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Friday, 17 July 2009

Porsche CEO says VW power struggle almost over

1973 VW Porsche 914Image by elanbeat via Flickr

Porsche SE is likely to reach an agreement on a stake sale in a few days, chief executive Wendelin Wiedeking told Bloomberg, when asked whether Porsche will be sold to Volkswagen. “It’s already on the table,” he said in Ingolstadt, Germany, where he’s attending the 100th anniversary celebration for Volkswagen’s Audi division. Porsche is also considering an offer by the Qatar Investment Authority to buy a stake in Porsche’s holding company and options on Volkswagen stock. Stuttgart-based Porsche is considering ways to reduce more than 9 billion euros in debt after amassing a 51 percent stake in VW as well as the options over a further 20 per cent of the Wolfsburg-based carmaker.

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Market Insight 17 - 24 July 2009 (PDF 37 pages)

•Overview - Opportunities in uncertainty

•More upside for Indonesia

•Botswana - Assessing the risk to FX policy

UAE - Problems, but oversold

Liquidity is gradually improving, but is far from adequate

The UAE faced a liquidity crunch for two main reasons. First, banks increased lending
aggressively during 2008 and this was partly funded by hot money which entered the UAE largely in anticipation of a currency revaluation. When the hot fl ows reversed, banks faceda funding gap. Second, the transmission mechanism is not functioning properly and interest rate cuts are not having the desirable effect on market interest rates.
While liquidity in the UAE is beginning to improve, it remains inadequate. We estimate that at the beginning of the year the funding gap for banks (i.e. the difference between deposits and advances) was approximately AED 120bn (c. USD 32.7bn). This led to a significant slowdown in credit, and at the same time drove market interest rates higher as banks competed for deposits. The gap narrowed significantly to AED 31.2bn (c. USD 8.5bn) as of May 2009. This allowed banks gradually to resume lending; it also alleviated pressure on market interest rates.

•Brazil - Regional growth leader

•iTraxx AXJ IG vs. US CDX IG - Convergence trade idea

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Qatari bank trebles provisions

The Commercial Bank of Qatar, the country’s largest private bank, saw provisions on bad loans and investments almost treble in the first half of the year as consumer debt defaults spread to the country with the highest GDP per capita in the Gulf.

The company reported its results as banks across the region come under increasing scrutiny because of rising loan defaults from customers unable to repay debt incurred during the boom years.

The bank took 254 million rials (Dh256m) in provisions in the first half. Of that, it set aside 105m rials for potential losses on its personal loan portfolio. It set aside another 97m rials to make up for corporate customers who did not pay back their loans. The remaining 52m rials went to offset declines on its investments.

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AZERBAIJAN: BAKU BECOMES A QUESTION MARK FOR NABUCCO PROJECT

Baku, AzerbaijanImage by teuchterlad via Flickr

The Nabucco pipeline project took a major step forward when five transit countries recently signed an agreement after years of hesitation. But at least one wild card remains in the path of the project’s realization -- Azerbaijan. Although Baku has voiced strong support for Nabucco, experts caution that the country’s recent gas deal with Gazprom could complicate Baku’s ability to serve as a major supplier for the long-planned pipeline.

Within Azerbaijan, reactions to the Nabucco agreement, signed July 13, have been outwardly warm. [For background see the Eurasia Insight archive]. President Ilham Aliyev expressed hope for a gas transit deal with Turkey "in the near future," the Turan news agency reported. On hand for the signing ceremony, Minister of Industry and Energy Natig Aliyev (no relation to President Aliyev) stressed that Baku remains interested in all profitable export routes, including Nabucco.

No one disputes the importance of Azerbaijan in making Nabucco a reality. With Iranian gas not an option, "if you [are] going to do anything about Nabucco and start the project you have to be able to rely on Azeri gas," Turkish international relations expert Soli Ozel told Voice of America on July 13.

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Algosaibi sues Saad Group owner

One of Saudi Arabia’s most powerful family-owned companies has filed a lawsuit in which it accuses Maan Al-Sanea, the Saudi billionaire, of “massive fraud” and alleges that he “misappropriated approximately $10bn as a result of his frauds”.

Ahmed Hamad Algosaibi and Brothers Company (AHAB) filed the suit in New York in answer to a case filed against it by Mashreqbank, a UAE-based bank, over $150m (€106m) allegedly owed to it by AHAB.

Such a public dispute is virtually unheard of in the Gulf. The court document alleges Mr Sanea, who is the owner of the Saad Group, a conglomerate with finance and property operations, is also a senior executive of AHAB’s financial service division, the “Money Exchange.”

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Saudi legal saga moves up to a new level

When it first emerged that one of the Saudi Arabia’s most respected merchant family groups was facing financial difficulties, the news was met with shock throughout the Gulf.

Although the oil-rich region had been hit by the global economic crisis, few understood why Ahmed Hamad Algosaibi and Brothers Company (AHAB) had allowed one of its wholly owned companies – a Bahrain-based bank – to default.

Then it was revealed that another of Saudi Arabia’s best known companies, Saad Group, was facing similar difficulties after that company’s owner, Maan al-Sanea, had his personal accounts frozen by the central bank.

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