Top Economics News

Greece may need extra help and we can not exclude an enhanced firepower of the European Stability Mechanism (MES), the future permanent emergency fund in the euro area , says Austrian Chancellor Werner Faymann.

"I would not trust someone who would declare that (help) to Greece is sufficient," he says in an interview with the newspaper Österreich. "For Greece, it depends on their ability to comply with the measures (reform) across several elections."

The Chancellor did not rule out building a resource of MES, holding that it "may be necessary".

French President Nicolas Sarkozy confirmed Friday that a long-awaited decision on this matter would take place probably by the end of March and it was expected by then to "initiatives ".

In late February, France and Belgium said they agreed to enhance TSS with the ways of his predecessor, the European Financial Stability Fund (EFSF). 

The proposal would combine 250 billion still available within the EFSF with EUR 500 billion planned for the SS to create a financial firewall that can better fight against a contagious the debt crisis, but Germany still seems reluctant to the idea.

Faymann also believes that the EU should continue to support not only Greece, but Portugal, Italy and Spain.

"Let us not forget that our economy is strongly linked to that of Italy," argued the Austrian Chancellor, adding that Rome was in a better position than Athens.

The rating agency Standard and Poor's downgraded Monday the credit rating of Greece to "SD", a level corresponding to "selective default. Anti-austerity protesters in Parliament in Athens on 7 February 2012.

. The rating agency Standard and Poor's downgraded Monday the credit rating of Greece to "SD", a level corresponding to "selective default", to reflect the restructuring of government debt launched Friday. S & P said in a statement it plans to raise the rating of the country to CCC rating assigned to issuers of poor quality with a real risk of default, when this operation has been fully carried out, probably around mid- in March.

The decision of the U.S. Agency was expected since it had indicated in the past it would raise the note by Greece SD begin as soon as the implementation of the Agreement on Cessation of Athens claims made by private financial institutions. However, "if a sufficient number of bondholders (public) Greek did not accept the exchange offer," wrote S & P said in a statement, "we believe that Greece would present an imminent risk of default characterized payment "to the extent that the release of the rest of the assistance promised to the country by the euro area and the International Monetary Fund is subject to the successful debt restructuring of Athens.

A default is characterized reflected in the note "D" in the notation of S & P. "I take note of the decision" S & P, said the leader of Finance Ministers of the euro zone Jean-Claude Juncker, in a statement released in Luxembourg, adding that he expected a "strong participation "of private creditors in the operation launched Friday.

This exchange transaction should allow Greece to obtain a cancellation of debt of 107 billion euros. Greece aims to give private creditors participating in the operation of shares worth 53.5% less than those they currently hold. A quarter of those titles that creditors will receive bonds from the European Stability (EFSF), presumably with a maximum maturity of two years. The rest will consist of new Greek bonds with maturities ranging from 11 to 30 years, a period much greater than those they replace.

The goal is to push the repayment schedule of Greece on the amounts it still accepts honor, for giving him time to recover. If successful, "we should consider that the incident of the partial failure of Greece belongs to the past," wrote S & P, for which the possible increase of the rating to CCC would then account "the economic growth outlook uncertain of the country "and its" public debt remains strong ", even after restructuring.

Several Directors of Veolia Environnement, whose CEO of EDF Proglio, are preparing to head the group's CEO, Mr. Frérot, reports financial daily Les Echos in its edition Monday.

The former Minister of Ecology Jean-Louis Borloo is among prospective successors, the newspaper said, predicting that a Board of Directors of Veolia Environnement scheduled on February 29 will be crucial.

Contacted by Reuters, a spokeswoman for Veolia declined to comment.

Officials from the euro area are studying how to delay parts of or the entire second level of aid to Greece, if possible until after the election pre views for April, it was learned Wednesday from European sources.

While the new aid package of € 130 billion is now almost ready, the finance ministers of the euro area are still not satisfied with the commitments of the Greek political leaders to implement the agreement, which realizes that Athens provides further budget cuts and introduce many unpopular reforms by 2014.

There are also doubts about the path of debt reduction Greek. It represents about 160% of Greek GDP and the "troika" consisting of the European Commission, the European Central Bank and International Monetary Fund would like to return to 120% of by 2020.

"There are proposals to delay the Greek package or cut into parts, so that immediate fault is avoided, but without commitment on the whole (package)" said one source.

"The options will be discussed (…) There is pressure from several countries to hold things until there is a concrete commitment in Greece, which could not come before the elections, "they added.

A telephone conference of finance ministers of the euro area must take place at 17:00.

European shares lost ground Tuesday in mid-session, while Wall Street expected a slight decline in market weighed down by disappointing results considered and the fear absence of agreement on a new bailout of Greece.

The CAC 40 was down 0.49% to 3,388.68 points at mid-session, while the Frankfurt Stock Exchange yields 0.74%, 0.42% London and the Eurostoxx 50 declined of 0.54%.

Torn between the impatience of Europe and the exasperation of its people, Greek political leaders meet Tuesday in full general strike, to give their response to measures drastic demanded by donors of Athens.

Investors are also made them more cautious approach to the meetings of European and British central banks Thursday. 

"Investors have begun to lift a little from the base until the rate decisions of the Bank of England and European Central Bank (…) while Greece remains a focus of the market, "said Joshua Raymond at City Index strategies.

Side values, ArcelorMittal shows the strongest increase in the CAC 40 and Eurostoxx 50's, with a gain of 2.3%. The steelmaker has published the results meet expectations and be announced ahead of its goal of reducing its debt. Its subsidiary of stainless steel Aperam takes 8%.

UBS was down 0.9%. The Swiss group announced a net profit of 393 million Swiss francs for the fourth quarter of 2011, with a loss before taxes of CHF 256 million in investment banking and prudent for a speech Q1 euro zone.

The Swiss Swatch lost 4.2%, a victim of profit taking after the announcement of results in line with expectations for 2011 and a double-digit growth in demand for watches and jewelery in January .

Alfa Laval lost 8.9%, following orders and operating profit below expectations, mainly because of lower demand from shipyards.

In Paris, LVMH loses more than 3.4%, largest drop in the ACC. The title continues to be a victim of profit taking, just like Swatch, after his strong performance in 2011.

Lagardere lost 5.1% after posting a turnover of slightly worse than expected and have announced writedowns of about 900 million euros.

After the loss of triple A, the real estate professionals were inclined rather to an increase in lending rates. But the opposite occurs in February, according to the online broker best rate.

Contrary to the fears widely reported by the loss of triple-A, mortgage rates are down slightly for this month. This is apparent from a study of online broker, Meilleurtaux.com. In February, 45% of banks show declines of 0.15 points on average, 31% have left the stable. Only 24% have made gains. Overall, the average credit rate stood at 4.28% against 4.31% in January.

OAT rates down

"We do not expect this result" surprising Sandrine Allonier, head of economic research meilleurtaux.com. It must be said that the rate of OAT (comparable Treasury obligations), that is to say the rate at which France takes the 10-year bond has not increased. The Hexagon borrows at preferential rates. And on the contrary, it borrows a better rate. "For example, in February it reached 2.89%, whereas before the loss of the triple A, it was 3.40%," says Sandrine Allonier. Second explanation, the rates of the European Central Bank (ECB) and the interbank rate, the interest rate charged between banks themselves, remain stable. Finally, the loss of the AAA had been anticipated by financial markets and banks have rebuilt their capital. Consequently, they can lower their lending rates long and short term.

March, the month in real estate transactions

"Presumably, this slight decline will continue in March, one month is very rich in real estate transactions." Banks are trying to position themselves in relation to competition. Hence their strategy to attract new customers by lower lending rates in the long and short term. "Some had rates at 4.30%, which rose 4% in February. These banks want to take their game," said Ms. Allonier. Before continuing, "the banks are still selective about the cases. All require a contribution of 10%."

Apply for credit up

The increase in the number of credit reports is the second conclusion of the study meilleurtaux.com. A figure up 20% compared with December, while still down 2% year on year. Borrowers do not turn away the real estate market. There are still a safe haven, especially since many of them expect lower prices in 2012, "the order of 5% in some areas," said Sandrine Allonier. However, "there is a caution for future buyers: they are occasionally more likely to assess their borrowing capacity before they have found a property. Those who led a project with a signed sales agreement fell 4% over a year. "

Greece wants a solution to their debt problems that would apply to all of its debt maturing until 2035, said Monday a government source.

"We think of all the Greek debt, expiring until 2035, not 2020 as planned in the previous plan," the source said, adding that "nothing can be done without the European Central Bank ".

Leaders of the 17 euro zone members must agree by the EU summit Wednesday on how the second aid package granted to Greece, including a marked discount on Greek bonds held by the private sector , which represent the 200 billion euros.

"We oppose any unilateral action that could be interpreted as a reconstruction of the debt," the source said.

Whatever emerges from the top of Wednesday, Greek banks are not nationalized, also said the source.

According to the information that leaked a report on the debt of Greece by international inspectors, it seems that the second aid package of € 109 billion agreed in July is no longer sufficient unless private investors n 'accept a discount of 60% on their Greek bonds.

Without it, it would take more than 250 billion euros for Greece is solvent, say economists.

Private creditors of Greece may have to accept a loss of up to 60% on their sovereign debt to the Greek debt can become sustainable over the long term, according to a report that will serve as the basis for decisions of the leaders of the euro area meet Sunday and Wednesday in Brussels.

The EU finance ministers STRIPS for their Saturday on different scenarios and try to resolve their differences in voluntary or not of such private sector participation to a new bailout for Greece.

Friday night, they brought a breath of fresh air in Athens, giving the green light to the payment by mid-November of the next tranche of international assistance by 8 billion euros, without which Greece would default on its securities sovereigns in the coming weeks.

The International Monetary Fund still has to also accept the payment, he conditioned ambitious decisions of Heads of State and Government of the euro area to reduce the mountain of Greek debt.

According to the scenarios included in the report of the troika – IMF, ECB and European Commission – representing international donors in Greece, a 50% discount on Greek bonds held by private investors is necessary to reduce debt to 120% of GDP , against 162% today.

If it was intended to bring it below 110%, a discount of 60% would be necessary, the report, which warns that the Greek debt could have a peak at 186% of GDP.

A footnote on page mentions, however, opposition from the European Central Bank to the publication of such scenarios because it believes that investors will refuse to subscribe voluntarily to these losses, resulting in an inadequate Greek.

Fearing to trigger a credit event with unforeseeable consequences, France and several other countries are also reluctant to go beyond the envelope of 50 billion euros negotiated last July 21 with the banks, as demanded German authorities if necessary by forcing them to go the extra mile.

FUND SUPPORT FOR THE EURO AREA

Reflecting a view increasingly shared by European leaders, the Swedish Finance Minister Anders Borg has called for Saturday to a "substantial discount" on the Greek titles.

"I do not think we should use taxpayers' money.The safeguards system can not only restore confidence, "he said on his arrival at the meeting of EU finance ministers.

In addition to the Greek plan, they try to move forward on Saturday a comprehensive plan to recapitalize banks on the continent, aimed not only to prepare them for losses in Greece but also to restore investor confidence.

Several European and banking sources told Reuters earlier this week that the plan could be around 100 billion euros.

They must also continue work to define a formula acceptable to all the Fund to leverage support for the euro area (EFSF), on which Paris and Berlin are divided.

Friday night, after a meeting of the Eurogroup, which barely touched the issue, the economy minister, Baroin said that France continued to believe that the conversion of cash in bank was the best solution but did not make "one final point of confrontation."

"What counts is what works.And what works is what will go towards deterrence and effective firewall and it is around that we're trying to work, "the minister said to the press.

SARKOZY, MERKEL MEETING

Granted a banking license in EFSF would allow access to funding from the European Central Bank to increase its capacity for action by a factor of up to five.

But Berlin rejects this possibility, which would be to accept that the institution of Frankfurt finance the countries of the euro area, one of the dogmas explicitly excluded by the European treaties.

The other members of the euro area are also divided, Belgium and Spain having voted for a reconciliation BCE-EFSF while Slovakia and Austria have indicated that this solution was not studied.

A European source said Friday that among the solutions on which floor the ministers, not imply the

ECB.

This issue could be decided on Saturday evening at a bilateral meeting in Brussels between Nicolas Sarkozy and Angela Merkel, who will be joined by the presidents of the Commission and the European Council, José Manuel Barroso and Herman Van Rompuy.

European leaders are under intense pressure by their international partners to take decisive action against the crisis, less than two weeks of the G20 summit in Cannes, where they planned to hold them accountable.

Olympus still has the title fell 6.81% Friday, the market value of the Japanese and melted with about 50% since last Friday, the day he announced the dismissal of its chief executive Michael Woodford.

Investors have pushed the action and the manufacturer of cameras and optical instruments of precision to a low of two and a half years, adding to even more pressure on the group to be explained on unusually high consulting fees paid in connection with an acquisition and revealed by the ousted leader.

Olympus acknowledged Wednesday it had paid $ 687 million (498 million) in financial advisors in the purchase of the British manufacturer of medical equipment Gyrus.

These fees represent a third of the price of the acquisition, whereas traditionally they account for only 1% or 2% of the value of a transaction, according to a PriceWaterhouseCoopers study commissioned by Michael Woodford.

POLICE PROTECTION

The latter told Reuters on Thursday it had filed for protection under the British police after submitting new information to investigators British anti-fraud regarding fees.

In the data transmitted to the authorities by Michael Woodford, a former investment banker from Japan appears to be the central figure in the matter of fees.

According to these documents, Hajime "Jim" Sagawa was the owner of AXIS, a financial services company little known American who received the exorbitant fees reported by Michael Woodford.

Olympus, which denies any impropriety, said the fees had been paid to its subsidiary AXIS Axam Investments, a company registered in the Cayman Islands, including Hajime Sagawa was a member of the Board, the report of PricewaterhouseCoopers.

Reuters visited the home of the latter, a former Nomura banker, only to find that his wife, who assured that her husband had done nothing wrong.

INVESTIGATION OF SESC JAPAN

Michael Woodford has also written to the Securities and Exchange Surveillance Commission (SESC), the authority of the Japanese financial markets, asking him to consider the case Olympus.

An investigation by the SESC could take months. Financial Services Minister Shozaburo Jim said the policeman of the financial sector would work, but refused to comment on individual cases.

"Olympus has clearly withheld information to investors. And even if she is not guilty of actions contrary to law, management has breached its obligations vis-à-vis shareholders.It should take responsibility, "said Shigeo Sugawara, manager of Sompo Japan Nipponkoa investments in Asset Management.

Olympus may have to spend significant impairment likely to weaken its balance sheet. And even if, according to manager, many candidates would be interested in the instruments of precision optics group, no one would touch it before the case is improper fees paid.

The company is now worth some $ 4.5 billion.

Brokers have suspended their coverage of Olympus as key shareholders and require that the group be made public links between management and its financial advisors.

Banks must be better capitalized to avoid an escalation of the crisis that would be caused by a financial collapse, said Sunday the German Finance Minister Wolfgang Schäuble on the ZDF television, adding that banks no longer trust the to each other.

"We need better regulation and better capitalization of banks," he said.

"Everyone will not like this, but it is the best way there is no escalation of the crisis caused by a collapse of the banking system."

"The cause of this crisis is too much debt, but we must fight the danger of contagion. We must simply recognize that banks currently have more trust towards each other, so the market Banking is not working as it should.The best way to combat this is a better recapitalization. "