CORPORATE NEWS
Government subscribed €10.5bn loan to reinforce banks’ capital under the debt refinancing scheme for credit institutions. Similarly to the first stage of the scheme in November , banks who susbcribe to such loan will have to make commitments regarding their conduct. Earlier during the month, financial institutions executives met with President Nicolas SARKOZY on renouncing bonuses following the Finance Minister's warning that banks in need of additional capital injection will have to drop bonuses destined to their respective executives. BNP Paribas abided unlike other banks. As a result, the President declared that "while some bankers got the message, others, forgive me for saying that, totally missed the boat. We will explain it to them. "
Under the debt refinancing scheme for credit institutions BNPParibas will borrow € 5bn from Société Française de Refinancement des Activités des Etablissements de Crédit, (SRAEC - refinancing company for the activities of credit institutions) to reinforce the bank’s capital, its second injection since the scheme was authorized in November by the European Commission. Standard & Poor (S&P) downgraded the group's rating to AA from AA+
Interests of € 380mn from borrowings by banks were paid to government under the first stage of the debt refinancing scheme for credit institutions via Société Française de Refinancement des Activités des Etablissements de Crédit, (SRAEC - refinancing company for the activities of credit institutions) to reinforce banks’ capital
Despite AIRBUS announcing record order intake of 777 net orders or 54% of market share, banks prudent lending led government to aid the Group: € 5 bn will be loaned to banks via the Société Française de Refinancement des Activités des Etablissements de Crédit, (SRAEC - refinancing company for the activities of credit institutions) to finance Airbus credit line
EUROCOPTER UK, a division of EADS, is to build a major new helicopter service centre at Kirkhill Commercial Park in Dyce, Aberdeen. The Eurocopter centre will comprise a 10,000 sq ft logistics warehouse and 5,000 sq ft of offices as well as 5,360 sq ft of flight simulator accommodation, which will house Eurocopter’s first UK-based EC225 Flight Training Simulator. Work at the site will begin with ground breaking in April, and it is expected that the facility will be completed by December 2009. The centre will occupy the 1.2 acre site four at Knight Property Group’s Kirkhill Commercial Park. The centre will bring the most up to date helicopter support technology to one of the busiest off shore oil and gas helicopter maintenance hubs in the world. The facility will be designed and built for Eurocopter UK by Knight Property Group. In 2008, Eurocopter ranked as the world’s No. 1 helicopter manufacturer in the civil and parapublic market, with a turnover of € 4.5 bn Euros, orders for 715 new helicopters, and a 53% market share in the civil and parapublic sectors. Overall, the Group’s products account for 30% of the total world helicopter fleet
SOC GEN will publish its full-year results for 2008 on 18 February 2009 and expects to post full-year estimated net income of approximately € 2 bn resulting from the solidity of its Retail Banking activities and its diversified business portfolio. In Q4 2008, the estimated Group net income should breakeven. The bank expects to post a Tier One Basel II ratio of approximately 8,5% at end December 2008. The ratio would be close to 9% after taking into account government second injection to reinforce banks’ capital
RENAULT sales fell -4.8% year on year to 2 381 million units sold. Sales of Dacia remained strong on the same period +12%
GDF-SUEZ confirmed that household gas prices will remain stable during the winter period and are expected to decline in April
The EUROPEAN CENTRAL BANK reduced key interest rates by 50 basis points to a record low 2%
AIR FRANCE posted a profit warning on its operating income in the third quarter, "likely to be negative to the tune of € 200 mn" due to the deterioration of the economic environment "which has led to a slight weakening in passenger unit revenues and a strong decline in cargo revenue. » According to the Group, « unit costs were not able to benefit from lower oil prices because of the negative effect of the oil hedges » Last week the Group acquired 25% of AL ITALIA and injected € 300mn into the company where 3000 jobs are to be axed
ALSTOM posted strong commercial activity in the first nine months of 2008/09: between April 1 and 31 December 2008, order books amounted to €21.5 bn or +8% year on year and sales rose +12% to €13.5 bn. In Q3 year on year, order books totaled €6.1 bn and sales amounted to €4.6 billion, or + 11% The total backlog reached €47 bn at 31 December 2008, representing approximately 32 months of sales
CARREFOUR opened its 16th and 17th hypermarkets in Malaysia
Company FORMATIONS rose a modest +1.8% in 2008 to 327 396 new companies while bankruptcies jumped +10% on the same period according to figures released by Insee
TOTAL announced that it is launching a public offer through its subsidiary Total E&P Canada Ltd to acquire all the issued and outstanding shares of UTS Energy Corporation (UTS), a company listed on the Toronto Stock Exchange, at a total amount of close to Can$ 617 million (about € 380 mn ). UTS’s main asset is a 20% stake in the Fort Hills Project, located in the Athabasca region, in Alberta, at approximately 100 kilometres northeast of Fort McMurray. The latest estimate of the Fort Hills Project’s resources is about 4 bn barrels of bitumen; these resources will be recovered using mining technologies. This project is expected to be developed in two phases of about 160,000 barrels of bitumen each, and the first phase has received the main approvals needed for its launch. Petro-Canada, a Canadian company, is the operator of this project with a 60% stake, the remaining 20% stake being held by Teck Cominco
STMicroelectronics Group will coordinate the five-year Nano2012 R&D programme with cost over €2 bn, to develop new technologies, design and produce the next generation of integrated circuits. State aid of €457 mn granted by France to STMicroelectronics Group, the project leader, to Laboratoire d'Électronique et de Technologies de l'Information du Commissariat à l'Énergie Atomique (CEA-LETI) and to several other research bodies and industrial players was authorized by the European Commission on the basis that the contribution is compatible with the Community guidelines on state aid for research, development and innovation. In addition, the Commission concluded that the aid bore limited distortion of competition given the small amount of grant compared with overall R&D expenditure in the sector, and given the presence of strong players able to compete on a market that has significant potential for growth
IN THE NEWS
France’s GDP is expected to drop -1.8% in 2009 prior to recovering to a modest +0.4% in 2010 according to the European Commission‘s Interim forecasts while unemployment is set to rise from 7.8% in 2008, to 9.8% and to 10.6% In Spain, unemployment is projected from 11.3% to 16.1% and 18.7% while the UK’s at 5.7% is forecasted at 8.2% and 8.1% In the EU, and as a result of severe contraction of world trade and manufacturing output and, in some countries, housing-market corrections, GDP is also expected to fall -1.8% and to recover +0.5% According to the forecast, Government consumption and public investment, will provide relief while discretionary fiscal measures announced since August 2008 will limit the contraction in GDP growth by about ¾ pp. this year. The Commission expects inflation to fall rapidly: France‘s, inflation is projected to fall to 0.8% in 2009 but to climb back to 1.5% in 2010. France’s Public budget balance, is forecasted to worsen -5.4% and remain in the red in 2010 at -5% Current account balance on the same period is projected at -4% and -3.9% Germany’s GDP is projected to dip -2.3% and +0.7% while public budget balance is forecasted to -2.9% and -4.2% Current account balance will stay positive however at 5.2% and 5.4% The Commission notes that forecast is again surrounded by exceptional uncertainty as the world economy faces its worst crisis since World War II
IMF projects that world growth will reach a mere 0.5% in 2009
Storm Klaus with gales up to 170km/h devastated the south west region where over 1. 6 million homes were left without electricity for up to two days. Bordeaux airport was shut down. Electricité De France experts from Martinique were flown to Paris in a gesture of solidarity to help their coworkers in Toulouse, and electricity specialists from the United Kingdom, Germany, Italy and Portugal traveled to France to join forces in Toulouse and the Landes region. In addition, nearly 1000 army soldiers participated in clearing out roads. The French Federation of Insurers estimated damages caused by the storm that devastated the south west region to be well over € 600mn. Nearly 300 000 hectares of pine trees in the Landes forest were destroyed during the storm
UNIONS announced that 2 million demonstrators, workers and while collars alike, voiced their discontent on Jan. 29th national strike over deteriorating working conditions, low pay and high consumer prices. The Internal Security Department, (Ministère de l’Intérieur) counted one million protesters. In GUADELOUPE, a general strike over high consumer prices has been paralyzing the country for the 10th day
Failure to implement 3rd Anti-Money Laundering Directive has taken FRANCE to the European Court of Justice. The European Commission has referred France to the ECJ for missing the transposition deadline for the Directive, 15 December 2007, adopted in 2005. The Directive builds on existing EU legislation and incorporates into EU law the June 2003 revision of the Forty Recommendations of the Financial Action Task Force (FATF), the international standard-setter in the fight against money laundering and terrorist financing. It tightens the EU anti-money laundering regime currently applicable to the financial sector as well as lawyers, notaries, accountants, real estate agents and casinos. The scope of the Directive is broadened also to encompass trust and company service providers as well as all providers of goods, when payments are made in cash in excess of €15.000. In addition, the Directive requires the application of the anti-money laundering tools (identification and verification of customers' identity, record keeping, training of personnel, etc.) to the fight against terrorist financing. The Directive introduces additional requirements and safeguards for situations of higher risk (i.e. trading with correspondent banks situated outside the EU)
EXTERNAL TRADE topped a new record deficit € -6.247bn in November to a cumulative €57.482bn in twelve months. STATE DEFICIT rose to a record €-66.6bn in November year on year compared with €-55bn in November 2007
Residential permits fell -15.7% in 2008 compared with 2007 according to Insee
The EUROPEAN COMMISSION announced that it has accepted the measures taken by France to put an end to the differentiation in passenger charges between domestic flights and flights from/to countries in the Schengen area. Following a complaint from a low-cost airline, the Commission examined the rules applicable in France for setting the level of airport charges and concluded that such differentiation was incompatible with the internal market. Accordingly, from the first half of 2008, the tariff differentiation between passenger charges for domestic flights and those for flights to countries in the Schengen area was abolished for French airports, except for Paris airports. The rates for Paris airports will be brought into line with full effect from 1 April 2009
The Future of the AUTOMOBILE INDUSTRY was debated at the Elysée Palace with major car manufacturers and sub contractors to determine aid packages to an ailing industry affected by the car market collapse: Prime Minister François FILLON announced that a substantial aid fund, an estimated € 5 bn to € 6 bn, will be confirmed next month
President Nicolas SARKOZY announced a three year € 600mn stimulus package destined to the ailing press
NEW PASSENGER CAR REGISTRATIONS, 153 692 units sold, plunged -23.5% in December year on year according to CCFA, similarly to Light Vehicles. On the same period, sales of Light Utility Vehicles dived -23.8%. By contrast, registrations of Industrial Vehicles, over 5 tons, rose +3.9% Last year, a total 2 050 289 new cars were sold, or -0.7% compared with 2007
Sub-zero temperatures, -10C in Paris to -19C in rural areas, engulfed the country, due to freezing winds originating from Siberia. On January 7th, the coldest day of the week according to Meteo France, heavy snow falls paralyzed the city of Marseille and the Var region. Electricity consumption of 92 400 MW at 7pm broke the previous day record, 91 500 MW according to Réseaux Français de Transport dElectricité (RTF) Over 1600 passengers were left stranded at Paris Roissy airport due to flight cancellations
The UNITED NATIONS denied that Hamas fighters were in hiding among civilians in one of its building, where over 40 people, mostly children died during bombardments of the Gaza strip. Diplomatic solutions to end violence on each side were finally agreed upon by mid-month following the Egyptian peace plan for a new truce. Over 1500 civilians were killed during the conflict. Several demonstrations to stop violence in Gaza took place in Paris but observers expressed concerns over the « pro Palestinian - anti Jewish » angle that some banners claimed. President Nicolas SARKOZY vowed zero tolerance for racist acts as several synagogues were the subject of arsons, and, following threats towards the Muslim community including an Imam
The EUROPEAN COMMISSION announced € 60mn aid package to the Gaza Strip for humanitarian purposes
OECD Secretary-General Angel Gurría has called for a more centralised and integrated supervision of Euro area banks and financial markets to help prevent a recurrence of the financial turmoil which triggered the current recession. Mr Gurría said policy-makers should create either a single EU-wide supervisor or a central agency to work in conjunction with national supervisors
Gas deliveries to Ukraine from Russia resumed in mid-month, following Russia’s decision to cut off supplies in a dispute over unpaid energy bills. The EUROPEAN COMMISSION had announced that a monitoring team had started work in Kiev to supervise Gas deliveries to Europe following negotiations led by Czech Prime Minister and President of the European Council Mirek TOPOLANEK and Ukrainian Prime Minister Yulia TYMOSHENKO. Russia and Ukraine had accused each other over gas suspensions to Europe where the Czech Republic, Bulgaria and other east European member states were left without heat in freezing temperatures. A proposal for an agreement, put forward by Mr. Topolánek , outlined the conditions for monitoring the transit of Russian gas through Ukraine to the EU. According to press reports, GAZ de FRANCE-SUEZ increased gas orders from Norway and Algeria and did not expect any gas shortage on the short term despite record gas consumption due to unusually cold temperatures
PARIS CHARLES De GAULLE airport with 60 million passengers ranked second to London/Heathrow the EU’s busiest airport with 68 million passengers in 2007 according to the European Commission. Frankfurt/Main with 54 million passengers ranked third followed by Madrid/Barajas with 51 million passengers and Amsterdam/Schiphol with 48 million passengers. Between 2006-2007, the busiest extra-EU27 routes were London Heathrow - New York/JFK with 2.8 million passengers taking traffic up +3%, Paris/Charles de Gaulle - New York/JFK 1.7 million passengers, +4%, London Heathrow - Chicago/O'Hare 1.6 million passengers, +6%, London Heathrow - Dubai International 1.6 million passengers +14% and London Heathrow - Hong Kong International 1.5 million passengers, +3%
As of this year, vessels carrying the new European safety certificate are allowed to navigate on all rivers in the European Union, including the Rhine: the European Commission announced that under new Community rules, Directive 2006/87/EC, a single certificate, which replaces 25-year-old technical rules, is delivered on technical requirements for inland waterway vessels. It is aimed at increasing the safety of passengers and freight transport by inland waterway in Europe and is also valid for navigation on the stretches of the Danube outside the EU territory. The Directive also allows a number of derogations from the common rules, if justified by local navigation conditions
