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SocGen Weighs Cost of a Clean-Up at Italian Banks, Trims PTs 2013-11-25 06:52:40.840 GMT

By Francesca Cinelli Nov. 25 (Bloomberg) -- Calculates EU44b extra-provision needed to normalize bad loans inventory level. * Excluding collateral coverage, SocGen sensitivity analysis of bad loans portfolio indicates that 40% markdown would reduce bad loans inventory ratio to 77% from ~120% almost in line with eurozone avg; but it would also bring a EU19b capital shortfall * Says such extremely harsh scenario could be manageable as, on SocGen calculations, banks may have total capital buffer of nearly EU8b stemming from shortfall of provisions to expected losses, already deducted from capital, and possibility of new LLP deductibility law being passed * Says using some of collateral to offset bad loans could further reduce bill * Keeps cautious view on Italy, keeping UniCredit as top pick * UniCredit PT cut to EU6.1 vs EU6.2; kept at buy * Intesa PT cut to EU1.8 vs EU1.85; kept at hold * Monte Paschi PT kept at EU0.14; sell rating unchanged * UBI PT cut to EU5.05 vs EU5.1; kept at hold * Banco Popolare PT cut to EU1.2 vs EU1.3; kept at sell * Pop. Milano PT kept at EU0.37; sell rating unchanged

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To contact the editor responsible for this story: Francesca Cinelli at +39-02-80644-252 or fcinelli@bloomberg.net

European telecoms revenue fall accelerates

The European telecoms industry has seen an accelerated decline in revenues this year, putting at risk spending on crucial next generation network equipment by the largest operators. Telecom service revenue will decrease by close to 3 per cent in 2013 among major European countries, according to Etno, the industry lobby group, reflecting a decline of €7.1bn. Across Europe as a whole Etno estimates that revenues will decrease by 3.7 per cent in 2013, twice the decline in 2012. The European telecoms industry has been hit by a combination of sluggish economic conditions in mature mobile markets and a regulated fall in traditional revenues streams such as roaming charges. As a result, most companies have been forced to cut or suspend dividends in 2013 while they harbour cash to cover balance sheets carrying too much debt. The much anticipated shift to higher speed and higher priced fibre and 4G networks has been slow to boost revenues. But Etno warned that there was a risk that companies would not be able to invest in the next generation of networks needed to carry high-speed internet services given the weak financial performance. In 2012, total capital expenditure across the industry reached €46bn, of which €26bn was invested in fixed networks and €20bn in mobile. The research, conducted by the telecom economics practice at Idate, shows that Europe is still lagging "behind in the investment race . . . with a negative capex growth, compared to strong growth in US and Japan". Etno said that regulation was a central driver of lower investments in Europe. The group is lobbying Brussels industry watchdogs for a more favourable regulatory regime, in particular to allow companies to merge within countries to strengthen their position. However, consumer groups warn that this could have a damaging effect on competition. The industry is waiting for the regulatory verdict on a proposed merger between O2 and E-Plus in Germany, which will be a test case for whether the European authorities will take a more broadly benign view on consolidation. One analyst said this week that the outcome of that decision would dictate the next year of share price movements in the sector. Luigi Gambardella, chairman of Etno, said that the report confirmed the conviction that unless the regulatory environment changes the EU telecoms sector will keep on losing revenue. "Regulation is a game changer when it comes to convincing investors that they should bet on EU telcos. We start seeing positive signals in Brussels and on the markets: the end of the tunnel might be close. It’s fundamental to continue sending the right signals in order to increase confidence in EU markets". The report says that overall service revenues have declined by about €18bn between 2008 and 2012 in the major countries covered by Etno, and by €21bn across the whole of Europe.

Asian Market Update: China escalates tensions around disputed islands just as Iran reaches nuclear agreement to ease sanctions

***Observations/Insights*** - Significant geopolitical developments spanning from the Middle East to the East China Sea were in the spotlight over the weekend, influencing the morning trading session in Asia. Beijing amplified nationalist sentiment, declaring an East China Sea area that includes the disputed Senkaku islands as the "air defense identification zone". Under the guidelines issued by the Defense Ministry, all planes entering the area must follow identification rules or risk intervention by the military jets. Japan's foreign ministry quickly responded, denouncing the measures with a formal protest to the minister at the Chinese Embassy in Japan. US Defense Dept and State Dept officials were also vocally opposed to China's move, vowing to protect its regional security partners. China defense stocks are trading higher, with some focus also falling on Japanese exporters potentially suffering from escalated trade tensions. - Iran foreign ministry and P5+1 reached a nuclear deal late on Saturday. As part of the agreement, Iran would receive $4.2B in foreign exchange and face less onerous sanctions on gold, petrochemicals and auto industries. In exchange, Tehran has to halt uranium enrichment above 5% and also cease installing any additional centrifuges or risk more sanctions. Ministers involved in brokering the deal cheered the breakthrough accord for its far-reaching regional security, while Israel called it a "historic mistake" and declared that it would not be bound by its provisions. US Pres Obama reached out to Israeli PM Netanyahu, just as WTI crude oil prices fell over $1 below $93.80/brl.

***Economic Data*** - (VN) Vietnam Nov Consumer Price Index (CPI) M/M: Y/Y: 5.8% v 5.9% prior (lowest since Aug 2012) - (SG) SINGAPORE OCT CPI M/M: 0.2% V 0.3%E; Y/Y: 2.0% V 2.2%E

***Fixed Income/Commodities/Currencies*** - (JP) BOJ offers to buy ¥250B in 1-3yr JGBs, ¥300B in 3-5yr JGBs, and ¥400B in 5-10yr JGBs - (KR) South Korea MOF sells 20-yr govt bonds, avg yield 3.865%

- SLV: iShares Silver Trust ETF daily holdings rise to 10,360 tonnes (lowest level since 10,284 on Jul 23rd) from 10,404 tonnes - GLD: SPDR Gold Trust ETF daily holdings fall 4.5 tonnes to 852.2 tonnes (lowest since Feb 2009)

- AUD and JPY are being aggressively sold against the greenback, with the respective technical breakdowns to multi-month lows accelerating the response to recent fundamentals of jawboning by the RBA and continued dovish stance at the BOJ. AUD/USD is down nearly 50pips below $0.9150 - lowest levels since early Sept. USD/JPY is at its highest level since late May, rising above ¥101.80. Despite the weakness in the Aussie, NZD/USD is marginally higher, rising about 30pips above $0.8210

***Speakers/Political/In the Papers*** - (CN) Beijing announces China military is setting up an "air defence identification zone" over East China Sea area that includes the disputed Senkaku islands - financial press - (CN) According to International Finance survey, 17 cities out of 32 in China have temporarily halted mortgage loans - financial press - (CN) China Hebei Province cut iron and steel overcapacity by more than 11Mt on a single day - Chinese press - (CN) China may include Guangdong, Tianjin in free trade zone (FTZ) trial - Chinese press

- (JP) Japan Dep Chief Cabinet Sec Kato: Japan will firmly, calmly defend its territory - financial press - (JP) Japan PM Abe: China's recent airspace declaration is dangerous, expresses concern - addressing parliament - (JP) S&P: Japan long-term credit quality continues to weaken; Tax hike and stimulus are near-term positive - (JP) Japan Vice Fin Min Furusawa: Japan deflation is coming to an end

- (KR) South Korea Ministry of Knowledge Economy: Oct industrial electricity sales rose 8% y/y to 22.4B kwh - Korean press - (KR) Bank of Korea (BOK): Q3 corporate lending rose by KRW13.1T q/q to KRW825.7T; Biggest increase in 3 years - Korean press - (KR) Moody's: South Korea's rising household debt is credit negative for financial system - (KR) South Korea Fin Min Hyun: South Korea economy is at a critical junction; Momentum for recovery is gaining - financial press

- (NZ) ANZ Bank economist: RBNZ may raise benchmark interest rates as early as January - (NZ) Westpac: Sees New Zealand Q3 GDP around 1.4%, up from 1.2% prior forecast - financial press

- (EU) Germany Fin Min Schaeuble: There are no longer any risks of contagion in the eurozone - German press - (EU) ECB Pres Draghi has returned a proposal to alter sovereign debt risk-weighting to advisers for more work - German press - (EU) ECB's Coeure (France): Recent ECB rate cut not due to any indications of deflation developing in the euro zone - financial press - (EU) ECB's Asmussen (Germany): ECB prepared to take further action if conditions demand it - German press - (GR) IMF's Greece envoy Thomsen: Greece needs to find further savings for 2014-16 but may avoid across-the-board cuts - financial press

***Equities*** Market Snapshot (as of 04:30 GMT): - Nikkei225 +1.3%, S&P/ASX +0.4%, Kospi +0.8%, Shanghai Composite +0.3%, Hang Seng +0.2%, Dec S&P500 +0.3% at 1,806, Feb gold -0.4% at $1,240, Jan crude oil -0.9% at $94.03/brl

US markets: - JNY: Sycamore said to be in advanced discussions to acquire Jones for less than $16/shr - financial press - BA: Said to have selected possible US sites for the production of the 777x - financial press

Notable movers by sector: - Consumer discretionary: Fast Retailing Co Ltd 9983.JP +2.3% (to list in Hong Kong); Ningbo Construction Co Ltd 601789.CN +10.0%, Ningbo Marine Co Ltd +10.0%, Ningbo Fuda Co Ltd 600724.CN +10.1% (Zhoushan free trade zone trial); Neway Group Holdings Ltd 55.HK +8.3% (H1 results) - Consumer staples: Warrnambool Cheese & Butter WCB.AU +2.4% (Saputo increases offer) - Industrials: Lend Lease Corp LLC.AU +1.4% (to start a China-focused property fund); Tianjin Port Development Holdings 3382.HK +3.5%, Tianjin Songjiang Co Ltd 600225.CN +10.0%, Tianjin Jinbin Development Co 000897.CN +4.5% (Tianjin free trade zone trial); James Hardie Industries NV JHX.AU +3.6% (shares repurchase plans); Jiangxin Hongdu Aviation 600316.CN +7.6%, China Spacesat 600118.CN +4.3%, China Avic Electronics Co Ltd 600372.CN +7.6% (on China airspace declaration) - Energy: Sinopec 386.HK -2.3% (pipeline explosion); Enviro Energy International Holdings 1102.HK +8.8% (distribution agreement) - Utilities: Yaskawa Electric 6506.JP +1.4% (China expansion plans)

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BFW 11/24 22:18 *AB INBEV IN TALKS TO BUY BACK ORIENTAL BREWERY, MAEIL REPORTS BN 11/24 22:17 *AB INBEV IN TALKS TO BUY BACK ORIENTAL BREWERY, MAEIL REPORTS

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AB InBev in Talks to Buy Back Oriental Brewery, Maeil Reports 2013-11-24 22:22:22.566 GMT

By Sam Kim Nov. 25 (Bloomberg) -- Anheuser-Busch InBev NV recently started talks with KKR and AEP to buy back Oriental Brewery, Maeil Business Newspaper reports, citing unidentified industry sources. * NOTE: Anheuser Busch InBev has rights, but not obligation, to re-acquire Oriental Brewery within five years of 2009 sale, according May 7, 2009 statement: http://bit.ly/VtkZey * NOTE: KKR acquired Oriental Brewery from Anheuser-Busch InBev in 2009 for $1.8b

Link to Company News:{ABI BB <Equity> CN <GO>} Link to Company News:{KKR US <Equity> CN <GO>}

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To contact the reporter on this story: Sam Kim in Seoul at +82-2-3702-1673 or skim609@bloomberg.net

To contact the editor responsible for this story: Marco Lui at +81-3-3201-8963 or mlui11@bloomberg.net

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BFW 11/24 20:11 *PEUGEOT SAID TO DISCUSS HIRING TAVARES TO SUCCEED VARIN NEXT YR BN 11/24 20:11 *PEUGEOT SAID TO DISCUSS HIRING TAVARES TO SUCCEED VARIN NEXT YR

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Peugeot Said to Discuss Hiring Tavares to Succeed Varin Next Yr 2013-11-24 20:12:30.568 GMT

By Andrea Snyder Nov. 24 (Bloomberg) -- * NOTE: Earlier, Peugeot Said to Seek Senior Executive to Prepare CEO Succession {NSN MWRP8G6S972C <go>} * NOTE: Nov. 23, Peugeot Seeks No. 2 Executive, Tavares May Be Candidate, Figaro Says {NSN MWOVY26S972N <go>} Link to Company News:{UG FP <Equity> CN <GO>}

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To contact the editor responsible for this story: Andrea Snyder at +1-202-624-1831 or asnyder5@bloomberg.net

Banks warn Fed they could charge customers

Leading US banks have warned that they could start charging companies and consumers for deposits if the US Federal Reserve cuts the interest it pays on bank reserves. Depositors already have to cope with near-zero interest rates, but paying just to leave money in the bank would be highly unusual and unwelcome for companies and households. The warning by bank executives highlights the dangers of one strategy the Fed could use to offset an eventual "tapering" of the $85bn-a-month in asset purchases that have fuelled global financial markets for the last year. Minutes of the Fed’s October meeting published last week showed it was heading towards a taper in the coming months – perhaps as soon as December – but wants to find a different way to add stimulus at the same time. "Most" officials thought a cut in the interest on bank reserves was an option worth considering. Executives at two of the top five US banks said a cut in the 0.25 per cent rate of interest on the $2.4tn in reserves they hold at the Fed would lead them to pass on the cost to depositors. Banks say they may have to charge because taking in deposits is not free: they have to pay premiums of a few basis points to a US government insurance programme. "Right now you can at least break even from a revenue perspective," said one executive, adding that a rate cut by the Fed "would turn it into negative revenue – banks would be disincentivised to take deposits and potentially charge for them". Other bankers said that a move to negative rates would not only trim margins but could backfire for banks and the system as a whole, as it would incentivise treasury managers to find higher-yielding, riskier assets. "It’s not as if we are suddenly going to start lending to [small and medium-sized enterprises]," said one. "There really isn’t the level of demand, so the danger is that banks are pushed into riskier assets to find yield." The danger of negative rates has deterred the Fed from cutting interest on bank reserves in the past. If it were to do so now, it would most probably expand a new facility that lets banks and money market funds deposit cash at a small, positive interest rate. That should avoid any need for banks to charge depositors. About half of the reserves come from non-US banks that do not have to pay the deposit insurance fee. Their favourite manoeuvre is to take deposits from money market funds and park them overnight at the Fed, earning millions of dollars risk-free. Cutting the interest on reserves would stop that. Lowering interest on reserves would also affect money market funds, said Alex Roever, head of US interest rate strategy at JPMorgan. "[It] would decrease the incentive for those banks to borrow in the money markets, which in turn could leave money market funds short of certain investments and force them to bid up the price of their next best options," he said. Richard Gilhooly, strategist at TD Securities, highlighted some benefits to the Fed from the possible cut: "[It] would not only anchor short-term rates near zero, it also stands to boost the profits for the Fed as they pay less interest to banks," he said. Additional reporting by Michael Mackenzie in New York and Patrick Jenkins in London

A smiling Hassan Rouhani stepped on to the spiral staircase of the presidential palace to announce to an anxious nation the first nuclear deal reached with world powers in a decade – a major achievement that capped his first 100 days in office. Departing from the austere conference hall press events of his predecessors, and opting instead for a White House Rose Garden-style appearance, he declared that the Islamic Republic had won global powers’ recognition of Iran’s right to enrich uranium. While the US and its partners were putting the emphasis on how Iran had bowed to international demands, agreeing in the six-month interim Geneva deal announced on Sunday morning to significant curbs on its nuclear programme, the pressing task of Iran’s new president was to sell the deal at home, where hardliners are waiting to pounce on any hint of weakness.

Although the right to enrich was not explicitly stated in the deal, the fact that the accord allowed Iran to continue enriching at low levels was enough for Mr Rouhani, and appeared to keep intact the red lines set by Ayatollah Ali Khamenei, the supreme leader and ultimate decision maker in Iran. “World powers have recognised the nuclear rights of Iran,” declared Mr Rouhani. “The confirmation from the great powers is of huge value.” Billing it as a turning point for Iran – both internationally and at home – the centrist president, elected on the hope of ending Iran’s isolation and fixing a collapsing economy, made the most of the little sanctions relief offered by the Geneva agreement. Putting his own spin on the deal – and along the way directly contradicting American officials’ assertions – Mr Rouhani said the sanctions regime “had been broken” by the agreement, “whether others like it or not”. With the passage of time, he predicted, the cracks “will widen”. Peppering his words with the necessary references to pride and dignity for Iranians, for whom the nuclear programme is above all a testament to the technological prowess that the country has achieved, he pledged that the Islamic Republic would not seek nuclear weapons. He remained adamant, however, that no one could stop Iran from pursuing nuclear technology for peaceful purposes. In another sign of his media savvy as president, Mr Rouhani produced relatives and children of four scientists killed since 2010, part of a covert war against the nuclear programme. Each family was presented with a roll of honour. Interactive

Iran’s nuclear sites Iran nuclear sites Profiles of seven of the key nuclear sites around the country Mr Rouhani reserved some of his final words for the supreme leader, declaring his appreciation for the Ayatollah’s guidance and stressing that negotiators had worked within these guidelines. To be sure, the nuclear deal would not have been possible without the supreme leader’s consent, and his backing of what he has called “heroic flexibility”. It is this approval – he hailed the deal as a “success” on Sunday and had previously referred to negotiators as “the revolution’s children” – which has, until now at least, kept hardliners’ attacks on the nuclear negotiations in check. Iran’s state television, which reflects views of fundamentalists opposed to Mr Rouhani, echoed the supreme leader’s words, portraying the agreement as an achievement without referring to Iran’s concessions. But so crucial is the supreme leader to the negotiations, and so mysterious his views on how much more Iran is willing to concede, that many Iranians are cautious about what will happen in six months’ time, and whether a comprehensive agreement can be successfully negotiated. Mr Rouhani also called on Iran’s beleaguered business community, crippled by sanctions as much as the mismanagement of the previous administration of Mahmoud Ahmadi-Nejad, to see the agreement as a stepping stone, encouraging them to help revive the economy. “From now on it is your turn,” he said. “We prepared the ground.”

Iran Foreign Min: Nuclear deal with P5+1 has been reached

- Iran to receive $4.2B in foreign exchange as part of an agreement in exchange for limited sanctions relief on gold, petrochemicals and autos as part of an agreement. - As part of agreement, Iran agrees to halt uranium enrichment above 5% and will not install any additional centrifuges. - France Foreign Min: "The mechanism foresees the strict control of the engagements taken and vigilance will be needed to ensure they are implemented." - Pres Obama: If Iran does not meet its commitments during 6-month period, US will increase the pressure and turn off sanctions relief. - US State Sec Kerry: Agreement between Iran and major powers would make it harder for Iran to build a nuclear weapon and would make Israel and other U.S. allies safer. - Israel PM Netanyahu cabinet official: This is a "bad deal." - Israel Econ Min Bennett: "Israel does not see itself as bound by this bad, this very bad agreement that has been signed." - PM Netanyahu: "What was achieved last night in Geneva is not a historic agreement, it was a historic mistake... Today the world has become a much more dangerous place because the most dangerous regime in the world took a significant step towards obtaining the world's most dangerous weapon." - Key US senator said to be expecting Senate to mull legislation allowing 6-month window before new sanctions imposed on Iran.

Barron's Saturday Summary: Positive on SIRI, QCOM, CCJ, BBBY, HD, M; Cautious on AVP, INTC

- Cover story: Positive on SIRI: After recovering from a near-bankruptcy, satellite radio company has nearly 26M subscribers and annual sales approaching $4B, giving it a market value in line with DISH and topping NFLX, yet investors still underestimate the companys potential and its effective monopoly in satellite radio; with strong free cash flow, it could buy back 40% of shares outstanding in the next five years, and stock could jump 50%. - Tech Trader: Cautious on INTC: Return to its roots as chipmaker could boost stock, but investors should hold off buying until company provides answers to some nagging questions after the new year; in addition, there is no guarantee that having the best chips at a reasonable price will win Intel business in tablets and smartphones. - Trader: Cautious on AVP: After years of strategic and operational mistakes, company is returning to basics under new CEO Sherilyn McCoy, and barring strong rebound remains a potential acquisition target; Americas public stock market has faced a de-equitization, with far fewer U.S. publicly traded stocks available for purchase today than there were in the late 1990s, partly due to buybacks and partly due to the rise in assets under management by private equity.

- Follow-Up: A poll of bullish money managers finds market is heading even higher, and might top 18,000 next year, with the S&P 500 reaching new highs amid improving economy and Fed move to maintain ultra-low interest rates; Cautious on HAIN: Company has boosted sales primarily through acquisitions and new distribution channels, but free cash flow numbers raise questions and shares seem overvalued.

Features: 1) Positive on BBBY, COH, CHS, DDS, DG, HD, KSS, M, URBN: Nine retail stocks are the rare bargains in sector, with modest P/E ratios relative to expected earnings growth. 2) Positive on QCOM: Wireless chip maker is growing at a slower rate these days, but the outlook is still good for its existing and new businesses, and shares should rise 20%. 3) With stocks up, investors should consider trimming U.S. stocks and small-caps while holding on to Europe and emerging markets, as well as parking cash a bank instead of with a broker.

- Small Caps: Positive on BHLB: Firm, one of New Englands largest community banks, is another winner of the consolidation trend, and its acquisitions are helping boost loan growth and earnings. - Hedge Funds: Interview with Philip Weingord, Founder, Seer Capital Management, which focuses on distressed and special situations in residential and commercial mortgage-backed bonds, and which has made money on JCP, FNMA, FMCC, and Punch Taverns; Interview with Cliff Corso, CEO and CIO, Cutwater Asset Management, who says that in 2014 we could see another double-digit year in equities, notwithstanding that there may be a correction. - European Trader: Investors shouldnt worry about ECBs recent forward guidance on monetary policy, and instead focus on the opportunities it creates. - Asian Trader: Korea is attractive not just because it is the cheapest market in Asia right now, but because it is probably the most leveraged to global growth, says Mozamil Afzal, chief investment officer at EFG Asset Management in London. - Emerging Markets: Despite troubles in emerging markets this past year, shares of large-cap growth companies catering to middle class consumers have been strong (Positive on Hindustan Unilever, Ambev, Want Want China, BIDU, Naspers); Some Macau-based casino giants could face headwinds next year (Cautious on Sands China, Wynn Macau, Melco Crown, Galaxy Entertainment). - Commodities: Prices for ethanol are still climbing, despite cut in U.S. targets for its use, since prices are still low enough to entice buyers overseas. - Streetwise: Positive on CCJ: Shares of uranium producer are showing signs of life as demand improves while little new supply has become available, and improving prices for the metal should energize the stock.

Apache Corp Said to be in talks with Argentina's YPF about a possible sale of its assets in the country - financial press - Report noting Apache has stakes in about 25 fields in Argentina.