Consumer confidence plunges on "fiscal cliff" fears

Fri Dec 7, 2012 11:37am EST

NEW YORK (Reuters) – Americans’ outlook on the economy and their finances took a turn for the worse in early December, likely due to anxiety about the potential for higher taxes resulting from contentious discussions in Washington over fiscal issues, a survey released on Friday showed.

The Thomson Reuters/University of Michigan’s preliminary reading of its index of consumer sentiment plunged to 74.5 in early December, the lowest level since August.

It was far below November’s figure of 82.7 and the median forecast of 82.4 among economists polled by Reuters.

“Confidence plunged in early December as consumers confronted the rising likelihood that political gridlock would push the country over the fiscal cliff,” survey director Richard Curtin said in a statement. He was referring to concerns of an economic contraction next year if the White House and Congress fail to reach a budget pact by year-end.

The “fiscal cliff” is a series of federal spending cuts and tax hikes worth $600 billion that would phase in next year if Washington does not take action to change the situation. Economists say the “fiscal cliff” could cause a U.S. recession.

One in four consumers mentioned hearing about prospects for higher taxes when asked to identify what economic news they had heard, the latest survey data showed.

Consumers’ mood is seen as a predictor of their spending, which accounts for two-thirds of the U.S. economy. The steep drop in confidence at this time bodes poorly for retailers who count on year-end holiday shopping to boost their bottom line.

The survey’s barometer of current economic conditions edged down to 89.9 in early December from a November final reading of 90.7. Economists had forecast a stronger reading of 91.0.

The survey’s gauge of consumer expectations tumbled to 64.6, also its lowest level in four months. It was far weaker than the 77.6 at the end of November and an expected figure of 78.0.

The measure of consumers’ 12-month outlook also fell hard in early December. It dropped 22 points from late November to 75, the lowest level since August.

The survey’s one-year inflation expectations rose to 3.3 percent from 3.1 percent, while the survey’s five-to-10-year inflation outlook inched up to 2.9 percent from 2.8 percent.

A bright spot in the glum report was that one in four home-owners reported rising home values, the highest proportion since January 2008 and further evidence of an improving real estate market.


Breaking down the survey households by income, the drop in confidence was most pronounced among the top third and bottom third, while the middle-income ones showed a small decline.

While much of the attention on the tax fight in Washington has been on the wealthiest Americans, the payroll tax holiday is also a part of the talks and affects far more workers.

“While a spending reduction from tax hikes on top income households can be anticipated, it will not influence confidence or spending as much as the end of the payroll tax holiday,” Curtin said.

Confidence among middle-income families fell 3.9 points in early December from late November. Confidence among low-income households and top-income ones fell 9.0 points and 12 points.

Increased worries about the labor market also undermined confidence in the economy despite evidence to moderate hiring.

The survey suggested job worries intensified to their highest level in a year as Americans reckoned companies might either hold back on hiring or fire workers in response to the possibility of higher income taxes and costs related to the federal Affordable Healthcare Act, dubbed Obamacare.

“This prompted consumers to significantly lower the pace of economic growth they anticipated and resulted in the majority of consumers to expect bad times financially in the year ahead as well as economic relapses over the next five years,” Curtin said.

Earlier on Friday, the Labor Department said the U.S. jobless rate fell to 7.7 percent in November, the lowest in nearly four years, although the decline stemmed from more Americans giving up on looking for work in tough job climate.

(Reporting by Richard Leong; Editing by Chizu Nomiyama)

Employment ducks superstorm Sandy punch

Fri Dec 7, 2012 1:31pm EST

WASHINGTON (Reuters) – Companies kept up their steady but slow hiring pace in November, defying predictions that superstorm Sandy would deal a big blow to the labor market.

While the unemployment rate fell to a near four-year low of 7.7 percent, that was only because many Americans gave up the hunt for work, tempering the signal from the stronger-than-expected payrolls growth.

A big drop in consumer confidence in December also offered a cautionary note on the economy’s health.

Nonfarm employment expanded by 146,000 jobs last month after gaining 138,000 in October, the Labor Department said on Friday. The increase was well above the 93,000 expected on Wall Street.

“We are moving in a trend-like modest job-growth environment,” said Michael Hanson, a senior economist at Bank of Bank of America Merrill Lynch in New York. “We really need to see payroll numbers break above 200,000 for a while to think we have a more sustained recovery underway.”

The government said Sandy, which slammed the densely populated East Coast in late October, did not have a substantive impact on the data. Economists had thought it would, with some predicting it would cut up to 75,000 jobs off payrolls growth.

Nevertheless, the storm did hit the economy hard.

Sandy knocked retail sales and industrial output in October and led to a big spike in claims for jobless benefits, one of the reasons economists expected job growth to slow.

A Labor Department survey of households found 369,000 workers were unable to make it to work in the aftermath of the storm and a further 1.1 million ended up working only part time. However, the department still considered them employed.

U.S. stocks were little changed at mid-day, with the downbeat reading on consumer confidence largely offsetting the stronger-than-expected payrolls data. Prices for U.S. government debt fell, while the dollar edged up against a basket of currencies.


November’s job gains left them just below the monthly average of 151,000 that has prevailed since January.

Economists consider that pace just enough to push the jobless rate lower over time. But they say roughly 200,000 to 250,000 jobs per month would be needed to make noticeable headway in absorbing the 22.7 million Americans who are either jobless or underemployed.

The 0.2 percentage point drop in the unemployment rate, which took it to its lowest level since December 2008, was due to a decrease in the size of the labor force, a suggestion frustrated Americans were giving up the hunt for work.

The labor force participation rate, or the proportion of working-age Americans who have a job or are looking for one, fell back to near a 31-year low.

Heidi Shierholz, an economist at the Economic Policy Institute in Washington, said it could take more than 10 years for the unemployment rate to drop back to its pre-recession level around 5 percent at the current pace of job growth.

Last month, the retail sector accounted for more than a third of jobs gains, which economists tied to a brisk start to the holiday shopping season. Still, private hiring slowed to 147,000 from 189,000 in October, pulled down by a sharp decline in construction employment and weak manufacturing payrolls.


Employment continues to be held back by fears the government may fail to prevent the $600 billion in automatic tax hikes and government spending cuts set to take hold at the start of next year. The debt crisis in Europe has also weighed.

Worries about this so-called fiscal cliff hit consumer sentiment in early December. The Thomson Reuters/University of Michigan’s preliminary confidence reading plummeted to 74.5 from 82.7 in November.

“That confirms my belief that the only thing the economy has to fear is Washington itself,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania.

“There is some real underlying strength in the economy as the November jobs numbers indicate, but it could be wiped out by the games being played by our political representatives,” he said.

With the labor market far from full health, Federal Reserve policymakers, who meet on Tuesday and Wednesday, look certain to keep U.S. monetary policy on its current ultra-easy course.

Economists said an anticipated tightening of fiscal policy next year, even if a deal is reached to avoid completely going over the fiscal cliff, provides ample reason for the U.S. central bank to maintain its stance.

The retail sector added 52,600 jobs last month after rising 50,900 in October. The pace of retail hiring over the last three months was the fastest since 1995.

There were also increases in information and temporary help hiring. But transport, financial, education and health services employment slowed.

Manufacturing employment fell 7,000, marking the third month it has dropped this year.

Construction payrolls surprisingly tumbled 20,000, despite a surge in homebuilding, which is benefiting from the Fed’s effort to hold borrowing costs down. Economists said they expect construction jobs to rise in the coming months as the housing recovery returns full swing.

Average hourly earnings increased four cents. In the 12 months to November, average hourly earnings are up just 1.7 percent, underscoring the trouble workers are having keeping up with inflation.

(Additional reporting by Richard Leong in New York; Editing by Andrea Ricci, Tim Ahmann and James Dalgleish)

Solid jobs data spurs little buying, Apple falls again

Fri Dec 7, 2012 1:48pm EST

NEW YORK (Reuters) – The SP 500 eked out only a slight gain on Friday as weak consumer sentiment data offset enthusiasm from a better-than-expected jobs report, while the Nasdaq slipped after some investors resumed a sell-off of Apple shares.

Wall Street opened higher after the U.S. Labor Department said non-farm payrolls added 146,000 jobs in November. However, the gains faded, and selling increased after the Thomson Reuters/University of Michigan’s consumer sentiment index for early December fell to its lowest level since August.

Apple (AAPL.O) shares resumed a recent slide, falling 2.9 percent to $531.27. The stock of Apple, the largest U.S. company by market value, is down 10 percent this week. It has dropped 24 percent from its all-time intraday high of $705.07 reached in late September.

In Friday’s session, Apple’s 50-day moving average fell to $599.52 – below its 200-day moving average at $601.38 – and putting the stock on track for its worst week since May 2010.

“There are a number of contributing factors to the weakness today. One is the return to the negative slide in Apple. It’s a pretty big proxy for tech in general, and the market overall,” said Michael James, senior trader at Wedbush Morgan in Los Angeles.

In Friday’s session, Apple’s 50-day moving average fell to $599.52 – below its 200-day moving average at $601.38 – and putting the stock on track for its worst week since May 2010.

Apple’s weakness drove the SP information technology sector .GSPT lower. The index fell 0.7 percent and was the weakest of the SP 500’s 10 major industry sectors on Friday.

The equity market has regained most of the ground it lost following President Barack Obama’s re-election as markets turned their focus to the coming “fiscal cliff.” Market response to the macroeconomic data remained muted as negotiations continued to command investor attention.

The conflicting reports “would have had more of a lasting effect in a normal environment, but in the current environment? No. There’s total uncertainty with what’s going to transpire here and abroad. Too many questions,” said Warren West, principal at Greentree Brokerage Services in Philadelphia.

U.S. House Speaker John Boehner said that talks this week with President Barack Obama produced no progress, and he renewed his demand that the president provide a new offer to avert the series of tax increases and spending cuts that are likely to hurt economic demand in 2013.

Still, the SP 500 is just 4.1 percent below the 2012 intraday high of 1,474.51 reached in mid-September.

The Dow Jones industrial average .DJI rose 53.67 points, or 0.41 percent, to 13,127.71. The Standard Poor’s 500 Index .SPX gained 1.80 points, or 0.13 percent, to 1,415.74. The Nasdaq Composite Index .IXIC fell 15.55 points, or 0.52 percent, at 2,973.72.

Amarin Corp (AMRN.O) shares lost 18.5 percent to $9.74 after the biopharmaceutical company raised $100 million in financing to help it launch its heart drug, Vascepa, but disappointed investors, who had hoped for a sale or partnership.

CombiMatrix Corp (CBMX.O) shares soared 250.3 percent to $6.90 after the company said two studies published in a medical journal favored technology it uses for prenatal diagnosis of genetic abnormalities over traditional technologies.

Shares of Netflix Inc (NFLX.O), which had fluctuated between positive and negative territory earlier in the session, turned higher once more by early afternoon. Netflix was up 0.6 percent at $86.66 following news that the Securities and Exchange Commission was considering taking action against the company and its Chief Executive Reed Hastings for violating public disclosure rules with a Facebook post.

(Additional reporting by Chuck Mikolajczak; Editing by Bernadette Baum and Jan Paschal)

Easiest Way to Be Healthier? Stand Up

Standing up more is scientifically proven to have huge health benefits, but in our digital world it’s not as simple as it sounds. Here’s how to make the switch to an upright workday.


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By now you know you probably know that sitting down all day is terrible for you. Who needs scientists to tell you that sitting for even one hour causes the production of fat-burning enzymes to decline a whopping 90%, or that more than four hours of desk time each day raises your risk of a heart attack by more than 100%?

You can feel exactly how crappy sitting all day makes you feel at the end of each workday. (Though you may be shocked to learn that being a regular gym-goer doesn’t protect you from the harmful effects of all that sitting.)

The solution, according to recent articles in the New York Times and Wired, is simple: Get a standing desk. You’ll join good company, they point out, as Leonardo da Vinci, Ben Franklin and Winston Churchill among many others worked standing up, and vastly improve your health.

So why don’t more of us actually make this move, especially entrepreneurs who are fully in control of how they work?

Simply put, it’s a bit daunting. What equipment will you need? Where do you get it and at what cost? Won’t it make your feet hurt? Sensible questions all, but thankfully there’s a wealth of resources to help out standing desk newbies from those who have made the switch. Here are some of their tips:

DIY Options Abound

As the Times points out, those flush with cash now have plenty of options to arrange their standing workspace, including Steelcase standing desks starting at $1,600 that are the “Mercedes-Benzes and Cadillacs of upright workstations.” But if that’s a gasp-worthy price tag for you, fear not. A trip to the Ikea and a couple of Coke cans can also sort you out too.

Writing on Macworld about his own conversion to upright work, Lex Friedman explains: “My approach was decidedly low-tech. My family owns a bunch of Ikea’s BILLY-model bookcases, each of which comes coupled with a “height extension unit”—an extra shelf topper.” Need an even cheaper solution? Try a bunch of soda cans and a board.

Invest in a Mat

Your instinct is right: your feet probably will get pretty tired. But the consensus from those who have tried upright working is the aches ease after just a couple of days.

“The first three days were brutal, so painful I doubted the whole endeavor…. Then, on the fourth day, it wasn’t so bad. On day five, I got lost in work for two hours before I thought about the fact that I was on my feet once. Now it’s my new normal,” writer Gina Trapani reports about her experience.

Friedman concurs but offers a suggestion to help ease you into more standing. “My legs got pretty tired for the first few days. But I was surprised to discover that while my legs adjusted to the increased standing relatively quickly, the aching in my feet got worse each day,” he writes.

“I soon realized that my traditional, be-socked approach wouldn’t cut it,” he continues. “I started wearing sneakers, which helped—but not enough. I bought gel inserts to boost arch support, which also improved things… but my feet were still sore. I bought an inexpensive ‘anti-fatigue mat.’ The combination of sneakers, inserts, and the mat finally soothed my tired feet.”

“If you stand on a hardwood floor, you might also invest in some sort of mat that can be more comfortable on your feet,” agrees writer and upright worker Bakari Chavanu.

Tweak the Ergonomics

Just as it’s key to get your work set up just right at a traditional sitting desk, it’s equally important to make sure you’ve found the most comfortable, least stressful way to work standing up.

“It is indeed better to type with your hands near waist level,” suggests Chavanu. “I also found that having the computer elevated at eye level as much as possible is very important. You get a lot of neck strain when you have to look down at the keyboard and screen,” he says.

Trapani also advocates an eye-level screen: “I bought a $20 monitor riser to get my screen to the right height so I’m looking straight ahead at it, not down.” Wired offers more tips and an illustration on proper standing-while-working posture.

Also, feel free to wiggle, Friedman says. “The other key for extended comfort while standing is adjusting my position. I rotate through standing more heavily on one foot, leaning against the desk, or even resting an arm on the table my keyboard sits upon.” Chavanu stresses taking a few breaks on a bar stool.

If you’re a real health obsessive, you can even go one better and opt for not a standing desk but a treadmill one and try working while walking.

Are you going to make the switch? 


Start-ups to Watch in 2013

Online fashion’s next big thing may be Sophia Amoruso. Her site Nasty Gal filters new and vintage garments the way travel sites like Kayak pick flights. That trick, paired with Amoruso’s eye for unusual and racy pieces, has earned the fashion site 470,000 Facebook fans, 321,000 followers on Instagram, and 10,160% revenue growth over the past three years.

5 Surefire Ways to Piss Off Customers

Frankly, there’s no excuse for these offenses. If you want to succeed in business, you should take notes.

Bad customer service


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We’ve all had customer service nightmares that never should have happened. I don’t know about you, but I’ve come to expect that sort of thing from big companies like ATT and Best Buy. Don’t even get me started on insurance and power companies.  

What really gets me is when small businesses shoot themselves in the foot by screwing up in ways that have nothing to do with their core products or services. Let me be blunt about this. These days, customers have nearly limitless choices. If you think you can get away with subpar customer service, logistics or any other function that impacts your customer’s experience with your brand, think again.

What’s sad is that there’s just no excuse for it. E-commerce and automation solutions make it easy for small companies to operate like the pros. There are all sorts of choices for outsourcing noncore functions to professional firms that get things done like clockwork. And there’s never been a better time to hire good people at competitive wages who would kill for a decent job.

Is it any wonder that you can pick just about any market and find one company that consistently gets things done right while a nearly identical competitor can’t manage a single flawless transaction?

Since I know you don’t want to be in the latter category, here are five common pitfalls that every business should avoid like the plague.  

1. Fail to deliver. With all the great logistics services available from the likes of UPS and FedEx, there’s simply no excuse for failing to deliver product to a customer as promised. And yet, it happens all the time. Either the tracking information is wrong, they deliver the wrong product, they show up on the wrong day, or they don’t show up at all.

2. Waste your customer’s precious time — and test their patience. How much time do you spend on the phone or online just trying to figure out what’s gone wrong and get it taken care of? And you never seem to get a straight answer until you’ve asked to speak with whoever’s in charge or threatened to take your business elsewhere.

3. Create problems out of thin air. Let’s face it. Not all customers are fun to deal with. And since I have the attention span and patience of a two year-old, I could never deal with the general public. Still, you’d think companies could do better than having customer service people who are like crazed lunatics that went off their meds.

4. Ignore feedback (or make it hard to give it). In the age of Twitter, Facebook, and Yelp, you’d think companies would clue in to the fact that, if they don’t take feedback to heart or make it easy for customers to get in touch with them, they’re going to get eviscerated in a very public way, which is never a good thing. And yet, some companies make it nearly impossible for you to contact them directly.

5. Hamstring employees. The most important thing I learned in quality training back in the 80s was that 90 percent of all problems are management problems. If anything, the real number’s actually higher. So most of the problem situations we attribute to individuals on the front line are actually caused by bad management and flawed processes. Go figure.

Now, here’s an example of how one small business somehow managed to nail four of the five pitfalls–in a single transaction.    

A winery uses a boutique next-day service for wine club deliveries. The service notified me that they’d be delivering on a Monday. Since it’s wine, they needed an adult signature. I was there. They weren’t. Three days later, they supposedly attempted delivery and said nobody was there. But I was there. All day.

I’ve probably gotten wine deliveries from a hundred wineries via UPS and FedEx over the past 20 years. Never had a problem.

So, there’s a problem with this little delivery service, right? Not so fast. The wine club director wasn’t buying it. First, she made excuses for why the delivery never went out on Monday and then questioned the authenticity of my story, saying, “Why would a delivery service make something up?” Yup, she really said that.   

Furthermore, she insisted I provide an alternative address where an adult would be around to sign for the delivery. I asked to speak with whoever’s in charge, and she said, “That’s me.” So I cancelled my club membership and sought a way to contact the winery owner, but there was none. So I posted on Yelp and called it a day.

For all I know, the owner is the problem and the seemingly shrill, agitated wine club director was caught between a dumb boss, a bad delivery service, and a customer. I doubt it, but you never know. In any case, that’s one winemaker whose product I can probably live without. Which is sad because, well, he made pretty good wine.

Don’t let that happen to your business.





Meet America’s Top Job Creator

Steve Jones, co-CEO of Universal Services of America, turns janitors and security guards into leaders. He’s created 17,330 jobs since 2008.

 BLUE-COLLAR HERO Co-CEO Steve Jones turns janitors and security guards into leaders.

Brad Swonetz

BLUE-COLLAR HEROCo-CEO Steve Jones turns janitors and security guards into leaders.

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Company: Universal Services of America

Headquarters: Santa Ana, CA

Revenues: $600 million

Employees: 20,760

Many people consider janitorial and security-guard positions to be the very definition of dead-end jobs. Hundreds of employees at Universal Services of America could prove those people wrong.

There’s Scott Naso, a senior regional vice president at Universal Services, who began working as a security guard on the graveyard shift when he was 21. There’s regional vice president Rafael Sorto, who, shortly after emigrating from El Salvador at 17, put himself through college while working as a daytime janitor. Don Brandt became a security guard after receiving his master’s in education. Now, he’s the company’s director of training.

“When you look through the organization and see all the people who have been promoted throughout the years, and you see all that they’ve become, it’s pretty amazing,” says Steve Jones, one of Universal’s two co-CEOs.

Based in Santa Ana, California, Universal Services of America is a 47-year-old company that provides janitorial and security services to corporate, industrial, and residential facilities. Among the company’s 20,760 employees are thousands of veterans, recent immigrants, and people who were laid off during the economic downturn. Many of them came looking for any job they could get, but soon learned, as Naso, Sorto, and Brandt did, that Universal’s owners take spotting and fostering talent seriously.

“If you have 20,000 employees, like we do, there are bound to be a lot of great people you don’t know about,” says Brian Cescolini, who shares the title of CEO with Jones. Cescolini himself started his career as a security guard, albeit at a different company, back in 1974. He joined Universal in 1981 and helped its co-founders, Jim Moses and Stephen Salyer, build the company before buying it, with Jones, in 2006.

Since then, Universal has grown in large part through acquisition. With thousands of new employees starting at a time, all the time, Cescolini and Jones have had to formalize the art of finding rising stars in an ever-growing pool. In 2001, they launched Universal University, an internal training program for employees with management potential. “We’re creating leaders,” Jones says. “If we don’t promote them fast enough, we’ll end up losing them.”

In fact, Jones says, one of the biggest retention problems the company faces is having clients hire Universal’s employees themselves. After all, they’re the people who see the employees every day. “We’re always losing individuals because they were doing a great job guarding a distribution facility, and the client wants to make them assistant warehouse manager.”

That, says Jones, is both frustrating and rewarding. “You get a great sense of pride when you’re able to see people accomplish their goals and become successful in careers they may not otherwise have had.”

6 Simple Ways to Be a Better Boss

Here are six changes to your management style that will make your employees happier.

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Last week, I described the 7 traits of extraordinary bosses. While that list has proven popular with readers, it doesn’t contain any practical advice for bosses who want to improve their own performance.

Over the years, I’ve read dozens, maybe hundreds, of emails from employees who either complain about their bosses, or offer fulsome praises. Here are six suggestions that have emerged from this dialog:

1. Manage your people not your numbers.

Conventional business thinking is that numbers are all important. As a result, many managers spend an great deal of time looking at the numbers, slicing and dicing the numbers, putting numbers into graphs, and talking about where the numbers are and where they ought to be.

However, all number in every business are the RESULT of how well you manage people not how well you manage numbers. The only way to get better numbers (regardless of your measurements scheme) is to improve the performance of the people who work for you. A good coach always trumps a good Powerpoint.

2. Have relevant and simple measurements.

While your main focus needs to be your employees rather than your numbers, you still need a way to measure how well those employees are doing. Ideally, your metrics should relate as closely as possible to the behaviors that you’re trying to encourage and be simple enough for every employee to understand at a glance.

By contrast, complex measurement schemes, with multiple metrics, inevitably create confusion among employees and managers alike. And if nothing that the employee does seems to affect those metrics, they’re just creating mental overhead.

3. Have one priority per employee.

I recently received an email from a person whose boss assigned multiple tasks and insisted that every was a “huge priority.” That boss, of course, was an idiot, because if everything is priority then nothing is a priority.

The entire concept of a “priority” means that there is ONE thing that’s more important than everything else. Giving your employees “multiple priorities” is foisting on them the responsibility to decide what’s really important. That’s YOUR job.

4. Never vent emotions on an employee.

Employees understand that managers are human, under pressure, and pressed for time.  They know that bosses get frustrated and angry, especially when confronted with bad news, mistakes that could have been avoided, and so forth.

Even so, when you blow your stack at an employee, or make a cutting or hurtful remark, it creates a wound that never heals completely and festers with secret resentment. You don’t have to be perfect, but your employees are emphatically NOT your punching bags.

5. Measure yourself by your worst employee.

Managers use their top performers as measure of how successful they are as managers. However, while you may have hired a top performer or grown him or her into that role, that success is more likely to reflect his or her drive and ability rather than anything that you brought to the table.

Instead, you should measure your management ability based on how you handle your worst performers. It is those people who define the lowest level of performance that you’re willing to tolerate as well, and how much you expect the other employees to compensate for your low standards.

6. Compensate higher than average.

There’s a tendency among managers to think of wages, perks and commissions as expenses that should be minimized in order to increase profit.  However, if there’s anything that’s true in the business world it that if you pay average wages, you end up with average employees.

This is simple cause and effect not brain surgery. Maybe back before the Internet it was possible to get top people to work for less than they were worth. Today, however, employees who possess even a modicum of common sense know exactly how much they more money could get elsewhere.

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Greek banks get board approval for debt buyback

Greece’s three biggest banks won board approval to take part in the country’s debt buyback which expires on Friday, putting Athens on track to meet targets set by international lenders.

The buyback scheme, in which investors must declare their interest by Friday, is central to efforts by Greece’s euro zone and International Monetary Fund lenders to cut its debt to manageable levels and unlock aid for the stricken country.

As expected, the country’s four biggest lenders – National Bank , Alpha , Eurobank and Piraeus bank – each said they had approval to participate, but did not specify how much of their sovereign debt holding they would tender.

Under the scheme, Athens aims to spend 10 billion euros of borrowed money to buy back bonds far below their nominal value, in a bid to cut debt by a net 20 billion euros.

Banking sources earlier said the banks had asked their boards to approve selling back as much as their entire holdings. Smaller Attica bank’s board also approved participation.

“The proposals by banks to their boards were positive on the buyback offer, asking for approval to participate by up to 100 percent,” said one banker, who declined to be named.

The buyback is the latest in three years of euro zone efforts to resolve Greece’s problems. The economy has shrunk by 20 percent in the last five years and unemployment has hit a record 26.2 percent, pushing public anger to new highs.

Athens has pressured its banks, which hold an estimated 17 billion euros ($22 billion) out of the 63 billion in eligible bonds, to sell and they had been expected to do so since they depend on bailout funds that a successful buyback would unlock.

Analysts said the better-than-expected terms announced by Athens earlier this week would draw enough foreign investors as well, ensuring success.

“Athens put forth a reasonable if not generous offer for hedge funds to participate,” said Sassan Ghahramani, CEO at New York-based Macro Advisers, a hedge fund consultancy.

“I expect there will be strong participation from hedge funds, tendering a substantial portion of their Greek bond holdings,” he said.


Finance ministry officials denied the government planned to extend the deadline for bids beyond Friday, dismissing a Greek newspaper report suggesting the deadline could be extended to early next week. The deadline expires at 12.00 p.m. EST.

The buyback is part of a broader debt relief package worth 40 billion euros ($52 billion) agreed by Greece’s euro zone and International Monetary Fund lenders last month.

Finance Minister Yannis Stournaras, who has told banks it was their “patriotic duty” to ensure the scheme is a success, told local radio Athens would include a provision that protects bank boards from lawsuits from shareholders in case of losses.

“There will be the same provision that was included in the PSI (earlier debt restructuring),” he told Real news radio, referring to the March debt swap where Athens passed a law shielding bank boards from investor lawsuits.

Greek banks – already battered by the country’s debt crisis – have been hit further by fears that they would be forced to book losses from the buyback.

The price range set for the buyback by Athens varied from a minimum of 30.2 to 38.1 percent and a maximum of 32.2 to 40.1 percent of the principal amount, depending on the maturities of the 20 series of outstanding bonds.

The buyback is being conducted through a Dutch auction, which allows Athens to assess the level of demand before setting the price. The settlement date is expected to be December 17.

Prime Minister Antonis Samaras has already said Greek pension funds holding more than 8 billion euros of the bonds would not take part, increasing the pressure on the remaining domestic bondholders to do so.

Two in three Greeks have a negative opinion of the pro-bailout government, a survey by Metron Analysis published in the Efimerida Syntakton newspaper showed on Friday.

If elections were held now, the main opposition party SYRIZA would win with 22 percent of the vote over the co-ruling New Democracy party, which would only muster 19.8 percent of the vote, the poll showed.

(Editing by Deepa Babington and Ruth Pitchford)

Imperial Tobacco Group Buys Back 100,000 Shares For Treasury/2501.35P

Imperial Tobacco Group PLC (IMT.LN) said Friday it bought 100,000 of its own shares at an average price of 2501.35 pence per share to hold in treasury.


-Shares closed Friday at 2,498 pence valuing the company at GBP24.5 billion.

-Write to Ed Ballard at

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