Brown, Sarkozy seek ‘new Bretton Woods’

Brown, Sarkozy seek ‘new Bretton Woods’

By Ben Hall in Paris and Jean Eaglesham in London

Published: November 2 2008 22:50 | Last updated: November 2 2008 22:50

Nicolas Sarkozy and Gordon Brown have struck up an unlikely partnership ahead of next week’s summit in Washington aimed at overhauling the global financial system.

But there are still big differences between Paris and London about the lessons to draw from the crisis and a fear in the Elysée that Mr Brown, the UK prime minister, is still committed to preserving a light-touch regulatory regime for the City of London.

French officials say the strongest message that should come out of the Washington meeting on November 15 would be a broad commitment from the US, the UK and other European countries to abandon competition between regulatory systems in favour of convergence. But they acknowledge this is unlikely.

Officials on both sides of the English Channel say the two leaders have in fact put to one side their differences about the need for harmonisation of rules so that they can both claim success at the summit.

Mr Brown and Mr Sarkozy, the French president, want agreement from the leaders of the G20 group of advanced and emerging economies in the US capital for a “new Bretton Woods”, a redesign of the postwar global financial architecture.

Mr Brown and Mr Sarkozy will seek EU backing for their proposals at a special summit of EU leaders in Brussels on Friday. The British do not expect the Washington summit to resolve all – or even most – of the issues, but to send out a signal of a commitment to act that will start to restore confidence in battered markets.

French officials say the meeting has two objectives. The first is to take executive decisions on issues that have been intensively discussed among regulators and supervisors for the past year.

These include supervision of ratings agencies, injecting flexibility into “fair value” accounting norms for illiquid assets and taking into account banks’ pay and bonus structures when evaluating their riskiness. “It’s time to wrap up this discussion,” said an official in Paris.

The second objective is to agree a set of principles underpinning reforms to be discussed at future summits. France would like to hold a second meeting in Paris in February to be attended by the new US president.

One of the main themes will be changes to the international financial architecture. Britain and France both want a better resourced International Monetary Fund to carry out an early warning function for the global financial system.

But by focusing on the broad outlines of a reformed global financial system and on issues such as tax havens, officials believe Mr Brown will be able to skirt round trickier questions about the standards of regulation in the City. Mr Brown’s vision of a reformed global regulatory system does not correspond with Mr Sarkozy’s enthusiasm for a more harmonised EU regulatory regime.

“I hear leaders taking a very different stance to the one they took six months ago,” said a senior French official alluding to Mr Brown. “But have they really changed? If we could have an agreement that regulatory convergence was more important than the individual interests of different market places, that would be great. But I’m not sure we are going to get that.”

The crisis has made it politically unwise for UK politicians to stand up for the City. The previous British political mantra of “light touch” regulation has now become a defence of “effective” regulation. But both main political parties in Britain believe the UK’s eschewal of heavy-handed statutory controls on the financial sector has given London a clear advantage over its main rival, New York. This is not an advantage that Mr Brown would sacrifice lightly.

-----------------------------
China U-turn on online money-making

By Mure Dickie in Beijing

Published: November 2 2008 18:53 | Last updated: November 2 2008 18:53

Less than two years after “strictly forbidding” players of online computer games from making money from trade in virtual currencies, China has announced a 20 per cent tax for such income.

The apparently contradictory rulings from different arms of the Chinese state highlight the difficulties faced by governments worldwide as they seek to regulate and tax the growing economic activity centred on “massively multi-player online role-playing games”.

Tax authorities generally take the view that all income from online business should be taxable, even if profits are derived from virtual worlds.

However, the practicalities of collecting those taxes – and valuing virtual assets – continue to be elusive.

Trade in virtual items – ranging from “gold” coins to magic swords and in-game property rights – is estimated to be worth more than Rmb10bn ($1.45bn, €1.15bn, £900m) a year in China alone, according to consultancy iResearch.

The widening trade in the virtual money used within games – and their burgeoning use for other transactions – last year prompted China’s ruling Communist party and the central bank to ban trading in virtual currencies and their use for purchases of “material products”.

However, in what amounts to tacit recognition that last year’s restrictions have had little impact, the State Administration of Taxation has announced that income from the sale of virtual currency with “increased value” is taxable at the same 20 per cent rate applied to real estate and other transactions.

Beijing tax officials declined to explain how they would implement the vaguely worded ruling, with local media saying detailed regulations could be announced in the coming days. However, Chinese analysts and games players suggested that the authorities’ attempt to tax the virtual currency trade would fare no better than the previous effort to ban it.

The contradictions between last year’s order and the tax ruling showed that authorities were “not very clear about online regulation”, said one industry analyst.

“If they can successfully implement this tax in the next two years, then I will jump over Mount Everest,” sneered one contributor to a discussion of the ruling on the popular Netease portal.

Another commentator involved in the growing business of “farming” virtual money and items used in games for sale to cash-rich but time-poor players in the US, Europe and other developed countries asked rhetorically if he or she could expect to benefit from the same tax incentives as other Chinese export businesses.

“I sell virtual currency to foreigners – will I get an export tax rebate?” the commentator said.

Despite last year’s restrictions, trade in virtual currencies used in games such as “World of Warcraft” or issued by online companies such as Hong Kong-listed internet group Tencent is carried out openly on Chinese auction websites.

Tencent’s widely popular “QQ Coins”, for example, were on Sunday being offered at a rate of one to Rmb0.91.

--------------------------
UK confident Saudis will help IMF

By Andrew England in Abu Dhabi

Published: November 3 2008 00:08 | Last updated: November 3 2008 00:08

Gordon Brown, the UK’s prime minister, on Sunday said he expected Saudi Arabia, the world’s largest oil producer, to provide funding to the International Monetary Fund to help it bail out economies hit by the financial crisis.

Mr Brown is visiting the oil-rich Arab Gulf to drum up investment in the UK and push for additional financial backing for the IMF, which has already agreed to provide rescue loans for Iceland, Ukraine and Hungary.

“The Saudis, I think, will contribute so we can have a bigger fund worldwide,” Mr Brown told reporters in Riyadh, after meeting King Abdullah, the Saudi leader.

“The oil producing countries, who have generated more than $1,000bn (€786bn, £622bn,) from higher oil prices in recent years, are in a position to contribute.”

Mr Brown’s comments were seen as part of his efforts to use a global summit on the financial crisis in Washington later this month to reform the workings of the IMF and boost its funding base.

Saudi Arabia, the region’s biggest economy, is the only Middle Eastern member of the Group of 20 nations that is scheduled to attend the Washington meeting.

The kingdom had amassed foreign assets of more than $500bn, and this year more than 50 per cent of its oil revenues were being invested in foreign assets, mainly US Treasury bills, because it could not spend the petrodollars domestically, a Saudi adviser said.

Last week investors from Qatar and Abu Dhabi, the capital of the UAE, stepped in to help Barclays, investing $5.8bn in the UK bank. Robert Kimmitt, deputy US Treasury secretary, also visited the region in a bid to promote investment in the US economy.

The trips illustrate the rising prominence of the Arab Gulf, which includes big oil producers and important western allies.

Although the region has been affected by the financial crisis and growth is expected to slow, the states have accumulated massive surpluses and are forecast to continue expanding.

Governments, however, have seen oil prices decline sharply from their record highs in July and realise the region will not be immune to a global recession.

Sheikh Abdullah bin Zayed Al Nahyan, UAE’s foreign minister, said last week that Gulf states would support the international financial system, adding that members of the Gulf Co-operation Council – the UAE, Saudi Arabia, Qatar, Kuwait, Oman and Bahrain – had asked Saudi Arabia to reflect their views.

Observers say that while Gulf countries want to be seen to be helping to tackle the global crisis, they are also interested in defining what their roles might be in a new financial order.

Saudi Arabia, however, is notoriously cautious and Saudi leaders will be sensitive to domestic issues amid complaints that projects at home have been delayed and ordinary Saudis have yet to feel a trickle down from the petrodollar-fuelled boom.

----------------------------
UN chief urges action on Gulf of Aden piracy

By Robert Wright in London

Published: November 2 2008 22:32 | Last updated: November 2 2008 22:32

The head of the United Nations body charged with combating piracy has advocated establishing a UN force to pacify an area of the sea, in the face of the piracy problem off Somalia and Yemen.

Efthimios Mitropoulos, secretary-general of the International Maritime Organisation, made the call in an interview with the Financial Times when he described the crisis in the Gulf of Aden – the gateway to the vital Suez Canal – as among the most severe facing the world.

This year has seen 77 attacks on vessels in the Gulf of Aden, with 31 hijacked, according to the International Maritime Bureau, which monitors piracy. More than 200 crew and 10 vessels are still being held in Somalia. The most recent hijacking – of an 80,000-tonne vessel carrying iron ore from Canada to China – came last Wednesday.

There are fears shipowners could start diverting vulnerable ships round the Cape of Good Hope rather than brave the increasingly risky route through Suez. Traffic through the canal accounts for about 12 per cent of oil transported by sea and significant amounts of other trade.

“I would like to see governments committing sufficient numbers of warships, military aircraft and surveillance assets to the region and to co-ordinate their command and control under the auspices of a United Nations mandate,” Mr Mitropoulos said.

The effort needed as many ships and other military assets as possible, he added. For that reason, he would prefer a UN-mandated force to one from a “defence organisation” – a reference to Nato’s growing involvement in deterring piracy in the area and protecting food-aid shipments for Somalia.

“I believe that it will be easier for countries which are prepared to make ships available to co-operate and co-ordinate their effort under the United Nations,” Mr Mitropoulos said.

Existing UN Security Council resolutions on the crisis should be made more explicit and extended, Mr Mitropoulos added. Resolution 1816, which allows foreign navies to act against pirates and robbers in Somali waters, expires on December 2.

Rules on the handling of captured pirates should also be clarified. “I would like to see the establishment of a legal jurisdiction to bring arrested pirates and armed robbers to justice and punishment,” Mr Mitropoulos said.

“This could include modifications to national laws, with due regard to their obligations under international conventions.”

----------------------------
Germany set for strikes as pay deal rejected

By Chris Bryant in Berlin

Published: November 3 2008 02:00 | Last updated: November 3 2008 02:00

Germany's engineering industry is braced for a series of strikes from today after the country's most powerful trade union rejected an employers' pay offer as an "insult" and a "bad joke".

More than 130,000 employees in 200 workplaces are expected to hold short stoppages in the next 10 days in an attempt to force employers to meet the IG Metall trade union's demand for an 8 per cent pay increase.

A first wave of strikes was held by more than 8,000 nightshift workers on Saturday.

Martin Kannegiesser, president of Gesamtmetall, the employers' association, yesterday warned that the escalation of strike action would ultimately endanger jobs. Gesamtmetall last week offered 2.1 per cent more pay next year, plus a 0.8 per cent one-off payment to cover the remainder of this year.

The stand-off represents an early test of how far the pay packets of Europe's industrial workers will be affected by the financial crisis. The dispute will also be closely observed by other industries that use the IG Metall pay round as a benchmark.

Analysts said the wage round, covering 3.6m engineering workers, had come at an awkward time for IG Metall. Soon after the union tabled its claim in September the collapse of US investment bank Lehman Brothers sent financial markets reeling, forcing the German government to agree a €500bn ($635bn, £393bn) bank rescue and slash its economic growth forecast.

Job growth in the metal industry has since come to a standstill, employers have begun to cut part-time staff, and carmakers, which account for about one in seven German jobs, have announced production stoppages to reflect declining orders.

Union officials have refused to revise their demands, arguing that ordinary employees should not be punished for the mistakes of wealthy financiers.

However, experts believe IG Metall's leadership is under pressure because members' expectations soared this year when steel, chemical and public sector workers all won bumper pay increases.

"IG Metall is the strongest union and represents the most productive sector, so when it came to making a wage demand it was expected to do even better than the others," said Josef Esser, a professor of political science at the Goethe University, Frankfurt.

Experts told the Financial Times that a resolution before the end of this month was still likely amid signs the union is starting to cede some ground. Berthold Huber, IG Metall chairman, has spoken of a pay increase of at least 4 per cent.

------------------------------
France’s invitation to overseas wealth funds

By Ben Hall and Scheherazade Daneshku

Published: November 3 2008 00:06 | Last updated: November 3 2008 00:06

France’s state-owned finance house wants overseas sovereign wealth funds to become co-investors in a new vehicle created by Nicolas Sarkozy to stop French companies being snapped up by foreign predators.

Augustin de Romanet de Beaune, the head of the Caisse des Dépôts et Consignations (CDC), which will manage the new investment vehicle, said it would be open to outside investors, as long as they committed for the long term.

“If the sovereign funds of China, Singapore and the Middle East want to come and invest with us, to become co-investors, they are welcome,” he told the Financial Times in an interview.

The 200-year-old CDC has become the government’s favoured institution to help tackle the financial turmoil, which has wiped 38 per cent off the value of the CAC40 of leading French stocks since January.

The finance house has poured €2bn ($2.5bn, £1.6bn) into Dexia, the troubled Franco-Belgian bank, offered loans to local government, and will now run Mr Sarkozy’s new fund. The president’s initiative, launched in a significant speech last month, has sparked fears in Europe of a new protectionism.

Within France, it has turned the spotlight on a long-standing tension at the heart of CDC’s role between maximising returns for French taxpayers – its ultimate owners – and being used by the government to protect companies from collapse or foreign takeover.

Created in 1816 as an independent body to restore trust in the public finances after the Napoleonic wars, the CDC is one of the country’s most powerful and prestigious institutions, with assets of €400bn ($509bn) at the end of 2007.

The finance house has interests “everywhere”, says Mr de Romanet, from managing the assets in the state-regulated savings account, known as the Livret A, to financing social housing, and now providing debt guarantees to French banks.

But, more controversially, the CDC is one of the biggest shareholders in the CAC40 of top French companies, with stakes worth a total of €20bn. It sees its role as that of the core long-term shareholder played elsewhere by pension funds. CDC has periodically sought to assert its independence from government, particularly after getting its fingers burnt on investments foisted on it by the state.

Mr de Romanet last year drew up plans for a stand-alone investment committee to scrutinise its projects after CDC bought a 2.25 per cent stake in EADS, the aerospace group, only to see its value plunge two months later after a profits warning.

Although CDC strongly denied any instruction from the state to buy the EADS shares, it made its investment just weeks after then-prime minister Dominique de Villepin, urged it to take equity stakes in French companies to stop them falling into foreign hands.

Mr de Romanet – a former chief economic adviser to ex-president Jacques Chirac – acknowledges that balancing political demands and investing for returns remains a “huge challenge”.

“We will try to prove that it is possible to manage both the political action desired by President Sarkozy and compliance with market rules. It is up to us to prove that.” Mr Sarkozy said the new investment fund would be used to fend off foreign “predators”.

--------------------------
Bakrie family to sell Bumi stake

By John Aglionby in Jakarta and Sundeep Tucker in Hong,Kong

Published: November 3 2008 02:00 | Last updated: November 3 2008 02:00

The billion-dollar debt crisis blighting the business empire of Indonesia's powerful Bakrie family appeared to ease this weekend after the holding company agreed to sell its stake in coal company Bumi Resources to an affiliate of the Texas Pacific Group for $1.3bn.

Bakrie & Brothers said that once the deal to sell its 35 per cent of Bumi is completed, which could take a few weeks, it would use the money to clear all its debts, which total more than $1.2bn.

However, people familiar with Saturday's agreement with Northstar, which is backed by TPG, say the deal is far from final.

The price, the size of the stake being sold, a buyback option for the Bakries, the involvement of three state-owned enterprises with Northstar and the future composition of the Bumi board are still "fluid", one person said.

Bukit Asam, a coal miner, Aneka Tambang, a mining company, and Timah, the world's largest integrated tin producer, are the three companies joining forces with Northstar.

In spite of the agreement, analysts warned that the Bumi share price, and with it the broader stock market, would only rebound if investors were confident about the precise terms of the deal.

Bakrie & Brothers is controlled by the family of Aburizal Bakrie, the senior welfare minister and prominent member of Golkar, the largest party in parliament.

The events are being closely watched around the world because the Bakries' crisis has enveloped the whole Indonesian capital market and the wider economy.

This is primarily because billions of dollars have been frozen since share trading in Bumi, the world's largest exporter of thermal coal, Bakrie & Brothers and Energi Mega Persada, a Bakrie-controlled oil and gas company, were suspended almost four weeks ago.

Bumi, which was worth $18.6bn in June but now only $3.9bn because the share price has collapsed, accounts for about 30 per cent of the Jakarta composite index's daily turnover and is widely held around the world. It is also very popular in the so-called repo market, where a seller of securities promises to buy them back later for a mutually agreed price. An unknown number of repo deals involving the Bakrie companies remain in limbo because positions cannot be cleared.

The uncertainty has exacerbated fears over the stability of the Indonesian economy after a liquidity squeeze in the last few weeks.

The Bakries have requested that trading in their companies' shares remain suspended for another month.

But Fuad Rahmany, the head of the capital market's supervisory agency, said the suspension would continue for only a few more days.

The crisis was triggered by the collapse of the Bakrie-linked companies' share prices because Bakrie & Brothers used the shares when they were near their peak value to guarantee $1.4bn of loans.

Ari Hudaya, a Bakrie & Brothers director and chief executive of Bumi, said that he was confident that the Northstar deal would be completed but acknowledged the final price might be adjusted after due diligence was completed.

-------------------------------
Norwegian to pick up where Sterling left off

By Kevin Done in London

Published: November 3 2008 02:00 | Last updated: November 3 2008 02:00

Norwegian Air Shuttle is moving fast to fill the vacuum left by the collapse last week of Sterling Airlines, the Copenhagen-based, Iceland-owned low-cost carrier.

This week it will open a base in Copenhagen and is aiming to have eight to 10 jets operating out of the Danish capital by May, as it scrambles to find more aircraft for its fleet. Some of the parked Sterling jets are a priority initial acquisition target.

Largely unnoticed by many rivals, Norwegian has grown to become the fourth largest low-cost airline in Europe behind the big players Ryanair, EasyJet and Air Berlin. It will fly more than 9m passengers this year with a fleet of 41 aircraft.

The group, which first listed in 2003, is seizing the opportunity offered by Sterling's bankruptcy to increase the pace of its own expansion despite the threat posed by the economic downturn.

Bjorn Kjos, chief executive of Norwegian, said "it is a huge opportunity".

He said that the group would replace Sterling as the main low-cost player in the Danish market.

Initially the airline would base two jets at Copenhagen from Thursday flying on six routes to Ålborg, Oslo, Stockholm, Alicante, Malaga and Nice.

It is planning to add further routes from Copenhagen to London, Amsterdam, Rome, Krakow, Prague, Barcelona and Pisa at the pace at which it could bring in more aircraft.

Today it is also starting new routes from Stockholm to some destinations previously served by Sterling.

As weaker airlines retrench or collapse, "it's a good time to expand", Mr Kjos said. "The market [for aircraft] is much better than last year . . . There are a lot of different airlines that have gone bust. There are aircraft available now."

Norwegian is also posing an increasing competitive threat to SAS Scandinavian Airlines, the Nordic region's legacy network carrier, which is struggling.

"They have much higher costs than we have, about twice our level," said Mr Kjos.

The Oslo-based carrier made clear the scale of its future ambitions by placing an order in August last year with Boeing for 42 186-seat 737-800s for delivery between 2009 and 2014. The deal had a list price value before discounts of $3.1bn.

Deliveries do not start until next summer and the collapse of Sterling has left an urgent need for more capacity.

The group could close deals with lessors for more aircraft this week.

Norwegian got its finances in order just before the financial markets were hit by mayhem this autumn.

This summer it completed a NKr400m ($59.5m) rights issue to finance its deposit for its new fleet orders, and agreed a $160m debt deal with Natixis to fund the pre-delivery payments for the first 10 Boeing jets.

---------------------------
Japan needs more than gestures

Published: November 3 2008 02:00 | Last updated: November 3 2008 02:00

The rate cut by the Bank of Japan is a stopgap that will change nothing. If Japan's monetary policymakers fear a return of deflation - and their own forecasts suggest that they do - rates must be cut to zero and Japan must consider some unconventional alternatives sooner rather than later.

On Friday, the Bank cut short-term rates from 0.5 per cent to 0.3 per cent, on the casting vote of the governor, but a 20 basis point cut in borrowing costs will make no difference to the yen: after the Federal Reserve's 50bp cut, the gap between yen and dollar interest rates will still be smaller this week than last. It will make no difference to consumers on fixed rate mortgages, nor will it bring back the foreign investment banks that fuelled a miniproperty bubble. Most of all, 20bp will not convince banks to throw cash at risky borrowers.

There is only one rationale for a 20bp cut: the markets demanded it, and it does not hurt to give them a cuddle and murmur that everything will be OK. Unfortunately things are not OK - Japan is racing back into deflation. The Bank cut its own forecast for core consumer price inflation in 2009 to zero, and now expects only the most minimal growth in output either this year or the next.

Japan's government also announced large funds to recapitalise banks, before any got into trouble, which should help to avoid systemic financial difficulties from exacerbating the downturn.

And the yen's rapid rise helps to erase the previous commodity shock - in yen terms the oil price is down 60 per cent from its peak in July - and so lowers headline inflation. That is no bad thing, but the stronger yen will also depress exports, creating slack in the economy, and cut import prices. It is hard to believe that Japanese consumers will create enough growth in demand to avoid deflation.

If consumption and exports are weak, investment will not come to the rescue. That only leaves the government. Taro Aso, Japan's prime minister, has proposed a Y5,000bn fiscal stimulus. But that is too small to make much difference, while general income tax rebates and small business loan guarantees look more like populist electioneering than an attempt at serious economic policy.

Japan's huge public debt makes it deeply undesirable, but it is time to think about a much larger stimulus. Policymakers missed opportunities to move Japan away from being so heavily export-dominated during its half a decade of growth; the only way to shift the economy toward domestic consumption is to put money into the pockets of low and middle income earners whose wages have now been stagnant for almost two decades.

As for the Bank of Japan, its eagerness to raise rates before inflation was properly established looks more mistaken than ever. Last time the country was in deflation, the Bank had to go beyond zero interest rates to "quantitative easing", and there was no monetary disaster. More than any other central bank, the Bank of Japan knows what works. If need be, it should not hesitate.

-----------------------------
Kingfisher to double Polish arm as migrants return

Reuters Mark Potter

Kingfisher , Europe's top home improvement retailer, plans to double its Polish business over five years, saying the return of over a million migrants will help limit the impact of a global recession there.

The British firm said it was aiming to have 100 of its Castorama and building trade-focussed Brico Depot stores in central Europe's biggest economy, up from 48.

Chief Executive Ian Cheshire said Poland would not be immune to a looming global recession, but that a young population, demand for new housing and rising wages would ensure the country outperformed Kingfisher's main UK and French markets.

"Even though we don't expect it will escape the recession ... I am absolutely convinced that it will perform better than France, which will probably perform better than the UK," he said on a media trip to Warsaw to its largest store by sales volume worldwide.

He said business would also be helped by the return of many of the 1.5 million young Poles who have emigrated in recent years -- many of them to Britain -- as they look to set up family.

"The Polish builder is now back here and building his own house and flat," Cheshire said.

Pawel Walus, Castorama Poland operations director, said 80 percent of migrants were expected to return following a strengthening in the Polish zloty and a rise in local wages.

Poland has been a rare bright spot for Kingfisher in recent years, as it battles a slowdown in consumer spending and a plunging housing market in Britain, a more modest consumer downturn in France and government curbs on building in China.

Its Polish business accounted for 65 million pounds, or 23 percent, of group trading profit in the 26 weeks to August 2, with like-for-like sales up 11.6 percent.

But in recent weeks the country has been swept up in a loss of investor confidence in emerging markets, even though it does not have the level of foreign borrowing of troubled nearby countries like Hungary and has a large internal market.

KEY INVESTMENT TARGET

"I fully expect tough times, and particularly with Poland's markets being driven by investment from outside ... that must slow down. But it's still got a lot of catching up to do and a lot of growth in real wages yet to come," Cheshire said.

He said the Polish do-it-yourself retail market was still fairly immature, and so the business would be able to thrive by expanding -- like its B&Q arm did in Britain during the mid 1990s -- even if trade got tougher.

Kingfisher was also confident of continuing to take market share from rivals such as France's Leroy Merlin and Germany's OBI, both privately owned, as well as Germany's Praktiker , through its focus on low prices, stock availability and own-brand products such as Colours paint, Cheshire said.

He declined to say how much the expansion plan would cost, but said the rough cost of a new store in Poland was about 10 million euros (8 million pounds).

"This is absolutely one of our key investment targets," he said, adding that if he needed to cut capital spending, it would be in other parts of the business before Poland.

Cheshire said Kingfisher, the world's number three home improvement retailer behind U.S. groups Lowe's and Home Depot , would continue its expansion into Russia and look in future at entering into Lithuania and Ukraine.

The group, which runs over 800 stores in eight countries, would look at a franchise model for smaller neighbouring countries and for possible future expansion into India.

"One of the problems Kingfisher has had is it's got massive amounts of capital tied up, particularly in property."

"If we could find somewhere a model, at least in some countries, which is more like the hotel model, where someone else owns the heavy assets ... it's definitely a opportunity for us to generate better returns," Cheshire said.

-------------------------------
Prosperous Nordic nations no longer immune to financial crisis

AFP Delphine Touitou

Long shielded from the global financial turmoil, the wealthy Nordic countries have come to realise they are not immune to the economic aftershock as they too face lower growth and increasingly worried consumers.

Iceland, whose once booming financial sector has collapsed under the weight of the worldwide credit crunch in recent weeks, is the most glaring example in the region.

The island nation has been pushed to the brink of bankruptcy after its government was forced to take control of the major banks, and its currency has nosedived some 40 percent since the beginning of the year.

Iceland, which now expects its gross domestic product (GDP) to shrink by as much as 10 percent next year while its deficit could swell to 10 percent of GDP, is an extreme example and does not reflect the situation in the rest of the region.

Yet Denmark, Finland, Sweden and even wealthy Norway, one of the world's leading oil and gas exporters, have also begun offering up gloomy predictions for the future.

On Wednesday, the Norwegian central bank, which has slashed interest rates twice in the past two weeks to try to get the economy back on track, said it expected the country's GDP to tick in at a mere 0.25 percent next year, excluding the shipping and petroleum sectors, down from the 2.0 percent growth it had previously predicted.

"The effects of the financial crisis will most likely be more pronounced than envisaged only recently. The slowdown in the Norwegian economy appears to be occurring rapidly and is likely to be pronounced," bank chief Svein Gjedrem said.

The same day, Sweden's National Institute of Economic Research (KI) said the country would likely suffer a light recession next year as its economy contracts by 0.1 percent, "the weakest GDP development since 1993."

That news came just a day after the Swedish central bank rushed to the rescue of scandal-ridden Carnegie Investment Bank, offering it a credit line of up to five billion kronor (500 million euros, 630 million dollars) to help it overcome an acute liquidity shortage amid sharp criticism in the media of bad management.

"The financial crisis has been deeper than we thought," Bo Enegren, an analyst with Swedish bank SEB, told AFP, pointing out that there had been "reason to expect the Swedish economy to be more resilient than other economies because of its strong public finances and healthy balance sheets."

"But Sweden is a very open, small economy that is highly receptive to international trends," he said, adding that Sweden, like Denmark, was being hard-hit by a rapid economic slowdown in the Organisation for Economic Co-operation and Development (OECD), which receives 80 percent of all Swedish exports.

"We don't think Sweden will be much better off than the rest of the OECD countries next year," Enegren said.

In Denmark, which until recently was considered to have one of the strongest economies in Europe with high growth rates and record-low unemployment, most analysts expect the economy to at least stagnate in 2009, with Handelsbanken experts predicting the country's GDP would contract by one percent.

"The beginning of a recession in the eurozone, in the United States, in Japan, will negatively impact Danish companies, which have already been handicapped by the Danish central bank's latest rate hike to 5.50 percent," Handelsbanken economist Jes Asmussen told AFP.

The situation is the same in Finland, the only Nordic country to belong to the eurozone, where the Research Institute of the Finnish Economy (ETLA) says stagnating GDP next year is a best case scenario.

Faced with these challenges, companies across the Nordic region have already begun cutting costs and slashing jobs to try to stay in business.

In Sweden, an estimated 10,000 jobs are expected to disappear over the next two years. The Volvo group, which includes the world's second-biggest heavy duty lorry maker Volvo Trucks, has already set the tone by announcing a total of 2,850 job cuts, including 2,450 in Sweden.

As a sign of the troubled times, consumer confidence in October in Denmark reached its lowest level since November 1989 and its lowest level in Finland and Sweden since the early 1990s.

-------------------------------
Irish tycoon O'Reilly to sell stake in Australia's APN media group

AFP

The share price of Australian-based media giant APN soared Monday after Irish tycoon Tony O'Reilly said he was selling his share in the group to ease debt as the global financial crisis bites.
O'Reilly's Independent News & Media (INM) has announced it will offload its 39.1 percent holding in one of the region's largest newspaper and broadcast groups, which publishes around 100 papers including the New Zealand Herald.

"INM, which owns 191 million shares ..., has informed the company that it recently received approaches from several parties in respect of its shareholding in APN," a statement from APN said.

"In its letter, INM states that it would like APN to be fully involved in the strategic review with the objective that the outcome is in the best interests of all APN shareholders," it added.

APN shares soared 16.1 percent to 2.80 dollars (1.87 US) after its largest shareholder announced it was divesting, ending a 20-year relationship with the Australian group.

APN said it had appointed ABN Amro as an advisor ahead of the sale.

The move by O'Reilly came less than two years after he and his private equity backers attempted a failed 3.8 billion Australian dollar takeover of APN.

INM said in a statement on Friday that it would raise 800 million euros (1.02 billion US dollars) from the sale of its stake in APN, cutting a large lump from its huge group debt of 1.4 billion euros.

The group's share price jumped 34 percent in London on Friday as news of its potential to repay its debt with cash freed up from APN washed through the market.

INM, publisher of London's Independent newspaper as well as other titles in Britain, Ireland and South Africa, also predicted operating profits would fall 11 percent to 13 percent this year due to weakness in its main markets.

------------------------------
22:37 GMT, Sunday, 2 November 2008
Arab singer held on drugs charges
George Wassouf (1 May 2008)

The Syrian-Lebanese singer, George Wassouf, has been arrested in Sweden on suspicion of drug offences, police say.

Reports say the singer was found in possession of cocaine when police raided a hotel in Stockholm on Saturday, shortly before a concert.

Police say they are continuing their investigation into the incident, and formal charges have not been pressed.

Mr Wassouf, 46 is a major music star in the Arab World. He has released more than 30 albums since the age of 16.

Thousands of people had bought tickets to see him perform on Saturday evening at a newly opened venue in the Stockholm suburb of Solna. The concert had to be cancelled following his arrest.

The Swedish newspaper, Aftonbladet, said Wassouf had been in possession of 30g of cocaine when he was arrested. Police would not comment on the report.

----------------------------
18:22 GMT, Sunday, 2 November 2008
Israel to end support of outposts
By Tim Franks
BBC News, Jerusalem

Settlement outpost of Nofei Nehemia in the northern West Bank (2005)

The Israeli government has announced that it will cut off all public funding and support for illegal Jewish settlement outposts in the West Bank.

Ministers said the move was in response to an "intolerable" rise in violence and threats from some settlers directed towards the Israeli security forces.

The settlement outposts are regarded as illegal under Israeli law.

The US-brokered "roadmap" peace plan demands Israel uproot all unauthorised outposts built since March 2001.

About 450,000 Jews live in the West Bank and East Jerusalem in settlements considered illegal under international law, although Israel disputes this.

'Disgrace'

Israeli ministers have long complained about the behaviour of a minority of settlers, particularly those who live in outposts. Now, they say, they will take action.

The government will stop money and amenities from the public purse going to outposts.

"This is an intolerable situation that we refuse to accept"
Prime Minister Ehud Olmert

"There is a not insignificant group of outlaws that are behaving in a manner that is threatening the rule of law," caretaker Prime Minister Ehud Olmert said ahead of Sunday's cabinet meeting.

"This is an intolerable situation that we refuse to accept."

Under international law, all Israeli settlements on occupied territory are regarded as illegal, except by Israel itself.

However, even Israel says that the 100 or so smaller, unauthorised settlements - known as outposts - break the country's own law.

Recently, there has been an increase in violence around outposts, as the Israeli army and police have attempted to evict a few of the settlers living on some of the newer and smaller outposts.

The head of the internal intelligence service, Shin Bet, said it was "very concerned" by the danger of Jewish extremists reverting to political assassinations.

The government's declaration that it is going to get serious with outposts may raise eyebrows in some quarters.

Almost four years ago, a government-commissioned report detailed how a large number of outposts had been established with official collusion.

Mr Olmert has described them as a "disgrace". And yet not one significant outpost has been dismantled or shut down by his government.

------------------------------
アジア・太平洋の災害復興費、共同補償へ保険　財務省とＡＤＢ

　財務省はアジア開発銀行（ＡＤＢ）と共同で、アジア・太平洋地域の国を対象に、大地震などの大規模自然災害に見舞われた場合の復興費用を共同で補償する保険制度の検討に入る。自然災害に弱い国が多い半面、地球温暖化や異常気象の影響などで、大きな自然災害が増える傾向にある。災害時の途上国の財政負担を軽減することで、域内の安定につなげたい考えだ。

　来春のＡＤＢ総会までに新制度の概要をまとめる方向で、議論を進める。具体的には、日本などの先進国や新興国が出資する信託基金をつくり、途上国には毎年保険料の支払いを求める代わりに、災害に見舞われた場合には保険金を支払う仕組みにする案が有力だ。日本の民間保険会社にも協力を求めながら、基金の規模や保険金を支払う条件など具体的な制度設計を急ぐ。(13:09)

------------------------------
三菱東京ＵＦＪ銀、ずさん融資80件　70億円焦げ付き

　三菱東京ＵＦＪ銀行が「不十分な審査で約80件の融資を実行し、このうち約70億円が焦げ付いている」と金融庁に報告していることが２日、わかった。融資先には反社会的勢力の関係企業もあったという。金融庁は審査体制などに問題がなかったか調査を始めたもようだ。

　ずさんな審査が明らかになったのは、東京都渋谷区や世田谷区の取引を開拓する「渋谷法人新規室」が担当した案件。問題があった融資は2002年から05年にかけて約80件、総額300億円にのぼるという。(07:00)

-----------------------------
日経社説１　石原さん、銀行ごっこはもうやめよう(11/3)

　東京都が設立した新銀行東京で不正融資が発覚し、元行員らが逮捕された。同行のずさんな経営実態が改めて明らかになった。

　元行員はブローカーや元暴力団組員らと共謀し、改ざんした決算報告書などをもとに融資を不正に引き出した疑いがもたれている。同行によると、財務諸表が改ざんされるなど不正が疑われる融資案件はほかにも多数あるという。

　新銀行を巡っては都議など政治家やその秘書が融資を口利きし、その後焦げ付いた案件もあるという。同行の甘い審査体制につけ込んで都民の税金が食い物にされている。

　石原慎太郎知事は今回の事件について「旧経営陣の責任が問われるべきだ」と弁明しているが、それで済む話ではない。財務データさえあれば無担保で安易に融資する手法や、その手法を中心に据えた過大な計画を策定したのは東京都である。

　設立当初の同行役員をみても社外取締役に都ＯＢや知事の知人が名を連ねていた。今回の事件が起きた2006年の株主総会では都自身が融資拡大を旧経営陣に求めている。

　都は新銀行救済のために今春、400億円を追加出資した。その後も経営は芳しくない。店舗を一つに減らし、無担保融資を絞り込むなど経営改善に努めているが、肝心の新たな収益源がみつからない。

　今や営業面でも都の支援が頼りだ。お金、人材、仕事のすべてで都が事実上、丸抱えしている。

　新銀行は08年3月末時点の累積赤字に相当する1016億円を減資し、都が当初出資した1000億円のうち、85％がすでに失われた。金融庁の検査で今後、不良債権の引当金を積み増す必要があるうえ、景気悪化で不良債権はさらに増えるだろう。このままでは傷が深くなるだけだ。

　今回の不正融資事件も含めて新銀行の開業後3年半の歩みをみると、金融機関の体をなしていない。東京都は「銀行ごっこ」をもうやめ、一刻も早く撤退すべきである。

　ただし、これまでの対策で同行の自己資本比率は08年6月末で44％強と極めて高い。赤字が当面続いても資産を圧縮するので同比率は国内基準（4％）を大幅に上回る。

　民主党は金融機関への予防的な資本注入を可能にする金融機能強化法改正案について、新銀行東京を対象から外すように求めている。同行に国民の税金を使うのはもちろん論外だが、自己資本比率が高い同行が実際に資本注入を申請する可能性はまずない。同行を材料に、法案成立を遅らせるのはおかしい。

-------------------------------
日本株投信、マネー戻る　10月は７カ月ぶり流入超に

　世界的な株価下落や円高を背景に、日本株で運用する投資信託に個人マネーが戻ってきた。10月は30日時点で新規構入から解約・償還を差し引いた資金流入額が約770億円となり、月間で７カ月ぶりの資金流入超に転じたもよう。日経平均株価がバブル後最安値を更新するなど割安感が出てきたことで、個人投資家の関心が高まった。一方でこれまで人気だった外国債券で運用するタイプは資金流出超に転じた。

　野村総合研究所が追加型公募投信（公社債投信や上場投資信託＝ＥＴＦ＝を除く）約2760本について調査した。日本株投信の中でも、日経平均株価などに連動する「インデックス型」への資金流入が目立った。「（リスクをとりながら日経平均株価などよりも高い値上がり益を目指す）アクティブ型よりも、値動きが分かりやすいタイプにまず資金が向かった」（投信コンサルタントの田村威氏）とみられている。(07:00)

-----------------------------
世界のＲＥＩＴ、時価総額７割減　07年５月のピーク時比

　世界の不動産投資信託（ＲＥＩＴ）市場が急速に縮小している。日米欧など主要国のＲＥＩＴの時価総額は合計で約30兆円と、昨年５月末のピークから７割近く減った。急速な円高もあり、金融危機が深刻化した10月だけで25兆円分が消失した計算。不動産市場への投資マネーの流入減が不動産価格の下落に拍車をかける恐れもある。

　ＲＥＩＴは株式に相当する投資口を各国の証券取引所に上場しており、投資家は市場で売買できる。大和総研によると日米英など世界主要８カ国のＲＥＩＴの時価総額は昨年５月末には94兆円まで膨らんだが、米住宅ローン問題の深刻化で大幅に縮小。「信用収縮で現金を手元に確保したい投資家の換金売りが多い」（みずほ証券）(07:00)

------------------------------
慶応、奨学金を年２億円　家計の苦しい学部生対象に

　慶応義塾大学は2009年度から、金融不安の影響などで家庭の経済状況が厳しくなった学部学生向けに年間２億円の「慶応義塾創立150年記念奨学金」を設立する。海外学習支援と経済安定支援の２種の奨学金があり、それぞれ年間250人、550人程度が対象。経済安定支援の場合、困窮度に応じて年間授業料の30％を基準に最高100％を給付する。

　海外学習支援は、慶応が春季・夏季休暇に設けている海外短期研修のほか、私費留学、語学研修、海外インターンシップ、海外フィールドワーク、国際学会発表などに参加する学生に、年間１人当たり10万―30万円を給付する。給付総額は年間5000万円。(07:00)

----------------------------
三浦元社長：都内で葬儀…知人や支援者ら２３０人参列

　８１年の米ロサンゼルス銃撃事件で逮捕され、ロス市警本部の留置場で死亡した輸入雑貨販売会社の三浦和義元社長（６１）の葬儀が３日、東京都大田区の葬祭場で営まれ、知人や支援者ら約２３０人が参列した。

　参列者によると、式では代理人の弘中惇一郎弁護士らが弔辞を読み上げ、思い出などを振り返った。あいさつした妻は、自殺とされる元社長の死因について「真実を解明してほしい」と訴えたという。

　友人で放送作家の河村シゲルさん（６５）は「なぜ突然逮捕されたのか、留置場内で何があったのか、真実を明らかにしようとみんなで誓い合った」と話した。【前谷宏】