>>> US Early premarket gappers

Early premarket gappers
Gapping up: ZFGN +71.7%, SYN +44.7%, GNC +10.4%, CLMT +7.6%, CLMT+7.6%, HMY +7.3%, IAG +6.1%, LLTC +3.6%, ABX +3%, GG +2.3%, SCS+2.1%, AEM +1.8%, NEM +1.7%, CREE +1.6%, NLS +1.5%

Gapping down: SDRL -11.8%, CHK -9.1%, VALE -8.6%, DDD -7.1%, BBL-6.8%, SUNE -6.5%, DVN -6.3%, BHP -6.2%, DOC -5.7%, FTNT -5.5%, SYMC-5.3%, MT -5.1%, AMD -5.1%, PBR -5%, DB -4.6%, HSBC -4.6%, IBM -4.6%,FCX -4.5%, MU -4.4%, IBKR -4.4%, RDS.A -4.4%, APC -4.3%, STO -4.2%, CS-3.9%, JOY -3.7%, BAC -3.7%, SLB -3.5%, TWTR -3.5%, C -3.4%, TOT -3.4%,AEG -3.4%, SSS -3%, BIDU -2.9%, BABA -2.9%, BCS -2.9%, JPM -2.7%, ING-2.7%, LYB -2.7%, RACE -2.6%

>>> Some Monte Paschi customers withdraw savings as bank's stock sinks - RTRS

Some Monte Paschi customers withdraw savings as bank's stock sinks - RTRS


20-JAN-2016 13:25:02

Bank's shares and junior bonds both fall on Wednesday
Monte Paschi's market value has halved this year
Lender faces crisis over its pile of bad loans
Some savers withdraw cash, CEO says outflow limited
(Adds Monte Paschi bonds)

By Francesca Landini and Stefano Bernabei

MILAN, Jan 20 (Reuters) - Some Monte dei Paschi BMPS.MI customers have been pulling savings out of the Italian bank, its chief executive said on Wednesday, as it faces a crisis over a mountain of bad loans that has halved its market value this year.

CEO Fabrizio Viola did not say how much money savers had withdrawn, or when the outflow began, though he said the fall in deposits was "limited" and that the bank could cope with it as he sought to reassure customers and investors.

Italian bank shares .FTIT8300 have lost 20 percent so far this year as investors, already rattled about global economic growth, have sold out of a sector with low profitability and about 200 billion euros ($218 billion) of loans that are unlikely to be repaid.

Monte Paschi - Italy's third-biggest bank - has lost the most ground as it is perceived to be the most vulnerable; it has the highest level of bad loans as a proportion of assets and was the worst performer in a 2014 health check of euro zone lenders.

The Tuscan-based bank's stock, which had sunk 15 percent on Monday and 14.4 percent on Tuesday, was suspended from trading several times after falling 18.2 percent on Wednesday. The plunge helped dragged down all other Italian banking stocks, with Carige CRGI.MI shedding 12.7 percent and Banco Popolare BAPO.MI falling more than 6 percent. (Full Story)

"Of course clients turning to our local branches are worried about what they read," Viola said in a statement.

"At present the size of the funding lost due to clients who decided to move part of their savings elsewhere is limited and anyway below levels seen during the previous crisis the bank faced in February 2013 which was overcome brilliantly."

The 2013 crisis he was referring to was when the world's oldest bank, already badly weakened by the euro zone debt crisis, was hit by a scandal about loss-making derivatives trades.

Monte Paschi's bonds also suffered on Wednesday, with a September 2020 subordinated paper yielding 24 percent, up from 19 percent at Tuesday's close and just above 10 percent on Friday. (Full Story)

A Milan bond trader said both retail and some institutional investors were trying to sell the bank's debt. "Everyone is trying to get out. Retail for sure but I saw also a couple of fund managers today," the trader said.


FRAGILE

Italian lenders' huge pile of soured loans is tying up capital and holding back fresh credit that could support a fragile economic recovery in the country.

A boost to bank stocks from merger speculation following an overhaul of cooperative lenders last year has fizzled out as a deal has yet to materialise.

Monte Paschi was told by the European Central Bank to seek a buyer after the 2014 health check. It appointed UBS and Citi as advisers more than a year ago but has so far failed to find one.


A rescue of four small lenders at the end of last year carried out under new EU rules which imposed losses on shareholders and junior bondholders has meanwhile caused concerns among Italians, traditionally large holders of bank debt.

Since then, there have been concerns that customers could move money out of lenders perceived as weaker, to those banks considered stronger, say industry players.

"Over the past few days many have been wondering about the pace at which people closed their accounts and sold bank bonds," said Giuseppe Sersale, a fund manager at Anthilia Capital Partners. "I wouldn't call it a bank run but there are definitely outflows," he added.

Viola said the plunge in Monte Paschi shares was not a reflection of the bank's fundamentals, which he said had improved in the last quarter of 2015.

He said revenues rose both compared with the third quarter and from a year earlier while costs were cut, adding that liquidity levels at the end of 2015 were at their highest in four years and the bank's capital base was adequate. The bank reports its annual results on Feb.5.

Viola said he was confident the bank would weather the current crisis and that the recent fall in the stock did not appear to be linked to sales of big stakes.

>>> PM: Austria will likely suspend Schengen

PM: Austria will likely suspend Schengen

The migrant situation is getting increasingly serious, Serbian Prime Minister Aleksandar Vucic said on Tuesday.

He at the same time "assured citizens that the stability of the country would be preserved," Tanjug reported.

Asked to comment on the refugee situation in Europe, Vucic said that he would meet with President of the European Commission Jean Claude Juncker by the end of the week, adding that Austria would probably suspend the Schengen regime.

“Slovenia will follow, and we stand ready to assist the Macedonian police even more, send additional troops there - we will know how to protect our state and national interests,” he said at the launch of works on a second bridge over the Sava River near Ostruznica.

>>> Casino’s Thai Big C and Vietnam assets attracting Asian strategics

Casino’s Thai Big C and Vietnam assets attracting Asian strategics 

* HSBC and BNP Paribas advising Casino
* Package deal potential played down
* Thai players aggressively looking at Big C

Asian retail players are lining up to acquire French hypermarket operator Groupe Casino’s [EPA:CO] Southeast Asian assets, buyside sources familiar with the situation said. Of particular interest is Casino’s 58.6% stake in Big C Supercenter [BKK:BIGC], Thailand’s largest hypermarket chain.

HSBC and BNP Paribas are advising Casino on the sale of its assets, it was said. BNP Paribas declined comment. HSBC could not be reached for comment.

Casino said last week that it received expressions of interest for its Thailand business in conjunction with the ongoing sale of its Vietnam operations. The French retailer is under pressure to reduce debt and has initiated a more-than-EUR 2bn deleveraging plan, including potential non-core divestments. Casino has also been targeted by the short seller Muddy Waters.

Casino has a 58.6% stake in Big C, which has a market cap of THB 185.66bn (USD5.1bn; EUR 4.7bn). According to Thailand’s takeover rules, a mandatory offer is triggered when a party acquires 25% voting rights of a target.

Casino itself has a market cap of EUR 4.2bn. The company’s Vietnam operations had close to EUR 600m in revenues in 2015, according to a company presentation.

Domestic interest

Local Thai players are aggressively looking at Big C, sources said. In particular, TCC Group, whose unit Berli Jucker [BKK:BJC] recently acquired Metro Cash and Carry’s Vietnam business, was named by two sources as a strong contender for one or both assets. Central Group, Thailand’s largest, private retail conglomerate, is looking at the Vietnam business aggressively, one source said. It could also be looking at Big C, given that it retains a small minority stake of around 3%, and that it was the previous owner before Casino acquired it, it was said.

The Chirathivat family behind Central Group is Asia’s 14th richest family with an estimated net worth of USD 11.7bn, according to Forbes’ Asia rich list 2015.

“To be honest, I struggle to see who could outbid a Thai group for this,” said one source.

A Berli Jucker spokesperson said they have not heard from management on this situation. Central Retail Corporation, Central Group’s retail arm, could not be reached for comment despite several phone calls.

Berli Jucker would likely be backed by parent TCC, the holding company for Thailand’s richest family, the Sirivadhanabhakdi family, one source said. TCC is most known for controlling SGD 17.2bn (USD 12bn) beer giant Thai Beverage.

Berli Jucker by itself cannot afford a bid for Big C, with its net debt of USD 390m and TTM EBITDA of USD 174m, according to this news service’s analytics. The company is required to maintain an interest bearing debt to equity ratio of 1.75, which means the company can only raise an additional debt of USD 481m, based on its 3Q15 report. If the company chooses to issue new shares to finance the bid, it could lead to a 79% dilution of the existing share capital.

Japanese retailer Aeon has big plans in Southeast Asia and is taking a look at Big C, two sources said. It could potentially go head to head with Thai bidders for the asset.

The Jardine Matheson Group, which owns pan-Asian food retailer Dairy Farm, could also take a look at what is on offer and afford Big C, one source said. Jardine Matheson is known as a disciplined buyer that does not enter high-profile bidding wars, the source added.

Aeon has a net debt of USD 10.2bn. The Jardine Matheson Group has a net debt of USD 7.19bn.

Bidders could come from the lesser expected Philippines, in light of recent outbound M&A activity from the country, one of the sources said. SM Prime Holdings [PSE:SMPH] and JG Summit Group’s [PSE:JGS] Robinsons Retail Holdings [PSE:RRHI] could be the most likely candidates from the Philippines in terms of ambition and financing capability, two other sources suggested.

Casino’s Vietnam assets could intrigue and make sense for Philippine buyers as it is sizeable in itself, one of the sources said. If they instead wanted to go for the much larger Thai operations, both groups could potentially have enough cash and financing relationships to line up a bid, this source added.

Based on the latest filings, SM Prime Holdings has USD 2.66bn net debt and a TTM EBITDA of USD 828.45m, which represents a net gearing ratio of 3.21x. It reported 12 month rolling EBITDA of USD 828m for the year ended 30 September 2015. A nil-premium bid for Big C that uses up every cent it has and borrows the remaining will push SM Prime’s net gearing to 9x, according to calculations by this news service.

Robinsons Retail reported net cash of USD 86m and a 12 month rolling EBITDA of USD 138m for the year ended 30 September 2015.

Package deal played down

Sellside advisors had flirted with the idea of selling the assets together, but found that not a lot of companies were interested in both, one of the sources claimed. “Once you bundle it up, the list of buyers becomes short,” another said.

For example, Aeon is not too keen on Casino’s Vietnam operations, a source familiar with Aeon said. Aeon did take a look, but decided it can grow organically in Vietnam on its own. It would only acquire the Vietnam business at a deep discount, this source added.

A spokesperson at Aeon said he had not heard of the company’s interest in Big C.

Casino Group did not reply to emails seeking comment as of press time.

(Citi) Auto Manufacturers : There's Plenty Left in the Tank

There's Plenty Left in the Tank : European Autos Have More to Give

* Backdrop for auto earnings (and stocks) remains bright: 2016 should be a
good year for European auto earnings – we see global volumes up c4% vs the 1.5%
in 2015. Input costs and FX should be supportive and there are signs European
capacity utilization is nearing a point where pricing may improve. Emerging markets
are a risk with US interest rates rising, but the precipitous falls seen in Russia and
Brazil should mean the pain will be broadly flat in 2016. To reflect the challenging
macro outlook, our stock calls are biased to names with good momentum and
scope for positive surprise (we have Buy ratings on Daimler and Renault). We are
wary of names where top-line growth is likely to be sub-par and margin expansion
limited – we have BMW (TP €72.50) and PSA (TP €12) on Sell. Controversially, we
initiate on VW as Buy/High Risk, TP €163. It will be a while before the bad news
fades, but the combination of growth potential and low valuation looks compelling.
We have a Neutral call on FCA (TP €7.00) and Ferrari (TP €37) as we think
technicals will dominate as the dust settles on the spin-off.

* Rising real incomes and employment provide support for sales growth: We
see conditions for auto sales improving in 2016. Based on our multi-regression
models for Europe and the expertise of our autos colleagues around the globe, we
forecast higher global volume growth vs ’15 (4% vs c1%). In terms of European
auto earnings, lower commodity prices and a weaker euro (our FX strategists have
it falling 5% to the dollar in ‘16) will help. In addition, a modest improvement in
capacity utilization (we have it at 79% in ‘16) also means the pricing environment
should be supportive, especially for carmakers launching new products.

* If auto earnings are going up, then so too are auto stocks: I/B/E/S consensus
for the European carmakers has earnings growing 24% in ’16 and another 15% in
’17. We’ve spent a great deal of time churning numbers to see if the well-worn
adage ‘valuation doesn’t matter for auto stocks’ is true. It is, with earnings
momentum generally being 2-3x (although at times as much as 8x) more important
than valuation (and we found EV/Sales is the best metric). We have developed an
autos investment clock that looks mainly at the interplay between market share and
changes in capacity utilization to determine when to buy. Right now we favour the
spenders or product cycle winners, so our key picks are Daimler and Renault.

* Timeline for tighter emissions control unlikely to change: In the aftermath of
the VW emissions scandal, there has been much media talk of tighter control and
higher associated costs for the carmakers. We don’t see this – model cycles in
Europe are c7 years, which means the product plans for 2021 (the deadline for the
next big jump in fuel efficiency) are already set, so changes now would be
unprecedented and draconian in terms of industry impact. It is worth remembering
the extent to which governments (US & European) have gone to protect jobs in the
auto industry. It is hard to see why they would jeopardise all those efforts now.

>>> Realia shareholder Carlos Slim discloses 30.306% holding to regulator

Realia shareholder Carlos Slim discloses 30.306% holding to regulator

Carlos Slim, via Inmobiliaria Carso, has informed the Spanish market securities regulator that it has reached a 30.306% stake in the Spanish real estate company Realia [BME:RLIA] after the capital increase, Cinco Dias said.

Slim has already asked the supervisor to make an exemption from making a compulsory full takeover bid required by law when the 30% threshold is exceeded, the Spanish language article noted.

In the request, Slim has argued that Realia has a shareholder that holds more than his share, referring to FCC [BME:FCC], which holds a 36.8% stake. In fact, Slim already owns Realia, since as well as its direct stake, he also owns an indirect stake through FCC, the Spanish construction group of which he is the largest shareholder.

Realia just closed a EUR 89m capital increase.

Cinco Dias