The Star Online: Business
The Star Online: Business |
- French government says has buyer for ArcelorMittal site
- Fidelity pushes BNY Mellon for better foreign-exchange pricing
- Day of reckoning for Cameron and British press
| French government says has buyer for ArcelorMittal site Posted: 28 Nov 2012 06:05 PM PST PARIS: The French government has found an industrialist willing to invest 400 million euros ($516.4 million) to renovate ArcelorMittal's Florange steelworks in northeast France, a minister said on Wednesday. Raising pressure on the group to agree to a sale, Industry Minister Arnaud Montebourg told lawmakers the interested party was a private steel industry investor who wanted to inject money into the site with financial backing from the state. Montebourg has been pushing hard for the Florange steelworks to be taken temporarily into state hands if Luxembourg-based ArcelorMittal refuses to keep two threatened blast furnaces running. "(The party) is ready to invest nearly 400 million euros to renovate this site," Montebourg told parliament during question time, without giving the potential investor's identity. Montebourg, who spoke as metal workers protested outside the National Assembly, said the aim was for the operation to have zero cost to public finances and that government stakes in other companies could be used to finance a purchase of Florange. He added that France was ready to move ahead with a temporary takeover of the site if no deal was reached. The government would compensate ArcelorMittal for the takeover and let a private industrialist run the steelworks while it looks for a permanent buyer to operate it. Union officials later said Montebourg had told them the government was considering selling a 1 percent stake in energy group GDF Suez to finance a rescue of the steelworks, which has become emblematic of President Francois Hollande's struggle to stem a wave of industrial layoffs. However, Montebourg later issued a statement saying that the sale of GDF shares was not under consideration. It said that he had told unions that a temporary nationalisation would have no net impact on the state finances if it were offset by the sale of state-held shares. CFDT union official Jean-Marc Vecrin had earlier told reporters that the government had told union members that it expected it could raise 420 million euros from the sale of GDF shares. A second CFDT union official had also said the government was mulling the sale of GDF shares. President Francois Hollande told journalists in Paris that talks were taking place with ArcelorMittal and potential buyers, a day after he pressed Chief Executive Lakshmi Mittal to keep the furnaces running. "He is waiting for Mr. Mittal to come up with a proposal other than the site's closure, or else the government intends to nationalise it temporarily," said Edouard Martin, a Florange union leader camping in front of France's finance ministry. ArcelorMittal has so far said it wants to sell only the idled furnaces and not the entire site, a steelworks that employs some 600 people in the heart of what was once French steelmaking country near the German border. The company has told France's Socialist government that it plans to shut the furnaces, which it says are no longer economically viable, unless a buyer willing to take them over can be identified by December 1. Steel industry experts say it would be tough to find a buyer for the furnaces alone without the adjacent steel plant. "Discussions are ongoing," a London-based spokesman for ArcelorMittal said when asked if the firm would be ready to sell the Florange steelworks. He would not elaborate. Earlier, Finance Minister Pierre Moscovici said the prospect of a temporary nationalisation of Florange was a special case and did not meant that further state takeovers for threatened factories were being prepared. The government owns 36 percent of GDF Suez. One percent of the company's capital would be worth 408 million euros at Wednesday's share price of 16.92 euros. - Reuters |
| Fidelity pushes BNY Mellon for better foreign-exchange pricing Posted: 28 Nov 2012 06:04 PM PST BOSTON: Fidelity Investments is pushing BNY Mellon Corp and other custody banks for stricter pricing on certain foreign currency trades, the latest sign of how big investment managers are using the same tactics as public pension funds to cut expenses. BNY had been taking advantage of customers like Fidelity and overcharging on so-called standing instruction FX trades, according to lawsuits filed by the U.S. Department of Justice and others. Now customers are paying more attention, putting pressure on the bank's revenue. Fidelity, the second-largest U.S. mutual fund company, has not filed a lawsuit of its own, but the firm is not waiting around for the litigation to wend its way through the courts, either. The Boston-based firm is now requiring more data from BNY and others about the specific timing and pricing of any foreign-exchange trades that aren't directly negotiated, Fidelity spokesman Steve Austin said. And Fidelity has enhanced its forex cost analysis as it works to lower expenses for its mutual fund investors, Austin added. In the U.S. District Court in the Southern District of New York, BNY Mellon is battling the Justice Department, which is pursuing a $1 billion-plus civil fraud case against the bank. The bank argues in court filings its trade-pricing policies were permissible and did not violate any laws. BNY Mellon spokesman Kevin Heine declined to comment on Fidelity, but said BNY foreign-exchange products continue to evolve in response to client demand and marketplace changes. Large investors typically negotiated specific pricing only when trading large amounts of foreign currency at a time. But for most smaller transactions, say the conversion of a dividend payment received by a U.S. fund from a non-U.S. stockholding, investors relied on so-called standing instructions that gave the banks leeway in pricing. Peter Weiler, head of global sales for Abel Noser Solutions, which analyzes the cost of foreign-exchange trades, said mutual fund boards, for example, are keen to know how their costs stack up against industry peers. "Interest has really taken off in the last 12 months or so," Weiler said. Fidelity ranked as one of BNY Mellon's largest standing instruction forex customers, according to the DOJ's lawsuit. The mutual fund giant lost more than $50 million on standing instruction trades with BNY Mellon from 2007 to 2010, according to DOJ filings. FX FADING Meanwhile, BNY Mellon's foreign-exchange business, once one of its most lucrative operations, is doing a fast fade. In the third quarter, BNY Mellon's total revenue for all types of foreign-exchange trading was $121 million, a year-over-year drop of 45 percent. Before the flurry of lawsuits, revenue from foreign exchange and other trading activities accounted for as much as 12 percent of the bank's total fee revenue. It was about 6 percent in the third quarter, the bank said in financial statements. BNY Mellon and other custody banks embroiled in litigation like State Street Corp A NOVEL STRATEGY Although Fidelity has not joined any of the foreign-exchange trading lawsuits, the Justice Department cited its losses as a key argument in recent legal briefs in the case against BNY Mellon. That is because prosecutors are pursuing a novel use of a statute originally designed to protect financial institutions following the 1980s savings and loan crisis, attorneys said. The Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) was intended to protect federally insured deposits, so the DOJ's latest brief emphasizes BNY clients, including Fidelity, that have at least some banking activities. The statute helps prosecutors because it provides a 10-year statute of limitations rather than a traditional five-year period. Under FIRREA, the government can recover civil penalties, up to $1 million for each violation or up to $5 million for a continuing violation. "FIRREA is a very powerful statute. The Justice Department is broadly interpreting the statute, stretching it in ways not originally contemplated," said Adam Lurie, a partner in Cadwalader, Wickersham & Taft LLP, who recently served as a DOJ white-collar crime prosecutor. Lawyers for BNY Mellon, in legal papers and background discussions with journalists, say the government can't prove that the bank's alleged foreign-exchange fraud imperiled any financial institution's federally insured deposits. BNY cited Franklin Templeton's "Absent concrete allegations, it is simply implausible that a comparatively tiny loss, 0.33 percent of profits ... would have had an effect - let alone a sufficiently direct one - on Franklin Templeton's federally insured subsidiary," BNY Mellon lawyers said in recent court filings. - Reuters |
| Day of reckoning for Cameron and British press Posted: 28 Nov 2012 05:59 PM PST LONDON: Prime Minister David Cameron faces a no-win dilemma on Thursday when a far-reaching inquiry into British newspapers delivers its verdict on how to curb the excesses of the country's notoriously aggressive press. Cameron, who was embarrassed when details of his personal links to Rupert Murdoch and his media empire emerged at the inquiry, will have to decide whether to accept its findings, which risk dividing his coalition government and angering an already hostile press. He will give his response to the Commons after the report is published at 1330 GMT, under scrutiny from the chamber's public gallery filled with high-profile figures who have campaigned for a clampdown on an industry they say ruins lives. The inquiry was ordered by Cameron following public outrage at Murdoch's now defunct News of the World tabloid, whose journalists had hacked the phone messages of schoolgirl Milly Dowler, who was later found dead. Exposing the cosy relationships between political leaders, police chiefs and press barons, the inquiry revealed the "dark arts" of journalists seeking ever more salacious stories in a bid to hold up dwindling circulation figures. Huge attention will be focused on whether Lord Justice Brian Leveson, one of Britain's top judges, recommends a new body to regulate the press with powers enshrined in law, or merely says the existing system of self-regulation should be overhauled. He could also criticise Cameron's government, including one of his most senior ministers, Jeremy Hunt, for close ties to Murdoch's News Corp and their handling of the company's aborted bid to take control of pay-TV group BSkyB in what would have been its largest acquisition. The press, backed by some 80 members of parliament, has lobbied hard for Cameron to resist calls for legislation, arguing it would curb freedom of speech and mean newspapers requiring state approval for the first time since 1695. However, a similar number of MPs, as well as academics and celebrities, favour statutory regulation while opinion polls suggest the public also agrees. The issue has divided the cabinet and could put the prime minister at odds with the leader of the Lib Dems, the junior partners in the coalition government. "The status quo is unacceptable and needs to change," Cameron told parliament on Wednesday. "This government set up Leveson because of unacceptable practices in parts of the media and because of a failed regulatory system." Some media have speculated that Cameron will give the press one last chance to get its house in order even if Leveson backs a new law, although critics say there have been similar repeated warnings for half a century, all of which have been ignored. Under the watchful eye of Leveson, celebrities - including Hollywood actor Hugh Grant, Harry Potter author JK Rowling, singer Charlotte Church, Dowler's parents and other unknown Britons who found themselves in the media spotlight, told the inquiry how they had been harassed, bullied, and traumatised by the press. Four prime ministers including Cameron were also quizzed in great detail about their links to newspaper owners, especially Murdoch, who himself endured two days of grilling, during which he denied playing puppet-master to those running the country. The inquiry heard intimate emails and text messages between Cameron and Murdoch's top lieutenant Rebekah Brooks, who goes on trial next year over the alleged phone hacking. "A lot of these very difficult decisions are no-win situations politically but what the prime minister wants to do is to do the right thing, and that's the kind of decision that will stand the test of time," Hunt, a former Culture Secretary and now Health Secretary, told Sky News. - Reuters |
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