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German banking authorities are weighing rules for banks off-balance sheet activities in an attempt to cope with the growing volume of sophisticated capital market instruments banking sources said. Interest rate and currency swaps and currency options are under closest scrutiny and if revisions are made they may resemble regulation jointly proposed by the U.S. And U.K. To Japan. Juergen Becker director of the Bundesbanks division of banking law and credit supervision said the U.S.-British proposals were interesting but declined to elaborate. But banking sources said West Germany was more likely to produce its own conclusions than to adopt foreign proposals. There is no formal plan yet but talks are in the latter stages one representative of the German Banking Association in Cologne said. Bankers expect rule changes this year. All alterations must be approved by the Bundesbank West Germanys four major banking associations and the Federal Banking Supervisory Office. Talks have been slowed by the fact that fundamental changes would require a revision of Germanys credit law which has been in effect since 1934. Authorities favour reinterpreting the credit law to fit present circumstances in order to avoid the long parliamentary political process of changing it banking sources said. Since the beginning of 1984 the banking law has limited banks lending to 18 times shareholders equity plus reserves on a consolidated basis. But lending ratios do not extend to several newer instruments such as spot and forward currency contracts currency and interest swaps commercial paper programs currency options interest rate futures in foreign currencies and various innovative types of interest rate hedges. The sources said the main value of the U.S.-U.K. Proposals lay in differentiating between different types of risk factor and for instance in placing greater weight on currency swaps than interest swaps. But even if German banking authorities agree with some of the assessments of swaps they disagree on how to find balance sheet equivalents for the risk. U.S.-British proposals include a complicated series of formulae for assessing the stream of payments involved in swaps whose ultimate risk is borne by the financial intermediary especially when counterparties remain anonymous. This is the so-called market-to-market value. But German authorities are likely to consider this much too complex and to base their evaluation instead on a schedule of lending ratings assigned according to the creditworthiness of the borrowers involved the sources said. The weightings also likely if lending ratios are extended to include banks securities portfolios are zero for public authorities 20 pct for domestic banks 50 pct for foreign banks and 100 pct for other foreign and non-bank borrowers. A further complication is that the more flexible definitions of equity allowed in the U.S. And the U.K. May put German banks at a competitive disadvantage the sources said. Stricter definitions here also mean the use of a version of the U.S.-U.K. Proposals could far exceed the intent of the U.S. And British authorities the sources said. One specialist for Dresdner Bank AG said a long-dated foreign exchange forward transaction could for instance be brought under the same rule as a cross-currency swap despite the fact that the risk may be entirely different. How new regulations will affect foreign banks here was uncertain. Many have converted to full subsidiary status and applied for a full banking licence over the last two years in order to lead-manage mark eurobonds. But as their equity capital is fairly small tight lending ratios will severely hamper foreign banks freedom of movement particularly in the growing business of currency swaps if they are required to include more transactions in the balance sheet the sources added. REUTER | GERMAN BANKING AUTHORITIES WEIGH SWAP REGULATIONS |
The New Zealand government borrowed 100 mln stg on the Eurosterling market to refinance a loan of the same amount maturing in June Finance Minister Roger Douglas said in a statement. The coupon rate is 9.62 pct and the loan life is eight years. Douglas said the coupon rate is the lowest obtained by the government on a sterling loan since 1971. REUTER | NEW ZEALAND GOVERNMENT BORROWS 100 MLN STERLING |
The Broken Hill Pty Co Ltd <BRKN.S> said it will merge its BHP Minerals division and <Utah International Inc> into a single business unit under a common management structure. The merger will be effective June 1 coinciding with the retirement of Utah International chairman and chief executive Bud Wilson BHP said in a statement. The new BHP-Utah Minerals International Group will be headed by Jim Curry as executive general manager and chief executive officer. Curry is currently executive vice-president of Utah International BHP said. <BHP Petroleum (Americas) Inc> formerly part of Utah International will become a subsidiary of BHPs renamed <BHP Petroleum International> now <BHP Petroleum Pty Ltd> the company said. BHP will also bring its Queensland coal operations under one management structure and consolidate minerals marketing and sales offices in various markets throughout the world. BHP acquired Utah from General Electric Co <GE> in 1984. Utahs assets include stakes of 40.25 to 52.25 pct in seven large Central Queensland coking mines 49 pct of the Samarco iron ore operation in Brazil 60 pct of La Escondida copper deposit in Chile the Island Copper mine at Port Hardy in Canada 70 pct of a coal mine and 30 pct of a gold mine in South Africa and coal and other mines in the U.S. BHP Minerals assets include wholly and partly-owned iron ore mines coal mines manganese and base-metal operations or prospects and 30 pct of the Ok Tedi gold-copper project in Papua New Guinea. REUTER | BHP TO MERGE BHP MINERALS AND UTAH INTERNATIONAL |
Bank of Japan satisfied with yen around current range, senior bank official says |
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West German retail turnover rose a real one pct in January compared with the same month a year earlier according to provisional data from the Federal Statistics Office. There were 26 shopping days in January this year the same as in January 1986 a Statistics Office statement said. A Statistics Office official added retail turnover had risen by 7.6 pct in December compared with the year-ago month a slight upward revision from the 7.5 pct increase provisionally posted. REUTER | GERMAN RETAIL TURNOVER RISES ONE PCT IN JANUARY |
The Bank of Japan is satisfied with the yen around its current range a senior central bank official told reporters. He said the pledge by major industrial nations in Paris last month to cooperate to hold exchange rates around current ranges applied in both directions a dollar fall or a dollar rise. Unilateral intervention itself cannot ensure currency stability but it can be useful when coordinated with other policies and with other central banks he said. The Bank of Japan is rather confident currency stability will continue for some time the senior bank official said but declined to be more specific. Finance Minister Kiichi Miyazawa told parliament on Friday the current dollar/yen exchange rate is not necessarily satisfactory for the Japanese economy. Asked what factors might destabilize the markets the official cited a lessening of market fear about intervention a completely unexpected change in the economy of Japan the U.S. Or West Germany or resumption of comments by government officials seeking to talk the dollar up or down. The senior bank official said he expects Japans gross national product (GNP) to grow three pct or slightly more in the fiscal year beginning in April. That would be little changed from the performance expected this year. Domestic demand may grow nearly four pct in 1987/88 but the external sector will have a negative impact on GNP of nearly one percentage point he said. He said there was virtually no room for further monetary policy action to boost the economy. The economys performance in the future very much depends on fiscal policy he added. The central banks monetary policy has already done its part in stimulating the economy the senior bank official said. The Bank of Japan has cut its discount rate five times over the last year and a half. Although the central bank does not see any imminent risk of inflation there could be some problems in the future he said. We are sitting on a barrel of powder but fortunately it may still be wet he added. Liquidity among private households and especially the corporate sector has increased substantially he said. The liquidity is the reason for the recent boom of stock exchange prices the bank official said. This inflow of funds into the stock exchange occurring also in other countries may continue he said. The senior official said the Bank of Japan is hoping Federal Reserve chairman Paul Volcker will be re-appointed when his current term expires later this year. Hes a great man the official said adding that more and more people expect his reappointment. Turning to exchange rates the official said the substantial drop in the dollar is beginning to have an effect on reducing the imbalance in world trade even though the impact has taken longer than expected to show through. Even the U.S. Trade position has begun to feel the impact although so far it has not been very strong he said. REUTER | BANK OF JAPAN SATISFIED WITH YEN AT CURRENT RANGE |
Bangladeshs broad-based M2 money supply rose 6.95 pct to 132.79 billion taka in December after rising 0.51 pct to 124.16 billion in November and 3.07 pct to 114.22 billion in December 1985 the Central Bank said. On a year on year basis M2 rose 16.25 pct in the 12 months to December 12.04 pct to November and 16 pct to December 1985. Narrowly-based M1 rose 9.55 pct to 50 billion taka against a fall of 0.45 pct to 45.64 billion in November and a 3.03 pct rise to 45.51 billion to December 1985 it added. Year on year M1 rose 9.86 pct in December. REUTER | BANGLADESH MONEY SUPPLY RISES IN DECEMBER |
Opposition to government plans to impose a five pct sales tax is spreading nationwide ahead of the start of campaigning for local elections next week political analysts said. The Asahi Shimbun said 31 of the 47 prefectural assemblies had so far opposed demanded amendments to or expressed wariness about the tax. Assemblymen from the ruling Liberal Democratic Party (LDP) have also joined the opposition against the tax in 11 prefectural assemblies the daily reported. About 2600 elections will be held on April 12 and 26 for a wide range of local posts including 13 governors. The sales tax is one of the main planks of Prime Minister Yasuhiro Nakasones plan to overhaul the tax system. A close aide to Nakasone has said the sales tax issue will have a minimal impact on the local elections because centrist parties by and large support LDP candidates in many of the races for governors. In the assembly elections even LDP candidates oppose the tax he said. On March 8 the LDP lost an Upper House by-election in the conservative stronghold of Iwate Prefecture in northern Japan for the first time in 25 years. The opposition socialist winner campaigned on the single issue of the sales tax. The surprise LDP defeat in Iwate coupled with Nakasones sagging popularity has forced the party to compromise with the opposition and agree to postpone public hearings on the fiscal 1987/88 budget to March 19/20 from March 13/14. The opposition parties have been staging recurring parliamentary boycotts to show their disapproval of the sales tax contained in the budget. They returned to the Lower House Budget Committee last Friday but walked out again after a few hours demanding detailed data on the tax. But parliamentary sources said they are expected to agree in a day or two to dispose of some of 29 bills the LDP will submit. The bills include nine which will become extinct on March 31 unless some action is taken the sources said. These cover such uncontroversial topics as wages for diplomats and revisions of the law covering court employees. Discussion is also expected of a provisional budget to allow the government to continue operating while debate on the main budget continues beyond the April 1 start of fiscal 1987/88 the sources said. The provisional budget could cover some 50 days and include authorisation for spending on some public works. Otherwise parliament will go into virtual recess until local elections start on April 12 they said. REUTER | OPPOSITION TO PROPOSED SALES TAX SPREADS IN JAPAN |
<Dowa Mining Co Ltd> said it will start commercial production of gold copper lead and zinc from its Nurukawa Mine in northern Japan in April. A company spokesman said the mines monthly output is expected to consist of 1300 tonnes of gold ore and 3700 of black ore which consists of copper lead and zinc ores. A company survey shows the gold ore contains up to 13.3 grams of gold per tonne he said. Proven gold ore reserves amount to 50000 tonnes while estimated reserves of gold and black ores total one mln tonnes he added. REUTER | JAPAN'S DOWA MINING TO PRODUCE GOLD FROM APRIL |
The extended decline in Japans overall business performance was likely to bottom out in the current January-March quarter the Finance Ministry said. Improved corporate earnings and better prospects for the stability of the yen had made companies more optimistic it said after carrying out a quarterly survey. The survey conducted in February was based on questionnaires returned by 8328 large and small firms in all sectors except the finance and insurance industries. The survey said overall corporate earnings were expected to turn positive with an estimated 0.4 pct year on year increase in the second half of fiscal 1986 ending on March 31 after a 5.4 pct decrease in the first half. Corporate earnings will grow further in the first half of fiscal 1987 rising an estimated 10.7 pct it added. Manufacturers earnings hit hard by the yens steady rise against the dollar will rise 7.7 pct in first-half fiscal 1987 after falling 10.7 pct in the second half of fiscal 1986 it said. Overall earnings of non-manufacturing companies will rise 11.8 pct year on year in the first half of fiscal 1987 after growing 9.8 pct in the second half of fiscal 1986 the survey said. It said this figure was bolstered by profits of firms such as electric power and gas companies which have benefitted from the yens appreciation. REUTER | JAPAN BUSINESS DECLINE SEEN BOTTOMING OUT |
Eksportfinans A/S of Norway is issuing 15 billion yen in eurobonds due April 23 1992 priced at 103 with a five pct coupon Mitsubishi Finance International Ltd said as lead manager. Fees are 1-1/4 pct for selling and 5/8 pct for management and underwriting. Payment date is April 23. Listing will be in London and the bonds will be sold in denominations of one mln yen. REUTER | EKSPORTFINANS LAUNCHES EUROBOND |
Carlton Communications Plc <CCML.L> said in a statement it had purchased a 20 pct stake or some 5.1 mln shares in Central Independent Television from Ladbroke Group Plc <LADB.L> at 578p per share. The consideration of 29.5 mln stg will be met with 18.2 mln stg in cash and the issue of one million ordinary Carlton shares it said. Central showed pretax profits up by 57 pct to 18.8 mln stg for the year ended 30 September 1986. REUTER | CARLTON BUYS STAKE IN CENTRAL INDEPENDENT TV |
The amount of a convertible eurobond launched on Friday for Metal Box Plc <MBXL.L> has been increased to 65 mln stg from the original 60 mln and the coupon has been fixed at 5-3/4 pct Swiss Bank Corp International Ltd said as lead manager. The conversion price has been fixed at 262p which represents a premium of 9.62 pct over Fridays closing share price of 239p. The indicated coupon on Friday was 5-3/4 to six pct. REUTER | COUPON SET, AMOUNT INCREASED ON METAL BOX EUROBOND |
European sugar beet plantings are expected to show little change from last year despite recent firmness in world prices analysts and industry sources said. A Reuter survey of planting intentions showed that while so far European Community (EC) growers plan unchanged to lower areas increases are expected in some Eastern European nations. Trade analysts said their private reports give similar results and do not differ significantly from the first estimate of stagnant 1987 European beet plantings made last week by West German sugar statistician F. O. Licht. Areas may be slightly lower but analysts and agricultural experts said the steady rise in yields resulting from improved seed varieties and better farming techniques could offset this. In recent years good autumn weather has given yields a late boost making up for lower areas despite some disappointing starts to growing seasons. Changes in EC areas reflect the extent to which producers will grow so-called C sugar for unsubsidised sale to the world market. This is what is produced in excess of the basic area needed to meet the EC A and B quotas which receive full and partial price support respectively. Some analysts said the open row that broke out last week between producers and the EC commission over its export policy could have serious implications for future sugar output. Beet producers have threatened to effectively dump nearly one mln tonnes of white sugar into EC intervention stocks as they feel export subsidies have been too low to compensate for the gap between high EC internal and low world market prices. However with the EC budget stretched to breaking point this could give treasury ministers extra resolve in resisting higher guaranteed sugar prices and build a case for a future cut in the basic A and B quotas they added. In France the largest producer of EC quota and non quota sugar the sugar market intervention board FIRS said first planting intentions indicate an area about the same as last years 421000 hectares nine pct below the previous year. The basic trend is towards stability a FIRS spokesman said. Unlike world market raw sugar prices in dollars white sugar French franc prices are not particularly high and are not encouraging higher planting levels he said. Beet sugar output last year was 3.37 mln tonnes with an average yield of 8.00 tonnes per ha the highest in the EC apart from the Netherlands but below 8.52 the previous year and a five year average 8.11. In West Germany recent price rises have not altered plans since planting decisions were taken a few months ago industry sources said. The farm ministry said a December survey is still valid and plantings should be cut slightly after being trimmed by just under four pct in 1986 when yields were above average. Licht last week estimated West German plantings at a reduced 385000 hectares against 399000 last year. British Sugar Plc the monopoly beet processor has signed up U.K. Farmers to grow 8.1 mln tonnes of beet. This should yield about 1.25 mln tonnes of whites. Last years crop equalled the second highest ever at 1.32 mln tonnes. British Sugar has A and B quotas totalling 1.144 mln tonnes of whites and its C output is due to improved yields from more consistent disease-resistant seed types. Recent price rises have not altered Polish plans Wincenty Nowicki a deputy director of Cukropol the Amalgamated Sugar Industry Enterprises said. World prices are still below Polish production costs and there is no way to convince farmers to increase the area above the already signed contracted level. The national plan set before prices began to rise put plantings this year at 460000 hectares against 425000 in 1986 Nowicki said. Last year production was 1.74 mln tonnes. World prices have less impact in Italy than in France or Germany as it is traditionally not an exporter but is geared to the domestic market an official at the national beet growers association said. Italian sowings are not yet complete but surveys suggest a drop from last years 270000 ha especially in the north where some farmers have switched to soya. Beet output last season of 15.5 mln tonnes yielded a higher than expected 1.72 mln tonnes of white sugar. Dutch plantings are expected to fall to 130000 ha from a record 137600 in 1986 as a new self-imposed quota system comes into force a spokesman for Centrale Suiker the second largest Dutch sugar processor said. The new system aims for an average of around 915000 tonnes of white sugar and to cut output of C sugar. Last year the Netherlands produced a record 1.2 mln tonnes of white sugar against a combined A and B quota of only 872000 tonnes. The world price of sugar would have to rise much higher than it has done recently to make planned production of C sugar really worthwhile the spokesman said. Western agricultural experts in Moscow said Soviet planting intentions are likely to be unchanged. Licht put this years Soviet beet area at 3.40 mln ha against 3.44 mln last year. Hungary is expanding its beet area to 105000 ha from some 95000 in 1986 the official MTI news agency said but diplomats said policy is to balance supply with domestic demand. The Spanish ministry of agriculture said beet sowings are estimated unchanged at 180000 ha this year. A spokesman for Denmarks largest beet concern De Danske Sukkerfabrikker A/S said its 1987 sugar target was unchanged from 1986 at 365000 tonnes from a steady area of 60000 ha. In Sweden where beet is grown just to meet domestic demand the planted area is seen little changed at 51000 ha against 51300 last year according to a spokesman for sugar company Svenska Sockerfabriks AB. Last year Irish yields were the lowest for 10 years due to late sowings and the state-run Irish Sugar Plc said the 1987 plantings target is the equivalent of 36400 hectares down from 37600 in 1986. REUTER | EUROPEAN BEET PLANTINGS SEEN LITTLE CHANGED |
Swiss unemployment edged down to 0.9 pct of the working population from one pct in January and in February 1986 the Federal Office of Industry Trade and Labour said. Seasonally adjusted however there was a slight rise in unemployment. The number out of work fell to 28439 down 1142 compared with the previous month. The number of vacant positions registered with employment offices stood at 11968 against 10694 in January. REUTER | SWISS UNEMPLOYMENT FALLS TO 0.9 PCT IN FEBRUARY |
Malaysias gold and foreign exchange reserves rose to 16.07 billion ringgit in February from 15.73 billion in January and 12.23 billion in February 1986 Bank Negara Malaysia said. The central bank said cumulative assets at end-February fell to 20.02 billion ringgit from 20.68 billion at end-January but were up from 17.07 billion at end-February last year. Holdings of federal government securities dropped to 876 mln ringgit in February from 1.70 billion a month earlier and 2.30 billion in February 1986. Malaysias special drawing rights rose to 355 mln ringgit at end-February from 352 mln at end-January and 286 mln at end-February 1986 the bank said. The IMF position was unchanged from January at 507 mln but was above the 422 mln in February a year ago. Currency in circulation in February fell to 7.43 billion ringgit from 8.32 billion a month earlier but was up from 7.18 billion in February last year. REUTER | MALAYSIA'S GOLD AND FOREIGN EXCHANGE RESERVES RISE |
Japan should step up the pace of its financial liberalisation if it wants to become a world financial centre equal to New York or London a leading U.S banker said. For Tokyo to become the third link in an international capital markets triangle it will need to create an environment more hospitable to international finance than currently exists Robert Binney senior vice-president of Chase Manhattan Bank N.A. Told a group of Japanese members of parliament and financial leaders. Binney said Japan must liberalise its financial markets not just to attract more jobs capital and taxable income but also to recycle effectively its vast trade surpluses to help counter growing protectionism in the United States. He called on Japan to remove all controls on deposit interest rates soon and to remove obstacles to the growth of its offshore market. He also said it should fully deregulate its short-term money markets develop comprehensive futures markets further open the Tokyo Stock Exchange to foreign membership and remove fixed rate brokerage commissions. Binney also urged Japan to abolish Article 25 of its Securities and Exchange Law which like the U.S. Glass Steagall Act separates commercial from investment banking. At the same meeting Goldman Sachs (Japan) Corp president Eugene Atkinson urged Japan to fully de-regulate short-term interest rates introduce commercial paper and open long-term government bond markets to an auction system. He said Japan should allow securities firms to participate in foreign exchange business and develop over-the-counter stock options and futures. Short-selling of Japanese government cash bonds was a vital hedging mechanism he added. The group of some 60 Japanese legislators and financial leaders which Atkinson and Binney addressed was recently formed to study ways in which Japan should promote liberalisation of its financial markets. We should not leave such matters solely to government bureaucrats Masao Hori Chairman of the lower house finance committee told the group. REUTER | U.S. BANKER URGES FASTER JAPANESE LIBERALISATION |
Malaysian crude palm oil (cpo) production fell to an estimated 270400 tonnes in February from an estimated 273300 tonnes in January and 332995 in February 1986 the Palm Oil Registration and Licensing Authority (PORLA) said. Cpo stocks fell to an estimated 286440 tonnes in February from 287940 in January and 653411 in February last year. Processed palm oil stocks in February fell to an estimated 193060 tonnes from 205060 in January and 225576 in February 1986. The January and February figures are subject to revision. REUTER | MALAYSIAN CRUDE PALM OIL OUTPUT FALLS IN FEBRUARY |
Shr 37.4p vs 30p. Final div 7p making 12p vs 10p. Pre-tax profit 121.1 mln stg vs 109.3 mln. Net profit before minorities 76.6 mln stg vs 62.8 mln. Turnover 952.6 mln vs 970.1 mln. Pre-interest profit 132.1 mln vs 124.6 mln. Net interest 11 mln vs 15.3 mln. Tax 44.5 mln vs 46.5 mln. Minority interests 3.1 mln vs 5.2 mln. Extraordinary debit 9.1 mln vs credit 11.5 mln. Note - Extraordinary debit reflected full provision for discontinuing the Financial Timess printing operations at Bracken House in 1988 partly offset by gains on disposals. REUTER | PEARSON PLC <PSON.L> YR ENDED DEC 31 |
Chinas trade deficit totalled 700 mln dlrs in the first two months of this year according to figures released by the State Statistics Bureau. The New China News Agency quoted the Bureau as saying foreign trade totalled 9.3 billion dlrs in the period of which exports were worth 4.3 billion dlrs. The bureau said total trade volume was up 2.5 pct on the same 1986 period with exports up 18.1 pct but it gave no other comparative figures. Chinas 1986 trade deficit totalled 12 billion dlrs official figures show. REUTER | CHINA REPORTS 700 MLN DLR TWO-MONTH TRADE DEFICIT |
Finns cast their final votes in two-day general elections today with opinion polls predicting a swing to the right which would bring the conservatives back into government after 21 years in the political wilderness. Turnout on the first day yesterday about five pct lower than in 1983 polls was lowest in leftist strongholds around the capital Helsinki electoral officials said today. Finnish media said this supported pre-election opinion polls predicting falling among voters for the Social Democratic Party of Prime Minister Kalevi Sorsa. Several days of inter-party bargaining are expected before a new government emerges. REUTER | POLLS PREDICT SWING TO RIGHT IN FINNISH ELECTION |
French machinery maker <Poclain> 40 pct owned by <Tenneco Inc> said it will raise its capital to 791 mln francs from 91 mln by a 100 for 13 rights offering to shareholders priced at par of 10 francs a share. The offer between March 25 and April 13 is the second stage of a capital restructuring plan announced in December under which Tenneco will become Poclains majority shareholder. In the first stage Poclain reduced its capital to 91 mln from 455 mln by reducing the nominal value of its shares to 10 francs from 50. Poclain traded Friday on the Paris Bourse at 38.20 francs. REUTER | <POCLAIN> OFFERS PAR RIGHTS ISSUE |
The Bank of England said it invited an early round of bill offers from discount houses after forecasting a shortage in the system of some 1.05 billion stg. Among the main factors affecting liquidity bills maturing in official hands and treasury bill take-up will drain some 1.07 billion stg while exchequer transactions will take out around 335 mln stg and bankers balances below target five mln stg. Partly offseting these outflows a fall in note circulation will add some 355 mln stg to the system today. REUTER | U.K. MONEY MARKET OFFERED EARLY ASSISTANCE |
Hailstorms and strong winds in south China killed two people injured 20 and damaged an undisclosed amount of crops a Hong Kong newspaper reported. The pro-Peking New Evening Post said in a report from Canton that more than 50 houses collapsed when the storms swept across five counties in south-western Guangdong province. It said the crops were damaged over a five-day period ended yesterday. It gave no other details. REUTER | SOUTH CHINA STORMS KILL TWO, DAMAGE CROPS |
While world exchanges revel in a continuing securities boom the Dutch stockmarket remains lacklustre despite a series of largely positive annual corporate results and signs of a more stable dollar analysts said. Prices and turnover on the Amsterdam Stock Exchange have sprung back from lows reached when the dollar dipped below the two guilder mark in January. But market analysts say only lower interest rates or a further rise in the dollar now trading at around 2.09 guilders could keep the momentum going. Between end-1982 and end-1986 Dutch stocks rose by around 150 pct but the dollars sharp fall last year put the brake on the bull market said Philip Menco analyst with bank CLN Oyens en van Eeghen. The dollars current level compares with an average in 1986 of 2.45 guilders and 3.35 in 1985 official figures show. But Arjen Los analyst with Dutch merchant bank Pierson Heldring en Pierson sees room for some optimism The market is exaggerating the whole dollar affair. Weve seen the bottom of its decline. But what is lacking is a stimulus on the interest rate front he said. Analysts said they expected little impact from provincial elections on Wednesday as the governments position was secure. The scope for price rises in Dutch shares is narrow given the limited room for lower interest rates said Los adding the Dutch market can currently only dream of returns of around 15 pct seen in rising markets elsewhere in Europe. When the dollar slumped in the second half of 1986 U.S. And U.K investors were heavy sellers of Dutch stock. They made an enormous currency gain Menco said. Finance Ministry figures show foreign investment in Dutch stock last year fell by nearly half to 4.2 billion guilders. Los envisaged no significant revival of foreign interest in the Dutch market. He saw the large liquid Dutch pension funds pursuing a more aggressive portfolio management policy while continuing to invest in markets with weaker currencies. Outflows of non-bank Dutch capital totalled a record 21.4 billion guilders last year 12.3 billion of which stemmed from securities transactions. Dutch institutions have been rallying to buoyant foreign markets but this seasons results could coax some of them back to the relatively underpriced Dutch market Koos Ten Have of Staal Bankiers said. Ten Have said Dutch price/earnings ratios based on forecasts of 1987 results were broadly unchanged compared with 1986. With an average ratio of 10 they were still attractively lower than shares of other exchanges he added. He said the reliability of the strong guilder was a further factor favouring Dutch stock investments. Senior bank economists said this weeks official economic forecast by the CPB planning agency painted a gloomy picture of the Dutch economy but this would not shake investor confidence in the Dutch business sector. The Dutch economy was doing relatively well compared with other nations they added. Analysts say most companies have fulfilled expectations while some firms particularly in food and publishing surprised the market with continued solid profit growth despite major dollar and sterling investments. Unexpectedly positive results from companies like Unilever Plc-NV <UN.AS> NV Philips Gloeilampenfabrieken <PGLO.AS> and Heineken NV <HEIN.AS> were balanced by poor performances by the three banks which achieved higher profits partly by reducing their risk provisions. Analysts still have doubts about the insurance sector and many companies stressed the negative impact of lower currencies on their guilder earnings in 1986. Food and publishing are seen as major growth areas despite the fact many of these companies have significant activities in the U.K and U.S. Food chain Ahold NV <AHLN.AS> reported an 8.1 pct increase in net 1986 profit but said it did not see profits growing in 1987 due to the uncertainty of the dollar. Turnover declined by 5.7 pct to 11.4 billion guilders. About 1.5 billion guilders of this decline was due to the lower dollar and one third of turnover volume was achieved in the U.S. Ahold is too cautious over the dollar Los said. As long as such companies continue to maintain their U.S. Activities and fund their expansion there the negative influence is purely an accounting effect. Koninklijke Wessanen NV <WESS.AS> and Heineken also managed handsome profit increases of 16.6 and 7.5 pct respectively while blaming disappointing turnover in their substantial overseas activities on the lower dollar. Initial publishing results indicate a bumper year for shares in this sector and ensure firm interest despite higher price/earnings ratios ranging from 12 to 14. REUTER | ECONOMIC SPOTLIGHT - DUTCH SHARE PROSPECTS MIXED |
A government commission that controls 51 pct of <San Miguel Corp> (SMC) stock will increase its nominees on the firms 15-member board to nine from six. We want to correct business practices Ramon Diaz chairman of the Presidential Commission on Good Government (PCGG) told Reuters. Right now there are a lot of companies that keep so many things from their shareholders and one of them is San Miguel he said. A San Miguel spokesman declined comment. Diaz said New York investment bank Allen and Co Inc told the PCGG it was interested in tendering for all outstanding SMC stock with the subsequent dispersal of 60 pct of the stock to Filipino investors to comply with investment laws. He said Australian businessman and brewer Alan Bond and the brewing company Elders IXL Ltd <ELXA.S> were interested in buying 40 pct each of SMC stock. He added that the PCGG wanted some foreign input but would not allow foreign control of the brewing and food conglomerate the Philippines biggest manufacturing concern. Diaz said the PCGG did not plan to remove SMC president Andres Soriano from his family company. He has tremendous prestige to run the company Diaz said. We appreciate his management but certainly some practices have to be corrected. REUTER | MANILA GOVERNMENT TO TAKE OVER SAN MIGUEL BOARD |
World Bank Vice-President David Knox said the bank was eager to finance Argentine plans to stimulate growth and that he was urging private banks to grant new loans to the country. Knox said in an interview with the local daily La Nacion yesterday that Argentinas current economic policies contained key elements to stimulate growth and the World Bank was very interested in financing its growth. We are encouraging creditor banks to grant new loans to make Argentine growth possible said Knox who arrived in Argentina last Thursday. REUTER | WORLD BANK VICE-PRESIDENT PRAISES ARGENTINE PLANS |
<Cie Bancaire> a subsidiary of recently privatised banking group Cie Financiere de Paribas <PARI.PA> said it is issuing 2.35 mln new 100 francs nominal shares on the basis of one for five already held. The operation will begin on March 31 a spokesman said. Cie Bancaire also said it has increased its capital to 1.41 billion francs from 1.17 billion by the incorporation of 237.74 mln francs of reserves. REUTER | CIE BANCAIRE IN ONE-FOR-FIVE BONUS SHARE ISSUE |
NEC Corp <NESI.T> may take legal action to halt introduction of <Seiko Epson Corp>s NEC-compatible personal computer series which NEC alleges infringes copyrights for NECs 9801 V computer series an NEC official said. We may have no choice but to take legal action the NEC official said. A Seiko Epson official said the companys PC 286 series the first NEC-compatible personal computer does not infringe on NEC copyrights. He said the company intends to go ahead with plans to market the computers from late April. A Seiko Epson official said of the new machine Its compatible with NECs machine so it appears similar. But our intention was to develop an original machine. Industry analysts said NEC controls about 70 pct of the domestic personal computer market. They said introduction of NEC-compatible machines could start a price war and cut NECs profits as happened to IBM following the introduction of IBM-compatible machines. REUTER | JAPAN'S NEC THREATENS LEGAL ACTION AGAINST SEIKO |
Preparations for the launch of a Swiss options and futures exchange billed as the first completely electronic market of its kind are at an advanced stage according to members of the project team. The Swiss Options and Financial Futures Exchange (Soffex) is a new departure in that it will introduce an additional range of financial instruments and electronic trading methods to the traditionally conservative Swiss market. There will be no physical exchange floor and both trading and clearing systems will be completely automated. The new market due to start operating in January 1988 follows a series of innovations by the bourses in Zurich Basle and Geneva aimed at preventing loss of business in the face of keen competition from London and Frankfurt. These innovations included the introduction last October of continuous trading in major shares plans to establish a single continuously updated Swiss share index from next month to supplement the various indices produced by the major banks at the close of business and experiments in electronic trading. Banks themselves last year took the initiative of launching covered warrants on the shares of other Swiss companies. If Switzerland wants to maintain and expand its international prominence in portfolio management our bankers and fund managers must have the same modern instruments at their disposal as their competitors says Soffex president Rudolf Mueller a director of Union Bank of Switzerland. The computer terminals on which business will be conducted will be confined to Switzerland. It is still unclear how many Swiss-based institutions will seek membership of the exchange. Formal applications are not due until next month but a preliminary survey completed by the Soffex project team this week showed strong interest in membership. The response from both Swiss and foreign institutions all over the country has been very encouraging says Philippe Bollag of the project team. Hans Kaufmann who follows Swiss equities for Bank Julius Baer says a regulated traded options exchange should boost foreign interest in Swiss shares and possibly increase bourse turnover generally. The possibility of protecting portfolios by hedging should attract Swiss institutional investors Kaufmann added. Soffex is a private company set up by the five major Swiss banks and the bourses of Zurich Geneva and Basle. Trading will initially be limited to stock options on 10 to 15 leading Swiss bearer shares. An options contract on the new Swiss share index should follow within six months but trading in financial futures will be delayed until an unspecified future date. Options on foreign shares may also be added later. Participants will be either brokers or dealers operating in the market through computer terminals in their own offices. Trading must be conducted exclusively through the exchange. Exchange membership is open to banks traders and brokerage firms with an office in Switzerland while Clearing Members must be recognised as banks under Swiss law. The trading system based on Digital Equipment Corp software and hardware provides for the display of best bid and offer prices matches orders electronically allows anonymous negotiation of block orders and maintains members order books. An interest facility aimed at helping participants to gauge the market mood shows the number of users watching a particular instrument at any time. Most of the electronic clearing functions will be carried out overnight. Each contract will cover only five shares instead of the 100 shares normally traded on existing options and futures markets in the United States London Amsterdam and Stockholm. This reflects the fact that Swiss shares often cost thousands of francs. Bearer shares in F. Hoffman-La Roche und Co AG <HOFZ.Z> likely to be on the Soffex opening list were quoted this week at 209000 francs each. Contracts will initally be offered for the three end-months following the trading date plus the subsequent January April July or October end-months. Longer maturities may be added in future if market liquidity permits. Detailed provisions have still to be worked out in areas such as margin requirements position limits the supervisory and regulatory functions of the exchange and brokerage fees. Banks polled by Reuters in a random survey were enthusiastic about Soffex but reticent about the level of their own involvement and about the exchanges prospects for success. Were moving into completely new surroundings and it will require a change in psychology said a securities dealer at a major Swiss bank. We in Switzerland are not used to sitting all day at a screen where nobody shouts at you. Moving into traded options will also require considerable investment in equipment and staff by participants. Completely new dealing and back-office skills will have to be acquired and some banks are already sending staff abroad for training. REUTER | ECONOMIC SPOTLIGHT - SWISS OPTIONS AND FUTURES |
Israels inflation rate for February was one pct compared to 2.1 pct in January and 1.6 pct in February 1986 a spokesman for the Central Bureau of Statistics said. Inflation for the 12 months ending in February was 23 pct the spokesman said. February price rises were mostly in housing health education entertainment and transport. Wage and price controls have been in force since August 1985. Officials said the controls have helped soften the effect of a recent 10 pct devaluation of the shekel. REUTER | ISRAELI INFLATION RATE IS 1.0 PCT IN FEBRUARY |
The Bank of England said it provided the money market with assistance worth 90 mln stg in response to an early round of bill offers from discount houses. Earlier the bank estimated the shortage in the system today at some 1.05 billion stg. The bank bought bills for resale to the market in equal amounts on April 1 2 and 3 at an interest rate of 10-7/16 pct. REUTER | U.K. MONEY MARKET GIVEN 90 MLN STG EARLY HELP |
A 250 mln dlr Philippine capital fund will be launched shortly to encourage private sector investment Finance Secretary Jaime Ongpin said in a report to President Corazon Aquino on his first year in office. The First Philippine Capital Fund will be launched jointly by New York investment house <Shearson Lehman Brothers> and the International Finance Corp an affiliate of the World Bank Ongpin said. He gave no date for the launch. Ongpin said the implementation of the fund had been delayed by his governments negotiations to reschedule about 9.4 billion dlrs of its 27.8 billion dlr foreign debt. Craig Nalen president of a U.S.-government backed Overseas Private Investment Corp mission which visited Manila in February told reporters at the time the capital fund would amount to at least 100 mln dlrs. Ongpin proposed the 250 mln dlr fund during a trip to the United States last September. His plan called on private investors to raise funds to buy discounted obligations of Philippine borrowers from creditors and convert them to equity in local projects. REUTER | PHILIPPINE CAPITAL FUND PLANNED, ONGPIN SAYS |
<Bond Corp International Ltd> a subsidiary of the Australian-based Bond Corp Holdings Ltd <BONA.S> said it would defer its planned rights issue but still wants the issue to be made before July 31. No date has been set for the issue announced in January. In a document to shareholders Bond Corp said the delay follows its receipt of a 240 mln H.K. Dlr loan from its parent company to meet the first payment on the newly acquired Bond Centre commercial complex in central Hong Kong. It also wants outside partners to take up to 50 pct in the project the company said. The January announcement said the rights issue would finance Bond Corps 1.4 billion dlr acquisition of a 23.77 pct stake in HK-TVB Ltd <TVBH.HK> from film magnate Run Run Shaw. The company then reached an agreement with a consortium led by Sino Land Co Ltd <SINO.HK> to buy a commercial complex that is still under construction for 1.9 billion dlrs. Bond International said in the document that except for the 240 mln dlr loan the deal would be financed from internal resources and by selling an interest in the building. The payments must be completed by the end of 1987. Bond International has also sold several residential buildings in Hong Kongs mid-levels district for a total of 68.35 mln dlrs the statement said. The flats were among the properties it bought last year from Hongkong Land Co Ltd <HKLD.HK> for 1.4 billion dlrs. Analysts said Bond International is heavily geared as it has relied on bank borrowings to purchase both the Hongkong Land properties and the HK-TVB shares. Bond International also said in the document that while it plans to sell an interest in the complex it will hold the HK-TVB shares as a long-term investment. REUTER | BOND DEFERS RIGHTS ISSUE, MULLS PROJECT PARTNERS |
Philippine government revenue is expected to rise 26 pct to 99.9 billion pesos this year from 79.1 billion in 1986 Finance Secretary Jaime Ongpin said. In a report to President Corazon Aquino on his departments performance during the year ended February 28 Ongpin said at least 15.9 billion pesos were expected to accrue from new tax reform measures announced last year. He said the goal for official development assistance (ODA) this year is two billion dlrs adding that aid donors have committed ODA inflows of 1.7 billion dlrs in 1987 up 30 pct from 1.3 billion in 1986. Ongpin said steps planned to provide a sound revenue base included a value added tax (VAT) system due to be introduced in 1988. He gave no other details. He said treasury bill maturities interest rate levels and the volume of government securities sold to the private sector have improved significantly. In particular short-term prime interest rates which had gone over 40 pct in 1985 are now down to less than 10 pct he said. Ongpin said the governments debt-equity scheme introduced in August last year had attracted more than 276 mln dlrs worth of applications but selective evaluation had resulted in approvals of only 61.8 mln dlrs at end-February. He said his department aims to accelerate its privatisation program and the sale of non-performing assets owned by associates of former President Ferdinand Marcos to achieve a 1987 sales target of four billion pesos which would help finance land reform. Aquino said earlier this month that all the 24 billion pesos the government hopes to raise from the sale of the failed companies will be used to finance the land reform plan. Ongpin also said the government would pursue efforts to obtain 500 mln dlrs in concessional funding for the program from a World Bank-led consultative group of multilateral and bilateral aid donors. The government has said the land reform plan aims to distribute 9.7 mln hectares of land to poor peasants. REUTER | PHILIPPINES SEES 1987 GOVERNMENT REVENUE UP 26 PCT |
Norways trade deficit widened in February to 957 mln crowns from 80 mln crowns in January and 492 mln crowns in February last year the Central Bureau of Statistics said. Exports dropped to 10.66 billion crowns last month compared with 11.11 billion in January and 10.85 billion in February 1986 it added. Crude oil and natural gas exports totalled 4.56 billion crowns in February against 5.10 billion in January and 5.36 billion a year ago. REUTER | NORWAY'S TRADE DEFICIT WIDENS IN FEBRUARY |
Yields on certificates of deposit issued by the United Arab Emirates Central Bank were unchanged at 6-1/8 pct the bank said. The yield applies to maturities of one two three and six months. REUTER | UAE GOVERNMENT PAPER YIELDS UNCHANGED |
The Dutch cost of living index (base 1980) fell 1.2 pct to 121.5 in the year to mid-February after a 1.3 pct fall in the year to mid-January 1987 the Economics Ministry said. The February index was 0.2 pct up on January. Clothing shoe and vegetable prices rose in February while prices of coffee heating oil and most car fuels fell the Ministry added. REUTER | DUTCH COST OF LIVING FALLS 1.2 PCT IN FEBRUARY |
Helaba Luxembourg Hessische Landesbank International has issued a 300 mln Luxembourg franc seven-year private placement with a coupon of 7.5 pct and priced at par lead manager Banque Generale du Luxembourg said. A spokesman said the issue had already been placed in full. Fees total 1-3/4 pct with 1-1/2 pct for co-managers. The management group includes Banque Paribas (Luxembourg) Kredietbank SA Luxembourgeoise and Banque de Luxembourg SA. The borrower is an affiliate of West Germanys Hessische Landesbank Girozentral REUTER | HELABA UNIT ISSUES LUXEMBOURG FRANC PLACEMENT |
Swedens industrial production fell 1.8 pct during January compared with a fall of 0.8 pct the month before and remains unchanged compared with January 1986 according to figures from the Central Bureau of Statistics. The bureau attributed the fall to a long Christmas break and particularly cold weather which lowered production in the forestry industry. REUTER | SWEDISH INDUSTRIAL PRODUCTION FALLS IN JANUARY |
The Bundesbank came into the domestic money market to add temporary liquidity through federal government funds as call money rates rose above 4.0 pct dealers said. They estimated that the bulk of liquidity was added at about 3.95 pct. Call money fell to 3.90/4.0 pct after the move. It had been 3.80/90 on Friday. The move came as call money extended a rise begun Friday after the Bundesbank took up some six billion marks owed to it by other European central banks after currency interventions in the framework of European Monetary System in January. Rates could ease further in trading today but dealers expect them to rise later in the week as banks begin paying out funds for tax payments on behalf of clients. Some 30 billion marks is likely to leave the market this month with the bulk being paid out next week. In anticipation of this liquidity drain banks have stocked up reserves at the Bundesbank. On Thursday minimum reserve holdings declined to 57.0 billion marks from 60.0 billion on Wednesday but were well above the 53.2 billion held on Tuesday. Daily average reserve holdings rose slightly to 54.7 billion marks from 54.5 billion. The daily average reserve holdings were above the level of around 51 billion marks dealers said is needed for the required daily average for the month. With the heavy tax drain in March banks are likely to remain cautious about taking more liquidity out of reserves than is absolutely necessary. However a new securities repurchase pact likely to be added next week to replace a facility expiring then could somewhat offset the drain. The Bundesbank is expected to allocate more than the 3.4 billion marks which is due to be rolled over dealers said. REUTER | BUNDESBANK ADDS MONEY MARKET LIQUIDITY |
Toyota Motor Corp <TOYO.T> is likely to name more American companies as suppliers of car parts for its wholly-owned U.S. Subsidiary Toyota Motor Manufacturing USA Inc (TMM) a Toyota official told Reuters. Toyota is studying the use of General Motors Corps <GM.N> GM Delco Products as a supplier of motors for windshield wipers and Illinois Tool Works Inc for window handles he said. Another U.S. Firm may be used to supply radiator tanks. Toyota had originally planned to use two Japanese companies to supply the parts Nippondenso Co Ltd <DNOT.T> and Aisin Seiki Co Ltd. Toyota is also considering some other U.S. Firms as suppliers but the spokesman declined to name them. Cars produced at Toyotas Kentucky plant will consist of 60 pct local content instead of an earlier planned 50 pct he said. The plant is scheduled to start production in mid-1988 and have an annual capacity of 200000 cars. Industry sources said the Toyota move was designed to head off criticism that it was not using enough U.S. Company-made parts at its Kentucky plant. REUTER | TOYOTA LIKELY TO NAME AMERICAN FIRMS AS SUPPLIERS |
Pechiney <PUKG.PA> said it signed two letters of intent with the Soviet Union covering the setting up of packaging and packaging materials joint ventures. It said one proposed venture would produce aluminium packaging for food and cosmetics. The other envisaged Pechiney putting together a consortium of European partners to set up a packaging and equipment manufacturing unit in the Soviet Union. A Pechiney spokesman said two working groups would prepare detailed projects over the next three months. He said it was too soon to estimate the financial value of the two ventures. REUTER | PECHINEY SIGNS LETTERS OF INTENT WITH SOVIET UNION |
OPEC produced only about 14 mln bpd of oil in the second week of March -- 1.8 mln bpd below its ceiling -- largely because of pipeline problems in Turkey and Ecuador the Middle East Economic Survey (MEES) estimated. A landslide breached Iraqs one mln bpd pipeline through Turkey on March 6 for a week and earthquakes in Ecuador have shut down its export pipeline for four to five months. Ecuador has an OPEC quota of 210000 bpd. MEES put Saudi Arabian output at 2.9 mln bpd in the first week of March and 3.1 mln bpd in the second in addition to output from the Neutral Zone between Saudi Arabia and Kuwait. MEES said Saudi Arabia was pumping more than 300000 bpd of its total production into floating storage. Saudi Oil Minister Hisham Nazer told Reuters and the television news agency Visnews yesterday that Saudi output including Neutral Zone production was around three mln bpd. The Cyprus-based newsletter also said authoritative Libyan oil sources said Libya was producing 850000 bpd compared with its 948000 bpd quota and that actual liftings are much lower than that. It said one major Libyan equity producer had partially stopped lifting its 55000 bpd equity entitlement for March because Libya was insisting on official prices but is still lifting 40000 bpd of debt crude at official prices and a further 25000 bpd of purchase crude. It said small equity producers with entitlements of only 2000 to 3000 bpd had also told Tripoli they could not lift at official prices. MEES said Iraq had sent a telex to OPEC and member countries calling for the formation of a committee to study what it said were inequalities in marketing potential among various members. The newsletter said the Iraqi letter indicated Baghdad was having difficulty selling crude at official prices. The Iraqi telex pointed out that some member countries export substantial volumes of oil that are not subject to OPEC price regulations -- exports of refined products equity crude on which the margins are equivalent to covert discounts and other forms of hydrocarbons which are marketed in package deals with crude oil. REUTER | MEES SAYS SECOND WEEK MARCH OPEC OUTPUT 14 MLN BPD |
Year-on year Finnish consumer prices fell to 3.5 pct in February 1986 from 3.7 pct in January and 4.6 pct in February 1985 the Central Statistical Office said. Consumer prices rose 0.3 pct in February after rises of one pct in January and 0.5 pct in February 1985. The consumer price index base 1981 was 142.7 in February 142.2 in January and 137.8 in February 1986. REUTER | FINNISH INFLATION FALLS TO 3.5 PCT IN FEBRUARY |
Engineering group Alsthom <ALSF.PA> said it planned to slash 420 jobs this year from the 5000 strong workforce in its electrical equipment division. Details of the proposed staff reductions will be put to labour representatives at a meeting on March 19. Company officials said the cuts were needed to adjust to a drop in orders from French state utility Electricite de France and the cancellation or postponement of unspecified export contracts. REUTER | ALSTHOM PLANS ELECTRICAL EQUIPMENT JOB CUTS |
Bridgestone Corp <BRIT.T> said it and <Clevite Industries Inc> of the United States will launch a joint venture in the U.S. To produce parts for car engines. The joint firm is to have a capital of 40 mln dlrs and will produce rubber for cushioning car engines from vibration. Launch date for the company be owned 51 pct by Clevite and 49 pct by Bridgestone is to be in June. REUTER | BRIDGESTONE AND CLEVITE IN CAR PARTS VENTURE |
Club Mediterranee <CMI.PA> said it planned a 150 mln franc increase in its authorised capital to 388.11 mln francs from the present 238.11 mln. Shareholders approval would be sought at an extraordinary meeting on April 16. The meeting would also be asked to approve a merger of two Italian subsidiaries <CM Italia Spa> and <Societa Amministrazioni Turistiche Srl>. This would realise a capital gain on CM Italias assetsthe amount of which would be determined by exchange rates ruling on the effective date of the merger a company announcement said. REUTER | CLUB MED ASKS SHAREHOLDER APPROVAL FOR CAPITAL INCREASE |
Japanese banks may have to realize significant losses on their seven billion dlrs in perpetual floating rate notes after the recent collapse of the market bankers said. How much of a loss is realized in the current fiscal year ending March 31 depends on the accounting treatment recommended by the Finance Ministry. Ministry sources said the Ministry has yet to decide what guidance to give Japanese banks in valuing the perpetual floating rate notes they hold. The notes are held by Japanese city trust long-term and regional banks including their overseas branches. Roughly half of the Japanese banks assess foreign asset portfolios on the basis of current market prices while the others assess them at either the acquisition cost or the current market price whichever is lower bankers said. With the market for such perpetuals non-existent Finance Ministry officials questioned the propriety of using nominal quotations supplied by the notes lead managers to determine bank book losses. The Ministry is currently awaiting a legal judgement by the National Tax Administration Agency on the propriety of using such quotations one official said. Banks using current market prices alone to value their holdings can avoid realizing losses now because they can argue that the market is non-existent and hope for a recovery next year bankers said. But those banks who use acquisition cost to value foreign portfolios cannot look to the market bankers said. The acquisition cost is obviously higher than the market price whatever it may be these banks must realize losses in the current fiscal year. REUTER | JAPAN BANKS FACE BIG LOSSES ON PERPETUAL FLOATERS |
Pearson Plc <PSON.L> said the recent sale of its Fairey Engineering companies in a 51.5 mln stg management buy-out was part of its policy of concentrating on four key sectors. In a statement with its 1986 results the company said its information and entertainments sectors Financial Times FT newspaper had record sales and profits. The FT is subject to a 70 mln stg investment programme with the printing and publishing operation moving to a new plant in the London docklands next year. Its other key sectors are merchant banking oil and china. Commenting on its Camco Inc oil service subsidiary Pearson said it believes the oil business setback is only temporary. The group has been acquiring oil properties in both the U.S. And Britain which will begin to make a significant impact on profits in the 1990s. Far East operations of fine china subsidiary Royal Doulton Ltd are being expanded in the wake of record recent sales in Japan it added. Pearson reported 1986 pre-tax profit of 121.1 mln stg up from 109.3 mln in 1985. Turnover fell to 953 mln from 970 mln. REUTER | PEARSON CONCENTRATES ON FOUR SECTORS |
German February central bank money grows annual 7.5 pct (January, same) - prov. Bundesbank data |
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The government-owned <Kowloon-Canton Railway Corp> is planning a new line to link up the existing railroad with the new light rail system now under construction a company spokeswoman said. She said the 14.9-kilometre link will connect the two independent lines in the northern part of the suburban area near the China border. It is not yet decided whether a light rail system or a conventional system will be used for the link. The link which will take about 3-1/2 years to complete is expected to cost 1.26 billion H.K. Dlrs she said. The spokeswoman said the final decision on the link is up to the government depending on the governments overall transport and development policy. She said consultancy studies commissioned by the company show that by 1996 the new link will carry 137100 passengers daily and generate an additional 50000 passengers in the conventional railway system. REUTER | H.K.'S KOWLOON-CANTON RAILWAY PLANS NEW LINE |
West German central bank money stock was growing at an annualized 7.5 pct in February unchanged from the 7.5 pct reported in January provisional data from the Bundesbank showed. The figure was thus outside the three to six pct range set by the Bundesbank for 1987. In absolute terms the measure rose to 223.2 billion marks in February from 221.8 billion in the prior month. The data showed that the stock grew at an annualized 8.6 pct over the six months to February slower than the 9.4 pct rise in the same period to January. Of the two components comprising central bank money stock cash in circulation rose to 111.7 billion marks in February from 110.9 billion in January the Bundesbank data showed. This gave an annualized 8.3 pct rise over the six months to February down from a 10.2 pct increase over the six months to January. Minimum reserve requirements on domestic liabilities grew to 111.5 billion marks in February from 110.9 billion in January. This yielded an annualized 8.8 pct rise over the six month to February up slightly from an 8.6 pct increase over the same period to January. REUTER | GERMAN FEBRUARY CENTRAL BANK MONEY GROWTH STEADY |
UK FEB RETAIL SALES RISE PROVISIONAL 2.2 PCT (JAN FALL 2.2 PCT) - OFFICIAL |
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Gold is expected to continue its rise this year due to renewed inflationary pressures especially in the U.S. Hamburg-based Vereins- und Westbank AG said. It said in a statement the stabilisation of crude oil prices and the Organisation of Petroleum Exporting Countries efforts to achieve further firming of the price led to growing inflationary pressures in the U.S. The worlds biggest crude oil producer. Money supplies in the U.S. Japan and West Germany exceed the central banks limits and real growth of their gross national products it said. Use of physical gold should rise this year due to increased industrial demand and higher expected coin production the bank said. Speculative demand which influences the gold price on futures markets has also risen. These factors and South Africas unstable political situation which may lead to a temporary reduction in gold supplies from that country underline the firmer sentiment it said. However Australias output is estimated to rise to 90 tonnes this year from 73.5 tonnes in 1986. REUTER | GERMAN BANK SEES HIGHER GOLD PRICE FOR 1987 |
The volume of U.K. Retail sales rose a provisional seasonally adjusted 2.2 pct in February after falling a final 2.2 pct in January figures released by the Department of Trade and Industry show. The February sales index base 1980 was put at a preliminary 125.0 after a final 122.3 in January. In the three months from December to February the level of sales was little changed over the previous three months but was nearly six pct higher than the same year ago period. On a non-seasonally adjusted value basis retail sales in February were a provisional 9.0 pct higher than a year earlier. The Department noted the latest figures were similar to the average in the fourth quarter last year but well above the January index which was depressed by the effects of severe weather. The February trading period comprised the four weeks February 1 to 28. Final February retail sales figures will be published on April 6. REUTER | U.K. RETAIL SALES RISE 2.2 PCT IN FEBRUARY |
Shr 17.15p vs 12.37p Final dividend 5.5p making 7.5p vs 6.2p Pre-tax profit 39.4 mln stg vs 29.7 mln. Turnover 543.2 mln stg vs 481.5 mln Operating profit 48.2 mln stg vs 38.2 mln Net interest 8.9 mln vs 8.6 mln Tax 14.3 mln vs 11.2 mln Profit after tax 25.1 mln vs 18.4 mln Minority interest 300000 vs 615000 Net tangible assets per ordinary shr 111.3p vs 101.6p REUTER | TRANSPORT DEVELOPMENT GROUP PLC <TDGL.L> 1986 YEAR |
The credibility of government efforts to stabilise fluctuating commodity prices will again be put to the test over the next two weeks as countries try to agree on how a buffer stock should operate in the cocoa market government delegates and trade experts said. Only two weeks ago world coffee prices slumped when International Coffee Organization members failed to agree on how coffee export quotas should be calculated. This week many of the same experts gather in the same building here to try to agree on how the cocoa pact reached last summer should work. The still unresolved legal wrangle surrounding the International Tin Council (ITC) which had buffer stock losses running into hundreds of millions of sterling is also casting a shadow over commodity negotiations. The ITCs failure has restricted negotiators ability to compromise as governments do not want to be involved in pacts with built-in flaws or unlimited liability but want clear lines drawn between aid and trade. A more hopeful sign of cooperation was agreement on basic elements of a new International Natural Rubber Agreement in Geneva at the weekend. Some importing countries insist the International Cocoa Organization (ICCO) buffer stock rules must not be muddied with quota type subclauses which might dictate the type of cocoa to be bought. One consumer country delegate said this would distort not support the market. Trade and industry sources blame uncertainty about the ICCO for destabilising the market as the recent collapse in coffee prices has made traders acutely aware that commodity pacts can founder. On Friday this uncertainty helped push London cocoa futures down to eight month lows. The strength of sterling has also contributed to the recent slip in prices. The ICCO daily and average prices on Friday fell below the must buy level of 1600 SDRs a tonne designated in the pact which came into force at the last ICCO session in January but without rules for the operation of the buffer stock. Consumers and producers could not agree on how it should operate and what discretion it should be given. The agreement limits it to trading physical cocoa and expressly says it cannot operate on futures markets. A cash balance of some 250 mln dlrs and a stock of almost 100000 tonnes of cocoa enough to mount large buying or selling operations were carried forward from the previous agreement. Members finance the stock through a 45 dlrs a tonne levy on all cocoa they trade. It has an upper limit of 250000 tonnes. The key arguments being faced by the ICCO working group on buffer stock rules which is meeting today and tomorrow will be over non-member cocoa and differentials the buffer stock should pay when trading different types of cocoa. Another working group is scheduled to meet Wednesday to discuss administrative matters and the full council meets on Thursday. Producers have so far maintained that buffer stock funds should not help mop up surplus cocoa produced in non-member countries such as Malaysia. Consumers say when this cocoa is the cheapest the buffer stock should buy it rather than compete with chocolate manufacturers for premium-priced high quality cocoas. The argument over buying non-member cocoa is closely linked to the one over differentials for different qualities. European industry and trade advisers have suggested as a compromise that the buffer stock have a maximum share that can represent non-member cocoa and that it use the London futures markets existing differentials for different qualities. Currently good West African cocoa is tendered at par onto the London market. Discounts which are currently under review range up to 50 stg a tonne for Brazilian and Malaysian cocoa. Consumer delegates said the same arguments in reverse would operate when prices are high - the buffer stock should sell the highest priced cocoa in most demand forcing all prices lower. The January talks were slowed by a split inside the European Community a key ICCO consumer group with France siding with producers. EC representatives met in closed session in Brussels on Friday in an attempt to reach a common ground and a diplomatic source said narrowed the range of positions among the 12 nations. The source said the EC will be looking for signs of flexibility on the part of producers in the next few days and will be able to respond if they are there. One ICCO delegate describing the producer/consumer split said consumer proposals mean buying more cocoa for less and backs the concept of the pact which is meant to support the market where trade buying is not. In contrast he said producers seem to want to sell their cocoa to the buffer stock rather than consumers. Other more technical issues still outstanding include whether the buffer stock should buy at a single announced posted price as in the previous pact or by announcing it is buying then accepting offers. In either case delegates said it is accepted that producers must be given a clear opportunity to make offers of cocoa for forward shipment directly to the buffer stock in a way that is competitive with spot offers made by dealers. REUTER | COCOA LATEST FOCUS FOR COMMODITY PACT NEGOTIATORS |
Cathay Pacific Airways Ltd <CAPH.HK> has won a two-year license from the Hong Kong government to operate scheduled flights to Toronto a Cathay spokesman said. He told Reuters the airline had sought a five-year right to add Toronto to its existing license to serve the United States and Canada. Were pleased the spokesman said. Its important because Toronto has a large ethnic Chinese commmunity and theres a growing amount of travel. Canadian and British authorities must agree on air service rights before Cathay can begin service to toronto. Cathay Pacific is controlled by Swire Pacific Ltd <SWPC. HK>. Hongkong Dragon Airlines Ltd a fledgling locally based airline had opposed the move saying that Cathay should wait until its license for its U.S. And Canadian routes expires in February next year. A hearing started today and continues tomorrow. An application by Dragonair is to start flights to Malaysian cities including Kuala Lumpur and Kota Kinabalu. Cathay is opposing Dragonairs request. REUTER | CATHAY PACIFIC WINS TORONTO ROUTE LICENSE |
Yugoslav retail prices in February rose 7.2 pct from January to stand 91.6 pct higher than in February 1986 the Federal Statistics Office said. In January retail prices rose 6.6 pct from December to stand 90.4 pct higher than in January 1986. The cost of living an index that includes services and utilities as well as retail prices was up 7.3 pct in February from January and stood 93.6 pct higher than in February 1986. In January the cost of living increased by 6.4 pct from December and stood 91.8 pct higher than in January 1986. REUTER | YUGOSLAV FEBRUARY INFLATION RISES 7.2 PCT |
Finnish two-day general elections ending tonight have not affected financial markets with trade continuing as normal bankers said. There is no sign of nervousness the market is steady as a rock. Trade is normal I see no special increase or decrease one foreign banker said. The markkas currency index was fixed today at 103.8 unchanged since early March. The mid-rate fix of the dollar was 4.517 markka down from 4.546 last Friday. Opinion polls show a possible return into government of the Conservatives after 21 years in opposition. Trade at the Helsinki Stock Exchange was unaffected by the election securities analysts said. They said the likelihood of major changes in economic policy even if the Conservatives join the government are slim although they favour further liberalisation of financial markets. The Conservatives who hold 44 seats in Parliament have shelved plans to privatise state industry in order to improve their chances of joining a centrist coalition. REUTER | FINNISH MARKETS SHOW NO PRE-ELECTION IMPACT |
Radioactive contamination of water supplies around the Chernobyl nuclear power plant will not reach danger levels when the winter snowfall starts to melt a Soviet scientist was quoted as saying at the weekend. Konstantin Sytnik vice-president of the Ukrainian Academy of Sciences said there had been fears that melted snow containing radioactive particles might flow into main water supplies. But he told the Communist Party newspaper Pravda that contamination of snow around the plant was within safety levels and some of it had already been absorbed into the soil. Snowfall this winter had been greater than usual and a certain increase in the amount of radiation in the water was inevitable. But contamination would be within the permissible limits Sytnik said. The banks of the river Pripyat which flows near the plant had been reinforced to prevent it bursting its banks when the thaw began this spring he added. About 135000 people were evacuated and 31 were killed after an explosion and fire at Chernobyl last April 26. A concrete wall was built last summer to prevent contamination of the Pripyat by radioactive ground water. Meanwhile a Ukrainian official was quoted as saying today that preparations were under way in the Ukraine to evacuate towns and villages before there was heavy flooding after higher than usual snowfall this winter. V. Martynenko head of a flood commission in the Donbass area of the Ukraine told Pravda preparations had begun for the evacuation of about 112000 people in the Donbass in the south of the republic. About 190 towns and villages and 12000 homes could be flooded when snow -- falls of which had been six times higher than usual in some areas -- started to thaw. Cattle had already been moved from some parts they said. REUTER | SCIENTIST ALLAYS FEARS ABOUT CHERNOBYL POLLUTION |
President Aquino has ordered the dissolution of all armed civilian vigilante groups around the Philippines officials said. The order follows protests about the activities of vigilantes by human-rights activists but goes against calls by the military for more such groups. The vigilantes have been credited with a major role in recent successes in several districts against communist rebels. Reuter | AQUINO DISBANDS VIGILANTE GROUPS |
Shr 25.7p vs 21.5p Div 6p vs 4p Pretax profit 24.13 mln stg vs 16.40 mln Net after tax 15.08 mln vs 10.52 Extraordinary credit 8.71 mln stg vs nil Turnover 140.8 mln vs 96.55 Note - The extraordinary item comprises profit less losses on the sale of certain subsidiaries less related tax and minority interests. Pretax profit comprises - Securities and money broking 15.44 mln stg vs 10.75 mln Personal financial services 3.6 mln vs 735000 stg Media 3.74 mln vs 3.16 mln Market reserch 912000 stg vs 732000 Net interest 438000 vs 1.03 mln REUTER | MAI PLC <MLLL.L> SIX MONTHS TO DECEMBER |
The head of a Philippine panel charged with recovering illegal wealth accumulated by former President Ferdinand Marcos and his associates said they still controlled large funds circulating in the countrys economy. Ramon Diaz Chairman of the Presidential Commission on Good Government (PCGG) told Reuters in an interview: There is every reason to believe that the cronies and President Marcos and his family were able to hide millions and millions of pesos before they fled. As a matter of fact we have been able to get hold of crates of newly printed currency. Diaz did not give figures but said: We believe they still have a lot of funds. These are the funds that they will use in the coming elections. These are the funds that they used to stage those coups. He was referring to congressional elections scheduled for May 11 and to the three coup attempts faced by President Corazon Aquino since she toppled Marcos a year ago. Diaz said the PCGG so far has recovered cash and property valued at about eight billion pesos and had sequestered shares of stock of at least 286 firms. We have achieved more than what we thought we could achieve in one year he added. The government last week announced that businessman Antonio Floirendo an associate of Marcos known as the banana king had turned over 70 mln pesos in cash to the PCGG and promised to surrender titles to property in New York and Hawaii worth another 180 mln pesos. In return the PCGG said it had lifted freeze and sequestration orders on Floirendos properties. Diaz said there were already similar preliminary agreements with another Marcos associate Roberto Benedicto. He said Benedicto had surrendered control of several newspapers and radio and television stations and agreed to PCGG control of the boards of a bank and a hotel he owned in the Philippines. Diaz said the PCGG based its estimates of illegal wealth on income-tax returns and land titles of Marcos associates. Anything over and above reported income -- thats what we have to recover he said. He said a decision by the PCGG last week to probe street certificates held by brokers at Manilas two stock exchanges was prompted by suspicion that illegal funds were in circulation. Street certificates describe securities held in the name of a broker or another nominee instead of a customer so as to permit easy trading or transfer. Reuter... | PANEL HEAD SAYS MARCOS STILL CONTROLS LARGE FUNDS |
Madagascars vital rice crop is estimated at 2286000 tonnes of paddy this year up from 2138000 in 1986 the Ministry of Agriculture said. The Trade Ministry said rice imports quadrupled in local currency value during the first nine months of last year as the government established a buffer stock of the countrys staple food. Rice imports increased to 82.4 billion Malagasy francs during the first nine months of last year from 20 billion in the same period of 1985 the ministry said without disclosing the tonnages involved. REUTER | MADAGASCAR RICE CROP ESTIMATED HIGHER IN 1987 |
The National Bank of Hungary said its name had been used in fraudulent foreign exchange contracts with Volkswagen AG <VOWG.F> but denied any misconduct on its part. National Bank managing director Laszlo Karczag told Reuters All our businesses (with Volkswagen) had been closed with all payments made when due on both sides and therefore we do not have ... Any open or unsettled positions whatsoever with them. Karczag said the bank was in contact with Volkswagen and was rendering them all possible assistance in their investigations. The West German weekly Der Speigel said a fraud involving VWs reported 480 mln mark loss on foreign exchange dealings came to light when the Hungarian National Bank refused to honour what turned out to be a fake forward currency purchase contract. Reading a prepared statement Korczag said We have knowledge however of the fact that in certain fraudulent contracts the name of the National Bank of Hungary has also been misused. We deny any kind of misconduct on our part. The bank had been doing foreign exchange business with Volkswagen for a few years he said. REUTER | HUNGARIAN BANK DENIES MISCONDUCT IN VW AFFAIR |
President Leon Febres Cordero said Ecuador would honour its debt when it had the capacity to make payments but said foreign banks had calculated oil would have to be 25 dlrs a barrel for Ecuador to meet its commitments. Ecuador said on Friday that last weeks earthquake was forcing it to reaffirm an earlier decision -- based on the slide in world oil prices -- to suspend debt payments to private foreign banks which hold two-thirds of its 8.16 billion dlr foreign debt. All legitimate debt is a commitment of honour the president said during a visit to the quake zone. A government as a sovereign entity has dignity and prestige to maintain. Private foreign banks and the World Bank had calculated oil would have to be at least 25 dlrs a barrel for Quito to be able to meet its commitments Febres Cordero said. He added that Ecuadorean crude was now selling for 15 to 17 dlrs a barrel after having been sold for many months at 12 dlrs a barrel and as low as seven dlrs before that. Meanwhile Ecuador announced an austerity program and a price freeze on key consumer goods as a result of the earthquake which killed at least 300 people. Presidency Minister Patricio Quevedo said the budget would be cut by five to 10 pct government hiring would be frozen and salaries of top officials including the president and cabinet would be reduced. He also said a price freeze would be imposed on 20 basic consumer items mainly food staples while the price of gasoline would rise by between 69 and 80 pct and bus fares would rise by 20 pct. Gasoline supplies would also be limited. Reuter | ECUADOR SAYS IT WILL PAY DEBT WHEN IT CAN |
The Bank of England said it had revised its estimate of the shortage in the money market today up to 1.15 billion stg before taking account of its early operations. Earlier the bank forecast the deficit at 1.05 billion stg and gave 90 mln stg assistance at an early round of bill offers. REUTER | U.K. MONEY MARKET DEFICIT FORECAST REVISED UPWARDS |
Banque Paribas which arranged a 220 mln dlr loan for Ecuador last year to pre-finance oil exports wants to adjust the terms of the facility to help the country recover from a devastating earthquake bankers said. But the French banks plan which would effectively postpone repayment of about 30 mln dlrs of the loan for several months is running into stiff resistance from many of the 52 members of the loan syndicate. The pipeline that carries all Ecuadors oil exports was ruptured in the March 5 tremor and will take some five months to repair at a cost of about 150 mln dlrs to repair. President Leon Febres Cordero on Friday estimated total damages caused by the quake at one billion dlrs and said that Ecuador as a result would maintain Januarys suspension of interest payments on its foreign commercial bank debt. Payments were halted in January because of the drop in the price of oil which accounts for nearly two-thirds of Ecuadors export earnings and 60 pct of government revenue. Although sympathetic to Ecuadors plight many banks in the Paribas facility feel that emergency financial relief is a job for international financial organizations and not for commercial banks bankers said. The 18-month oil-financing facility which was signed last October 28 is one of the few purely voluntary credits for a Latin American nation since the regions debt crisis erupted in August 1982. Because it was a voluntary deal many bankers feel strongly that the orginal terms must be adhered to. Otherwise they fear the gradual re-establishment of normal market conditions for Latin borrowers will be set back. Theres a lot of reluctance by the other banks. They feel its a different facility and so any kind of suggestion of a restructuring would look bad one banker commented. Reuter | PARIBAS SEEKING TO ADJUST ECUADOR OIL FACILITY |
The Bank of Japan is satisfied with the yen around its current range a senior central bank official told reporters. He said the pledge by major industrial nations in Paris last month to cooperate to hold exchange rates around current ranges applied in both directions a dollar fall or a dollar rise. Unilateral intervention itself cannot ensure currency stability but it can be useful when coordinated with other policies and with other central banks he said. The Bank of Japan is rather confident currency stability will continue for some time the senior bank official said but declined to be more specific. Finance Minister Kiichi Miyazawa told parliament on Friday the current dollar/yen exchange rate is not necessarily satisfactory for the Japanese economy. Asked what factors might destabilize the markets the official cited a lessening of market fear about intervention a completely unexpected change in the economy of Japan the U.S. Or West Germany or resumption of comments by government officials seeking to talk the dollar up or down. The senior bank official said he expects Japans gross national product (GNP) to grow three pct or slightly more in the fiscal year beginning in April. That would be little changed from the performance expected this year. Domestic demand may grow nearly four pct in 1987/88 but the external sector will have a negative impact on GNP of nearly one percentage point he said. He said there was virtually no room for further monetary policy action to boost the economy. The economys performance in the future very much depends on fiscal policy he added. The central banks monetary policy has already done its part in stimulating the economy the senior bank official said. The Bank of Japan has cut its discount rate five times over the last year and a half. Although the central bank does not see any imminent risk of inflation there could be some problems in the future he said. We are sitting on a barrel of powder but fortunately it may still be wet he added. Liquidity among private households and especially the corporate sector has increased substantially he said. The liquidity is the reason for the recent boom of stock exchange prices the bank official said. This inflow of funds into the stock exchange occurring also in other countries may continue he said. REUTER | BANK OF JAPAN SATISFIED WITH YEN AT CURRENT RANGE |
Bank of China has taken a stake in Luxembourg-based finance company BAII Holdings SA a spokesman for BAII said. The stake was between three and five pct but no further details of the deal which was announced simultaneously in Paris London and Hong Kong were immediately available. BAII which is 50 pct Arab owned is looking to expand its activities in the Far East and recently established a wholly-owned merchant banking subsidiary in Hong Kong the spokesman said. The group had earnings of 15.4 mln dlrs in 1985. REUTER | BANK OF CHINA TAKES STAKE IN BAII HOLDINGS |
Saudi Arabian Oil Minister Hisham Nazer said OPECs December agreement to stabilize oil prices at 18 dlrs a barrel was being implemented satisfactorily and there was no immediate need to change it. Nazer in an interview with Reuters and the television news agency Visnews said Saudi Arabia was producing around three mln barrels per day (bpd) of crude oil well below its OPEC quota. Saudi Arabia the worlds largest oil exporter will continue to restrain production as long as other OPEC members adhere to the pact Nazer said. The 13-nation OPEC agreed in December to cut its production ceiling by 7.25 pct to 15.8 mln bpd and abide by fixed prices averaging 18 dlrs a barrel from February 1. Nazer in his first interview since succeeding Ahmed Zaki Yamani last October said: I do not foresee any need for new measures before the 25th of June when our (next OPEC) meeting will take place as scheduled. Nazer said OPEC was producing below 15.8 mln bpd and all members were abiding by its agreements. Weve heard news every now and then of violations but they were not at all verified he said. OPEC production curbs have boosted world oil prices from a 13-year low of around eight dlrs a barrel last August to near 18 dlrs after announcement of the December pact. Spot market prices slipped some two dlrs in February but have firmed in the past two weeks to near OPEC levels as traders gained confidence in OPEC price and output discipline. Nazer said Saudi Arabia would continue to produce below its 4.133 mln bpd quota if necessary to defend the 18 dlr price. As long as all the OPEC members adhere to the program as devised in December Saudi Arabia will continue to adhere to the agreement he said. Current production of three mln bpd includes oil from the Neutral Zone shared with Kuwait but not sales from floating storage Nazer said. King Fahd of Saudi Arabia in an interview with Reuters and Visnews on March 11 said the kingdom wanted oil price stability and called on non-OPEC producers to avoid harmful competition with OPEC. Saudi Arabia doesnt decide prices by itself but certainly desires price stability he said. Nazer said the output level did not mean the kingdom had returned to a role of swing producer within OPEC. Saudi Arabia allowed its output to sink as low as two mln bpd in August 1985 to compensate for slack demand and over-production by some OPEC states. Saudi Arabia is not playing that role. It is being played by OPEC membership as a whole because the reduction in the 15.8 mln bpd share of OPEC in the market is being shared by other members of OPEC Nazer said. Nazer said OPEC estimated demand for its oil during third quarter this year would be around 16.6 mln bpd. But he said if circumstances changed I am sure then the OPEC members will consult with each other and take the necessary measures. Oil analysts say the OPEC pact could come under strain when demand for petroleum products generally falls in the northern hemisphere spring and summer. Nazer said he was satisfied with the extent of cooperation from non-OPEC producers. Norway Egypt and the Soviet Union agreed to help OPEC by restraining production or exports after he visited them on OPECs behalf earlier this year. We did not ask any country to do anything. These were programmes they thought were necessary to stabilise market conditions and to help themselves attain better pricing conditions Nazer said. He said it was up to countries that declined to cooperate -- such as Britain -- to come up with their own proposals if they saw fit. | SAUDI OIL MINISTER SEES NO NEED TO ALTER PACT |
Turkeys trade deficit rose to 3.65 billion dlrs in 1986 from 3.39 billion in 1985 following increased imports from Western countries figures from the State Statistics Institute show. Exports were down 6.3 pct at 7.45 billion dlrs compared with 7.95 billion in 1985 while imports were down 2.1 pct at 11.10 billion dlrs from 11.34 billion. Total trade with Mid-East Gulf states fell some 40 pct due to lower oil prices with imports at 1.55 billion dlrs compared with 2.74 billion and exports at 1.65 billion after 2.72 billion. Exports to Organisation for Economic Cooperation and Development countries rose to 4.29 billion dlrs from 4.11 billion in 1985 while imports were 4.56 billion after 3.55 billion. Turkeys trade deficit in December narrowed to 216 mln dlrs from 340 mln in November and compared with 277 mln in December 1985. Reuter | TURKISH TRADE DEFICIT WIDENS IN 1986 |
A huge explosion in a flax factory in the northeast China city of Harbin killed 45 workers and injured 185 the official China Legal News reported. The newspaper said the explosion in the early hours of yesterday destroyed four buildings at the plant. More than 470 workers were in the factory at the time of the explosion. Doctors specializing in burns were rushed to Harbin to help treat the injured. The paper said the cause of the blast was still being investigated. It gave no further details. Reuter | 45 KILLED, 185 HURT IN CHINESE FACTORY BLAST |
Bearer shares of Schweizerische Aluminium AG <ALUZ.Z> (Alusuisse) fell sharply as trading resumed after a one-day suspension on Friday when the firm disclosed plans for a capital cut. The bearers held mainly by foreign investors dropped 30 Swiss francs to 460. But volume was not particularly heavy. Registered shares were less affected slipping five to 165. The participation certificates fell to 43 francs from 45.50. Alusuisse made a net loss of 688 mln francs after a restated 756 mln loss in 1985 and set a 50 pct capital cut. The company said it could break even this year. REUTER | ALUSUISSE SHARES FALL AFTER CAPITAL CUT NEWS |
The Bank of England said it provided the money market with a further 30 mln stg assistance. This brings the Banks total help so far today to 120 mln stg and compares with its upward revised estimate that the system would face a shortage of some 1.15 billon stg. The central bank bought bills for resale to the market in equal amounts on April 1 2 and 3 at an interest rate of 10-7/16 pct. REUTER | U.K. MONEY MARKET GIVEN FURTHER 30 MLN STG HELP |
Egypt and the Soviet Union are expected to sign an agreement in Moscow next week settling Cairos three billion dlr military debt Egyptian officials said. One official who asked to remain anonymous told Reuters a draft agreement would reduce to zero from two pct future interest payable on the 10 year-old debt and set a 25 year repayment term. Talks are due to begin in Moscow on Wednesday. Economy Minister Youssri Mustapha who leaves for Moscow on Tuesday met President Hosni Mubarak and Egyptian ambassador to Moscow Salah Bassiouni to discuss the issue. One official said Egypt would propose a new exchange rate for trade with the Soviet Union. Current commerce is based on a rate set in the 1960s of 0.38 Egyptian pounds to the dollar which Moscow sees as unreasonable. The fluctuating official rate is about 1.36 pounds to the dollar. The officials said part of the debt would be paid in exports of goods such as textiles leather and furniture. Egypt wants to settle the debt problem partly to open the door for new cooperation mainly in modernising Soviet-built steel aluminium and fertiliser plants under a five-year development plan ending June 30 1992. Egypt which already imports Soviet coal wood newsprint and glass also wanted a debt deal to allow purchases of currently blocked spare parts for its ageing Soviet military hardware the officials said. An estimated 65 pct of Egypts arsenal is still made up of Soviet-supplied equipment one official said. Cairo stopped repaying Moscow for arms purchases in 1977 when then-president Anwar Sadat broke with its long-standing ally and turned to the U.S.. REUTER | EGYPT, SOVIETS TO RENEGOTIATE ARMS DEBT TERMS |
Peru will put into effect today a foreign exchange rationing system for imports designed to stop a slide in the countrys international reserves a government decree in the Official Gazette said. Under the system importers will be required to present a bill from the foreign seller of goods and apply for a license for foreign exchange. The central bank will have 10 days to decide whether to issue the required foreign exchange. Net international reserves now total about 800 mln dlrs compared to 1.54 billion dlrs a year ago. The system will be effective until the end of 1988. A ceiling for foreign exchange availability will be set by a council with members from the central bank the economy ministry and the planning and foreign trade institutes. The central bank will issue licenses to procure foreign exchange in accordance with guidelines set by the council. Perus reserves fell sharply due to a drop in the trade surplus to about five mln dlrs in 1986 from 1.1 billion in 1985 according to preliminary central bank estimates. Total exports dropped to 2.50 billion dlrs last year against 2.97 billion in 1985. Reuter | PERU BEGINS FOREIGN EXCHANGE RATIONING |
The United States wants Taiwans currency to appreciate faster to reduce Taiwans trade surplus with the U.S. A senior trade official said. Board of Foreign Trade director Vincent Siew told reporters on Saturday U.S. Officials told him in Washington last week that unless Taiwan allowed its dollar to rise faster it would face retaliation. Siew returned from Washington on Friday after the U.S responded to Taiwans request to increase its textile export quotas by promising further talks in May. Taiwans surplus with the U.S. Hit a record 13.6 billion U.S. Dlrs in 1986. Washington signed a three-year accord with Taipei last year limiting textile export growth to 0.5 pct a year. Siew said the Taiwan dollar had risen by about 15 pct against the U.S. Dollar since September 1985. It surged last week amid indications Washington was seeking a major rise in its value. It rose four cents against the U.S. Dollar on Saturday to close at 34.59. Western trade sources told Reuters Taiwan and the U.S. Have been holding talks on the currency issue but added it is not clear how far Washington wants to see the Taiwan dollar rise. REUTER | TAIWAN SAYS U.S. WANTS TAIWAN DOLLAR TO APPRECIATE |
Saudi Arabia has dropped its condition that Brazil secure international bank guarantees before Saudia Arabia would ship it oil state-oil company Petrobras said in a statement. Petrobras said the Saudis will accept Banco do Brasil credit guarantees. Petrobras cancelled a 40 mln dlr crude oil purchase from the Saudis yesterday after they refused to accept a letter of credit from the official Bank of Brazil. The Saudis had demanded that Brazil get credit guarantees from leading international banks. Petrobras said the Saudis had been advised that if they did not change their mind by Monday Petrobras would negotiate the purchase of oil with other producers. The Petrobras statement said the shipment of 2.2 mln barrels will be made by the Saudis on March 24 as scheduled. The shipment was part of a contract signed in February for the Saudis to supply Brazil with 125000 barrels per day until June. REUTER | SAUDIS DROP CONDITION FOR OIL SALE TO BRAZIL |
Philips DuPont Optical Co is arranging a 145 mln dlr three-year transferable loan facility Chemical Bank International Ltd said as agent. The financing involves a 70 mln dlr loan which is available for drawing in the six months after signing and a 75 mln dlr revolving credit which is available for the life of the credit. Drawings under both tranches will be at 17.5 basis points over the London Interbank Offered Rate. There will be a utilisation fee of five basis points on the revolving credit if more than 50 pct is used and a commitment fee of 7.5 basis points. Borrowings will be available in currencies other than dollars and banks have been invited to join as lead managers at 15 mln dlrs for 7.5 basis points and as managers at 7.5 mln dlrs for five basis points. The borrower is an optical disk joint venture between Philips Gloeilampenfabrieken NV and E.I. Du Pont de Nemours and Co. REUTER | PHILIPS DUPONT UNIT ARRANGES 145 MLN DLR CREDIT |
Banca della Svizzera Italiana <BISZ.Z> said it planned a one-for-12 rights issue at 300 pct of nominal value to raise about 50 mln francs new capital. The rights issue would have a theoretical value to shareholders of 140 Swiss francs per bearer share and 45 per registered share. BSI was also seeking shareholder authorization for 200000 new participation certificates of a nominal value of 100 francs without rights for shareholders to back future convertible or warrant bonds or for other purposes. Existing 500-franc B tranche certificates would be split five-for-one. The split would improve the marketability of the existing certificates chief executive Giorgio Ghiringhelli told a news conference. The new bearer shares would be priced at 1500 francs compared with a closing price last Friday of 3325 on the Zurich Stock Exchange while the registered shares would be issued at 300 francs against a market price of 900. REUTER | BSI RAISING 50 MLN SWISS FRANCS VIA RIGHTS ISSUE |
PEPSICO OFFERS TO ACQUIRE CALNY INC FOR 11.50 DLRS A SHARE |
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Britain and West Germany told their European Community partners they would strongly oppose major elements of proposals to rid the EC of its farm surpluses. At a meeting of EC foreign ministers Britain called for a full debate on a proposed tax on edible oils and fats that has already angered EC consumer groups and unleashed Washington-led protests from exporters to the EC diplomats said. West Germany also opposed to the oils and fats tax will advise the meeting formally later today it cannot countenance other proposals that could hit German farmers they added. They said West Germanys objections were put in a letter this weekend from Chancellor Helmut Kohl to Jacques Delors the president of the ECs Executive Commission which had put forward the proposals last month in a bid to avoid a new EC cash crisis. Kohl reiterated German objections to proposed cereals production curbs but reserved his harshest criticism for a proposed dismantling of Monetary Compensatory Amounts (MCAs) - a system of cross-border subsidies and taxes which level out foreign exchange fluctuations for farm exports. Kohl made clear the dismantling would mainly hit German farmers who without MCAs would find it much more difficult to export to weaker currency states which means virtually all other 11 EC states diplomats said. Britain initiated the discussion on the proposal to impose a hefty tax on domestic and imported oils and fats because it could seriously damage EC trade relations. The diplomats said the United States had been the most outspoken among foreign critics of the proposal describing it as a breach of the ECs obligations under the world trade body GATT. But protests had also come from other exporters to the EC such as Senegal Malaysia Indonesia Brazil Argentina Iceland and Norway they added. Britain has often lined up against West Germany on the farm reform issue in the past but is keen to avoid measures that could spark a damaging trade war with the U.S. Foreign ministers were unlikely to take a decision on either the oils and fats tax or the MCA proposals today diplomats said. But their discussion should make clear that neither has a chance of surviving when it comes up for substantive consideration by EC farm ministers later this month they added. REUTER | U.K. AND GERMANY LEAD ATTACK ON EC FARM REFORMS |
Harper and Row Publishers Inc said its board of directors decided to take no action on two takeover bids that the company has received. Instead it appointed a committee of independent directors to study strategic alternatives for the 170-year-old firm. The alternatives include continuation of the companys existing business plans possible business combinations sales of stock restructuring and the sale of all or part of the company. Kidder Peabody and Co Inc has been retained to advise on the alternatives Harper and Row added. Private investor Theodore Cross last week offered 34 dlrs a share for Harper and Row prompting a rival bid of 50 dlrs a share from another publishing firm Harcourt Brace Jovanovich Inc <HBJ>. After carefully considering the two offers at a meeting on Friday the Harpers and Row board decided not to act on them. The directors unanimously expressed their strong desire to preserve the companys independence and take advantage of its considerable future prospects according to director Winthrop Knowlton former chief executive and now chairman of the newly established independent committee. However given the significant current interest in the company we also feel that we should carefully review all the options available. The committee will consider all the pertinent facts and alternatives... We intend to make a careful and informed decision but will proceed expeditiously to a conclusion Knowlton said. Pending its deliberations Harper and Rows board has postponed indefinitely a special meeting of stockholders that had been scheduled for April 2 to discuss a proposal to recapitalize the companys stock in order to create two classes of shares with different votinmg rights. Reuter | HARPER AND ROW <HPR> TO MULL OPTIONS AFTER BIDS |
The Federal Home Loan Bank Board (FHLBB) announced the acquisition of Home Savings and Loan Association in Seattle Washington by InterWest Savings Bank of Oak Harbour Washington. The FHLBB said Home Savings was the 12th troubled savings institution requiring federal action this year. It said Home Savings had assets of 150.6 mln dlrs in assets and InterWest had assets of 342.9 mln dlrs. Reuter | FAILING WASHINGTON STATE S/L IS ACQUIRED |
U.S. Commerce Secretary Malcolm Baldrige predicted Congress will pass a reasonable trade bill this year and said tough protectionist legislation could prompt a trade war. The mood of the Congress right now is as tough on trade as Ive ever seen it in six years in Washington Baldrige said in a weekend television interview. I think well still be able to get a reasonable trade bill out in spite of that because the whole Congress is trying to work together with the administration but there is a hardening trade attitude he said. President Reagan opposes protectionist legislation but agreed to support a trade bill when it became apparent that opposition Democrats would pass such legislation. However Baldrige warned measures that would penalize trading partners such as Japan South Korea and Taiwan for failing to cut their trade surpluses with the U.S. could lead to retaliation and he said he would urge Reagan to veto any such bill. When asked if there is a rising danger of a worldwide trade war Baldrige said: Yes I dont think theres any question about that. Reuter | BALDRIGE WARNS OF WORLD TRADE WAR DANGER |
Seventeen people were killed and 22 are missing after a dam collapsed following heavy rains in Soviet Tadzhikistan the official news agency Tass said. Water broke through the dam in the Kulyab region of the Central Asian republic and fell on the village of Sargazan sweeping away 53 houses destroying bridges and damaging railway lines Tass said. The Central Committee of the Tadzkhikistan Communist Party had sent condolences to the relatives of the dead Tass said. Reuter | 17 KILLED AFTER SOVIET DAM COLLAPSES |
Leading industrial nations will meet again next month to review their accord on currency stability but U.S. Officials said financial markets are convinced for now the countries will live up to commitments to speed up economic growth. The narrow currency movements of recent weeks strongly suggests the six leading industrial countries have tamed the normally unruly financial markets and next months talks seem likely to build on that stability. A Reagan administration official said the Paris agreement last month was the main reason markets were calm. But he said in an interview that financial markets also understood That all six countries concluded that the measures to be taken over a period of time in the future should foster stability of exchange rates around current levels. That is in fact what has happened since Paris. Monetary analysts said stability has been helped in part by the decision of industrial nations to bury the hatchet and cease to quarrel over short-term policy objectives. Instead they have focused on medium-term policy goals but left room to adjust their agreements with periodic meetings. The official refused to comment however on whether the agreement included a secret pact to consider further coordinated interest rate cuts -- a measure industrial nations have taken jointly several times in the past year. On February 22 the United States Japan West Germany France Britain and Canada agreed that major currencies were within ranges broadly reflecting underlying economic conditions given commitments by Washington to cut its budget deficit and by Toyko and Bonn to boost economic growth. The shake-up would strengthen the U.S. Position in future international talks. I think these changes will strengthen the Presidents hand politically and the stronger he is politically the better off we are with the Congress and the better off we are in international fora said the official an Administration economic policymaker. So it would be beneficial to the continued conduct of our initiatives. But the official also said the Administration would resist calls for a tax increase to cut the budget deficit -- a target Europeans say is crucial to help curb economic instability. Currency analysts believe the Paris agreement set secret short-term target ranges for their currencies with a specific agreement to defend those bands with intervention. According to market sources the ranges agreed were 1.60 to 1.90 marks to the dollar and 140 to 155 yen to the dollar. There is no official confirmation that specific bands were set although the agreement used the term ranges for the first time in an international economic agreement. The Paris accord stated the six would cooperate closely to foster currency stability around current levels. Last week dealers said the Federal Reserve intervened to stop the dollar rising against the mark which had breached 1.86 to the dollar. British authorities are also understood to have intervened to curb sterlings strength. International monetary sources say finance ministers and central bankers who will review market performance and their own economic prospects will reassemble again in Washington just before the April 9 policymaking meeting of the International Monetary Fund. The sources said Italy which refused to join the Paris pact was invited back by Treasury Secretary James Baker. Since Paris there are signs West German growth is slowing while U.S. Officials said they were giving Japan until April to show that an economic stimulus package was in the offing. Signs of concern about German prospects emerged recently when Bundesbank (central bank) president Karl Otto Poehl told bankers he would consider cutting West German interest rates if the Fed was ready to follow suit. A Reagan Administration official said this would show there had been some change in approach on the part of the central bank in Germany. But he declined to comment on the prospects for action by the Fed and the Bundesbank. If there is such a provision it is private and if I talked about it it would no longer be private said the official who asked not to be identified. Public comments by Fed officials suggest the central bank is keeping credit conditions broadly unchanged but if the major economies continue to show sluggish growth and the U.S. Trade deficit remains stubbornly high further coordinated action could be on the April agenda. REUTER | LEADING INDUSTRIAL NATIONS TO MEET IN APRIL |
Calny Inc said it has received an offer to be acquired by PepsiCo Inc which already owns 9.9 pct of Calny stock for 11.50 dlrs per share subject to approval by PepsiCo and Calny boards and Calny shareholders. The company said its board intendsd to schedule a meeting in the near future to review the proposal and it has asked <Oppenheimer and Co Inc> to assist it in evaluating the offer and advise Calny on its alternatives. Calny is the largest franchisee of PepsiCos Taco Bell restaurants operating 143 in California Oregon Texas and Washington as well as 15 La Petite Boulangerie bakeries in Seattle. Calny earned 1192000 dlrs on sales of 56.2 mln dlrs for the nine months ended November Four. On December Four Calny rejected as inadequate an investor group led by former president and chairman Robert A. Larives second offer to acquire it because the bid was inadeuqate and subject to too many contingencies. The group offered 11.50 dlrs and one dlr of 10 pct preferred stock per Calny share. Reuter | CALNY <CLNY> GETS BID FROM PEPSICO <PEP> |
Indonesia will build a crude palm oil terminal at a new port on Batam island south of Singapore Research and Technology Minister Yusuf Habibie said. The terminal will be able to handle 2.1 mln tonnes of crude palm oil from new plantations in northern Sumatra and western Kalimantan (Borneo) he said. A tender for engineering work on the Asia Port project will be offered mid-year. Habibie did not say when the terminal was expected to be operational. Reuter | INDONESIA PLANS TO BUILD PALM OIL TERMINAL |
<Warburg Pincus Capital Corp> said it has started a tender offer for up to 2500000 common shares of Symbion Inc at 3.50 dlrs each. In a newspaper advertisement The firm said the opffer is not conditioned on receipt of any minimum number of shares but is conditioned on holders of nor more than 400000 Symbion sharesseeking to receive the fair value of their shares under provisions of the Utah Business Corporation Act. Warburg said receipt of 2500000 shares would raise its interest in Symbion to about 59.3 pct from 25.8 pct currently and give it control. Warburg said it reserves the right to buy more than 2500000 shares if the offer is oversubscribed but has no present intention of doing so. It said it has asked Symbion to provide its shareholder list to help in disseminating the offer. The firm said the offer proration period and withdrawal rights expire April 22 unless extended. Reuter | WARBURG PINCUS STARTS SYMBION <SYMB> BID |
Philippines finance minister Jaime Ongpin said he was cautiously optimistic an accord on debt rescheduling would be reached with commercial bank creditors as he prepared for the third week of talks starting Monday. One can never be too optimistic but Im cautiously optimistic that we can get an agreement....We think were close to a deal Ongpin told Reuters by telephone. He said he had received a new proposal from the banks late Friday and had spent the weekend evaluating it with other members of the Philippine delegation. Ongpin declined to disclose details of the banks new offer and bankers also declined to be specific ahead of their next meeting with Ongpin on Monday. But one senior banker said he too was guardedly optimistic a deal could be struck possibly by the end of the week. Still at the heart of the talks is Ongpins offer to pay part of the countrys interest bill in Philippine Investment Notes PINs instead of cash. The bank creditors advisory committee led by Manufacturers Hanover Trust Co rejected the concept as it was originally drafted but the counter-proposal made on Friday contains a revised version bankers said. Manila seeking to reschedule 9.4 billion dlrs of its total debt of 27.2 billion wants to pay the London Interbank Offered Rate (LIBOR) in cash and a margin above LIBOR in PINs. These dollar-denominated notes would be sold by banks at a discount to multi-national firms which would then convert them at face value with the central bank thus receiving subsidized pesos for use in funding government-approved investments. Effectively foreign companies would be paying the interest margin above LIBOR. The Philippines would conserve foreign exchange and enjoy investment inflows reducing marginally the need to seek new bank loans. But the banks rejected the PINs proposal in its original form fearing regulatory and accounting problems. They were also reluctant to veer from the principle that interest should be paid in cash not paper fearing that other debtor nations would emulate the idea bankers said. Ongpin sweetened his original offer by guaranteeing that his government would redeem the notes at 7/8 pct over LIBOR if there was no buyer in the secondary market. Last week the banks came under pressure to accept this when senior U.S. Officials endorsed it as fully consistent with Treasury Secretary James Bakers debt strategy. But banking sources said that the margin over LIBOR was still a sticking point. After Venezuela clinched a revised rescheduling agreement last month at 7/8 pct over LIBOR some New York bankers imediately claimed that 7/8 pct should be seen as a new benchmark for a debtor that needs no new loans is current on interest and is repaying some principal. The Philippines meets the first two criteria but not the third. REUTER | PHILIPPINES' ONGPIN OPTIMISTIC ON DEBT TALKS |
ZIM Energy Corp said it has entered into an agreement for a group consisting of <Strategy and Development Inc> <Norsk Vikingolje A/S> of Oslo and MIS Gas Corp -- which already owns one third of ZIM -- to buy 15 to 20 mln new common shares at 20 cts each in association with <Polo Energy Corp> and <Jaguar Petroleum Corp>. The company said the investor group also bought about 6.3 mln shares from ZIM management. It said James Mitchell William Richardson and Steven Duin have resigned as officers and directors. ZIM said Chemclear Inc <CMCL> has unilaterally canceled an agreement to merge with ZIM and ZIMs board is studying the possiblity of a claim against Chemclear. The company said it expects to report a loss for the year of about 3125000 dlrs due to lower oil and natural gas prices unsuccessful well workover programs and excessive overhead and corporate expenses. It said it plans a dramatic reduction in overhead costs that should improve results. The company said Michel Billard has been named chairman and Robert Berckmans has been named president and chief executive and Berckmans and two others have joined the board. ZIM said it has agreed to acquire the remaining interest in its Buccaneer and Blue Dolphin Pipeline affiliates for about one mln dlrs in cash and stock. It gave no further details. Reuter | ZIM ENERGY <ZIMR> TO SELL SHARES PRIVATELY |
Bluefield Supply Co said its board declared its second liquidating dividend of 1.71 dlrs per share payable March 16 to shareholders of record March 13. The company paid an initial liquidating dividend of 15.75 dlrs per share on January Eight. Reuter | BLUEFIELD SUPPLY <BFLD> IN LIQUIDATING PAYOUT |
Shr 33 cts vs 48 cts Shr diluted 33 cts vs 44 cts Net 4435000 vs 6410000 Revs 839.3 mln vs 751.8 mln 1st half Shr 55 cts vs 94 cts Shr diluted 55 cts vs 88 cts Net 7374000 vs 12.6 mln Revs 1.68 billion vs 1.51 billion Reuter | BERGEN BRUNSWIG CORP <BBCA> 2ND QTR FEB 28 NET |
A rash of firings fears of mass layoffs and management overtures for wage concessions have set the stage for all-out war between Eastern Airlines and its unions analysts and labor leaders say. The bitter labor-management dispute has hurt efforts to revive the ailing carrier and could ultimately lead Texas Air Easterns new owner to tranfer scores of Eastern jets to its non-union sister airlines analysts said. Its a trump card that Texas Air could resort to if things get bad enough -- repainting Eastern planes and shifting them over Continental Airlines said Louis Marckesano an analyst for Janney Montgomery Scott Inc of Philadelphia. Eastern lost 130.8 mln dlrs in 1986 and analysts see little chance of the carrier returning to profitability this year. Since the Miami-based carrier was taken over by Texas Air last year the morale of Easterns 38000 employees has plummeted workers and labor leaders say. Some Eastern officials acknowledge privately that morale problems have contributed to high absenteeism and a decline in customer service triggering a barrage of passenger complaints. Union leaders are accusing Easterns managers -- many of them newly installed by Texas Air chairman Frank Lorenzo -- of conducting a campaign of harassment and intimidation aimed at ridding the airline of high-paid senior employees. Its an underhanded way of forcing experienced people out in an attempt to cut the companys labor costs said Nancy Tauss vice president of the Transport Workers Union Local 553. Some flight attendants complain that they are being stalked by what they call spyriders -- teams of auditors they say have been hired by Lorenzo to fly on Eastern jets and secretly examine flight crew performance. Since the beginning of the year at least a dozen flight attendants have been fired as a result of such audits some for having as little as two dlrs missing from liquor sales and movie headset rentals Tauss said. Eastern officials acknowledge that management is tightening its accounting procedures and cracking down on absenteeism which the airline says cost 70 mln dlrs last year -- the highest in the industry. But Eastern spokeman Jim Ashlock denied that the Miami-base airline was using unfair labor tactics. Were just trying to correct long-standing problems and that causes some dissatisfaction he said. U.S. Rep. Newt Gingrich a Georgia Republican has met with groups of dissident Eastern employees in Atlanta and is reported to have told them he may call for hearings on the airlines labor tactics. Labor and management have a long history of bitter relations at Eastern Airlines. But the conflict has escalated sharply since January 21 when Eastern president Philip Bakes called for a reduction of 490 mln dlrs or 29 pct in annual labor costs mostly through union concessions. Easterns three principal unions have rejected demands for wage cuts and have refused to open their contracts for renegotiation. Union officials say that in retaliation for their resistance the airline has launched a firing frenzy aimed at intimidating employees and squeezing concessions from labor. During 1986 -- the year in which Texas Air managers assumed control of Eastern -- 123 flight attendants were fired. That was nearly five times greater than 1985 the union said. In the first two months of this year 35 flight attendants losing their jobs according to union records. Other unions report similar losses. Texas Air last month said it would switch six of Easterns wide-body jets to Continental its cut-rate sister airline. Eastern has begun hiring other Texas Air carriers to repair its planes in several cities and plans to shut down some maintenance bases according to a recent internal memo. Texas Air is not going to write checks to Eastern to underwrite an outmoded labor cost structure Bakes told a meeting of Miami businessmen this month. He denied however that Lorenzo planned to strip Eastern of its assets. Reuter | TALKING POINT/EASTERN AIRLINES <TEX> |
Dixons Group Plc <DXNS.L> has sold 8.3 mln shares in Woolworth Holdings Plc <WLTH.L> through Salomon Brothers U.K. Equity Ltd a statement from Salomon said. The shares were placed with about 45 to 50 institutions in Europe and the Far East. Dixons retains one mln Woolworth shares a Dixons spokesman added. Industry sources said Dixons acquired the Woolworth shares in connection with its unsuccessful bid for the company last year. Dixons paid an average price of 695p per share which compares with 819p today. Woolworth closed on Froday at 833p. A Dixons spokesman said the decision to retain one mln shares reflected Woolworths buoyant prospects. REUTER | DIXONS SELLS 8.3 MLN WOOLWORTH SHARES |
Joule Inc said its board declared a three-for-two stock split payable April 30 record March 31. Reuter | JOULE' INC <JOUL> SETS STOCK SPLIT |
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