News Archive

Greece, creditors agree on need for quick deal as talks continue

ATHENS Greece and its European creditors agreed on the need to reach a cash-for-reforms deal quickly as Athens missed a self-imposed Sunday deadline for reaching an agreement to unlock aid, sources close to the talks said.

Athens and its euro zone and International Monetary Fund (IMF) creditors have been locked in talks for months on a reforms agreement. Without a deal, Athens risks default or bankruptcy in weeks.

The pressure has intensified in recent days as Athens faces a payment to the International Monetary Fund on June 5 as well as the expiration of its bailout program on June 30.

The government said this week it was looking for a deal by Sunday, but sources close to the talks at the so-called Brussels Group of EU/IMF creditors said that was unlikely.

In a phone call on Sunday with German Chancellor Angela Merkel and French President Francois Hollande – the second in four days – Greek Prime Minister Alexis Tsipras pushed for a political solution for the country’s economic troubles.

“(The teleconference) took place in a very good climate,” a Greek official said, adding that all three recognized the need for a quick deal.

Tsipras has long sought a political push to end negotiations and get aid flowing to his cash-strapped country. But the lenders have insisted that Greece must wrap up talks at the technical level with adequate concessions on reforms so that its budget and debt numbers add up.

In a column published on French daily Le Monde’s website on Sunday, Tsipras said Greece should not be blamed for not yet reaching a deal with its creditors and called on fellow European leaders to bypass technical talks and come to a political solution.

“If we have not reached an agreement with our partners, it’s not because of our intransigence or incomprehensible positions from the Greek side,” Tsipras wrote.

“It is rather because of the obsession of some institutional representatives who insist on unreasonable solutions and are being indifferent to the democratic result of recent Greek elections.”

He said the Greek government had been ready to make compromises, for instance on privatizations, despite its ideological opposition to them.

Labor and pension reforms are believed to be among the big sticking points with Athens. Another source close to the talks said the major issues holding up a deal remained.


Earlier, a Greek government official speaking on condition of anonymity, said the two sides were “very close” to a deal but one was not expected on Sunday.

It was not immediately clear if the talks would continue in Brussels on Monday.

In an interview published in newspaper Corriere della Sera on Sunday, Greek Economy Minister George Stathakis said he expected a deal in “a few days”, followed by a meeting of euro zone finance ministers to approve disbursement of the aid.

Asked whether the 300 million euro ($329.49 million) payment to the IMF on June 5 was at risk and there was a question of lumping it together with other installments that fall due next month, Stathakis said: “There shouldn’t be any need. No danger.”

Athens has frequently said it is on the verge of a deal in recent weeks but international lenders have been less optimistic, citing Greece’s resistance to labor and pension reforms that are conditions for more aid.

In a sign of greater willingness to compromise, Interior Minister Nikos Voutsis said on Saturday that Greece was open to pushing back parts of its anti-austerity program to reach a deal this week..

($1 = 0.9105 euros)

(Additional reporting by Stephen Jewkes in Milan and Michel Rose in Paris; Writing by Deepa Babington and Karolina Tagaris; editing by Susan Thomas)

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GE launches bidding process for U.S. lending operation: WSJ

NEW YORK General Electric Co launched the bidding process for a $40 billion portion of its U.S. commercial lending business, a critical step in its effort to avert regulation by the U.S. Federal Reserve, the Wall Street Journal said on its website on Sunday.

The chunk of the operation represents more than half of the $74 billion U.S. commercial lending and leasing portfolio that includes loans for equipment purchases and financing and leases for midsize firms.

The business units could all go to a single buyer or could be divided and sold separately, the Wall Street Journal said.

GE is working with Credit Suisse Group AG and Goldman Sachs Group Inc on the sale, while J.P. Morgan Chase Co is overseeing all of the sales processes, it said.

(Reporting by Richard Leong; Editing by Eric Walsh)

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OPEC likely to keep output unchanged at June 5 meeting: delegates

VIENNA OPEC is likely to keep its output target unchanged when it meets on Friday because the global oil market appears to be in good shape and prices are expected to firm up from current levels, a senior Gulf OPEC delegate told Reuters.

Two more OPEC delegates said they expect no change in policy on June 5 when oil ministers from the Organization of the Petroleum Exporting Countries (OPEC) are scheduled to meet in Vienna.

Oil prices have rallied after falling to a near six-year low close to $45 a barrel in January due to a global glut. Brent crude settled at $65.56 on Friday, up $2.98, or 4.8 percent, on the day. [O/R]

“It is unlikely that OPEC will make a decision regarding its production ceiling for two reasons: the first one that Russia and other non-OPEC producers have expressed their non-desire to cooperate in any idea of a production cut,” the Gulf delegate said on Sunday.

    “And the second one is that the market is firming up. Prices are expected to continue at current levels and most likely will go higher. Demand is also strong and the inventories are balanced. The market seems to be in good shape,” the delegate said.

Crude oil inventories are above the five-year average but oil products stocks are within the five-year average, the delegate added.

    “At the end, of course the final decision will be made by the ministers when they meet,” the senior Gulf delegate added.

Two officials from other OPEC producers made similar remarks.

“I don’t think there will be any changes,” said an official from an African OPEC member, referring to OPEC’s output policy decision on June 5.

“Prices … are within $60-$65, at least they are improving from where they were at before,” another Gulf OPEC delegate said. “There is still an oversupply in the market, but the oversupply is less than what it was in November.”

OPEC refused to cut output to shore up prices at its last meeting in November despite the glut, seeking to defend market share against higher-cost producers such as the United States. It left its output target at 30 million barrels per day.

The decision exacerbated the price fall from as high as $115 in June 2014.

However, early signs of slowing production in the United States and higher-than-expected growth in demand have helped drive the rally in prices from January’s low.

(Editing by Susan Thomas/Ruth Pitchford)

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Germany’s Schaeuble offers Varoufakis chocolate euros for his nerves

BERLIN German Finance Minister Wolfgang Schaeuble has offered to give his Greek counterpart some chocolate euro coins as “nourishment for his nerves.”

Schaeuble has clashed repeatedly with Yanis Varoufakis over Greece’s debt and economic reforms since the leftist Syriza party took power in January, pledging to end austerity and renegotiate the bailout terms.

In an interview with the children’s television program “Logo” on German broadcaster ZDF last week, a girl reporter gave Schaeuble a supportive handful of the chocolate coins.

“I’ll take a few for my Greek colleague, he also needs strong nerves,” Schaeuble replied.

Greece hopes to secure a cash-for-reforms deal with its lenders this week. But after four months of tortuous negotiations no breakthrough is in sight. Without a deal Athens risks default or bankruptcy in weeks.

(Reporting by Caroline Copley; Editing by Ruth Pitchford)

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Crunch time for Greece; U.S. and Chinese data in focus

LONDON Years of uncertainty and economic pain spent keeping Greece in the euro zone boils down in June to a handful of make-or-break debt repayments, while a raft of key data in the next few days will point to the progress of the global economy.

The threat posed to the wider world by an eventual Greek exit from the euro may have diminished over the last few years, but last week the United States warned of an “accident” for the world economy if Greece and its creditors miss deadlines this coming month to avert a debt default.

Most analysts think Greece has enough cash and options to avoid default when a roughly 300 million euro ($330 million} payment falls due on June 5 to the International Monetary Fund. What happens in the subsequent weeks is less clear.

“We believe meeting the 1.6 billion euros in payments to the IMF by the end of June will be difficult. Payments of 3.5 billion euros on bonds held by the ECB on July 20 appear even more unlikely,” said Michael Gapen, economist at Barclays.

“Without an agreement, Greece could descend into what would effectively be an exit from the euro area, where defaults and capital controls become a permanent feature.”

Gauging the likelihood of a substantive agreement is difficult because of a clear difference in tone between Athens, optimistic of striking a deal soon, and its far more cautious creditors.

Greece’s left-wing government — elected in January to fight austerity measures imposed by its international lenders — indicated at the weekend it could compromise on some of its demands, although it didn’t specify how.

“The antipathy towards more austerity with the general public and (Greek governing party) Syriza is a major sticking point and means a quick resolution is unlikely if it means Greece has to capitulate,” said Ben May, economist at Oxford Economics.

Still, analysts polled by Reuters last week put a less than one-in-three chance on Greece leaving the euro zone this year.

Mark Zandi, chief economist at Moody’s Analytics, believes that the global economy is now “largely inoculated” from Greece because European banks — the main channel of contagion — are in better shape than they were a few years ago.


Instead, a protracted slowdown in China, along with how financial markets respond to the U.S. Federal Reserve’s intention to raise interest rates from record low levels, are Zandi’s top worries for the world economy going into the second half of this year.

Business surveys this week will show if there are any signs that China’s vast industrial sector will shake off its recent stagnation.

“My working assumption is that the Chinese are going to be able to gracefully manage their slowdown. But if they stumble too much, that’ll make it more difficult for the global economy to kick into a higher gear for sure, including the U.S. economy,” said Zandi.

The world’s largest economy contracted in the first three months of the year as it buckled under the weight of unusually heavy snowfalls, but most economists think a rebound is already underway.

Purchasing managers indexes from the United States this week should go a long way to confirming that, but even more important will be labor market data due on Friday as the Federal Reserve gauges when to raise interest rates.

Economists believe the U.S. economy added around 225,000 non-farm jobs in May — a rate that most expect would keep the Fed on track to tighten policy by the end of the year.

But that also raises the possibility that financial markets, relatively calm during the latest Greek debt standoff, are set for a rocky few months.

Fearful of a looming tumble in stocks and bonds from multi-year highs, global investors have increased the share of safe-haven cash in their portfolios to the highest levels in seven months, according to a Reuters poll of fund managers last week.

“There is a lot of concern about the global growth outlook, and as much as people are welcoming better trends in the euro zone, they know it’s not going to be a locomotive for growth,” said Marc Ostwald, strategist at ADM Investor Services.

Comments from European Central Bank President Mario Draghi after Thursday’s policy meeting will be scrutinized for the central bank’s latest views on the economic outlook and the Greek crisis.

(Editing by Crispian Balmer)

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Micromanaging new CEO impresses at Malaysia Airlines but doubts run deep

SINGAPORE/KUALA LUMPUR New CEO Christoph Mueller’s plans for troubled Malaysia Airlines – including a new brand, a smaller fleet and one third less staff – are widely seen as a promising blueprint for a fresh start.

The 52-year old German has successfully restructured Ireland’s state-backed Aer Lingus and spearheaded a revamp at Lufthansa. He has also already impressed in his new job with his micromanaging ways, according to one long-time Malaysia Airlines executive.

Even so, many analysts worry that the state-owned carrier’s long history of mismanagement and government interference, and its severely damaged brand after last year’s two plane disasters will be too much to overcome.

“You can’t parachute in someone irrespective of how sterling his previous record shows and expect him to do a job with an airline that’s been abused for two decades,” said Shukor Yusof, an analyst at Malaysian aviation consultancy Endau Analytics.

In addition to an unprecedented need to build a completely new brand after the disappearance of flight MH370 and the shooting down of MH17, Mueller must slash costs at a time when the airline faces intense competition from other full-service carriers and budget airlines.

Forced to fly to unprofitable destinations to promote Malaysia’s foreign policy agenda, keep on more staff than needed due to powerful unions and to hand out contracts to politically connected firms, the airline has been saddled with a cost base 20 percent bigger than its peers, analysts say.


Mueller, who speaks directly and concisely, is well aware of challenges.

“It is the government who is funding. What they want in exchange is a new national icon, a new national carrier,” he told Reuters in an interview last week.

“I’m hired to run the new company entirely on commercial terms and there’s very little margin for error,” he said.

Mueller, who joined the airline’s board early this year and became CEO last month, added that he was aiming for a much smaller network and fleet and a sharper focus on cost-cutting – some of the strategies he pursued at Aer Lingus which was on the verge of collapse when he took over in 2009.

Efforts to rationalize the fleet have, however, hit some early speed bumps with the carrier so far unsuccessful in finding buyers for two A380 aircraft that it has put up for sale.

Mueller was also not shy of resetting some expectations.

Khazanah Nasional Bhd, the majority stakeholder that took the airline private last year in the wake of the plane disasters, said last August it wants to see the carrier profitable by the end of 2017 and to re-list in five years.

Mueller said in the interview, however, that the first goal could be difficult to meet given depreciation in the ringgit against the dollar that has taken place this year.


On the plus side, analysts are pleasantly surprised that Malaysia Airlines’ owner Khazanah, a state investment firm, has agreed to a clean break from the past – including the dismantling of old labor unions that have stymied change.

Some are optimistic that given time, Mueller has a decent chance of being able to work things out.

“The airline needs to simplify its fleet and network whilst facing many competitive and reputational challenges. But given the growth dynamics of the region and the geography of its KL hub, I believe that success can be achieved over the medium term,” said John Strickland, a UK-based independent consultant.

As it confronts those challenges, Mueller’s meticulous nature is expected to be a key asset – even if it ruffles some feathers.

“He takes an interest in very minute details,” said the Malaysian Airlines executive, declining to be identified as he was not authorized to speak on the matter.

“Some don’t like the fact that he is a micromanager, but we badly needed someone who pays attention to everything.”

(Editing by Edwina Gibbs)

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Policies working, ECB must persist with purchase programs: Constancio

SITGES, Spain The European Central Bank’s monetary policy, aimed at raising inflation in the euro zone area, is working according to plan, ECB vice president Vitor Constancio said on Saturday, citing recent figures.

“We have to persist in our policies as promised, given that these encouraging projections are predicated on the full implementation of our purchase programs until next year,” Constancio said at a conference in Sitges, northeastern Spain.

He added that policy interventions always carried side-effects but that no “generalized overvaluations” in European markets had been identified.

(Reporting by Sarah White; Editing by Catherine Evans)

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Airbus sees ‘several hundred’ orders at Paris Airshow

PARIS Airbus could announce “several hundred” airplane orders at the June 15-21 Paris Airshow, Fabrice Bregier, chief executive of the planemaking unit of Airbus Group, said on Saturday.

“It will be a good show,” he told i-Tele television.

Airbus has seen a surge in demand for jets like the medium-haul A320, but is struggling to find buyers for its largest model, the 544-seat A380 superjumbo.

Despite calls by Dubai’s Emirates to update the engines, Bregier said a A380 revamp was “not currently on the agenda”, adding, “we’ll do that when the time is right”.

Bregier said the recently weakened euro was at a “good level” for European businesses.

Asked about suggestions Airbus would quit Britain if it leaves the European Union, he said: “We produce all our wings in Britain and I have no intention of changing this strategy. I am very satisfied with the support we receive from the UK.”

The head of Airbus UK warned last week of “huge” economic risks for Britain outside the EU and said Airbus would reconsider investments if Britons voted to leave the bloc in a referendum due by the end of 2017.

“As a European citizen, and as the head of one of the few flourishing European enterprises, I hope the UK stays in Europe, but it is up to them to determine themselves,” Bregier said.

“If the UK happened to leave then we would examine the consequences for our business. I think we will avoid this, because Europe has made progress on the basis of crises that subsequently lead to progress.”

(Reporting by Tim Hepher, Chine Labbe; editing by Michel Rose and Crispian Balmer)

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Greece open to compromise to seal deal this week: interior minister

ATHENS Greece’s government is confident of reaching a deal with its creditors this week and is open to pushing back parts of its anti-austerity program to make that happen, the country’s interior minister said Saturday.

Greece and its EU/IMF creditors have been locked in talks for months on a cash-for-reforms deal and pressure is growing for a deal, since Athens risks default without aid from a bailout program that expires on June 30.

“We believe that we can and we must have a solution and a deal within the week,” Interior Minister Nikos Voutsis, who is not involved in Greece’s talks with the lenders, told Skai television.

“Some parts of our program could be pushed back by six months or maybe by a year, so that there is some balance,” he said.

He did not elaborate on what parts of the ruling Syriza party’s anti-austerity program could be pushed back, but the comments suggested a greater willingness to compromise on pre-election pledges.

Prime Minister Alexis Tsipras stormed to power in January on promises to cancel austerity, including restoring the minimum wage level and collective bargaining rights.

The government earlier this week said it hoped for a deal by Sunday, though international lenders have been less optimistic, citing Greece’s resistance to labor and pension reforms that are conditions for more aid.

Voutsis said Athens and its partners agreed on some issues, such as achieving low primary budget surpluses in the first two years. But they still disagreed on a sales tax, with Greece pushing so any VAT hikes will not burden lower incomes.

“A powerful majority in the political negotiations has showed respect for the fact that there can’t be further austerity strategies for the Greek issue, the Greek problem and the Greek people,” he said.

The debt stand-off between Greece and its European Union partners overshadowed a meeting of policymakers from the Group of Seven rich nations in Dresden, Germany, on Friday.

The United States warned of a possible accident for the world economy if Greece and its creditors miss their June deadlines to avert a debt default.

In an interview with Realnews newspaper published on Saturday, Economy Minister George Stathakis said Athens had no alternative plan.

“The idea of a Plan B doesn’t exist. Our country needs to stay in the eurozone but on a better organized aid program,” he said.

Stathakis was confident a deal will be reached. “Otherwise, mainly Greece but the European Union as well will step into unchartered waters and no-one wants that.”

(Reporting by Angeliki Koutantou; Editing by Deepa Babington and David Holmes)

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