Business World

Friday 23 February 2018

What's happening in the rest of Europe

ATTENTION turns to the European markets this morning, as traders make their first moves after the results of the stress tests on Spanish banks last Friday.

The test showed Spain's lenders needed an additional €59bn in capital but that figure has been met with scepticism in some quarters, as Ireland's much smaller banking industry ended up needing €64bn. The direction of today's indices will go a long way to deciding how credible the stress tests are.

"The tests look credible with good methodology and it's what Spain needed to do, but the market is still going to test them," Luis Garicano, an economy professor at the London School of Economics, said.

THE biggest takeover in recent history will move a step closer to resolution this week when Xstrata finally recommends its proposed takeover by Glencore to shareholders.

Xstrata, the mining giant, and Glencore, the biggest commodities trader in the world, had long been expected to merge and announced proposals for such a deal last February, but the deal turned sour when Qatar's sovereign wealth fund -- a major shareholder of Xstrata -- demanded a better offer.

Glencore replied by saying it would attempt a hostile takeover, rather than merge with it as had been expected. Now, at last, Xstrata is finally expected to back Glencore's bid and put it to its investors.

ED Miliband may not be the UK prime minister right now but with the strains beginning to show in the Conservative-Liberal Democrat coalition, an election within 12 months is looking increasingly likely.

Mr Miliband (pictured) will address his party's annual conference on Thursday, when he is expected to outline his economic plan -- a 50pc tax rate for high earners, a super tax on bankers' bonuses -- and will say he will break up the big UK banks if they don't separate investment banking operations from their retail arms.

With Mr Miliband closer to power than at any time since 2010, his words will carry more weight than most UK opposition leaders.

In review ...

BRUSSELS: Last week, the European Commission (EC) said it would revive plans to allow non-EU airlines to take bigger stakes in the continent's airlines. Under EU law, a foreign company can own no more than 49pc of an EU airline. This restriction has been cited as preventing the likes of Etihad taking over Aer Lingus. Now, however, the commission said such rules were limiting airlines' access to capital and investment. The EC plans to consult with ministers from member states in December and propose its priorities for negotiating mandates early in 2013.

ROME: Italian Prime Minister Mario Monti appeared to backtrack on his pledge to not seek a second term, claiming he would stand in next year's elections if there was "a need for my service".

Mr Monti had previously said he wouldn't run as a candidate as he was already a lifetime member of the Senate.

An economist by training, Mr Monti replaced Silvio Berlusconi as PM last November.

PRAGUE: The recession-hit Czech Republic cut interest rates to a record low, the country's central bank governor said he may use the koruna's exchange rate to ease monetary conditions further.

Benchmark rates were cut in half to 0.25pc. Monetary authorities in eastern European Union members are following central banks in the US and UK in policy easing to address an economic slowdown amid the European debt crisis.

Irish Independent

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