News Archive

Swatch CEO sees 3-4 week production delay at unit due to fire

ZURICH (Reuters) – Swatch Group (UHR.VX) Chief Executive Nick Hayek said on Monday production at one of the firm’s watch mechanism units could be delayed by several weeks after a fire destroyed one of its workshops on Sunday.

“We need to clean all the machines and reorganize, there will be a small delay of three or four weeks to production, maybe a bit more,” Hayek told Reuters by phone.

Hayek played down the impact of the fire at Swatch’s ETA unit, calling it a “relatively minor event” for the Swiss watchmaker.

Hayek said watchmakers that buy watch components from ETA would be most affected by the blaze and he expected some delays in deliveries.

(Reporting by Alice Baghdjian)

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Stock futures little changed ahead of home sales data

NEW YORK (Reuters) – U.S. stock index futures were little changed on Monday, in the wake of the best two-week advance for the SP 500 in five months, and ahead of data on the housing market.

* The benchmark SP 500 .SPX has risen 3.7 percent over the past two weeks, the index’s best fortnight since July, thanks to the Federal Reserve’s decision to begin winding down its stimulus measures on signs of economic improvement.

* The SP has soared 29.1 percent this year and is on pace for its best yearly performance since 1997, powered largely by the central bank’s stimulus measures. The Dow .DJI has jumped 25.8 percent and the Nasdaq .IXIC 37.7 percent this year.

* Investors will eye pending home sales data for November from the National Association of Realtors at 10:00 a.m. (1500 GMT). Economists in a Reuters survey expect a 1.0 percent rise compared with a 0.6 percent fall in the previous month.

* SP 500 futures rose 1 point and were slightly above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures gained 14 points and Nasdaq 100 futures added 0.25 point.

* Markets will close Wednesday for the New Year’s holiday, ahead of which trading is expected to be light, with many market participants out of the office. The thin volume could make for greater volatility.

* Shares of Crocs Inc (CROX.O) jumped 13.1 percent to $15.07 in light premarket trading after the shoemaker said its chief executive, John McCarvel, plans to retire in April, and that Blackstone Group LP (BX.N) is making a $200 million investment that will give the private equity firm a 13 percent stake in the company.

* Trina Solar (TSL.N) climbed 6.5 percent to $14 after the company signed an agreement to develop a solar power plant in China.

* European stocks edged higher, consolidating in holiday-thinned trade after two weeks of strong gains that have pulled markets to five-year highs. .EU

* Japanese shares ended a stellar year with a flourish, rising to a six-year peak, as the yen skidded to fresh lows for a third straight session.

(Reporting by Chuck Mikolajczak; Editing by Bernadette Baum)

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Nokia Solutions chairman to step down after Microsoft deal

HELSINKI (Reuters) – Nokia said the chairman of its networking equipment unit, Nokia Solutions and Networks (NSN), will step down following the sale of the Finnish company’s mobile phone business to Microsoft.

Jesper Ovesen, who joined NSN in 2011 when it was still a joint venture between Nokia and Siemens, will continue for a while as an advisor after the mobile phone business is transferred to Microsoft, Nokia said on Monday.

Markets expect more details on the new management structure at Nokia and its equipment business to be announced after the deal is closed, which is expected to happen in the first quarter of 2014.

(Reporting by Ritsuko Ando; Editing by Anthony Barker)

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Britons less inclined to pay down mortgage debt

LONDON (Reuters) – Britons were less inclined to use savings to pay down mortgage debt in the third quarter, data showed on Monday, adding to signs of improving consumer confidence as house prices rise and the job market recovers.

Homeowners put 10.4 billion pounds of equity into their homes in the quarter, the Bank of England figures showed – more than two billion pounds less than in the previous quarter and the lowest since the fourth quarter of 2009.

Britons have paid down their mortgages on a net basis for the past four years, reversing the trend towards higher debt levels that dominated from late 1999 until the financial crisis.

Borrowing against the rising value of property was a key driver of the consumer boom of the last decade, and while the Bank of England may welcome a return of that “feelgood” factor, it will be wary of a recovery that is heavily reliant on household spending and cheap credit.

Data earlier this month showed households saved just 5.4 percent of their disposable income in the third quarter, down from 6.2 percent in the second. Household spending, meanwhile, rose an annual 2.5 percent, faster than growth in the economy overall.

Keeping property price gains in check without crimping growth in the rest of the economy is shaping up to be the biggest challenge facing the central bank in 2014.

While inflation in the broader economy has come within a whisker of the BoE’s 2 percent target, house prices are rising six times as fast in the capital and almost four times as fast nationwide.

(Reporting by Christina Fincher; Editing by John Stonestreet)

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Crocs to receive $200 million from Blackstone, CEO to retire

NEW YORK (Reuters) – Crocs Inc (CROX.O) said Blackstone Group LP (BX.N) is making a $200 million investment that will give the private equity firm a 13 percent stake in the shoe company.

In exchange for the $200 million, Blackstone will receive preferred stock that can convert to common stock in three years if certain conditions are met. It will also receive two board seats.

The preferred stock will have a 6 percent cash dividend rate and is convertible into shares of common stock at a conversion price of $14.50 per share.

The shoemaker also said late on Sunday that the company’s chief executive, John McCarvel, plans to retire in April and will also give up his seat on Crocs’ board.

“We will recruit a new CEO who will work with the reconstituted board to refine our short-term and long-term strategic plans, which will include a sharper focus on earnings growth with less emphasis on top-line growth,” Chairman Thomas Smach said in a statement.

Crocs, which is known for its colorful clogs, intends to use the Blackstone investment to help pay for a $350 million stock repurchase it expects to launch in the first quarter.

Established in 2002, Crocs sells its shoes, made out of a proprietary closed-cell resin it calls Croslite and which are offered in more than 300 four-season footwear styles in some 125 countries, according to its website.

Crocs posted a 2 percent decline in sales for the third quarter, hurt by weakness in the Americas and Japan. The company said it saw less discretionary spending for footwear, apparel and other consumer goods in the United States.

The company now expects fourth-quarter revenue to be at the low end of the previously provided outlook range of $220 million and $225 million, while it expects loss per share to be near 23 cents.

Analysts, on an average, were expecting fourth quarter loss per share of 20 cents on revenue of $222.3 million, according to Thomson Reuters I/B/E/S.

Moelis Co LLC was the financial advisor and Perkins Coie LLP provided legal counsel for Crocs.

Blackstone was advised by Piper Jaffray Co while Simpson Thacher Bartlett LLP acted as legal counsel in connection with the investment.

(Reporting by Michael Erman in New York and Sakthi Prasad in Bangalore; Editing by Matt Driskill)

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Monte Paschi shares volatile after cash call delay

MILAN (Reuters) – Banca Monte dei Paschi di Siena (BMPS.MI) shares were volatile on Monday after an unprecedented clash between its top executives and main investor delayed a vital cash call at Italy’s third-biggest bank.

The postponement makes the fundraising riskier and brings closer the prospect of a possible nationalization of the bailed-out lender, a move the government would like to avoid.

It also highlights the weaknesses of Italy’s fragmented banking system – where cash-strapped foundation shareholders have often hampered lenders’ capital raising efforts to avoid losing influence – ahead of a Europe-wide health check of the sector.

At a meeting on Saturday, rebel shareholders led by the Monte dei Paschi foundation, the biggest investor in the Tuscan bank, sank management plans for a 3 billion euro ($4 billion) share sale in January, delaying the move until after May 12.

The world’s oldest bank needs fresh capital to pay back by end-2014 part of the 4.1 billion euros in state aid it received earlier this year and avert nationalization.

“The uncertainty over the bank’s fate is increasing,” Banca Akros analyst Luigi Tramontana said in a note. “The postponement of the capital increase marks a deterioration of the situation.”

Monte Paschi fell at the start of trade but recovered on a bout of short-covering to be up 2.5 percent by 0935 GMT.

The Siena-based bank was kept afloat by the bailout, which plugged a capital shortfall that arose after the bank was hammered by the euro zone debt crisis and loss-making derivatives trades.

The capital increase is part of a restructuring plan agreed with the European Commission in order to receive clearance for the state bailout.

The head of the Monte dei Paschi foundation, a charitable entity with close ties to Siena politicians in control of a third of the bank, was quoted on Monday as saying she hoped the bank’s top executives would stay on.


The bank’s Chairman Alessandro Profumo, an experienced banker formerly head of UniCredit (CRDI.MI), said he and Chief Executive Fabrizio Viola would decide in January whether to step down.

The foundation’s success in delaying the cash call was described in the Italian press as a failure on the part of Italy’s government, as local interests took precedence over concerns about the stability of the wider banking system.

The Treasury has oversight of banking foundations and together with the Bank of Italy has been closely following the events.

A Treasury spokesman said the government’s priority was to give the bailout money back to taxpayers and it had no interest in nationalizing Monte Paschi, ANSA news agency reported on Sunday evening. No comment was immediately available from the Treasury when contacted by Reuters.

Profumo and Viola had secured a pool of banks to guarantee the rights issue, but only if it was carried out by the end of January.

They said the delay risks putting Monte Paschi in competition with other Italian lenders as an upcoming asset review by the European Central Bank pushes banks to boost their capital, and could precipitate the Tuscan bank’s nationalization.

By forcing the postponement, the debt-laden foundation is hoping to win more time to sell down its 33.5 percent holding and repay its 340 million euro debts.

Italian daily Il Messaggero quoted a foundation member on Monday as saying the Fondazione Monte Paschi would now try to sell most of its stake gradually in coming months.

($1 = 0.7258 euros)

(Additional reporting by Danilo Masoni; Editing by Erica Billingham and David Holmes)

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Low interest rates cannot continue for ever: German FinMin

BERLIN (Reuters) – German Finance Minister Wolfgang Schaeuble told a newspaper on Monday that low interest rate policies adopted by central banks around the world could not continue for ever.

Schaeuble told Bild daily that expansive monetary policy around the world caused problems for long-term investments.

“That cannot, of course, carry on for ever,” he told Tuesday’s edition of the paper, according to extracts of an article released in advance.

(Reporting by Madeline Chambers)

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SEC pushes US insurers for details on ‘captives’: WSJ

(Reuters) – The U.S. securities regulator has asked life insurers to disclose the potential cost of forcibly winding down in-house insurance units known as ‘captives,’ whose business model has come under regulatory radar, the Wall Street Journal reported.

State insurance regulators, which approve these captive units, have previously raised concerns that some companies may be covering up their financial health by moving business to such related entities, the daily reported. (

Insurers that have been in touch with the Securities and Exchange Commission (SEC) on this matter include MetLife Inc, Genworth Financial Inc, Hartford Financial Services group Inc, Protective Life Corp and Reinsurance Group of America, the Journal reported, citing regulatory filings and people familiar with the matter.

The newspaper quoted some insurers responding that discontinuation of captives could hurt their financial condition and force them to raise prices on certain products.

Companies form a captive insurance unit if they are unable to find an outside firm to insure them against a particular business venture, or to get better coverage with lower premiums.

Such captive insurers can be set up with minimal disclosures and lesser amount of assets to back up these policies than the insurers themselves. Some insurers use captives to help consolidate their hedging of the risk in minimum-income and other guarantees sold on variable annuities, the report said.

None of the companies could be immediately reached for comment by Reuters outside of U.S. business hours.

(Reporting by Sampad Patnaik in Bangalore; Editing by Gopakumar Warrier)

(This story was refiled to add source to the headline)

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BMW, Toyota agree on joint sportscar platform

FRANKFURT (Reuters) – Carmakers BMW (BMWG.DE) and Toyota (7203.T) have agreed to develop a joint platform for sportscars, BMW’s development chief Herbert Diess told a German newspaper.

“We have agreed on a joint architecture for a sports car. What is important is that there will be two different vehicles that are authentic to the two brands,” Frankfurter Allgemeine Zeitung on Monday quoted Diess as saying.

BMW and Toyota had in January signed an agreement to cooperate on various areas including lithium-air batteries and lightweight technology.

They also said at the time they would study the potential for a joint platform for a mid-sized sports vehicle in a feasibility study to be completed by the end of 2013.

Frankfurter Allgemeine said that Diess declined to provide details on the models that would result from the cooperation.

(Reporting by Maria Sheahan; Editing by John Stonestreet)

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