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R&D Economic Research & Business Development Date: June 21st, 2009

Highlights

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Nepali Congress on Saturday elected Ram Chandra Paudel as its Parliamentary Party leader, 14 months after the formation of the Constituent Assembly. Lt. Gen. and second-in-command in the Nepal Army Kul Bahadur Khadka retired from his job from Saturday. Indian Foreign Secretary Shiv Shankar Menon arrived here on Saturday on a two-day visit to learn about latest political developments. Indian Foreign Secretary Shiva Shanker Menon has said that New Delhi will look into the encroachment of the Nepali territory from the Indian side. Senior UCPN (Maoist) leader Mohan Baidhya warned to write a note of dissent over Chairman Puspha Kamal Dahal’s political document presented at the party’s politburo. Finance minister Surendra Pandey has said education, local development and infrastructure construction would be prioritized in the budget for the next fiscal year. The government has decided to let the development budget allocated to six remote districts be available for 16 months. Agriculture Development Bank Limited (ADBL) has sought permission for the issuance of initial public offering (IPO) worth Rs. 960 million. Except for the shareholders of trading sub-group, all other lost this week. After a long time Bishal Bazaar Company saw its 324-unit of shares being traded on Thursday. A new telecom company is soon making its foray in the Nepali market. Total deposit in all banks and financial institutions in Kaski has reached Rs. 25.65 billion.Of the total deposit, 75 percent is in savings. The domestic gold market continued to see fluctuations this week too. Gold, that was traded for Rs 23,580 per 10 gram on Sunday, closed at Rs 23,665 per 10 gram on Friday. Terai, Janatantrik Madhesh Mukti Tigers, on Satruday burnt the national flag and a Dhaka topi (cap). Dacoits bring terror to quiet Sunsari VDC.

POLITICS: Paudel elected NC leader in House Nepali Congress on Saturday elected Ram Chandra Paudel as its Parliamentary Party leader, 14 months after the formation of the Constituent Assembly. Paudel defeated 1


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his rival Sher Bahadur Deuba by 13 votes to become the leader of the party in the Parliament. Paudel got 61 votes while Deuba had the support of 48 lawmakers. Five NC lawmakers abstained from voting. Deuba and Poudel contested in the second round of voting late in the evening, after no candidate got clear majority in the first round. “I have not taken this result as victory or loss. It is just division of work. I’ll move ahead taking Deuba and his supporters into confidence,” said Paudel after being elected NCPP chief. Interestingly, Deuba was not present when the election result was announced. Party president Girija Prasad Koirala abstained from voting. A source close to Koirala claimed that the octogenarian leader did not participate in the poll process because he did not want to take sides. He wants to act as a patron and keep the party unity intact, he added. Along with Koirala, Dr Ram Sharan Mahat, Dr Shashank Koirala, Baladev Sharma Majgaiya and Nilambar Acharya also did not cast votes. Dr Mahat and Dr Koirala are currently in the US, while Sharma is in India. Acharya, a nominated CA member of the party, refused to take part in the election process. In the first round, Deuba and Poudel got 45 and 39 votes respectively, while KB Gurung and Suprabha Ghimire received 12 votes each. One vote was declared invalid. According to the party statute, a candidate needs to get 51 per cent of the votes to win the election in the first round. However, a simple majority would be enough in the second round. The leader can later appoint his deputy, according to the statute. Earlier, 10 out of 17 members in the 19-member working committee of the PP were elected unopposed on the basis of inclusiveness. Jagadish Narsingh KC, Nabindra Raj Joshi, Badshah Kurmi, Ramesh Lekhak, Amrit Lal Rajbanshi, Kabita Sardar Bantar, Ajaya Kumar Chaurasia, Kiran Yadav, Purushotam Basnet and Arjun Prasad Joshi were unanimously elected as members in the working committee. Pramila Rai, Dhyan Govinda Ranjit, Dhana Raj Gurung, Ishwori Neupane, Kalyani Rijal, Lila Subba and Sita Gurung were elected in the PP working committee thro-ugh majority votes. While Deuba wanted to hold the second round of polls tomorrow, Poudel was adamant on holding it today. Though party president Koirala remained neutral, his daughter Sujata openly lobbied for Deuba. Deuba also found allies in vice-president Prakash Man Singh and general secretary Bimalendra Nidhi. Poudel got support from acting president Sushil Koirala. NC activists believe PP election points to leadership transfer to younger lot. Source: The Himalayan Times Date: 06/21/2009

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Khadka retires, Katawal denies meeting him Lt. Gen. and second-in-command in the Nepal Army Kul Bahadur Khadka, who was appointed as the acting chief by Maoist-led government retired from his job from Saturday. His retirement comes right after the UML-led coalition revoked the decision of the former government and approved the step taken by president Ram Baran Yadav to reinstate Rookmangad Katawal as the army chief. Khadka said he would obey the government decision. Though the army initiated action against Khadka alleging him of violating the institution’s discipline, government restricted the move. Due to government intervention, the NA failed to constitute any court of inquiry against Khadka. Khadka, who served in the army for 39 years, spent around two hours in office on Friday to hand over his responsibilities to Chhatra Man Singh Gurung, an officer junior to him. Reports say, his three attempts to meet army chief Katawal were rejected, indicating how rivalry had been built between these two army generals. Khadka spent the last two months of his career in controversy but he never discharged duties in capacity of the acting CoAS. NA broke traditions to organise farewell programmes for retiring senior army officials on Friday. According to Annapurna Post daily, the usual Friday meeting of the senior army officials started shortly after Khadka left the office where army chief Katawal expressed satisfaction that Maoist attempt to interfere into the army has ended at last. Source: www.nepalnews.com Date: 20/06/2009

Indian foreign secy meets Nepal Indian Foreign Secretary Shiv Shankar Menon arrived here on Saturday on a two-day visit to learn about latest political developments. After arriving at the Tribhuvan International Airport, Menon headed towards Baluwatar to meet Prime Minister Madhav Kumar Nepal. According to Rajan Bhattarai, foreign affairs advisor to the PM, Menon assured Nepal of India’s continued support to Nepal’s peace process, drafting of new statute and the newly formed government. “The duo also dwelt on the issues of trade and investment between the two countries and speeding up the construction of transmission lines on Nepal-India border to reduce electricity deficit,” Bhattarai said. Menon also called on President Dr Ram Baran Yadav at the President’s Office in Shital Niwas. He also met Nepali Congress president Girija Prasad Koirala, Unified CPN-Maoist’s chairman Pushpa Kamal Dahal, President Dr Ram Baran Yadav and UML chairman Jhala Nath Khanal.

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“Indian foreign secretary expressed commitment to resolving the border issues between two countries through a high-level mechanism,” Khanal said, adding that Menon also expressed concerns about the ongoing peace process, state restructuring and the drafting of the new constitution. “He responded positively to the concerns regarding the need to review all the treaties between two countries, including NepalIndia Peace and Friendship Treaty-1950. He said New Delhi was aware of the fact that the proposal was first made during the UML’s government led by late Prime Minister Manmohan Adhikary,” added Khanal. Source: The Himalayan Times Date: 06/21/2009

India ready to look into border dispute with Nepal Visiting Indian Foreign Secretary Shiva Shanker Menon has said that New Delhi will look into the encroachment of the Nepali territory from the Indian side, The Kathmandu Post reported on Sunday. Talking to Prime Minister Madhav Kumar Nepal at the prime minister's official residence in Baluwatar Kathmandu Saturday afternoon, Menon assured the former that the Indian government will take action against the ones found guilty of breaching the Nepal-India border. The duo agreed upon containing the encroachment of territories by developing a strong mechanism, informed Prime Minister's foreign affairs advisor Rajan Bhattarai. It has been learnt that the Indian side discussed signing a newly prepared border map in an authority level with PM Nepal. Meanwhile, the Indian foreign secretary assured Nepal to provide assistance in taking the ongoing peace process to a logical conclusion. He also handed over Indian Prime Minister Manmohan Singh's invitation to Nepal for India visit. Source: news.xinhuanet.com Date: 21/06/2009 Baidhya challenges Dahal’s document Senior UCPN (Maoist) leader Mohan Baidhya on Saturday warned to write a note of dissent over Chairman Puspha Kamal Dahal’s political document presented at the party’s politburo. During the politburo meeting held at Koteshwor, Baidhya expressed dissatisfaction over Dahal’s document saying it was incomplete and he will register dissent over the document if his view was not incorporated. Baidhya said the party’s upcoming strategy should focus on creating an atmosphere of revolt. 4


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In the 19-page document presented at the politburo meeting on Tuesday Dahal had proposed formation of a national government under Maoist leadership after the correction of the President’s move to reinstate the Army chief. “There is a very little chance of another parallel document against the Party Chairman’s,” a leader close to Baidhya told the Post. “But if the line of revolt is not incorporated, he will write a note of dissent.” Speaking at the meeting Baidhya said the national government with Nepali Congress and the CPN-UML would just be a compromise and nothing more for establishing a “people’s republic.” According to a source, Baidhya said the atmosphere for revolt is building up and the party should focus on it. During the Kharipati gathering in December, Baidhya had presented a separate document challenging Dahal’s document. However, Dahal has combined both documents pledging that party will adopt the “People’s National Federal Democratic Republic.” Source said the Baidhya faction has accused Dahal for giving less priority to policy fixed by the Kharipati meeting. Senior leaders Baburam Bhattarai and Narayan Kaji Shrestha also spoke in Saturday’s meeting. Both said the document of Dahal was principally correct but needed more explanation. They said the national government is possible through agitation and stressed on the need of strong protest for the restoration of civilian supremacy. Source: www.kantipuronline.com Date: 20/06/2009 POLICY: New budget will prioritize education, infrastructure development: FM Finance minister Surendra Pandey has said education, local development and infrastructure construction would be prioritized in the budget for the next fiscal year. Speaking at a press conference organised by Press Chautari, Chitwan Saturday Minister Pandey said the size of the new budget would be larger than that of the previous year. The previous government was able to collect a lot of revenue, but not able to spend it; but the new government will succeed in both collecting the revenue and spending it, minister Pandey said. Whether or not to give continuity to the previous government’s programmes would be decided by the cabinet, Pandey added. Pandey has gone for a visit to his home district for the first time after being appointed the minister. Source: www.nepalnews.com Date: 20/06/2009 16-month fiscal year for remote districts

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The government has decided to let the development budget allocated to six remote districts be available for 16 months. The unspent portion of the development budget normally gets frozen at the end of the fiscal year. According to the cabinet decision on May 4, the money set aside for Darchula, Bajhang, Dailekh, Bajura, Jajarkot and Rukum can be spent until mid-November 2010. The government has been similarly lenient with five districts in Karnali, namely Jumla, Humla, Kalikot, Mugu and Dolpa for the last three years. It said that it decided to extend the deadline due to the geographical situation of these districts. "As development activities cannot be carried out in these places from October to April because of snow, the government decided to extend the fiscal year for them up to midNovember 2010," said Shankar Adhikari, spokesman of the Finance Ministry. According to him, the actual development work starts from mid-April in the districts with a 16-month-long fiscal year. The government has started the Karnali Employment Programme in five districts with an extended fiscal year under which 70,000 families are benefiting from partial employment. An official of the Office of the Financial Comptroller General said that it was hard to keep accounts of budget allocations and expenditures in specific projects with a 16month schedule. A senior official said that they were keeping records of the expenditures made until mid-July, but that the expenditures for the rest of the year remained unaccounted for. But, former vice-chairman of National Planning Commission (NPC) Dr. Shankar Sharma has all praise of the provision for 16-month fiscal year in those districts. "The people can work only 3-4 months effectively beginning form April when the region does not witness snowfall," he said. "That's why, the extension of period of fiscal year has been very essential in those to achieve certain progress," he added. He said that the budget accounted for as a result of 16-month period of spending will not make big difference to the economic fundamentals as their amount remains significantly low. He suggested that programme could be extended to other districts in the mid-hill and the western remote districts as well if demand arose. Source: www.kantipuronline.com Date: 20/06/2009

MARKET: ADBL to issue largest-ever IPO

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Agriculture Development Bank Limited (ADBL) has sought permission from the Securities Board of Nepal (SEBON) for the issuance of initial public offering (IPO) worth Rs. 960 million. ADBL will sell its 9.6 million units of shares valued at Rs. 100 per share to the general public as per the plan. It will be the largest ever IPO in the country any company has offered so far. "As soon as SEBON approves the proposal, we will start floating the IPO," said Manohar Shrestha, a manager of the bank. "We hope we will be able to issue shares within three months." The company should issue shares within two months of approval from the SEBON as per the SEBON's regulation on share issuance. According to the bank, 480,000 units of share out of 9.6 million will be sold to its employees. It is the second time the bank is floating ordinary shares. The bank had floated ordinary shares worth Rs. 125 million about a year and a half ago. Farmers who had taken loans from the bank were given the bank's shares then. Ace Development Bank will be the issue manager in ADBL's IPO if SEBON approves its application. With the latest issuance of shares, the ownership of the government in the bank remains at 51 percent, according to Shrestha. The Bank has ordinary paid up capital of Rs. 1.62 billion. After the bank was converted into a public limited company in 2005, the process of issuing shares for public had begun. A public limited company should issue 30 percent share to the public as per the Bank and Financial Institution Act. SEBON spokesperson Niraj Giri said that the regulator would see the documents whether the measures of disclosures were taken and provide approval after necessary conditions were met. "Given that this is the largest ever floating of shares, it will also be an acid test of whether the public will respond to the bank against its relatively weak financial position," he said. As per the Nepal's Rastra Bank's third quarterly report, the bank's reserves and surpluses are still negative by Rs. 4.5 billion. However, the bank's non-performing loans are decreasing and the status of its capital fund is also positive. Its NPL stands at 10.8 percent of its total loans. NPL of less than five percent is considered a good performance. ADBL is one of the three banks in which the government has a majority stake. Nepal Bank Limited and Rastriya Banijaya Bank still have negative net worth which disqualifies it from issues IPOs. Source: www.kantipuronline.com Date: 20/06/2009

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Bishal Bazaar Co’s shareholders gain Except for the shareholders of trading sub-group, all other lost this week. After a long time Bishal Bazaar Company saw its 324-unit of shares being traded on Thursday to push the trading sub-group’s index up by 8.57 points to 290.35 points. Bishal Bazaar’s shares were traded between Rs 3,213 (maximum) and Rs 3,150 (minimum) — making a total of Rs 1,029,060 transaction — from earlier closing of Rs 3,100 per unit. Of the total nine sub-groups, two sub-groups — manufacturing and others — did not see any changes in their indices as manufacturing sub-group did not see its shares being traded throughout the week whereas others group had a rollercoaster ride before closing at 646.19 points equal to the last week’s closing. The shareholders of commercial banks, development banks, finance companies, hydropower, insurance companies and hotels have to wait for a couple of weeks to get better prices for their scrips as investors’ have not gained confidence. Though the Nespe dropped by only a minimal 0.68 point — to close at 683.71 points from last week’s closing of 684.39 points — the transaction amount dropped by a whopping 75.79 per cent to Rs 230.97 million against last week’s increase of 176 per cent to Rs 953.93 million. The sensitive index also lost 0.32 point to 183.64 points from 183.96 points. Similarly, the float index also shed 0.23 point to close at 66.03 points from last week’s closing of 66.25 points. Similarly, the contribution of GroupA companies also plunged to 14.38 per cent. The top performers of this week are NCC Bank (with Rs 30.70 million), Bank of Kathmandu (with Rs 14.62 million), Standard Chartered Bank Nepal (with Rs 13.48 million), Citizens Bank International (with Rs 12.82 million) and Nepal SBI Bank (with Rs 10.71 million). National Hydropower topped the chart in terms of share units traded as its 1,11,000-unit of shares changed hands, whereas Nepal Express Finance topped the chart in terms of number of transactions with 563 transactions. Source: The Himalayan Times Date: 06/21/2009

BUSINESS:

Smart Telecom to begin services in Nepal A new telecom company is soon making its foray in the Nepali market, taking up the number of telecom operators in the country to five, local media reported on Saturday. If things go as planned, Smart Telecom will launch basic telephone service within 2009, an official of Smart Telecom requesting anonymity told the website.

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According to myrepublica.com, Smart Telecom, which acquired the license to provide telecom services after depositing a fee of 39,500 U.S. dollars, is a joint venture between Nepali, Singaporean and Israeli companies. As per the commitment expressed by the company during the time of acquiring the license, it will have to first introduce services in 398 Village Development Committees (VDCs) in remote areas of western, mid-western, far-western and central regions. Although the company has not yet finalized the locations from which it plans to begin its services, it has said it will install at least two lines in each of the VDCs that it sets its foot upon. After starting service in 398 VDCs, it will be allowed to expand its network to other parts of the country and introduce international call service as well. "We hope the introduction of telecom services in the villages selected by Smart will fill in the vacuum created by country's major telecom companies that usually do not pay attention to rural markets," said Kailash Neupane, spokesperson for Nepal Telecommunications Authority, the telecom regulatory body of Nepal. Currently, around 420 VDCs in Nepal do not have access to telephone services. In order to deliver basic telephone services in rural areas, Smart Telecom will rely on VSAT (very small aperture terminal) technology. This technology is considered quite expensive compared to other wireless technologies like CDMA. But it is considered one of the best for countries like Nepal with difficult terrain as it offers very reliable service. The company is yet to fix tariff rates on its services. Currently, four companies -- Nepal Telecom, Spice Nepal Private Limited, United Telecom Limited and STM Telecom Sanchar -- are providing telecom services in the country. Source: news.xinhuanet.com Date: 20/06/2009

Kaski banks’ deposit touches Rs 25.65bn Total deposit in all banks and financial institutions in Kaski has reached Rs. 25.65 billion.Of the total deposit, 75 percent is in savings. The customers have been lured towards savings account as they can withdraw their deposit easily without extra charge on this account and also get interest, said Nepal Rastra Bank’s Pokhara branch manager Keshav Thapa. Similarly, Rs 4.48 billion has been put into the fixed account and Rs 1.72 billion in the current account. Customers have to pay an extra charge to withdraw money before the fixed date from the fixed account whereas the current account does not give any interest. Of the total deposit, 23 per cent has been deposited in joint investment banks, 19 per cent in private banks, five per cent in NRB, 26 per cent in all commercial banks, two

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per cent in agricultural banks, 20 per cent in development banks and 0.11 per cent in others. There are 89 central offices and branches of commercial and development banks and financial institutions in the Syangja district. Around 42 offices of 22 commercial banks, 32 offices of 23 development banks and 16 offices of 12 finances including others are carrying out transactions in the district. Some 89 per cent of the total deposit has been invested in different sectors. Of the total investment, 19 per cent has been invested in whole-sellers and retailers, said Thapa. Source: The Himalayan Times Date: 06/21/2009

GENERAL: National flag torched Activists of an armed outfit active in Terai, Janatantrik Madhesh Mukti Tigers, on Satruday burnt the national flag and a Dhaka topi (cap) at Gulariya Municipality-10 in Bardiya district. Cadres of the Mukti Tigers fled the scene leaving some copies issued in the name of Ranabir Singh, Bardiya in-charge of the outfit. Source: www.kantipuronline.com Date: 20/06/2009

Dacoits bring terror to quiet Sunsari VDC They come from across the border, plunder everything and flee. Every night, people of Amaduwa Village Development Committee (VDC) along the Nepal-India border say, around 30 Indian dacoits enter their settlement to loot. According to Amaduwa folks, looting has been continuing for quite some time in the village, which is about 30 kilometres southeast of Sunsari district headquarters Inaruwa. “We have been living amid fear of dacoits,” says a local resident, adding that the villagers cannot even sleep out of fear. Dacoits struck some houses on Wednesday, while around three dozen looters entered the village on Friday night and started firing to take the villagers under control. “We went to the village when we heard gunshots,” according to Sarilal Chaudhary, Sub-Inspector at the Amaduwa Police Post. By the time we reached the site at Amaduwa-1, the dacoits had plundered houses and left, according to police. The looters also beat up Sujan Sah, Sunil Sah, Rajesh Ram, Rajkumar Ram and Muneshwor Ram that night.

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While local people accuse police of doing precious little to safeguard their life and properties from the outlaws, the Sunsari District Police Office says it has sent a team to hold talks on the issue with Indian border security force on Saturday. “We have drawn the attention of Indian authorities towards rampant looting,” states the police office. Source: www.kantipuronline.com Date: 21/06/2009

International Financial and Economical NewsBrief: Top Stories §

Lawmakers question Geithner about regulatory overhaul Testifying before the Senate Banking Committee, U.S. Treasury Secretary Timothy Geithner answered lawmakers' questions about the Obama administration's proposal for sweeping changes to regulation of financial markets. Geithner defended the plan and said the country "cannot afford inaction." "Our economy has been brought too close to the brink for us to let this moment pass," Geithner said. The Wall Street Journal (19 Jun.)

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Clearing gains steam around the world A clearing venture announced this week by NYSE Euronext and The Depository Trust & Clearing Corp. is the latest in a wave of clearing efforts worldwide. Clearinghouses and exchanges are taking advantage of political and regulatory pressure for increased clearing to prevent financial meltdowns. "We are going to see more changes in the clearing space than we have seen in the last 10 years, and that's being driven by the [multilateral trading facilities]," said Mark Hemsley, CEO of BATS Europe. Financial Times (free registration) (18 Jun.)

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European CDS market poised for radical restructuring Starting Monday, credit default swaps on single corporate borrowers in Europe will be priced based on fixed coupons. The change is part of an effort to increase transparency and decrease counterparty risk in Europe's CDS market. "This new system ... will help new investors gain the confidence to enter the market. This is an opportunity to sort out the mess in the CDS market," said Willem Sels, a credit strategist at Dresdner Kleinwort. Financial Times (free registration) (18 Jun.)

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BBA allows banks outside London to contribute quotes to Libor The British Bankers' Association is striving to make the London Interbank Offered Rate as representative as possible of banks' borrowing costs. It opened the Libor up to accept quotes from banks outside London. "This is being done so we don't lose contributors who may in the current financial climate decide they wish to consolidate their operations," said John Ewan, a BBA director. "There are plenty of banks which are very similar to the other Libor banks that can't currently quote because they may not be physically located in London." The Wall Street Journal (19 Jun.)

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GE objects to parts of Obama's regulatory overhaul Analysts said the Obama administration's proposal for revamping the financial regulatory framework in the U.S. might force General Electric to separate from its GE Capital finance division. GE has voiced opposition to parts of the proposal. "We're opposed to it," said GE General Counsel Brackett Denniston. "The financial crisis had nothing to do with the fact that some institutions, many institutions, had banking and nonbanking activities." Bloomberg (19 Jun.)

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Discover CEO says credit card changes might not benefit consumers David Nelms, CEO of Discover Financial Services, said recently adopted rules in the U.S. aimed at protecting credit card holders will likely lead to increased interest rates and fees. "There are many consumers that actually will not benefit," Nelms said. "Some of the unintended consequences are going to be difficult for customers." Bloomberg (19 Jun.)

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Banks reluctant to finance aircraft purchases Tony Fernandes, founder and CEO of AirAsia, said the biggest threat to the airline industry is not the outbreak of H1N1 influenza, commonly called swine flu. "We've been through [severe acute respiratory syndrome], bird flu, tsunami, you name it," Fernandes said. "The only swine now are bankers." Airlines are struggling to deal with banks that are unwilling to finance purchases of aircraft. Bloomberg (19 Jun.) Market Activity

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Asian markets gain with boost from tech stocks Markets across the Asian-Pacific region mostly advanced Friday. Tokyo's Nikkei 225 and China's Shanghai Composite both climbed 0.9%. South Korea's Kospi Composite gained 0.6%, Australia's S&P/ASX 200 rose 0.2% and Hong Kong's Hang Seng Index went up 0.8%. Both Taiwan's Taiex and Singapore's Straits Times advanced 1.4%, and India's Sensex added 0.3% The Wall Street Journal (19 Jun.) Economics

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Conference Board index signals U.S. recession is slowing The Conference Board's index of leading economic indicators in the U.S. posted its biggest gain in five years last month. The index, which rose 1.2% in May, forecasts economic activity in the next three to six months. "The recession is losing steam," said Ken Goldstein, an economist with The Conference Board. "If these trends continue, expect a slow recovery beginning before the end of the year." Forbes/The Associated Press (18 Jun.)

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BoJ needs to consider exit strategy, officials say Some members of the Bank of Japan's policy board said the central bank needs to review economic trends as well as the corporate-financing environment to decide whether it is time to stop pouring cash into the banking system. Masaaki Shirakawa, governor of the Bank of Japan, said the institution will decide "by the

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end of September in a predictable manner to market participants." Bloomberg (18 Jun.) Geopolitical/Regulatory §

EU leaders move ahead with stricter financial oversight EU leaders came to an agreement in principle at a summit in Brussels this week to boost financial oversight and establish pan-European regulators. "We agreed that we intend to continue our fight against the global economic crisis ... We need the right institutional framework for that," said Czech Prime Minister Jan Fischer. A final agreement is expected to be announced Friday. Reuters (19 Jun.) , The Wall Street Journal (19 Jun.)

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Brown agrees to common EU rules for financial oversight: At a summit of EU leaders in Brussels, U.K. Prime Minister Gordon Brown agreed to "a single rule book" for all financial institutions. However, Brown rejected efforts for a panEuropean regulator that would have the authority to order governments to rescue struggling businesses. EU officials are looking to move quickly on a supervisory system that would include three new entities with power to oversee banking, securities, insurance and pensions across Europe. The Times (London) (19 Jun.)

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King's call to beef up BoE control fails to get City support Mervyn King, governor of the Bank of England, is pressing for the central bank to have greater control to prevent future crises. Industry groups, including the British Bankers' Association and the Association of British Insurers, continue to support the U.K.'s tripartite system. They are calling for a better relationship between the Bank of England, the Treasury and the Financial Services Authority. Telegraph (London) (18 Jun.)

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Global coordination of regulatory overhaul falls apart For months, officials from around the globe, particularly in the U.K., Europe and the U.S., have been discussing the financial crisis, its causes and ways to prevent a similar meltdown. They came to a consensus that global cooperation, stricter regulation for the banking industry, and more oversight of derivatives and hedge funds are needed. Now that politicians are working on concrete proposals, the coordination is lacking. Financial Times (free content) (17 Jun.)

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FASB's codification system to launch July 1 The alphabet soup of standards that makes up the Generally Accepted Accounting Principles is about to disappear as the Financial Accounting Standards Board launches its codification system. "Instead of GAAP being represented by thousands of different documents, it's represented by one single authoritative source," said Ronald P. Guerrette, vice president of the Financial Accounting Foundation, which oversees the standards board. With the launch only weeks away, many unknowns remain. CFO.com (17 Jun.)

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Pelosi asks GOP moderates for support on climate bill U.S. Speaker of the House Nancy Pelosi appealed to moderate Republicans for support on climate-change legislation. Pelosi is working for a vote on the bill as early as next week or in July. Reuters (18 Jun.) 13

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