Biz this week!

The Reserve Bank of Australia raised its main interest rate by 25 basis points, to 3.25%, the first central bank in a G20 country to increase rates since the start of the financial maelstrom in September 2008. The move took markets by surprise. Analysts wondered if other governments would follow and hoist their rates, but some cautioned that Australia was a special case, having avoided a recession and retained a comparatively robust banking system.
The failure of a government-bond auction in Latvia caused more concern about the struggling Baltic economies. Separately, the European Union warned nine countries, including Germany and Italy, that their budget deficits were excessively high.
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European banks took further measures to repay bail-out money. Société Générale launched a €4.8 billion ($7 billion) rights issue, €3.4 billion of which will be returned to the state. And ING agreed to sell its Swiss private-banking unit to Julius Baer, a wealth manager, for SFr520m ($505m). ING is offloading assets to help it pay back the Dutch public.
Spain’s Santander completed a share offering for its Brazilian banking unit that raised 14 billion reais ($8 billion), the world’s biggest flotation so far this year, but the unit’s share price fell on its first trading day.
Spurred on by buoyant equity markets, Aviva, a British insurance company, launched an initial public offering of its Dutch subsidiary from which it hopes to raise £1 billion ($1.6 billion). There have been few flotations in America and Europe lately; the value of IPOs in Europe plunged by 83% last year.
Norway’s Telenor reached a tentative agreement to merge its telecoms assets in Russia and Ukraine with those of Alfa, its partner in both countries, with which it has been engaged in a courtroom battle over control of the units. Alfa has stakes in a diverse range of enterprises, including TNK-BP, a joint venture with BP.

(Source: Economist.com)

Carmakers Porsche and VW to merge

Carmaker Porsche says it has agreed a merger with fellow German manufacturer Volkswagen (VW) after weeks of talks between the two firms' management.
The luxury carmaker said in a statement that it wanted to see the "creation of an integrated car manufacturing group".
VW hailed the decision of the Porsche and Piech families, owners of Porsche group, to create the merger.
It means a Porsche takeover of VW will not happen. The format of the new group will be decided in the next four weeks.
Talks will now take place between the two carmakers, VW's home state of Lower Saxony, and employee representatives.
The state's president Christian Wulff said in a statement: "We are ready for discussions, which must be carried out quickly."
Brand independence

Porsche will now hold further discussions with VW
The move should unite 10 brands under one roof, Porsche said.
Nine of the brands are owned by VW, and the other is the Porsche sports car brand.
"In the final structure 10 brands shall stand below an integrative leading company alongside each other, whereby the independence of all brands and explicitly also of Porsche shall be ensured," a Porsche statement said.
It also said that its plan would also include unspecified "capital measures".
In January, Porsche announced it had increased its stake in Volkswagen to more than 50%, and said it planned to lift its stake in VW to 75%.
However, even with a 75% stake it would not have been able to take complete control because under the "VW law" the state of Lower Saxony, which holds a 20% stake, can block strategic decisions.
Stock markets had closed before the announcement, with Porsche shares up 1.2%, and VW's down slightly, by 0.4%.

(BBC > Business)

‘In the Great Ship Titanic’

The Department of Energy is at the center of U.S. efforts to end our dependence on foreign oil, roll back climate change and create new jobs. Fareed Zakaria sat down last week with the department's new head, Nobel physicist Steven Chu, at NEWSWEEK's Energy Independence 2020 Forum Luncheon to talk about smart grids, solar panels and more. Excerpts:
Zakaria: Skeptics say there's still conflicting evidence on global warming.Chu: I urge everyone to do this: Google the 2007 IPCC report. The 100-year trend is unmistakable. The first thing to emphasize is don't get excited about one or two years. It's just like you should not get excited that one very bad hurricane is evidence there's global warming.
Can we really prevent global warming? Or should we be thinking more about adaptation? Building coastal fortifications may be cheaper than halting the release of CO2.Right now, the climate scientists feel that if all humans shut off carbon emissions today, it will still glide up by about 1 degree centigrade. In the business-as-usual scenarios, Nicholas Stern says there's a 50 percent chance we may go to 5 degrees centigrade. We know what the Earth was like 5 or 6 degrees centigrade colder. That was called the Ice Ages. Imagine a world 5 degrees warmer. The desert lines would be dramatically changed. The West is projected to be in drought conditions. And certain tipping points might be triggered. We can adapt to 1 or 2 degrees. More than that, there is no adaptation strategy.
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What do you mean by tipping points?There's lots of carbon in vegetation that has grown and died in the northern tundras of Russia, Canada. Normally what happens when a tree falls and dies is the microbes come and gobble it up and they recycle in terms of carbon dioxide, methane. But in the frozen tundra, those microbes are asleep. So the big fear is that once the tundra thaws, those microbes wake up, they digest all that carbon. It goes up in the atmosphere. At that point, no matter what humans do, it's out of our control. This is the realization in the last decade that has caused many of us to get very, very concerned. Adaptation at 1 or 2 degrees will be painful, it will cause a lot of hurt and pain, but adaptation at 5 or 6 degrees—I'm terribly frightened that that's catastrophic.
Aren't we in pretty bad trouble no matter what we do? We're not going to be able to stop burning fossil fuels for quite a while.We're in the great ship Titanic, the Earth is, and it's going to take a half century to really turn the ship. But that doesn't mean we can't start doing it today, and we must. It's possible that the United States can greatly reduce its use of energy in our buildings, which consume 40 percent of our energy, and our personal vehicles.
You're basically talking about insulating buildings and using more fuel-efficient cars?Well, not only insulating buildings—we haven't taken full advantage of the technologies that exist today. They haven't been integrated into making smarter buildings that can be 60, 80 percent more energy-efficient than existing buildings.

(Part I - from Newsweek.com)

Citigroup's Mergers Business Is Still Thriving

Citigroup hasn't lost all its muscle. Despite talk of nationalization and speculation that bad loans might soon push the bank into insolvency, Citi's bankers who advise other companies on mergers and acquisitions are having a banner year. Through the first two months of 2009, bankers at Citi were hired to offer guidance on more of the nation's largest deals than any of its rivals, according to Dealogic, which tracks financial activity. Globally, Citi has been a part of four of the six largest deals in 2009. Its biggest score came in January when it was picked by Pfizer to be one of the drugmaker's advisors on its $68 billion acquisition of rival Wyeth. "We are very proud of the success we have had this year," gushes Mark Shafir, who is the head of the M&A division at Citi.

(Time.com)

British 2010 motor show cancelled

The 2010 British International motor show has been cancelled as the motor industry cuts spending.
Carmakers cannot commit to the event at a time when they face "unprecedented challenges", said Paul Everitt, chief executive of the industry body SMMT.
Car sales, and thus carmakers' profits, have plunged in recent months as consumers have struggled to get loans to buy cars.
But the London show was struggling even before the credit crunch.
For years, the show was held in Birmingham, though it moved to London in 2006 after several carmakers decided not to attend the show there and as visitor numbers tumbled.
The 2006 show was well-supported by the industry, though by 2008 some carmakers had decided to stay away from the biennial show in spite of its growing popularity with consumers.
Not the end

The global credit crunch has placed the automotive sector under unique pressure
SMMT chief executive Paul Everitt
The plight of the UK's motor industry
The Society of Motor Manufacturers and Traders (SMMT) said the decision to cancel the show had been a "difficult one".
"The global credit crunch has placed the automotive sector under unique pressure and has created a level of uncertainty that deters manufacturers from committing to large-scale, international events," said SMMT chief executive Paul Everitt.
The show's organisers stressed the cancellation would not be permanent.
"Given the great strides that the Motor Show has taken since its return to London, we fully endorse the decision to postpone [it] until market conditions will again permit us to deliver a world class event that truly showcases the UK industry," said Rob Mackenzie from International Motor Industry Events.
When the show returns it may not be in "its current form", the SMMT indicated.
Manufacturers were, however, committed to holding an event to showcase the UK car industry, SMMT spokesperson Nikki Rooke told the BBC.
Global challenge
The British motor show is not the only one to feel the pinch as carmakers reduce their marketing budgets during the recession.
In January, the important Detroit auto show saw several carmakers stay away, with others cutting back spending on lavish displays and parties.
The Tokyo show has also been warned that some automotive groups might stay away and there have already been some cancellations by carmakers ahead of the Frankfurt show in September.
Yet the British show's problems are different from those faced by some of the major industry shows.
The London show is widely seen as a consumer show and as such it will be the first to be deserted by carmakers traditionally more eager to display their products at shows that are described as industry fairs, such as Detroit, Geneva, Frankfurt and Paris.
Consequently, world premieres and important concept vehicles have been relatively few and far between at British shows in recent years, a factor that in turn has hit visitor numbers.

(BBC.co.uk)

Abu Dhabi fund invests in Daimler

Daimler, which makes Mercedes Benz cars, has sold a 9.1% stake to an Abu Dhabi state investment fund.
The fund, Aabar Investments, will invest 1.95bn euros (£1.83bn;$2.7bn), becoming the biggest shareholder.
The move comes after Daimler reported a net loss of 1.53bn euros in final quarter of 2008 as the global downturn hit demand for luxury cars and trucks.
It will strengthen Daimler's finances and make it less vulnerable to unwanted takeover attempts.
Aabar's chairman Khadem Al Qubaisi said that Daimler was an iconic brand and had an excellent reputation.
Daimler and Aabar said they would co-operate on the development of electric vehicles and new materials for auto production as well as establish a centre to train young people in Abu Dhabi for the auto industry.
"We are delighted to welcome Aabar as a new major shareholder that is supportive of our corporate strategy," said Daimler chairman Dieter Zetsche.
Investors welcomed the news, with Daimler shares gaining of 6.3% to 22.67 euros on the Frankfurt stock exchange.

(BBC.co.uk)