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Germany, Netherlands, Finland and Luxembourg not to be cut in S&P move, Les Echos says

Forex-Master — Sat, 14 Jan 2012 01:49:04 +0000

Les Echos says Germany, the Netherlands, Finland and Luxembourg will not be cut in S&P move
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Published: Sat, 14 Jan 2012 02:49

Germany, Not ECB, Must Buy Bonds

Forex-Master — Fri, 16 Dec 2011 02:49:02 +0000

The markets pinning its hopes on the wrong European central bank.

If the ECB would properly exercise a bond buying program of peripheral debt it would shorten the euro zones economic slowdown and restore confidence in Europes financial system.

The market hoped ECB President Mario Draghi wou…
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Published: Fri, 16 Dec 2011 03:49

Germany, France Split on EFSF Bond Purchases, Handelsblatt Says

Forex-Master — Fri, 07 Oct 2011 09:49:02 +0000

Germany and France are at odds over whether the European Financial Stability Facility should have limits on government bond purchases, Handelsblatt reported, citing an unidentified high-ranking European Union diplomat.

France doesnt want to restrict the EFSF on how much of its funds it can use …
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Published: Fri, 07 Oct 2011 11:49

Germany, Italy resisting second IEA oil release

Forex-Master — Fri, 15 Jul 2011 18:49:06 +0000

Germany and Italy are likely to oppose a second release of emergency oil reserves by the International Energy Agency (IEA), a French government source said on Friday.

“Germany and Italy were not much in favour of the decision back in June,” the source said. “While the decision was unanimous not a…
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Published: Fri, 15 Jul 2011 20:49

Auf Wiedersehen Recession – US-FOREX.US

Forex-Publisher — Thu, 13 Aug 2009 11:46:27 +0000

It seems like exceptionally good news. Germany, Europe’s biggest economy, has just confounded expectations and emerged from its recession, thanks to reporting a quarter-on-quarter growth rate of 0.3% for the second quarter, instead of the contraction of 0.2% that was expected. A margin of five basis points is quite a difference-but don’t get too excited. The real reason Germany’s economy was able to post growth was that its government has been doing everything it can to stimulate domestic demand. Germany is one of the world’s biggest exporters-think cars, chemicals and engineering services-and with the collapse of global consumer demand for goods, the state has enacted policies to keep its citizens buying things. There’s been the success of Germany’s car scrapping program, which vastly outweighs America’s “cash for clunkers” program in scale and effect-it boosted new car registrations to 3.5 million in 2008, up from 3.1 million the year before. And there’s also Germany’s short-term work program, through which the state subsidizes companies’ wages so that they don’t have to fire workers. This has cushioned German unemployment, so that at 8.3%, it trails the rate of unemployment for the euro zone, which is at 9.5%. But the German government can’t forever subsidize the labor market and car industry. Germany’s Federal Statistics said that it was only able to report growth because price-adjusted imports declined far more sharply than exports, tipping the balance in favor of exports. While this is a good start, the country needs the United States and the rest of Europe to pick up steam and start buying its cars, chemicals and engineering services, in order to keep that growth sustained. There are risks to the country’s economy if it doesn’t. Bank lending in Germany is still woefully low. Ernst & Young said earlier this week that 37% of the medium-sized German businesses it had surveyed said financing through their principal bankers had become more difficult. That’s up from 14% in January. Germany’s liquidity problem will have wider implications once the government’s stimulants run their course, which means economic growth in the next two quarters won’t be anything to cheer about either.

Commerzbank Feels Germanys Pain – US-FOREX.US

Forex-Publisher — Thu, 06 Aug 2009 12:46:17 +0000

It’s not easy being Commerzbank. Whereas other European heavyweights like Barclays, Societe Generale and BNP Paribas have reported strong second-quarter profits, boosted by a turnaround in investment banking, the German lender’s heavier dependence on retail banking resulted in a second-quarter 1 billion loss on Thursday. And with Europe’s biggest economy expected to shrink 6% this year, the pain is not over yet.
Commerzbank
said on Thursday it had sharply increased its loan-loss provisions in the second quarter, to 1.8 billion euros , an increase of more than 300% over the year. Corporate lending was the big culprit, with the German small-to-medium-sized business segment-or “Mittelstand”-throttled by the recession. In April, the latest month for which official data is available, German insolvency filings were up by 7.1% over the year.”I think provisions will increase in the coming quarters,” said Tutku Bagriyanik, an analyst with BHF Bank, who recommended selling Commerzbank shares. “Maybe we will see a peak in the third or fourth quarter.” He added that Commerzbank was unlikely to post a net profit before 2011.Commerzbank said that its loan-loss provisions in 2009 would be on a par with those of 2008, which came in at 3.6 billion euros .Shares of Commerzbank fell 1.2%, or 7 euro cents , to 5.84 euros , during afternoon trading in Frankfurt. The stock had initially rallied after the lender’s results came in better than expected, with a narrower operating loss of 201 million euros . But Bagriyanik thinks investors may have also initially misinterpreted Commerzbank’s promise of returning 5 billion euros in state guarantees as repaying part of the government’s 25% stake in the bank.Once Commerzbank gives up the 5 billion-euro slice of loan guarantees, it will save 440,000 euros per month in payments to the state.
Although Deutsche Bank
also reported heavier-than-expected loan loss provisions in the second quarter, its share price has only fallen 26% over the year, while Commerzbank’s is down 73%. Commerzbank itself admitted that its lower exposure to investment banking revenues was the cause, and said that it and fellow commercial banks would be forced to take “significant” writedowns on their credit portfolios.Commerzbank has pushed to expand its investment-banking exposure by buying Dresdner Bank from Allianz
. The acquisition led to a charge of 216 million euros in the second quarter.

Oppenheim Opens Its Doors – US-FOREX.US

Forex-Publisher — Wed, 05 Aug 2009 17:46:15 +0000

German financier Salomon Oppenheim, Jr. would be turning in his grave. The private bank he founded 220 years ago, Sal. Oppenheim & Cie., has opened its books for the first time in more than a century to an outside investor-Germany’s Deutsche Bank. The “strategic partnership” being discussed could lead to Deutsche Bank taking a minority stake, but the last time Deutsche took a minority stake-in retail lender Deutsche Postbank-it promised to subsequently take full control.Sources familiar with Sal. Oppenheim’s strategy played down the possibility of allowing anything more than a “minority stake,” arguing that Deutsche Bank wouldn’t want to sacrifice the private bank’s family ownership and close ties with customers. But it’s clear that Luxembourg-based Oppenheim is under pressure and in need of capital, so even though it is an attractive asset that won’t sell itself cheap, the scales seem to be tipped in Deutsche Bank’s favor. How could this happen? Although Oppenheim’s stronghold in asset management seems to have helped it avoid the worst of the banking sector’s toxic debt losses, the financial crisis did hurt its investment banking division and led to a net loss in 2008 of 168.6 million. The bank’s family shareholders clubbed together in December and poured in 200 million euros to help fill the cracks in the balance sheet; at the end of last year, Oppenheim had 1.9 billion euros in equity and a regulatory capital ratio of 12%.But the real “black swan” event for Oppenheim was the collapse of German tourism-and-retail conglomerate Arcandor in June. Oppenheim had taken a 30% stake in the company last September, in a bid to support one of its clients, billionaire Madeleine Schickedanz, who owns around 25% of Arcandor. Although Oppenheim did sell 4% of this stake after Arcandor’s collapse, leaving the rest in the lap of its family shareholders, it suffered a book loss of around 43 million.So with Oppenheim’s owners’ capital health damaged by their 26% ownership of a bankrupt company, and Fitch Ratings’ subsequent downgrade of the bank’s credit rating, to A minus, from A, there were few options left on the table. Sources say BNP Paribas
and Credit Suisse
were interested in Oppenheim, but Deutsche Bank
seems to have won the day.Sources close to the bank think there could be a positive future with a big investor in tow, such as more international opportunities outside of the German-speaking world. But Oppenheim’s situation is not of its own making, and the talks will likely be tinged with more than a hint of regret.

Another Small Meal For Deutsche Bank – US-FOREX.US

Forex-Publisher — Wed, 05 Aug 2009 13:46:23 +0000

Germany’s Deutsche Bank likes nibbling rather than swallowing. It announced on Wednesday a potential “strategic partnership” with venerable 220-year-old Luxembourg-based private bank Sal. Oppenheim, but sources close to the talks say Deutsche is only interested in taking a minority stake-”anything between zero to 49%.” Nor is this the first time: Six months ago, Deutsche Bank bought a 25% stake in retail bank Deutsche Postbank, with the option to buy the rest in three years time.Is there a pattern developing? Merck Finck analyst Konrad Becker thinks so. He says that Deutsche Bank
has enough cash to swallow Sal. Oppenheim whole, which he estimates would cost around 2 billion euros , without the need to raise capital. But Deutsche Bank is unlikely to want to threaten its Tier 1 capital ratio-currently at 11%-by buying another company, especially with stricter capital requirements under the new Basel II international banking regime.That was the logic behind Deutsche Bank’s deal with Postbank, which is essentially a three-tier acquisition proposal. Deutsche has promised to acquire a further 27.4% of Postbank in 2012, via a convertible bond, and will also decide whether to exercise options for the remaining 47.6%. It wasn’t all Deutsche’s idea, as the original agreement did not include the mandatory convertible bond, but it seems to be working out. A spokesman for Deutsche Bank refused to comment on whether the acquisition strategy might be repeated, but one source close to the talks said: “It worked for Postbank. It might work for Sal. Oppenheim.”Shares of Deutsche Bank rose 0.6%, or 28 euro cents , to 46.64 euros , during afternoon trading in Frankfurt. The lender spooked investors with its second-quarter results last month, which showed a bigger-than-expected 1.4 billion in provisions for risky loans. Then again, perhaps it’s logical that Deutsche Bank is not interested in acquiring Sal. Oppenheim outright. The private bank reported a loss of 117 million euros last year, and there’s no telling what troubles may lurk in its accounts. WestLB analyst Georg Kanders says Deutsche’s main aim is keeping out other potential buyers like Credit Suisse
, which would likely have no problem with swallowing Sal. Oppenheim whole.

No Joy For Deutsche Bank – US-FOREX.US

Forex-Publisher — Tue, 28 Jul 2009 11:46:00 +0000

Once the straw that broke the camel’s back, investment banking has now been the saving grace of lenders like Banco Santander, Goldman Sachs and Credit Suisse, as it offset rising defaults amongst consumers and businesses. Not so for Deutsche Bank.Shares in the German bank tumbled 7% on Tuesday morning, as it set aside 1 billion euros in provisions for risky loans, well above the 650 million euro figure that analysts had been expecting.”The bulk of the increase is deriving from loans which have been reclassified under IAS39 and lie within the investment bank,” explained Konrad Becker, an analyst at Merck Finck Private Bankiers in Munich, Germany.
Deutsche Bank
said that over 400 million euros of those provisions were for unnamed two leverage-buyout loans it had issued. Under International Accounting Standards Board rules altered at the end of last year, the bank reclassified these from assets they would have to make write-downs on, to their loans and receivables category. “The market fears that these provision could lead to losses of 1 billion euros or so each in the following quarters,” said Becker.In addition to the provisions for the leveraged buyouts, the bank took 364 million euros in charges for real estate and severance pay costs, an impairment of 110 million euros at its RREEF alternative investments division-part of Deutsche Bank Asset Management-and 316 million euros on the financing they provided for the botched takeover of U.S. chemical firm Huntsman by private equity firm Apollo Management .
The investment banking business also disappointed on other fronts: though equity sales and trading revenues more than tripled from the first quarter of the year, its fixed-income business, which had been expected to steal the show, saw debt sales and trading revenues plunge 44% from the first quarter. “The number will be seen as disappointing after expectations ran very high and after the U.S. peers generally exceeded the first quarter levels in the second quarter,” said Nomura analyst Jon Peace. By way of expectation, Deutsche Bank told an analyst conference call that volumes had fallen across the businesses it focused on in fixed income, such as foreign exchange and commodities, but they had managed to maintain their market share. In addition, they were still de-risking their balance sheet, which was holding back revenues.Still, Deutsche Bank’s figures suggest that the resurgence in investment banking is far from as straightforward as the earnings from Goldman Sachs
, JP Morgan
and Credit Suisse
had suggested. It’s still a business capable of dishing out nasty surprises.

The Big German Export Gamble – US-FOREX.US

Forex-Publisher — Wed, 22 Jul 2009 20:46:01 +0000

Forget Germany’s rather tepid climate for a moment and imagine that its economy is like a tropical island: When times are sunny, life is exceedingly good, and when hurricane season comes around, times are quite the opposite. Such is the case with the country’s heavy reliance on exports, with manufacturers like Daimler
, BMW
Siemens and Bayer
making up a quarter of its economic output, meaning Germany is subject to volatile swings in the global economy. Germany’s government expects gross domestic product to contract by 6% this year, thanks to the global demand slump. Germans might have been celebrating on Wednesday after the World Trade Organization released figures showing that their country had retained its position as the world’s leading merchandise exporter last year, with exports of 1.47 trillion, slightly larger than China’s 1.43 trillion. But the party can’t last.China will almost certainly surpass Germany as the world’s biggest merchandise exporter this year, according to economist Timo Klein of IHS Global Insight, who predicts German exports to drop by roughly 20% in 2009 while Chinese exports show a much smaller decrease.Since the government can’t suddenly re-shape the economy so that it’s not so heavily dependent on exports, it is currently piling billions of euros into policies that delay the full effects of the economic crisis.One example: Germany’s car-scrapping scheme has been lauded as a success after it boosted new car registrations to 3.5 million in 2008, up from 3.1 million the year before, instead of falling to the expected 2.6 million without the program, according to Klein. Critics of the scheme argue that it is simply delaying a time when domestic demand for cars will crater. But Angela Merkel’s government is betting that before that happens, global demand for cars will have picked up to help fill the vacuum.
German carmakers Audi and BMW expect as much. Audi’s chief financial officer told Bloomberg on Wednesday that the Volkswagen
division would sell more cars next year, and an executive from BMW said last week that the carmaker was ready to increase production in the next six months. But it’s by no means a certainty. If global demand for Germany’s exports doesn’t pick up, the state will continue to be drained by subsidizing domestic demand for cars, as well as wages. Merkel is currently supporting short-term work schemes at a scale not seen before, which has so far cushioned unemployment. While euro zone unemployment has risen by around two percentage points to 9.5%, the jobless rate in Germany has risen less than a percentage point to 8.3% from 7.6% this year. The reason: The state subsidizes companies that apply for its short-term work scheme, subsidizing wages at manufacturers as production and working hours fall, and thus avoiding redundancies. Around 1.4 million people, out of a total national workforce of 40 million, were taking part in a state-backed short-term working scheme in the spring, after company applications skyrocketed in the previous months. It means that if an employer reduces a wage to 60%, the state can top that up to, say, 90% of the original salary, allowing a manufacturer to make temporary plant closures while its workers still receive either full or nearly full pay. But all this subsidizing can’t go on forever. The German government, which is up for reelection in September, is betting on a revival in trade and export growth later this year. “The current situation cannot last and it’s not stable,” says Klein, who says that if exports don’t pick up, German unemployment will suddenly jump. “It’s high time now for a recovery.”