Economic Analysis and Indicators

European shares are stepping up their gains, resulting in the CAC 40 index beyond the resistance of 3,300 points in markets relieved after the agreement reached in the night on the Greek debt restructuring, capacity building fund support the euro and the recapitalization of European banks.

In Paris the CAC 40 is doped by the bank and Axa, up 12%. At the top of the index, Crédit Agricole flies by 21%.

Dexia wins more than 10% at the resumption of trading of the security.Constraint to the dismantling early October due to the debt crisis in the eurozone, the bank said Thursday that its capital requirements amounted to 1.7 billion euros.

PPR takes more than 6%, boosted by the announcement on the eve of a very strong sales growth in the luxury market in the third quarter despite a difficult economic environment.

The euro peaked at 7 weeks against the dollar at 1.4038. Traders refer to a new level of resistance around 1.4050 dollar.

Beijing could become an important contributor to the relief fund of the euro according to European diplomats. The use of third party investors will be part of discussions at the EU summit this evening. Chinese Premier Wen Jiabao at the "Forum Summer Davos" in Dalian City, September 14, 2011.

China is ready to replenish the European Financial Stability Fund (EFSF), the main instrument to stem the debt crisis in the euro area, said European diplomats Wednesday before a summit of EU leaders in Brussels. "China is to" replenish the fund by creating an autonomous investment ("spin-off"), said a diplomat speaking on condition of anonymity. Other emerging powers (Brazil, Russia, India, China, South Africa) have "not yet" indicated whether they participated in the fund, he added.

Argentina has made clear it would not participate in the rescue of the euro area, said another diplomat. The diplomats did not specify how high should reach the participation of China. The Director of EFSF, Klaus Regling, is expected in Beijing Friday, after the summit, also announced the Delegation of the European Union in Beijing.

The spokesman for the Chinese Foreign Ministry, Jiang Yu, said Wednesday that China had "an open mind" and would "talk to the Europeans of many ways to cooperate." China has reiterated several times in recent weeks support for the euro area. It was unclear what would be the interlocutors in Beijing by Mr. Regling and no official was immediately available to the Ministry of Finance or the central bank.The Heads of State and Government EU could decide Wednesday night to extend the Emergency Fund of the euro area to external investors.

The markets expect strong action from the summit of heads of state and government of the Monetary Union in Brussels, which will open in the evening after a summit of 27 countries of the European Union. But hopes of a big deal are slim because of persistent differences between Europeans. EU leaders must avoid at all costs including the contagion of the Greek debt to Italy and Spain, especially by finding a way to increase the firepower of the EFSF, with a capacity of 440 billion deemed insufficient to meet the crisis.

On Wednesday, the China Daily said that emerging markets and including China agreed to participate in a European relief fund via the International Monetary Fund (IMF). Citing an unidentified source "close to the European decision-makers," the newspaper stated that "the agreement (the emerging) could be included in the final document of the summit of European leaders", if the Brussels summit decides to open the fund to of external public and private investors. In this case, China, which already holds some 500 billion of European sovereign debt, according to French and German experts, and is sitting on a huge cushion of foreign exchange reserves of 3,200 billion, would be well positioned to invest in the EFSF.The EFSF must be reinforced, either by him to carry the debt issued by European countries, either through an expansion of the means at its disposal, including through the use of outside investors.

A report of the creditors of Athens believes that the refinancing needs of the country may rise to 440 billion euros in the darkest scenario, against 109 billion announced in early July. Greece in the storm

Rigor more poisonous than a solution? Troika seems at least begin to doubt the effectiveness of reforms undertaken by the austerity Greece. A confidential report of the creditors of Athens assumes that the country's situation is even worse than before starting the measurements. "Greece must prepare for a recession longer and more severe than that announced at the beginning of treatment," reports the BBC, citing the report.

According to this document, the need may arise in Athens for the next year to 252 billion euros, against 109 billion before the summer. Troika evokes even a worst-case scenario, where these needs would rise to 440 billion.The deadline after which Greece is supposed to be able to refinance market risk it being postponed for 2021, as originally intended, to 2027. According to the document, if the situation remains unchanged, the Greek debt will peak at 186% of GDP in 2013, before declining to 152% and 130% in 2020 to 2030.

For a discount of 50% of private debt

"The aid plan adopted in July (with a number of austerity measures) reduces the rate of debt but the effect is more than balanced macroeconomic and political" troika concerned. By virtue of its low situation, Athens may not be able to implement these reforms at the same time, according to the document.

"Greece will fail to juggle internal devaluation (through lower wages, tackling its budget deficit and the completion of its privatization program" ensures creditors.Privatization also loses in profitability every day. The recession and the collapse of markets by lowering the value of assets Greek, the product could yield maximum disposal of businesses by the state increased from 66 to 46 billion euros since the beginning of austerity.

Troika and urges government and private sector to put their hands in the leg as soon as possible. It ensures that private creditors should decide on a discount of 50% of the country's debt, so that it reaches 120% of GDP by 2020. In addition, "Greece needs public support significant long-term and sufficiently generous" insists the document. He believes the need for participation of public partners to 114 billion euros, if private creditors play the game of the discount to 50%.

Dexia has paid 1.5 billion euros in its first two institutional shareholders that they carry out acquisitions of securities of the Franco-Belgian bank until 2008, the Financial Times reported Friday.

According to the newspaper, Holding Communal, an organization representing large municipalities in Belgium, has borrowed 1.2 billion euros to Dexia Bank Belgium (DBB), the Belgian branch of Dexia specializes in bank deposits.These funds were largely used to participate in two capital increase of Dexia Group in 2006 and 2008.

Arco, which invests on behalf of a Belgian trade union, has in turn borrowed 275 million euros, back into the capital of Dexia in fund-raising, according to the FT.

These two entities jointly owned 35% of Dexia, and are still represented on the board, the newspaper said.

The Franco-Belgian bank has actually borrowed money which it owned to finance its capital increase.

In addition, the FT reported that Dexia agreed in collateral on its loans its own shares, which implies that any collapse of the stock price is likely to generate heavy losses.

Dexia's market capitalization has increased from about 21 billion euros in 2006 to one billion euros to date.

This funding at the time had aroused the concern of regulators in Belgium, says the FT. However, if they are illegal in most countries and now banned in the European Union, Dexia has not broken the law then in effect.

According to the financial daily, the British bank HSBC dream to make an offer on DenizBank, Turkish subsidiary of the Franco-Belgian bank.

It has already received expressions of interest, including the Qatar National Bank (QNB), the sovereign wealth fund Qatar Investment Authority (QIA) holds half the capital, and the first Russian bank Sberbank.

Nestlé raised slightly its expectations for 2011 after nine months figures broadly in line with expectations and once again heavily impacted by currency effects.

"For the full year, despite the pressure of raw material costs, we expect to achieve a performance slightly above our range of long-term organic growth of 5-6% and continue to seek an improved margin at constant exchange rates, "said the CEO Paul Bulcke, quoted in the statement.

Organic growth at 7.3% which posted 4.1% real internal growth and 3.2% in price increases.However, currency effects reduced sales by 15.1% and divestitures, primarily Alcon, 5.7%.

At group level, the turnover fell to 60.89 billion Swiss francs (49 billion) against 65.3 billion during the same period last year, the global food Alcon recalling counted for 5.1 billion.

Analysts polled by Reuters on average expected a turnover of 61.88 billion. They anticipated organic growth of 7.14% and a real internal growth of 4.09%.

Alcatel-Lucent announced Wednesday have a firm offer of $ 1.5 billion (1.1 billion euros) of the European fund Permira on its Genesys subsidiary, but plans to keep the rest of his division company, which he considering the sale for several months.

The group of telecom equipment was explained in July to study all possible options on that line of business, which employs some 5,000 people worldwide this year and should generate a billion euros in revenue based on estimates of Analysts.

"In terms of our business company, we concluded that the best choice is to preserve and strengthen it in the interest of Alcatel-Lucent and in the interest of our customers," said Wednesday the CEO, Ben Verwaayen, the statement said.

The sale of Genesys, which specializes in call center management solutions and customer relationship is expected to close permanently "to the end of 2011 or early 2012," subject to the agreement of the appropriate regulatory authorities, the company said.

This sale covers some 1,800 employees.

Genesys, which achieved in 2010 a turnover of about $ 500 million, should maintain a "strong trade relationship" with the branch company of Alcatel-Lucent through a joint development agreement, said the statement.

At the Paris Stock Exchange, the announcement of exclusive negotiations with Permira allowed the action Alcatel-Lucent to cut its losses and even briefly in the green board.The title, however, is left down and gave up 4.01% to 2.0320 euro at 11:28.

It had touched a low of 1.9820 in early trading, including affected by the revision of the recommendation to neutral from Oddo, against purchase.

The $ 1.5 billion offered by Permira for Genesys exceeds that mentioned in recent months to the entire enterprise division.

The Deposit and Consignment Office (CDC), La Banque Postale and Dexia have reached an agreement on modalities for resumption of the activities of local government financing of French Dexia in the dismantling of the Franco-Belgian bank, reports Tuesday the daily Les Echos.

The newspaper said without citing sources, initially, the CDC will take 65% stake in Dexia Municipal Agency, the SCF for the refinancing of loans granted by banks to local communities.

La Banque Postale will take a 5% DMA, which was valued at 380 million gross, or 250 million net, the difference being the cost of necessary liquidity (estimated at 130 million euros) to operate a such vehicle, the newspaper which states that Dexia will retain 30%.

Les Echos added that this ownership structure will evolve in the production of new loans.

"The share of Dexia aims to reduce, but the way that La Banque Postale will strengthen remains to be defined," writes the daily.

The CDC, which represent the investment of 162.5 million euros, will retain a majority of DMA so that the vehicle remains the best financing conditions in the market related to its "AAA" rating.

According to Les Echos, DMA, which is currently a stock of 77 billion euros in loans to local governments, will be renamed in the coming months and will work exclusively for the new bank of French local authorities, a joint venture will be owned 65% by La Banque Postale and 35% by the CDC.

The Board of Directors of Dexia must rule on the agreement Wednesday, which will be submitted in the coming days to instances of La Banque Postale and the CDC, the paper said.

The agreement must also obtain clearance from the European Commission.

The European Union must reform its treaties to prevent in the future of its member states to create problems for others, as is the case now, especially for Greece, said Sunday the president of the Central Bank Jean -Claude Trichet.

He was speaking on Europe 1 for two weeks at the end of his term, and when European countries are trying to stem the crisis caused by the Greek debt and its impact on banks that have lent money.

"We must think about the future. Tomorrow, I think we need to change the treaty to be able to prevent a member of the euro area to roam and create problems for all others," he said.

Despite the green light Slovak EFSF and the new consensus in Europe to recapitalize banks, there are still some gray areas to be clarified before the euro area out of the crisis. An overview. The logo of the euro to the European Central Bank in Frankfurt.

The yo-yo scholarships continues. After jumping on Wednesday with the hope that the comprehensive plan to rescue the euro zone was well on track, European stock markets closed lower on Thursday. Paris dropped 1.33%, 1.33% Frankfurt, London 0.71%, 3.7% and Milan. The questions or the concerns of investors are doing now on the details and in particular the implications for banks of the measures.

Greece is close to the partial default

Despite the agreement on the payment of 8 billion euros by its creditors, the scenario of the fault beyond the initial charge for the year rose 21% to Athens.The level of potential losses on the country's debt is not yet official but "the discussion focuses on a discount of 50%," said a government source on Thursday in Europe. But determining the level of the discount "is very open, said a source in Brussels told Reuters. You have to see what the initial reaction of investors. Voluntary participation is the goal, at least for now and many feel that we must avoid the risk of total failure. " This scenario therefore a deletion of the Greek debt has at least prompted European leaders agree on bank recapitalization.For all creditors of Athens will have to place new provisions in their accounts, which will weaken their balance sheets.

The recapitalization of banks is finally Cohosh

If the IMF has long been the only one to ask for urgent recapitalization of European banks, the idea is now accepted by all, including France. She is now driven by Brussels, which would raise the capital ratio to 9% against 7% today, to reassure the markets strength. The President of the European Commission, José Manuel Barroso delivered his script to get there. The banks will first have to rely on private sources of capital. If they fail, the states can participate by lending institutions. And if they do not have the means, the European Financial Stability Fund will he also intervene with the banks.

Increase the firepower of the EFSF

Just approved by the Slovak vote, the new enhanced EFSF is already considered insufficient to address emerging risks since July. It is therefore to do to participate in the recapitalization of banks and lending to troubled states – Italy, Spain and Portugal in particular – and avoid a scenario in the Greek.

Two scenarios are being considered to "maximize" its strength as stated Jose Manuel Barroso. Either turn the EFSF bank and let buy from the ECB, as would France. Or allow to act as an insurer from the holders of debt fragile, and guarantee them some of the losses in case of default of the countries concerned.However, the idea, a moment on the table to increase staffing at state EFSF seems ruled out, including Berlin refused.

The ECB, Germany and the banks resist

This "maximization" dear to Barroso does not delight everyone. Including the main concerned with two options on the table, the European Central Bank (ECB). The institution said it is "not appropriate" to use leverage by financing it with a banque.Une position shared by Germany, which fears that this requires the get their hands in their pockets to bail out the ECB. Germany refuses to elsewhere as the EFSF can be used to bail out banks in countries that are not under assistance. France has partially agreed with this view, stating that the State was ready to inject public funds into financial institutions without seeking the ease Europe.

Remaining banks, concerned about the forced recapitalization. The President of the Deutsche Bank, Josef Ackermann, is such that this debate is "against-productive." "The money will come certainly not private investors, but rather states that will raise new funds," he said, quoted in the Financial Times. "And they will do so by increasing their debt levels, while the key problem lies in the ability of governments to restore confidence in public finances," he adds.

France wants a "collective European solution" to the issue of recapitalization of banks in the euro area and will not use, for its part, the European Financial Stability Fund (EFSF), said Wednesday the spokesman of the French government.

President Nicolas Sarkozy and German Chancellor Angela Merkel pledged Sunday to respond "lasting and comprehensive peace" to the crisis in the euro area for the G20 summit under the French presidency in early November in Cannes.

This solution involves a recapitalization of banks in Europe, weakened by their exposure to sovereign debt of Greece and other countries in the euro area.

According to the spokesman of the French government, the collective solution will be presented at the European Council of 23 October in Brussels, at which Nicolas Sarkozy could inform Washington and Beijing before the G20 summit.

"We have no doubt about the strength of French banks but there is turbulence in financial markets that cause the increase of capital of European banks has become a necessity," said Valérie Pécresse during the proceedings of the Board of Ministers.

"Faced with this request to increase the equity of banks, France wants a European collective solution," she said."We will look at all the European banks, identify those that have the greatest weaknesses and help them recapitalize."

Under the Europe Agreement of 21 July on the financial rescue of Greece and the strengthening of the EFSF, the fund money in the euro area will lend money to states who need to recapitalize their banks.

"But France will not appeal to EFSF," assured Valérie Pécresse, who is also Minister for the Budget, which has however not rule out state intervention.

Anticipating BASEL III

"We value the contribution of private capital.Now, if public capital is needed, well, the French government is ready to face a public demand for capital by banks, "she said.

The French Foreign Minister Alain Juppe said Tuesday that French banks had committed to increase their capital levels "to 9% of their balance sheets (…) instead of the 7% expected in 2013."

He told the National Assembly that banks could be achieved by mobilizing their income – for those who make money – and private capital, "if necessary, ultimately," the state capital.

The three major French banks, BNP Paribas, Credit Agricole and Societe Generale, have accelerated the building of their own funds in an attempt to reassure investors about their ability to withstand the debt crisis in the euro area, which has already forced the Franco-Belgian bank Dexia to a dismantling.

They said they were able to achieve an equity ratio of "hard" ("core tier one") of 9% or more in 2013, as part of the new banking regulations Basel III will come into effect .

This regulation requires banks a minimum ratio of 7%, while Britain and Switzerland are already asking their institutions to go beyond 10%.

"We want to anticipate the implementation of these rules," said Valérie Pécresse.

"Europe must show its solidarity and at the same time give themselves a collective set of rules in terms of equity, recapitalization and strength," she said.

Concerning the European Agreement of 21 July, that Slovakia is the last country in the euro zone that have not ratified, which blocks the implementation, she said to believe a new vote of the Slovak Parliament, this time positive.

"This issue was raised during the Council of Ministers and the French government has confidence in the Slovak government to hold a second vote quickly to validate the agreement of 21 July," she said.