moving
India Won’t Pick Up China’s Oil Slack
As Replacement for Chinese Demand, India Will Fall Short.
Of all the candidates oil investors are interviewing to replace China as the world’s center of demand growth, India seems the most promising. But India won’t turn out to be as reliable as China used to be.
In February, India consumed a record 3.91 million barrels of refined oil products a day, up 9.4% year over year, according to Amrita Sen at Energy Aspects. So far this year, India’s usage is up more than 6% year-over-year, four times as fast as during the same period last year. The International Energy Agency thinks a rising India will make waves in energy markets over the next few years.
This is all the more noticeable when even optimistic forecasters reckon China’s demand has slowed to around 3% in the past year. That is down from an annual average of 6.5% between 2009 and 2013.
What matters to global oil markets, though, is India’s oil demand growth in absolute barrels. It is unlikely India will replace China’s heft as oil’s marginal buyer, but it is certainly getting nearer. Analysts are penciling in Indian demand growth of between 140,000 to 200,000 barrels a day in 2015. That is closer to the range of estimates for Chinese growth—190,000 to 300,000 barrels—than seen in previous years.
These different demand pictures reflect India’s economy accelerating while China’s growth is slowing. Also promising for India is that new Prime Minister Narendra Modi wants to push policies that favor oil-intensive sectors such as infrastructure and manufacturing. Diesel use rose 5% in January and February from a year ago, says Ms. Sen, as more construction machines and trucks consumed India’s most popular fuel.
Yet to gauge India’s long-run oil demand, the key question is how sustainable this investment in infrastructure or manufacturing will be. China kept at it for more than a decade, unfettered by the level of environmental reviews or local opposition that is common in India.
In contrast, the longest period modern India has managed to expand its fixed assets in double digits annually in inflation-adjusted terms is five years, according to data provider CEIC. That was between 2003 and 2008, when all emerging markets boomed in a rare environment of easy money and rising trade.
Another problem is that India’s growth could, counterintuitively, destroy some oil demand. Liquefied petroleum gas accounts for 18% of the country’s oil consumption, much more than LPG’s share in China, partly because India’s government subsidizes it for household cooking and heating. Economic growth may provide cover to cut them, which would hit LPG demand.
A richer India may also build the infrastructure needed for more households to use piped natural gas, as in developed countries, says Citigroup’s Ivan Szpakowski. That would also undermine demand for LPG. In the same vein, if Mr. Modi reforms the coal and power sectors, as he says he intends to do, that should make electricity supply more stable, reducing the need for backup generators that burn diesel.
Though long-term forecasts deserve a pinch of salt, Mr. Szpakowski calculates that India will consume a total 5.6 million barrels of oil a day in 2025. Cumulatively, that’s about a 1.6 million barrel a day increase from 2015, not exactly impressive given China’s consumption galloped by 4.3 million barrels a day between 2004 and 2014, according to Citigroup.
India’s demand growth combined with that of other emerging economies such as Indonesia could one day equal China’s. But that in itself means investors can no longer depend on one big economy—with a single-minded drive for growth—to underpin demand forecasts. They will need to look for multiple workers, pulling at different speeds, to do the job China once performed on its own.
Rapid7, LogRhythm and Mimecast are joining a growing list of cyber security firms planning to go public in 2015 to capitalize on investor interest following a spate of hacker attacks, according to people familiar with the matter.
Shares of publicly traded cyber security firms have outperformed the market in recent months, as high-profile data breaches at Sony, JPMorgan Chase & Co and Anthem prompt businesses to spend more to secure their computer networks.
“The cyber security market is in the early innings of a massive growth opportunity,” said FBR Capital Markets analyst Daniel Ives. “There are many innovative private security vendors. Tech investors’ eyes are glued to who has the ‘magic solution.'”
Boston-based Rapid7 provides software and services that help businesses assess and monitor security risks. It has more than 3,500 customers, including Amazon, American Express and Bank of America.
Mimecast, also based in Boston, is an email security firm with 10,000 customers. According to its website, revenue rose 30 percent in 2014 to $88.4 million. LogRhythm, based in Boulder, Colo., provides technology to help companies monitor activity across their networks.
All three companies are planning to sell shares to the public and are seeking valuations in excess of $1 billion, according to people familiar with the matter who declined to be identified because the plans are not yet public.
Rapid7, whose investors include Bain Capital Ventures and Technology Crossover Ventures, has chosen Morgan Stanley and Barclays to assist with an initial public offering, these people said.
LogRhythm, whose investors include Access Venture Partners, Adam Street Partners, Grotech Ventures and Riverwood Capital, has chosen JPMorgan Chase and Morgan Stanley for an IPO in the second half of the year, the sources said.
Mimecast, whose investors include Insight Venture Partners, Dawn Capital and Index Ventures, has spoken to some investment banks about an IPO later this year but has not hired any firms, the sources said.
Representatives from the three companies and the banks working with them all declined to comment.
With global spending on IT security set to increase 8.2 percent in 2015 to $77 billion, according to market research firm Gartner, the shares of publicly traded cyber security firms have done well.
FireEye shares have risen 38 percent so far this year, while Qualys is up 24 percent and Palo Alto Networks has climbed 19 percent. The PureFunds ISE Cyber Security ETF has gained 9 percent over the same period, while the S&P 500 Index is up 1.9 percent.
But investing in cyber security is not without risk.
FireEye’s share price plunged more than 70 percent in less than three months last year, after Chief Executive Dave DeWalt and other insiders sold shares, spurring investors to take a more critical look at the firm’s finances and valuation.
The stock had more than quadrupled in the first six months after its September 2013 IPO, even though FireEye later reported losses of $121 million in 2013 and $444 million in 2014. Analysts do not expect FireEye to post a full-year net profit until 2018, though they are forecasting rapid revenue growth, according to Thomson Reuters data.
Amid investor enthusiasm for the cyber security industry, FireEye has recovered this year, though at around $42 a share, the stock remains far below its March 2014 high of $97.35.
Rapid7, LogRhythm and Mimecast are not the only cyber security firms planning to tap public markets this year.
Veracode, which protects Internet applications from hackers, has selected banks to lead a potential IPO that could value the company at between $600 million and $800 million, Reuters reported in December.
Another company widely expected to debut this year is Bit9 + Carbon Black, whose software protects computers from malware. The firm has not yet hired banks, according to people familiar with the matter. It declined to comment.
According to FBR’s Ives, emerging cyber security companies could earn a combined annual revenue of $15 billion to $20 billion in three years. That excludes the slower growing but larger market for traditional cyber security technology, such as anti-virus software.
Venky Ganesan, managing director at Silicon Valley venture capital firm Menlo Ventures, said average corporate spending on cyber security will rise from about 0.25 percent of total revenue to as much as 2 percent of revenue in the coming years.
“The window is wide open for cyber security companies. We have a perfect storm of opportunity,” said Ganesan, who had invested in Palo Alto Networks while at Globespan Capital.
Dow+0,94% S&P+0,90% Nasdaq+0,68% Russell+0,92%
US Market closed higher, with decent volume thanks to quadruple witching (>2bil shares), Eur$ Rallied to 1.08, this move was supportive of commodity market, Crude trade higher on Friday +2.4% @ $46.58...$45.89 now -1.44%..technology sector (+0.5%) slumped to the bottom of the leaderboard during the final minutes as Apple (AAPL 126.05, -1.45) fell to a fresh session low. today we'll have only Existing Home sales for Feb...Shanghai Composite is building on its 7% gains of last week, extending its rally above 3,600 to mark fresh 7 year highs. PBoC Gov Zhou announced policymakers will conduct further reform in capital markets, improving foreign direct investment while also allowing "more space and freedom" for equity and debt financing. a research report from China Academy of Social Sciences (CASS) warned Q1 and Q2 GDP would slow further to 6.85% and 6.80% levels.Greek PM Tsipras and German Chancellor Merkel will hold more talks today to iron out their differences. Over the weekend, the former warned Greece may not be able to meet impending debt payments without financing help from the EU. On the German side, local press estimated that Athens has enough liquidity for roughly two more weeks, and that Greek finances would be deemed "critical" if it fails to submit viable reform plans. EUR/USD trading was relatively volatile for the Asian session, though the single currency was unable to recover more ground beyond Friday's 1.0880 high.
Nikkei +0.99% Hang Seng +0.38% Shanghai +1.78%
RUB $59.0425 WTI $45.89 (-1.44%) Brent $54.75 (-1.2%) EURCHF 1.0569 CHF 0.9787
EUR$ 1.0798 S&P +0.07% EuroStoxx -0.33% Dax -0.26% SMI -0.10%
Macro :
- Germany’s Gabriel Places Conditions on TTIP, Sueddeutsche Says
- U.K. EU Exit Would Be Worse Than Greek, Allianz CIO Tells Welt
- Rouhani Says Progress Made in Talks May Lead to Resolution: BBC
- Tsipras Says Wants to Improve Greece’s Relations With Germany
- Gabriel Says Euro Area Must Do All to Avoid Greek Euro Exit: ARD
Keep an eye on :
- A2A IM : Italian Utility A2A Considering Alliance With Sorgenia: Il Sole
- AERL LN : IAG takeover of Aer Lingus criticised by Virgin Atlantic for adverse effect on Irish consumers
- AFR LN : Afren Reports Concerns About Hiring, Payment of Travel Expenses
- ADS GY : Adidas Manager Salaries to Be Tied to Market Share: Die Welt
- AF FP : Air France-KLM Renews CEO De Juniac’s Contract for 4 Years
- ATLN VX : Actelion to Buy Back Up to 10m Shrs in 3 Yrs
- BMPS IM : Paschi Confirms Profumo Resignation Comment in Corriere Intvw
- GBF GY : Bilfinger Probing Allegations of Bribery Linked to Brazil Unit
- BMPS IM : Paschi Top Shareholders Propose Confirmation of Profumo, Viola
- BT/ LN : BT to Reveal Consumer Mobile Phone Market Plans Next Week: FT
- CRG IM : Carige Can Grow Alone or Seek Consolidation Opportunities: Sole
- DAI GY : Daimler Partner BAIC Plans to Buy 35% of Mercedes-Benz Leasing
- DBK GY : Deutsche Bank to Weigh 3 Strategy Options, Sueddeutsche Reports
- DBK GY : Deutsche Bank Considers Spanish Unit Sale, Confidencial Says
- FUR NA : Boskalis Raises Fugro Stake to 25.1%, Says Not a Step Toward Bid
- FUR NA : Fugro Says Further Stake Rise by Boskalis Remains Unexpected
- GALP PL : Galp Board to Propose Gomes da Silva to Be CEO, Diario Reports
- GKP LN : Gulf Keystone Set to Raise GBP30m in Share Sale: Sunday Times
- ITV LN : Liberty Global Seeks to Distribute ITV Programs in Europe: FT
- KD8 GY : Kabel Deutschland EGM Rejects Extended Special Audit
- LG FP : Lafarge-Holcim CEO Won’t Be on Board, Lafont Says: Figaro
- LG FP : Lafarge Said to Identify Gauthier, Olsen as CEO Candidates
- NOVOB DC : Novo Nordisk Not Expecting Imminent Saxenda Success: Berlingske
- PC IM : Pirelli’s Top Investor OKs 26.2% Stake Sale to ChemChina
- PFV GY : Pfeiffer Vacuum May Seek Acquisitions, Chief Tells Welt
- UG FP : Peugeot Is Considering a Factory in Africa, Les Echos Says
- QIA GY : Qiagen CEO Schatz Exercises Options, Then Sells Shares: Filings
- SAB SM : Sabadell Eyeing More U.K. Bank Targets After TSB Deal: Times
- SAP GY : SAP May Cut 1,600 European Jobs Amid Savings: WirtschaftsWoche
- SGO FP : Saint-Gobain CEO Says Sika Strategy Won’t Change: Tages-Anzeiger
- SHP LN : Shire CEO’s Bonus May Boost Pay to More Than $10m a Year: Times
- SCMN VX : Swisscom Needs Stable Shareholder for Investment: NZZamS
- TIT IM : Metroweb suitor Telecom Italia reopens talks - La Repubblica
- TEC FP : FMC Technologies, Technip to Form Forsys Subsea Joint Venture
- TEF SM : Hutchison, Telefonica May Confirm O2 Deal This Week: The Times
- VIV FP : Canal+ to Offer 25 More Channels in Africa, Echos Says
- VIV FP : Bollore Faces Strategy Challenge From Activists at Vivendi: FT
- VOW3 GY : VW Said to Cut Jobs, Reduce Shifts at Russian Car Factory
>>> Up
*BANCO POPULAR ESPANOL RAISED TO NEUTRAL VS SELL AT GOLDMAN
*INFINEON RAISED TO BUY VS HOLD AT DEUTSCHE BANK
*KLOECKNER RAISED TO NEUTRAL VS CONVICTION SELL AT GOLDMAN
*SMITH & NEPHEW RAISED TO BUY VS NEUTRAL AT GOLDMAN
*SPIRENT RAISED TO NEUTRAL AT GOLDMAN
>>> Down
*ARCELORMITTAL CUT TO HOLD AT JEFFERIES
*BANKIA CUT TO SELL VS NEUTRAL AT GOLDMAN
*CHRISTIAN DIOR CUT TO NEUTRAL AT JPMORGAN
*ELEKTA AB CUT TO NEUTRAL VS BUY AT GOLDMAN
*HEINEKEN CUT TO REDUCE VS NEUTRAL AT MIRABAUD
*LVMH MOET HENNESSY VUITTON CUT TO NEUTRAL AT JPMORGAN
*MEGGITT CUT TO MARKETPERFORM VS OUTPERFORM AT BERNSTEIN
*SERCO CUT TO SELL VS HOLD AT BERENBERG
*SODEXO CUT TO SECTOR PERFORM AT RBC CAPITAL
*STANDARD LIFE CUT TO NEUTRAL VS BUY AT BOFAML
*WEIR GROUP CUT TO SECTOR PERFORM AT RBC CAPITAL
>>> PT Change
>>> Initiation
*AENA SA RATED NEW NEUTRAL AT GOLDMAN
*ELIS SA RATED NEW BUY AT GOLDMAN, PT EU18
*GRAND CITY PROPERTIES RATED NEW BUY AT BANKHAUS LAMPE, PT EU19
*GRANDVISION RATED NEW NEUTRAL AT JPMORGAN, PT EU21
*GRANDVISION RATED NEW OVERWEIGHT AT BARCLAYS, PT EU25
*GRANDVISION RATED NEW BUY AT ING; PT AT EU28.50
*GRANDVISION RATED NEW BUY AT HSBC, PT EU25
*HEIDELBERGCEMENT REINSTATED UNDERPERFORM AT CREDIT SUISSE
*LPP S.A. RATED NEW NEUTRAL AT GOLDMAN
*TOD'S RATED NEW UNDERPERFORM AT MAINFIRST, PT EU75
>>> Call
>> Stock
*HIKMA ADDED TO UBS MIDCAP KEY CALL LIST, STAYS BUY RATED
>> Sector
*LUXURY SECTOR CUT TO NEUTRAL VS OVERWEIGHT AT JPMORGAN
Havas planning to stand alone rather than being integrated within the Vivendi group
Listed French advertising group Havas is planning to remain an independent group, French daily Le Figaro reported, citing Chairman Yannick Bollore. Asked if Havas, which is now 82% controlled by the Bollore group, also a major shareholder in listed media conglomerate Vivendi, would be integrated within Vivendi, he replied that Havas was conducting a stand-alone strategy.
Havas reported revenues of EUR 1.87bn for the full-year 2014.
Le Figaro
Vincent Bolloré, the French financier who chairs Vivendi, is facing a challenge to his strategy for the media giant from a dissident shareholder concerned about his outsize influence at the company.
P Schoenfeld Asset Management, a US hedge fund, is preparing resolutions for Vivendi’s annual general meeting next month urging the company to take actions to improve its share price, according to three people familiar with the matter.
The emergence of a potential activist investor comes after shareholders and analysts raised questions over what Mr Bolloré intends to do with the €15bn cash pile he has amassed from selling assets to focus Vivendi around media and content.
Last month, the company said it expected to return €5.7bn in the form of buybacks and dividends to shareholders by mid-2017, which includes €1.3bn in distributions in 2014.
The deadline for submitting annual meeting resolutions is March 23, and PSAM may yet decide to hold off, particularly if other shareholders emerge with similar plans. The hedge fund, run by Peter Schoenfeld, has a little less than 1 per cent of Vivendi stock and has hired advisers in New York and Paris to plan a proxy fight after becoming disillusioned with the company’s share price performance. One resolution would request Vivendi pay a higher dividend, one of the people said.
Analysts at Liberum said this month: “Vivendi’s main attraction was the potential return of cash . . . The share buyback announcement disappointed and it does sound as though anyone waiting for further significant cash returns from Vivendi is in for the long haul. “
Analysts also criticised the Paris-listed group’s recent decision to sell its remaining 20 per cent stake in Numericable-SFR, the telecoms operator, to billionaire Patrick Drahi for just €40 a share — only about two-thirds of the share price at the time. Last week, Vivendi dismissed a report in the New York Post that US billionaire John Malone had offered to buy Universal Music, the world’s largest record label by revenues, through his Liberty Media group.
A PSAM spokesman declined to comment. The fund is only an occasional activist, concentrating mainly on other event-driven hedge fund strategies, but successes in recent years include improving the terms of the takeover of MetroPCS by T-Mobile USA.
The influence of Mr Bolloré, who has built a stake of more than 8 per cent in Vivendi over the past three years, is set to increase further: a new law passed last year by the French government grants double voting rights to investors who have held nominative shares for at least two years, unless shareholders decide otherwise in a general meeting. Vivendi is not planning to pass a resolution that would keep the principle of “one share one vote” on April 17, when it is holding its annual meeting. This would automatically boost Mr Bollore’s voting rights.
Mr Bolloré first began amassing a stake in 2012 when he sold his television channels to Vivendi’s Canal Plus in exchange for shares. By October of the same year, he had built a 5 per cent holding, becoming the group’s largest shareholder. He also won a seat on the board.
In late 2013, he began to assert his power more clearly, successfully heading off a move by then chairman Jean-Rene Fourtou to install a new chief executive. The two men buried their differences and Mr Fourtou made way for Mr Bolloré, who became Vivendi chairman last year.
Vivendi had net cash of €4.6bn at the end of 2014, not including the €7.5bn it is set to receive from the sale of GVT, a Brazilian telecoms company, which is set to close in the second quarter, and the €4bn it will get from the Numericable-SFR stake sale to Altice.
Asian Mid-session Update: China Development Forum features a variety of plans and promises
***Economic Data***
- (NZ) NEW ZEALAND Q1 WESTPAC CONSUMER CONFIDENCE: 117.4 v 114.8 PRIOR; first rise in 4 quarters
- (TW) Taiwan Feb Unemployment Rate: 3.7% v 3.8%e
***Index Snapshot (as of 02:30 GMT)***
- Nikkei225 +1.1%, S&P/ASX -0.3%, Kospi +0.1%, Shanghai Composite +1.2%, Hang Seng +0.5%, Jun S&P500 +0.3% at 2,103
***Commodities/Fixed Income***
- Apr gold -0.1% at $1,181/oz, May crude oil -1.0% at $45.96/brl, May copper +0.9% at $2.78/lb
- SLV: iShares Silver Trust ETF daily holdings fall to 10,163 tonnes from 10,181 tonnes prior
- GLD: SPDR Gold Trust ETF daily holdings fall 5.4 tonnes to 744.4 tonnes; Lowest since Jan 26th
- (JP) BOJ offers to buy ¥300B in 1-3yr JGBs, ¥350B in 3-5yr JGBs and ¥400B in 5-10yr JGBs
- (KR) South Korea MoF sells 20-yr bonds at 2.365%
- USD/CNY: PBoC sets yuan mid point at 6.1448 v 6.1496 prior setting (strongest Yuan setting since Feb 26th)
***Market Focal Points/FX***
- Shanghai Composite is building on its 7% gains of last week, extending its rally above 3,600 to mark fresh 7 year highs. Coming on the heels of the National People's Congress and the People's Political Consultative Conference, Beijing-hosted China Development Forum offered an opportunity for more rhetoric from high-ranking State Council members as well as international dignitaries. Among the more notable remarks from local leaders, Vice Premier Zhang said China has "paid a price for very high growth of the past" and that it is not "sustainable", calling for even more focus on environment with zero tolerance" on air, water, soil pollution. PBoC Gov Zhou announced policymakers will conduct further reform in capital markets, improving foreign direct investment while also allowing "more space and freedom" for equity and debt financing. On the currency front, PBOC research bureau chief Lu saw the current Yuan level as appropriate just as the central bank restrained RMB depreciation again with a stronger setting. Also of note, a research report from China Academy of Social Sciences (CASS) warned Q1 and Q2 GDP would slow further to 6.85% and 6.80% levels.
- USD majors saw some fresh dollar-negative flows, particularly against AUD and NZD in the afternoon session. AUD/USD rose 50pips to 1-week highs above 0.7820, and NZD/USD took out stops above 0.7610 - a key technical level that marked support in Dec-Jan and resistance in Feb - to gain about 100pips from Friday's US close. USD/JPY traded in a range around the 120 handle despite speculation of a rift growing between PM Abe and BOJ Gov Kuroda which could jeopardize continued monetary policy easing. Report suggested Kuroda is frustrated over the persistent high debt levels and slow structural reform, unveiling an easing last October as an offset to 2nd round of consumption tax hikes that never materialized.
- Greek PM Tsipras and German Chancellor Merkel will hold more talks today to iron out their differences. Over the weekend, the former warned Greece may not be able to meet impending debt payments without financing help from the EU. On the German side, local press estimated that Athens has enough liquidity for roughly two more weeks, and that Greek finances would be deemed "critical" if it fails to submit viable reform plans. EUR/USD trading was relatively volatile for the Asian session, though the single currency was unable to recover more ground beyond Friday's 1.0880 high.
***Equities***
US equities/ADRs:
- LOW: Approves new $5B buyback program (6.8% of market cap)
- TM: Expected to approve construction of its first car plant in Mexico for production of Corolla models within weeks - Japan press
- SNP: Reports FY14 Net CNY47.4B v CNY53.3Be, Rev CNY2.83T v CNY2.86Te; Issues profit warning for Q1
- DAI: BAIC Motor Co plans to take a 35% stake in Daimler's leasing subsidiary Mercedes-Benz Leasing; Terms not disclosed - financial press
- AAPL: Said to halve Apple Watch monthly shipment target - Taiwan press
- THC: Said to acquire United Surgical Partners International for over $2.5B valuation - financial press
Notable movers by sector:
- Consumer Discretionary: Yue Yuen Industrial 551.HK -5.1% (FY14 results)
- Financials: China Vanke 000002.CN +2.6%, China Merchants Property 000024.CN +4.8%, Poly Real Estate 600048.CN +2.4% (VAT reform); Premier Investments PMV.AU +12.3% (H1 results)
- Materials: Zhaojin Mining Industry 1818.HK -1.6% (FY14 results); Saracen Mineral Holdings SAR.AU +2.4% (provides exploration update); Newcrest Mining NCM.AU +3.7% (to sell asset)
- Energy: China Coal Energy 1898.HK -1.7% (FY14 results)
- Industrials: Great Wall Motor 2333.HK +2.6 % (FY14 results); Orica Ltd ORI.AU +3.1% (provides outlook)
- Technology: Sharp Corp 6753.JP +3.4% (Hon Hai to consider a stake)
Greece’s leader warns Merkel of ‘impossible’ debt payments
Alexis Tsipras, the Greek prime minister, has warned Angela Merkel that it will be “impossible” for Athens to service its debt obligations due in the coming weeks if the EU fails to distribute any short-term financial assistance to the country.
The warning, contained in a letter sent by Mr Tsipras to the German chancellor and obtained by the Financial Times, comes as concerns mount that Athens will struggle to make pension and wage payments at the end of this month and could run out of cash before the end of April.
The letter, dated March 15, came just before Ms Merkel agreed to meet Mr Tsipras on the sidelines of an EU summit last Thursday and invited him for a one-on-one session in Berlin, scheduled for Monday evening.
In the letter, Mr Tsipras warns that his government will be forced to choose between paying off loans, owed primarily to the International Monetary Fund, or continue social spending. He blames European Central Bank limits on Greece’s ability to issue short-term debt as well as eurozone bailout authorities’ refusal to disburse any aid before Athens adopts a new round of economic reforms.
“Given that Greece has no access to money markets, and also in view of the ‘spikes’ in our debt repayment obligations during the spring and summer . . . it ought to be clear that the ECB’s special restrictions when combined with disbursement delays would make it impossible for any government to service its debt,” Mr Tsipras wrote.
He said servicing the debts would lead to a “sharp deterioration in the already depressed Greek social economy — a prospect that I will not countenance”.
“With this letter, I am urging you not to allow a small cash flow issue, and a certain ‘institutional inertia’, to not turn into a large problem for Greece and for Europe,” he wrote.
Mr Tsipras was rebuffed in efforts to secure quick financing from either the ECB or eurozone lenders at Thursday’s Brussels meeting with Ms Merkel and a small group of other EU leaders — including French president François Hollande and ECB chief Mario Draghi.
In an interview, Luis de Guindos, Spanish finance minister, said his eurozone counterparts would not sign off on any new bailout funding until a full set of approved reforms was passed and implemented by Greek authorities, a process that could take months.
Mr Tsipras’s five-page letter is particularly critical of the ECB, which he said had forbidden Greek banks from holding more short-term government debt than they did when they requested an extension of the current bailout last month — a cap that has prevented Athens from relying on Treasury bills to fill its urgent cash needs because Greek banks have become nearly the only buyer of such debt.
The Greek prime minister insisted the ECB should have returned to “the terms of finance of the Greek banks” that existed immediately following his government’s election — when ECB rules were more lenient — once the deal to extend Athens’ €172bn bailout through June was agreed last month.
Far from going easier on Athens, the ECB is considering whether to give its guidance to Greek banks more authority by making it a legally binding requirement not to add to their T-bill holdings. A decision is expected this week.
He also criticised the ECB for only increasing the amount of emergency central bank loans to Greek lenders “at shorter intervals than normal and at rather small increments”, arguing such drip-feeding continued to “incite speculation and spread uncertainty vis-à-vis Greece’s banking system”.
Although Mr Tsipras wrote that Athens was “committed to fulfilling its obligations in good faith and close co-operation with its partners”, he also warned Ms Merkel that a failure to find short-term funding could lead to much bigger problems.