Staley wins again, then retreats

Jes Staley’s investment and trading business has remained a difficult-to-define work in progress for longer than shareholders have been comfortable with, but it’s getting a track record of beating the market.

Barclays Investment banking (IB) fees still caught flak in a volatile quarter for markets, geopolitics and the global economy. But the 1% fall on the year was shallower than the 11% plunge expected, looking at a consensus forecast compiled by Bloomberg.

The markets business, which Staley, a former trader, has become most synonymous with, also held its own against European and Wall Street rivals. Fixed income, commodities and currencies (FICC) particularly shone. A 3% income rise excluding Barclay’s share of Tradeweb IPO proceeds was better than many players on The Street. Equities tanked as hard as the competition though, down 17%.

That’s still further vindication of the CEO’s high-profile strategy to maintain exposure to volatile businesses that cost more than they make and which consequently, British and European peers have retreated from. The chief benefit of exposure for Barclays, which also has a sizeable UK deposit base, is shielded net interest income. NII slipped 3% in the UK to £2.9bn and rose 5.5% at group level.

Unsurprisingly though, as G10 rates trend lower, Barclays continues to describe the income environment as “challenging”, underlined by a 20 basis-point group net interest margin drop. As such, Barclays expects to make cost reductions in the second half and sees 2019’s total below £13.6bn, the low end of prior guidance.

Though underlying return on tangible equity was 9.4% in the six months to 30th June, it had tumbled from 11.6% in the year before. Pressures will almost certainly keep RoTE, a key profitability measure for banks, below the group’s >10% target for 2020. As such, the dividend rise announced on Thursday was just in-line. An announcement signalling a higher gradient of returns in the medium term seems unfeasible.

Chart thoughts

A declining line connects a high on 5th June, 23rd April and 23rd July. If extended it is pierced by subsequent highs in sessions that followed, though not permanently. This symbolises rejection of a ‘breakout’ above the bearish trend. As we can see, price subsequently followed through and continued to decline.

It’s not just the descending trend that is applying resistance to BARC.LN. Let’s plot a zone that is bound at its top by the 28th November 2018 high. It is significant due to the aggressive month-plus sell-off that followed. It was also tagged cleanly on 23rd May and on a number of other occasions. For the bottom side we can use a similarly important session high on 16th May. The pair creates a theoretical band of resistance.

So far, the zone has stymied attempted BARC.LN rallies on two occasions, 16th May being one. The latter is the cluster of attempted incursions between 22nd July and 29th July. After the last failure, the stock subsequently dropped and continued to fall throughout this week, including on 1st August, when Barclays released half-year earnings.

The shares closed on Friday almost exactly on the 61.8% Fibonacci interval of the 25th June-to-25th July up leg. The marker appears to be providing ‘classic’ support. Should the stock break below this level (and the Relative Strength Index) gives us a rough indication that it might, then the next probable downside objective ought to be a cycle low notched in July 2016.

If the Fib holds, further tests of the declining trend and then the band of resistance would be required before any upward trend change could be declared. Fundamentally, this stock has been unappealing for years. From the perspective of technical analysis, the probability of a strong recovery in the medium term looks low.

Barclays (UK) CFD – daily – source: City Index

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Testing, testing, please ignore

‘Lighting Magazine’ on Philips NV Splitting in Two

I share this as I’m quoted:

Philips splits business to create separate lighting company | News | Lighting.

Aside | Posted on by

Do make use of this! RT @johnpmcdermott

Do make use of this! RT @johnpmcdermott “The FT has made free all its #indyref articles. Hadrian’s paywall has been temporarily removed.”

Margin Call 0004

Ken Odeluga, July 11th 2014

  •  M2:
  • US Regulators, German banks inch toward Settlements
  • FCA losing Patience with Asset Managers
  • US ExIm closure could hit Boeing -FT
  • SSP Group IPO Priced at Lower End of Range
  • Middle East, Africa:
  • 53 Blindfolded Bodies Found south of Baghdad
  • 35,000 displaced by Yemen Conflict -Agency
  • Dutch Special Forces in Mali

 

M2 – Banking

 

US Regulators, Commerzbank, Deutsche inch toward Settlements

 

U.S. state and federal authorities have begun settlement talks with Commerzbank and Deutsche Bank over their dealings with countries blacklisted by the United States, Reuters reported on Tuesday, citing a source with direct knowledge of the regulatory investigations. The New York Times had first revealed the existence of talks between regulators and Commerzbank on Monday, citing people briefed about the matter.

The settlement talks have just begun and the timing of the deal is unclear at this time, the person told Reuters.

Deutsche Bank and Commerzbank declined to comment.

 

 

The New York Times said a deal with Commerzbank could be struck as soon as this summer.

 

Commerzbank, accused by U.S. authorities of transferring money through its U.S. operations on behalf of companies in Iran and Sudan, could pay at least $500 million in penalties, the New York Times reported.

 

The No.2 German lender would likely face a so-called deferred prosecution agreement that would suspend criminal charges in exchange for the financial penalty and other concessions, the report said.

 

A potential deal with Commerzbank, which is expected to pave the way for a separate settlement with Deutsche Bank, would pale in comparison to the deal with France’s BNP Paribas SA , the NYT said.

Sources: Reuters, New York Times

 

M2-Asset Management

 

FCA losing Patience with Asset Managers

 

An asset management firm has been told to repay customers after using their money to settle its market data bill, Britain’s Financial Conduct Authority (FCA) said on Thursday, in a crackdown on commission charges.

 

The watchdog’s chief executive acknowledged it is losing patience with firms that fail to comply with stricter rules imposed to help safeguard the UK’s position as a leading centre for asset.

 

British asset managers pay brokers about £3 billion a year in dealing commission, which is passed on to customers, but FCA investigations found that many firms have been using this as cover to get customers to pay for market data and research of questionable value.

 

Only trading fees and useful research can be passed on to customers as dealing commission, but the watchdog’s CEO Martin Wheatley said the review of 17 investment managers and 13 brokers found that only two investment managers were fully in line with the new rules.

 

Given poor compliance with the regulations, Wheatley said that the FCA is now backing a European Union law to separate research and trading fees to encourage greater competition and transparency.

Source: Reuters

 

M2Trade Finance

 

US ExIm closure could hit Boeing -FT

 

Dissolution of the US’s Export-Import Bank could have a “significant” long-term impact on Boeing, the commercial aircraft maker which receives more than a third of the bank’s credit, according to the Financial Times, which cites a report by Standard & Poor’s.

Boeing could be forced to finance more of its overseas sales directly, says FT, and Boeing could find itself in a more difficult financing position than Airbus, its European rival, when negotiating aircraft sales, the paper adds.

 

FT notes that ExIm, the US export credit agency, has been caught in the crossfire of the latest political shootout between Republicans affiliated with the Tea Party movement, who want to shut down or reform the bank, and the party’s business-friendly party moderates.

To stay in operation ExIm needs to be reauthorised by Congress by September 30.

Source: Financial Times

 

M2 – IPOs

 

SSP Group IPO Priced at Lower End of Range

Takeaway food and coffee company SSP Group has set the offer price for its listing on the London Stock Exchange at 210 pence a shares, at the low end of the previously mooted price range, the company said on Thursday.

 

SSP, which owns the Upper Crust and Caffe Ritazza brands, said it would raise £482 million giving the company a stock market value of £997 million. Conditional dealings in the shares began on Thursday.

 

The group’s advisors had narrowed the price range to between 210p and 230p, from between 200p and 240p set at the start of the flotation.

Source: Reuters

 

Middle East, Africa

 

 

53 Blindfolded Bodies Found south of Baghdad

Iraqi security forces found 53 corpses, blindfolded and handcuffed, in a town south of Baghdad early on Wednesday, local officials said.

They said the bodies had been left in the mainly Shi’ite Muslim village of Khamissiya, about 25 km (15 miles) southeast of the city of Hilla, near the main highway running from the capital to the southern provinces.

The head of the provincial council, local police and the governor’s office all confirmed the discovery of the bodies, but had no immediate information on the identity of the dead, who appeared to have been killed execution style.

The bodies were found at 2 a.m. (2300 GMT) on Wednesday, they said.

Source: Reuters

 

35,000 displaced by Yemen Conflict – Agency

More than 35,000 people have been displaced in Yemen’s Omran province, a local government refugee agency said on Wednesday, a day after Shi’ite Muslim tribal fighters overran the provincial capital following fighting that killed more than 200 people.

 

In an urgent appeal sent to relief organizations operating in Yemen, the head of the Yemeni government refugee agency in Omran reported “mass flight of Yemenis from Omran and surrounding areas after the city’s fall”.

 

“Based on the monitoring and follow-up that we have been doing, there are more than 35,000 people that have left for other areas in Omran or to the greater Sanaa area, Hajja and Mahaweet,” Mutahhar Yahya Abu Sheeha wrote in his appeal.

Source: Reuters

 

Dutch Special Forces in Mali

Dutch troops have joined a U.N. peacekeeping mission in Mali to meet a growing security threat from the region to the Netherlands, and Europe as a whole, the Dutch foreign minister said.

 

The Netherlands has deployed some 450 Special Forces troops, intelligence operatives and attack helicopters to a U.N. force rolling out across northern Mali, where al Qaeda-linked Islamists occupied swathes of the country before being driven back last year by French troops.

 

Although Dutch forces do not have an offensive mandate, the deployment marks a shift towards security issues in Africa for the Netherlands and their task – gathering intelligence – is new to U.N. peacekeeping missions that have traditionally avoided the art of spying.

Source: Reuters

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Margin Call 0003

Ken Odeluga, July 8th 2014

 

Middle East

 

(Updated) Iraq Parliament Postpones, Reconvenes next Sitting

Iraq’s new parliament put off its next session for five weeks on Monday, fuelling concerns that the country’s political paralysis would be extended amid a Sunni Islamist insurgency that claimed the life of an army general near Baghdad. However early Tuesday, The Financial Times reported on its website that Iraqi politicians had decided late on Monday to hold a meeting the following Sunday after all.

The initial postponement had been due to failure to reach “understanding and agreement” on nominations for the top three posts in government, the office of acting speaker Mehdi al-Hafidh had said earlier, indicating parliament would not meet again until Aug. 12.

Iraqi officials described the announcement of a hastily reconvened meeting as a “clarification”, according to the FT.

The United States, the United Nations and Iran, have all urged the swift formation of an inclusive government to hold the country together.

Sources: Reuters, FT.com 

 

Yemen forces clash with Rebels in North, South

 

Clashes in the north Yemen town of Omran continued on Sunday between the army and fighters from the Houthi movement after at least 104 people were killed on Saturday, while in the south six soldiers were shot dead by al Qaeda militants.

 

Yemen’s government is struggling to regain stability in a country facing a deadly uprising in the north, a separatist movement in the south and a growing al Qaeda insurgency that has survived repeated assaults by the military.

 

Western and Gulf governments fear the spread of al Qaeda in Yemen and persistent fighting in the north could allow the militants room to plot attacks on international targets and in neighbouring Saudi Arabia, the world’s top oil exporter.

Source: Reuters

 

Kuwait Opposition Leader Bailed

A prominent Kuwaiti opposition politician whose detention last week set off a wave of sometimes violent protests in the oil-rich Gulf Arab state was freed on bail on Monday, his lawyer said.

 

Musallam al-Barrak, who had been detained for questioning after allegedly insulting Kuwait’s judiciary, has long been at loggerheads with the authorities over changes made in 2012 to an election law which he and other opposition politicians said were intended to prevent them taking power.

 

One of Barrak’s lawyers, Mohammed Abdel-Kader al-Jassim, said a Kuwaiti court on Monday had ordered the former lawmaker be freed on payment of a 5,000-dinar ($17,700) bail and delayed his case until September.

Source: Reuters

 

Islamic State Extends Gains in Syria

Around 30 Islamic State fighters broke out of a makeshift jail where rival Syrian Islamists had been holding them, a monitoring group said on Friday as it detailed the latest territorial gains by the al Qaeda offshoot.

The insurgents demolished a wall to escape the building – a former school – after fellow Islamic State fighters took control of al-Hawaaj village where al Qaeda loyalists had been holding them, the Syrian Observatory for Human Rights said.

In the same province on Thursday, Islamic State seized control of Syria’s largest oil field from the Nusra Front, al Qaeda’s official wing in Syria, consolidating its position in the eastern Deir al-Zor province bordering Iraq.

Source: Reuters

 

Three European Engineers believed Kidnapped in Libya

 

Three Europeans working for an Italian construction company have probably been kidnapped in Libya, officials from the Libyan and Italian governments said on Sunday.

 

A car used by Italian, Macedonian and Bosnian engineers was found abandoned in the town of Zuwara, west of the capital Tripoli, an official in the local town council told Reuters.

 

“They are missing and we suspect they have been kidnapped,” said the official, without giving further details.

 

A spokesman for the Italian Foreign Ministry named the missing Italian as Marco Vallisa, an employee of Piacentini Costruzioni SpA based in northern Italy, and said the ministry “presumes him to have been kidnapped”.

Source: Reuters

 

Violent Protests spread to Israel

 

Violent protests sparked by the abduction and killing of a Palestinian teenager spread to Arab villages in Israel on Saturday, presenting a new challenge to the government of Prime Minister Benjamin Netanyahu.

Israeli-Palestinian tensions have risen sharply since three Israeli teens were kidnapped on June 12 and later found dead in the occupied West Bank.

 

Latest updates – Monday July 7 (haaretz.com)

11:50 P.M. Hundreds of Israeli protesters, most of them Orthodox, continuing to clash with Israel Police and Border Police at Bar-Ilan Junction. The protesters are attempting to block the intersection by burning tires, but police scatter them with batons and horses. (Nir Hasson)

 

11:45 P.M. IAF planes strike a Gaza rocket-launching cell. The IDF has identified a direct hit. (Gili Cohen)

 

11:34 P.M. A rocket launched from Gaza explodes in an open area in the Eshkol Regional Council. In Tel Sheva, near the southern city of Be’er Sheva, Israel Police arrest eight people suspected of rioting and stone-throwing. (Shirly Seidler)

Sources: Reuters, Haaretz

 

Ukraine

 

Ukraine Forces Capture Separatist Stronghold

 

Ukrainian forces routed pro-Russian rebels in a flashpoint area of eastern Ukraine on Saturday and raised the country’s blue and yellow flag again over what had for months been the separatist redoubt of Slaviansk.

A Reuters reporter saw a convoy of about 20 military transport vehicles and buses filled with armed rebels driving out of Kramatorsk where they had gone after apparently fleeing Slaviansk 20 km (12 miles) to the north.

Source: Reuters

 

Pro-Russian Rebels Consolidate in Donetsk

Pro-Russian rebels erected new barricades on the streets of Donetsk on Monday, preparing to make a stand in the city of a million people after losing their bastion in the town of Slaviansk in the worst defeat of their three-month uprising.

 

Occasional bursts of gunfire could be heard in the distance from the centre of Donetsk, where residents said they were now living in fear of a potential battle between government forces and the separatist gunmen now out in force.

Source: Reuters

 

 

Kenya

 

Gunman Kill at least 29 in Kenya

Gunmen killed at least 29 people in raids on two coastal areas of Kenya, Reuters reported on Sunday. The attacks are the latest in a series claimed by Somali Islamists who have vowed to drive Kenyan forces out of Somalia, although police cast doubt on their role.

The Interior Ministry said one attack killed nine in the trading town of Hindi in Lamu County, the same district where about 65 people were killed by gunmen last month. Another was further south in the Gamba area, where 20 died.

Source: Reuters

 

 

 

M2

 

Chinese hackers Switch Focus to US Experts on Iraq

 

A sophisticated group of hackers believed to be associated with the Chinese government, who for years targeted U.S experts on Asian geopolitical matters, suddenly began breaching computers of experts on Iraq as the rebellion there escalated, a security firm said on Monday.

 

CrowdStrike Inc said that the group is one of the most sophisticated of the 30 it tracks in China and that its operations are better hidden than many attributed to military and other government units.

 

CrowdStrike co-founder Dmitri Alperovitch said he has “great confidence” the hackers are affiliated with the government, though he declined to provide many details on the matter. A spokesman for the Chinese embassy in Washington could not be reached for comment.

Source: Reuters

 

IMF Hints at Global Growth Forecast Cut

Global economic activity should strengthen in the second half of the year and accelerate in 2015, although momentum could be weaker than expected, IMF chief Christine Lagarde said on Sunday, hinting at a slight cut in the Fund’s growth forecasts.

Lagarde said central banks’ accommodative policies may have only limited impact on demand and that countries should boost growth by investing in infrastructure, education and health, provided their debt stays sustainable.

The IMF’s update of its global economic outlook, expected later this month, will be “very slightly different” from the forecasts published in April, she said. In April, the IMF had forecast that global output would grow by 3.6 percent in 2014 and 3.9 percent in 2015.

Source: Reuters

 

American Apparel Creditor, Legal Worries Intensify

Lion Capital has ordered American Apparel to immediately repay a $10 million loan, after the retailer failed to do so by a July 4 deadline, a source close to the matter said on Monday.

 

The ousting of American Apparel Chief Executive Officer Dov Charney more than two weeks ago prompted Lion Capital to demand repayment of a loan that was originally due in 2018.

 

In an unrelated matter, a shareholder named Tammy Federman sued Charney and American Apparel board members, saying they failed to take appropriate, timely actions despite knowing about Charney’s misconduct, according to a case filed in a U.S. district court in California on Monday.

 

A spokesperson for American Apparel declined to comment on the Lion Capital loan and was not immediately available to comment on the lawsuit. Federman’s lawyer was not immediately available for comment.

American Apparel’s legal and credit-related issues intensified as investment firm Standard General LP said it gained voting control of ousted CEO Dov Charney’s shares in the firm and that it would back the retailer in its battle against bankruptcy.

Source: Reuters

 

BHP has Six Bidders for Australia Nickel Unit – AFR

Six potential bidders, including Dutch commodity trader Trafigura and Hong Kong-listed MMG Ltd, are looking at the books of BHP Billiton’s Australian nickel unit, the Australian Financial Review reported on Sunday, without saying where it got the information.

X2 Resources, a private company run by former Xstrata chief executive Mick Davis, Canadian nickel miner Sherritt International Corp, Glencore Plc and Chinese nickel refining company Jinchuan Group are also doing due diligence on Nickel West, which could be worth as much as A$800 million ($749 million), the newspaper said.

Sources: Australian Financial Review, Reuters

 

More US Companies adopting ‘tax efficient’ measures

Seventy-six U.S. corporations have shifted their tax domiciles out of the United States to other countries since 1983 to avoid U.S. taxes, with a sharp increase recently in such deals, a policy research arm of Congress said on Monday.

Known as inversions, these transactions are still rare but are becoming more common and causing concern in Washington. Responding to a request from lawmakers for background, the Congressional Research Service said it had found 47 such deals had been done in the past decade and more are in the works.

Source: Reuters

 

New CEO at Portugal’s BES faces Questions about Loans to Founding Family

The naming of the first CEO from outside the founding clan of Banco Espirito Santo (BES) has reassured investors, but he will be under pressure to explain how Portugal’s biggest bank will recover nearly a billion euros lent to family-controlled firms.

BES nominated respected economist Vitor Bento on Saturday as CEO, just five days after revealing it was owed 980 million euros by firms controlled by the founding Espirito Santo family, 700 million more than had been disclosed when it raised 1.045 billion in new capital from shareholders on June 11.

Source: Reuters

Posted in Margin Call

Margin Call 0002

Margin Call

 

Ken Odeluga, July 5th, 2014

 

(M2 items only this time.)

 

Goldman Sachs hit with Rare Broker Downgrade

 

The stock of The Goldman Sachs Group Inc. was downgraded by an analyst at brokerage Sanford C. Bernstein & Co., according to the website of Institutional Investor magazine, which called such a downgrade of the stock “rare”. The magazine said Bernstein analyst Charles Hintz had been bullish on the stock for more than a decade. In a report meant for clients dated June 30th in which he changed his stance on GS to ‘market perform’ from ‘outperform’, Hintz said Sanford C. Bernstein “had not anticipated the effect of the regulatory response to the financial crisis”. Citing the new Basel III and Volcker Rule regimes which include funding policy changes and “onerous stress tests”, Hintz went on to lament Goldman’s “heavily weighted” propensity to “sales and trading, especially [fixed income, currency and commodities].” The analyst qualified the opinion by noting he still had confidence in Goldman’s management, but he noted his brokerage could not “get around the fact that sales and trading is facing deep structural impairment and will likely not get back to its previous highs.”

Source: Institutional Investor

 

 

Nibor reforms don’t end risk of manipulation – Industry Experts

 

Proposed central bank reforms of Norway’s Nibor interbank lending rate will fail to eliminate the risk of manipulation, according to finance industry experts.

 

Norway promised reforms of the Norwegian Interbank Offered Rate last year after some foreign banks complained about suspected rigging.

 

After investigating, the banking regulator said it found no evidence of rate rigging but could not rule it out either.

 

There has been intense scrutiny of the numerous interbank rates in use around the world following the scandal that led to some of the world’s biggest banks being fined $6 billion for rigging the London Interbank Offered Rate (Libor) and its European counterpart Euribor.

 

Norway introduced new rules for Nibor – which sets parameters on a range of financial instruments including bonds – last autumn, including the creation of a control committee.

 

The experts say the proposed mechanism still lacks transparency and the panel that sets the benchmark is too small.

 

Additional measures have been under consideration since then.

 

In a letter to the Norwegian financial regulator published in early June, NorgesBank said regulations needed to be changed as soon as possible “to make Nibor more robust and create more trust than it does today”.

 

Source: Reuters

 

 

 

Stanford Marine pulls London IPO

 

Stanford Marine Group postponed a planned London listing after its Dubai-based majority owner Abraaj Group said it was now searching for potential buyers of the business, Bloomberg reported, citing two people with knowledge of the matter.

Abraaj Group, which is the largest buyout firm in the Middle East, declined to comment on the report.

The sources said Stanford Marine may now sell shares in the first half of 2015 instead of this year and will not proceed with the IPO if it finds a buyer earlier.

Abraaj may seek a market value of about $300 million for Stanford Marine, with a valuation of about five times Ebitda, Bloomberg said.

Stanford Marine Group is an operator of offshore supply vessels for oil and gas firms in the Middle East and Gulf of Mexico.

Abraaj owns 51 percent. The rest is held by Al Waha Capital PJSC, an Abu Dhabi-based investment firm.

Source: Bloomberg

 

 

Israeli ad firm Matomy in ‘Take Two’ with plans for London IPO

 

Israeli digital advertising firm Matomy Media Group is once again looking into floating on the London Stock Exchange, according to a report by Reuters on Friday citing a source familiar with the matter. The report comes just months after the firm got cold feet amid earlier plans to list. Matomy indicated, at the time that it put plans to list on ice, that it was concerned the market’s appetite for Internet stocks had soured. Matomy was one of the first companies of the year to pull plans, as European investors balked at a drop in U.S. Internet stocks like Facebook.

 

Matomy has since trimmed its $100 million offering of new shares, plus an unspecified amount of existing shares, Reuters said. Matomy will now only offer $75 million of new shares, at a fixed price of 227 pence each, giving the firm an equity value post-listing of around £205 million, Reuters added.

 

The books are fully covered at that price, which is a scale-back from the previously expected valuation of closer to £300 million, the source told Reuters.

Source: Reuters

 

BT takes out Insurance against Pension Fund Risk

 

The trustees of BT Group Plc.’s pension scheme have taken out insurance against the costs associated with members living longer than expected, the biggest such deal of its kind in Britain.

 

BT has 320,000 members in its scheme, making it the country’s largest private sector defined-benefit pension plan.

 

The trustees said on Friday they created their own insurance company with the Prudential Insurance Co of America that would cover 25 percent of the scheme’s total exposure to people living longer, currently £16 billion –worth of the scheme’s liabilities.

 

The type of deal that BT has entered is known as a longevity swap. It is intended to insure against the risk that a company might make a mistake in calculating potential shortfalls in funding a pension scheme. Under a longevity swap, a pension fund makes regular payments to a third party, based on agreed expected mortality rates among the scheme’s policyholders.

 

The third party then agrees to take on the risk that those figures were underestimated and is liable to pay out to policy holders based on actual mortality rates.

 

The U.K. appears to have taken the lead in this new market. Insurer Aviva entered into such an arrangement in March.

 

Deals done since the first by engineering contractor Babcock in May 2009 totalled nearly £32 billion pounds, according to Reuters, with an additional 50% of that total expected from BT’s deal.

 

BT currently pays annual deficit payments of £325 million and analysts believe this could increase to almost £500 million following the next review. The triennial review began on June 30 and often takes around 9 months

Source: Reuters

 

 

 

 

Bulgaria’s Bank run the backdrop for a tale of political, criminal intrigue

 

A run on major commercial and retail banks in Bulgaria was precipitated by political rivalries between major bank shareholders and investigations into senior central bank figures whilst the situation was exacerbated by claims of malicious rumours, a report by Reuters’ INSIGHT team alleges.

 

The bank run initially centred on Bulgaria’s Corporate Commercial Bank (Corpbank) which at the end of the 2013 financial year was adjudged by auditor KMPG, to be in good health, with less than one percent of its loans non-performing, against an average of 17 percent for Bulgarian banks.

 

The country’s central bank initially blamed the bank run on media reports about Corpbank’s main owner and leaked news that a central bank deputy governor was under investigation. Central Bank Governor Ivan Iskrov called the leak a deliberate “attack” on the bank.

 

Privately, Reuters said, senior government officials blamed the run on a clash between Corpbank’s main owner Tsvetan Vassilev and his political rivals, without saying who they were. Prime Minister Plamen Oresharski publicly blamed a “corporate clash” for the run on Corpbank, without going into specifics.

 

By June 20, more than a fifth of the bank’s assets had been withdrawn, prompting the central bank to temporarily nationalise Corpbank.

 

The run quickly spread to another bank and saw Sofia announce a protective $2.3 billion credit line.

Source: Reuters

 

Fund Managers increasing Exposure to Copper

 

Some fund managers are increasing exposure to copper mining companies, betting the industry has reached the bottom of a downturn and that shares offer value for money, according to Reuters.

 

Reuters calculates that copper has lost almost a third of its value from a peak in 2011 due to a slowdown in top metals consumer China, which buys about 40 percent of global output.

 

Current conditions in the commodity market provide an attractive entry opportunity for investors in shares of copper miners, with a 2-5 year view because copper’s fundamentals are expected to improve in the medium term, Reuters suggests.

 

It cites data from Morningstar which shows that some of the largest natural resources funds, including JPM Natural Resources and BGF World mining, have already increased their exposure to copper companies in the last few months.

Source: Reuters

 

 

 

 

 

 

 

 

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