Sunday, 31 March 2013

Cyprus Trading May Resume Tuesday, Exchange Chief Says

By Tom Stoukas - Mar 30, 2013 2:00 AM GMT+0400

Cyprus’s stock exchange may resume limited trading on April 2 after closing for more than two weeks as the country faced a banking crisis and ejection from the euro, Chief Executive Officer Nondas Metaxas said.
“We have formed at the exchange so-called crisis committees and they are meeting continuously,” Metaxas said in an interview in Nicosia yesterday. “There are three or four committees meeting now, making different scenarios which we will be studying Tuesday morning, when we might get more information to see which stocks will be traded. We may resume trading on a number of stocks but this is not something which we can say with 100 percent certainty.”
Cyprus Equity Trading May Resume Tuesday, Exchange Chief Says
Cyprus’s stock exchange may resume limited trading on April 2 after closing for more than two weeks as the country faced a banking crisis and ejection from the euro, Chief Executive Officer Nondas Metaxas said. Photographer: Chris Ratcliffe/Bloomberg
Metaxas said the bourse had initially planned to allow transactions on March 28, when the country’s banks opened for the first time in almost two weeks. The bourse decided to remain shut due to uncertainty surrounding new capital controls, which include a 300-euro ($385) daily limit on bank withdrawals and restrictions on transfers to accounts outside the country.
After more than a week of wrangling between officials in Nicosia and Brussels, Cyprus reached a 10 billion-euro bailout agreement in the early hours of March 25. As part of the deal, President Nicos Anastasiades agreed to shutter Cyprus Popular Bank Pcl, largely wiping out deposits above the insured limit of 100,000 euros. Depositors in Bank of Cyprus Pcl stand to lose as much as 40 percent of their uninsured savings. The country’s parliament rejected an earlier deal that imposed losses on all depositors.

Stocks Slide

The Cyprus General Market Index (CYSMMAPA) declined 11 percent this year through March 15, the last day on which trading took place, according to data compiled by Bloomberg. The gauge has slumped 98 percent from its October 2007 high, compared with a 23 percent drop in the Stoxx Europe 60 Index (SXXP) in the same period.
Bank of Cyprus and Cyprus Popular Bank, the nation’s biggest banks, account for 59 percent of the index’s weighting, data compiled by Bloomberg show. Both companies are also listed inAthensHellenic Bank Pcl (HB), the third-largest lender, makes up another 15 percent of the Cypriot gauge.
“You can see that what happens with these two banks is more or less a shock for the exchange,” Metaxas said. “Nevertheless, for the past few months we have seen a decline in the overall trading of these stocks and we have prepared a strategic plan whereby we are diversifying by designing and implementing new products. We hope that by diversifying our products, by diversifying our listing, by diversifying our market we will be able to survive this situation.”

Athens Cooperation

In addition to steering the market’s dependence away from financial stocks, Metaxas said the exchange is in talks with Hellenic Exchanges SA, operator of the Athens Stock Exchange (EXAE), to increase “synergies.” He didn’t rule out a merger of the two companies.
“We have a very close strategic cooperation with the Athens Stock Exchange,” he said. “We are discussing a number of measures which we could take together to increase trading in both markets. We have some specific thoughts on the table but we are waiting to see when the dust settles. Everything is possible in the relation to the Athens Stock Exchange, but it’s very, very early to say anything at this stage.”
Metaxas said he’s also in talks with other European bourses, though he declined to give details.
“Other exchanges have shown a lot of interest,” he said. “I can’t say because we have signed non-disclosure agreements, but I can say we are discussing with many exchanges in Europewhich have approached us and they want to explore certain opportunities.”
To contact the reporter on this story: Tom Stoukas in Nicosia at
To contact the editor responsible for this story: Andrew Rummer at

Napolitano Names Advisers in Renewed Push for Italian Deal

By Andrew Frye - Mar 31, 2013 6:31 PM GMT+0400

Italian President Giorgio Napolitano renewed his push to forge a government from the country’s divided parliament by drafting advisers from two of the top three political forces.
Members of the parliamentary coalitions headed by Pier Luigi Bersani and ex-Prime Minister Silvio Berlusconi were among the 10 men selected, according to an e-mail sent late yesterday by Napolitano’s office. Civil servants, a former politician, a retired judge and a central banker rounded out the two lists. Beppe Grillo’s Five Star Movement, the third-largest group, had no lawmakers included.
Italian President Giorgio Napolitano
Italian President Giorgio Napolitano speaks during a news conference at the Quirinale Palace in Rome. Napolitano reiterated that he will serve until his mandate ends on May 15, denying reports that he was considering a resignation to speed the entry of his successor into the talks. Photographer: Alessia Pierdomenico/Bloomberg
The effort by Napolitano, 87, follows a week of talks among parliamentary leaders that failed to produce a government. Clashes that arose during the election campaign in January and February made it difficult for Bersani and Berlusconi to come to terms after the vote. Napolitano, in the final two months of his seven-year term, is counting on the lawmakers loyal to Bersani and Berlusconi to find common ground.
“What Napolitano is trying to force is a kind of road map toward a coalition government,” said Giovanni Orsina, a history professor at Luiss Guido Carli University in Rome. “These names all together tell me dialogue.”
Compromise between the top two groups may be easier after Bersani, who refused to share a cabinet with Berlusconi, took a step back on March 28 and relinquished control of negotiations. Berlusconi, a 76-year-old billionaire, has said he is open to governing with Bersani’s Democratic Party. Five Star, which campaigned for a renewal in Italian politics, has rejected forming a government in tandem with another party.

Institutional Change

Gaetano Quagliariello, a senator in Berlusconi’s People of Liberty party, and Luciano Violante, an ex-lawmaker with a forerunner of the Democratic Party, are on the team set to explore institutional changes. Democratic Party Senator Filippo Bubbico and Giancarlo Giorgetti, a representative with the Northern League, a Berlusconi ally, are among six members of the team focusing on economic, social and European issues.
The work of the teams “may become in various forms the base for compromise among the various political forces,” Napolitano said at the presidential palace in Rome before the members were announced. “It could become useful material also for the tasks that will be required of the new president.”

Grillo Criticism

Napolitano reiterated that he will serve until his mandate ends on May 15, denying reports that he was considering a resignation to speed the entry of his successor into the talks. Presidents in the final stages of their mandates aren’t permitted to dissolve parliament and call new elections, an option that would be available to the next incumbent.
Grillo, an ex-comic who characterized his party’s mission as the French Revolution without the guillotine, criticized Napolitano’s appointment of advisers in a blog posting today.
Italy “doesn’t need ‘caretakers of democracy,’ but rather to make its parliament function better and quickly,” Grillo said. “The country doesn’t need mysterious negotiators or facilitators of the caliber of Violante, the grand master of backroom deals, to cite just one, to act as a group of wise men.”
Violante, a former speaker of the lower house of parliament, didn’t respond to a request via hiswebsite for comment.

Parliamentary Majority

Italy needs a government with a majority in parliament to take steps such as passing economic stimulus measures and to guard against bond-market speculation in the wake of the financialcrisis in Cyprus. Italian Prime Minister Mario Monti, who remains in office until a new government is installed, can’t count on a majority in parliament and has said he is eager for his mandate to expire.
Italy is stuck in its fourth recession since 2001, and each of the top three political forces has proposed tax cuts aimed at spurring growth. Investors, who buy more than 30 billion euros ($38 billion) of bonds each month to finance Italy’s debt, are counting on a deal that will ensure a government strong enough to pass measures to boost the economy and manage the budget.
Quagliariello and Violante are joined on the institutional- change team by Valerio Onida, a former president of Italy’s Constitutional Court, and Mario Mauro, a senator in Monti’s Civic Choice party who previously belonged to Berlusconi’s group.
The economic and social team is completed by European Affairs Minister Enzo Moavero Milanesi, Competition Commissioner Giovanni Pitruzzella, Bank of Italy Deputy Director General Salvatore Rossi and Enrico Giovannini, chairman of the national statistics office Istat.
To contact the reporter on this story: Andrew Frye in Rome at
To contact the editor responsible for this story: James Hertling at

Thursday, 28 March 2013

Cypriot Banks to Open After Two Weeks as Customers Hunt Cash

By Marcus BensassonMaria Petrakis & Tom Stoukas - Mar 28, 2013 12:29 PM GMT+0400

Cyprus’s banks are preparing to open their doors today for the first time in almost two weeks, with new rules curbing access to the cash some customers have been struggling to find for food and bills.
The Central Bank of Cyprus’s capital controls will include a 300-euro ($383) daily limit on withdrawals and restrictions on transfers to accounts outside the country. Banks will open at midday and close at 6 p.m. local time, Yiangos Dimitriou, head of the central bank’s audit department, said yesterday in comments broadcast on state-run CyBC television.
Cypriot Banks to Open for First Time in 2 Weeks With Curbs
A pedestrian passes a Bank of Cyprus Plc branch in Nicosia, Cyprus. Photographer: Simon Dawson/Bloomberg
March 27 (Bloomberg) -- Francine Lacqua reports on today's top news headlines on Bloomberg Television's "The Pulse." (Source: Bloomberg)
March 28 (Bloomberg) -- Cyprus's banks will open their doors to customers today for the first time in almost two weeks, with new rules curbing access to cash. Ryan Chilcote reports on Bloomberg Television's "Countdown" with Mark Barton. (Source: Bloomberg)
March 28 (Bloomberg) -- Diego Valiante, research fellow at the Centre for European Policy Studies, discusses the need for an independent bank resolution authority in Europe and the potential risks on the region of Cyprus's capital controls. He speaks with Mark Barton on Bloomberg Television's "Countdown." (Source: Bloomberg)
Cypriot Banks to Open for First Time in 2 Weeks With Curbs avmm A Greek national flag is reflected in office windows above a closed Kyprou Leasing branch, which is a member of the Bank of Cyprus Plc group, in Athens on March 26, 2013. Photographer: Kostas Tsironis/Bloomberg
Cypriot Banks to Open for First Time in 2 Weeks With Curbs
Local men sit and play backgammon on a street bench in Nicosia. Photographer: Simon Dawson/Bloomberg
“I only bought a few small items during these days to survive,” said pensioner Kyriakos Hadjisophocleos, 65, waiting on a bench in front of a Bank of Cyprus branch in Nicosia since 7:30 a.m. to get money to pay part of his 380-euro rent. “I had many coins saved up so I was using them. If the banks didn’t open today I would have had to borrow from some friends.”
Cyprus’s lenders have been closed since March 16, when the European Union presented a proposal to force losses on all depositors in exchange for a 10 billion-euro bailout. That plan touched off protests and political upheaval on the island, and was rejected by the country’s parliament. A subsequent agreement shuts Cyprus Popular Bank Pcl (CPB), the second-largest lender, and imposes larger losses on uninsured depositors.

Call for Calm

The controls will be in force for seven days, according to a statement from the Finance Ministry. Dimitriou had said they would be in effect for four days. Security guards at banks in Nicosia said they had been instructed to allow only eight customers in at any one time today.
“Please, let’s all be calm and be careful not to create more problems,” Dimitriou said. “It will serve no purpose for us to run to banks and try to find ways to get money.”
The European Commission said in a statement today the control on capital movements must remain “proportionate” and be lifted as soon as possible.
The Cyprus Parliament last week gave wide-ranging powers to the central bank governor, Panicos Demetriades, and Finance Minister Michael Sarris, who have spent the last days deciding which measures to implement.
Those chosen include bans on terminating time deposits and cashing checks. Customers can transfer at most 5,000 euros per month from a given financial institution.

Chaos Fear

“I will not go to the bank today because I’m afraid that it will be chaos,” said Maria Charalambous, a grocery store owner. “You do not know who will be behind you in the line and you could end up getting robbed. I will wait and see.”
The restrictions aim to protect the country’s financial industry, while trying to uphold the principle of free movement of capital within the EU, Aliki Stylianou, a central bank spokeswoman, said yesterday before the measures were announced.
Cyprus in June became the fifth euro-area nation to request a rescue, after Greece’s debt restructuring trashed the financial health of lenders including Bank of Cyprus Plc (BOC), the nation’s biggest lender, and Cyprus Popular.
The 18 billion-euro economy is the third-smallest in the 17-nation euro area. Before the bailout, which was coupled with an austerity package, the European Commission predicted a contraction of 3.5 percent in 2013. Economists said afterward that the damage will be greater.

Ratings Cut

Moody’s Investors Service yesterday lowered the highest rating that can be assigned to a domestic debt issuer in Cyprus to Caa2, citing a growing risk that the country would exit the euro. The company said Cyprus’s Caa3 government bond rating and negative outlook remain unchanged.
Listed Greek companies reported the amounts of the deposits they held in Cypriot banks at the request of the Hellenic Capital Markets Commission. Jumbo SA (BELA), Greece’s biggest toy retailer, said it holds about 58 million euros at Bank of Cyprus and predicted sales in Cyprus would drop as much as 25 percent by the end of the current fiscal year.
The Athens Stock Exchange index dropped 4 percent to 850 yesterday and has lost 12 percent since the March 16 proposal. The Cyprus Stock Exchange has been shut throughout the period.
Deposits at Alpha Bank SA’s Cypriot unit stood at 2.7 billion euros at the end of 2012, Chief Financial Officer Vassilios Psaltis said yesterday. Alpha, Greece’s third-largest lender and the one with the biggest presence in Cyprus, reported a 1.1 billion-euro loss for the year.
To contact the reporters on this story: Marcus Bensasson in Athens; Maria Petrakis in Athens at
To contact the editors responsible for this story: Craig Stirling at; Stephen Foxwell at

European Stocks Rise as German Data Counters Debt Crisis Concern

By Jae Hur - Mar 28, 2013 12:09 PM GMT+0400

European stocks rose and the euro rebounded from near a four-month low as an unexpected pickup in German retail sales countered concern Europe’s debt crisis will deepen. The yen strengthened.
The Stoxx Europe 600 Index advanced 0.2 percent as of 8:04 a.m. in London, while the euro appreciated 0.1 percent against the dollar. Futures on the Standard & Poor’s 500 Index were down 0.1 percent, having earlier slid as much as 0.4 percent. The yen advanced against all 16 major peers, while natural gas futures added 0.7 percent on forecasts for colder-than-normal U.S. weather.
Asia Stocks Fall on Europe Concern, U.S. Data; Japan Bonds Climb Employees work on the trading floor of the Tokyo Stock Exchange in Tokyo. Photographer: Tomohiro Ohsumi/Bloomberg
March 28 (Bloomberg) -- Shane Oliver, head of investment strategy at AMP Capital Investors Ltd., talks about the outlook for global markets and his investment strategy. He speaks from Sydney with Rishaad Salamat on Bloomberg Television's "On the Move." (Source: Bloomberg)
March 28 (Bloomberg) -- Mike Werner, an analyst at Sanford C. Bernstein & Co., talks about the outlook for China's financial industry. China’s largest banks capped a sixth year of record profits by posting a 21 percent average return on equity, more than twice the rate earned by U.S. and European rivals led by JPMorgan Chase & Co. Werner speaks in Hong Kong with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
March 28 (Bloomberg) -- Philippine Finance Secretary Cesar Purisima talks about the country's credit rating upgrade by Fitch Ratings and the outlook for the nation's economy. The Philippines achieved investment grade for the first time as Fitch raised its assessment, rewarding President Benigno Aquino for leading a growth resurgence after lagging its peers for decades. Purisima speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)
March 28 (Bloomberg) -- Emirsyah Satar, president and chief executive officer of PT Garuda Indonesia, talks about the company's business outlook and expansion strategy. He speaks with Rishaad Salamat on Bloomberg Television's "On the Move." (Source: Bloomberg)
Moody’s Investors Service affirmed junk debt ratings for Ireland and Portugal today and said the outlooks on both were negative given the euro area’s “continued vulnerability to shocks.” German sales, adjusted for inflation and seasonal swings, gained 0.4 percent last month from January, data showed. Economists surveyed by Bloomberg forecast a 0.6 percent drop. Italian bonds fell as political parties remained deadlocked ahead of a deadline today for forming a government.
“Just as one euro-zone fire has been put out, another is being stoked elsewhere,” Jonathan Sudaria, a trader at Capital Spreads in London, wrote in a note. “As tiny Cyprus prepares for a run on its banks, the real source of instability is taking place in the parliament of the much more significant Italy.”
Cyprus’s banks will open their doors to customers today for the first time in almost two weeks, with new rules curbing access to cash. They have been closed since March 16, when the European Union presented a plan to force losses on depositors in exchange for a 10 billion euro ($12.8 billion) bailout, and will shut again tomorrow when most of Europe and the U.S. have holidays.

Italy Impasse

Italy’s 10-year bond yield climbed three basis points to 4.81 percent. It jumped 21 basis points yesterday, the most in a month, as Democratic Party leader Pier Luigi Bersani said there was no chance of a broad coalition to end a political deadlock following February’s elections.
The euro traded at $1.2798 from $1.2780 yesterday, when it touched $1.2751, the weakest level since Nov. 21. Swiss Re Ltd. gained 0.4 percent after the world’s second-largest reinsurer said it has settled a dispute with Berkshire Hathaway Inc. and will receive $610 million.
The yen strengthened 0.2 percent today versus the dollar andJapan’s 10-year bond yield touched 0.51 percent, the lowest since June 2003. Central bank Governor Haruhiko Kuroda signaled to lawmakers that asset purchases will be stepped up to stamp out deflation, damping expectations for more novel measures. The currency has weakened about 8 percent versus the greenback since the start of 2013.
Figures from the Commerce Department today may show theU.S. economy expanded at a revised 0.5 percent annual pace in the fourth quarter, faster than the government’s previous estimate of 0.1 percent growth, according to the median forecast in a Bloomberg News survey.
Natural gas for May delivery climbed to $4.098 per million British thermal units on the New York Mercantile Exchange after closing at $4.068 yesterday, the highest settlement price since August 2011.
To contact the reporter on this story: Jae Hur in Tokyo
To contact the editor responsible for this story: James Regan at

German Unemployment Unexpectedly Rises Amid Euro Crisis

By Stefan Riecher - Mar 28, 2013 1:26 PM GMT+0400
German unemployment unexpectedly rose in March as renewed tensions in financial markets increased concerns the euro region’s recovery will falter.
The number of people out of work increased a seasonally adjusted 13,000 to 2.94 million, the Nuremberg-based Federal Labor Agency said today. Economists had predicted a decline of 2,000, according to the median of 24 estimates in a Bloomberg News survey. The adjusted jobless rate held at 6.9 percent, slightly above a two-decade low of 6.8 percent.
German Unemployment Unexpectedly Rises as Euro Crisis Weighs Cyclists pass an Agentur fuer Arbeit, or unemployment office, in Munich. Photographer: Michael Nagle/Bloomberg
The euro area, the country’s largest export market, remains mired in recession and Cyprus’s botched bailout is weighing on confidence. Sentiment among entrepreneurs fell from a 10-month high in March and manufacturing output unexpectedly dropped. Still, the Bundesbank expects the German economy will return to growth in the current quarter after shrinking 0.6 percent in the final three months of 2012.
“The economic weakness in Europe is, of course, affecting Germany,” said Nick Kounis, head of macro research at ABN Amro Bank NV in Amsterdam. “A global economic recovery later this year may help Germany bring down unemployment but for now, there’s still some uncertainty.”

Job Cuts

The euro extended losses after the report, trading at $1.2766 at 10:16 a.m. in Frankfurt.
Unemployment was unchanged in February, the labor agency said. It had previously reported a decline of 3,000.
Siemens AG (SIE), Europe’s biggest engineering company, is preparing to eliminate as many as 1,400 jobs at three sites of its energy and infrastructure businesses to bolster profitability, according to two people familiar with the matter.
“Demand for new employees is shrinking, but still at a high level,” said Frank-Juergen Weise, president of the Federal Labor Agency said at a press conference following the release. “The higher seasonally-adjusted jobless number is partly due to the cold weather in March.”
The European Central Bank cut its economic forecasts this month and now expects the euro-area economy to shrink 0.5 percent this year before growing 1 percent in 2014. While ECB President Mario Draghi foresees a gradual recovery later this year, the economic risks are still “on the downside,” he said on March 7.

Export Markets

Some German companies are making up for lower demand from the 17-nation currency bloc with sales to faster-growing markets outside Europe.
Schaeffler AG, the industrial-bearing maker that’s the biggest investor in car-parts producerContinental AG (CON), said last week demand in North America and Asia will more than offset a drop in Europe to allow sales growth in 2013.
Daimler AG (DAI)’s truck division plans to increase vehicle sales, profit and market share this year on its expansion in emerging markets and demand in Brazil, Andreas Renschler, head of the carmaker’s truck unit, said on March 13.
The Bundesbank forecasts growth of 0.4 percent this year, with exports and factory output helping the German economy gather momentum.
Consumption may get a boost from higher wages. German workers won deals of as much as 6.5 percent last year and IG Metall, the country’s most powerful labor union, is seeking pay increases of 5.5 percent in 2013.
“The German labor market is robust, despite the uncertainty about the euro area,” said Lothar Hessler, an economist at HSBC Trinkaus & Burkhardt AG in Dusseldorf. “The unemployment rate will move sideways this year before posting new record lows in 2014.”
To contact the reporter on this story: Stefan Riecher in Frankfurt at
To contact the editor responsible for this story: Craig Stirling at