The Week in Europe: Banks and Tax Scandals
The Societe Generale trading scandal is in full swing, as the lawyer of jailed trader Jerome Kerviel said this week that his client should be released to be able to defend himself. Another scandal, this time involving investigations into whether rich German businessmen have been dodging taxes, has started to unfold. Read Europe's most important stories of the week below:
Monday, Feb. 11
- SocGen Launches Discounted Rights Issue
The turmoil surrounding Jerome Kerviel’s scandal with Societe Generale does not seem to be going away any time soon. Monday, the French bank’s shares were the biggest decliner on the CAC-40 after it launched its $7.97 billion capital hike. The offer was at a 39% discount to the previous Friday’s closing price. Follow the link below for more details on SocGen’s rights issue launch.
- Google to Join Mobile Market?
The World Mobile Conference kicked off in Barcelona, where the industry’s top leaders revealed new products and discussed both current and future innovations in the telecoms world. One of the hot topics at the gathering was the speculation over Google’s plans to enter into the mobile market and how that would affect the mobile world as a whole. Follow the link below to learn about Google’s new mobile platform, Android.
Tuesday, Feb 12
- Credit Suisse Trims Writedowns
Although the market was disappointed with the 49% fall in fourth-quarter net earnings reported Tuesday, Credit Suisse was able to trim subprime writedowns and make positive forward-looking projections in a very challenging environment. The Swiss bank stands in stark contrast to UBS, its rival down the street, who reported $18 billion US writedowns for the year. To learn about what is necessary for growth in 2008 from the brokerage’s CEO, click the link below.
- Alcatel-Lucent CEO on Performance
Although many argue that the merger of Alcatel-Lucent was a mistake due to poor market reports in 2007, the telecom’s CEO says the rough patches were due to softness in the market and felt by competitors across the industry. Alcatel-Lucent's overall annual loss is 3.5 billion euros and has forecasted losses of 789 million euros, but is keeping an optimistic outlook. The company was represented by its key leaders at the 2008 Mobile World Conference in Barcelona this week to discuss new developments and products with other top players in the industry. Follow the link below to learn more from the company’s CEO.
Wednesday, Feb 13
- Rio Value Much Higher Than Offer: CEO
Mining giant and takeover target Rio Tinto is to raise its dividend after it posted a rise in full-year profit and surprised analysts across the board. The company reported record earnings and record cash flow in the second half of the year. Still, the threat of a takeover by other industry giants looms over the mining company. Monday, Rio Tinto’s chairman wrote to all shareholders, urging them to take no action on a bid for the miner by BHP Billiton. Rio Tinto’s CEO said his company’s value was much higher than the hostile offer. Click the link below for his perspective.
- Peugeot Citroen Shares Jump
Shares in Peugeot soared Wednesday after the French automaker reported a strong rise in 2007 profits. Peugeot also unveiled ambitious targets this week with growth hopes on China and Latin America – markets that are already established with strong competitors in the industry. Many analysts have doubts about the automaker’s aspirations, as it still has yet to reveal a convincing product plan, but the company’s CEO remains confident on outlook for ’08. Follow the link below for more from Peugeot’s leader.
Thursday, Feb 14
- SocGen Ignored Signs of Alarm: Kerviel's Lawyer
Societe Generale ignored early signs of alarm regarding Jerome Kerviel's trading, as long as he was bringing money to the bank, Guillaume Selnet, one of Kerviel's lawyers, told CNBC Europe. Societe Generale did not want to comment on the allegation. The trader should not be in jail, and his lawyers will do everything in their power to release him so he can properly defend himself, Selnet added. Click below for the full interview.
- ABB Prepares for Changes
Just one day after the surprise departure of ABB’s CEO Fred Kindle, the Swiss engineering group delivered an upbeat outlook for ’08. The company reported that it would benefit from the development of new power infrastructures in Asia, the Middle East and Africa, and plans on overcoming the challenges that are left in the wake of Kindle’s split from the ABB on Wednesday. To learn more about the situation from the group’s interim CEO, click on the link below.
- Zurich Financial Beats Forecasts
Zurich Financial is one of several banks who put forth positive results in the midst of market turmoil and volatility. The brokerage has beaten forecasts on profits in 2007 with a net profit rise of 22% to $5.6 billion, and there is also something in the results for all the shareholders: a dividend hike, a fresh share buyback program and a continued hunt for acquisitions for future growth. To hear from Zurich’s CEO and learn about the bank’s outlook for ’08, click on the link below.
Friday, Feb. 15
- Deutsche Post Head Resigns in Tax Scandal
Klaus Zumwinkel will resign as chief executive of German mail and logistics group Deutsche Post, the company announced, as a tax-dodging probe threatened to ensnare more rich Germans. Zumwinkel, who is 64, is a pillar of Germany's corporate establishment and has led Post for 18 years. He came under pressure to go after prosecutors said they suspected him of dodging about 1 million euros ($1.5 million) in taxes by transferring money to tax haven Liechtenstein. Click below for the full story.