percent. The company first sold shares to the public in December 2006 at 19.55 euros apiece. No More Aid Francois Perol , French President Nicolas Sarkozy ’s appointee to head the combined bank, became Natixis’s chairman in April. Perol picked Mignon, formerly a managing partner at Oddo & Cie., to replace Dominique Ferrero as CEO in May. BPCE received a total 7 billion euros from the state, more than any other French bank. BPCE may start to reimburse the government funds at the end of 2010, Chairman Perol said. Potential losses on the Natixis holdings that BPCE has agreed to guarantee don’t threaten the bank, he said. “The loss in value estimated in a hyper-stress scenario wouldn’t call into question BPCE’s solvency,” Perol said. BPCE has no need for additional funds from the government, he said. Natixis has reported about 6 billion euros of net losses over the past 24 months, according to company data. To contact the reporter on this story: Fabio Benedetti-Valentini in Paris at fabiobv@bloomberg.net .

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