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Chase Bank Limits Cash Withdrawals, Bans International... Before you read this report, remember to sign up to for 100% free stock alerts Chase Bank has moved to limit cash withdrawals while banning business customers from sending...

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Richemont chairman Johann Rupert to take 'grey gap... Billionaire 62-year-old to take 12 months off from Cartier and Montblanc luxury goods groupRichemont's chairman and founder Johann Rupert is to take a year off from September, leaving management of the...

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Cambodia: aftermath of fatal shoe factory collapse... Workers clear rubble following the collapse of a shoe factory in Kampong Speu, Cambodia, on Thursday

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Spate of recent shock departures by 50-something CEOs While the rising financial rewards of running a modern multinational have been well publicised, executive recruiters say the pressures of the job have also been ratcheted upOn approaching his 60th birthday...

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UK Uncut loses legal challenge over Goldman Sachs tax... While judge agreed the deal was 'not a glorious episode in the history of the Revenue', he ruled it was not unlawfulCampaign group UK Uncut Legal Action has lost its high court challenge over the legality...

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Google offers concessions to European commission

Category : Business

Search engine understood to be offering to label search results which point to one of its own properties

After nearly a year of negotiation, Google has submitted a package of concessions to the European commission to head off an antitrust investigation that has ground on for two and a half years.

The search company is understood to be offering to label results where its own properties, such as YouTube or Google Shopping, appear in listings when people perform searches, in a response to the principal complaint from the EC’s antitrust division.

But the move is unlikely to pacify companies that originally complained to the EC. They have complained that Google artificially boosts its own properties and penalises rivals.

The proposals from Google will now undergo “market testing” with complainants, including the British “vertical search” company Foundem, which was one of the first companies in Europe to raise concerns .

Last month a coalition of 11 European companies, including Foundem, wrote to Joaquin Almunia, the EC competition commissioner, urging him to raise a formal “statement of objections” to Google’s behaviour. “Google’s search manipulation practices lay waste to entire classes of competitors in every sector where Google chooses to deploy them,” the companies said in the letter.

Almunia has always said he would prefer a negotiated settlement with Google rather than a long court case.

The EC wrote to Google in May 2012 saying it had concerns about the way that Google displayed its own “vertical search” services; its “scraping” of content from third-party sites to display in search results; exclusivity agreements for search adverts on third-party sites; and lack of portability of ad campaigns.

Google chairman Eric Schmidt subsequently denied that the company was violating European antitrust laws. But Google made changes to its scraping of content in what was seen as the first move to mollify the EC, which could impose fines of up to 10% of the company’s global turnover.

Greek PM intervenes in ‘difficult’ talks with creditors

Category : Business

Finance minister reportedly lashed out at mission chiefs from EU, ECB and IMF as pressure builds over next repayments

Almost three years after Greece narrowly avoided bankruptcy with its first bailout from the EU and IMF, the country’s relations with its international creditors have taken an unexpected turn for the worst.

The Greek prime minister Antonis Samaras was forced to step in on Sunday after stalled negotiations became bogged down in acrimony when visiting inspectors resumed talks last week.

Indicative of the tensions, Athens’s normally mild-mannered finance minister, Yiannis Stournaras, reportedly lashed out at mission chiefs from the EU, ECB and IMF during a heated exchange in his office on Thursday, telling them they could “take the keys” to the economy ministry if they continued to demand more austerity from a nation experiencing a sixth straight year of recession.

Emerging from the building, the economics professor uncharacteristically labelled the talks as “very difficult” and gave a taste of his own frustration. “The negotiations for the next loan tranches are still very difficult. I can assure you that things are not simple at all,” he said.

After troika representatives abruptly cancelled a meeting with Stournaras late on Saturday, Samaras tried to smooth over the cracks. At stake are two slices of aid worth €8.8bn (£7.5bn) that have been put on hold because of the slow pace of structural reforms.

The first instalment, of €2.8bn, is contingent on the governing coalition agreeing to sack 25,000 civil servants by the end of the year and 150,000 by 2015. The demand has placed what is being called “intolerable pressure” on Samaras’s already fragile administration, with his two junior leftwing partners openly opposing the measure at a time when unemployment is nearing a record 30%.

Highlighting the discord, the administrative reform minister, Antonis Manitakis, in charge of streamlining the bloated public sector and aligned with the small Democratic Left party, threatened to resign – a move that would dramatically undermine the government’s unity.

Other sticking points, according to well-placed sources, include the recapitalisation of Greek banks – and a possible merger between the National Bank of Greece and Eurobank – and a highly contentious property tax levied through electricity bills the conservative-led coalition pledged to scrap when it assumed power last June.

Household incomes have fallen by as much as 50% since the debt crisis erupted in Athens more than three years ago. In an attempt to placate lenders and keep a restive population at bay, Samaras and his coalition partners proposed last week that the property levy be substantially reduced by broadening the tax base to include farmland and undeveloped real estate. Creditors, so far, have failed to react.

Greece faces two debt repayments, including €3.6bn in maturing treasury bills, this month and next. “Not reaching an agreement is not an option,” said Pandelis Kapsis, a prominent political commentator and former government spokesman. “There may be a delay [in disbursement of rescue funds] but there is absolutely no way we can move ahead without an agreement,” he told the Guardian.

Greece is likely to suffer from the turmoil in Cyprus, whose economy is expected to contract sharply following its own bailout agreement. But last week Samaras spoke for the first time of an economic recovery amid signs that fiscal consolidation was finally beginning to pay off.

“Even those who until recently had their doubts are today convinced that we can make it,” he told an audience in Athens, insisting that with private sector hirings outpacing firings in March the country was at long last breaking the vicious cycle of recession.

The investment bank Morgan Stanley also predicted that Greece would achieve a primary surplus by the end of the year, saying it was now optimistic about the country.

Portugal’s prime minister plans more cuts to health and education spending

Category : Business

Pedro Passos Coelho chooses not to raise taxes again in order to meet stringent targets set by international lenders

Portugal’s prime minister has announced plans for further cuts to health and education spending rather than raising taxes again, in order to meet tough targets set by international lenders after the constitutional court threw out budget measures on Friday.

“I shall instruct ministries to implement necessary reductions in functional spending to offset what the court ruling prohibited. It will certainly be a very difficult process,” Pedro Passos Coelho said in a live broadcast on Sunday evening.. He added that while he respected the court, its ruling would hamper government plans to take back control of its own finances from international lenders next year.

The speech followed an emergency cabinet session on Saturday and a meeting between Passos Coelho and President Aníbal Cavaco Silva, who has the power to dissolve parliament but urged the government to complete a four-year mandate it won at the polls in June 2011.

On Friday the court found that proposed cuts in holiday bonuses for civil servants and pensioners were unconstitutional, as were reductions in sick pay and unemployment benefit, all of which would have trimmed €1.3bn from budget spending for this year, according to media estimates. The court, however, upheld other planned measures such as tax hikes.

Passos Coelho’s conservative Social Democrats took power after his Socialist predecessor asked a “troika” of lenders for a bailout in March 2011, before resigning. Since then, the government has imposed stringent and unpopular spending cuts totalling €13bn – about 8% of Portugal’s economic output – which have led to widespread protests in common with other eurozone countries suffering from a persistent economic slump.

The government failed to meet its budget deficit targets last year set by the European Union, the International Monetary Fund and the European Central Bank, and in order to fulfil the terms of its €78bn bailout Lisbon has pledged to trim a budget shortfall of 6.4% of gross domestic product in 2012 to 5.5% this year.

Passos Coelho survived his fourth vote of no confidence last Wednesday but faced renewed calls to resign over the weekend. Opposition Socialist leader António José Seguro accused the government of breaking campaign promises and said dole queues of almost a million people showed austerity had merely locked the country into a recessionary spiral, which might yet lead to a second bailout. Portugal’s economy shrank by 3.2% last year.

“The country needs a different exit strategy from the crisis, one that prioritises economic growth,” Seguro told state television. “The country is living in a social tragedy. This needs to change, and that change entails substituting the government.”

In crisis-hit neighbouring Spain, meanwhile, the CSI-F union for civil servants said the government in Madrid should “take note” of the Portuguese court’s decision and reimburse workers with a Christmas bonus axed last December in cuts which likewise aim to trim a yawning budget gap.

In France, Hollande is losing the battle for the eurozone | Jonathan Fenby

Category : Business

The president’s woes matter outside France. The failure of his anti-austerity pledge has left the balance of power with Germany

It is just 11 months since France elected François Hollande as its first Socialist president since 1995, spurring a wave of expectation on the European left that he would lead a pro-growth offensive against the cheerleaders of austerity. When his party and its allies won an absolute majority in the national assembly, it seemed Europe might be acquiring a real challenger to the Berlin-Brussels-London consensus.

It has not turned out like that, of course, evoking inevitable reminders of the last Socialist presidency, that of François Mitterrand. He came to office in 1981 on a reflationary platform declaring that there was nothing wrong with dreaming; the trouble was that waking up proved very jarring, as the Hollande administration is now discovering.

Growth under the would-be expansionary champion has not risen; in fact, it has positively slumped. Finance minister Pierre Moscovici says it might total 0.1% this year compared with the official forecast of 0.8%. The economy contracted by 0.3% in the last quarter of 2012. France will miss the target of reducing its deficit to 3% of national output in 2013. Unemployment is at 10.6%, and much higher among young people.

France has been running a monthly trade deficit of €5 billion and its falling competitiveness in costs is widely acknowledged. The structural reforms the economy needs have been held back by vested interests, largely in the public sector. Hollande is the first president of the Fifth Republic who is a creature of his own party rather than its progenitor, limiting his authority, while his attempt to be a “normal” president sits ill with the quasi-monarchical character of the post crafted by Charles de Gaulle for himself.

What’s more, the political crisis that has blown up over a former French budget minister’s secret foreign bank deposits, and the revelation by the Guardian and other newspapers that Hollande’s presidential campaign treasurer has off-shore accounts in the Cayman Islands, gave the head of state his toughest test to date, exacerbated by his harping on the evils of money.

Already scoring the lowest opinion poll ratings of any president (27% in the latest survey), Hollande seems caught in a downward spiral. In a big television interview last week, he was earnest and spoke sense, but offered nothing to galvanise a jaundiced nation. At the weekend, the Elysée palace played down talk of a government reshuffle, but the prime minister, Jean-Marc Ayrault, cuts a lacklustre figure and some Socialists are calling for a referendum on public morality. The National Front’s Marine le Pen thunders about national decline and the hard-left leader Jean-Luc Mélenchon is mobilising his troops against “an intrinsically rotten system”.

Hollande’s woes matter outside France’s frontiers. The way the country is stumbling economically has shown just how hard it is for the European left to craft policies to redress the continent. Ed Miliband is likely to be rather more circumspect in his embrace of the beleaguered figure in the Elysée than he was in the first flush of Hollande-mania.

That leaves the field to belt-tighteners and bond markets. The chaotic outcome of the election in Italy reinforces this; having saved his country from a Greece-style crisis, the prophet of austerity, Mario Monti, trailed in fourth place, but the Socialists have been unable to form a government. The Five Star Movement of comedian Beppe Grillo is a recipe for chaos and, incredibly, Silvio Berlusconi still lurks on the fringes of power. The crisis of authority across southern Europe has been exacerbated by scandal allegations against the government in Spain while Greece remains mired in the morass of dodgy accounting. The terms of the bailout of Cyprus introduce a whole new level of uncertainty.

The wider effect of all this and, in particular, of Hollande’s troubles, is to reinforce Germany ahead of the federal elections in September. Berlin would prefer not to find itself in increasingly lonely leadership. But there is nothing Angela Merkel can do. Though her Christian Democrats have suffered setbacks at state elections and the polls show the CDU short of an overall majority – opening up the possibility of an alliance with the Greens against the Social Democrats – Merkel is personally popular. She enjoys support for her European policies. But the context is shifting.

Her country’s relationship with France has provided the backbone for the construction of Europe since the Franco-German friendship treaty signed by de Gaulle and Konrad Adenauer in 1963, but it is now in questionable shape. Merkel and Nicolas Sarkozy did not get on well, but the Frenchman knew better than to get out of step with the chancellor in public. Paris and Berlin can agree on some things, such as their rejection of David Cameron’s plan for a new European treaty to pacify his euro-sceptics. But Hollande’s proclamation of a pro-growth agenda in his election campaign widened the division; the Germans regard the pace of French structural reforms as too slow and take a dim view of France’s sympathy for critics of austerity in southern Europe.

If Hollande had been able to set out a strong pro-growth stall there might have been an equilibrium between the two big continental states, even if this discomforted Merkel. But his weakness makes that a remote prospect, with no serious alternative policies in sight to those put forward by the chancellor, despite popular resentment at austerity and the inner contradiction of expecting spending reductions to breed growth.

This means that a two-speed eurozone, divided between northern and southern states, becomes more likely, with Brussels and Berlin incurring rising unpopularity in the latter as anti-austerity election results underline the EU’s democratic deficit. France risks being caught in the middle, its heart with the south, its economic prospects tied to the north, while Cameron’s search for a fudge on Europe increasingly irritates leaders with more serious matters on their minds. Europe’s politicians have been adept at kicking the can down the road in this crisis, but the nature of the road is changing, abetted by the storm swirling round the Elysée.

Jonathan Fenby is author of The General: Charles de Gaulle and the France He Saved

EU output slumps as job losses mount

Category : Business

Unemployment rate in eurozone states hits 12%, while UK manufacturing sector shrinks for second successive month

Europe’s woes deepened on Tuesday after surveys revealed much of the continent locked into a spiral of declining manufacturing output and rising unemployment.

Predictions that the eurozone economies would stage a recovery this year appeared to be woefully wide of the mark as a long-run contraction in manufacturing accelerated and the number of unemployed people in the eurozone reached 12%. Across the wider, 27-country EU the total number of jobless is a record 26.3m.

Britain failed to shake off the gloom after bad weather and weak demand from the eurozone left the UK manufacturing sector contracting for a second successive month in March.

Factories in Germany and Ireland, which fared well last year compared to their counterparts in Spain and Portugal, also fell back into decline in March according to the purchasing managers index (PMI) compiled by Markit.

The eurozone manufacturingPMI fell to 46.8 from 47.9 in February – slightly better than an preliminary estimate of 46.6, but extending its run below the 50 mark that separates growth and contraction for a 20th month. Separate data showed European car sales shrank 8.2% across Europe last year to a 17-year low of 12.05 million vehicles, reflecting declining wages and higher unemployment.

Car makers blamed much of the decline on consumers postponing purchases while the crisis in Cyprus flared. After a dismal 2012, analysts warned that several car firms could struggle to survive 2013 with further declines in sales threatening more losses.

Across a broad range of manufacturing, the picture was equally bleak, especially in France. French factory activity retreated for a 13th month and car registrations dived 16.4% in March, further underlining the malaise sweeping through the eurozone’s second-biggest economy.

Capital Economics said: “Combined with today’s record-high unemployment figures, the survey confirms that the euro-zone is mired in recession. What’s more, there is no reason to expect things to turn around any time soon.”

Even Switzerland, which has proved a haven from much of the euro crisis, suffered a sharp decline in manufacturing.

The landlocked country is notorious for its secretive banking industry, but less well known is its reliance on manufacturing for almost a third of GDP. However, the high value of the Swiss franc has increased the price of the sector’s exports and, combined with the decline in demand from eurozone countires, triggered a fall in sales.

In Britain manufacturing output dropped at the fastest pace since October 2012 but the prospects for new business brightened slightly.

New export orders weakened for the 15th successive month amid reports of stiff competition from the US and Asia and poor demand from Europe.

CIPS/Markit said there had been modest job losses in industry last month, concentrated in bigger companies. But the survey warned that cost pressures on manufacturing were increasing as a result of dearer electricity, oil and food products.

Figures from the European statistics office Eurostat showed that the overall unemployment rate in the 17-member currency union has risen steeply since February last year, when the rate was 10.9%.

Across the EU as a whole, there are now 26.3m people out of work, pushing the jobless rate to 10.9%, up from 10.2% in the same month last year.

Britain, which had until recently succeeded in cutting unemployment, joined a list of 19 EU member states that suffered a rise in February. Only eight countries experienced a fall in unemployment.

Despite operating against a backdrop of rising unemployment and falling inflation, the European Central Bank president, Mario Draghi, has so far resisted easing monetary policy in a similar vein to the Bank of England and the US Federal Reserve, which have pumped vast sums into their respective economies under the policy of quantitative easing (QE).

The ECB meets on Thursday to consider cutting interest rates to boost growth, but it is expected to maintain the current 0.75% base rate and reject pleas to adopt QE.

Andrea Broughton, principal research fellow at the Institute for Employment Studies, said Brussels risked creating a “lost generation” of young people who have left school or college only to join the dole queue.

She said: “Youth unemployment remains the EU’s biggest employment-related headache, and shows no signs of abating, with an average rate for the under-25s of 23.5% in the 27 EU member states. In Greece, the youth unemployment rate is nearing 60% – a rate of 58.4% was recorded in December 2012. In Spain, the youth unemployment figure is 55.7%.”

Brussels launched a youth guarantee this year that urged member states to ensure all young people receive an offer of work, continued education, an apprenticeship or a traineeship within four months of leaving formal education or becoming unemployed.

Borussia Dortmund, Malaga and Europe’s political football of austerity | Stefan Szymanski

Category : Business

There is a close similarity between football and the economy of Europe. Should German-style regulations control both?

The Champions League quarter final between Borussia Dortmund and Malaga is a metaphor for the economic and political fault lines of Europe. Dortmund represents solid German values, a profitable club from the tightly regulated Bundesliga. Malaga, by contrast, has been in dispute with Uefa for some time and had until midnight on 31 March to prove to Uefa that they have paid up all overdue debts or they will be excluded from Uefa competition for the next four years.

It’s true that a few years ago Dortmund had financial troubles, but they were forced to sell players and accept a loan from Bayern Munich to balance the books. Equivalent regulation and control is unknown in Spain. Last week a report suggested that Spanish clubs as a whole may come under investigation by the European commission for receiving illegal state aid, and by most accounts the majority of Spanish clubs are not commercially viable. Even Spanish MEPs have called for football clubs to live within their means.

Just as the Spanish economy is mired in recession because of a catastrophic backlog of bad debts and the German economic juggernaut continues to prosper, so German football seems ready to carry all before it while southern Europe’s traditional strength seeps away. Indeed, there is a very close similarity between football and the wider economy of Europe, in terms of the causes of crisis, the solutions, and ultimately the winners and losers.

First, the problem. Contrary to appearance, there is little difference between a football manager and a bank manager. Both are gamblers who use other people’s money to bet on the next big thing. Both work hard to present an aura of invulnerability and inevitability, when in reality both are exposed to the fickle laws of chance.

The principle of banking is to borrow short and lend long, giving rise to two sorts of risk – liquidity risk (depositors want their money back) and solvency risk (the long-term investment you lent to went belly up). Usually it is insolvency that leads to a liquidity crisis and general failure.

The principle of football is to buy players today in the expectation of future success and income, which also gives rise to liquidity risk (the future revenues are slow to arrive) and insolvency risk (the future revenues never arrive).

Given that we cannot live without banking or football, both sorts of manager are prone to moral hazard – taking excessive risk today in the knowledge that if things don’t work out tomorrow then the organisation is too big to fail. Banks and football clubs almost never disappear, but they often have to be propped up when they fail.

Historically the propping up has been carried out by local and national governments. In the case of banks, it has been the national central bank that has provided liquidity as the lender of last resort, and the central government that has bailed out losses by using the largesse of the taxpayers. In the case of football, typically local governments have provided subsidies and the national tax authorities have written off overdue payments to keep the clubs afloat.

Now Europe has a new regime, the eurozone for banking and Uefa financial fair play for football. For those nations signed up to the euro, the European Central Bank provides liquidity for the banks and if the bad debts are too large for the national government to cover – as has been the case in recent years for Ireland, Portugal, Greece, Spain and now Cyprus – then bailout has to come from the combined eurozone, whose decision-making is currently dominated by Angela Merkel and the German government.

In the past many governments were prepared to write off bad debts by printing more money and inflating the problem away, reducing the value of their currencies and thus stimulating an economic revival following a short-term crisis. Austerity will not allow this to happen, so exposed countries are forced to live with seemingly permanent recession. So long as the eurozone crisis keeps the euro exchange rate competitive, German exporters benefit and the German economy continues to grow.

This is not, as some would like to suggest, a German conspiracy. To the Germans it just seems like common sense, but it is also true that everyone goes into these things with their own interests at heart while convincing themselves they are acting in the best interests of everyone.

So too with the financial fair play regulations. Under Uefa’s rules, clubs are penalised if they lack liquidity, while EU rules against state aid prohibit a government bailout for insolvent clubs. Traditionally strong clubs from southern Europe are now being forced to live within their ever decreasing means, and this football austerity is also likely to benefit Germany.

German clubs were at the forefront of pushing for financial regulation at the European level to match their own regulation at home. Thanks to public investment in new stadiums for the 2006 World Cup, generous sponsorship from Germany’s industrial giants and a wealthy population of 80 million, German clubs are set to outspend their southern neighbours in the years to come, reversing a decade or more of weakness.

Many people argue that Europe’s austerity policy is not tenable in the long run if it impoverishes the poorer nations, and much the same can be said of the financial fair play regulations. Sound finance is a worthy goal, but not if it guarantees German and English dominance (in the latter case funded by international broadcast income) at the expense of the game’s traditional southern powers.

Cyprus has a future in the euro, insists president

Category : Business

Nicos Anastasiades says crisis has been averted but blasts eurozone members for turning island into an ‘experiment’

Cyprus’s president on Friday insisted his country has a future in the euro in a speech that also criticised his eurozone partners for forcing the Mediterranean island to be an “experiment”.

“We have no intention of leaving the euro. In no way will we experiment with the future of our country,” Nicos Anastasiades said.

Speaking the day after Cypriot banks reopened after a two-week closure to stave off financial collapse, the Conservative head of state said the threat of bankruptcy had been averted.

He also promised that restrictions on banking transactions – the first ever to be imposed on a eurozone member state – would be gradually lifted, but did not specify when.

Cash withdrawals from banks have been limited to €300 (£253) a day, while only €1,000 in cash can be taken out of the country, and there are restrictions on the use of credit cards abroad. Cypriot authorities loosened some restrictions on using cheques on Friday – but only to allow payments to government agencies of up to €5,000.

In another turnaround of capital controls placed on a euro member state, the finance ministry announced that debit and credit card transactions with the borders of the country could also be unlimited.

Cyprus’s Central Bank has also imposed limits on the money that can be taken “beyond the control of the Cypriot authorities” – a reference to the northern part of the island under Turkish control.

After an initial estimate that the capital controls would be in place for a matter of days, the government then warned later in the week they could last for “about a month”.

Anastasiades, who was elected in a landslide victory on a pro-bailout platform last month, has faced a backlash over the terms of the rescue. On Friday he accused eurozone leaders of making “unprecedented demands that forced Cyprus to become an experiment”. He also criticised European banking authorities for allowing money to flood into Laiki, the island’s second biggest bank, which had racked up billions of debt in bad loans and is now being wound up as part of the rescue deal.

“How serious were those authorities that permitted the financing of a bankrupt bank to the highest possible amount?” Anastasiades said.

Barely a month in power, the government has appointed an investigating committee of former supreme and international criminal court judges to probe possible criminal misconduct in the collapse of the Cypriot economy. With shocked Greek Cypriots now facing years of economic pain, there are mounting calls for punishment to be meted out to the politicians and bankers found to be responsible for the dire straits in which the island now finds itself.

The Swedish foreign minister, Carl Bildt, who flew into Cyprus to hold talks with Anastasiades, said Cyprus was heading for years of economic recession. “It is going to go into recession, a big slump,” he told the Guardian. “A lot could have been done to stop it reaching this point. I cannot say I am optimistic, but I am also not alarmed.”

Cyprus secured a €10bn (£8.4bn) bailout from the “troika” of lenders – the European Union, the European Central Bank and the International Monetary Fund – to avert financial collapse. As well as the winding up of Laiki, the island had to agree to an unprecedented levy on bank savings of more than $100,000 to fund the bailout. Earlier plans to raid the accounts of small depositors were abandoned amid fury from ordinary savers.

Cypriot banks were calm on Friday, with no big queues reported. “The situation, despite all its tragedy, has been contained,” said Anastasiades.

The Cypriot president’s attempt to draw a line under the crisis that has gripped the eurozone came as Slovenia, another minnow of the currency union, insisted it did not need the eurozone to rescue its troubled banks.

“We will need no bailout this year,” said the Slovenian finance minister, Uros Cufer. “I am calm.” Borrowing costs for the former Yugoslav republic, which has a population of two million, have jumped as investors look for the next weak link in the single currency.

The Cypriot crisis has sent shudders throughout the eurozone, where the outlook remains gloomy and unemployment rises to record levels.

Figures released on Friday showed that France failed to meet its budget deficit target in 2012 and will miss it again this year. The country’s public debt has also risen to a record level.

The latest bad news came only hours after French president François Hollande had gone on live television to reassure the nation of his ability to lead it out of the economic mire.

INSEE, France’s national statistics agency reported that public debt rose to €1.8 trillion, a record 90.2 per cent of GDP, in 2012, up from 85.8 per cent in 2011. France’s Socialist government has already admitted it will not be able to keep a pledge to bring the deficit down to 3 per cent by the end of 2013 as agreed with the European Commission. The figure is now expected to be around 3.7 per cent, and France has asked for an extension to the deadline for reaching the target. France has not balanced its books since 1974 under successive governments of different political hue.

Cyprus banks to reopen with emergency restrictions on cash withdrawals

Category : Business

People leaving island can reportedly take only €3,000 in banknotes and spend up to €5,000 a month on credit cards

Cyprus has made eurozone history by imposing swingeing measures to stop money flooding out of the country when its banks reopen after a 12-day hiatus

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Cyprus told: take bank levy or leave euro

Category : Business

President, eurozone finance ministers and bailout troika hold emergency meeting as €100 limit imposed on ATM withdrawals

Wealthy Russians stand to lose billions of euros in Cypriot banks under draconian terms being hammered out on Sunday night in Brussels to prevent the Mediterranean tax haven becoming the first country forced out of the single currency.

Negotiations got underway amid a hardening of the stance held by the International Monetary Fund and Germany, who insisted that depositors must take the hit for bailing out the eurozone’s latest crisis economy.

There were signs of panic in Cyprus as a €100 (£85) limit was imposed on ATM withdrawals, with more stringent capital controls to follow if a deal is reached.

The European Central Bank has threatened to cut off funds propping up Cypriot banks on Monday, precipitating the island’s exit from the euro if agreement was not reached on Sunday night at the emergency meeting between eurozone finance ministers, the president of Cyprus Nicos Anastasiades, and the bailout troika of the IMF, European Commission and the ECB.

The Europeans, with the Germans and the IMF taking a particularly hard line, demanded the winding up of Cyprus Popular Bank, the country’s second biggest, and the restructuring of Bank of Cyprus, the biggest financial institution.

The parties considered new proposals that had emerged over the weekend with European officials speaking of a levy of up to 25% on Bank of Cyprus depositors with accounts holding more than €100,000, plus a further levy of up to 5% on similar deposits in other banks.

“The numbers have not changed. If anything they’ve got worse,” said Wolfgang Schäuble , Germany’s finance minister. He said that last week’s agreement to raise €5.8bn had to be achieved. This time, however, savers with less than €100,000 would be spared, meaning the burden would fall much more heavily on the wealthy than the 9.9% levy proposed for their accounts last week.

Berlin is determined that the island deflates a bloated financial sector that exceeds the size of the Cypriot economy by a factor of seven. “It is well-known that I won’t allow myself to be blackmailed, by no one or nothing,” said Schäuble. “I’m aware of my responsibility for the stability of the euro. If we take the wrong decisions, we’ll be doing the euro a great misservice,” he told a German Sunday newspaper.

Russians are estimated to hold more than €20bn of the €68bn deposited in Cypriot banks. Some €38bn of the total is in accounts liable for the levy, suggesting that Russians could forfeit around €3bn. If the Cypriot government balked at the bank levy, the IMF and German officials were likely to demand even stiffer terms, including a “bail-in” arrangement whereby account holders with more €100,000 would forfeit up to 40% of their savings in return for shares in restructured banks.

Anastasiades held meetings with EU officials in Brussels before the main summit with the euro group – the 17 finance ministers of the single currency area – which included troika representatives Christine Lagarde, head of the IMF, Mario Draghi, president of the ECB, and Olli Rehn, European commissioner for economic and monetary affairs.

Little progress was reported from the earlier meetings on Sunday on resolving the stalemate over how to structure a €17bn bailout, with creditors unwilling to offer more than €10bn while expressing dissatisfaction over Cypriot proposals to supply the remainder.

Over the weekend, Nicosia moved on legislation to wind up Cyprus Popular Bank and to introduce capital controls to try to prevent a bank run and flight of money out of the country.

If an agreement is found, the proposed deal would still need to pass the Cypriot parliament probably by Monday at the latest. It was clear that whether Cyprus accepted or rejected the bailout terms, its economy and banking sector faced maximum disruption and turmoil. “There are only hard choices left,” said Rehn.

Cyprus strikes last-minute EU bailout deal

Category : Business

Agreement set to involve heavy losses for wealthy investors, while those with savings under €100,000 will be spared

European leaders reached an agreement with Cyprus early on Monday morning that closes down the island’s second-biggest bank and inflicts huge losses on wealthy savers.

Russians would lose billions of euros under draconian terms that are aimed at preventing the Mediterranean tax haven becoming the first country forced out of the single currency.

“Herman Van Rompuy has brokered an agreement between the troika and Cyprus,” said an EU source, referring to the president of the European council and Cyprus’s trio of creditors: the European commission, the European Central Bank and the International Monetary Fund.

A meeting of eurozone finance ministers that started six hours late reached an agreement in the early hours of Monday morning to finalise the fine print of the deal. Savers with deposits of less than €100,000 (£85,000) would be spared but it was thought there would be heavy losses inflicted on the deposits of the wealthy.

Laiki, or Cyprus Popular Bank, is to be closed, with its good assets transferred to Bank of Cyprus, the country’s biggest bank, where savers would suffer big losses in return for equity shares. Those with more than €100,000 in Laiki would also be hit hard.

Negotiations got under way amid a hardening of the stance by the IMF and Germany, which insisted that depositors must take the hit for bailing out the eurozone’s latest crisis economy.

There were signs of panic in Cyprus as a €100 limit was imposed on ATM withdrawals, with more stringent capital controls to follow if the deal is finalised.

The European Central Bank had threatened to cut off funds propping up Cypriot banks on Monday, which would have precipitated the island’s exit from the euro if agreement was not reached at the emergency meeting.

“The numbers have not changed. If anything they’ve got worse,” said Wolfgang Schäuble, Germany’s finance minister. He said the aims of last week’s agreement to raise €5.8bn – details of which were rejected by Cyprus – had to be achieved. This time, however, savers with less than €100,000 will be spared, meaning the burden falls much more heavily on the wealthy than the 9.9% levy proposed last week for their accounts.

Germany is determined that the island deflate a bloated financial sector that exceeds the size of the Cypriot economy by a factor of seven.

“It is well known that I won’t allow myself to be blackmailed by no one or nothing,” said Schäuble. “I’m aware of my responsibility for the stability of the euro. If we take the wrong decisions we’ll be doing the euro a great disservice,” he told a German Sunday newspaper.

Russians are estimated to hold more than €20bn of the €68bn deposited in Cypriot banks. Bank of Cyprus holds €28bn in deposits although it was not clear how much of that would qualify for the “haircut”. But it was clear that the losses would amount to several billion.

The Cypriot president, Nicos Anastasiades, held meetings with EU officials in Brussels before the meeting of the euro group – the 17 finance ministers of the single-currency area – which included troika representatives Christine Lagarde, head of the IMF, Mario Draghi, president of the ECB, and Olli Rehn, European commissioner for economic and monetary affairs.

Little progress was reported from the earlier meetings on resolving the stalemate over how to structure a €17bn bailout, with creditors unwilling to offer more than €10bn while expressing dissatisfaction with Cypriot proposals to supply the remainder.

The agreement outlined early on Monday came close to what Lagarde had demanded a week ago and which had been rebuffed by Anastasiades.

Over the weekend Nicosia moved on legislation to wind up Cyprus Popular Bank and introduce capital controls to try to prevent a bank run and the flight of money out of the country.