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.

Positioning high-end of Germany and its strong presence in emerging markets, causing a record growth, should protect Europe's largest economy from the impact of an economic slowdown in the U.S. or its neighbors in the euro area.

During the last two decades, German companies are well established in the markets of emerging Asia and Latin America, particularly in infrastructure which these economies need to grow.Germany and last year signed a cooperation agreement with Brazil to develop the infrastructure needed to organize the World Cup soccer in 2014 and the Olympics in 2016.

Controlling the production of capital equipment up-end the German strategy was used. Indeed, the demand for these products is very strong, and machinery and commercial vehicles alone representing nearly 50% of German exports.

"We are well represented in many markets that are now very important, but which were not specifically before.We are better represented than others, "says Volker Treier, chief economist of the Chamber of Commerce and Industry (DIHK).

This good exposure to growth markets is reflected by good orders to German companies, even as mature economies like the United States, struggling to recover.

Orders in the German manufacturing sector have increased by 3.2% on month in June, after a strong second quarter showing a growth of 2.2% over the first three months of the year, the strongest growth since the reunification in 1990.

Businesses benefit directly from this favorable environment.Of the 30 groups listed on the DAX index, 23 of them have published results above market expectations in the second quarter, and 12 have raised their forecasts.

EXPORT DEPENDENCE

But the economic profile of Germany, focusing on exports, has its downside.Last year, at the height of the recession, German exports have dropped sharply, causing an economic contraction of 4.7%, higher than the average contraction across the euro area – 4.1%.

"The sensitivity to exports has struck the German economy in 2008 and 2009, and now she supports a remarkable growth," explains Niels Thygesen, professor of economics at the University of Copenhagen.

During the recession, foreign groups often had no access to funds for the purchase of German equipment, explains Volket Treier. "Often, the financial structure does not follow.(…) Now, repeat orders. "

These include small and medium businesses, often family, the famous Mittelstand, which form the backbone of the German economy.

SUPPORT HOUSEHOLD AND CONSTRUCTION

Another key factor in recovery: households.German consumers, known for their sense of savings, have supported the growth in the second quarter after starting the year marked by sluggish consumption.

The construction sector also contributed to the improved economic situation of the country, bouncing over the period April to June after a particularly harsh winter, which had greatly affected the industry.

Economists expect growth in the German economy at least 3% in 2010, prompting the country's trade unions to demand a high wage growth, after agreeing to tighten its belt during the greater part of the decade elapsed.

Such a decision would certainly erode the competitiveness of Germany, but without affecting the economy significantly.

The powerful IG Metall union calls for a wage increase of 6% to 85,000 steelworkers, a claim well above the inflation rate of 1% of Germany.

Oil prices had closed up on Friday for the third consecutive session on the New York market, as investors were reassured by statements by Fed Chairman on possible new measures to support the economy if necessary.

The October contract on the U.S. light crude closed up 1.81 dollars, or 2.47%, to 75.17 dollars a barrel on the New York Mercantile Exchange.

At the time of closing in New York, a barrel of Brent crude advanced $ 1.70, or 2.27%, to 76.72 dollars.

On the whole week, the contract on crude grew by $ 1.71, or 2.33%, signing up after two consecutive weeks of declines.

The Federal Reserve Chairman United States, Ben Bernanke said Friday that the economic recovery had slowed more than expected and the Fed was prepared, if necessary, to adopt additional measures to support the activity.

Prices were also supported by redemptions of short positions against the threat of tropical storm "Earl", which moves in the Atlantic and could become a hurricane by Sunday.

Concerns over Hurricane Danielle "were however attenuated as it swirls currently above the Atlantic, far from shore, according to the U.S. weather service.

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 trade deficit of France fell to 3.796 billion euros from 5.179 billion in June (revised) the previous month, thanks to increased exports find their level two years ago, according to data CVS / CJO published by Customs.

Throughout the first half, the deficit totaled 24.544 billion against 22.928 billion during the first six months of 2009, a decline due mostly to the increase in energy costs.

Six economists polled by Reuters had expected on average a deficit of 4.5 billion euros in June, with estimates ranging from 4.0 to 4.9 billion.

The remainder of May was revised to 5.179 billion from the $ 5,500 billion announced an initial estimate a month ago.

Exports FOB data CVS / CJO surged to 33.016 billion euros against 29.948 billion in May, reaching their highest level since August 2008.

Imports amounted to 36.812 billion euros against 35.127 billion the previous month.

In June, France sold its 26 Airbus reported 1,719,000 euros for 19 aircraft against 1,050 million euros in May

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.

Schlumberger, a global oilfield services company, reported Friday in an increase in line with expectations, 33% of its quarterly earnings, strong growth of its land in North America offset the effects of the moratorium on drilling offshore in the Gulf of Mexico.

Net income from continuing operations of U.S. group stood at 818 million dollars (632 million euros) over the second quarter, or $ 0.68 per share, against 613 million ($ 0.51 per share) last year.

Turnover rose 7.4% to 5.94 billion dollars.

Analysts on average had forecast earnings per share of $ 0.68 and revenues of 5.915 billion.

In exchange for pre-market action Schlumberger, who finished at 61.30 Thursday, yielded more than 2%.

The moratorium on offshore drilling in the Gulf of Mexico was decided after the explosion and sinking of the platform Deepwater Horizon, operated by BP, which left 11 dead and is causing the worst oil spill from the history of the United States.

But Schlumberger is less affected than, for example, Halliburton, by stopping the activity in the Gulf of Mexico, this region represents only 5% of its turnover.

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.