Nissan wants Britain to pledge compensation for any tax barriers resulting from its decision to leave the European Union or the automaker could scrap a potential new investment in the country's biggest car plant, its CEO said Thursday. Carlos Ghosn's remarks indicate growing concern among ...
French presidential candidate Nicolas Sarkozy said on Tuesday that if he wins in 2017 he will offer Britain a chance to reverse its Brexit vote by negotiating with Germany a new treaty for the European Union, the Financial Times reported. Sarkozy said the new treaty ...
It is hard to think of what more Angela Merkel could have done over the past weeks to nudge fellow European leaders toward a post-Brexit consensus. In the run-up to Friday's EU-27 summit (the bloc minus Britain) in Bratislava, the German chancellor met personally with ...
The forces that led the British to vote for Brexit — rejection of too much centralism and a yearning for greater local control — are sweeping the rest of Europe.
Rather than uniting to resist the populist threat they all face, EU member states have played into its hands by becoming increasingly unwilling to cooperate with one another.
Britain's decision to leave the European Union may weaken the continent's relations with both Japan and China and leave all parties looking to realign their relationships, analysts have said. A European Union without Britain may, for example, take a softer line on China's human rights ...
Japan has warned Britain that its exit from the European Union could prompt Japanese financial institutions to relocate from London and listed a raft of concerns from Japanese companies about the transition away from the EU. In a 15-page report published on the eve of ...
Theresa May opens the Tory conference tomorrow – a conference that presents her first real chance to define her premiership and detail her admirably radical agenda. First, however, she has some prior business to take care of ...
Theresa May delivers a speech at the British Academy, on September 9, where she said that a new wave of grammar schools will end "selection by house price" and give every child the chance to go to a good school.CREDIT: 2016 GETTY IMAGES
Some nonsense is being spoken about the EU negotiations, particularly the suggestion that there is a diametric choice to be made between a hard or soft Brexit. What is sometimes called soft is barely Brexit at all; what is sometimes called hard is a mix of proposals that are either logical or so radical that they are not even on the table. But saying that Brexit will mean Brexit is clearly not good enough. Enigma won’t satisfy the public; business needs to know what it has to look forward to. Nissan, for instance, has suspended new investment in Sunderland while it awaits the outcome of Brexit talks – and warns against allowing tariffs to be placed on its products.
So Mrs May will have to use her opening address on Sunday afternoon to lay out goals even if she cannot go into specifics. Those goals are interrelated. Many Leave voters expect immigration to be controlled, which means ending free movement. If free movement goes then it is highly likely that membership of the single market will be challenged by other EU members. Membership of the customs union must surely be rejected by the UK. And if Britain is to decouple from the EU then it must be ready to go straight out into the world and negotiate new free trade arrangements. This the country is well placed to do. Several nations have indicated that they want to strike deals; some have even offered to lend Britain the negotiators it lacks after decades of Brussels being in charge.
Germany's insistence that Italy accept tough conditions in tackling its problem lenders may rebound now that Berlin faces a banking crisis of its own. Fri Sep 30, 2016 | 5:28pm BST By John O'Donnell| FRANKFURT A man walks past Deutsche Bank offices in London, Britain, December 5, 2013. REUTERS/Luke MacGregor/File Photo
After months of argument over how to deal with bad debts in the Italian financial system, Deutsche Bank (DBKGn.DE) instead took centre stage on Friday, with its share price near record lows and its chief executive trying to reassure staff and markets that Germany's biggest bank remains robust.
For many in Italy, including Prime Minister Matteo Renzi, this diverted attention from the country's own difficulties in recapitalising the likes of Banca Monte dei Paschi di Siena. (BMPS.MI)
Renzi went easy on expressing any Schadenfreude on Friday, but knocked the ball back into the German court. "We have always said that the European Union has to do everything in its power to fix the problems of the banking sector and the main worry focuses on the German lenders," he told national broadcaster RAI.
He is not alone. The International Monetary Fund has named Deutsche as a bigger potential risk to the wider financial system than any other global bank.
With Monte dei Paschi struggling to persuade investors to back its third recapitalisation in as many years, Economy minister Pier Carlo Padoan acknowledged Italy had to get its own house in order, but not in isolation.
"Just like the problem of bad bank loans must be solved within a reasonable time frame, so it should be for Deutsche Bank's problems," he told La Stampa newspaper.
Rome and Berlin have been at odds for months over demands that Italian savers should shoulder the burden of a rescue of Monte dei Paschi, Italy's third biggest and oldest bank.
Rome had tried to shield institutional investors and ordinary Italians who put their savings into the bank's bonds, while Berlin had wanted them to suffer losses as a condition for allowing state support.
An official familiar with the German government's stance, had told Reuters it wanted to prevent Italy tapping European funds to solve its banking problems, a move that would mean Berlin footing part of the bill.
Germany points out that while the Italian government is saddled with heavy debts, citizens' personal savings are high, meaning private investors should play a role in bank rescues. "The state is poor," said the official. "The Italians are rich."
Renzi's government opposes such a step, fearing it would be unpopular before a referendum on constitutional reform in December.
'SOFTER LINE'
Although Germany is far stronger economically than Italy, Deutsche Bank's great size poses a greater problem than any individual Italian lender.
As they prepare for national elections in 2017, politicians in Berlin also oppose any state bailout of Deutsche, a bank unpopular among many voters because of its aggressive expansion on Wall Street that resulted in billions of euros of fines.
The possibility that Deutsche could run short of capital if it is overwhelmed by penalties puts Berlin in a more vulnerable position than before, possibly undermining any push for a tough solution for Italy.
"They have taken a very doctrinaire line with the Italians," said Simon Tilford of the Centre for European Reform, a London-based think tank. "Maybe this gives Germany cover to soften their line."
While final approval for state aid for banks lies with the European Commission, Germany's position, as the euro zone's largest economy, is nonetheless important.
Throughout the euro zone debt crisis, Berlin tried to insulate its lenders and citizens alike from the problems of countries such as Greece. This caused ill feeling in states that were forced into bailouts as well as in some, like Italy, that did not need one.
Tilford believes that an amicable end to the tensions between Germany and Italy is now important both for tackling the banking problems and for the unity of the 19-member euro currency area.
"What Germany has sought to do since the start of the crisis is avoid any costs to its banks or taxpayers," he said. "The big fault line in the euro zone is between Italy and Germany."
Others believe, however, that even the problems at Deutsche will do little to change Germany, which has lectured other European countries on how to manage their economies and finances better throughout the debt crisis.
"Deutsche Bank is embarrassing," said Sven Giegold, a German member of the European Parliament, adding, however, that he did not expect Germany to change its general stance. "German arrogance is more deeply rooted than that."
An attractive capital, offering high value jobs, an educated workforce, stunning architecture, centuries of history, a peerless reputation for arts and culture and some ...
Edinburgh remains an attractive city in which to invest in residential property (Source: Invest Edinburgh)
An attractive capital, offering high value jobs, an educated workforce, stunning architecture, centuries of history, a peerless reputation for arts and culture and some of the best schools in Scotland, Edinburgh remains a highly sought after property market.
With demand sky high, across both the owner-occupier and private rented (PRS) sectors, prices and rental yields are on the up, helping to reinforce Edinburgh’s appeal among investors and developers.
With such strong supply and demand fundamentals in place, magnified by Edinburgh’s global appeal as an attractive city in which to live, work and invest, market confidence is buoyant – a fact borne out by developers’ interest and recent success in the city.
Insatiable demand
“Despite being a smaller city, transaction volumes are very similar to Glasgow, and in terms of total value of property sold, Edinburgh is approximately 60 per cent higher than Glasgow. In fact, the most accurate gauge of the health of the market, total market value of property sold, is up by 7.1 per cent in Edinburgh for the year.” explains Dr. John Boyle, Director – Research & Strategy at Rettie & Co, one of Scotland’s leading property specialists.
Edinburgh remains an attractive city in which to invest. In London, investors seeking to buy an average property will need to spend at least £500k, and real prices will be ahead of where they were in 2007 by as much as 20 per cent. As prices have been shooting ahead of rents, rental yields have dropped to around 3 per cent in the UK capital.
Dr. John Boyle, Director – Research & Strategy, Rettie & Co:
In terms of the number of transactions over the past 12 months, Edinburgh has increased 9 per cent year-on-year."
In Edinburgh, prices remain approximately 10-15 per cent down on their 2007 peak in real terms, meaning further room for recovery. In addition to the lower average entry price of £235k, rents are performing exceptionally well against house price growth, yielding 5-6 per cent on average.
Average purchase price and rent - Edinburgh versus London (Source: www.foxtons.co.uk)
So what does the future hold for residential property in Scotland’s capital?
“You can’t deny that there is uncertainty across the country. Here in Scotland, we’ve had two years of political uncertainty, which now looks set to be the norm across the whole of the UK for the foreseeable future,” says Dr Boyle.
“If uncertainty is therefore the new norm, then you just have to get used to it. As a potential investor you have a decision to make. Am I going to invest my money or have my capital sitting in a bank at a time of record low interest rates? With a potential Brexit deal looking at least three years on the horizon and a general election coming in 2020, how long do you wait? This is going to be a long and drawn out process, everyone just has to get used to this new environment.”
“Brexit will not affect the fundamental demand/supply conditions in the Scottish market, which will support market activity and prices going forward.”
Robust rental yields
“When it comes to renting property in Edinburgh, as long as the price is right, you can rent anything right now. We see strong demand in all parts of the city with longer term tenancies now more common place,” says Rob Trotter, Associate Director, D.J Alexander, the largest property management agency in Central Scotland.
“Brexit has made no difference to demand. For a central Edinburgh property, annual rental yields are holding steady at around 5 per cent, but if you go out to sought after areas on the outskirts of the city, that figure can increase to 6.5 per cent. With record low interest rates, that level of return means buy-to-let property remains an attractive investment option.”
London's mayor Sadiq Khan will launch an inquiry into foreign ownership of property in the British capital which has helped push up housing costs, the Guardian newspaper cited him as saying on Thursday.
Fri Sep 30, 2016 | 8:42am BST Mayor of London Sadiq Khan waves after his speech during the third day of the Labour Party conference in Liverpool, Britain, September 27, 2016. REUTERS/Darren Staples
"It's clear we need to better understand the different roles that overseas money plays in London's housing market, the scale of what's going on, and what action we can take to support development and help Londoners find a home," the Guardian quoted Khan as saying.
"That's why we are commissioning the most thorough research on this matter ever undertaken in Britain – the biggest look of its kind at this issue – so we can figure out exactly what can be done."
London property prices rose more than 12 percent in the 12 months to July after notching up annual gains of around 20 percent in mid-2014, according to official data.
The mayor's office has no powers over taxation of property in the city.
The Guardian said Khan's inquiry would focus on the scale and impact of different types of overseas investment in London and consider how other major cities around the world are tackling the problem.
"We welcome investment from around the world in building new homes, including those for first-time buyers," he told the newspaper. "At the same time, as more and more Londoners struggle to get on the property ladder, there are real concerns about the prospect of a surge in the number of homes being bought by overseas investors."
Real estate firm Savills estimated in 2014 that overseas purchases of property in London for investment purposes - rather than foreign residents buying a home in which to live - accounted for around 7 percent of all residential transactions in London.
Khan said there was an urgent need for more transparency in foreign investment. "Londoners need reassuring that dirty money isn’t flooding into our property market, and ministers must now make all property ownership in London transparent so we can see exactly who owns what," he said.
Last year, anti-corruption campaign group Transparency International said nearly 200 million pounds of money believed to be the proceeds of foreign corruption had been spent on British properties since 2004 and that amount was probably just the tip of the iceberg.
Instead of having a steady hand, German chancellor lets things get out of hand
Sept 30, 2016 3:07 a.m. ET
DARRELL DELAMAIDE
German Chancellor Angela Merkel is not the great leader Europe needs.
It would be a sadly fitting capstone to Angela Merkel’s checkered tenure as chancellor of Germany if her mishandling of the Deutsche Bank DBK, +3.87%DB, +1.74% crisis leads to a cascade of bank failures in Europe and completes her destruction of the euro EURUSD, -0.3921% .
Earlier this week, MarketWatch columnist Matthew Lynn incisively analyzed the crisis facing Germany’s largest bank and the crucial need for Berlin not only to be ready to intervene but to let the world know it right now.
The German government is denying that it has any plans or intention of bailing out the bank, which by any measure is a globally systemic financial institution — that is, its failure would inevitably trigger a global banking crisis.
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While German banks, and Deutsche in particular, enjoyed a solid reputation for much of the postwar period, it was the collapse of Austrian and German banks in 1931 that led to a worldwide banking crisis, perhaps contributing as much to the onset of the Great Depression as the U.S. stock market crash in 1929.
The new Deutsche Bank crisis is just the latest chicken that has come home to roost for Merkel. Her unilateral decision last year to open Germany’s borders to Syrian refugees has led to political turmoil at home and riven Europe.
As a result, her Christian Democratic party has suffered dramatic losses in two recent regional elections, one in her home province of Mecklenburg-Vorpommern and the latest in the German capital, Berlin.
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Opinion Journal: Raiding Deutsche Bank
Europe Editorial Page Editor Joseph Sternberg on the regulatory assault on one of Europe’s biggest banks. Photo credit: Bloomberg.
In accepting responsibility for these electoral defeats, Merkel said she regretted not paying attention earlier to the growing crisis in the Middle East and its potential impact on Europe.
And the reason she was not paying attention, of course, was because she was fixated on her blinkered policy of pommeling Greece into the ground for running afoul of the strict conditions Germany has placed on euro membership.
In that long-running crisis, Merkel rejected any compromise or sense of European solidarity as she drove Greece into a devastating recession. This uncompromising stance also prolonged the recession and drove up unemployment in other Southern European countries.
Let’s not even dwell on the European Union’s bungled efforts to recruit Ukraine for EU membership in such a heavy-handed way it forced a revolution in Kiev and provided an opening for Russian President Vladimir Putin to annex Crimea and to infiltrate border areas.
During all this time, Merkel was lionized in the press — in Germany, in Europe, and even in the U.S. — as Europe’s de facto political leader and a rock of stability for the continent, even as she repeatedly demonstrated that she had no strategic vision and pursued strictly tactical goals to ensure that her party remained in power in Germany and that she remained chancellor.
This is, after all, the politician who stabbed her political mentor, longtime Chancellor Helmut Kohl in the back; ruthlessly elbowed aside Kohl’s crown prince, Wolfgang Schäuble; destroyed her erstwhile coalition partner, the Free Democrats; and yet has been revered by German voters as “Mutti” — which translates as “Mommy” but might more accurately be rendered as “Mommy Dearest.”
Which brings us back to Deutsche Bank. Well into the 1980s, Deutsche was one of the few triple-A-rated banks in the world. For better or worse, it had been a power in Germany’s convulsive history since its founding in 1870, and in the postwar years pursued a conservative strategy that kept it strong.
The problems began when Alfred Herrhausen, a brash and self-confident utility executive, came to the helm of Deutsche in 1985, and made a conscious decision to break with this tradition of conservatism. He was tragically assassinated by German terrorists in 1989.
His successor, Hilmar Kopper, sought to emulate Herrhausen’s ambition, but unfortunately lacked his vision and talent. He followed through on Herrhausen’s ill-fated decision to acquire British merchant bank Morgan Grenfell and to launch Deutsche into the global competition with Anglo-Saxon investment banks that has led to the German bank’s decline and fall.
The curious inferiority complex that runs through German history then became evident in the bank’s decision to put foreigners in charge, either as chief executive or co-chief executive. Some of them never even learned German.
There was the Swiss Josef Ackermann, the Anglo-Indian Anshu Jain, and currently the British banker John Cryan who became the stewards of one of Germany’s proudest institutions — and successively ran it into the ground in the reckless pursuit of markets they never understood and abandonment of any shred of ethical behavior.
It’s hard to know how much of this history Merkel is aware of, if any. For the daughter of a Lutheran pastor who grew up in East Germany and trained as a chemist, it would be hard to fully catch up with the intricacies of Germany’s sophisticated market economy.
Ironically, the trigger for the current collapse of Deutsche’s stock price is the $14 billion fine proposed by the U.S. Department of Justice for the German bank’s infractions in selling mortgage securities — just another example of the “me-too” mentality driving Deutsche’s managers and reducing it to its sorry state today.
It is truly inconceivable that even Merkel would actually allow Deutsche Bank to fail, but her modus operandi of waiting too long to acknowledge crises and then kicking the can down the road may already have done irreversible damage.
