International Business News

Weakened by the crisis, the French capital again to make headlines in the business press but professionals are questioning the sustainability of a recovery that dare not speak its name.

The uncertainties in the sector are also the prospect of entry into force of new rules that regulators want to impose the financial sector, whether the standards of solvency of banks and insurance and new tax regimes on capital gains and bonuses of investment funds.

The Forum's capital organized by Reuters of 8 to 10 September in Paris will provide an update on the new standards and expectations of the profession after the excesses of the years 2004-2007 and the bursting of the credit bubble.

According to data compiled by Thomson Reuters over the period from January 1 to September 7, the activity of private equity in France, measured by value is more than six times lower than it was in 2006, a report close to that observed globally.

The nascent recovery is still tangible: the activity is about 60% higher than it was in 2009.

"There is still a little early to give a real trend for the end of the year, although there is still a 'stock' of deals that can be done," said Vincent Ponsonnaille, a lawyer specializing in capital at Linklaters.

"Especially on small and mid-cap activity there," says his side OSSMANN Remy, vice president of the consulting firm LEK in France.

Selling Frozen Picard, the largest operation in France since the bankruptcy of U.S. investment bank Lehman Brothers, however, showed that the billion euros was more impenetrable.

VIRTUOUS CIRCLE

But uncertainty over the economic environment and financial markets remain a brake, particularly in terms of IPOs (IPO).

"If the IPO market reopens for sizes and valuations fairly consistent, it is a bit of a virtuous circle for a variety of companies that are still in the portfolios," said Catherine Vincent, Chief Executive within the activity of investment bank Goldman Sachs in Paris.

Analysts said the IPO provided the chain of casinos Lucien Barriere will be a test.

But conversely, the withdrawal of the sale of fast food chain Quick or the retirement homes Medi-Partners also show that investors remain cautious.

"There is a fairly long list of transactions that have no takers, either for reasons of size or profile, for reasons of funding or pending award," notes Céline Méchain, director in charge of relationship with the investment fund at Goldman Sachs.

The continued funding of operations, moreover, remains uncertain because if the banks agreed to finance numerous records at the end of the first semester, they must organize now, that is to say, find investors interested in debt.

This process has also been launched on Monday by the banks in charge of LBO mounted for the redemption of Picard Frozen by Lion Capital.

"We can not consider access to the debt as an asset for the moment," he told Reuters late August Monique Cohen, managing partner of private equity group Apax.

NEW WAVE

The banks also require different ways to structure transactions so as to regain control faster business purchased by the funds in case of restructuring.

Because the crisis has shown the procedure to safeguard French was rather favorable to shareholders and creditors trying to turn faster debt capital.

The news of the capital since the outbreak of the crisis has been marked by restructuring banks that were very expensive to fund and precipitated the departure of certain officers.

In France, corporate restructuring or OMS Monier were characterized by such deadweight losses for the PAI, Sagard and Cognetas.

"We had a first wave of restructuring.By 2011, there could be a second for companies whose underlying economic activity is not to go and who only see their problem of excessive leverage, "says Catherine Vincent.

"2012 will be the first year where we will face a wall of refinancing," explained her side Céline Méchain.

"We'll see how some funds are recovering from their previous failures, particularly in the fundraising going and coming but for now there are many more records in 2009 rollover," said Olivier Tordjman, a lawyer with Ayache Salama.

"And if subjects remain restructuring, there is less risk of 'dead'," he says.

Sanofi-Aventis does not set a limit for lead in discussions with the U.S. biotech group Genzyme, which he formalized this weekend an offer to buy, said Monday the director general of the French laboratory in Echoes.

Sanofi expressed readiness Sunday to pay $ 69 per share in cash, or a total of $ 18.5 billion (14.5 billion euros) to take control of rare diseases specialist.

Asked by the newspaper on the time he has given direction to Genzyme to meet her proposal, Chris Viehbacher said: "It's hard to say since this is a great deal for both parties. "

"The goal now is to meet to discuss," he added."We want to show our determination and seriousness, but not immediately threatening. A lot of time may elapse."

Asked about the production problems encountered by Genzyme, Chris Viehbacher said that Sanofi could help the U.S. group to solve.

"We will certainly have the opportunity to conduct due diligence," said Director General of the French laboratory. "Organic products are difficult to make but we master this technology."

The president and CEO of Hewlett-Packard Co., Mark Hurd resigned Friday after being accused of falsifying expense reports to conceal a "close personal relationship" with a woman working for a subcontractor.

The announcement was made during the dip the world's largest maker of personal computers by 10%, Mark Hurd is credited with having brought HP to the highest level in five years at the helm of the U.S. group.

Mark Hurd will be replaced by Chief Financial Officer Cathie Lesjak who is acting as interim executive director.A committee was responsible for appointing a new CEO.

A colleague outside the group, who had worked on the marketing of HP between late 2007 and fall 2009, contacted the Board in June and accused of sexual harassment Mark Hurd, the group said.

An investigation ensued and concluded that Hurd had not breached the code within the company for sexual harassment.

But the CEO of 53 years, married, kept "a close personal relationship" with the woman without the knowledge of the board of directors, said HP.

"The investigation board has concluded that Mark had demonstrated a profound lack of discernment that has seriously damaged his credibility and was highly prejudicial to his ability to lead HP, and Mark agreed," said Mike Holston, director of corporate legal department.

The departure of the CEO was unanimous, he added.

The group says Hurd submitted "number of expense reports inaccurate" to conceal the relationship with the offending subcontractor, which has itself received compensation and refunds without a legitimate reason.

The sum of her falsified expense would reach 20,000 dollars for travel, accommodation and meals shared with the woman according to a source close to the Hurd's statements on the case, who spoke of a "working relationship".

Another source with knowledge of the case made it clear that this woman was not a major subcontractor.

ANTICIPATED RESULTS

Mark Hurd, known for its rigor in cost reduction, said in a statement that the decision to resign was "painful".

"I realized that on some occasions I have not met the standards and principles of trust, respect and integrity that I adopted at HP," he said.

The shock is brutal for investors, who saw Mark Hurd as the chief of the success of the Informatics Group.Since his arrival at the helm of the group five years ago, the stock price has more than doubled.

"Mark Hurd has a large responsibility in the revival of the group," said analyst Jeffrey Fidacaro.

"His departure will leave a big void at the head of the group."

The now former CEO of HP scored his mark, combining the rigor of external growth strategy, which took shape with major acquisitions as the pioneer of the smartphone or Palm, in 2008, EDS Corp., a leading software houses U.S. 13.9 billion.

Analysts said the place of Mark Hurd will be coveted both externally as internally, where the manager's PC division Todd Bradley and chief strategy Shane Robinson figure are potential candidates.

Hurd's departure, they added, should not affect either the strategic direction of the company or its performance.

The announcement was however immediately reflected on the price of HP has lost up to 10% in after-hours transactions, dropping to 41.50 dollars after the meeting ended at 46.30 dollars.

To cushion the shock, the group decided to bring forward the publication of its quarterly results.

He announced on Friday earnings per share to $ 1.08 in non-GAAP standards for the third fiscal quarter offbeat performance slightly higher than that anticipated in the consensus among analysts polled by Thomson Reuters I / B / E / S consensus forecast of $ 1.07.

The company raised its earnings per share over the year to a range of 4.49 to 4.51 against $ 4.45 to 4.50 dollars previously. The consensus is at 4.49 dollars.

HP also said it expects an annual turnover of between 125.3 and 125.5 billion dollars, while analysts are predicting a figure lower than this range to 124.515 billion dollars.

The vagaries of the economic recovery and the prospect of new banking regulations temper the optimism of investors after quarterly results exceeded expectations published this week by several major European banks.

Reversals of impairment greater than expected second quarter have offset the slowdown in investment banking, penalized by the threats of contagion of the crisis of the Greek sovereign debt investors who scalded.

Societe Generale has reported a profit of nearly one and half times higher than expected, and Standard Chartered, which operates mainly in Asia, has released a record result.

Lloyds has returned to the green to the first half thanks to a halving of asset impairments.

However, European banks have not divested of their caution, particularly when faced with the consequences of coming prudential reforms.Although the deadlines for application of solvency ratios so-called "Basel III have been repulsed, concerns remain about them.

"There is fragility in the global economy and nervousness in financial markets," said John Peace, Chairman of StanChart, adding that British banks were particularly disadvantaged by the rules on pay, taxation and financial regulation.

Most European banks which have published their results on Wednesday have followed the trend shown Monday by BNP Paribas and HSBC with a lower level of bad debts.

However, even if SocGen gained 0.6% at the Paris Stock Exchange in the afternoon, StanChart lost 6.3% to the London Stock Exchange.

The quarterly results and the prudence of banks are an excuse for profit taking while the lure investors to the sector had been increased by the publication, July 23, heartening results of resistance tests suffered by banks in the European Union.

The European banking stocks index yielded 1.2% on Wednesday afternoon, after having won over 20% since early July against 10% for pan-European Stoxx 600 index – and nearly 9% since the release of stress tests .

"The results show that emerging markets like China, India and Brazil are areas where we can go to generate meaningful activities," said Ted Huang, a fund manager Pinebridge Asia High Yield in the results of StanChart.

Against the trend, the German Postbank increased its provisions for impairment related to risky real estate loans and has revised downwards its objectives.

Allied Irish Banks The Irish, partly nationalized, has also reported a doubling of losses in the first half while making clear progress towards its recapitalization.

These two facilities join the Italian UniCredit, the first credit agency in Central and Eastern Europe, which was published on Tuesday a quarterly profit well below consensus, hit by a dramatic drop in trading revenue.

BP announced the sale for 1.9 billion dollars (1.44 billion euros) of its Colombian subsidiary to a consortium of the Canadian Talisman Energy and Ecopetrol, the Colombian national oil company.

This sale is the latest of British Petroleum, which has announced plans to lift a thirty billion through asset sales to offset the costs of the oil spill in the Gulf of Mexico.

BP has already sold last month to seven billion dollars of assets in the United States, Canada and Egypt, the American Apache.It also plans to divest its assets in Pakistan and Vietnam, which could bring him $ 1.7 billion, in the opinion of analysts.

The Kuwait's oil minister said Tuesday that the national carrier Kuwait Petroleum International might be interested in certain assets from BP.

The emirate's sovereign wealth fund owns shares in British company to the tune of 1.75% and on Monday denied media reports that BP had asked him to reach 3%.

BP announced last week a charge of $ 32.2 billion on its second quarter results, due to the spill, but analysts believe the final slate will be much higher.

The International Monetary Fund and the European Union have suspended Saturday program evaluation assistance granted to Hungary in 2008 to enable it to overcome the financial crisis, noting that tough measures must be taken to reduce deficits.

The suspension means that consultations, as the assessment has been completed, Hungary can not access funds that have not yet been used for the loan of 25.1 billion euros earmarked by EU and the IMF.

The negotiations were supposed to be completed by early next week.

According to analysts, the forint, the national currency could fall sharply at the reopening of markets on Monday.The loan from the EU and the IMF now serves as a safety net for Hungary, which is financed on the markets since the end of last year.

"In an environment of increased scrutiny by the markets of government deficits and debt levels, the budget deficit targets previously announced – 3.8% of GDP in 2010 and less than 3.0% of GDP in 2011 – remains a appropriate basis for the necessary process of consolidation and debt sustainability (…) but additional measures will be taken to achieve these goals, "said the IMF.

The new center-right government, based on the April elections, said he wanted to extend the current agreement with the EU and the IMF until the end of 2010 and obtain a new agreement, as precaution, for 2011 and 2012.

The Minister of Economy, Gyorgy Matolcsy said clearly that the government wanted to resume negotiations with its international creditors.

"The government will obviously continue discussions with international organizations, including the EU and the IMF," he said in a statement taken Saturday by the news agency MTI.

'DIFFICULT DECISIONS'

Christoph Rosenberg, who led the IMF delegation to Hungary, said that the international organization requested more details on the budget next year."When we come next time, unless we were coming next week, the government has consistently advanced the budget 2011 and budget will be very important," he told Reuters.

He also said that the IMF had not discussed with the Hungarian authorities for a new funding agreement for 2011 and 2012.

In a separate statement, the EU has indicated that the conclusion of the evaluation had to be postponed and that further consultations would be held.

"Hungary has returned on a path of positive economic growth and record today one of the lowest gaps in the EU.I welcome the commitment of the authorities towards the 2010 target of reducing the deficit, "said Olli Rehn, European Commissioner for Economic and Monetary Affairs.

"However, the correction of the excessive deficit from next year will require difficult decisions, including spending," he added.

Hungary needs to maintain the safety net that provides the loan of the EU and the IMF to maintain the confidence of the markets from which it borrows.The country remains vulnerable to high public debt, which represents 80% of GDP, and its dependence on foreign financing.

"If we do not have the safety net international creditor, it will penalize us where we are most vulnerable," he responded Zsolt Kondradt, analyst at MKB Bank, adding that a decline in the forint is expected Monday.

The Hungarian currency was trading at 282 forints per euro Fridays.

Romania has already had to make tough decisions last month to ensure the disbursement of IMF aid and reassure the markets.

Boeing said that delivery of the first 787 Dreamliner could be delayed until early 2011 instead of the fourth quarter of 2010, flight tests have revealed some difficulties.

Speaking at a teleconference with the press, Scott Fancher, general manager Dreamliner program, however, said the decision to postpone the delivery of first aircraft from All Nippon Airways (ANA) has yet been taken .

"We found some difficulties that challenge our schedule a bit," he said adding that these difficulties were related to issues of "configuration tools".

Around 17:30 GMT, Boeing retreated 0.51% to 64.42 dollars, wiping out a portion of losses just after the announcement of a possible further delay, while the Dow Jones yielded 0.57 %.

If ever the first delivery was postponed again, the behind the original schedule – May 2008 – would exceed two and a half years.

The beginning of the production launch of the plane was delayed five times in three years and the first flight, which occurred in December 2009, had been postponed six times, due to both a lack of parts, problems design and a two-month strike that affected Boeing plants in 2008.

"We want to play the card of caution and say it could be that delivery is delayed to the first part of next year. But at this point, our schedule still provides a delivery by the end of the year "Scott Fancher continued.

Moments earlier, Boeing said it had revised upwards its forecast of orders for new aircraft by 2029, thanks to an increase in the number of LCCs, the replacement of less fuel efficient aircraft and economic recovery.

The U.S. aircraft manufacturer estimates that 30,900 the number of orders over the next two decades, a figure up 6.5% compared to the forecast of 29,000 made last year.

Agricultural Bank of China (AGBANK), China's third largest bank, has priced its initial public offering dual Hong Kong and Shanghai, which should enable it to raise more than $ 22 billion (17.5 billion euros ) hypothesized high, bigger bet on the market ever.

The first trading day will be held July 15 in Shanghai and Hong Kong the next day. The official announcement of the award is scheduled for Wednesday.

AGBANK, founded by Mao Zedong in 1951, operates a large network of branches in the Chinese countryside and in larger cities.

Three years ago, AGBANK was technically bankrupt.His recovery, after a rescue of 30 billion dollars, has been boosted by the strong growth experienced in the country and the state control over the banking sector.

In Hong Kong, AGBANK sold 25.4 billion shares, representing 8% of its enlarged capital, at a price of 3.20 Hong Kong dollars part, totaling 10.4 billion U.S. dollars, it was reported Tuesday source close to the matter.

The bank had tightened Monday its price range, between 3.18 and 3.38 dollars per share in Hong Kong, against an initial range of 2.88 to 3.48 dollars.

In Shanghai, the price was fixed at the top of its indicative range which started at 2.52 yuan.AGBANK will sell 22.24 billion of yuan-denominated A shares at a price of 2.68 yuan coin, or 59.6 billion yuan (8.8 billion dollars).

In total, AGBANK rise $ 19.3 billion through its dual listing and even 22.2 billion dollars if the over-allotment option is exercised, an event likely in view of the application.

Previously, the largest ever IPO was that of Industrial & Commercial Bank of China with 21.9 billion in 2006.

OFFER 20 times oversubscribed

China International Capital Corp (CICC), Deutsche Bank, Goldman Sachs, JPMorgan, Macquarie and Morgan Stanley are the banks organizing the operation in Hong Kong, with the brokerage firm of AGBANK.

For placing on the market in Shanghai, banks are CICC, CITIC Securities, Guotai Junan Securities and Galaxy.

AGBANK is quoting on the stock market to allow the government to achieve its objective, namely to have the four largest banks in the country publicly traded.

Having for many of them had periods of insolvency, it are now among the largest banks – and companies – in terms of market capitalization.

A source familiar with the matter, it indicates that the offer of AGBANK in Shanghai was 20 times oversubscribed by institutional investors.

In Hong Kong, the institutional demand came from Asia to 4%, 30% U.S. 25% Europe thee, according to sources involved.

Individuals have however shown little enthusiasm in Shanghai, like Hong Kong.

The IPO allotment option included, values AGBANK about 150 billion dollars (nearly 120 billion euros), making it the fourth largest bank in terms of global market capitalization behind ICBC, China Construction Bank and HSBC .

Chaired by Xiang Junbo, headline writer and war hero, AGBANK operates 24,000 branches, employs 441,000 people and boasts 320 million customers.

The price for AGBANK bodes well for the four Chinese banks wishing to raise capital as is the case for Bank of China and ICBC.

The Shanghai stock market has lost nearly 25% since mid-April and fell sharply last week, partly because investors sold shares to participate in the offer AGBANK.

Sales of new homes in the United States has declined more sharply than expected in May and reached a record low with the end of a tax credit related to real estate, official statistics show, adding to fears a slowdown of economic recovery.

These sales fell by 32.7% to 300,000 annualized, against 446,000 (revised) in April, ending two consecutive months of increases.

This is their biggest decline ever in percentage since the launch of this statistical series began in 1963.

Economists and analysts polled by Reuters on average had forecast 410,000 annualized sales figure of 504,000 after the originally announced for April.

Since the buyers had to sign a contract later than April 30 to qualify for federal tax credit, which expired, observers expected a slowdown in new housing last month.

The median sales price of new homes fell 1% between May and April fell to 200,900 dollars. In one year, prices fell 9.6%, evening their biggest drop since July 2009.

The Chinese growth model, based on a docile workforce and cheap, is it threatened? The strike in Chinese factories of Honda and suicide clusters among the subcontractor Foxconn electronic, seem at least symbolic of a turn. These two events led to strong wage increases. And Beijing has validated this finding of a lack of remuneration in deciding dramatically Friday to raise the minimum wage by 20%. Twice that during the normal annual adjustment.

In a country accustomed to explosions of anger – with 127,000 protests in 2008 – and where information is locked, it is unclear whether they had the same impact in other times.

240 euros to live in Shenzhen

Until recently, indeed, the authority said that this kind of slippage occurs only in "capitalist" countries.But Premier Wen Jiabao has officially acknowledged the existence of a "certain level of social tension." It is also not a coincidence that the budget for public safety has increased significantly this year. But power is also well aware that the inequalities of wealth, rather than decreasing with the crisis has intensified further.