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Greece 'will run out of cash by end of March'

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Greece is burning through its cash reserves and will not be able to meet payment obligations beyond the end of March unless it secures additional funds from its creditors, according to a Reuters report.

The country remains locked in a battle with euro zone partners over the future of its bailout programme, which is due to expire in 10 days.

Failure to clinch a deal would leave it at risk of bankruptcy, though until now it had not been clear how much time Greece had until state coffers run dry.

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It will submit a request to the euro zone tomorrow to extend a “loan agreement” for up to six months but EU paymaster Germany says no such deal is on offer and Greece must stick to the terms of its existing international bailout.

The move, confirmed by an official spokesman, is an attempt by the new leftist-led government of Prime Minister Alexis Tsipras to keep a financial lifeline for an interim period while sidestepping tough austerity conditions in the EU/IMF programme.

An EU source said whether euro zone finance ministers, who rejected such ideas at a meeting on Monday, accept the request as a basis to resume negotiations will depend on how it is formulated.

German Finance Minister Wolfgang Schaeuble poured scorn on the Greek gambit, saying: “It’s not about extending a credit programme but about whether this bailout programme will be fulfilled, yes or no.”

With the current bailout deal with the euro zone due to expire on 28 February, Mr Tsipras said talks were at a crucial stage and his demands for an end to austerity were winning support.

“There were protests across Europe supporting the moves made by Greece.

“We have managed for the first time through contacts with foreign leaders to create a positive stance on our requests,” he said at a televised meeting with President Karolos Papoulias.

EU officials said intensive consultations were under way between Greece, the Eurogroup of finance ministers and the European Commission, with Italy and France also involved in the search for a compromise.

Greece will be able to repay a €1.5bn loan from the IMF that falls due in mid-March, but the state will struggle to make payments after that despite continuing efforts to minimize cash needs, a Reuters source said.

“Greece can cover its needs until mid-March or the latest by the end of March unless it secures additional funding from official lenders,” the source told Reuters.

The Greeks have repeatedly asked their euro zone partners to be allowed to issue more Treasury bills beyond an existing €15bn ceiling that it has already hit but its request has been denied.

Adding to the pressure, budget data for January showed the state’s finances worsening sharply as Greeks held off on paying taxes ahead of the 25 January general election.

That resulted in a €1bn shortfall in tax revenues, 23% below the targeted level, putting the country’s bailout target of a 3% budget surplus this year in doubt.

Mr Tsipras’ government has sought to play down cashflow concerns, with ministers saying the state has enough money on hand and refusing to speculate on when it might run out.

Asked at a news conference today about the state’s cash reserves, Deputy Finance Minister Dimitris Mardas said: “We are trying to pay our obligations all the time, I don’t have anything else to tell you.”

US Treasury Secretary Jacob Lew warned Greece to move quickly to reach a deal with creditors on its bailout to avoid further economic difficulties.

In a call with Greek Finance Minister Yanis Varoufakis, the US Treasury said Mr Lew “noted that failure to reach an agreement would lead to immediate hardship in Greece, that the uncertainty is not good for Europe, and that time is of the essence”.

He “urged Greece to find a constructive path forward in partnership with Europe and the IMF to build on the foundation that exists to advance growth and reform,” the Treasury said.

Earlier, the conservative daily Kathimerini said cashflow projections showed government coffers would start to run dry as early as next Tuesday.

After the March IMF repayment, Greece faces €800m in interest payments in April followed by a major financing hump in the summer, when it has to repay about €8bn to official lenders including €6.5bn to the ECB for maturing bonds.

In addition, Greece also faces a monthly bill of €1.5bn for public sector salaries and pensions, and an additional €1bn a month for social security and healthcare costs.

Shut out of capital markets in 2010, Greece has survived over the past four and a half years on a continued stream of over €240bn in aid from the European Union and IMF.

It broke its four-year exile from bond markets in April last year amid signs that the worst of its debt crisis was over, but the return was short-lived as bond yields rose to unsustainable levels in the autumn when political tensions rose.

Greece’s government today offered debt forgiveness to thousands of individuals and companies that owe the state money, hoping to secure a fraction of arrears.

Junior finance minister Nadia Valavani said debtors offering to pay a minimum of €200 upfront could see a haircut of up to 50% on the rest of their debt.

Ms Valavani told a news conference that debts to the Greek state had ballooned to €76bn in unpaid taxes and social insurance contributions.

But realistically, just €9bn from that total can be recovered, she added.

[…]

$2m stadium loan will 'buy the council time'

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$2m stadium loan will ‘buy the council time’

LOIS CAIRNS

Last updated 12:53 25/09/2014

Joseph Johnson/Fairfax NZ

BREAKING EVEN: Without a $2m loan, the AMI Stadium maybe forced to close – potentially leaving Christchurch without a stadium for professional sport.

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How long the temporary rugby stadium at Addington remains in play rests on the outcome of negotiations between the Government and the city council, says Christchurch Stadium Trust chairman Jim Anderton.

Anderton fronted up to the Christchurch City Council this morning to plead for a $2 million loan.

The cash is needed so the trust, which administers the stadium, can buy rather than lease the stadium’s tiered seating.

Buying the seating will save the trust around $700,000 a year, money it can then use to upgrade and improve the stadium so it can remain in use beyond 2017.

Without the loan the stadium maybe forced to close – potentially leaving Christchurch without a stadium for professional sport – as it is only breaking even and there is no spare cash to pay for work needed to extend the life of the stadium.

“You have to decide whether you want a stadium there after 2017 and if you do, then some assistance is going to be required,” Anderton told councillors.

It was planned that Christchurch would have a new permanent stadium by 2017, as outlined in the central city recovery blueprint, but the scheduled date for completion has now been pushed out to 2019.

That date may be delayed further due to financial challenges facing the council, but that will depend on the outcome of negotiations between the council and the Government.

The Christchurch Stadium Trust is working on the premise the stadium may be needed until 2022.

In a hint that it may be required even beyond that date, Mayor Lianne Dalziel asked Anderton whether the trust would be in a position to repay the council’s loan in December 2022 even if the temporary stadium was still being used.

“Yes, we believe we can do that,” Anderton assured her.

Under the terms of the loan approved by the council, the trust will pay back a minimum of 60 per cent of the $2m borrowed ($1.2m) by December 2022. How much of the remaining balance the trust will pay back will depend on the value of the assets it holds at the time it is wound up.

Council chief financial officer Peter Gudsell said by giving the trust a loan the council was ensuring it had options when it came to negotiating the timing for the new stadium.

“This gives us options,” Gudsell said.

Deputy mayor Vicki Buck said it was “absolutely logical and sensible” to loan the money to the trust, while Cr Yani Johanson said it would buy the council time.

“The sooner we do this, the greater leverage we can have around the timing of the major new stadium,” said Johanson, adding he believed the council should be pushing the delivery of the new stadium out until 2025.

Cr David East said any suggestion that the temporary stadium would be needed beyond 2022 was not appropriate at this time.

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[…]

Cash-for-loan scam: Rajiv Takru says SBI MDs report by weekend

MUMBAI:

Financial Services

Secretary

Rajiv Takru

on Wednesday said the in-house panel constituted by the State Bank to probe corruption charges against one of its senior most Deputy Managing Directors

Shyamal Acharya

, who was sent out on forceful leave since then, will submit its report by weekend.

Takru, who is on the board of the bank as government nominee, also said it is wrong to blame the high bad assets in state-run banks to corrupt and lax practices in the loan appraisal process and ruled out changing the existing laws and procedures of working of banks.

“What has happened is most unfortunate. SBI has come out with their own internal committee and we expect the report of the committee by weekend,” he told reporters after a meeting at the Reserve Bank.

On asked about the prevalence of high NPAs–some state-run banks have reported gross NPAs at over 7 per cent while in SBI, it is over 5 per cent—and if it can be attributed to corrupt practices in loan sanctioning process, Takru said that would be “speculative”.

“NPAs are rising for a variety of reasons which you know,” he added.

He said these allegations do not merit changing any of the laws and procedures of working of state-run banks and added that “we should wait for the law to take its own course.

“If anybody is guilty, surely you don’t expect the government to say nothing should be done. If he is guilty, certainly, the law will take its course. But I think its a bit premature, we should not speculate on this,” Takru said.

“I don’t think there is anything here which requires a change in law or in procedures,” he added.

Last Sunday, the Economic Offences wing of the CBI had registered a case against Acharya, who was heading the mid-corporate group at SBI, after raiding his house in the city.

Cases were registered against him along with an ex-SBI official KK Kumarah and Chairman of a Delhi-based firm Worlds Window, Piyoosh Goyal, for alleged graft in disburals of Rs 400 crore loan.

Following this, SBI on Monday set up a two-member internal panel, comprising two MDs – Hemant Contractor and A Krishna Kumar – to probe the issue.

[…]

Local communities can help crack payday lenders' hold on the …

Last week the Office of Fair Trading gave rogue payday lenders just 12 weeks to get their act together and play fair with customers, or be closed down. Meanwhile the government has promised to clamp down on the misleading advertising used by high-cost credit providers.

But we know from experience that it can take years for regulators and legislators to change things for good. In the meantime the battle to keep vulnerable people out of the clutches of unscrupulous payday lenders is being fought by local communities.

Last month in the North East, for instance, local groups – including Citizens Advice – held a Fair Credit “listening event” in the centre of Newcastle. Leading the day was financial inclusion charity Fincan, chaired by Alison Baxter. “We wanted to hear the views of people who may have been affected by high cost credit,” she says.

“Not many of us involved in the day have been in the position where the only way we could pay our mortgage that month was take out a loan which would cost almost half again to pay back. The event allowed us to gather some interesting stories from those who usd pay day lending firms.”

The campaign for Fair Credit in the north-east also has support from the local council. Newcastle Deputy Council Leader Joyce McCarty said: “We know that times are tough for many local people who are struggling to pay bills and risk getting into debt. That’s why we are working closely with Newcastle CAB and others to help people at risk.”

In Kilburn in north London, local community leaders have taken on the challenge to tackle the menace of expensive payday lenders. Last Thursday they met council chiefs to try to improve access to fair credit in the area and give vulnerable people an affordable alternative to payday lenders.

The Kilburn Fair Credit Commission aims to improve the presence of credit unions in the area. The community- or work-based financial institutions offer low-cost loans to their members and can help ensure people don’t fall into the loan trap set by unscrupulous payday lenders.

Sarah Hayward, leader of Camden Council, and Muhammed Butt, leader of Brent Council, have agreed to work with the Commission to examine the idea of setting up a Community Finance Hub on Kilburn High Road.

It would help guide local residents towards credit unions as well as offering financial advice and money management courses. The Council has promised a progress report by 9 April, which I will look forward to seeing.

But it’s through partnerships with caring communities and councils that we can help people avoid falling into desperate straits by borrowing money at rates they can’t afford.

Another new weapon against payday lenders is London Mutual Credit Union’s CUOK! service. It’s similar to a payday loan in that it offers fast turnaround with a loan decision in 15 minutes, but it’s much cheaper than commercial short-term credit companies. A £400 loan from the scheme, for instance, will cost £8, compared to £120 or more at a typical payday lender.

The scheme is only available currently in Southwark, Lambeth or Westminster, but I hope other credit unions will follow London Mutual’s lead and offer it.

I also hope that the positive examples of Newcastle, Brent and Camden will be followed by other councils across the country. We must do all we can to help keep vulnerable people out of the clutches of unscrupulous lenders.

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Robosigning victims soon to get cash from lenders

Robosigning victims soon to get cash payments from lenders

CARLOS BARRIA / Reuters file

A foreclosure sale sign sits in front of a house in Miami Beach, Florida in this file photo taken February 27, 2009.

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Mortgage lenders will begin making cash payments to homeowners harmed by wrongful foreclosures of anywhere between a few hundred dollars to as much has $125,000 beginning in April, federal bank regulators said Thursday.

The payments were part of a deal struck with 10 banks that abruptly ended a comprehensive review of some 4.2 million mortgages after widespread mistakes were found in documents used to foreclose millions of American homes following the housing bust.

But critics of the settlement, first announced in January, say it doesn’t adequately compensate those who lost homes for the harm they suffered.

The review was designed to determine which homeowners were harmed by “robosigning” and other shoddy document practices that resulted in wrongful foreclosures and then compensate those borrowers for their losses. But after more than 18 months and $1.5 billion in fees to independent consultants, only about 104,000 loan reviews had been completed, regulators said Thursday

“It just doesn’t make sense for these (mortgage) servicers to continue funneling money to consultants that could be better used to help distressed borrowers who have lost their homes,” said Thomas Curry, Comptroller of the of the Currency, in a speech earlier this month. “The cost of concluding these reviews would far exceed the harm that would be found.”

The lenders are Aurora Bank, Bank of America, Citibank, HSBC, JPMorgan Chase, MetLife Bank, PNC, Sovereign Bank, U.S. Bank National Association and Wells Fargo Bank. Three other mortgage lenders, GMAC Mortgage, Everbank and OneWest, didn’t sign the deal and will continue their own mortgage reviews.

The banks who agreed to the settlement will pay a total of $3.7 billion to a fund compensating borrowers who were harmed. They’ve been ordered to review eligible loans and divide them into 11 categories depending on the severity of harm borrowers suffered. Regulators have not yet determined how many borrowers fall into each category

The list ranges from relatively minor clerical mistakes all the way to homes that were improperly seized even though the borrower was not in default. The maximum payout will be $125,000. The average payment represents about $850 per eligible loan.

Critics of the review process argue that the amount paid by the banks is inadequate, and that the settlement amount was based on flawed accounting of harm done to borrowers.

“If the review is being done on the basis of the (mortgage) servicer files, and the servicer files are a mess, how can you make a finding that’s accurate?” said Alys Cohen, a consumer attorney at the National Consumer Law Center.

But OCC officials say they had enough information to conclude that the error rate on document processing was about 6.5 percent. Since January, a further review of the data collected indicates the error rate was even lower, Deputy Comptroller Morris Morgan said on a conference call with reporters.

Consumer advocates and several members of Congress are pressing the OCC to disclose the results of the loan reviews that were competed. Earlier this month, Rep Maxine Waters, D-Calif., wrote to Curry requesting a final accounting of the final payments made to homeowners under the settlement.

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“Without this information, the public will have no means by which to determine whether relief was provided in a manner that appropriately reflects the overall impact of foreclosures on certain communities and demographic groups,” she said.

The settlement is also intended to prod banks to modify more loans and stop foreclosures in progress. They’ve agreed to pay another $5.7 billion in so-called “soft dollars” that will be used to write down loan balances and approve short sales, in which the banks approves the sale of a house for less than the balance of the mortgage.

Under formulas similar to those worked out in a separate National Mortgage Settlement with the Department of Justice and state attorneys general, banks will receive a series of credits for various types of mortgage relief. Joseph Smith, the independent monitor appointed to oversee that settlement, recently reported that lenders had earned the bulk of those credits by approving short sales and writing down second mortgages.

Housing advocates note that, unlike relief extended to first mortgages, those measures don’t directly help keep families in their homes.

Though the pace of new foreclosures has fallen since the depths of the housing crisis, the volume of so-called “distressed” sales continues to weigh on housing prices. Foreclosure-related sales made up 21 percent of all U.S. home sales last year, according to the latest data from RealtyTrac. Short sales made up another 22 percent, meaning two in five transfers involved distressed sales.

OCC officials say their settlement terms are also designed to prevent future foreclosures. Consumer advocates and housing counselors say it’s not yet clear whether the measures in place go far enough.

That concern was echoed in Smith’s latest report.

“I believe we have made progress, particularly as it relates to consumer relief,” he said. “But I know from my regular conversations with advocates across the nation that the banks and I have much more work to do on behalf of borrowers.”

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[…]

Failure to manage cash major weakness of Malay entrepreneurs, says Dr M

PUTRAJAYA, Nov 28 — Former prime minister Tun Dr Mahathir Mohamad has noted poor cash management as among the main weaknesses of Malay entrepreneurs.

He said Malay entrepreneurs often regarded money as an item for purchasing things they desired while it should instead be regarded as capital, which if invested wisely, could generate lucrative returns.

“Management of cash is very important but the problem is when they have money, they want to spend. For instance, (they) take a bank loan of RM1 million but half of it is spent on buying a Mercedes and other things, and only RM500,000 is used for business.

“This means the interest is now doubled because that RM500,000 must pay the interest on RM1 million. It means your profit margin must be very much higher in order to repay the loan,” he said at a luncheon talk held in conjunction with the Bumiputera Timber Industry Entrepreneurs’ Gathering at the Maritime Centre, here, today.

Also present was Plantation Industries and Commodities Deputy Minister Datuk Hamzah Zainudin.

Dr Mahathir said there were also cases where Malay entrepreneurs participated in renowned and successful franchise business, yet they failed because they were not good in managing cash as they used the money on other things instead of buying stocks.

Therefore, he said, they needed to be taught good cash management; to keep part of the profits so as to continue doing business or expanding it.

Later, at a press conference, Dr Mahathir said managing cash could be introduced in school so that the future generations would learn to value money from young and able to manage their finances well.

He said to be successful in business, an entrepreneur must work hard, work smart, determine what he wanted to do through market research and diversify his products.

“A small starting capital is not a problem, as most businesses tend to start small while now there are so loan facilities available to start a business.”

He said merging with other companies was also possible in order to explore bigger markets, where they also needed to learn working with others and not be individualistic.

After the talk, Hamzah witnessed the signing of an agreement between the Malaysian Furniture Entrepreneurs Association (MFEA), Kuala Lumpur and Selangor Furniture Entrepreneurs Association (KLSFEA), Muar Furniture Association (MFA) and Malaysian Furniture Industry Council (MFIC) for the organising of The Export Furniture Exhibition (EFE) 2013 from March 6-10, next year. — Bernama

[…]

Poor Cash Management A Major Weakness Of Malay Entrepreneurs, Says Mahathir

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November 28, 2012 19:07 PM

Poor Cash Management A Major Weakness Of Malay Entrepreneurs, Says Mahathir

PUTRAJAYA, Nov 28 (Bernama) — Former prime minister Tun Dr Mahathir Mohamad has noted poor cash management as among the main weaknesses of Malay entrepreneurs.

He said Malay entrepreneurs often regarded money as an item for purchasing things they desired while it should instead be regarded as capital, which if invested wisely, could generate lucrative returns.

“Management of cash is very important but the problem is when they have money, they want to spend. For instance, (they) take a bank loan of RM1 million but half of it is spent on buying a Mercedes and other things, and only RM500,000 used for business.

“This means the interest is now doubled because that RM500,000 must pay the interest on RM1 million. It means your profit margin must be very much higher in order to repay the loan,” he said at a luncheon talk held in conjunction with the Bumiputera Timber Industry Entrepreneurs’ Gathering at the Maritime Centre, here, today.

Also present was Plantation Industries and Commodities Deputy Minister Datuk Hamzah Zainudin.

Dr Mahathir said there were also cases where Malay entrepreneurs participated in renowned and successful franchise business, yet they failed because they were not good in managing cash as they used the money on other things instead of buying stocks.

Therefore, he said, they needed to be taught good cash management; to keep part of the profits so as to continue doing business or expanding it.

Later, at a press conference, Dr Mahathir said managing cash could be introduced in school so that the future generations would learn to value money from young and able to manage their finances well.

He said to be successful in business, an entrepreneur must work hard, work smart, determine what he wanted to do through market research and diversify his products.

“A small starting capital is not a problem, as most businesses tend to start small while now there are so loan facilities available to start a business.”

He said merging with other companies was also possible in order to explore bigger markets, where they also needed to learn working with others and not be individualistic.

After the talk, Hamzah witnessed the signing of an agreement between the Malaysian Furniture Entrepreneurs Association (MFEA), Kuala Lumpur and Selangor Furniture Entrepreneurs Association (KLSFEA), Muar Furniture Association (MFA) and Malaysian Furniture Industry Council (MFIC) for the organising of The Export Furniture Exhibition (EFE) 2013 on March 6 to 10, next year.

— BERNAMA

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[…]

UPDATE 1-BP board considers Rosneft bid for TNK-BP

* BP will hold board meeting Friday to discuss offer

* Bid for BP stake is cash and shares, offer to tycoons may be different

* Offers value all of TNK-BP at over $50 billion

* Swoop by Rosneft part of Putin’s drive to recover state control

* BP says statement “in due course”

By Andrew Callus and Megan Davies

LONDON/MOSCOW, Oct (KOSDAQ: 039200.KQnews) 19 (Reuters) – Rosneft is poised to secure a tighter grip on Russia’s oil industry by buying BP’s 50 percent stake in TNK-BP, the country’s third largest producing company.

The British oil company’s board was expected to consider a cash and stock offer worth over $25 billion on Friday that would allow it to exit a profitable but troublesome joint venture.

The offer is not tied to asset deals or exploration tie-ups with Rosneft, although sources said those may follow.

Rosneft has already made a tentative offer to BP’s equal partners in TNK-BP, the AAR (NYSE: AIRnews) consortium owned by four Soviet-born tycoons, that could be worth up to $28 billion.

“If and when BP reaches any agreement it will make an announcement at the appropriate time,” BP said in a statement.

Some British newspapers reported that BP’s chief executive Bob Dudley would be recommending the offer to his board.

“The offer is in. It’s a split of the two,” (cash and shares). It’s a clean offer and there’s no other plan on the table,” said one source.

“If he thinks it’s the best offer Dudley will recommend it but the board may say we need to reconvene and consider this aspect or that. It’s not an automatic tick in the box.”

Sources have said a three-way deal that could soon emerge, with some details to be hammered out during a visit to London this week by Rosneft Chief Executive Igor Sechin.

They said BP and the four tycoons could emerge with minority stakes in an enlarged Rosneft plus billions of dollars in cash in exchange for the highly profitable company.

The combined group would dominate Russia’s increasingly state-controlled oil industry.

STATE CONTROL

President Vladimir Putin has been regaining state control of assets that passed cheaply to a small group of businessmen when privatised in a hurry in the 1990s.

Rosneft’s absorption of another oil firm, Yukos, and the imprisonment of its former owner Mikhail Khodorkovsky in the mid-2000s was the biggest step in this process until now.

That was also masterminded by Sechin, who was deputy chief of staff at the Kremlin (Berlin: KML.BEnews) – Putin’s gatekeeper – at the time.

Citing this background, sources said that although BP would likely get stock in Rosneft as part of its package, the tycoons might not, and that a structure of deferred payments of more cash could be on the cards for the AAR partners.

A stock purchase by BP could also allow Putin to show some of his critics that he is diversifying, not concentrating, ownership in the oil industry, analysts have said.

A reminder of that pressure on him came from a Russian cabinet meeting on Friday.

First Deputy Prime Minister Igor Shuvalov said Rosneft’s prospective buyout of TNK-BP would not deflect the government from reducing the state’s stake in the country’s largest oil company from the current 75.2 percent by the end of 2014.

“Regardless of Rosneft’s further activities in acquiring assets, our strategic goal of privatisation remains,” Shuvalov said after a cabinet meeting chaired by Prime Minister Dmitry Medvedev. “We will proceed very carefully, as our president has said, paying attention to the quality of investors and maximizing the proceeds that are raised.”

MORE OUTPUT THAN EXXON

A combined Rosneft-TNK-BP would produce well over 4 million barrels of oil and gas a day – more than U.S. No.1 Exxon Mobil (NYSE: XOMnews) , the biggest producer among the world’s investor-owned oil companies.

To finance a deal worth over $50 billion if both parties get bought out, about $15 billion could be met by a loan Rosneft has been negotiating with international banks.

It could get another $3 billion from Russian banks, but one financial source said “there is a point where raising debt would have a negative impact on Rosneft’s credit rating.”

Some of the offer will be in stock, sources have said. Rosneft already holds over 12.5 percent in treasury stock – worth over $9 billion based on Friday’s stock market valuation of $74 billion, and it could issue more.

Sources have also said that the AAR side of the deal could involve deferred payments over a number of years.

Finally, the TNK-BP business itself has strong cashflow and little debt, allowing the partners to rake off $4 billion a year in dividends in recent times.

Bankers told ThomsonReuters LPC that Rosneft’s $15 billion loan request had not changed since this week’s developments. The loan package consists of bridge loans to be refinanced with bond issues and a term loan that will be held by banks. A total of 10 banks have already joined the deal and the loan could be concluded in three to four weeks.

Rosneft declined to comment. AAR has declined to comment since abandoning its own plan to buy out the BP stake this week and leaving Rosneft as the only bidder. BP would not comment beyond its statement.

Shares in BP climbed 3 percent on Wednesday and added a further 0.7 percent on Thursday and 0.5 percent on Friday to 454.3 pence, trading at their highest levels since April.

Investors see potential for BP’s fraught history in Russia to take a positive turn, even if their half of the deal does not go through. The stock underperforms its peers by most financial measures because of uncertainty in Russia and with regard to its liabilities for the U.S. Gulf oil spill.

ARCTIC REVISIT

The AAR part of the deal is a re-hash of a plan that fell through last year, under which BP and Rosneft offered to buy out the tycoons and sign a tie-up deal to explore in the Arctic together.

Relations between BP and the tycoons Mikhail Fridman, German Khan, Viktor Vekselberg and Len Blavatnik have long been fraught. The soured further last year when AAR blocked the proposed co-operation between BP and Rosneft, saying it violated a TNK-BP exclusivity agreement.

An attempt to resolve the dispute was thwarted when AAR (Berlin: ARZ.BEnews) turned down a $32 billion offer for its stake from BP and Rosneft in May 2011. Relations deteriorated further, with Fridman quitting as CEO of TNK-BP in May this year.

BP put its stake up for sale the following month in an attempt to bring the issue to a close.

[…]

Greece needs bridging loan, scrambles for more cuts

By Lefteris Papadimas and Harry Papachristou

ATHENS (Reuters) – Greece’s coalition government will seek a bridging loan to tide it over while it scrambles to find 11.7 billion euros of spending cuts to bring a derailed bailout plan back on track and appease exasperated international lenders.

The measures must be submitted for approval by July 24, when auditors of the so-called “troika” of the European Union, the International Monetary Fund and the European Central Bank are expected to return to Athens for a check-up mission.

The visit, and subsequent haggling that is expected to last until September, will determine whether the EU and IMF continue bank rolling Athens or abandon it and let it slide towards chaotic default and eventual exit from the euro zone.

The troika has already turned the screws on cash-strapped Athens, effectively suspending payments under its ongoing 130 billion euro rescue and prompting it to seek a bridging loan from its lenders to cover financing needs until September.

“We are fighting to secure the bridging loan by September,” a finance ministry official told reporters, speaking on condition of anonymity.

Cabinet members and senior ministry officials have been holding daily meetings to thrash out the spending cuts. Finance Minister Yannis Stournaras is expected to submit on Wednesday a draft list to the leaders of the three parties comprising the country’s ruling coalition.

“Since last Thursday, there is a methodical effort by all ministers to find realistic proposals,” Deputy Finance Minister Christos Staikouras told Reuters. “We must be ready by July 23,” he added.

The cuts, equivalent to 5.5 percent of the country’s GDP, must be enforced over the next two years for Greece’s budget deficit to narrow to below 3 percent of GDP by the end of 2014 from 9.3 percent in 2011.

MORE MEASURES

The government is considering a wide range of cuts, such as lowering caps on high pensions, closing tax loopholes, reducing the government’s operating expenses, cutting public hospitals’ costs and cracking down on fraud to curb social spending.

Athens has pledged to streamline public administration to make it leaner. The government is also considering proposals to extend military service to reduce its need for professional soldiers and to make the church pay half of the salaries of priests, thousands of whom are on the government’s payroll.

Measures worth 5.6 billion euros out of the 11.7 billion total have been identified so far, a finance ministry official told reporters on Tuesday on condition of anonymity. The official gave no details as to what kind of measures have been fleshed out.

But Greece’s fragile coalition government has little scope to find the savings after it pledged to austerity-hurt voters it would not fire any civil servants and avoid across-the-board cuts of pensions and public sector wages.

“We have made plans for cuts that do not affect human souls,” Interior Minister Evyrpidis Stylianidis said after meeting Samaras on Tuesday.

The three-party coalition was cobbled together after pro-bailout parties won a narrow victory in elections last month. Conservative Prime Minister Antonis Samaras has pledged to renegotiate the bailout and soften its terms, particularly by spreading the 11.7 billion euro cuts over four years to soften their impact on the economy.

He will meet the leaders of the co-ruling Socialist party, Evangelos Venizelos, and leftist Democratic Left, Fotis Kouvelis, on Wednesday morning to secure their approval for the cuts before final decisions are taken.

Austerity policies implemented since the country’s first EU/IMF bailout in May 2010 have turned Greece’s recession into its longest and deepest since World War 2. Unemployment climbed to a record 22.5 percent in April. Economic output has shrunk by about a fifth since 2008, when the country’s recession started.

The finance ministry official acknowledged that pushing through the cuts would not be easy, but that the government was determined to come up with the austerity measures.

“It’s difficult, but we will make it,” the official said.

Greece is already finding it difficult to meet its current fiscal targets, let alone future ones. Government paralysis during the country’s long election period, reluctance to implement privatizations and fiscal cuts and the recession have thrown the country’s bailout plan into disarray.

Tax revenues were almost 1 billion euros below target in the first half of the year. The country’s privatization agency said it would not manage to raise more than 3 billion euros this year as had been planned. And the country has failed over a string of targets set out under its bailout plan since March.

(Writing by Harry Papachristou; editing by Stephen Nisbet)

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NBFIRA plays hardball with micro-lenders

Government through the Non-Bank Financial Institutions Regulatory Authority (NBFIRA) has ordered micro-lenders and cash loan operators to submit loan book values in order for them to be levied, a development the latter fears will run them out of business.

Melville Brown, NBFIRA deputy chief executive officer, Regulatory, issued a statement last week requesting that loan book values be submitted on a monthly basis. “This letter is to give notice to all non-bank financial institutions that are regulated and supervised by the Non-Bank Financial Institutions Regulatory Authority (NBFIRA), as provided for in the NBFIRA Act of 2006 that the regulations authorising the collection of annual licensing fees and scheduled supervisory levies for all regulated non-bank financial institutions’ operations have now been approved and published in the Government Gazette of February 17, 2012,” stated Brown in the statement. Consistent with Section 51 of the NBFIRA Act, Brown stated that micro-lenders and cash loan operators are requested to submit loan book values between the periods of February 28, 2010 to December 31, 2011.

“The figures will be used as a basis of invoicing regulatory fees and levies. This will also assist NBFIRA in better understanding the operations and performance of all the non-bank financial institutions,” Brown said. He said all micro-lenders are advised to complete this exercise as soon as possible as after June 30 this year, NBFIRA will begin to impose sanctions on those found to be conducting unlicensed micro-lending businesses.

“Please note that all information should be submitted within fourteen days (from May 7, 2012). Going forward, monthly information should be submitted by the 20th of the following month,” stated the deputy CEO. Micro-lenders and cash loan operators who spoke on condition of anonymity said the development would affect their business immensely as the law is being applied retrospectively.”This situation has the potential of disrupting our business performance. How are we expected to be levied for a period when the law was not in force? NBFIRA’s main purpose here is to kill our business,” argued one micro-lender.

Another said the sole purpose of one venturing into a business is to make profit but with the levies micro-lenders are expected to pay, they will not realise any proceeds. “What we are expected to submit is just too much. It is becoming unprofitable for one to operate a cash loan anymore,” complained one dejected cash loan operator.Some have complained that NBFIRA does not give them a notice. They charged that the NBFIRA slaps them with directives week in week out.

Another micro-lender expressed that authorities in Botswana do not recognise the role played by the micro-lending industry in the country’s economy. “The development will cause chaos. Some business people will be forced out of business due to lack of funds. The development is ill-timed,” lamented another cash loan operator.

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