Opinion

Hugo Dixon

Portugal’s bank rescue plan has one hole

Hugo Dixon
May 4, 2011 20:57 UTC

By Hugo Dixon and Neil Unmack
The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

LONDON — Portugal’s bank rescue scheme has one big hole. The European Union and International Monetary Fund have come up with a punchy blueprint to restore confidence in the financial system, as part of the country’s 78 billion euro bailout. The plan includes recapitalisations, stress tests and privatisations. But there’s one weakness: funding. Allowing banks to issue state-guaranteed bonds, as envisaged by the plan, is only a partial solution so long as the government’s credit is still weak.

First, look at the good part of the blueprint. Banks will have to boost their core Tier 1 capital ratio to 9 percent by the end of 2011 and 10 percent by end-2012. That’s above the 7 percent agreed under the new global banking rules. If the banks can’t raise this capital on their own, the state will provide up to 12 billion euros.

What’s more, there will be quarterly stress tests. If a bank’s core Tier 1 ratio threatens to fall below 6 percent under a stress scenario, it will have to raise more capital. This is tougher than the EU’s upcoming stress tests, which use a 5 percent threshold. And while the 6 percent figure is in line with Ireland, the idea of quarterly tests seems an innovation.

The bailout plan also envisages Portuguese banks issuing up to 35 billion euros of state-guaranteed bonds to maintain their liquidity. Funding is clearly the sector’s biggest problem. Wholesale markets are largely shut to the banks, with the result that, as of March, they had borrowed 39.1 billion euros from the European Central Bank.

Exclusive: Geronzi payoff, expenses in focus at Generali

Hugo Dixon
Apr 27, 2011 06:55 UTC

LONDON/MILAN (Reuters) – Cesare Geronzi’s apparently hefty payoff and his seemingly lavish expenses during 11 months as non-executive chairman of Generali (GASI.MI: Quote, Profile, Research, Stock Buzz) are set to come under the spotlight at the insurer’s shareholder meeting on Saturday, several directors and other sources said.

Geronzi, a powerful Italian corporate insider who has been close to Prime Minister Silvio Berlusconi, resigned in the face of a boardroom coup on April 6. He was awarded a payoff of 16.6 million euros ($24.3 million) upon leaving Europe’s No.3 insurer, several Generali directors and other high-ranking Generali sources told Reuters on condition of anonymity.

Geronzi also ran up bills to cover extensive use of private jets, five secretaries, multiple cars and drivers in four cities, the rent for a flat in Milan, a public relations team separate from the company’s main communications office, and sponsorship of events and media outside the company’s normal advertising program, according to the sources.

Geronzi payoff, expenses in focus at Generali

Hugo Dixon
Apr 27, 2011 06:54 UTC

LONDON/MILAN, April 27 (Reuters) – Cesare Geronzi’s
apparently hefty payoff and his seemingly lavish expenses during
11 months as non-executive chairman of Generali (GASI.MI: Quote, Profile, Research) are
set to come under the spotlight at the insurer’s shareholder
meeting on Saturday, several directors and other sources said.

Geronzi, a powerful Italian corporate insider who has been
close to Prime Minister Silvio Berlusconi, resigned in the face
of a boardroom coup on April 6. He was awarded a payoff of 16.6
million euros ($24.3 million) upon leaving Europe’s No.3
insurer, several Generali directors and other high-ranking
Generali sources told Reuters on condition of anonymity.

Geronzi also ran up bills to cover extensive use of private
jets, five secretaries, multiple cars and drivers in four
cities, the rent for a flat in Milan, a public relations team
separate from the company’s main communications office, and
sponsorship of events and media outside the company’s normal
advertising programme, according to the sources.

Exclusive – Geronzi payoff, expenses in focus at Generali AGM

Hugo Dixon
Apr 27, 2011 06:43 UTC

LONDON/MILAN (Reuters) – Cesare Geronzi’s apparently hefty payoff and his seemingly lavish expenses during 11 months as non-executive chairman of Generali (GASI.MI: Quote, Profile, Research) are set to come under the spotlight at the insurer’s shareholder meeting on Saturday, several directors and other sources said.

Geronzi, a powerful Italian corporate insider who has been close to Prime Minister Silvio Berlusconi, resigned in the face of a boardroom coup on April 6. He was awarded a payoff of 16.6 million euros (14 million pounds) upon leaving Europe’s No.3 insurer, several Generali directors and other high-ranking Generali sources told Reuters on condition of anonymity.

Geronzi also ran up bills to cover extensive use of private jets, five secretaries, multiple cars and drivers in four cities, the rent for a flat in Milan, a public relations team separate from the company’s main communications office, and sponsorship of events and media outside the company’s normal advertising programme, according to the sources.

Special Report: Inside the Egyptian revolution

Hugo Dixon
Apr 13, 2011 08:32 UTC

CAIRO (Reuters) – In early 2005, Cairo-based computer engineer Saad Bahaar was trawling the internet when he came across a trio of Egyptian expatriates who advocated the use of non-violent techniques to overthrow strongman Hosni Mubarak. Bahaar, then 32 and interested in politics and how Egypt might change, was intrigued by the idea. He contacted the group, lighting one of the fuses that would end in freedom in Tahrir Square six years later.

The three men he approached — Hisham Morsy, a physician, Wael Adel, a civil engineer by training, and Adel’s cousin Ahmed, a chemist — had all left Egypt for jobs in London.

Inspired by the way Serbian group Otpor had brought down Slobodan Milosevic through non-violent protests in 2000, the trio studied previous struggles. One of their favorite thinkers was Gene Sharp, a Boston-based academic who was heavily influenced by Mahatma Gandhi. The group had set up a webpage in 2004 to propagate civil disobedience ideas in Arabic.

Non-violent protest and “political jujitsu”

Hugo Dixon
Apr 13, 2011 08:32 UTC

LONDON (Reuters) – Gene Sharp’s writings on how to use non-violent techniques to bring down autocratic regimes are often cited as a major influence on the activists who led the campaign against Egypt’s Hosni Mubarak.

The 83-year-old American academic had never met or spoken to those behind the successful uprising. But he has strong views on what happened in Egypt and what is happening elsewhere in the Middle East. First and foremost, he stresses the importance of preparation and discipline. The Egyptian protesters were prepared while the Libyans were not, Sharp said in an hour-long telephone interview from Boston, where he runs the Albert Einstein Institution, a non-profit organization that advances the study and use of nonviolent action in conflicts around the world.

Discipline means remaining non-violent despite brutality and provocation. “Sometimes the people using non-violent techniques don’t fully understand the methods,” says Sharp, who has written numerous books on the history of non-violent struggles, including two books on India’s Mahatma Gandhi. “They think that if they refrain from violence, their opponents will too.”

Inside the Egyptian revolution

Hugo Dixon
Apr 13, 2011 07:36 UTC

CAIRO (Reuters) – In early 2005, Cairo-based computer engineer Saad Bahaar was trawling the internet when he came across a trio of Egyptian expatriates who advocated the use of non-violent techniques to overthrow strongman Hosni Mubarak. Bahaar, then 32 and interested in politics and how Egypt might change, was intrigued by the idea. He contacted the group, lighting one of the fuses that would end in freedom in Tahrir Square six years later.

The three men he approached — Hisham Morsy, a physician, Wael Adel, a civil engineer by training, and Adel’s cousin Ahmed, a chemist — had all left Egypt for jobs in London.

Inspired by the way Serbian group Otpor had brought down Slobodan Milosevic through non-violent protests in 2000, the trio studied previous struggles. One of their favourite thinkers was Gene Sharp, a Boston-based academic who was heavily influenced by Mahatma Gandhi. The group had set up a webpage in 2004 to propagate civil disobedience ideas in Arabic.

Egypt needs a reconstruction fund too

Hugo Dixon
Mar 24, 2011 20:37 UTC

By Hugo Dixon
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

LONDON — Egypt needs a reconstruction fund too. Japan will be spending tens of billions of dollars on rebuilding after its tsunami. Egypt can’t afford to finance an equivalent fund after its political tsunami. But foreign powers could help by showing they are not just interested in bombing neighbouring Libya.

In the long run, the most important thing is to accelerate free trade between Egypt and the industrialised world, notably the European Union. More immediately, as the country teeters on the brink of recession, foreign countries can show they really care about Egypt’s transition to democracy by financing a fund to invest in physical and social infrastructure — such as power generation, transport, housing and education.

Riposte: Portuguese default shouldn’t be taboo

Hugo Dixon
Mar 24, 2011 10:33 UTC

– The author is a Reuters Breakingviews columnist. The opinions
– The author is a Reuters Breakingviews columnist. The opinions
expressed are his own –

By Hugo Dixon

LONDON, March 24 (Reuters Breakingviews) – A Portuguese
default shouldn’t be taboo. The euro zone should make clear that
there will be no bailout until Lisbon gets its act together.

Portugal is in its current mess because Jose Socrates, whose
minority socialist government has just fallen, has spent the
last year dithering. The prime minister rejected many
opportunities for a bailout from his euro zone partners, most
recently in advance of a summit two weeks ago. Now time has
virtually run out. It may take two months to call elections and
form a new government and, in the meantime, Portugal has a big
debt repayment due in April.

Arab spring’s violent phase ratchets up risk

Hugo Dixon
Mar 21, 2011 15:21 UTC

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

By Hugo Dixon
The Arab spring’s violent phase is ratcheting up investor risk. Hopes that further dominoes would fall with minimal violence, in the same way that regimes in Tunisia and Egypt were toppled, have been dashed. Others — notably Libya, but also Bahrain, Syria, Yemen and even Saudi Arabia — are still tottering. But none will fall easily. The prospect of bloody conflicts will push up already-heightened risk premia, including the resurgent oil price.

Conflicts are bubbling up throughout the region — most obviously in Libya, where it is unclear whether the Western-led imposition of a no-fly zone will lead to the swift ousting of Colonel Muammar Gaddafi or a long drawn out civil war. Yemen could be next but it probably won’t fall in a happy manner: the al-Qaeda-infested country could split and turn into even more of a failed state.