Cyprus fears for ‘lost generation’

from the Financial Times..

March 29, 2013, By Michael Stothard in Nicosia

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Angelos Perdios, like many young and well educated Cypriots, is talking about leaving the country, driven away by the disastrous prospects for the local economy following the collapse of the country’s main banks last week.

Mr Perdios’ father was displaced by the first national disaster of Cyprus’ modern times, forced in 1974 to leave the northern village of Morphou when the Turkish invaded. He came south to the Greek part of the island. The second disaster could drive the son even further.

“It’s a move I was not considering before two weeks ago,” says Mr Perdios, who is 25 and has been working in the Cypriot finance sector for two years now. “But with the situation so bad, maybe it would be better in the UK or the US.”


Most of the young people in Cyprus considering a move abroad say they would hope to return after a few years when the economy starts to recover.

“It’s not the case that there is no future here in Cyprus, but just in the timeframe of the next two or three or five years it is going to be rough on the island,” says Mr Perdios.

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In Cyprus, Goods Hit a Bottleneck

from The Wall Street Journal..


LIMASSOL, Cyprus—A multicolored stack of shipping containers stuffed with goods intended for Cypriot stores towered over this island nation’s largest seaport—a monument to the country’s financial paralysis.

In normal times, thousands of tons of cargo speed through the sprawling complex here every week, feeding Cyprus’s import-hungry economy. But with the country’s banking system on life support, the cargo network has shuddered to a halt.

“This is the artery of the economy and now nothing can move through here because no one’s sure they’ll get paid,” dockworker Marios Theodosiou said, as a huge crane moved another steel container into the holding area.

Many suppliers, wary of accepting letters of credit from Cyprus’s troubled banks, which reopened for business on Thursday after being closed for nearly two weeks, have refused to release the containers for anything but cash. The result: Some goods are starting to disappear from shop shelves.


When Costas Talashis opened his restaurant in Nicosia a year and a half ago, he paid all his suppliers with checks for orders that would last weeks. Now, he said, his suppliers accept only cash and he orders produce one day at a time. “We’re now living in a cash economy. Thankfully we still have some customers paying in cash, otherwise we’d have nothing to pay our suppliers and staff,” Mr. Talashis said.

There is a silver lining, he added: “Goods have now become much cheaper, so if you have cash, you’re actually getting a better deal.”

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Standard Chartered bets on Nigeria for growth

from Business Day online..

March 18 2013, By PATRICK ATUANYA

Standard Chartered, the United Kingdom-based bank with an emerging market focus, is betting on Africa, particularly Nigeria, to drive growth for the next decade.

Standard Chartered will double its branch network in Nigeria in the next two to three years, up from 36 branches now, according to Stephen Atkinson, group head, Corporate Affairs, Standard Chartered Bank, who was on his first trip to Nigeria last week.

The bank’s African business, he said, is growing fast with eight markets earning over $100 million in revenue for 2012 and three of those, including Nigeria, earning over $200 million in revenue.

“Ten years ago we made $21 million in revenues here, but we are now well over $250 million in revenues,” Atkinson said in an interview with BusinessDay. “We are looking to get bigger in Nigeria, it is clearly a growth market for us, and it is our largest African business.”

The bank’s Nigerian revenues rose by 1,100 percent in the past 10 years as the Nigerian economy expanded fourfold to $274 billion in 2012 from $65.7 billion in 2003, with an average GDP growth rate of 7.46 percent per annum for the period.

Standard Chartered’s income from Africa, Atkinson said, rose 15 percent last year to $1.59 billion, with 10 countries posting growth of more than 10 percent, including Kenya, which gained 34 percent, South Africa, which rose 28 percent, Ghana, which grew at 20 percent, and Nigeria, which grew at 13 percent. Revenue from Africa made up more than 8 percent of income last year. For Nigeria, 80 percent of revenue comes from wholesale banking while 20 percent comes from retail, he said.

Standard Chartered, with operations in 16 African countries, plans to invest $100 million over the next three years opening 110 branches on the continent and recruiting 950 consumer-banking staff. The bank currently has 900 staff in Nigeria, and over 500 of them are on the retail side. “That gives you an idea of our commitment to grow that segment of our business,” he said.

Atkinson added that the bank, which has 7,500 SME customers in Nigeria, is not too concerned about competition coming from other established banks in the country.

“The benefits to Nigeria of a bank like us are to be able to bring in our international network and other specialised expertise. There is no point in us coming here to recreate what the local banks are doing,” he said, adding that the bank plans to double revenue at its African business in the next 4-5 years.

The lender, which gets most of its profit from Asia, has been expanding in Africa, India and China, whose economies are outpacing many developed nations. The bank is trying to attain revenue growth of at least 10 percent, while keeping expenses under control as it hires and adds branches in Africa.

“We like to be disciplined with our cost management so that we can keep investing in the franchise,” Atkinson said, while also maintaining that the bank overall is extremely well capitalised and the liquidity position is very strong with loan to deposit ratio at 74 percent.

Standard Chartered said, March 5, that pretax profit for 2012 gained to $6.88 billion, and revenues increased 8 percent to $19.1 billion. The stock has gained 13 percent this year, valuing the bank at about 42.6 billion pounds ($65 billion) at Friday’s close in London.

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Sub-Saharan Africa – The Final Frontier

from Foreign Policy..


In popular culture, sub-Saharan Africa may still conjure  images of conflict and poverty, yet investors from Wall Street to Main Street are taking a decidedly rosier view. Africa’s surging growth is now well known — the region is home to six of the 10 fastest-growing economies in the world. “Never in the half-century since it won independence from the colonial powers has Africa been in such good shape,”gushed a recent special report in The Economist.

If you had jumped on this bandwagon in 2012, you too would be an Afro-optimist. Investors may be thrilled that the S&P 500 index rose a cheery 13 percent in 2012 and is up another 8 percent this year — but this pales next to Nigeria’s stock market, which spiked 35 percent last year and is up another 18 percent so far this year. Ghana (up 24 percent), Uganda (up 39 percent), and Kenya (up 30 percent) also posted strong showings in 2012, and even longtime economic basket case Zimbabwe is up 20 percent in 2013.

But potentially huge returns are only part of the reason to invest in one of sub-Saharan Africa’s budding equity markets. The real play is diversification. As we discovered in our recently released study for the Center for Global Development, African bourses are among the last of a rare and endangered species — stock markets that remain uncorrelated with the major global exchanges.

Diversification is a basic principle of asset allocation. Few investors want to put all their eggs in one basket, thus risking losing it all in the event of a downturn. By spreading around one’s assets in markets that do not move in a synchronized manner, investment risks can be dramatically lessened. However, all this depends on finding markets that move independently from each other.

But an irony of globalization is that as financial markets integrate, they respond to similar events — and thus the benefits of spreading one’s assets across different markets shrinks. These linkages can lead to contagion in times of crisis — such as Mexico in 1994 or Thailand in 1998 — when panic in one country can plunge markets into crisis on the other side of the globe.

The old exotic is already the new normal: Traditional emerging markets, like those in Latin America or Asia, are even more strongly correlated with the United States than we expected. The main U.S. and European stock market indices monthly correlation is about 0.9 (with 1 meaning they move in perfect sync), and Latin America is not far behind. The correlation of the S&P 500 with a weighted average of Latin American stock indices reached 0.86 in 2010, up from a meager 0.15 in 1992. That means, when the Dow moves on Tuesday, it’s highly likely that markets in Sao Paolo and Beijing will follow suit.

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Cyprus’s Banks Open After Two Weeks as Controls Curb Panic

from Bloomberg..

March 28, 2013, By Tom Stoukas, Maria Petrakis & Marcus Bensasson


Cypriots Queue to Enter Banks With New Rules

Cyprus’s banks opened for the first time in almost two weeks, with new rules curbing access to cash preventing an initial panic to withdraw deposits.

“We expected much more people,” said Argyros Eraclides, manager of a Bank of Cyprus Plc branch in the Stavrou area of Nicosia. “Fortunately there are only some people who needed cash for the day, but customers reacted fantastically. We expected some people to be more aggravated.”

Banks opened at midday local time today, with lines of about 15 to 20 people waiting to enter branches in the Cypriot capital. They close at 6 p.m. The Central Bank of Cyprus’s controls include a 300-euro ($383) daily limit on withdrawals and restrictions on transfers to accounts outside the country.


The Cyprus Parliament last week gave wide-ranging powers to the central bank governor, Panicos Demetriades, and Finance Minister Michael Sarris, who have spent the last days deciding which measures to implement.

Those chosen include bans on terminating time deposits and cashing checks. Customers can transfer abroad at most 5,000 euros per month from a given financial institution.

“People have organized their budget for the week through the ATM machines and the radio has been calling on people not to run to the banks today,” Maria Kyriacou, a Cypriot ruling-party lawmaker, told Bloomberg Television.


Cypriot banks lost 1 billion euros in deposits in February amid rising uncertainty over the country’s ability to secure a bailout, European Central Bank data showed today.

Cyprus in June became the fifth euro-area nation to request a rescue, after Greece’s debt restructuring trashed the financial health of lenders including Bank of Cyprus, the nation’s biggest lender, and Cyprus Popular.

The 18 billion-euro economy is the third-smallest in the 17-nation euro area. Before the bailout, which was coupled with an austerity package, the European Commission predicted a contraction of 3.5 percent in 2013. Economists said afterward that the damage will be greater.

Ratings Cut

Moody’s Investors Service yesterday lowered the highest rating that can be assigned to a domestic debt issuer in Cyprus to Caa2, citing a growing risk that the country would exit the euro. The company said Cyprus’s Caa3 government bond rating and negative outlook remain unchanged.

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Galvanised by Arab revolutions, WSF 2013 begins in Tunisia

from ahramonline..

March 28, 2013, By Salma Shukrallah in Tunisia

Honouring the Arab Spring revolutions, this year’s World Social Forum is being held in its epicentre, Tunisia.

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Thanks to the Arab Spring revolutions, Tunisia is playing host to the first World Social Form (WSF) held in the Arab world since its inauguration in 2001 in Porto Allegre. The organisers are keen to celebrate this year’s forum as stemming from the sweeping changes that spanned the region, beginning in host country Tunisia.

“We would not have been able to receive you if it was not for the people’s struggle in the region,” said WSF coordinator’s Abdel-Rahman Al-Hazeely.

In his opening speech, Al-Hazeely stated: “We are here for the people to stay united against neo-liberal policies,” marking the continuation of the forum’s decade-long heritage of social and political struggle.


Strong Arab presence

With strong Arab participation, the forum’s opening day witnessed slogans calling for “bread, freedom and social justice,” which echoed the demands and ambitions of the now two-year-old popular uprisings across the region.

Flags of Tunisia, Egypt, Libya, Syria, Palestine, Morocco and Algeria dominated the scene, waved by participating groups as they converged on 14 Janvier (January) Square, named to commemorate the Tunisian revolution, where tens of thousands gathered to start the opening march.

“The people of Tunisia are free people … No to America, No to Qatar,” was one of the chants voiced by Tunisian groups in reference to the countries believed to be allies of the ruling Islamist Nahda Party.


Palestine: special focus

Meanwhile, Palestine got a large share of participants’ attention. Pictures of Samer Issawi, who has been on hunger strike for over 200 days, were widely carried around.

“Oh you merchants of religion … Palestine is that which deserves jihad,” was one of the chants condemning Islamists who call for jihad against their opponents instead of focusing on Israel.

Palestinian flags, stickers and posters were spread across the city centre. Hung on the walls of the university campus, where the forum sessions were held, was a tens of metres long Palestinian flag that covered the façade of one of its central buildings, with songs honouring the Palestinian struggle commonly sung in the forum.

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Argentina ponders offer in debt drama

from the Financial Times..

March 27, 2013, By Jude Webber in Buenos Aires and Robin Wigglesworth in London

Argentina is hoping an offer it must make to a US appeals court by Good Friday spelling out exactly what it is prepared to pay its “holdout” creditors will be enough to avoid crucifixion in its high-stakes sovereign debt drama.

The saga – which centres on interpretation of two little words in Latin: pari passu , or equal treatment – has gripped the international financial industry for months. It has pushed Argentina almost to the brink of a new default and raised fears that the case could set a precedent making sovereign restructurings harder in future.

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