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SocGen take-up

SocGen take-up

LONDON/PARIS, Feb 29 (Reuters) – French bank Societe Generale will have a take-up rate of close to 100 percent for its deeply discounted 5.5 billion euros ($8 billion) rights issue, sources close to the deal said on Friday.
The one-for-four rights issue at 47.50 euros per share, to shore up its finances after $7 billion of losses it blamed on rogue trading, closes on Friday night.
“Everybody is confident the take-up rate here is going to be, if not 100 percent, is going to be pretty close to,” said one of the sources.
SocGen shares close 1.14 percent higher at 71.10 euros, up 9.4 percent from Feb. 21, when the rights issue started. SocGen rights closed at 5.79 euros each, up 41.2 percent from 4.10 euros on Feb. 21.
Institutional investors had said they were keen to subscribe to the new SocGen shares, given the deep discount.
Key shareholders including Groupama and French insurer CNP, which hold around 3 percent and 1.1 percent of the bank’s share capital respectively, have said they would take part in the rights issue.
French fund management company Montsegur Finance said it had signed up, and Montsegur Finance fund manager Gregory Moore said he had heard that the rights issue was going well.
“It’s going fairly well, thanks to the bid rumours which mean that everyone wants to buy the stock,” he said.
SocGen Chairman Daniel Bouton has also taken part, investing 1.5 million euros, according to the sources.
Morgan Stanley, JPMorgan, and SocGen’s own investment bank are the underwriters of the deal, while Credit Suisse and Merrill Lynch are co-bookrunners.
 
BANKS RAISE CAPITAL
Investment banks in the U.S. and Europe are racing to shore up their capital bases after being hit by huge subprime losses.
Shareholders of Swiss bank UBS this week approved the issue of $12 billion of convertible bonds to Singapore’s Government Investment Corporation (GIC) and an unidentified Middle East investor.
Some small shareholders had argued that UBS should make a rights issue instead because it was unfair that they cannot participate in the convertible bond.
Investment bankers expect there will be more rights issues from European banks in the coming months.
Millennium BCP, for example, has announced plans to raise 1.3 billion euros in an issue fully underwritten by Morgan Stanley and Merrill Lynch. The deal is expected to be launched in April.
SocGen is not totally out of the woods yet. Its U.S. residential credit exposure could result in a further writedown of 1.2 billion euros this year, according to Lehman Brothers.
Lehman analysts said a possible bid for the bank and a low valuation will be the main drivers for the shares going forward.
SocGen trades at 1.1 times 2008 book value, similar to French peer BNP Paribas, which a source familiar with the matter said was evaluating on a possible bid.

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The forgotten political generation

The forgotten political generation

The forgotten political generation The election campaign may be under way but new research from The University of Nottingham shows that the parties are in danger of immediately writing off at least four million young working class female voters.
The lead author of the report: ‘Lambrini Lady — the forgotten political generation’ — is Professor Steven Fielding, Director of the University of Nottingham’s Centre for British Politics.
“It may sound like a cliché,” says Professor Fielding, “but the fact is Britain’s political class is now, more than ever, dominated by men, the middle class, the middle aged and the elderly.
“The figures speak for themselves: Despite ‘Blair’s Babes’, only 20 per cent of MPs elected in 2005 were women, and while they have helped introduce some positive changes for all women, these changes can be fairly described as modest.”
The report is co-authored by Rob Ford of the University of Manchester and Matthew Goodwin who will be joining The University of Nottingham in the Autumn.
It shows the problem is caused by a mixture of disengagement on the part of the ‘Lambrini Ladies’ and lack of genuine interest in such voters’ concerns from the parties.
The idea that specific social groups hold the outcome of a general election in their hands isn’t new. In the 1980s ‘Essex Man’ was said to be vital to Conservative success; in 1997 ‘Mondeo Man’ and ‘Worcester Woman’ were seen as important to New Labour; in 2001 the ‘Pebbledash People’ were (unsuccessfully) targeted by the Conservatives; and in 2005 Tony Blair turned his sights toward ‘School Gate Mum’. In recent months, it has been claimed that ‘Motorway Man’ possesses the key to the 2010 election.
This new report identifies the latest generation of potential key stakeholders for the parties — the ‘Lambrini Ladies’— as C1/2 and D women of voting age, working full and part-time, usually mums of pre-school or school age children.
The political parties have historically never taken this group seriously, ensuring they were the last to get the vote.
The report shows the ‘Lambrini Ladies’ remain the group that is probably the most alienated from politics. In fact this group take the least interest in politics, with many already having decided they won’t be voting in the 2010 election.
“Many of the women in this group may have decided not to take the election seriously,” continues Professor Fielding, “but there are very good reasons why the parties should take them seriously.
“Compared to others in the electorate they are more open to third party appeals, more likely to ‘don’t-know-who-to-vote-for’ — but are less likely to vote.
“If Gordon Brown can enthuse them or David Cameron change their minds or another party somehow connect with them, they might just end up determining who winds up in Downing Street.”
While there are obvious gains to be made by the parties in reaching out to this group, the report also finds that responsibility lies with the ‘Lambrini Ladies’ themselves and that they should think about taking politics more seriously, no matter how patronising the politicians might appear.
“Only then.” Professor Fielding adds, “will the parties take them seriously and properly address matters like the low level of minimum wage, the pay gap between men and women and the provision of affordable childcare.”
The report insists this is not simply a matter for the ‘Lambrini Ladies’. They reflect a broader process of political disengagement in society, and if they can be enthused about politics, then others can too.
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Get the most of marketing

Get the most of marketing

The Chartered Institute of Marketing is the leading international body for marketing and business development. They help over 50,000 people at every stage of their career with training, qualifications and resources .

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General Election won by the media

General Election won by the media

As the debate continues to rage on the ability of a Conservative-Lib Dem UK coalition to govern effectively, small- and medium-sized businesses have hailed the General Election as being won by the media.
Questioned shortly before the General Election, participants in the UK Business Barometer quarterly online survey, run by The University of Nottingham Institute for Enterprise and Innovation (UNIEI), overwhelmingly felt that the large amount of press, broadcast and social media comment would have the biggest influence on voters.
A massive 85 per cent of respondents — and an even greater 88 per cent of respondents in its sister survey the UK Business Adviser Barometer (UKBAB) — believed that interpretation and presentation of views in the media would win out over the actual policy proposals contained in manifestoes or party political broadcasts.
Quizzed about the possibility that Britain could wake up on Friday May 7 with a hung parliament, respondents believed this would not bode well for business. More than half of UKBB participants (55 per cent) thought that a hung parliament would worsen economic prospects either somewhat or greatly. In the UKBAB 59 per cent of respondents agreed that the future looked gloomy. Only 18 per cent of UKBB and 14 per cent of UKBAB respondents felt that the economy would thrive greatly or somewhat.
Over the period October 2008 to March 2010 the government streamlined more than 300 different publicly funded business support schemes into a new package of 30 schemes under the title Solutions for Business. These are provided through local, regional and central government departments and private and third sector provision is also brokered through Business Links.
Respondents to the April 2010 UKBB and UKBAB surveys were quizzed on what extent they believed national, regional and local government should be involved in providing business support. The least popular direct source on average, with respondents to both surveys, was national government. UKBB respondents favoured regional government to local, while the reverse was true for UKBAB respondents.
The surveys also posed questions on pension arrangements and benchmarking businesses, as well as the usual quarterly trends questions that cover issues including business growth, skills shortages, the situation with access to finance and the effect of low market demand.
The UKBB and UKBAB online surveys pose a number of topical questions in a bid to uncover the key issues affecting the small business market and how it is coping with the current state of the economy. Operating over the web means that results can be rapidly generated and the surveys have unique software that enables results to be processed and posted on their respective websites immediately they arrive.
More information, including results and analyses, can be found on the web at www.ukbb.ac  and www.ukbab.ac . Businesses and advisers wishing to contribute as panellists on the project should visit the appropriate Business Barometer website to register.

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Saving the economy and saving the planet

Saving the economy and saving the planet

Saving the economy and saving the planet
The potential economic benefits offered by the green economy in the current economic downturn will be explored on Budget Day by three leading experts in the fields of economics and environmental research: Dr Alex Bowen, of the LSE’s Grantham Research Centre, Professor Paul Ekins of Kings College, London and Dr Ralf Martin part of the ESRC’s Centre for Economic Performance.
Is the recession an opportunity to move away from some traditional, and environmentally unfriendly, industries to cleaner, greener industries to create new and sustainable employment? The potential economic benefits offered by the green economy in the current economic downturn will be explored on Budget Day by three leading experts in the fields of economics and environmental research: Dr Alex Bowen, of the LSE’s Grantham Research Centre, Professor Paul Ekins of Kings College, London and Dr Ralf Martin part of the ESRC’s Centre for Economic Performance.
Research Economist, Ralf Martin, proposes an interesting opportunity for the Chancellor to consider in the forthcoming budget, commenting: “If the revenue raised through carbon taxation or auctioning of carbon permits is used to reduce payroll taxes then climate change policy would not only address climate change but indeed would act as a direct stimulus package without straining the government’s budget.”
Professor Paul Ekins is Professor of Energy and Environment Policy at Kings College, London. He states that public policy needs to act on four fronts to ensure that the UK comes out of the recession better able to respond to low-carbon and climate change agendas.
“First, any fiscal stimulus in the Budget will have to be far more low-carbon oriented. There is no reason why all the public investment in any fiscal stimulus package should not support low-carbon objectives. Second, the stimulus will need to support employment. The greatest opportunity here is in labour-intensive measures to increase energy efficiency in the building stock.”
“The Budget will also need to incentivise private investment in low-carbon opportunities,” he added. “And, finally, it should clearly signal an environmental tax reform that will give a robust price to carbon across the economy.”
Professor Ekins is joined by Dr Alex Bowen, who recently took up an appointment at The Grantham Research Centre as a Principal Research Fellow. Dr Bowen points out that strong action against human-induced climate change is urgent and the current financial crisis could prove a timely opportunity. He says: “The need for a global fiscal stimulus provides an opportunity to lay the foundations for more sustainable low carbon growth when recovery comes – and at a lower cost than if the world economy were already working at full capacity.”
The lecture is the last in the Global Financial Crisis series hosted by the Economic and Social Research Council, which has explored the impact of the recession on health and happiness and poverty.

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Get results with a group

Get results with a group

Research shows that two heads really are better than one
If you are one of those people who firmly believe that making decisions by committee is never a good idea, you may have to eat your words.
A group of scientists from the Universities of Essex, Leeds and Bielefeld (Germany) have successfully demonstrated that groups of people can reach decisions more accurately than individuals. Their work will be published in the September issue of the journal Animal Behaviour.
The research shows how groups of volunteers navigate closer to a prescribed target than individuals, when given only limited information of where to go.
Dr Edward Codling, who is jointly appointed between the Departments of Mathematical Sciences and Biological Sciences at the University of Essex, designed the experiment to test ‘the many wrongs principle’. First suggested in 1964 as a way to describe the movement of animal groups, the principle states that individual error can be overcome by staying within a group, so groups can navigate more precisely than singletons. As a result, the group as a whole stays on target, and does so more accurately than any given individual.
Dr Codling and his colleagues (Jolyon Faria and Jens Krause from Leeds, and Fritz Trillmich from Bielefeld) found that when they provided only very low levels of information about the target, and hence uncertainty was high, large groups navigated the most accurately – as predicted by the principle. It did take groups longer to reach the target than individuals, however, suggesting that greater accuracy comes at the cost of slower decision-making.
The team hopes their new findings might lead to a better understanding of how many animals manage to navigate so well. Dr Coding said: ‘The principle has been demonstrated using computer simulations, and has some support from studies on bird flocks, but before our experiments, no one had tested whether humans would show a similar kind of improved group-based accuracy. This may help explain how some animals can navigate so accurately, and why animals often navigate in groups.’
The researchers recruited schoolchildren and colleagues to take part in their experiments, which involved them moving towards one of 16 numbered targets placed around the walls of a circular arena. Members of the group were given a shortlist of targets, only one of which was correct. Each group member had a different list of targets, but all lists included the correct target’s number. Group members – who were forbidden from communicating directly with one another – were then told to head toward whichever target they liked, as long as they stayed within arm’s reach of everyone else in their group.
The work is published online in the journal Animal Behaviour, and was funded by the Biotechnology and Biological Sciences Research Council (BBSRC). 

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Wealth unit helps Credit Suisse

Wealth unit helps Credit Suisse

ZURICH, July 24 (Reuters) – Credit Suisse posted a smaller-than-expected fall in second-quarter earnings on Thursday as it managed more cash for the world’s wealthy and its investment banking unit returned to profit.
The Swiss bank’s earnings easily beat analysts’ forecasts, despite falling 62 percent to 1.2 billion Swiss francs ($1.16 billion), due to smaller asset writedowns than expected and as its investment bank, private bank and asset management business all posted profits.
A Reuters poll of analysts had forecast net profit of 526 million francs.
Its shares jumped over 8 percent early in the day and by 1010 GMT were up 5 percent at 52.40 francs.
A reduction in risk exposure, the small writedown and strong inflows for private banking were all positive, analysts said.
The first results from a big European bank for the second quarter also backed up signs from U.S. peers that banks could be through the worst of the writedowns sparked by the subprime mortgage crisis and subsequent credit squeeze.
“(It’s) a result that could be the confirmation of the beginning of the end of the financial crisis,” said Georg Kanders, analyst at WestLB.
Credit Suisse, which has reported billions of francs in losses stemming from the credit crunch and was forced to admit billions more from a trading scandal, said volatile market conditions would continue but this also offered opportunities.
“At a time when many competitors are questioning their business models, our strategic direction is clear and consistent,” said Chief Financial Officer Renato Fassbind, adding the credit crunch “is definitely still here” and volatility would last into the medium term.
“Given our strength, this period of change in our industry will provide Credit Suisse with unprecedented opportunities,” he told reporters on a conference call.
The Swiss bank — which has emerged less damaged from the turmoil than some big names, notably local rival UBS — said its wealth management unit attracted net funds of 15.4 billion francs, more than twice the forecast amount and up from 13.3 billion a year ago.
The inflow last quarter included about 3.5 billion francs in Switzerland, Fassbind said.
“The main positive within the result was the massive net new money inflow into the wealth management operation,” Dirk Becker, analyst at Landsbanki Kepler, said in a note.
“Apparently, it was able to capitalise on the problems of its peer UBS and is winning market share in this highly attractive business,” he added.
Its private banking margin of 1.16 percent was up from 1.13 percent a year ago, and the bank said it was confident it would stay between 1.1 and 1.17 percent.
INVESTMENT BANK BACK IN PROFIT
Credit Suisse has cut its risk exposure significantly since the third quarter and will continue to manage its balance sheet “prudently”, Fassbind said.
The strategic focus is on organic growth, he said, citing further expansion in private banking — it added 120 bankers in the second quarter — and improving the capital efficiency of its investment banking arm.
That area is under increased scrutiny since Swiss regulators said earlier this month they could impose more stringent capital rules for its flagship banks UBS and Credit Suisse.
Credit Suisse’s investment bank made a pretax profit of 281 million francs in the second quarter, sharply down from a record 2.5 billion a year before as revenues fell by half as the credit crunch hit origination activity, particularly for structured products and leveraged finance.
Underwriting and advisory revenues also fell.
But investment bank revenues were up from the first quarter, and expenses in the business dropped almost a third from a year before as bonuses fell.
Its net writedown of 22 million francs compared to a forecast for over 1 billion. In the first quarter its 5.3 billion franc writedown led to a loss of 2.1 billion, its first quarterly loss in five years.
But Credit Suisse has not had to turn to shareholders for cash, unlike UBS, Royal Bank of Scotland and other European rivals who have had to repair damaged balance sheets.
Its tier 1 capital ratio improved to 10.2 percent at the end of June, from 9.8 percent at the end of March.
Credit Suisse shares trade at 7.6 times forecast 2009 profit, a small premium to the European banking sector due to its more limited exposure to debt linked to subprime mortgages.
 

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The effect of accents

The effect of accents

What makes an accent in a foreign language lighter
More empathy and political identification with native speakers of a language makes the accent in that language lighter
The more empathy one has for another, the lighter the accent will be when speaking in a second language. This is the conclusion of a new study carried out at the University of Haifa by Dr. Raphiq Ibrahim and Dr. Mark Leikin of the Department of Learning Disabilities and Prof. Zohar Eviatar of the Department of Psychology at the University of Haifa. The study has been published in the International Journal of Bilingualism. “In addition to personal-affective factors, it has been found that the ‘language ego’ is also influenced by the sociopolitical position of the speaker towards the majority group,” the researchers stated.
We all know how to identify the average Hebrew speaker trying to speak English: the Israeli accent is an easy give-away. But why is there an accent and what are the factors that make one speaker have a heavier accent than another? One possibility is based on the cognitive discipline, which suggests that our language system limits the creation of language pronunciations in a non-native language. Another explanation is derived from the socio-lingual field, which claims that socio-affective elements have an effect on accent and that the second language constitutes an image label for the speaker in the presence of a majority group.
“Israel is a perfect lab location for testing the topic of second languages, because of the complex composition of its population. This population is made up of immigrants who learn Hebrew at an advanced age; an ethnic minority of Arabs, some of whom learn Hebrew from an early age, and others who learn the language as mature adults; and a majority group of native Hebrew speakers,” the researchers explained.
The first stage of the study divided participants – students from the University of Haifa – into three groups: 20 native Hebrew speakers, 20 Arabic speakers who learned Hebrew at the age of 7-8, and 20 Russian immigrants who learned Hebrew after age 13. The participants’ socioeconomic characteristics were identical. All were asked to read out a section from a report in Hebrew, and then to describe – in Hebrew – an image that was shown to them. The pieces were recorded and divided into two-minute sections. Additionally, the participants filled out a questionnaire that measures empathetic abilities in 29 statements.
The second stage of the study took 20 different native Hebrew speaking participants. They listened to the pieces that had been recorded in the first stage, and rated each piece according to accent “heaviness”. Subsequently, each participant from the first stage was given a score on the weight of his or her accent and another score for level of empathy.
The study has shown that the accent level of Russian immigrants and of native Arabic speakers is similar. It also revealed that for the Russian immigrants, there is a direct link between the two measures: the higher the ability to exhibit empathy for the other, the weaker the accent. Amongst the Arabic speakers, however, no such link – either positive or negative – between level of empathy and heaviness of accent could be seen.
The researchers’ hypothesis is that in the group of Arabic speakers, a new factor enters the ‘language ego’ equation: sociopolitical position. “We believe that the pattern among Arabic speakers demonstrates their sentiment toward the Hebrew-speaking majority group, and the former consider their accent as something that distinguishes them from the majority.
Our research shows that both personal and sociopolitical aspects have an influence on accent in speaking a second language, and teachers giving instruction in languages as second languages, especially among minority groups, must relate to the social and political connection when teaching,” the researchers explain.

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Battered European bank shares face more pain

Battered European bank shares face more pain

LONDON, July 24 (Reuters) – European bank stocks have tumbled 40 percent in the past year, roiled by a global credit crisis, and while results from U.S. peers suggest an end to the carnage, an economic slowdown should push shares lower still.
Analysts say the shares may be six months away from hitting a bottom but are unlikely to sink to as big a discount to the broader market as they did in the last financial sector crisis in the 1990s. The DJ Stoxx European banking sector index fell to within 14 percent of its 2003 cycle low earlier this month, and then rallied as some U.S. banks reported better-than-expected results.
On Wednesday the bank index had its best one-day percentage gain in four months, and on Thursday, Credit Suisse easily beat analysts’ forecasts with its quarterly results, sending its shares higher.
JPMorgan, Citigroup and Bank of America reported results that were not as grim as analysts had feared, and although Merrill Lynch was a standout loser, the overall tone from the U.S. earnings season was positive.
But even if the worst of the credit crunch is behind them, bank stocks are likely to suffer further as the effects of the resulting economic slowdown hit earnings and banks struggle to find ways to grow their businesses, analysts said.
“It’s going to be difficult for banks to make any progress in terms of profits at the moment. Consumer confidence is very low, and due to the economic slowdown they’re not going to see the loan growth they have in the past,” said Mark Bon, a fund manager at Canada Life.
“In a normalised banking environment if you have three years as an investment horizon you’d be seriously considering buying stocks for the longer term, but if you’re trying to judge when the bottom of the share prices are, probably some time within the next six months is a better bet than today or last week.”
How far further stocks fall depends on whether an economic slowdown is long and deep, or short and reasonably shallow as analysts currently expect.
“We’re somewhere near the bottom so long as the economy turns out to be broadly as anticipated,” said Roger Noddings, UK chief investment officer at HSBC Investments. “The markets are pricing in all but the most appalling downturn.”
STEEP AND STEEPER
On the face of it, stocks would appear to have fallen to horrific levels.
In terms of price to book value, banks trade at 1.05 times currently compared with 1.4 at the bottom of the last stock market cycle in 2003, while price to earnings at 7 times are at a sharp discount to 11 times in 2003, according to Thomson Reuters data.
Analysts say financials trade at a 22 percent discount to the broader market’s price to earnings ratio, but added that this is small compared to the discount during the fallout in the 1990s of the earlier savings and loan crisis.
“The discount to the market bottomed at 40 percent in the last crisis, and very roughly banks are valued at 20 percent higher than they were at the rock bottom then,” said HSBC’s Noddings.
“Broadly speaking, that was too cheap. I don’t think you are going to get stocks given away to the degree that they were a giveway in the early 1990s, as the tribal memory of investors goes back that far,” he said.
Citigroup said in a note that the three biggest threats to book value this time round were rising bad debts, ongoing sector recapitalisation and the scope for further structured credit writedowns.
It said it would avoid banks with exposure to UK, Spanish or Irish property and those most in need of fresh capital and/or with writedown risks, like Barclays, Deutsche Bank, UBS, Hypo Real Estate, Bank of Ireland, Bankinter and Bradford & Bingley.
Its said its key buys included KBC, DNB Nor and Intesa Sanpaolo.
Morgan Stanley said that most banks were trading near its bear values, and upgraded the sector to “in-line” from “cautious”.
SUCCOUR FROM OIL, M&A?
Bank stocks may be rescued by a fall in crude oil prices. Oil has fallen 15 percent since hitting a peak above $147 a barrel on July 11, in which time banks have risen by nearly 17 percent.
“The consensus position is to long energy and short financials…financials have seen such a massive de-rating. If we start to see the oil price coming off, the temptation to switch those two becomes much greater,” said UBS strategist Gareth Evans.
One other potentially supportive factor is merger and acquisition activity, though there is a risk that companies could wait for valuations to fall further.
Spanish bank Santander announced a deal to buy the U.K.’s Alliance & Leicester on July 14, and sources familiar with the matter have said that Germany’s Allianz is in talks about the sale of its Dresdner bank unit with Commerzbank and Santander.
And Deutsche Post is in talks to sell Postbank, with sources saying potential buyers could include Deutsche Bank, Santander and ING.