Takatoshi Ito: “Prisoners in Euroland”.

Takatoshi Ito: “Prisoners in Euroland”.

Santander buys SEB’s German branches. July 12 2010 11:54. Santander of Spain, the eurozone’s largest bank by market capitalisation, on Monday said it had agreed to buy the German retail bank business of Skandinaviska Enskilda Banken for €555m ($698m). The agreement, which had been expected, is the latest move by Santander to expand outside its home market in Spain. “Germany is a core market for Santander,” Emilio Botín, Santander chairman, said in a statement. “This acquisition is a significant step towards achieving our goal of being a full-service retail bank in Europe’s largest market.” Santander Consumer Bank AG is already a leading provider of auto finance and consumer loans in Germany, with 6m customers. The deal to buy SEB’s 173 German branches, which is expected to be completed next year following regulatory approvals, will nearly double the size of Santander’s German branch network. The SEB branches serve 1m customers, including 10,000 small and medium-sized businesses, mainly through making mortgage loans and taking deposits. Santander said the purchase would cost it about 10 basis points in the group’s core capital ratio, which stood at 8.8 per cent of assets at the end of the first quarter. Santander’s increased presence in Germany brings it into more direct competition with incumbents such as Deutsche Bank and Commerzbank in the fierce battle for German retail deposits. The country’s retail banking market is extremely fragmented, with most Germans using small local savings banks and co-operatives. Deutsche has attempted to build scale by buying a stake in 2008 in Postbank, which it is expected to take over completely within the next year. Commerzbank bought Dresdner Bank in 2008, in an attempt to become the largest bank serving German retail customers. Foreign banks have rarely been attracted to the German high-street banking market, although Italy’s UniCredit bought HypoVereinsBank in 2005, in the biggest cross-border banking deal in Europe. UniCredit had also been in the running for the SEB business to try to expand its presence. The other large non-German rival in the market is Credit Mutuel, the French mutual, which bought Citibank’s German retail business in 2008. SEB’s sale of its German business would signal defeat for the lender in its efforts to become a force in German retail banking 11 years after entering the market. The Swedish bank has been considering a sale since 2008, but efforts to find a buyer were abandoned during the financial crisis.
Annika Falkengren, SEB chief executive, has long made clear her dissatisfaction with the German retail operation, which has suffered from low profitability and lack of scale in a fiercely competitive market.
SEB entered the German retail market in 1999 through the acquisition of BfG Bank from Credit Lyonnais for €1.6bn. But Germany has increasingly taken a back seat, as the Swedish bank focused on expansion in the Baltic states of Latvia, Lithuania and Estonia over the following decade. Elsewhere in Europe, Santander is also expected to win the auction for a network of UK retail branches being sold by Royal Bank of Scotland. Aside from Europe, Mr Botín has focused on the US and Latin America in recent months. Brazil is already a big contributor to the group’s global profits. Last month, Santander paid $2.5bn to buy Bank of America’s minority stake in its Mexican operations and so take back full control of the business. Francisco Luzón, managing director of Santander’s Americas division, has meanwhile told the Financial Times of the bank’s desire to increase its presence in Latin American countries where it has only a small share of the market, notably Peru and Colombia.

Germany wants' controlled bankrupt "poor countries. 07/12/2010, 16:55. Euro exchange rate is rapidly declining against the dollar after the publication of Der Spiegel that Germany has proposed a plan of "controlled bankruptcy "of countries with high debt. The plan, according to the publication, can lead to serious losses among investors that invested in government bonds. Plan "controlled bankruptcy "- part of a strategy Germanic Chancellor Angela Merkel to establish procedures for bankruptcy countries - members of the eurozone, which no longer cope with their obligations. In this strategy, according to Spiegel, also includes the creation of "the Berlin club "- a union of states, who will oversee the bankruptcy and to serve as a guarantor of all pledged in a payment plan. This club should be independent and not politicized. When the idea of Germany will become a reality, is not yet known. The representative of the Minister of Finance of the country in an interview with Western media has refused to comment on what he called the"intermediate steps ". If the plan is "controlled bankruptcy "will enter into force, the lenders would lose half of the nominal value of government bonds issued bankrotyaschimisya eurozone countries.
According to Spiegel, Germany's finance minister , Wolfgang Schäuble explained the need for such a strategy with a quotation from a working draft of the law: "When a company is bankrupt, the creditors have had to abandon some of their demands, and so too should happen in case of bankruptcy of the States. " The private sector should be included in the process so that taxpayers are not forced to assume the full financial burden, says the German edition of the Government initiative. According to the plan holders of government bonds as an incentive to participate in the restructuring of debts will be able to count on a guaranteed payment of half the nominal value of securities. In Germany, this should help the IMF, which is planned to be involved in the restructuring from the outset. One of the important points of the plan is that in case of bankruptcy of the state will not be able to manage their own finances. They will feed into the "person or group of people familiar with the regional characteristics of the nation ". These people will be appointed by the Berlin club. Even the theoretical possibility of the appearance of the Berlin club with all the attendant was enough to derail the euro. For now the euro has lost 0.43% against the U.S. currency. Since the beginning of the year the euro, according to Bloomberg Correlation-Weighted Indexes, lost 8.8%. For comparison: the dollar has risen by 5,1% and the yen - 10%.

Paula Maria von Hafe Teixeira da Cruz (n. Luanda) é uma advogada portuguesa: “Foi o medo dos tribunais que juntou PT e Telefónica”

Cavaco answering to Crugman statements say that ‘The Portugal will not be out of Euro’. Economico with Lusa. 12/07/10 13:56. "I do not believe that Portugal ever leave the euro zone," Cavaco Silva said today in reaction to statements from Paul Krugman. "I studied much of the eurozone, have published books on the euro area, I do not believe that Portugal ever leave the euro zone, nor do I believe that Greece will leave," said the head of state, Anibal Cavaco Silva, when asked on the statements of Paul Krugman, Nobel Prize for Economics. In an interview published yesterday in El Pais, Paul Krugman said he believed "there is a plausible possibility that Greece was forced to leave the euro" and found that infected all other eurozone countries, with special reference to Portugal. "I guess it's a lack of knowledge of what is in fact the euro zone, I think it would be a disaster for Europe, it was not for Greece, Portugal, to Ireland or Spain, would be a disaster for Europe is no accident that this building is the European Monetary Union would collapse, "he said Cavaco Silva, who spoke to reporters on the sidelines of the Fourth round of the Roadmap for Innovative Local Communities. Stressing that one should not "go that way" because, in his opinion, this is "an entirely unlikely," the President said he believed the "wisdom" of European leaders not to allow this to happen. "We really rely on the euro, I am an advocate of the euro, the euro gives us a hand remarkable that we do not always realize," he noted. A "help", the head of state, passes through each country do not have to worry about the devaluation of the currency, but also by reduced costs for currency trading. Also, he said, the doors of international financial markets were open. "It is known that the advantages for a small country belonging to the euro zone are much larger than a big country," also admitted, recalling that the transaction costs with weak currencies was always much higher than the transaction costs with currencies.

Prisoners in Euroland. July 2, 2010 | 24:32. Takatoshi Ito. Americans (and some Asians) often call the eurozone to "Euroland". Given the similarity with the word "Disneyland", a fantasy land, turns out to be a much more ironic than helpful. Americans (and some Asians) often call the eurozone to "Euroland". Given the similarity with the word "Disneyland", a fantasy land, turns out to be a much more ironic than helpful. Since the euro was conceived, skeptics (mostly Americans) and supporters (mostly European) heatedly debated the initial economic conditions of the single currency, the benefits for their members and their political viability. The Asian economies that promote regional integration in Asia watched this debate with surprise, since the line was not based on economic philosophy, as "Neoclassical vs. Keynesian" or "liberal vs. conservative", but a geographical division transatlantic. The American economists, led by Martin Feldstein, have argued that the economies of the eurozone are very different, with many institutional differences and rigid labor markets, to form an optimum currency area. Furthermore, a common monetary policy combined with an independent fiscal policy is doomed to failure: the first increases unemployment in the weaker economies because the interest rate reflects the average indicators of the Eurozone (where Germany and France have a large weight) but keeps costs low enough debt to governments of weaker economies can finance the fiscal profligacy. Supporters insist that the European single currency is really based on strong political desire to maintain the eternal peace in Europe. Even though in principle the Eurozone does not meet the pre-economic conditions, economic variables will converge in the future. The middle-income countries and low prices and wages would grow faster with an inflation rate higher. The Stability and Growth Pact would ensure fiscal discipline. During the first and prosperous decade of the eurozone, the European supporters appeared to have won the debate. The eurozone countries have grown at a fairly high rate, income per capita and price levels have converged, the spreads of interest rates declined and there were occasional small market turmoil.Several countries have integrated successfully, the eurozone after fiscal and monetary reforms. And more are waiting to do. The euro became the second most important currency of the international financial system. The Asian crisis noted the Greek with a quiet sense of revenge. In 1997, many thought that the Asians who suffered speculative attacks on Asian currencies at the time were unjustified, the Prime Minister of Malaysia, Mahathir Mohamad, to lead the charges against the speculators. In response to the crisis, Asians have tried to create the Asian Monetary Fund, which would help any country reached the crisis, providing massive liquidity. It was hoped that the mere announcement of the creation of this fund halt the attacks. But the International Monetary Fund and the United States rejected this idea. Now the Europeans are to establish the International Monetary Fund - to name who might oppose - in cooperation with the International Monetary Fund. But announcing a program of the International Monetary Fund (with support bilateral cooperation) was not that calmed the markets in South Korea and Indonesia in 1997. In the end, South Korea was rescued coordinated through refinancings and forced loans from foreign banks (why not try the same in Greece?) And Indonesia experienced a financial turmoil because the country failed to meet most of the conditions of the Fund IMF (a new and kinder IMF dispensed with such requirements in the case of Greece). There are two differences between the 1997 Asian crisis and the crisis that currently live in Greece. One has to do with who borrow money. In Greece, the problem has to do with public deficits (most of them hidden for a long time), while the problem in Asia was the private sector debt, which grew out of control. The second difference has to do with the system of exchange rates. The United States, the International Monetary Fund and others have encouraged Asian countries to increase the flexibility of exchange rates.The depreciation that followed the crisis helped to speed recovery by increasing exports. In fact, since depreciation is a key instrument to set a quick economic recovery, why not invite Greece to leave the Eurozone? After all, by staying in the euro, the country is impossible to register a rapid recovery based on increased exports. The other way to achieve a reduction in real terms is through a massive deflation of domestic prices, together with a severe recession. Moreover, all the structural problems of Greece (weak tax base, a large number of public officials who receive bonuses and generous pensions) can not be sustainable in the Eurozone. But solving any of them will be extremely difficult and if these problems were not solved in Greece, and other troubled countries of the Eurozone, those countries will follow the same trend. Even the International Monetary Fund may not be enough to solve the problem, because those who are now in the rescue team may need help in the future. Any financial crisis seems a liquidity crisis for those involved in it - or close to it. The same attack is similar to a solvency crisis for those who are geographically distant. And crises are repeated in different regions, driven by similar economic and financial mechanisms, although details are different. How to write Carmen Reinhart and Ken Rogoff, all people who deal closely with a financial crisis thinking "this time is different." But the evolution of the Greek crisis is different from the Asian crisis. Europeans are now a regional monetary fund, the Asians wanted but might not have. The political will to protect the euro is strong - perhaps strong enough to overcome concerns about moral hazard. Keep the Eurozone intact, regardless of cost, has become the only viable option in Europe since the single currency was adopted. So while the "Euroland" is in danger of collapse due to the Greek crisis, economists point out the enigmatic last line of the Eagles song "Hotel California" 70s: "You Can check out any time you like, But you Can never leave. " This phrase echoes while Germany and Greece have come a common destiny. Their concerns are a good lesson for those Asians who continue to think of further economic integration through a single currency. Takatoshi Ito, an economics professor at Tokyo University, is a former vice finance minister for the Japanese International Affairs and Senior Adviser in the Research Department, International Monetary Fund.