CORPORATE NEWS
The ELYSEE PALACE announced bailing out DEXIA Bank with € 6bn capital increase involving the French, Belgian and Luxembourg governments along with the Caisse des Dépôts et Consignations following an emergency meeting at the Elysée to discuss the Dexia case amid the financial crisis. The French government will detain, upon this capital increase, more than 25% of capital which will allow for a minority holding right
A total 27 359 companies declared bankrupty or +3.2% in the first six months compared with last year according to the Banque de France September report. In one year to June, insolvencies increased +3.4% ( cumulative 51860) and the real estate sector recorded a significant liquidation rate +24.3% along with construction +13.3%
President Nicolas SARKOZY lambasted in Toulon rogue capitalism , which he said triggered the current crisis that has been shaking financial stability worldwide. In his long awaited speech, and alluding to the situation in the US where taxpayers money will subsidize failed banking institutions, the President declared that « it would be a historical mistake » to have ordinary people pay for banks misbehaviors. The first round of applause literally erupted as the President declared that the age of golden parachutes is over and that executives pay must be in line with their performances. «They must do it themselves, or the Government will do it before the end of this year » he added in a stern tone meaning that new laws could be voted to eradicate executive pay excesses whether or not they succeed or fail in their tenures. As he declared that employees deserve to be rewarded when their managers benefit from bonuses, new applauses filled the audience. Although the President did not specifically announced new measures to jump start the current economic slow down, he stroke out any austerity policy, « new taxes and the like, that would slow down growth » he added, he stressed out the need for new regulations as regards hedge funds, rating agencies, short selling, and other similar hot topics. Regarding French banks, the President declared that they « appear to be in good shape » but, he said, « if one single person was to lose one single euro, I will ensure, and I take the solemn commitment, that the Government will guarantee the solidity of the French financial system ». Declaring on several occasions in his 45mn speech that this time of crisis is « an accelerator for reforms » the President announced two revolutions to come. A « cultural revolution » whereby out of 30 600 civil servants going on retirement next year, one out of two will not be replaced. « The second revolution is to put capitalism back on its feet » and re-establish the balance between assets and work. In a program that could be reminiscent with the New Deal, the President also spoke about « renovating our public transportation system, that will give work to our companies ». « I believe in sustainable development, we will invest massively in clean energy.»
AIR FRANCE announced the reduction of its fuel surcharge (previously applied in July ) effective September 5th and valid on tickets from France due to oil prices declines: € -2 for domestic flights, € -4 on medium flights and between € -10 to €-14 on long haul flights
The CGT Union called for all RENAULT workers to go on strike on Thursday, September 11th following the Group's announcement that 3000 white collar jobs will be axed in addition to 1000 jobs at the Sandouville plant
THALES Alenia Space, European leader in satellite systems and a major player in orbital infrastructures, announced that they started construction of 16 of its Low Earth Orbit communications satellites for Jersey, Channel Islands based O3b Networks Limited, with options for additional spacecrafts.The satellites will offer low latency Internet backhaul to emerging markets and developing countries worldwide at speeds up to 10 Gbps with a combined total capacity in excess of 160Gbps.The delivery of the initial satellites and service activation are scheduled for late 2010
ALSTOM signed a contract worth about €1.9 bn with Saudi Electricity Company (SEC) to build stage 3 of the Shoaiba power plant further to a letter of intent last June. The new 1,200 MW steam power plant will be constructed adjacent to the existing plant, located on the Red Sea coast 100 km south of Jeddah. Upon completion of the project, the Shoaiba power station will comprise 14 units of 400 MW each, with a gross total output of 5,600 MW. Under the terms of the contract, Alstom, as leader of the consortium, will notably design, supply, install and commission the entire plant, including oil-fired boilers, STF40 steam turbines, GIGATOP turbogenerators, sea-water flue gas desulphurization and auxiliary equipment. The boilers are designed to burn both crude and heavy fuel oil and will use Alstom’s advanced low NOx tangential firing technology. Alstom’s consortium partner, Saudi Archirodon, will carry out all the associated civil and marine works.
The Pentagon announced the cancelation of the competition for the $35 bn Air Force tanker contract for the delivery of 179 KC-45A aircrafts,awarded to Northrop Grumman and EADS in March but contested by Boeing Corporation. Defense Secretary Robert M. Gates "decided the contract cannot be awarded by January, and told the House Armed Services Committee that rather than award a contract that will be contested, the better idea is to let the next administration make its decision".
The National Debt totaled a record € 1269.3bn at the end of Q2 or about 65.7% of GDP up +0.4% (+ € 18.8bn) compared with the previous quarter according to Insee. The budget deficit is forecasted to widen to € 52bn next year or 66% of GDP
UNEMPLOYMENT soared in August to a record 1 949 800 million jobless, the highet increase since March 1993, or +2.2% of the total working population according to Dares figures. Job seekers on long term unemployment (over 2 years) and the 50+ age group were impacted the most, respectively +3.8% and +2.9%
The Euro reached a one year record low on September 11th at USD 1.3896 and London Brent Crude oil prices fell below $97 per barrel
INFLATION was forecasted to rise to 3.8% in France in Q3 and to decelerate to 3.3% in Q4 according to the European Commission Quaterly HICP projection. Inflation estimates for the same periods in Germany stood at 3.3% and 2.7% in Spain at 5% and 4%, in Italy at 4.1% and 3.6% and in the Netherlands at 3.6% and 3.5% FRANCE’s GDP was revised down to 1% from the previous 1.8% by the OECD’s September interim assessment report which stated that the organization’s «short-term forecasting models point to worldwide weak activity through the end of the year« . According to the report,in the Euro area « activity is foreseen to remain broadly flat" and GDP is expected at 1.3% from 1.7%. Germany’s GDP is forecasted at 1.5% from 1.9% Italy at 0.1% from 0.5% and the UK at 1.2% from 1.8% Government announced a 1.1% new tax on capital investments, effective from 2009, to finance back to work programs for three million long term unemployed on welfare benefits. The tax will not be applicable to bonds and savings accounts but will increase the current 11% tax on capital investments to 12.1% Unemployment stagnated in France in Q2/08 with 2 027 000 million jobless or 7.6% of the total working population according to Insee.The under 25 and 50+ jobless rates rose respectively to 19.1% (from 18.2% the previous quarter) and to 5.2% (from 4.9%) Sales of apartments known as ancien (built around 1948) dived -25% in Q2/08 compared with last year on the same period in major provincial cities according to the Conseil Superieur du Notariat September report. In July, the Paris IDF Notary report published record sales slump of newly built apartments since 1997
Sales of newly built APARTMENTS collapsed -33.9% in Q2 compared with last year according to the Department of Housing. Stocks reached a record high 110,500 unsold units on the same period. Sales dived below -50% in five departments Aquitaine, Lorraine, Midi-Pyrénées, Bourgogne, Limousin. Passenger car registrations fell -7.1% in August, expressed in gross figures, according to CCFA but rose +2.2% year on year seasonally adjusted. Car gas consumption fell to a record low -12% on the same period as consumers shied away from inflationary oil prices. Office space immediately available in the Paris Metropolitan area increased +5% to 2578 sq/m in Q2/08 from 2451sq/m the previous quarter according to Immostat while office rent grew a modest €318/sq/m from €312sq/m on the same period. In Paris inner business district, office space immediately available performed nearly similarly to 223sq/m compared with 213sq/m unlike La Défense which recorded a major decline -38.7% to 114 sq/m from 186 sq/m. Acccording to provisional figures, investments in office space buildings dived -44.3% in Paris inner business district, -12.5% in La Défense and -17.4% in the Paris Metropolitan area
A petition to stop personal data processing counted over 135 000 signatures as an automated system known as EDVIGE (anagram for internal security data retention) under decree 2008-632 will « centralise, and analyse information pertaining to any individual or company with a significant position in entrepreneurship, political, religious, or union membership activities » in addition to sensitive data such as health records, sex life, and ethic origins. The decree will also allow for data storage and processing of any individual found protesting and disturbing the peace, including children from the age of 13 years old. The national data protection authority (CNIL) has recommended that the law be more protective as regards personal data integrity and only applicable from the age of 16. Under mounting pressure, the decree was amended to exclude storage of sensitive data, politicians and journalists personal data. However, storage of personal data pertaining to law-breaking children from the age of 13 will remain applicable but will include a right of erasure when they reach the legal adult age of 18
More BANKS in the EURO area plan to toughen their selection criteria as regards COMPANY CREDIT LOANS in Q3 (45% compared with 43% in Q2) according to the Banque de France August Report due to risks as regards the economy, in general, and to perspectives specific to certain sectors and certain companies. In Q1 and according to the report, out of all banks polled 49% had firmed up conditions to grant loans
The European Commission revised down the Euro area's GDP to 1.3% similarly to the OECD's interim forecast and announced that Germany, the UK and Spain, France's main trading partners, are entering into a recession
GDP declined for the first time -0.2% in the Euro area and -0.1% in the EU 27 according to a Eurostat revised first estimate (in Q1 +0.7% in the Euro area and +0.8% in the EU 27). Germany’s GDP declined -0.5% and Italy’s -0.3% Compared with the first quarter of 2007, seasonally adjusted GDP rose +1.4% in the Euro area and +1.6% in the EU 27. Household final consumption expenditure fell –0.2% in the Euro area and -0.1% in the EU27 (after 0.0% and +0.2% respectively in the previous uarter). Investments declined -1.2% in the Euro area and -1.6% in the EU27 (after +1.5% and +0.9%). Exports dropped - 0.4% in each the Euro area and the EU27 (after +1.8% in both zones). Imports fell -0.4% in the Euro area and -0.5% in the EU27 (after +1.9% and +1.6%). In the US, GDP increased + 0.8% in Q2/08 (+0.2% in Q1/08) In Japan GDP decreased -0.6% (after +0.8% ). Compared with the same quarter of the previous year, GDP rose by 2.2% in the US (+2.5% in the previous quarter) and by 1.0% in Japan (+1.2% in the previous quarter)
The EU27 external current account recorded a deficit of € 36.3 bn in the second quarter of 2008, compared with a deficit of €18.1 bn in the second quarter of 2007. The deficit stood at € 26.5 bn in the first quarter of 2008
The European Commission announced that the EU 27 and UKRAINE signed an Association Agreement which will lead to the establishment of a Free Trade Area for which talks will continue into 2009. The agreement, signed during the Summit held at the Elysee Palace in Paris on September 8th, covers three other primary areas of activity -- political dialogue and foreign and security policy; justice, freedom and security issues; and economic and sectorial cooperation--, and will replace a Partnership and Cooperation which has been in force since 1998. A Provisonal Agreement has been reached on the first two areas and on the majority of issues concerning economic and sectorial cooperation since negotiations begun in 2007. The EU is Ukraine’s largest trading partner. The EU 27 recorded a €10bn trade surplus in 2007 with Ukraine, its 16th trade partner who accounted for 2% of all EU exports and 1% of all EU 27 imports. Main EU27 exports to Ukraine included medicines, motor vehicles and cell phones while major imports from Ukraine counted steel products, sunflower oil, nickel steel products, steel minerals and crude oil. Germany ranked first exporter to Ukraine with € 5.9bn or 26% of all exports and major importer as well with €1.3bn (11%) and recorded the largest trade surplus € +4.6bn. France’s stood at € +506mn Poland ranked second with total exports at €4.1bn (18%) and €+2.8%bn trade surplus while Italy ranked first importer with € 2.4bn or 19% along with Bulgaria €1.6bn (13%) The largest trade deficit was also recorded by Bulgaria € -1.4bn
The Presidency of the European Union announced that it firmly condemned Russia’s decision to recognize the independence of South Ossetia and Abkhazia, as it over rules Georgia’s sovereignty, territorial integrity and independence principles. Each South Ossetia and Abkhazia announced that they are ready to sign military agreements with Russia following the Russia Georgia conflict which errupted in August. A EU extraordinary meeting held on September 1st in Brussels about the Russia- Georgia crisis,was concluded under a new "partnership" with Russia « as long as Russia does not completely pull out troops out of Georgia ». On September 8th, in a formal agreement signed between President SARKOZY and President MEDVEDEV, a timetable established that Russian troops must pull out from the five observation posts on the Poti to Senaki route within 7 days as a first step towards implementing the peace agreement of August 12th . In the same agreement known as the MEDVEDEV-SARKOZY plan, Russian troop are also due to entirely pull back from South Ossetia and Abkhazia within 10 days of the first international observers deployment set to take place at the latest on October 1st
