Europe

Bankers on Wall Street and in Europe have struck back against moves by US lawmakers to slap punitive taxes on bonuses paid to high earners at bailed-out institutions, the Financial Times reported. Senior executives on both sides of the Atlantic on Friday warned of an exodus of talent from some of the biggest names in US finance, saying the “anti-American” measures smacked of “a McCarthy witch-hunt” that would send the country “back to the stone age”. “There are three big industries where the US has global leadership: financial services, media and technology.
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The current global financial crisis is different from all the others since the end of the second world war, George Soros argued in a Financial Times editorial. Among other measures, both Europe and the US in effect guaranteed that no other important financial institution would be allowed to fail. This necessary step had unintended adverse consequences: many other countries, from eastern Europe to Latin America, Africa and south-east Asia, could not offer similar guarantees. As a result, capital fled from the periphery to the centre.
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Carmaker Renault on Friday announced a production boost at one of its French plants but distanced itself from a minister's comments that the move amounted to transfer of foreign auto jobs back to home soil, Reuters reported. As the world's leading carmakers battle to survive the worst sales crisis for decades in an industry now flirting with protectionism, French Industry Minister Luc Chatel characterised the temporary output increase as a first sign that aid measures for the country's auto sector were working.
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The launch of an Irish '"bad bank" to quarantine toxic debts of the banks could require loan write-offs which match or are more severe than the banks’ worst-case scenarios under proposals being devised for the Government, Finfacts Ireland reported. Economist Dr Peter Bacon has advised the Irish Government to establish a bad debt company to offload the problem loans off the banks’ balance sheets to free up lending.
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Spain's publicly traded banks have weathered the financial storm remarkably well thus far--but that's only half the story. Around 48% of Spain's lending business is in the hands of cajas de ahorro, unlisted savings banks largely controlled by the country's regional governments. Amid the collapse in the Spanish construction sector and an ensuing jump in delinquent loans, many of these are in trouble. The industry body that represents them is calling on the government to take urgent action or face "dramatic consequences." The Spanish government hasn't yet responded.
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Austria's banks exert an outsize influence beyond the country's borders. In the 1990s, after the fall of communism, banks based in Vienna expanded eastward and came to dominate finance in Eastern Europe. Today, however, Hungary, Romania and Ukraine--where Austrian banks nearly cornered the market--have sought emergency aid from the International Monetary Fund. Foreign investors are fleeing Eastern Europe, worried that the problems could spread. Credit-rating agencies have warned that Austrian banks are highly exposed if Eastern European borrowers trigger a wave of defaults.
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UBS AG, the Swiss bank’s Luxembourg units and Ernst & Young LLP were sued over their alleged “serious faults” in the supervision of a fund that invested about 95 percent of its assets with confessed fraudster Bernard Madoff, Bloomberg reported. About 70 investors whose money was put into Access International Advisors LLC’s LuxAlpha Sicav-American Selection sued UBS, which was the fund’s custodian bank and Ernst & Young, its auditor, in a Luxembourg court, seeking compensation for their losses, Pierre Reuter, one of the lawyers, said today.
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Russia’s government may buy a stake in billionaire Vladimir Yevtushenkov’s Indian mobile-phone unit to help his holding company AFK Sistema pay off debt. “It’s only at the discussion stage and a lot will depend on the Indian side, which is also a shareholder in this company,” First Deputy Prime Minister Igor Shuvalov said in an interview in his office in Moscow yesterday. Sistema Shyam TeleServices Ltd. has licenses to operate in all of India’s 22 regulatory regions, which have a combined population of more than 1 billion.
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Europe risks being the last region to pull itself out of recession unless it can present a united front on the economic crisis and bulk up stimulus plans, according to the head of Italy’s business lobby group. Emma Marcegaglia, president of Confindustria, told the Financial Times in a video interview that the Group of 20 summit in London next month was doomed to failure if Europe did not take a co-ordinated approach to ending the crisis and forget about side issues such as hedge fund regulation, the Financial Times reported.
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Policy makers in the U.K. and Germany set out plans to place a much heavier regulatory burden on banks and other financial institutions in a sign of how rules throughout Europe are likely to change in the wake of the financial crisis, The Wall Street Journal reported. In the U.K., Lord Adair Turner, chairman of the country's financial watchdog, laid out recommendations for what he called a "profound" overhaul of banking supervision that, if adopted, will mark the end of more than a decade of light regulation in one of the world's financial centers.
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