Repos are short-term loans in return for collateral, such as government or corporate bonds, and are key element of day-to-day financing in the economy. The Fed has suggested a “resolution authority” to scoop up collateral held by a struggling or bust broker to avoid a fire sale of bonds that could disrupt markets. “I worry that a mainly American problem is being exported, and that this could itself have a destabilising effect,” Godfried De Vidts, chairman of the European Repo Council, part of the International Capital Markets Association, told Reuters. Industry officials, speaking at the annual European Repo Council conference on Wednesday, said a “one size fits all” rule would not work in Europe’s 6 trillion euro repo market. “The structure of the market in Europe is completely different so we are not subject to the same concentration of risk of fire sales,” said Richard Comotto, author of the European Repo Council’s market surveys. The Financial Stability Board, which coordinates global regulation for the G20 group of leading economies, proposed new rules for making the repo market safer in August. It stopped short of proposing changes to the market’s structure but one FSB member signalled the draft rules may not be the end of the story given the U.S. fire sales concerns. “I think particularly in the U.S. there may be more regulatory initiatives in that area,” David Rule, a UK regulator who chairs the FSB’s repo market group, told the meeting. A “resolution authority” could buy the collateral from a bust broker, hold it and sell the assets over time to avoid fire sales, with losses or gains passed on to whoever held the original positions.
Europe faces new wave of oil refinery extinctions
The KPN boards werent able during their numerous discussions to obtain an acceptable proposal on the content, firmness, duration and enforceability of America Movils commitments to KPNs stakeholders, the company said. Peter Schiefer, a spokesman for Vienna-based Telekom Austria, didnt immediately respond to phone and e-mail messages after normal business hours. Slim directed America Movils highest-ranking executives to negotiate with KPN, including Chief Executive Officer Daniel Hajj, Chief Financial Officer Carlos Garcia-Moreno and Elias, who is director of strategic alliances for the companys landline unit. Slim, 73, didnt personally take part in the talks, said Elias, who like Hajj is a son-in-law of the billionaire. Telefonica Deal The companies failed to reach an agreement even after America Movil helped KPN negotiate a better price from Telefonica SA (TEF) for its German unit, E-Plus. After discussions with Slims company, Madrid-based Telefonica agreed in August to raise its bid for the KPN unit to 8.55 billion euros from 8.1 billion euros. A Telefonica press official declined to comment yesterday. The transaction is awaiting regulatory approval. KPN had argued that a tax offset from the sale of E-Plus makes the company more valuable, people with knowledge of the discussions said earlier, asking not to be identified because the talks were private. KPN was seeking as much as 3 euros a share from America Movil, said Robin Bienenstock , an analyst at Sanford C. Bernstein & Co. in London . They came in to make an offer for a company without fully understanding the rules of the market, she said.
Billionaire Slim’s Europe Plans on Hold as KPN Talks End
Improving Market The industrywide gain in September, which included one more working day than a year earlier, was the biggest since a 7.8 percent jump in August 2011 and the third for this year. Still, deliveries — which include European Union members as well as Switzerland, Norway and Iceland — are set to contract in 2013 for a sixth consecutive year and hit a two-decade low. The situation is clearly improving, Carlos Da Silva, a Paris-based analyst with IHS Automotive, said in an e-mail. Europe is not in brilliant shape, yet the underlying trend of the market is calling for a certain dose of optimism. Among the regions five biggest markets, Spain posted the largest increase. Sales rose 12 percent in the U.K., where consumer confidence was at a six-year high in September, and climbed 3.4 percent in France . Registrations fell 1.2 percent in Germany, Europes biggest economy, and 2.9 percent in Italy . Dacias Surge Renaults deliveries were helped by a 40 percent surge at the no-frills Dacia brand, which entered the U.K. in 2013. Dacia in the last two years has introduced new versions of the Sandero hatchback and Logan sedan, while the namesake marque has brought to market its first compact crossover, the Captur, as well as a revamped Clio hatchback. Daimlers delivery gain was propelled by a 14 percent jump at the Mercedes-Benz brand, which added the CLA four-door coupe in April as part of a compact-car push. The vehicles include a new version of the van-like B-Class and a redesigned A-Class hatchback. The German carmaker also presented an overhauled S-Class sedan in May and brought a revamped upscale E-Class to market in April. Growth last month at Wolfsburg, Germany-based Volkswagen included gains of 2.1 percent at the main VW brand, 3.2 percent at the luxury Audi division, 17 percent at the Skoda unit and 16 percent at Spanish nameplate Seat. New versions of VWs best-selling Golf hatchback and Audis Q3 and Q5 sport-utility vehicles helped boost sales.
“This year we haven’t seen closures and that is why pressure is accumulating… Especially in East European countries there is far too much capacity so you can expect much of the next consolidation round there,” he said. Italy’s 52,000 barrels per day (bpd) Mantua refinery will halt operations on New Year’s Eve and be converted into a product storage terminal, its owner Hungary’s MOL Group said this month. The closure was “a consequence of the unfavourable economic environment that the refining business faces in Italy,” said Ferenc Horvath, downstream vice president for MOL. Demand for refined fuels in Italy dropped from 116 million tonnes in 2000 to 80 million tonnes in 2012, he said. In Scotland, the 210,000 bpd Grangemouth refinery was shut down earlier this week in a labour dispute that could lead to the plant’s full closure. A total of 16 European refineries, or 1.7 million bpd of refining capacity has been mothballed since 2008, according to the International Energy Agency. Europe’s nameplate capacity stood at around 16 million bpd in 2012, according to the IEA. Around 330,000 bpd of European refining capacity – or six Mantua refineries – need to be shut down every year by 2020 in order to meet declining demand and rising competitive pressures, Wech said. THE LOSER IS EUROPE Many of Europe’s refineries, numbering around 120, were built in the two decades following the Second World War and are heavily geared towards gasoline production. But as demand for gasoline sharply declined in recent years in favour of diesel, refineries today face a huge surplus of gasoline which is increasingly hard to sell overseas as demand from the United States weakens.