News Archive

Nigeria signs $1.3 billion power plant deal with China

Sun Sep 29, 2013 10:55am EDT

ABUJA (Reuters) – Nigeria has signed a deal for Chinese state companies to build a $1.3 billion power plant, the finance ministry said on Sunday, part of efforts to end chronic electricity shortages that are a major brake on growth.

Nigeria produces only a few hours of electricity a day, forcing those who can afford it to rely on expensive diesel generators that drain billions of dollars from Africa’s second largest economy and discourage foreign investment.

President Goodluck Jonathan is on a drive to increase investment in the power sector and has nearly completed the privatization of its inefficient state electricity company.

A loan from China’s Eximbank will pay for 75 percent of the planned 700 megawatt Zungeru hydro-electric power plant, while the Nigerian government has put up the rest of the cash.

The plant would be a boost to the country’s current 4,500 megawatt electricity capacity and is scheduled to be finished in four years, although Nigerian projects usually run over time and over budget and many are never completed.

The building of a hydro plant in Zungeru, Niger state, was first announced three decades ago but this is the most significant effort yet to get the project underway, experts say.

“This project will create thousands of jobs for Nigerian engineers, technicians and artisans during the construction phase … It will also boost the economy,” Nigeria’s Finance Minister Ngozi Okonjo-Iweala said in a statement.

Despite holding the world’s ninth largest gas reserves, Nigeria only produces a tenth of the amount of electricity as South Africa for a population three times the size.

(Reporting by Camillus Eboh; Writing by Joe Brock; Editing by Ruth Pitchford)

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SocGen chief confident of meeting post-crisis rules: paper

Sun Sep 29, 2013 10:54am EDT

FRANKFURT (Reuters) – Societe Generale’s (SOGN.PA) Chief Executive Frederic Oudea is confident his bank will meet tougher post-crisis rules on European bank risk, a German newspaper quoted him as saying.

SocGen, like banks across Europe, is cutting costs and selling securities to soothe investors worried about balance sheets.

The ECB will start supervising the euro zone’s banks from late next year as part of a closer integration of the European financial system, in response to the crisis that threatened to overwhelm the bloc’s weakest government debtors and some of the banks that hold their bonds.

“As for the core capital ratios, I’m not worried,” Oudea was quoted as saying by German newspaper Handelsblatt in a pre-release of an interview, which will be published on Monday.

Oudea added that the market already forced major banks to meet a core capital ratio of 10 percent, while national supervisors required a ratio of at least 7 percent.

“However, it is important to assure there are no hidden losses in the balance sheet.”

Earlier this month SocGen Deputy Chief Executive Severin Cabannes had said the bank was eyeing a 10 percent core capital ratio by end-2013, higher than its official target of 9.5 percent.

Oudea said he expected that by 2020 only four European banks would be active in international investment banking, including Societe Generale. He urged European supervisors to ensure a role for strong European players.

(Reporting by Harro ten Wolde. Editing by Ruth Pitchford)

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IMF and EU mission to Greece takes breather after progress

Sun Sep 29, 2013 10:28am EDT

BRUSSELS (Reuters) – Greece’s international lenders called a temporary halt to their latest mission to Athens on Sunday, saying they had made good progress and expected to resume talks with the government soon.

The pause in talks between the two sides had already been flagged at the end of the first week of work by the inspectors, who are seeking to determine the size of a third bailout for Greece and what Athens will have to do for it.

“To allow completion of technical work, policy discussions in Athens will pause, and are expected to resume in the coming weeks. In the meantime, contacts will continue between staff and the Greek authorities,” the European Union, IMF and European Central Bank said in a joint statement.

In a review that is expected to stretch at least until the end of October, the inspectors will take stock of Greek reforms and update their growth and budget forecasts.

Two senior officials from the Greek finance ministry told Reuters this week that the two sides have agreed on a forecast that predicts the economy will shrink by 4 percent this year, less than previously projected, which may give Athens more leeway as it seeks to meet targets under the existing bailout.

Greece’s finance minister on Saturday played down the risk of political instability after police arrested the leader of the far-right Golden Dawn party, two of its lawmakers and party members.

(Reporting by Barbara Lewis; editing by Patrick Graham)

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France says will negotiate on Sunday-trading dispute

Sun Sep 29, 2013 9:55am EDT

PARIS (Reuters) – France’s government is ready to negotiate with retailers on Sunday-trading laws, though not on late-night shopping, after two retailers decided to stay open despite the threat of legal action.

Unions, trying to defend the 35-hour working week, are pitted against some retailers and even some employees who want to increase business at a time of record unemployment and stagnant economic growth. Retailers Leroy Merlin and Kingfisher-owned (KGF.L) Castorama were open in Paris and its suburbs this Sunday, defying a court ruling on Thursday.

“The (Sunday-trading) law is a kind of machine that churns out lawsuits,” Budget Minister Bernard Cazeneuve told Europe 1 radio. “Given that there are some employees who want to work and shoppers who today want to shop, could we not try to find some kind of path to an appropriate response?”

His comments echoed those made by a junior minister for trade, Sylvia Pinel. “We have inherited a kind of regulatory ‘millefeuille’,” she told Sunday newspaper Journal du Dimanche, referring to a layered French cake and the different trading regulations that apply in various districts.

“We will now work with sector professionals to address the question of Sunday trading,” she said.

A spokeswoman for the French Prime Minister’s office said that ministers would meet on Monday to discuss the topic, though she declined to comment directly on the government’s position.

Despite the apparent flexibility on Sundays, Junior Minister Pinel said he would yield little ground on late-night shopping.

Apparently referring to a separate legal ruling on Monday that ordered LVMH-owned (LVMH.PA) cosmetics store Sephora to close its Champs Elysees outlet at 9 p.m. (2000 GMT) instead of midnight, she said, “Late-night labor must remain the exception in order to preserve the health and free time of employees.”

“Flexibility is possible via employee-management talks but reforming this law is unnecessary… It is always possible to wait till tomorrow to make a purchase,” she said.

No one at Leroy Merlin, Castorama or the Elysee Palace of President Francois Hollande was immediately available to comment.

(Reporting by Lionel Laurent and Yann Le Guernigou; Editing by Louise Ireland/Ruth Pitchford)

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Sony’s PS4 tops Xbox One as gamers’ holiday choice: Reuters/Ipsos poll

Sun Sep 29, 2013 9:06am EDT

SAN FRANCISCO (Reuters) – More U.S. shoppers prefer Sony Corp’s upcoming PlayStation 4 than Microsoft Corp’s Xbox One, according to a Reuters/Ipsos poll, as the industry’s two leading videogame console makers prepare to do battle this holiday season.

Asked about their interest in dedicated game devices, 26 percent of 1,297 people surveyed online last week say they are likely to purchase the new PlayStation 4 when available, versus 15 percent opting for the Xbox One.

The rift widens among those below the age of 40. Of that group of 408 people, 41 percent picked Sony’s PS4 versus 27 percent for Microsoft’s Xbox One, according to a Reuters/Ipsos poll conducted from Sept 23 to Sept 27.

Though based on a limited sample, the results potentially point to a lopsided battle during the crucial holiday season, with Microsoft and Sony hoping to get their newest consoles into U.S. households. Apart from games, they act as conduits for living-room entertainment, from TV shows to music.

Microsoft came under fire from gamers after initially saying it would set restrictions on used games, and require an Internet connection to play. After a flurry of complaints, the company reversed its policies in June. In contrast, Sony has consistently touted support for used games and offline gameplay at industry events. And the PS4 comes $100 cheaper.

Sony said at video game industry trade show in Germany that it had received more than 1 million pre-orders for its upcoming console, while Microsoft has revealed only that preorders for the Xbox One exceeded those of its predecessor, the 360, eight years ago.

Microsoft “couldn’t make up their mind and Sony hadn’t wavered from the beginning,” said 26-year-old gamer Christopher Turner from Salem, Alabama, who intends to spend his cash on the PS4. “The PlayStation 4 is for both hardcore and casual gamers.”

But 56-year-old participant Jon Leigh, who plays six to 10 hours of video games a week and lives in Harlan, Kentucky, thinks the Microsoft controversy won’t sway Xbox fans.

“People who use Microsoft products will continue to use them, he said. Leigh will go with the Xbox One because of its upgraded “Kinect” motion sensor, and because he’s more familiar with the Xbox than the PlayStation.

The $399 PS4 and $499 Xbox One represent the first major upgrades of mainstream gaming hardware in years, setting game developers scrambling to put out new releases that take advantage of better graphics and faster processors.

They are scheduled to hit store shelves from mid-November, about a year after Nintendo’s slow-selling Wii U. Of the 1,297 respondents, only 3 percent said they now played games on the Wii U, versus 20 percent on the Xbox 360, 20 percent on computers, and 18 percent on Sony’s PlayStation 3.


More broadly, the shrinking videogames industry hopes the advent of the two new game consoles can breathe fresh life into a sector battered by the proliferation of free games on mobile devices and PCs, as well as on social networks like Facebook Inc’s.

Indeed, 64 percent of total respondents said they would not buy any new game hardware at all this season, when posed with choices ranging from the Xbox and PS4 to Nintendo’s 2DS and Valve’s Steam Box.

The Reuters/Ipsos poll underscored strong interest in Activision Blizzard Inc’s “Call of Duty: Ghosts,” slated for November, which will try and take on Take-Two Interactive Software’s mega-hit, “Grand Theft Auto V.”

GTA V, the latest in the critically acclaimed series that helped ignite a nationwide debate about violence in the media, became the fastest game to hit the $1 billion sales-mark, just three days after sales began on Sept 17.

About a quarter of 715 participants who owned gaming devices said they were likely to buy GTA V, while 22 percent said they would pick up a copy of “Ghosts,” the latest from Activision’s money-spinning Call of Duty franchise.

Analysts say GTA V, which won rave reviews, benefited from pent-up demand as the first major game from the franchise in five years. In contrast, Activision spits out a new Call of Duty game annually. Last year’s “Call Of Duty: Black Ops II” raked in $500 million on its first day.

Ubisoft’s historical action-game “Assassin’s Creed IV: Black Flag” came in third place in the poll with 19 percent expressing interest. Electronic Arts’ “Madden NFL 25” and shooter “Battlefield 4” were the participants’ fourth and fifth choices, respectively.

(Editing by Edwin Chan and Leslie Gevirtz)

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SEC, billionaire Mark Cuban set for insider trading trial

Sun Sep 29, 2013 9:04am EDT

(Reuters) – Mark Cuban, the billionaire who regularly sits courtside to cheer on his Dallas Mavericks basketball team, is heading to a court of a different kind on Monday.

Once there, he hopes to convince a federal jury that a civil insider trading case brought against him by the U.S. Securities and Exchange Commission should fail.

The showdown in U.S. District Judge Sidney Fitzwater’s courtroom in Dallas is expected to last eight to 10 days.

The case stems from Cuban’s June 2004 sale of 600,000 shares of Inc, soon after he had supposedly learned of an equity offering that could depress the Montreal-based Internet search company’s stock price.

The SEC said the sale let Cuban avoid a roughly $750,000 loss on his 6.3 percent stake. It seeks to recoup illegal gains, impose a fine, and win a permanent ban against similar conduct.

While the SEC has become more aggressive in pursuing higher-profile defendants, a description that fits the charismatic Cuban, Monday’s trial comes in a case that predates that push.

Cuban, who might have tried to settle with the SEC for a fairly small sum, has been battling the regulator for nearly five years.

“The fact it is going forward is probably motivated by Mark Cuban’s desire for vindication,” said Jay Brown, a securities regulation professor at the University of Denver’s Sturm College of Law. “If the SEC could have settled, it would have. They hate it when they lose, and there’s a possibility of that.”

Forbes magazine estimates Cuban’s net worth at $2.5 billion, and Cuban has more than 1.8 million Twitter followers.

He has appeared on TV shows such as ABC’s “Dancing with the Stars” and HBO’s “Real Time with Bill Maher,” and is known for arguing with referees during Mavericks games. Last year he offered Donald Trump $1 million for a charity of his choosing if the fellow billionaire would shave his head.

Cuban’s combativeness has extended to the SEC case, where he accused enforcement staff of targeting him because of his fame and because they disliked his politics. In 2011, SEC Inspector General David Kotz cleared the regulator of misconduct. (here)

“We look forward to a fair trial,” Christopher Clark, a partner at Latham Watkins in New York, who is one of Cuban’s lawyers, said in an interview. “We believe that when the truth is out and the evidence is in, Mark will be vindicated.”

A spokeswoman for the SEC declined to comment.


The SEC said Cuban hurriedly unloaded his shares after having become “very upset and angry” when he learned from Chief Executive Guy Fauré on June 28, 2004, that the company planned to raise capital via a private investment in public equity (PIPE) offering.

“Well, now I’m screwed. I can’t sell,” Cuban told Fauré, according to the SEC.

Within hours, according to the regulator, Cuban instructed his broker to sell his shares, and the $7.98 million sale was completed on June 29. announced the PIPE offering later that day, and its shares fell 9.3 percent the next morning, to $11.89. Cuban’s shares were sold at an average $13.30 each, court papers show.

Cuban has maintained that he had no obligation not to trade, and that there was no evidence that the information he had was confidential or material.

“It’s a question of fact, whether Mark Cuban needed to keep the information he received confidential,” Brown said.

Cuban and Fauré are expected to testify. Fitzwater dismissed the SEC lawsuit in 2009, but a federal appeals court revived the case the following year. later became known as Copernic Inc.

Cuban’s holdings also include the AXS TV television channel and Landmark Theatres. The Mavericks won the National Basketball Association title in 2011, but missed the playoffs last season.

Lawyers for Cuban also include Thomas Melsheimer at Fish Richardson, and Stephen Best at Brown Rudnick. Jan Folena is among the SEC lawyers handling the case.

The case is SEC v. Cuban, U.S. District Court, Northern District of Texas, No. 08-02050.

(Reporting by Jonathan Stempel in New York; Editing by Leslie Adler)

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Asian, Gulf banks fill void in plane finance: Airbus executive

Sun Sep 29, 2013 8:32am EDT

DUBAI (Reuters) – Cash-rich Asian and Middle Eastern lenders are taking a larger share of the $100 billion global aircraft financing market as Western rivals step back due to the liquidity crunch and stricter regulations, a top executive at Airbus (EAD.PA) said.

European commercial banks, previously the primary funding source for airlines, have substantially cut their exposure to the aviation sector after the continent’s debt crisis, leaving a funding gap for fast-growing airlines in emerging markets, said Francois Collet, vice president for structured finance at Airbus (EAD.PA).

“Some European lenders have halved their lending availability for the aviation sector,” Collet said in an interview in Dubai.

“They have tried to fill the gap by bringing in other regional and local banks and working together in syndicated deals. Traditional banks are now playing the role of arrangers,” he said.

French banks BNP Paribas (BNPP.PA), Societe Generale (SOGN.PA), Natixis (CNAT.PA) and other European lenders said last year they would cut exposure to risky and dollar-denominated assets such as shipping and aircraft financing to meet tougher capital rules and shore up reserves.

They have given way to Asian banks like Development Bank of Japan (DBJ), Sumitomo Mitsui Financial Group Inc (SMFG) (8316.T) and Mitsubishi UFJ Financial Group Inc (8306.T), South Korean and Chinese banks, as well as Middle Eastern lenders like National Bank of Abu Dhabi NBAD.AD among others.

DBJ expects its global aircraft financing business to double in the three years through 2013.

“We see Southeast Asian banks developing expertise and there’s lot of interest from Japan and South Korea gaining an interest in the sector,” said Collet.

“They clearly want to grow outside of their region.”

Asian giants like Singapore Airlines (SIAL.SI), Malaysia’s low-cost carrier Air Asia (AIRA.KL), Japan’s All Nippon Airways (9202.T) and Indonesia Lion Air are among companies that have ordered planes worth billions of dollars to support growing passenger numbers.

Airbus (EAD.PA) has recently raised its 20-year jet demand forecast, saying the world needed to double its fleet to meet demand.

The plane maker says Middle East plane orders account for 8 percent of the planemaker’s total backlog as of end-August.

Emirates, which has the world’s largest fleet of the A380 superjumbos, used a mixed bag of funding including bonds, operating leases, U.S. export credit facilities and financing leases to raise $5.5 billion in the current financial year.

“The challenge for airlines would be to diversify funding sources as growth comes back to the aviation industry,” said Collet.

Capital markets will also have a bigger role to play in aircraft financing — it will account for about 14 percent of total jet financing in 2013, up from 10 percent last year, Boeing said in an annual forecast in December.

For instance, Dubai-based Emirates has sold two bonds this year – a $1 billion sukuk in March and a $750 million bond in January – and more is expected in 2014.

Pension funds and insurance companies, which have traditionally stayed clear of aircraft finance, are also looking at the sector, attracted by reasonable stability and the long-term nature of the financing, said Collet.

(Editing by Dinesh Nair and David Cowell)

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ArcelorMittal sells majority of Algerian unit to state

Sun Sep 29, 2013 8:30am EDT

PARIS (Reuters) – Steelmaker ArcelorMittal (ISPA.AS) said it will sell a majority stake in its Algerian operations to the Algerian state as part of a $763 million investment agreement.

Algerian state-controlled entity Sider will own 51 percent of ArcelorMittal’s Annaba and Tebessa units as part of the deal, with Arcelor owning the rest, according to a statement from Arcelor on Sunday. The current ownership split has Arcelor owning 70 percent and Sider owning 30 percent.

The sale price of the stake was not disclosed.

ArcelorMittal, the world’s largest steelmaker, recently cut its 2013 profit guidance due to weaker-than-forecast demand in some regions and lower raw-materials prices.

The Algeria deal covers two iron-ore mines and the El-Hadjar steel plant in the eastern town of Annaba, whose production would more than double to 2.2 million metric tons from 1 million in 2017 under the new agreement.

The El-Hadjar plant has been hit by strikes over pay rises in the past months.

Arcelor said the investment would be funded by shareholders and by bank credit.

Talks between Arcelor and the Algerian government were first confirmed on September 17 by Algerian Prime Minister Abdelmalek Sellal via state news agency APS.

(Reporting by Lionel Laurent; Editing by Ruth Pitchford)

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A Fed love story: Janet Yellen meets her match

Sun Sep 29, 2013 8:05am EDT

(Reuters) – Janet Yellen found love at the Federal Reserve. She met him at a luncheon in 1977, launching a whirlwind romance that led to marriage in less than a year.

In connecting with George Akerlof, then on a temporary assignment at the Fed’s research division in Washington, Yellen discovered not just a soul mate but an intellectual equal with similar views about the societal impact of economic policy.

Together, they formed one of the pre-eminent power couples of modern economics. They collaborated on ambitious research while holding increasingly demanding jobs and raising a son who grew up to share their academic passion.

Yellen, who is currently the No. 2 official at the Fed, is expected to win nomination from President Barack Obama to become its next chairman, replacing retiring Ben Bernanke. If approved by the Senate, her appointment would crack one of the highest U.S. glass ceilings and make her the first woman to head the central bank in its 100-year history.

But the influence of her husband in shaping her thinking and professional success cannot be overestimated, say those who have known the couple for decades. Yellen and Akerlof declined interview requests.

The support went both ways. Yellen helped Akerlof maintain the focus that distinguished his academic work, highlighted in 2001 when he shared a Nobel Prize in economics. He later wrote in an autobiography for The Nobel Foundation (posted on about happily collaborating with his wife for more than a decade.

“Not only did our personalities mesh perfectly, but we have also always been in all but perfect agreement about macroeconomics. Our lone disagreement is that she is a bit more supportive of free trade than I,” he wrote.

Yellen, 67, came to the Fed in 1977 from Harvard University after a recruiting effort that involved Ted Truman, then about to take over the Fed’s international finance division. Truman had known Yellen since 1967 when she came to Yale University to pursue her PhD in economics; he was a junior professor and heard her oral exam.

The recruiters faced an uphill battle because Yellen was teaching at Harvard University and her early research made her a sought-after talent. But she took the Fed job to work on projects in trade and financial studies.

The Fed was under pressure in 1977 with rising inflation unsettling the economy. Truman assigned Yellen to research international monetary reform.

Akerlof, 73, whose early paper, “The Market for Lemons,” had made a splash among economists, landed at the central bank for a one-year stint between jobs. Recently divorced, he came from the University of California-Berkeley en route to a post at the London School of Economics.

After connecting with Yellen, “we decided to get married hastily, not only because we had so little doubt about each other, but also for practical reasons … if we were to avoid being separated, Janet would also need to get a job in England too,” he wrote.

Truman said Yellen had barely settled into the Fed before announcing she would join Akerlof and lecture at the London School of Economics. “We were disappointed when she left with him, though completely understanding. We had invested a lot in attracting her,” he told Reuters in an email.

Yellen, of course, would be back eventually – next as a Fed board member and one of Truman’s seven bosses.

In London, Yellen and Akerlof both had identity problems. “We were Americans, not English,” he later wrote. After two years, they returned to Berkeley, where Yellen was hired to teach in the business school.

Yellen twice won a coveted Berkeley teaching award. And she and Akerlof, sometimes in partnership with others, collaborated on research that benefited from their different styles, colleagues said.

“George was less disciplined, more artistic and perhaps creative; Janet was more grounded, sensible, and a paragon of common sense,” said Andrew K. Rose, who was hired by Yellen and now serves as associate dean of Berkeley’s Haas School of Business. Rose collaborated with the couple on several papers, including a year of research on the East German economy.

Jim Adams, a University of Michigan economics professor who has known Yellen since 1973 and also did research with her, said her relationship with Akerlof shows “how mature they are that they can be so deeply in love as people who are so different from each other.”

“George is an incredibly creative person,” Adams said. “He just has such unusual ideas by the standards of a very buttoned-down discipline where there is conformism, as is economics these days. He is not afraid to be unorthodox and off-beat in the service of real intellectual exploration.”

Yellen, he said, “champions what is known as ‘slow-thinking’ – really thinking through things carefully and their implications.”

The couple’s first paper together was inspired during a Berkeley visit from Yellen’s Yale mentor, Keynesian economist James Tobin. Tobin had advanced a line of thinking that government intervention could avert recession. He urged the couple to study why, and, as Akerlof put it, they discovered “sticky prices and wages would explain why monetary policy would be effective: if the money supply increased, real balances, which determine real demand, would rise.”

Their later research focused on poverty and policy, including on unemployment and a paper on the costs of out-of-wedlock childbearing.

Yellen returned to the Fed in 1994 with her appointment to the central bank’s board, and Akerlof commuted between Washington and Berkeley, continuing to teach. When Yellen moved to the President Bill Clinton’s Council of Economic Advisers, Akerlof took leave.

He tended the household and helped raise their son, but his main support for Yellen while she was at the White House was “providing psychological support in the daily political storms,” he wrote. Yellen maintained balance, friends say, with mothering and gourmet cooking.

In 1999, the couple returned to Berkeley, their son having followed their paths to Yale. She was named head of the Federal Reserve Bank of San Francisco in 2004 and nominated to be vice chair of the Fed in 2010.

Akerlof won the Nobel prize in October 2001. In media coverage, he posed for photos with Yellen as the family cat sashayed through the room.

Now, as Yellen anticipates yet-another promotion, their friends say she is bound to make the Fed a stronger organization.

“She’s the kind of person who makes everyone around her better,” Adams said.

The couple certainly is unusual in one way, joked their collaborator Rose. “How many Nobel laureates work in the same discipline as their spouse, but are less famous?”

(Additional reporting by Ann Saphir; Editing by Andrea Ricci)

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