US & World News

The government deficit in France was equivalent to 5.2% of gross domestic product (GDP) in 2011, writes Les Echos Thursday on their website.

The first estimate of the deficit is to be published by INSEE Friday morning.

The objective of the Finance Act was 5.7% and the government indicated it could be 5.3%.

Asked by Reuters, the Budget Ministry did not wish to comment.

The government and the two main candidates in the presidential election, the socialist Francois Hollande and Past President Nicolas Sarkozy pledged to reduce the deficit (which includes State, local and social security) to 4.5% of GDP at end 2012 and 3% in late 2013.

BNP Paribas and Societe Generale Wednesday reaffirmed their commitment to carry through their plan to reduce balance sheet.

Speaking at a conference organized by Morgan Stanley in London, Jean-Laurent Bonnafe, the CEO of BNP Paribas, has announced that the bank would be able to completed by the end of her program initiated in the second half of 2011, at the height of the debt crisis in the euro area.

He recalled that the group had given the end of February to the U.S. bank Wells Fargo loan portfolio to oil companies and sold in early March a 28 , 7% in the property company Klépierre. 

"Our number one priority remains the implementation of our plan to reduce balance (…) In all, we have already achieved 70% of the program," said ; John Lawrence Bonnafé.

BNP Paribas announced in September will reduce by 10% the size of its balance sheet by the end of 2012. In late 2011, its assets amounted to 1.965 billion euros against 1.998 billion at end-2010.

Speaking at the same conference, the CEO of Société Générale Frédéric Oudéaa assured that SocGen, whose market capitalization has shrunk by half last year, was also determined to achieve the reduction of its balance sheet.

"The deleveraging will continue," said Frederic Oudéa. "We have clear objectives."

During the fourth quarter of 2011, SocGen sold for 10 billion euros in assets, but analysts still expect the bank's most significant disposals to strengthen its solvency.

"BNP CLEARLY IN ADVANCE"

"On the 'deleveraging' (reducing balance, Ed), BNP Paribas is clearly ahead, with an impact on NLP ('profit and loss', Ed) quite limited. It's rather good news, "said Alex Koagne, an analyst at Natixis

." However, the Company General ; eral, I think they come to do their 'deleveraging' on the sale of loans but they are now waiting on disposal of business units, "he says ……

… "It's been several months since they announced they would sell assets and there was still nothing yet."

To strengthen their financial strength undermined by the crisis in the euro area and alleviate tensions in interbank liquidity, European banks have also begun to re reduce and diversify their funding sources and reduce their financing needs

. Their difficulties in dollar funding has also forced the European Central Bank has injected over $ 1.000 billion euros of liquidity to three years (LTRO) in the European banking system.

BNP Paribas said the bank had reached since the beginning of the year 60% of its funding needs for 2012, raising 12 billion euros between January 1 and March 22.

Societe Generale, for its part said it has raised 7.6 billion euros of debt since the beginning of the year, with a maturity average of 6.3 years.

SocGen is continuing its efforts to restructure its BFI, said its CEO. This table and a reduction of 50 to 60 billion euros of liquidity needs by 2013 in these activities.

In exchange, like most European banking stocks, securities of French banks have closed in the red Wednesday because of investor concerns about growth in the U.S. and the budgetary situation of Spain.

In Paris, BNP Paribas and Societe Generale ended the session down 1.3% and 2.89% respectively. Credit Agricole – who canceled his participation at the London conference – sold 2.82%. The European banking index ended down 1.45%.

The Spanish bank La Caixa confirmed Monday its intention to acquire its rival Banca Civica through its listed subsidiary CaixaBank to give birth to the first Spanish bank to Santander and BBVA.

CaixaBank offers the equivalent of 1.97 euro per share Banca Civica via a public exchange offer (the offer) that values ​​the target at 980 million euros.

A second wave of consolidation is underway in the Spanish banking sector. This is for banks to rebuild capital after losses from the bursting of the speculative real estate bubble in late 2007.

With total assets of 285 billion euros, CaixaBank is about four times larger than the Civic.

The shareholders of Banca Civica CaixaBank will receive five shares for every eight shares held. This represents a discount of 11% over the closing price Friday of Banca Civica. Quotations CaixaBank and Banca Civica were suspended Monday before the markets open.

The banks hope to have the approval of their shareholders by June 30.

Sources close to CaixaBank, it is not excluded that the institution has used a capital increase to finance its acquisition.

The government of Mariano Rajoy wants to reduce the number of banking groups to ten when they were over 40 before the crisis.

The new alignment will bring more difficult to find a partner for Bankia, particularly exposed to real estate, say observers.

Caixa said in a statement it would maintain its dividend to 0.231 euros per share in 2012.

Of the 35 billion budgeted in 2010, 25 billion has been spent on 880 projects ranging from education to digital through aviation. It is too early to measure the impact of these investments on the economy. President of the Republic, Nicolas Sarkozy, has held 27 June 2011 at the Elysee a press conference on the big loan.

In March 2010, financial storm, the government launched the national loan to support the economy: the key to an envelope of 35 billion euros to finance research and innovation. Two years later, the device has already helped to select and provide funding to 880 projects on 3,000 proposals received.  

"Today it is 25 billion spent, but in a few days, there will be 27 billion," says Alain Juppe, who was with Michel Rocard, co-chairman of the Supervisory Commission and Great Loan Rene Ricol, Commissioner General investment, a press conference-record March 20.

€ 6 billion for education

Among the 880 projects already selected, higher education is carving the lion's share. 8 and excellence initiatives, designed to bring out the poles leading academics, have been funded for more than 6 billion euros. In addition, eight technology research institutes combining private and public research have received a total of 2 billion.  

In industry, it is aviation, and in this case EADS, with its two subsidiaries Airbus and Eurocopter, which has hit the jackpot: € 1.4 billion for two demonstrators, one of composite airplane, another helicopter of the future. The banking industry, announced in February by Nicolas Sarkozy, should also benefit from a contribution of one billion euros through the big loan.

In sustainable development and the digital economy, the budget allocated to the various projects are less important. They concern, for the first, low-carbon or renewable energies, for the second, the digitization of content, cloud computing, e-health or e-education.

No doubt, the teams have carbureted big loan. They still have two new programs announced yesterday university hospital oncology in Ile de France and Toulouse. But it is still early to assess the impact of these investments for the future of the economy and the role of France in international competition.

Over the past three months, the U.S. stock market has regained its levels of late 2007. And in Europe, France has rebounded even stronger. The improvement could well last until May. But then train for the return of volatility. Explanations. The stock market rally seen through the evolution of the Dow Jones: an increase of nearly 18% in almost four months.

Equity markets have recovered tone. Wall Street has lost ground with the financial crisis, is now finding its levels in late 2007 after a 11% jump in three months. For the first time in its history, its flagship index, the Dow and the Nasdaq, dominated by technology, rose this week above the psychological threshold of 13,000 points and 3,000 points, during the same session. European stock markets are pronounced the same trend, the Cac 40 in Paris even showing since mid-February a gain of 21% which allowed him to retake the course of 3600 points.

The rally in shares is not new. It has already lasted three months and we owe largely to central banks, said Benjamin Melman, Director absolute performance at Edmond de Rothschild IM. The rebound in stock prices coincided with the opening last December, to tap liquidity from the ECB or the provision of banks over 1000 billion euros of resources at low cost. This proactive reassured investors who constantly claim that the central bank acts as a lender of last resort to stem the contagion of debt. But his determined action has contributed to lower interest rates in the bond market and away along the spectrum of the credit crisis that threatened the European economy. The Fed has also facilitated the rise of the stock market by deciding to extend until 2014 its ultra accommodative monetary policy. Of course, the rescue of Greece has also helped to ease investors. Although all issues are not resolved, a page of the European crisis has turned, says Francois Chevallier, strategist at Bank economist and Leonardo.

And the good news for investors is that the rally is not over yet. Price increases in January and in February was made with very little volume, Melman says Benjamin. Many investors have been waiting patiently for several issues are resolved. They return on the market today. We assist in some way, a second wave of purchases, which explains the recent acceleration in price rises.

How long can it last? Difficult to say. Looking at the ratios of current profits, we say that most of the journey was made, says François Chevallier. However, the stock market has another engine, that of profit expectations. But they will remain well oriented in the short term due to the favorable business surveys. The ZEW index in Germany and that of the Philadelphia Fed – two leading indicators of the industry – improved further in March, says the expert. This means that the plateau expected in the industry has not yet occurred. The next ISM index, which takes the pulse of American industry, may still show an increase in early April, at the same time giving a new impetus to the market.

As of May, however, the stock market could consolidate, ie enter a phase of slower growth. Indeed, the production rates in the industry expected to slow. Moreover, the return of valuations at pre-crisis level will lead to profit taking, says Francois Chevalllier. Tensions on the bond markets – the U.S. 10-year rates rose in a few weeks from 1.8% to 2.3% – would create air holes on the stock market, adds Benjamin Melman. Volatility will brief comeback. The opportunity for investors to remember an old adage stock: sell in may and go away.

According to the Chinese premier, the yuan has appreciated 30% since 2005. It is now close to its equilibrium value. Beijing could stabilize once more its currency to the chagrin of Western countries. A 100-yuan face a $ 100 bill.

The military budget and export quotas of rare earths are not the only subjects of friction between China and Western countries. There's one in particular which is recurrent and that may well not be resolved anytime soon: the yuan. And despite official statements sometimes included ambiguous way too optimistic by some Western obervateurs.

Early on the course of the Chinese currency, deemed too low, the subject of criticism. In the U.S., the yuan is accused of trade deficit and destroy jobs. Following the Forum summit of Asia-Pacific Economic Cooperation (APEC), last February, U.S. President Barack Obama, once again called for an appreciation of Chinese currency. His hopes are to go up in smoke.

According to Chinese Premier Wen Jiabao, speaking at its annual press conference, the last of its mandate, the yuan is now approaching an equilibrium value. It is indeed appreciated 30% since 2005 and has changed little since the beginning of the year. In other words, you must not rely on an appreciation of Chinese currency in the coming months. "We will accelerate reform of the exchange rate", has certainly also said Wen. But it was soon clear "by giving more scope to fluctuations in both directions." In other words, the yuan revaluation claimed to body and cries by the major developed countries, is absolutely not announced.

The braking worrying the Chinese economy is no stranger to these statements. The Chinese export growth has moderated from 21% in the third quarter to 14% in the fourth quarter. In February, China has even recorded a record trade deficit.

China undergoes economic cooling in other countries, experts note of BNP Paribas. The decline in exports is explained clearly by the decline in sales to European countries (22% of total exports in 2011) and to a lesser extent, the United States. Another measure of trade intensity, the current account surplus of China has reached 2.8% of GDP in 2011. "It is below the international norm of 3% of GDP", says Chinese Premier.

Under these conditions Beijing, which needs growth to ensure social peace, has every interest in stabilizing its currency. This lever has been used during the crisis: the 2008-2010 period, Beijing was chosen to secure the dollar before losing a little ground in 2011. In fact, since mid-2008, the yuan has only appreciated that about 5% against the greenback, causing the exasperation of the United States.

In 2012, BNP Paribas' experts provide at best a 3% appreciation of the Chinese currency. But its "internationalization," however, is expected to continue at a rapid pace. Eventually, indeed, China dreams of being less dependent or concurrent, of the dollar. Since 2008, it is redoubling its efforts to force the yuan internationally. Since 2009, Chinese companies can charge in yuan business transactions with foreign countries. Since 2010, foreign companies can borrow yuan, via Hong Kong on an offshore market. Air Liquide has issued bonds last September in yuan to 185 million euros. For two or three years, the yuan also sees its role reinforced by the swap agreements (that is to say, temporary exchanges of cash) made between the central bank of China and its neighboring countries (Korea, Malaysia, Singapore).

Recently, the Austrian Central Bank has signed an agreement with the Chinese central bank, becoming the first Asian central bank not be able to make investments in yuan! Finally, China allowed Japan to buy the first time in its history of Chinese government bonds. The Middle Kingdom does not stop there. Zhou Xiaochuan, governor of China's central bank, requires the input of the yuan in the composition of the SDR, the IMF's currency. But it will be hard to convince world leaders, as are many disputes between China and the West.

The main European stock markets opened in fall Tuesday in the wake of Wall Street and Asian markets, fears of an economic slowdown in China and Europe prompting investors to reduce their exposure to risk.

In Paris, at 9:30 am, the CAC 40 lost 0.83% (29 points) to 3458 points. London yields 0.56% and Frankfurt was down 1.01%. The pan-European Euro Stoxx 50 index was down 0.96% after gaining over 9% since the beginning of the year, supported especially by abundant liquidity injected by the Bank Central Bank (ECB).

The values ​​of the automobile are among the largest declines. The European sector index losing 2.2%, weighed down primarily by PSA Peugeot Citroen.

PSA lost more than 5% in the Paris Stock Exchange after the announcement of the terms of the capital increase of a billion launched after its alliance with General Motors. The French group also announced it would not pay a dividend this year.

The German Merck was down 1.3% after reporting fourth quarter results below expectations, within the scope of a claim to half mast for the crystal used in the tee ; léviseurs flat screen.

The earnings season in Europe has been relatively poor. According to Thomson Reuters data Starmine, only 49% of STOXX 600 companies have published the results meet or exceed expectations, against 68% of companies S & P 500 on Wall Street.

"The macroeconomic data from the euro area, while the main liquidity operations of the ECB are completed, have aroused fears of a recession and de ; ceived markets. To make matters worse, China has lowered its forecast for growth ", says Koen De Leus for KBC Securities in Brussels.

Markets have also coldly received the message sent Monday by Athens, which it was prepared to force private creditors to take losses on Greek debt. Private investors have until Thursday to say whether they intend to or not participate in the exchange of debt that should allow Greece to erase more than 100 billion euros of its debt, as part of its second bailout of 130 billion euros.

Volksbank Austrian bank said Monday it would be partially nationalized and its minority shareholders could lose up to 70% of the value of their participation.

The majority of the capital should remain controlled by regional banks, which will 230 million euros on the table while the state plans to provide at least 250 million.

A financial source said that the state would recover the direct participation of over 40% in Volksbanken after the recapitalization.

The capital of the bank is currently owned 60.8% by sixty Austrian credit institutions, to 23.4% by the German DZ Bank, to 9.4 by the insurer Ergo% and 5.7% by Raiffeisen Zentralbank. 

Volksbanken had received in 2009 one billion euros from the state but failed to meet its deadlines for repayments on time, providing the government Austria the opportunity to turn his loan into securities.

The Austrian Minister of Finance, Maria Fekter, however, said they wanted to avoid this scenario, Vienna has already had to nationalize Kommunalkredit and Hypo Group Alpe Adria since the outbreak of the financial crisis .

Air Liquide, whose growth has slowed sharply in the fourth quarter, however, table of new growth in its net profit in 2012 barring any major degradation of the situation after one year 2011 range by emerging and resistance in Europe.

The world's largest industrial gases account on a portfolio of opportunities 12 months – that is to say that projects the group is likely to win – a record level of 4.2 billion euros at end 2011, against 3.9 billion euros at end 2010.

Air Liquide announced Friday sales up 7.2% to 14.457 million euros in 2011, down 6.8% on a comparable basis, and net income of 1.535 million, up 9.4%, with an operating margin stable at 16.7%. 

Analysts polled by Reuters on average expected a turnover of 14.479 million euros and net profit of 1.533 million.

The cluster gas and service, which provides the bulk of group sales, was up 7.5% of its sales on a comparable basis, driven by a 20% increase in sales in countries é ; mergents thanks to strong growth in demand and start-ups and ramp-up units. Emerging, high growth, now represent 21% of sales against 15% in 2008.

The growth of this division has slowed to 1.9% in the fourth quarter on a comparable basis, its lowest level since late 2009, reflecting an unfavorable comparative and global caution client group, particularly in the steel and electronics.

The group, whose competitors Linde German and American Praxair and Air Products intends to pay an increased dividend to 2.50 euros from 2.35 euros for 2011 against 2010.

"The signing of new contracts and continuous innovation to expand its businesses allow the group (…) to be confident in its medium term development program in the 2015 Alma" , said in a statement the CEO Benoît Potier. 

This strategic plan, presented in December 2010, is an average annual growth of 8% to 10% of sales and sustained growth in net income by 2015.

Decisions of industrial and financial investments, totaled 2.0 billion euros in 2011 against 2.2 billion in 2010, with the group's entry in Mexico, Ukraine and Turkey.

BNP Paribas, whose 2011 accounts were affected by the provisions on Greece and the financial crisis, nevertheless reassured the markets on Wednesday the outlook for 2012 Aftern s have reported a good start to the year in investment banking.

Its CEO, Jean-Laurent Bonnafe, also said he expects this year to stabilize the crisis in the euro area and an economic slowdown in Europe, e cartant and the recession scenario chosen by some economists.

"We think there will be some sort of stabilizing the situation in the euro area," said Chief Executive of BNP Paribas in an interview with Reuters Insider. "There will be some kind of slowdown (economic, Ed) in Europe this year, but no recession."

Asked about the prospects for business in 2012, he reported a "strong" start to the year in investment banking.

Around 24:50, the BNP Paribas signs the largest increase in the CAC 40 up 6.62% to 35.73 euros, outperforming the European sector index (+2.5%). The action resumed nearly 18% since the beginning of the year, bringing the Group's market capitalization to 43 billion euros, after falling 36% in 2011 .

"The performance (of the CIB, ed) is clearly better than the average BFI European and American," said Alex Koagne, an analyst at Natixis Securities.

"In addition, the group was generally optimistic, indicating that the beginning of the year had been good in this business," he says.

"AHEAD" ON RECAPITALIZATION

Despite being down by 50% to 765 million euros in the fourth quarter, net income is superior to the expectations of analysts surveyed by the editor Reuters. 

The latter on average expected higher losses in the banking business and investment banking (CIB), the image of what came out of the results of Deutsche Bank.

"Despite a year marked by many non-recurring items (…), the bank shows a fair return while its solvency and liquidity position continue to strengthen, "said Pierre Chedeville, an analyst at CM-CIC Securities in a note.

BNP Paribas, which has decided to maintain a dividend, unlike SocGen and Credit Agricole, also estimated to have reached six months ahead with the objectives set for recapitalization by European regulators, with a capital ratio of 9.6% at end 2011. 

"They do not need to accelerate the process of 'deleveraging' (reducing balance, Ed)," Yohan holds Salleron, manager at Mandarine Gestion.

The French bank, who spent an additional charge of 639 million euros in its accounts for the last quarter of 2011 on government debt, reports that it has now reached 75% of its funding on the Gre ; this against 60% previously.

NEW DEVELOPMENT PLAN IN 2013

Its chief executive said to be confident that the group will not have to place new provisions on Greece, which is negotiating a new bailout with the International Monetary Fund The European Union, the European Central Bank and its private creditors. 

In BFI, where the bank has suffered for 510 million euros in losses on disposals of sovereign debt in Q4, the group table in 2012 on new charges outstanding € 850 million related to divestitures of assets and restructuring of its operations.

"The early years (2012, Ed) has been quite strong in investment banking", indicated Jean-Laurent Bonnafé.

Hired as many European banks in a plan to reduce stock and asset sales, the general manager of the BNP, however states that he "no plans" regarding a sale of its subsidiary American BancWest. He also rejects any sale of its land Klépierre which the bank holds 51% stake.

In terms of its refinancing needs, focus point on which investors concerned about the financial health of European banks, BNP announced that its issuance program in the medium and long-term amounts to 20 billion euros for 2012, five billion has been raised.

The new leadership of the bank, led since December by John Lawrence Bonnafé, present in 2013 a new development plan.