MILAN, Oct 3 (Reuters) – New restructuring commitments agreed by Italy and the European Union over state-owned bank Monte dei Paschi di Siena (MPS) (BMPS.MI) include disposals worth up to 400 million euros ($391 million), a document showed on Monday.
The text of the EU Commission’s decision that extended an end-2021 deadline for Rome to sell its stake in the Tuscan bank also showed Italy had committed to keeping the management of its holdings in various state-owned banks separate.
After failing to clinch a sale of MPS to UniCredit last year, Italy has secured a new deadline to re-privatise the bank it rescued in 2017 from the EU agreeing to new restructuring goals.
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MPS needs to carry out property disposals worth 100 million euros and sell non-core equity holdings, including stakes in ATM-machine operator Bancomat and credit card firm Visa (V.N), which had a value of 250-300 million euros at the end of last year, the document said.
The bank has also failed to meet an existing commitment to reduce its leasing portfolio, which stood at 3.3 billion euros at the end of last year, or 700 million euros above target, the EU said in its decision.
“The bank shall carry on a deleveraging of its leasing portfolio, also by means of sale of assets,” it added.
MPS aims to offload leasing contracts by the end of the year by joining forces with other Italian banks on a bad loan securitisation transaction worth in aggregate 1 billion euros, a source close to the matter told Reuters.
The securitisation deal would make use of a state guarantee scheme which is in the process of being renewed.
To meet cost-reduction targets Italy agreed with the EU, which set a cost-to-income ratio of 60% in 2024, MPS aims to launch an up to 2.5 billion euro new share issue later this month.
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Reporting by Valentina Za and Giuseppe Fonte; editing by Agnieszka Flak and David Evans
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SOFIA, Oct 1 (Reuters) – Greece and Bulgaria started commercial operation of a long-delayed gas pipeline on Saturday which will help decrease southeast Europe’s dependence on Russian gas and boost energy security.
The 182-km pipeline will provide a relief to Bulgaria, which has been struggling to secure gas supplies at affordable prices since the end of April, when Russia’s Gazprom (GAZP.MM) cut off deliveries over Sofia’s refusal to pay in roubles.
Russia has decreased its gas deliveries to Europe after the West imposed sanctions on Moscow over its invasion of Ukraine, leaving European Union countries scrambling to secure alternative supplies amid surging prices.
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“This pipeline is a game changer. It’s a game changer for Bulgaria and for Europe’s energy security. And it means freedom. It means freedom from dependency on Russian gas,” European Commission President Ursula von der Leyen said during an inauguration ceremony in Sofia attended by the leaders of Bulgaria, Greece, Azerbaijan, Romania, Serbia and North Macedonia.
“Both here in Bulgaria and across Europe people are feeling the consequences of Russia’s war. But thanks to projects like this, Europe will have enough gas for the winter,” she said.
The Interconnector Greece-Bulgaria (IGB) pipeline will transport 1 billion cubic meters (bcm) of Azeri gas to Bulgaria.
With an initial capacity of 3 bcm per year and plans to later raise this to 5 bcm, the pipeline could provide non-Russian gas to neighbouring Serbia, North Macedonia, Romania and further to Moldova and Ukraine.
It will carry gas from the northern Greek city of Komotini to Stara Zagora in Bulgaria. IGB is linked to another pipeline, part of Southern Gas Corridor that carries Azeri gas to Europe.
On Friday, gas operators in Bulgaria, Romania, Hungary and Slovakia proposed to transport increased Azeri shipments through their networks to central Europe. read more
The 240 million euro ($235.18 million) pipeline is controlled by a joint venture between Bulgarian state energy company BEH, Greek gas utility DEPA and Italy’s Edison (EDNn.MI).
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Reporting by Tsvetelia Tsolova; Additional reporting by Kate Abbnet in Brussels and George Georgiopoulos in Athens; Editing by Mike Harrison
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LONDON, Sept 30 (Reuters) – British house prices failed to rise in monthly terms for the first time since July 2021, mortgage lender Nationwide said on Friday, a latest sign of the slowdown in the market caused by the cost-of-living squeeze and rising interest rates.
House prices were unchanged from August and were 9.5% higher than in September last year, representing the first time the annual measure did not show a double-digit percentage gain since October of last year, Nationwide said.
Economists polled by Reuters had forecast monthly and annual price rises of 0.3% and 10.0% respectively.
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Britain’s housing market has cooled after a coronavirus pandemic boom as surging inflation hits consumers budgets and the Bank of England raised interest rates.
Robert Gardner, Nationwide’s chief economist, said the slowdown had been modest so far and a shortage of homes for sale meant price growth remained firm in annual terms.
“However, headwinds are growing stronger suggesting the market will slow further in the months ahead,” Gardner said. “High inflation is exerting significant pressure on household budgets with consumer confidence declining to all-time lows.”
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Writing by William Schomberg; editing by William James
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SINGAPORE, Sept 30 (Reuters) – Singapore’s Temasek Holdings (TEM.UL) said that market valuations had not yet priced in a global economic recession and that said the state investor was waiting for further declines before stepping up investments.
“Current valuations are not reflecting the risk of downturn we see in the next 12 to 18 months,” Temasek’s chief investment officer, Rohit Sipahimalani, said on Friday.
“I do expect as these valuations correct, we will again step up our pace of investment,” Sipahimalani told a session at the Milken Institute Asia Summit in Singapore.
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Temasek remains committed on its four major investment trends, including digitization, longer lifespans, sustainable living and the future of consumption, he said.
“I think those trends are still valid,” he said. “For the long term, we will continue investing alongside them with a few nuances.”
Stock markets globally have fallen sharply this year as big increases in interest rates by inflation-fighting central banks raise worries about a recession or economic slowdown.
Sipahimalani said the markets had not forecast any major decline in earnings and were instead factoring in growth in 2023.
“Even in a mild recession, you will probably, usually see a double-digit decline in earnings,” he said, adding that earnings could decline by as much as 15 percent.
Temasek, which owns some of the biggest Asian companies, such as DBS Group (DBSM.SI), China Construction Bank (601939.SS) and Standard Chartered (STAN.L), is mainly anchored in Asia.
The investment firm has a 63% exposure to the region as measured by underlying assets of its portfolio companies, most of which are in Singapore and China.
“The UK hasn’t been a significant investment destination for us,” Sipahimalani said. “Whether it’s sort of digitization or longer lifespans, and health tech, biotech or sustainable living, the main areas we’ve seen that happen are in markets like the U.S. and China.”
Temasek remains bullish on China in the longer term based on its investment themes, Sipahimalani said.
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Reporting by Yantoultra Ngui; Editing by Anshuman Daga and Gerry Doyle
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The logo of Swiss bank Credit Suisse is seen at an office building in Zurich, Switzerland September 2, 2022. REUTERS/Arnd Wiegmann/File Photo
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Sept 22 (Reuters) – Credit Suisse Group AG (CSGN.S) has drawn up plans to split its investment bank in three, the Financial Times reported on Thursday, as the Swiss lender attempts to emerge from three years of relentless scandals.
Under proposals to the board, the bank is looking to sell profitable units such as its securitised products business to prevent a damaging capital raise, the report said, citing people familiar with the plans. https://on.ft.com/3BZHTUd
Credit Suisse declined to comment on the story when contacted by Reuters.
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The proposals could see the investment bank split into three parts: the group’s advisory business, which might be spun off at some later point; a “bad bank” to hold high-risk assets that will be wound down; and the rest of the business.
“We have said we will update on progress on our comprehensive strategy review when we announce our third-quarter earnings,” the newspaper report quoted Credit Suisse as saying. “It would be premature to comment on any potential outcomes before then.”
Chair Axel Lehmann had appointed Ulrich Körner as chief executive officer in the summer with a brief to carry out a radical shake-up of the bank, which has been hit by a corporate spying scandal, investment fund closures, a record trading loss and a litany of lawsuits in recent years, the report said.
Reuters reported earlier this month that Credit Suisse, Switzerland’s second-biggest bank, was also looking to cut around 5,000 jobs, about one position in 10, as part of a cost-reduction drive. read more
In May, Reuters said the bank was in the early stages of weighing options to bolster its capital after a string of losses had eroded its financial buffers. read more
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Reporting by Juby Babu in Bengaluru; Editing by Sherry Jacob-Phillips
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Property estate agent sales and letting signs are seen outside an apartment building in Lichfield, Britain, May 3, 2022. REUTERS/Andrew Boyers
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Sept 21 (Reuters) – Shares in British homebuilders rose sharply on Wednesday morning after a media report said the government would cut stamp duty – a tax on property purchases – in a mini-budget on Friday.
Such a move would be a major fillip for the housing sector, which has shown signs of cooling this year amid rising inflation and interest rates.
The UK housebuilders’ index (.FTNMX402020), which has lost more than 43% so far this year, rose 4.1%.
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FTSE 100 stocks Barratt (BDEV.L), Persimmon (PSN.L), Taylor Wimpey (TW.L) and Berkeley (BKGH.L) climbed between 3.2% and 6%, among the top percentage gains on the blue-chip index.
CMC Markets analyst Michael Hewson said housing stocks were getting a boost from the report in the Times newspaper, but added rising interest rates and the worsening cost of living were offsetting factors.
“It can’t hurt but the devil will be in the detail,” Hewson added.
Peel Hunt analyst Sam Cullen said any stamp duty cut could help housebuilders better offset inflation in building costs, which has been largely cushioned by higher house prices.
The Times said the plan to cut stamp duty would be part of new Prime Minister Liz Truss’s drive to boost economic growth. https://bit.ly/3xFQCbn
The report did not specify the size of the cut and Reuters could not immediately verify the news.
A temporary stamp duty cut was used to support the market by previous finance minister Rishi Sunak during the COVID-19 pandemic.
Currently, no stamp duty is paid on the first 125,000 pounds ($141,650) of any property purchase.
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Reporting by Aby Jose Koilparambil and Yadarisa Shabong in Bengaluru; Editing by Savio D’Souza and Mark Potter
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Soccer Football – Premier League – Chelsea v Leicester City – Stamford Bridge, London, Britain – May 19, 2022 a Chelsea flag is pictured inside the stadium before the match REUTERS/Toby Melville/Files
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Sept 21 (Reuters) – Chelsea said they have terminated commercial director Damian Willoughby’s employment with immediate effect after receiving evidence he had sent “inappropriate messages” before being appointed by the Premier League side.
Willoughby began working at Chelsea earlier this month following the club’s takeover by an investment group led by Todd Boehly and Clearlake Capital.
“Evidence of inappropriate messages sent by Mr Willoughby, prior to his appointment at Chelsea FC earlier this month, has recently been provided to and investigated by the club,” a club spokesperson told Reuters.
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“While they were sent prior to his employment at the club, such behaviour runs absolutely counter to the workplace environment and corporate culture being established by the club’s new ownership.”
Willoughby has yet to reply to a request for comment from Reuters.
The Telegraph reported that Willoughby had been sending the messages to a football finance agent from last year. The report added that Willoughby’s lawyers had declined to comment.
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Reporting by Silvia Recchimuzzi in Gdansk, writing by Manasi Pathak in Bengaluru; Editing by Peter Rutherford
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LONDON, Sept 20 (Reuters) – Britain’s low headline rate of corporation tax has failed to boost business investment, which lags behind that of all its major peers, according to a report on Tuesday which comes as the government prepares to reverse a planned rise.
Britain’s 19% corporation tax rate – the lowest in the Group of Seven (G7) large, rich nations – had been due to rise to 25% in 2023 under plans announced last year by former finance minister Rishi Sunak.
However, opposing the rise formed a major part of Liz Truss’s successful campaign to defeat Sunak in the contest to succeed Boris Johnson as Conservative Party leader and Britain’s prime minister.
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New finance minister Kwasi Kwarteng is expected to confirm this in an emergency fiscal statement on Friday, where he gives more details about Truss’s plan to support the economy in the face of surging energy bills.
Truss said during her campaign that keeping corporation tax low was vital to attract investment, but a report from the Institute for Public Policy Research (IPPR) showed past reductions in the tax rate had not led to more investment.
Britain cut its headline rate of corporation tax rate from 30% in 2007 to 19% in 2017, but in 2020 private-sector investment was the lowest in the G7 at 9.8% of gross domestic product. Across 31 mostly wealthy nations in the OECD, Britain had the fourth-lowest business investment in 2020.
“Slashing corporation tax is just a continuation of a failed race to the bottom that hasn’t delivered for the UK economy,” said George Dibb, head of the Centre for Economic Justice at the IPPR, which describes itself as a progressive think tank.
Headline corporation tax rates do not always give a clear sense of the overall business tax burden in a country, and some countries with high rates offer widespread exemptions.
Before he resigned as finance minister last month, Sunak had been working on measures to reshape business taxation to promote investment.
Low business investment is one of the main reasons economists give for poor productivity and very slow growth in living standards since the late 2000s.
Weak demand after the global financial crisis, followed by years of uncertainty over the consequences of Brexit, are among the reasons economists give for Britain’s poor investment performance, alongside difficulties measuring investment in some services industries Britain specialises in.
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Reporting by David Milliken, editing by Andy Bruce
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The logo of Ernst & Young is seen in Zurich, Switzerland November 13, 2020. REUTERS/Arnd Wiegmann/File Photo
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NEW YORK, Sept 9 (Reuters Breakingviews) – It’s easy to say a company should break up, but hard to make it happen. That couldn’t be more true of the plan to dismantle Ernst & Young, whose partners will vote over the coming months on splitting the firm’s consulting business from its audit arm. Strategically it’s appealing. Logistically and mathematically, it’s a number-cruncher’s nightmare.
EY is carving itself up because regulators in the United Kingdom and elsewhere want it to, but also because it makes sense. Accounting firms often can’t audit companies which are also consulting clients, so being two separate firms, most likely with the consultancy as a public company, would let EY squeeze more milk from the cow. Chief Executive Carmine Di Sibio reckons that could create $10 billion of revenue on top of the $45 billion a year the group makes now.
The devil really is in the detail, though. Unlike a listed company, where shareholders might vote once to approve a breakup, EY must hold local polls in around 75 countries. Some require a simple majority, others need two-thirds’ backing. Some locations give each partner one vote; others divvy up power according to how much capital a person owns. And in some places, partners with certain accounting qualifications get a separate vote.
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Valuation is no less troublesome. If the firm splits, audit partners would effectively trade their share in the consultancy for consultants’ share in the audit business. A slug of cash would go to audit partners to balance things out. But the valuation will rest on assumptions. Pricing a consultancy isn’t too hard: rival Accenture (ACN.F) trades at just under three times this year’s forecast revenue, according to Refinitiv. But none of the big U.S. accounting practices are publicly traded.
EY sold its original consultancy in 2000 to IT firm Capgemini (CAPP.PA) in return for stock. Partners then watched in agony as the buyer’s shares fell 95% in two years, and EY rebuilt its consultancy once the non-compete agreement lapsed. This time there’s no acquirer’s stock to worry about, but valuation still matters. The firm’s owners are also its employees, so a deal where one side does much better than the other is likely to lead to a disgruntled workforce. Auditors and consultants are trained to be critical of deals and valuations; selling them on this scheme will put EY through its paces.
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CONTEXT NEWS
Ernst & Young will ask partners to vote on whether it should separate its audit and consulting businesses, it said on Sept. 8. The ballot, which will take place on a country-by-country basis, will start later in 2022 and the firm expects to finalize the decision in early 2023.
The split would involve partners in each business retaining stakes in their respective sides and would most likely involve cash paid to audit partners to adjust for the different values of the two units.
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Editing by Antony Currie and Thomas Shum
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Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
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LONDON, Sept 7 (Reuters) – Britain’s oil and gas industry body called for new drilling licenses in the North Sea and rapid investment in the sector to mitigate the impact of high prices on consumers as the country grapples with the worst energy crisis in decades.
The incoming UK Prime Minister Liz Truss has vowed to act immediately to help people cope with surging energy bills that threaten to leave many unable to heat their homes this winter and said during her campaign she would seek to extract more oil and gas from the North Sea. read more
The benchmark European gas price has quadrupled in the last year due to a war in Ukraine, sanctions on Russia and the aftermath of the coronavirus pandemic.
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Offshore Energies UK (OEUK), an industry body for offshore oil, gas, hydrogen and wind producers, warned that Britain could face potential energy shortages this winter while global prices could remain high for at least three years.
“The best way for the UK to ensure secure gas and oil supplies is by increased investment in its own resources,” said Ross Dornan, OEUK’s market intelligence manager.
Gas production in the United Kingdom rose 26% in the first half of 2022 compared to the same period last year, buoyed by new projects off England’s east coast. read more
OEUK said in a report published on Wednesday that the increase could be “short-lived” without a surge in investment. The industrial body sees a potential for 26 billion pound ($30 billion)capital investment in oil and gas sector by 2030.
Britain is not directly reliant on Russian gas imports, but its connectivity to the European countries through pipelines and its imports of liquefied natural gas (LNG) from other regions mean that it is also affected by the European and global price increases.
Without new investment, it will have to import around 80% of its gas by 2030, and around 70% of its oil, up from around 60% and 20% now respectively, the OEUK said.
Green groups have argued ramping up Britain’s oil and gas extraction is at odds with its climate target of reaching net zero emissions by 2050.
“This will do nothing to tackle the cost of living crisis as new licenses take many years to develop,” said Mike Childs, head of science, policy and research at Friends of the Earth.
In an interview with Reuters on Tuesday, the CEO of British oil and gas firm Enquest (ENQ.L) also urged the incoming government to offer investment incentives to North Sea oil and gas companies. read more
Increasing oil and gas drilling in the UK North Sea is one of the solutions to tackling the current energy crisis, EnQuest’s Amjad Bseisu said.
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Reporting by Bozorgmehr Sharafedin
Editing by Tomasz Janowski
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