Browsing all articles tagged with Bank
Jun
1

Banks In The Dark Over $15 Billion of Promised Rosneft M&A business

Banks that assist Russian oil company Rosneft finance its $55 billion buyout of rival have been left waiting for their payback a share in $15 billion in asset sales projected to follow the deal.

State oil company Rosneft’s takeover of this year aimed to generate a major oil group producing more oil than however it also tightened the Russian government’s grip on the country’s energy sector.

The asset sales promised by Rosneft Chief Executive Igor Sechin would offload less-profitable businesses to turn the company into the major oil player the CEO has stated he wants it to be. The delay demonstrate Rosneft has a lot on its plate integrating and that the sales are on the back burner.

Rosneft had dangled the juicy divestment mandates at the banks in exchange for a $29.8 billion loan the largest in Russia’s history on good terms, all the lending banks are waiting. We thought asset sales and refinancing bonds would kick start straight following the closing.

Rosneft’s slow motion is annoying the banks as they would earn fat fees from advising the oil giant on the asset sales this year, which would assist boost M&A revenues in an otherwise arid deal making landscape.

M&A activity across all sectors is losing 7 percent in Europe, Africa and Middle East since January partly due to the impact of the euro zone crisis on business confidence.

Banks that uphold big balance sheets throughout the financial crisis have been hoping to use this muscle to win lucrative M&A advisory business from competitor which had to shrink partly to meet tough European capital rules.

Banks frequently use their balance sheets to offer cheap loans to corporate clients to secure higher margin business such as share or bond issues or M&A work.

Big balance sheets helped Deutsche Bank and Barclays to achieve number 2 and 3 rankings in M&A league tables previous year, challenging US rival Goldman Sachs which had the top slot.

May
4

ECB Cuts Interest Rates, Open to Further Action

The European Central Bank cut interest rates for the first time in 10 months on Thursday and held out the likelihood of further policy action to hold up the recession hit euro zone economy.

Responding to a fall in euro zone inflation well below its target level and growing unemployment, the ECB lowered its main rate by a quarter percentage point to a record low 0.50 percent.

Mario Draghi, ECB President promising to provide as much liquidity as euro zone banks require well into coming year and to help smaller companies get access to credit, also indicated that some policymakers had pushed for a bigger cut.

He told a news conference after the ECB’s Governing Council met in Bratislava, there was a very, very strong existing consensus towards an interest rate cut. Within that, there was a prevailing consensus for a cut of only 25 basis points.

The ECB was also technically prepared to cut its deposit rate from the current zero percent into negative territory, meaning it would begin charging banks for holding their money overnight.

Such a move could encourage the banks to lend out money rather than hold it at the ECB, although it would also almost certainly have a big impact on banks own operations and major implications for funding and bond markets.

Draghi said the ECB could cope with these, a departure from his prior statements.

There are several unintentional consequences that may stem from this measure, we will address and cope with these consequences if we make a decision to act. And we will again look at this with an open mind and we placed ready to act if needed.

Acknowledging that, the ECB stated it would prime banks with as much liquidity as they need until at least July 2014 and look at ways to enhance lending to smaller companies, which are the lifeblood of Europe’s economies however have been starved of credit in many countries.

May
4

Job Market Resilience Eases Growth Concerns

Employment rose at a quicker pace than expected in April and hiring was much stronger than formerly thought in the prior two months, a sign of flexibility that should help the economy absorb the blow from belt tightening in Washington.

Labor Department said on Friday,non-farm payrolls increased by 165,000 jobs previous month and the unemployment rate dropped to 7.5 percent, the lowest level since December 2008. The job counts for February and March were revised up by a net 114,000.

Scott Anderson, chief economist at Bank of the West in San Francisco said that this boosts the case that the US economy will be able to survive the joint headwinds of sequestration and a deepening recession in Europe.

Investors on Wall Street cheered the statistics, which beat economists’ expectations for a 145,000 jobs advance and a steady 7.6 percent reading on the unemployment rate.

US stocks rallied, with the Dow Jones industrial average and the Standard & Poor’s 500 index closing at record highs. The US dollar vaulted to a one week high against the yen, however Treasury debt prices tumbled.

Payrolls climbed by 138,000 jobs in March, 50,000 more than formerly reported, and job growth for February was revised up by 64,000 to 332,000, the largest growth since May 2010.

However the gains previous month were far below the 206,000 jobs per month average of the first quarter, the newest evidence the economy is cooling even if not as rapidly as earlier feared.

Construction employment dropped for the first time since May and manufacturing payrolls were flat. The length of the average workweek pulled off a nine  month high and a gauge of the overall work effort knock down.

Economists pin the slowdown mainly on higher taxes that took hold at the start of the year and $85 billion in federal government spending cuts known as the sequester, that went into effect at the start of March. Economies overseas have also weakened cutting into US export growth.

However the US economy grew at a 2.5 percent annual pace in the first quarter, statistics on construction spending, retail sales and trade suggested it ended the period with less speed.

May
4

Precious Metal Ends Lower, Copper jumps 7% on US Jobs Data

Yellow metal futures finished with a modest loss on Friday as greater than expected US employment numbers dulled the gold’s safe-haven appeal.

For the week, bullion found support from the European Central Bank’s decision to cut interest rates and from strength in physical demand to end the week 0.7% advanced.

Precious metal for June delivery chop down $3.40 or 0.2%, to settle at $1,464.20 per ounce on the Comex division of the New York Mercantile Exchange.

Labor Department said on Friday that the US economy created a net 165,000 jobs in April. The figure surpassed the 135,000 prediction of economists. The rushing in hiring nudged the unemployment rate down to 7.5%, the lowest level since December 2008.

Right before the data’s release yellow metal prices were trading about $13 per ounce higher than Thursday’s close, then following the figures they fell to trade around $10 lower.

Copper futures rallied almost 7% for their biggest one day percent advance in over two and a half years, as the jobs statistics brightened demand prospects for the industrial metal.

The July silver contract added 18 cents, or 0.8%, to end at $24.01 per ounce, climbed 1% from a week ago.

Chintan Karnani, an independent bullion analyst based in New Delhi said that if hiring continues to increase at the current pace for the coming two to three months that would be bearish for safe havens like silver and gold.

He further said only the interest rate cut by the European Central Bank and firm physical gold demand in Asia are supporting gold prices.

Gold dealers reported impressive jumps in April precious metal sales.

Will Rhind, managing director of ETF Securities, a provider of physically backed gold ETFs including the ETFS Gold Trust stated request is mainly being seen by coin/bar merchants and gold dealers (bullion banks) that act on behalf of central banks and other great institutional physical players.

Copper for delivery in July jumped 21 cents or 6.8% to a three-week high of $3.315 a pound. It rose approximately 4% for the week.

 

May
2

Precious Metal Holds Near 1 week Low, ETFs Outflows Persist

Precious metal held near its weakest level in practically a week on Thursday, following declines in holdings of exchange traded funds, equities and other commodities overshadowed the US Federal Reserve’s decision to uphold its loose monetary policy.

Prices fall $225 per ounce between April 12 and 16 on fears of a withdrawal of the Fed’s monetary stimulus and after the International Monetary Fund and the European Central Bank asked Cyprus to sell reserves as part of a bailout deal.

While the Fed’s money-printing to buy assets could stoke inflation, yellow metal has been overwhelmed by fears of sales by central banks and a fall in global bullion ETF holdings to their lowest since September 2009.

However this is unlikely to be sold on the open market. I consider another central bank will be buying it. China’s physical demand is still strong. This morning they are perhaps keeping a lookout to see where the market is going before purchasing.

Precious metal fell $3.05 per ounce to $1,453.69, having shed more than 1 percent in the previous session its largest daily drop since gold’s historic decline in mid-April. It smash a low of $1,439.74 on Wednesday, the weakest since April 25.

Brian Lan, managing director of GoldSilver Central Pte Ltd in Singapore said that people are more wary as yellow metal has been trading within the same trading band. Moreover, Europe has agreed on a loan deal for Cyprus, and one of the terms state that assets in bullion might be sold.

US gold for June delivery stood at $1,453.70 per ounce, climbed up $7.50.

In its statement subsequent a two-day meeting, the Fed reiterated it would carry on to buy $85 billion worth of bonds each month to support a moderately expanding economy that still has too high an unemployment rate.

Investors are now waiting for US non-farm payrolls report for April scheduled for release on Friday, which will signal the longer term predictions for the Fed’s monetary stimulus.

However instead of rallying on the news, yellow metal tracked other markets lower on renewed doubts over the Chinese and US economies following the latest economic data from both countries elevated doubts about the strength of the global economy.

The US economy is likely to have added 145,000 jobs.

March’s number chop down far short of expectations at 88,000, triggering a sell-off in riskier assets. Precious metal for June delivery added $9.70, or 0.7%, to $1,456 per ounce.

China’s factory sector growth eased in April as new export orders chop down for the first time this year, a private survey showed on Thursday, suggesting the euro zone slump and sluggish US demand may be risks to China’s economic recovery.

Apr
25

IMF, ECB Square off in Europe Severity Debate

An intense debate about Europe’s austerity drive flared back into life on Thursday with leading IMF and European Central Bank officials harshly at odds and Angela Merkel declaring that Germany required superior interest rates.

With the threat of the currency bloc’s break-up retreating; some euro zone officials are saying currently is the time to throttle back on debt cutting drives as calmer financial markets will not react badly.

The International Monetary Fund is also pushing that prescription for both the Britain and euro zone however Germany and the ECB are opposed.

IMF First Deputy Managing Director David Lipton told a conference in London that there is a risk that Europe could drop into stagnation, which would have very serious implications for households, banks, companies and other bedrock institutions.

He further said that to decisively avoid that dangerous downside, policymakers must act now to strengthen the prospects for growth.

However at the same conference, the Economist’s Bellwether Europe Summit, ECB Executive Board associate Joerg Asmussen urged governments to push on with budget consolidation and reforms.

Asmussen said delaying fiscal consolidation is not a simple way out. If it were, we would have taken it; holdup fiscal consolidation is no free lunch. It means superior debt levels and this has real costs in the euro area where public debts are already very high.

The ECB is expected to cut interest rates coming week, even though a quarter-point reduction is unlikely to lift the euro zone economy out of recession.

Lipton said it will perhaps require additional unconventional measures from the ECB, as Asmussen said monetary policy was not an all purpose weapon.

The ECB is in a difficult position, for Germany it would really have to lift rates slightly at the moment, however for other countries it would have to do even more for more liquidity to be made available, she said at a banking conference, in a strangely outspoken comment on central bank policy.

Apr
15

Gold slump for 2nd day, Week China Data Fuels Recovery Uncertainty

Precious metal sank to its weakest in two years and because investors sold off commodities for a second day on Monday, concerned that central banks will pull the plug on stimulus and as disappointing Chinese statistics signaled a setback for the global economic recovery.

China’s economy grew 7.7 percent in the first quarter undershooting market prospect for an 8.0 percent expansion and annoying investors hoping the world’s No. 2 economy would rebound following posting its weakest growth in 13 years in 2012.

The Chinese statistics comes following soft US retail sales and consumer sentiment numbers lift worries regarding the economic recovery momentum in the world’s top economy, driving down commodities and equities on Friday.

Yellow metal fell more than 3 percent, following sliding 5.3 percent on Friday, as investors further cut their gold holdings on concern that central banks are bent on halting stimulus measures this year, cutting precious metal’s appeal as a hedge against inflation. Holdings on global gold exchange traded funds strike their lowest in more than a year.

Spot gold hit a session trough of $1,427.14 per ounce, its lowest since April 1, 2011. Spot gold climbed as high as $1,495.16 early in the session, earlier than a sell-off in US futures dragged it down.

Vishnu Varathan, market economist at Mizuho Corporate Bank in Singapore said that there are questions concerning the trend of bottoming in China’s economy and whether it can re-accelerate over 8 percent this year in a sustainable way.

China’s weaker than predicted GDP growth is backed by slower boost in industrial production and fixed-asset investment, despite strong lending growth in March as previous week’s data indicated.

Varathan said that demonstrate how China’s economy looks a bit uneven and risks in the property and shadow banking sectors might be mounting. What this means is that policymakers in China have less autonomy to spur the economy because they’ll be mindful of these risks.

Gold future for June delivery fall $90.20 or 6%, to $1,411.00 per ounce. Gold last week lost 4.7%.

Apr
13

Gold Drop into bear market on institutional Migration

Yellow metal sank more than 5 percent on Friday, entering bear market territory as institutional investors fled gold in favor of other safe-haven assets amid concerns regarding central bank sales and souring sentiment.

The span of the sell off will underscore some expectations that gold’s meteoric rally may end following 12 years of gains.

Robin Bhar, Societe General analyst stated the scale of the turn down has been absolutely breathtaking, they tried to rally and that just did not get anywhere, there has not been any downside support it’s like a knife through butter.

Selling became heavy following an unexpected contraction in US retail sales statistics, which hurt stocks and supported the US dollar. It increased to pressures that were building this week from numerous factors, including a draft plan for Cyprus to sell gold and outflows from exchange traded yellow metal funds.

The precious metal slide below $1,500 per ounce for the first time since July, 2011. Yellow metal posted its largest weekly decline since December, 2011.

The speed of the sell-off appeared tied to instability in the price of Japanese government bonds, which has forced certain holders to sell other assets to meet the risk modeling of their investment portfolios.

The spot price of gold strike a low of $1,476 per ounce, down 5.3 percent on the day. For the week, it showed a turn down of more than 6 percent, in its largest weekly drop since December 2011, bonds rallied on Friday.

Geoffrey Fila, associate portfolio manager at Galtere Ltd, commodities focused hedge fund in New York with almost $600 million under management. Could it retest $1,300 or $1,200 on a short term technical basis? Absolutely yes.

Losses in precious metal accelerated and trading volumes ballooned following prices fell through key support at $1,521 per ounce. The market is down some 23 percent below a record peak of $1,920.30 strike in September 2011. Investors define a bear market as a turn down of 20 percent or more from a market high.

US gold futures also strike their lowest since July 2011, with metal for June delivery declining to as low as $1,476 per ounce by 5:20 p.m. EDT (2150 GMT). It settled at $1,501.40, losing 4.1 percent.

Apr
11

Precious Gold Losses Seemed limited on Cyprus bullion Sale Program

Yellow metal posted its largest one day fall in almost 2 months on Wednesday following Cyprus was forced to sell most of its gold reserves, however analysts stated strong gold buying by other central banks should underpin the price of the metal.

James Steel, chief precious metals analyst at HSBC said that the bigger concern for the bullion market may be the prospective for other distressed euro zone nations to liquidate a portion of their precious metal reserves.

He further said that we do not think this will be the case, but we expect the official sector to remain standout buyers of bullion.

Investor fears over additional gold sales by other debt stricken euro zone members such as Greece and Portugal sent spot gold prices down 1.7 percent on Wednesday, within striking distance of a 10 month low.

Rehabilitated gold interest by emerging economies and gold sales limitations stipulated by Europe’s Central Bank Gold Agreement (CBGA) are positive factors that should place a floor under the market.

Cyprus, one of euro zone’s nominal economies, has to sell excess gold reserves to lift about 400 million euros which is equal to $523 million to assist finance its part of its bailout, an estimation of Cypriot financing needs prepared by the European Commission showed.

At existing prices, 400 million euros worth of yellow metal amounts to 10.36 tonnes, representing just a small fraction of precious metal liquidated by gold exchange traded funds since the start of the year.

It was the first major bullion disposal by a euro area central bank since France sold 17.4 tonnes in the first half of 2009.

According to data from the World Gold Council Cyprus total, gold reserves stood at 13.9 tonnes at end-February.

Strength in the US dollar and a rally in US equities combined with a bearish gold attitude from Goldman Sachs to push futures prices for gold losing by almost $28 per ounce on Wednesday. The turn down came just a day following prices marked their highest closing level since April 1. June gold dropped $27.90 or 1.8%, to settle at $1,558.80 per ounce on the Comex division of the New York Mercantile Exchange.

Apr
9

Banking Union a Priority For Lew in Europe

Europe’s economic weakness and financial disorder affect the US economy, Jack Lew, US Treasury Secretary told EU leaders on Monday, stressing the require to enhanced demand and move ahead with a euro zone banking union.

There economy’s strength remains sensitive to events beyond our shores and they have an huge stake in Europe’s health and stability, Lew informed reporters following talks with European Union leaders including European Council President Herman Van Rompuy and European Commission President Jose Manuel Barroso.

Lew further said in this circumstance he was particularly interested in their European partners plans to strengthen sources of demand at a time of growing unemployment, EU forecasts indicate the largest trading partner of the United States will remain in recession for the second year in a row this year.

Lew’s visit also comes shortly following messy negotiations among the euro zone, the Cyprus and International Monetary Fund on a bailout for the Mediterranean island, which in the end forced losses on large Cypriot bank depositors.

In his talks with Van Rompuy and Barroso, Lew highlight the significance of the euro zone moving ahead with plans for a banking union which will engaged handing over supervision to the European Central Bank and drafting bank resolution laws.

This would permit the 17-nation bloc to handle troubles like the resolution of banks in Cyprus more efficiently. Senior EU official said that they discussed the banking union a bit more than other things the Americans are keen for the process to move forward.

The surprise levy on bank deposits over 100,000 euros in Cyprus agreed as part of the country’s bailout has spoiled confidence that Europe will be united in tackling bank problems rather than leaving countries to struggle alone.

If anything, this crisis and recent events in Cyprus have exposed the absolute need to anchor, once and for all a logical scheme that would allow resolving failing financial institutions in an effective, consistent manner and predictable across the European Union.