EXCLUSIVE-EU warned of wind-down risk for Spain's Banco Popular - source - Reuters News
31-May-2017 15:34:57
- EU banks body worried Popular sale may fail
- Watchdog gives "early warning" on liquidation -source
- New regime to shutter European banks is untested
By Francesco Guarascio
BRUSSELS, May 31 (Reuters) - One of Europe's top bank watchdogs has warned European Union officials that Spain's Banco PopularPOP.MC may need to be wound down if it fails to find a buyer, an EU official told Reuters.
Elke Koenig, who chairs an EU body that winds down troubled banks, recently issued an "early warning", the official said.
The move highlights growing concerns about Spain's sixth-largest bank, although there is no suggestion that winding down Popular is inevitable.
Popular's problems come some five years after Madrid spent more than 40 billion euros ($45 billion) rescuing lenders hit by the financial crisis. The sector has since consolidated, leaving just 14 banks out of 55 in 2008.
Popular, which has been unable to sell off 37 billion euros of soured property loans quickly enough, is seeking a buyer after Spanish Economy Minister Luis de Guindos ruled out a state bailout. The bank says it could extend a deadline of June 10 for binding offers.
But if merger efforts fail, Popular would have few alternatives and Koenig's warning illustrates rising disquiet about the group, whose troubles, although isolated in Spain's largely robust banking sector, could rattle investors.
"Koenig has said ... that the Single Resolution Board is following the (Banco Popular) procedure with particular attention with a view to a possible intervention," the official said, adding that the bank's merger bid "may be fruitless".
"General preparations are under way although no concrete steps have yet been taken," a second source said.
If Popular were to run out of other options and be closed, it could be the first case in Europe using new rules to impose losses on bondholders. That could in turn make funding more expensive for other Spanish banks, undermining one of the euro zone's largest countries.
The ECB and the Resolution Board declined to comment, while a Banco Popular spokesman said it was working on several plans including a merger, a capital hike and asset sales.
But the European watchdog fears these could prove difficult, while the European Central Bank, which supervises the bank, is also watching closely, a third person said.
UNTESTED SCHEME
As head of the so-called Resolution Board, Koenig can push for the bank's liquidation, but could face opposition in Spain in the same way as Italy, which has grappled with similar problems, has resisted measures such as closing a large bank.
The European regime to shut banks, introduced after the financial crash, has yet to be used and Koenig would, in practice, require ECB and European Commission backing, as well as the tacit support of euro zone countries.
One euro zone official said that finance ministers had not discussed any winding down of Popular. The bank could sell fresh shares, although shareholders would balk at injecting further money into a stock which has slid in recent years to a tiny fraction of its earlier worth.
Spain's biggest bank Santander SAN.MC and state-owned lender Bankia BKIA.MC are seen as the most likely to step in to save the lender and several bankers in Spain said the process was still under way. (Full Story).
In the meantime, Popular continues to grapple with loans at risk of non-payment, which amount to more than 40 percent of the total credit it has given.
And it now has a capital cushion that is thin compared to its peers. Its chairman, Emilio Saracho, has said it likely needs more, after a multi-billion-euro loss last year.
If its situation deteriorates and European authorities demand it be shut, Spain would face the possible imposition of losses on bondholders.
That could make it harder and more expensive for Spanish banks as well as the country itself to raise money. Some small Spanish lenders plan to raise funds in coming months.
Apple might acquire a stake in Foxconn subsidiary General Interface Solution - report (translated)
31 MAY 2017
Apple [NASDAQ:AAPL] might acquire a stake in General Interface Solution [TPE:6456], a Taiwanese touch panel unit of Foxconn, the Economic Daily News reported, citing a market rumour.
However, Apple would prefer to buy an entire stake of the target company than a part of the stake, an unnamed industry source said in the Chinese-language report.
General Interface Solution has a market cap of TWD 70.862bn (USD 2.4bn).
Zurich (ots) - The South Korean implant producer Megagen has filed a complaint against Straumann, the dentist from Basle and a former employee of Megagen. There were police house searches. Now determined the Korean prosecutor's office. The ad is available for the "trading newspaper". The reason for the actions of the authorities is the presumed conspiracy of an ex-Megagen employee with a Straumann employee. In the course of the negotiations between Straumann and Megagen, the managers were supposed to have exchanged business secrets. Straumann is said to have gained an advantage in the negotiations with his information. The presumption of innocence applies.
In a statement, Megagen's attorney writes: "Until Straumann became a partner of Megagen, Straumann was no more than a creditor and had no right to access the relevant information." The attorney adds: "The Straumann representative has bribed our Megagen employee with the promise of a higher-ranking company post at Straumann, in return, the employee passed on business secrets over a longer period of time."
Straumann secures its cooperation in the ongoing proceedings. Straumann CEO Marco Gadola says about the "Handelszeitung": "Our employee, who is here in the fire, we fully support by providing her legal and moral support." Meanwhile, Megagen is working on the next complaint, as the "Handelszeitung" learned: The Korean implant manufacturer also wants compensation from Straumann.
Olympic Committee Favors Paris in 2024
An agreement taking shape would put the Summer Games in Paris in 2024, with Los Angeles to follow in 2028
The International Olympic Committee is progressing toward an agreement that would give Paris the Summer Olympics in 2024 and Los Angeles the event four years later, according to people familiar with the matter.
While important details still need to be worked out, top officials overseeing the Olympic bids for the two cities are conceptually lining up behind the plan, these people said.
The movement toward an agreement follows months of deliberations and negotiations after the two cities emerged as the finalists to host the world’s biggest sporting event in 2024. Getting the deal finalized is contingent on Los Angeles and the U.S. Olympic Committee securing enough incentives that waiting an additional four years for the Games remains financially viable and beneficial to the city, the people said.
That would allow Los Angeles officials to claim victory after they have said for months that their primary aim was getting the 2024 Games.
People involved with the process say the principals on all three sides of the negotiations have agreed in broad strokes to a solution that IOC President Thomas Bach has been pushing the parties toward over the past year.
For the IOC, the deal would lock up two of the world’s leading cities to host coming Summer Games after a tumultuous 2016 in Rio de Janeiro forced the organization to rethink its commitment to holding the event in developing countries. Some major international cities have also shied away from hosting Olympics because they are expensive and thus politically unpopular.
A Summer Games in Paris would mark the 100th anniversary of the last time the City of Lights hosted the event, in 1924. Los Angeles last hosted in 1984.
The 2020 Summer Olympics will be in Tokyo.
According to the people involved, the tide toward a 24/28 deal—as it has become known to Olympic insiders—gained momentum in recent months after Mr. Bach held separate private conversations with Los Angeles Mayor Eric Garcetti and USOC chairman Larry Probst, who has become an influential IOC member over the past four years.
Bach made it clear to both men that it was extremely important to him that Los Angeles allow for the deal to move forward while he also committed the IOC to making sure the four-year wait could be made worthwhile for both the USOC and Los Angeles. The U.S., whose corporations account for the largest sources of IOC revenues through television contracts and sponsorships, has not played host to the Summer Games since Atlanta in 1996.
“Everyone agrees that no one can emerge from this process feeling like a loser, and President Bach is committed to making that happen,” said one person involved in the discussions.
Speaking at a news conference in San Marino, Italy, on Tuesday, Bach said the IOC was thrilled with the choices for 2024, “but we would not be in sport if we did not at least explore how to even improve the situation—to make it even better by a potential double allocation.”
Not wanting to give up any leverage in ongoing discussions, representatives for the Paris and Los Angeles bids continue to insist publicly the campaign is still only about 2024.
“The U.S. Olympic Committee is totally focused on bringing the Olympic Games back to the United States in 2024,” said Patrick Sandusky, chief spokesman for the USOC.
A spokesman for Paris 2024 said that city’s organizers have “always been clear that our bid is for the right to host the Olympic and Paralympic Games in 2024. We have built our campaign and total public and political support with this aim.”
A spokesman for the Los Angeles group said, “While the IOC is reviewing its bid process, we remain focused on the 2024 Games. We’re honored that Los Angeles is a 2024 Candidate City at this important time for the Olympic and Paralympic Movements, and we look forward to collaborating with the IOC in the months ahead.”
The IOC’s bid evaluation committee visited both Los Angeles and Paris in mid-May, and came away believing it had two bids that deserved to win the competition, which is supposed to conclude at the IOC session in Lima in September. However, the process may be largely wrapped up much sooner, according to the people involved. The IOC executive board meets on June 9 in Switzerland and is expected to ratify a proposal to award both the 2024 and 2028 Olympics simultaneously.
The full IOC then has to vote on such a shift in procedures.
Paris officials say focusing on 2024 has become something of a necessity because key elements of the bid may not be available four years later. Ironically, those weaknesses seem to have helped Paris’s cause. For example, the Paris bid relies on billions in public funding that could disappear if it does not win the Games for 2024. Also, the private owners of land that has been set aside for the athletes’ village have said they won’t wait another four years to develop the property.
IOC executives have has accepted the argument that Paris should go first because the financial underpinnings of its bid are more tenuous.
In contrast, the strengths of the Los Angeles bid—namely its reliance almost entirely on existing facilities—make it a solution that would work just as easily in 11 years as it would in seven. The bid does not rely on any public funding. Also, all the venues either already exist or are under construction, and the University of California at Los Angeles has agreed to lease its newest, most modern dormitories to a Los Angeles Olympic Games for the athletes village.
Also, waiting until 2028 will provide a series of major public infrastructure projects in southern California with more time. Those include the renovation of Los Angeles International Airport and construction of new rail lines. One other advantage of waiting until 2028 for the Games to come to the U.S.: It virtually guarantees that Donald Trump, who has been supportive of the bid but is unpopular overseas within the IOC membership, will no longer be president.
In return for waiting until 2028, the Los Angeles organizing committee is expected to receive financial assistance from the IOC to help underwrite operations for an additional four years. Specifics of the deal have yet to be worked out but could involve IOC funding youth sports programs in Los Angeles region.
The deal makes sense for many of the leading personalities involved. Bach lands two popular destinations as hosts and avoids the embarrassments of recent years. For Probst, the deal would make him the man who brought the Games back to the U.S. and restored the primacy of the USOC. Probst took over the USOC less than a year before the disastrous vote for the 2016 Games, in which Chicago finished last among four cities at a time when the USOC was in the middle of a financial dispute with the IOC.
Casey Wasserman, the chairman of the Los Angeles bid, is 42 years old, and waiting until 2028 provides him with more than a decade in a position of major influence. His eponymous sports and media company is already one of the major players in sports and entertainment.
While term limits guarantee Garcetti will not be mayor in 2028, the deal allows him to take significant credit for winning the Games for his city without having to bear much of the responsibility for putting them on.
UBS notes the first three parts of their series argued that (1) a 13-15x P/E multiple is reasonable given what they know today, (2) further expansion toward a Nike (NKE) multiple is possible if there is growth beyond the iPhone 8 cycle, and (3) the iPhone 8 ASP likely is being underestimated by analysts. Here firm concludes that the consensus F18 gross margin estimate of 38.2% may be too low. They calculate that a 39-40% margin is reasonable if firm's iPhone unit growth of 15% and ASP of $730 assumptions are correct. Potential for a declining gross margin seems a constant worry for Apple investors. The iPhone appears vulnerable to either an attack from lower cost competitors or a constantly rising build of materials not offset by price increases. In recent years, however, Apple typically comes in at the high end of its gross margin guidance. Firm expects the iPhone 8 contribution margin to decline due to a higher BoM; Buy, $170 tgt
Regulator demands detailed Brexit plans from UK asset managers
FCA asks for information on staff relocation and impact on capital and IT systems
The UK regulator has sent letters to several of Britain’s largest asset management companies requesting detailed information about their Brexit contingency plans as concern mounts about the impact of the EU divorce process on the City of London.
The Financial Conduct Authority’s letter contains 30 questions about the effect of Brexit on asset managers’ business models, including whether or not UK-based companies are planning to relocate staff or operations to the EU.
Asset managers have also been asked to explain whether their Brexit contingency plans will affect their capital base or IT systems; whether they have applied for new licences from foreign regulators; and to what extent fund houses are responding to Brexit based on how other companies react.
The letter comes at a pivotal moment for the UK’s investment industry, with many asset managers divided on how best to prepare for Britain’s departure from the EU before formal negotiations over the terms of Brexit between Brussels and Westminster begin.
Last week it emerged that Jupiter and Legal & General Investment Management, two of Britain’s largest fund companies, plan to set up new entities in mainland Europe in response to Brexit, while Intermediate Capital Group and M&G have already strengthened their presence in Luxembourg.
Other asset managers, including Schroders and Ashmore, have held back from making operational changes before having more clarity on Britain’s future relationship with the EU.
Last week Martin Gilbert, chief executive of FTSE 250-listed Aberdeen Asset Management, said that if clearing of euro securities and pricing of euro assets moved from the UK to other EU countries — as some European politicians have proposed — his company would need to move jobs to mirror those shifts.
But he clarified: “This is not a hugely significant point. It may be a handful of jobs rather than anything more.”
The FCA’s letter was sent to 20 companies overseen by the regulator, including asset managers and custodians based in the UK with international operations. The FCA declined to comment.
Sean Tuffy, head of strategy for Europe at Brown Brothers Harriman, the US bank, said: “With the clock ticking on Brexit, the FCA needs to be looking at what the impact will be on asset managers, and how [Brexit] will change the business that it oversees. [The regulator] also needs to gauge how far along groups are in their thinking. I suspect they will find that many groups have far more developed plans than has been publicly announced.”
The letter was sent out soon after the Bank of England wrote to banks and other large financial services firms in April giving them a deadline of July 14 to set out their plans for a hard Brexit whereby Britain does not maintain access to the single market.
Sam Woods, head of the Bank of England’s Prudential Regulation Authority, said in the letter: “Our current assessment is that the level of planning is uneven across firms and plans may not be being sufficiently tested against the most adverse potential outcomes.”
Owen Lysak, a partner at Clifford Chance, the law firm, said: “The FCA does not want to see a sector that falls behind in terms of planning, or that is at risk because it has not planned appropriately. As the Brexit negotiations start to ramp up, the FCA will want to feed into the government on the issues that are starting to develop.”