(BFW) RSA Will Seek Minimum 600p/Shr Bid From Zurich: S. Telegraph

RSA Will Seek Minimum 600p/Shr Bid From Zurich: S. Telegraph
2015-08-02 13:33:09.655 GMT


By Kit Chellel
(Bloomberg) -- RSA Insurance Group pushing for higher price
than last week’s proposed 550p offer, the Telegraph says,
without saying where it got the information.

* Goldman Sachs, Robey Warshaw advising RSA on its options,
with Bank of America and JPMorgan also playing a role:
Telegraph
* Morgan Stanley working with Zurich: Telegraph
* NOTE: Zurich Said to Prepare Financing for Possible RSA
Offer NSN NSDAA26KLVRA <GO>


For Related News and Information:
First Word scrolling panel: FIRST<GO>
First Word newswire: NH BFW<GO>

To contact the reporter on this story:
Kit Chellel in London at +44-20-3525-0668 or
cchellel@bloomberg.net
To contact the editor responsible for this story:
Anthony Aarons at +44-20-3525-2227 or
aaarons@bloomberg.net

(Economist) banking scandal is set to bankrupt Europe’s poorest country


Gutted
A banking scandal is set to bankrupt Europe’s poorest country

WHEN Alina, a Moldovan student, had her bank card rejected by a cash machine last week, her first thought was to wonder whether the bank had quietly gone under. Happily, the cause was a fleeting technical glitch—but her reaction was not far-fetched. The country’s financial system is limping badly. In November, thieves stole $1 billion from Moldova’s three biggest banks through a series of fraudulent loans and transfers. Moldova, sandwiched between Romania and Ukraine, is the poorest country in Europe; the theft amounted to more than an eighth of GDP. It has set in train a series of events that will leave the government unable to pay salaries by the end of the summer, according to the recently departed finance minister.
The fraud left the three banks insolvent, so the National Bank of Moldova, the central bank, has taken them over, injecting 12.5 billion Moldovan lei ($660m) in new capital. It did not have such a sum to hand, however—it had to create it. The huge expansion of the money supply caused inflation to double to 8% and the currency to drop. It has fallen by 20% against the dollar this year.

In response to the jump in inflation, the central bank began raising its benchmark interest rate sharply. It has vaulted from 8.5% in January to 15.5% now. That, along with the addled state of the banks, is causing businesses to rein in their investments.
It does not help that Russia, one of Moldova’s biggest trading partners and source of almost $800m in remittances from Moldovan workers last year, is facing an economic crisis. Russia’s recession has caused Moldova’s GDP growth to fall by 4.6 percentage points, the World Bank reckons. That accounts for a big part of the economy’s reversal from growth of 5% in 2014 to a contraction projected at 2% this year.
In addition to all these disasters, the country is in the grip of political upheaval. The prime minister, Chiril Gaburici, resigned in June after state prosecutors and fellow politicians accused him of forging his high-school diploma. A replacement was only agreed this week.
Meanwhile, many of the foreign countries and international agencies that bankroll Moldova’s government say they are suspending assistance until it gets to grips with corruption and mismanagement in the financial sector. The European Union was the most recent donor to pull out, announcing on July 5th that it was freezing its €40m ($44m) aid programme. The World Bank has stipulated that it will resume lending only if the three stricken banks are closed, since it considers them open targets for future fraud, even in the hands of the central bank.
The government relies on concessionary loans and aid to plug its deficit, which is projected to be 7% of GDP this year. The loss of tax revenue caused by the recession will only make the shortfall grow. The government has slashed spending, disbursing 20% less than planned in the first five months of the year and freezing all investment projects from July. Two public hospitals in the capital, Chisinau, briefly closed all departments except emergency services and surgery earlier this year. Suspending basic services, however, will only exacerbate Moldova’s problems.
It is not clear that the country’s political elite has much interest in sorting out this mess. It was not until April that much information about the bank scandal became public, after the speaker of parliament leaked a report on the crime by Kroll, a security firm. The judiciary is not strong enough to clamp down on corruption. A week before Mr Gaburici stepped down, he called for the chief prosecutor to resign over his failure to act on the bank scandal.
“The heist was obviously covered up,” says Francis Malige of the European Bank of Reconstruction and Development (EBRD). The EBRD recently tried to buy a majority stake in Victoriabank, one of the largest remaining private banks, to try to ensure a continued flow of lending to local businesses; the parliament inexplicably blocked the acquisition.
Moldova’s fortunes do not need to be so grim, says Alex Kremer of the World Bank’s local office. It has a long border with the EU, and an extremely competitive average monthly wage of just over €200. “This should be a booming export economy,” he says. “If they sort out the governance and corruption, it will be.”

(ZeroHedge) Did We Just Hit The Threshold For Short Covering In Gold?

Did We Just Hit The Threshold For Short Covering In Gold?

Two weeks ago we noted something that has never happened before in gold - hedge funds, according to CFTC, had a net short position for the first in history. The past week saw a very surprising negligible shift of just 11 contracts as the short position shrank to 11,334 contracts. However, the aggregate net long position has dropped to a level that in the past has represented a threshold for signficant short-covering (21% and 17% rallies respectively). So with hedgies as short as they have ever been in history and aggregate positioning at a historically crucial level, one wonders if gold is due for a bounce...

 

Hedgies remain the most short they have ever been in gold...

 

 

This is what happened the last time gold saw a 'low' net long position...

 

and now, the aggregate net position in gold futures appears to have hit a threshold that in the past has created a significant short-covering rally...

 

The last 2 times aggregate net long positions were this low, gold rallied 21% and 17%...
Did we just reach that short-covering threshold once again?

(ZeroHedge) Greece May Miss ECB Payment As Germany Says Bailout Timeline Is Unre

Greece May Miss ECB Payment As Germany Says Bailout Timeline Is Unrealistic

Creditors European Central Bank Germany Google Greece International Monetary Fund

Greek PM Alexis Tsipras won a hard fought victory over party rivals on Thursday when Syriza’s central committee voted to postpone an emergency congress until after formal discussions on the country’s third bailout program are complete.

Syriza has been grappling with bitter infighting since more than 30 MPs in Tsipras’ parliamentary coalition defected during a vote on the first set of bailout prior actions, forcing the PM to rely on opposition votes to clear the way for formal discussions with creditors. The party dispute was exacerbated by reports that ex-Energy Minister and incorrigible Grexit proponent Panayiotis Lafazanis (along with several Left Platform co-conspirators) planned to storm the Greek mint and seize the country’s currency reserves.

Fed up, Tsipras told 200 members of Syriza’s central committee on Thursday that essentially, they could either hold a party referendum on the bailout on Sunday or wait until September to sort things out, leading us to note that "were Syriza to vote on whether or not Greece should follow through on the agreement with creditors, the market could be in for an event that is far more dramatic and important than the original referendum."

Lafazanis refused to go along with the idea. "How many referenda are we going to hold? We’ve already done one and we won with 62 per cent of the vote", he said. Ultimately, the party approved a September congress. This gives Tsipras some "breathing space," FT notes, "but Thursday’s highly charged debate signalled that the Left Platform, which supports an end to austerity and a 'Grexit' from the euro, would continue to oppose a fresh bailout."

And the party’s radical leftists aren’t alone in their opposition to the third program for Athens. On Thursday, FT reported that according to "strictly confidential" minutes from the IMF’s Wednesday board meeting, the Fund will not support the new bailout until the debt relief issue is decided and until it’s clear that Greece "has the institutional and political capacity to implement economic reforms."

Somehow, all of this must be worked out in the next three weeks. Greece must make a €3.2 billion payment to the ECB on August 20 and if the bailout isn’t in place by then, it's either tap the remainder of the funds in the EFSM (which would require still more discussions with the UK and other decidedly unwilling non-euro states) or risk losing ELA which would trigger the complete collapse of not only the Greek economy but the banking sector and then, in short order, the government. The question is whether Germany can be reasonably expected to take it on faith that i) the Greek political situation will not eventually result in Athens walking back its austerity promises, and ii) that the IMF will eventually hold up its end of the deal once Berlin approves some manner of debt re-profiling for the Greeks.

Now, according to Focus magazine, there are questions as to whether the timetable for cementing the bailout agreement is realistic. German lawmakers may now have to postpone a Bundestag vote and Athens has already discussed the possibility of taking a second bridge loan from the EFSM, Focus says. Here’s more (Google translated):

The timetable for the negotiations on a third aid package in favor of Greece is to look for an internal assessment of the federal government any more. According to the already contemplated for mid-August special session of the German Bundestag must be moved, according to government sources in Berlin.
The objective pursued by the EU Commission scheduling is too closely knit, criticize experts.This was reported in its latest issue of FOCUS.
Accordingly, the negotiations should be completed before August 10.On August 11, the euro zone finance ministers would approve the results before the agreement of other euro countries ratified and approved by the Parliament in Athens.Also, the Bundestag must still approve.
Due to delay Greece threatens a serious cash problem.The government in Athens must, at the latest on August 20, 3.2 billion euros, the European Central Bank to transfer (ECB), which should be possible without new loans from the third aid package barely.
Therefore already searched in circles of the EU Commission for ways to temporarily raise money from another pot. Speaking here a renewed bailout from the European Financial Stabilisation Mechanism is (EFSM)
This is difficult, however, because the EU states will again require an indemnity outside the euro-zone in this case. As early as September Greece must further loans operate: The International Monetary Fund (IMF) then expected repayments totaling € 1.56 billion in four tranches.In addition, running on 4 September from short-term government bonds in the amount of 1.4 billion euros, which Greece must also refinance.
And here’s the summary from Bloomberg:

German parliament meeting that was considered for mid-August might have to be postponed as European Commission’s schedule for aid talks is "much too tight," Focus magazine reports, citing unidentified people in German govt.
Greece has to pay EU3.2b to the ECB by Aug. 20, which it may not be able to do without third aid package.
In other words, Greece will likely need yet another bridge loan from the EFSM and that will once again require the approval of non-euro countries that will, for the second time in a month, be asked to put their taxpayers at risk in order to keep the ill-fated EMU project alive and preserve the now thoroughly discredited notion that the currency union is "indissoluble."

And make no mistake, Greece and its EMU "partners" had better hope things go smoothly after August because one more bridge loan and the EFSM is tapped out, which means Brussels will have to devise some other circular funding mechanism in the event the third program (which is itself nothing more than a dressed up ponzi scheme) isn't in place by September.

Reuters : Greece may seek up to 24 billion euros in first new aid tranche: paper

Greece may seek up to 24 billion euros in first new aid tranche: paper

Greece may seek 24 billion euros in a first tranche of bailout aid from international lenders in August to prop up its banks and repay debts falling due at the ECB, a pro-government Greek newspaper said in its early Sunday editions.

Athens is now in talks with the European Commission and the International Monetary Fund to secure up to 86 billion euros ($94.48 billion) in bailout aid. It will be its third bailout since 2010.

Avgi newspaper, which is close to the leftist Syriza government, said Greek authorities expected to conclude talks with lenders by mid-August.

The first tranche of 24.36 billion would be used to channel 10 billion euros as an initial recapitalization to Greek banks, 7.16 billion euros to repay an emergency bridge loan, 3.2 billion euros toward Greek bonds held by the European Central Bank and other payments, Avgi said.

It has been estimated that Greek banks may require up to 25 billion euros to be recapitalized, a shortfall exacerbated by an outflow of deposits when a stalemate with lenders threatened Athens' place in the euro zone.

The flood of money leaving the country culminated in authorities imposing capital controls on June 29 to prevent a financial meltdown.

In exchange for funding Greece has accepted reforms including making significant pension adjustments, increasing value added taxes, overhauling its collective bargaining system, and measures to liberalize its economy and limit public spending.

If the talks are not completed in time, European authorities may have to provide further temporary financing as they did with a July bridge loan, though Avgi said that possibility had not been discussed with lenders.

WSJ : Will Lamborghini Fans Accept a SUV?

Will Lamborghini Fans Accept a SUV?
Maker of handcrafted sports cars is shifting gears to build ultimate soccer mom’s car

SANT’AGATA BOLOGNESE, Italy—Italian super-sports car maker Lamborghini is about to test the allegiance of drivers and fans with radical changes to its product line and production methods.

Automobili Lamborghini, which since 1998 has been owned by the Audi unit of Volkswagen AG, currently makes just two sports cars: the Aventador, starting at $404,195, and the Huracan, at $241,945. With its next model, the iconic brand is attempting the delicate maneuver of broadening its market while maintaining a cachet and price tag few others in the industry can match.

Its new model will be a superluxury sport-utility vehicle. Code-named “Urus” and slated for sale in 2018, it could potentially double the company’s annual output to more than 5,000 vehicles.

Lamborghini, which is famous for making limited-edition versions that customers compete to own, recently broke ground on a factory for the Urus and is preparing to hire 500 employees to build the new SUV. But artisanal car-making is expensive in Italy, so for the economics to work, management is tapping the Volkswagen group for much of the vehicle’s basic structure. That means it will be the first Lamborghini that is substantially not Lamborghini.

“This will radically change Lamborghini,” Chief Executive Stephan Winkelmann said in an interview at the auto maker’s headquarters.

Mr. Winkelmann, a 50-year-old native of Berlin who grew up in Rome and speaks English with an Italian accent, said a car giant like Volkswagen, with its multitude of models, can easily add one more design. But for Lamborghini, going from two models to three poses big risks.

“This is a major effort and you have to have a rock-solid business case and a clear idea of how to digest this,” he said.


Part of that is managing customer reactions. Mr. Winkelmann knows the shift could upset many Lamborghini lovers, who value the car’s exclusivity. Every single Lamborghini has been crafted by hand amid postcard-beautiful fields of grain. They are still tested on oak-lined country lanes in the area—sleek bursts of color screaming past farm vehicles and unhurried locals.

To satisfy purists, the Urus will be built at the company’s home base near Bologna, where one-time tractor maker Ferruccio Lamborghini in 1963 dramatically shifted products.

The changes attending the Urus follow years of gradual acceleration for the business under Audi ownership. Since 1998, Lamborghini has boosted production more than eightfold, to 2,530 cars last year. In the past five years it has more than doubled its workforce, to roughly 1,200 employees, and recently completed a €400 million ($437 million) factory in Sant’Agata

Lamborghini’s customers traditionally were an elite club of extremely wealthy men, mostly in Europe and the U.S. With the rise of China and other emerging economies, the market for ultra-high-end products ballooned.

Now, Lamborghini and rivals are betting that the wave of global luxury consumers is about to merge with another global trend: the shift away from sedans and hatchbacks to sport-utility vehicles.

Global SUV sales across all segments totaled 12.3 million vehicles last year, nearly double sales in 2010, according to JATO Dynamics Ltd., an automotive researcher. Its analysts say the U.S. and China now account for three of every four SUVs sold globally and that world-wide growth in the segment remains solid except in France, Russia and Turkey, which show signs of weakening.

Mr. Winkelmann and his bosses show confidence in the Urus partly because Volkswagen group pioneered high-end SUVs, first with Audi and then more extravagantly with Porsche, which is also owned by Volkswagen. Now Volkswagen’s Bentley unit in England is preparing next year to roll out the first hyper-luxury SUV, the Bentyaga.

Bentley CEO Wolfgang Dürheimer understands skepticism about the new concept because he faced it at Porsche in spearheading the Cayenne SUV, which made its debut in 2002.

“When we proposed this at Porsche, no one thought it could be done,” he said in an interview. Mr. Durheimer expects Bentley will repeat Porsche’s success. “Our wealthy customers who want an SUV for skiing trips to Aspen will buy a Bentley.”

Porsche last year sold more than 100,000 of its Cayenne and smaller Macan SUVs. Porsche and Audi share the premium SUV market with BMW AG, Daimler AG’s Mercedes-Benz, Jaguar Land Rover Ltd. and car makers in the U.S. and Japan.

Prices for the overpowered vehicles haven’t been announced. Mr. Winkelmann said it is premature to set a price for the Urus but expects it to be in the range of the Huracan.

While likely to be eye-popping, the lofty numbers mask a paradox of luxury SUVs: They are generally less profitable for manufacturers than their sibling top-end sedans and sports cars, due to a mix of high production costs, low volumes and pricing dynamics.

Producers of more mass-market models, including Porsche, offset that by spreading costs across greater volumes.

But volume isn’t an option for ultraluxury brands, which bank on exclusivity. Lamborghini expects the Urus to double the company’s total vehicle sales. But that still means producing fewer than 3,000 SUVs annually. Bentley expects to sell about 4,000 Bentyagas.

Lamborghini aims to lower its costs by using the same automotive platform on which Volkswagen group builds all its premium SUVs, including the Bentyaga, Porsche’s Cayenne, Audi’s Q7 and planned Q8 and even Volkswagen’s Touareq. The approach is part of Volkswagen group’s effort to leverage its modular manufacturing system to achieve scale even with low-volume models.

Many Urus parts will be manufactured at Volkswagen and Audi plants in Germany and Slovakia and shipped to Sant’Agata for assembly.

Acknowledging the risk of diluting the brand, Mr. Winkelmann said integration is the only way he could afford to build an SUV and contends the Urus will still be uniquely Lamborghini.

“There is no surviving for a brand like ours if you don’t maintain the DNA, but this is only possible if you have a group that allows you to make synergies and scale,” he said. “Otherwise, if you have to go it alone,” he said, ”you would have to go in big volumes,” which would cheapen the brand.

It took Mr. Winkelmann more than a year to win approval from Audi and Volkswagen to build the SUV at Lamborghini headquarters. Sant’Agata competed against bids from other Volkswagen group plants that promised lower costs. Mr. Winkelmann won out with favorable terms from Italian unions and subsidies from the Italian government.

“Let’s try to learn from Lamborghini,” said Gian Luca Galletti, Italy’s environment minister, at the recent opening in Sant’Agata of Lamborghini’s new energy-efficient factory. “This shows that it is possible to attract investment to Italy.”

Mr. Winkelmann said Lamborghini is considering building its first electric vehicle, a later plug-in version of the SUV.

NY Post ; Employee stock ownership plans back in spotlight as big player exits

Politicians promising to close the gap between the haves and the have-nots might want to think about Alion before championing employee stock ownership plans, or ESOPs.
The plans, which have been around for decades as a way to spread corporate riches among workers, are back in the news as Hillary Clinton, Bernie Sanders and other populists look to tackle income inequality.
But while ESOPs are in the spotlight again, one of its biggest stars — Alion Science and Technology — has just quietly exited. The McLean, Va.-based engineering firm has agreed to sell itself to buyout shop Veritas Capital.
As part of the deal, Alion’s ESOP, with more than 7,000 participants, will be converted to a 401k, according to a source.
Alion opted for a buyout because it is saddled with upwards of $500 million in debt and is in danger of collapsing.
One problem with ESOPs is that companies often take on debt to fund employee ownership. To convert to an ESOP, the company buys the shares and distributes them to employees.
Before their latest resurgence, ESOPs had been widely criticized for rarely achieving harmony between worker welfare and corporate interests. Some of the biggest ESOPs, including United Airlines, Enron and Tribune Co., collapsed, giving the plans a bad name.
Despite their shortcomings, ESOPs are staging a small comeback, mostly among smaller companies.
There are roughly 7,000 ESOPs, with most companies employing fewer than 500 workers, according to ESOP Association President M

FT : Clintons earned $140m over past 8 years

Hillary Clinton, the Democratic frontrunner for US president, revealed that she and her husband earned more than $140m over the past eight years, as her campaign released a vast treasure trove of documents aimed at rebutting suggestions she has not been fully transparent about her finances.
Both Mrs Clinton and her husband, former president Bill Clinton, carved out lucrative careers after he left the White House in 2001, mostly though book deals, paid speeches and a variety of other business ventures.

After serving as a senator and secretary of state under President Barack Obama, Mrs Clinton commanded a speaking fee as high as $400,000, the documents show.
Mr Clinton’s fee ranged as high as $750,000 per speech, and he also earned millions annually in recent years from his role at for-profit college system Laureate Education and education company GEMS.
The detailed breakdown of the couple’s wealth — they earned more than $28m in 2014 alone — is likely to be used by Mrs Clinton’s rivals in both her own party and among a crowded field of Republican challengers. Though it is also possible the presence of other wealthy candidates in the race, such as billionaire Donald Trump and former Florida governor Jeb Bush, whose own tax returns showed he made more than $7m in 2013, will neutralise that line of attack.
She has been criticised for saying last year that she and her husband were “dead broke” after his presidency, and her campaign was keen to stress that the couple has paid nearly $58m in state and federal taxes between 2007 and 2014.
“We’ve come a long way from my days going door-to-door for the Children’s Defense Fund and earning $16,450 as a young law professor in Arkansas — and we owe it to the opportunities America provides,” she said.
Her campaign’s release on Friday of eight years of tax returns and the couple’s 2013 speaking fees came on the same day that the state department released thousands more pages of Mrs Clinton’s emails, amid an ongoing controversy over her use of a private server and email account during her tenure as secretary of state.
Mrs Clinton also released a statement from her personal physician declaring that “she is in excellent physical condition and fit to serve as president of the United States”. A 2012 health scare, when she was treated for a bloodclot between her brain and her skull following a concussion, has been resolved, the statement said.


While still the clear frontrunner for her party’s nomination, Mrs Clinton has struggled to build momentum behind her campaign amid the email controversy and a series of articles questioning the propriety of donations to the Clinton’s charitable foundation while she served as secretary of state.
Polls have consistently showed that voters question her trustworthiness, and that her favourability rating has dipped significantly nationally as well as in some states that will be key to her campaign.
Her team sought to get back on the front foot with Friday’s document dump, casting her as a champion of tax reform who will close down loopholes that are exploited by the wealthy.
Mrs Clinton said she and her husband paid a combined federal, state, and local effective tax rate of 45.8 per cent in 2014, and contributed just over 10 per cent of their income to charity. She has now released 38 years of tax returns in total, dating back to 1977.
“I want more Americans to have the chance to work hard and get ahead, just like we did. And reforming the tax code can help,” she said in a statement.
But the disclosure that Mrs Clinton and her husband were earning as much as $650,000 in speaking fees from companies such as Goldman Sachs as recently as 2013 may rattle sections of the Democratic base, particularly a progressive wing that has rallied behind the candidacy of self-proclaimed socialist Bernie Sanders in recent months.
Mitt Romney, the Republican presidential nominee in 2012, was effectively typecast by Mr Obama as an out-of-touch private equity mogul, a characterisation the Clinton campaign is eager to avoid in what is shaping up as a tougher battle for the nomination than many expected.