Rather than taking significant risks, Blom Bank lends to solid markets. By pursuing a model of organic over forced growth they have managed to defy expectations.
Month: February 2010
US Q4 economic growth revised up on inventories
In its second reading of fourth-quarter GDP, the Commerce Department said the economy grew at a 5.9 percent annual rate, rather than the 5.7 percent pace it estimated in January.
It was still the fastest pace since the third quarter of 2003. The economy expanded at a 2.2 percent annual rate in the third quarter.
Analysts had forecast GDP growing at a 5.7 percent rate in the October-December period.
While the economy rebounded strongly in the second half of 2009 from the worst downturn since the 1930s, data so far suggests the rapid rate of acceleration slowed somewhat in the first quarter of 2010.
A sharp brake in the pace at which businesses liquidated inventories combined with increased spending on equipment and software to boost growth in the fourth quarter, offsetting lacklustre consumer spending and residential investment.
Stripping out inventories, the economy expanded at an annual rate of 1.9 percent, rather than the 2.2 percent pace estimated in January, indicating growth was not being driven by demand.
Business inventories fell only $16.9bn in the fourth quarter instead of $33.5bn estimated at the start of the year. They dropped $139.2bn in the July-September period. The change in inventories alone added 3.88 percentage points to GDP in the last quarter.
This was the biggest percentage contribution since the fourth quarter of 1987.
For the whole of 2009, the economy contracted 2.4 percent, the biggest decline since 1946, the department said.
In the final three months of 2009, consumer spending increased at a 1.7 percent rate, rather than the two percent pace reported in January. That was below the 2.8 percent rate in the prior quarter when consumption got a boost from the government’s “cash for clunkers” auto purchase programme.
In the fourth quarter, consumer spending – which normally accounts for about 70 percent of US economic activity – contributed 1.23 percentage points to GDP.
The department confirmed robust spending on equipment and software caused business investment to grow for the first time since second quarter of 2008, despite a drop in spending on commercial real estate.
Business investment rose at a 6.5 percent rate, much faster than the 2.9 percent pace estimated in January. It had dropped 5.9 percent over the prior three-month period.
Spending on new home construction grew at a slower five percent rate in the fourth quarter, instead of 5.7 percent estimated originally. It had grown at an 18.9 percent pace in the third quarter.
Both exports and imports grew much stronger than initially estimated in the fourth quarter, leaving a trade gap that contributed 0.3 percentage point to GDP growth, the data showed.
India lifts borrowing in budget, bonds hit
India will increase market borrowing by 1.3 percent in the next fiscal year, disappointing bond investors, as it counts on a surging economy and a partial rollback of stimulus measures to cut its fiscal deficit.
Bond markets reversed earlier gains on worries over the government budget’s plans to increase market borrowing, and some watchers said India missed an opportunity to take more aggressive fiscal measures.
Finance Minister Pranab Mukherjee rolled back some tax incentives implemented to help tide the economy through the worst of the global downturn, and outlined plans to bolster agricultural output.
Gross borrowing for the new year will total 4.57 trillion rupees ($99bn), slightly below a poll forecast for 4.61 trillion rupees and above the expected 4.51 trillion rupees in the current fiscal year.
“The government missed the opportunity of fiscal timing despite growth being on a strong trajectory,” said Robert Prior-Wandesforde, HSBC senior Asian economist in Singapore.
“Given that the fiscal stimulus withdrawal was not strong, the Reserve Bank of India may have to be more aggressive in its policy tightening,” he said.
The central bank is widely expected to raise interest rates at its next quarterly policy review on April 20.
India’s economy grew six percent in the December quarter, short of a poll forecast of 6.8 percent as farm output fell 2.8 percent.
Mukherjee said the fiscal deficit will decline to 5.5 percent of GDP in the new year, from 6.9 percent this year, slightly lower than a reporters poll forecast of 5.6 percent. The deficit figure was slightly better than forecasts and in line with government expectations.
Expectations for robust economic growth in the new fiscal year will help India reach its deficit target without making tough decisions to cut spending.
“The first challenge before us is to quickly revert to the high GDP growth path of nine percent,” Mukherjee said in a budget speech to parliament that was interrupted by loud protests from opposition lawmakers.
High food prices have helped push broader inflation to what some economists expect could hit 10 percent next month.
Mukherjee is counting on surging economic growth, which his ministry forecasts will grow by 8.5 percent in the next fiscal year, as well as higher revenues from sales of government company stakes and 3G mobile licences to forestall the need for politically unpopular spending cuts.
The government growth target for next year exceeds the eight percent forecast in a poll of economists in late January.
Tearful Toyoda apologises; Japan hopes for recovery
Toyota Motor Corp President Akio Toyoda apologised to US lawmakers probing the automaker’s safety record and ended the day in tears, in what Japanese politicians hoped was a first step towards rebuilding trust in the country’s most valuable company.
Toyoda, peppered with questions about a massive recall that has rocked Toyota’s reputation, told lawmakers he was “deeply sorry” for accidents and injuries involving its cars.
He said Toyota had lost its way during a period of fast growth but vowed to steer it back to the values that made it a watchword for quality.
Cheered by Toyota plant workers and dealers at an event organised by the automaker on February 24 in Washington, Toyoda broke into tears under a giant display bearing the name of the company that his legendary grandfather founded.
“I believe that Toyota has always worked for the benefit of the United States,” Toyoda said. “I tried to convey that message from the heart, but whether it was broadly understood or not, I don’t know.”
He also offered a sober assessment of the challenges still ahead: “We at Toyota are at a crossroad. We need to rethink everything about our operation.”
Toyoda’s appearance in Washington marked a dramatic peak in a safety crisis that broke in early January with a series of recalls over unintended acceleration and braking problems that now include more than 8.5 million vehicles globally.
Politicians in Japan are worried about the potential fallout from the crisis. Toyota, with a market value of about $125bn, is at the the heart of a massive supplier network that is vital to the economy’s health.
“It was good that the Toyota president himself appeared before the panel and testified,” Prime Minister Yukio Hatoyama told reporters in Tokyo.
“I don’t think this marks the end of everything. He spoke of working to make improvements. This is a matter involving cars, that affects people’s lives, so the important thing is pay close attention to safety and to fulfil its aim to make improvements where they are needed. I’m hopeful and I think they will do so.”
Japanese Trade Minister Masayuki Naoshima said Toyota’s problems could have an impact on the image of Japanese products and that he wanted the car maker to win back consumer trust.
Electronics probed
The costs of the recall are set to grow with an agreement with New York state to speed customer repairs and provide alternative transportation, a pact likely to expand to other states.
Toyoda’s efforts to reassure US officials and consumers were undercut by a confrontation over a 2009 memo in which Toyota boasts of saving $100m by persuading safety regulators to accept a relatively cheap recall of floor mats implicated in the unintended acceleration.
US Transportation Secretary Ray LaHood, who preceded Toyoda before the committee, simply labeled recalled Toyota vehicles as “not safe.”
Dressed in a gray, pinstriped suit, Toyoda said he, more than anyone, wanted Toyota cars to be safe. “My name is on every car,” he said in English before using an interpreter to answer questions.
But Toyoda rejected the possibility that some of the acceleration problems are in the electronics rather than the recalled sticky accelerator mechanisms and floor mats that can trap the accelerator pedal.
Chris Gidez, director of risk management and crisis communications at Hill & Knowlton, said Toyoda gets points for coming from Japan to testify and judgments will not be made in just one hearing. “This is going to be a marathon for Toyota.”
Five deaths
The unintended acceleration problems have been linked to five US deaths, with 29 other fatality reports being examined by US authorities.
Representative Paul Kanjorski, a Democrat from Pennsylvania, warned Toyoda that his company would have to pay for the deaths and injuries as US lawsuits mount. “You will be called upon to pay compensation,” Kanjorski said.
Republican John Mica, a Florida Republican, called it an embarrassing day for regulators and for Toyota.
“I’m embarrassed for you, sir,” Mica told Toyota’s North American President Yoshimi Inaba, who was testifying with Toyoda. “I’m embarrassed for the thousands of Americans who work at 10 plants across the United States.”
Toyota now faces a criminal investigation and a securities probe in the US as well as unresolved questions about hundreds of incidents of unintended acceleration reported by consumers.
The FBI raided the Detroit operations of three Japanese suppliers of electronic components to the auto industry on February 24. Denso Corp confirmed the raids were unrelated to the Toyota recalls.
Toyota has promised internal reforms, including a new committee on safety chaired by Toyoda himself.
Jim Press, a former North American chief for Toyota who left in 2007, said the company had become dominated by “anti-family, financially oriented pirates” and needed Toyoda at the helm.
“Akio Toyoda is not only up for the job, but he is the only person who can save Toyota,” Press wrote in an email to industry publication Automotive News.
Toyoda, who took just a few questions from reporters, only appeared to relax at the evening rally organised for Toyota dealers and workers.
One woman who works in a Toyota plant in Alabama, building engines, asked what she could do to help the company in its crisis. “Let’s make a better car,” Toyoda said, breaking into English.
Saenz: Reform could be dangerous
“If all these elements that are being discussed under the Basel III umbrella are put in place… it would be very onerous, a heavy burden on the profitability of the banking system and the banking industry,” Alfredo Saenz, chief executive of Santander, told UK lawmakers recently.
He said it was impossible to accurately predict the impact as details of many of the measures were not known.
Top banks would see annual profits slump by $110bn if proposed regulations to increase capital and liquidity and other reforms are brought in, analysts at JPMorgan estimate, saying it would hurt economic growth and raise bank costs.
As part of the reform process, Santander submitted a “living will” to the Bank of Spain earlier in the month, to outline how it would be wound down if it collapsed, to prevent a wider financial crisis, Saenz said. He said its plan will need to be “fine-tuned” but he thought it was the first bank in the world to submit one.
All systemically important banks need to develop a living will by the end of this year, under proposals set out by G20 countries last year.
Saenz was being quizzed by UK lawmakers as part of a probe on whether banks are “too big to fail”.
He and Executive Chairman Emilio Botin have steered Santander through the financial crisis thanks to a risk-averse model, a focus on retail banking and lucrative operations in Brazil and elsewhere offsetting a tough Spanish market.
More capital for risk
Forcing banks to hold more capital to cover riskier activities would be better than forcing the break-up of big lenders, Saenz said.
“I would be in favour of extra requirements of capital for riskier activities, such as proprietary trading. Rather than a separation, I would advocate for additional requirements of capital,” he told the UK parliament’s influential Treasury Select Committee.
Saenz said Santander had “negligible” activity in so-called “prop trading”, which the US wants banks to separate from other areas. Proprietary trading is when a firm actively trades with its own money, rather than on behalf of a customer, to make a profit for itself.
“I can’t see any benefit in this kind of break up of banking, the community and the customers would lose efficiency which means better prices and better services,” Saenz said.
He said use of a leverage ratio, which the US is pushing to be used more widely, was not popular in Europe as it failed to capture the risk of assets.
Santander is the second-biggest home loans provider in Britain with a market share of 13 percent and wants to bulk up in commercial banking, Saenz said, targeting a market share of between eight percent and 10 percent, from under three percent now.
It could pick up some of the assets being sold by rivals Royal Bank of Scotland or Lloyds, sources familiar with the sales have said previously.
Kenya economy to grow by 4.5 pct in 2010
The effects of post-election violence, a drought and the global economic crisis pushed Kenya’s economic growth to 1.7 percent in 2008, after expansion of 7.1 percent in the previous year.
“Last year, the recovery in tourism, and in some other key sectors, mitigated effects of the severe drought that caused food, water and energy shortages,” he said at the opening of parliament after a recess.
“As a result, the economy grew at 2.5 percent. This year we are optimistic that the forecasted 4.5 percent growth rate will be achieved.”
The 2.5 percent figure is in line with the government’s forecast of 2-3 percent growth for 2009.
Kibaki said a united coalition government and a low interest rate environment, were necessary for economic growth.
“Our politics must promote political stability and public confidence in the future of our country. Secondly we must take policy initiatives that will reduce and maintain low interest rates,” he said.
Parliament is reconvening amidst a deep division between the two main coalition partners, Kibaki and Prime Minister Raila Odinga, over the suspension of ministers whose ministries have been accused of graft.
One of the major tasks ahead of this parliamentary session will be constitutional review.
Copenhagen billions key to climate talks success
But there’s only months to figure out a way to start deploying the cash, say the world body, negotiators and greens.
A sense of despair has shrouded UN climate talks after what many say was a disappointing outcome of last December’s Copenhagen summit at which world leaders crafted a non-binding political accord in the final hours of the meeting.
While groundbreaking in some ways, the accord left nations struggling to figure out how to achieve the ultimate objective of years of negotiations: a tougher pact that succeeds the existing Kyoto Protocol and strengthens the fight against climate change.
Money could be one way to try to restore momentum, and trust, some analysts feel.
“There needs to be some kind of mutual understanding of where to move forward. My sense is that finance is a good one for that,” said Kim Carstensen, head of environmental group WWF’s global climate initiative.
The accord promises $10bn a year in aid from 2010-12, rising to $100bn a year from 2020 and scores of countries have submitted action plans to curb emissions by 2020, effectively supporting the document.
It also makes clear that steps by all major emitting nations, rich and poor, were key to limit the impacts of rising seas, floods and more disease as the planet heats up.
“I think the finance part of the accord is the critical test of credibility and I don’t think any hedging about implementation of that will be seen kindly by developing countries,” a senior climate negotiator said on condition of anonymity.
Recently, the head of the UN Environment Programme, expected developing nations could be able to apply for some of the $30bn promised in the accord within months. If that didn’t happen, that part of the accord would be in trouble, he said.
Poorer nations feel the rich have broken past climate aid promises and aren’t doing enough to cut their own emissions, creating years of mistrust that have undermined climate talks.
Yet China, India, Brazil and other big emitters have ramped up efforts to curb the growth of their emissions and expect the rich, particularly the US, to finally step up.
China has the world’s third largest wind capacity, behind the US and Germany. Growth last year was highest in the world at 13 gigawatts, bringing China’s total to 25 GW. The government has set a 100 GW target for 2020 – about twice Australia’s total power generation capacity.
Negotiating table
Getting back around the negotiating table is also crucial. The chaotic scenes in the final hours of Copenhagen created doubts over the UN’s ability to deliver a tougher climate pact.
“We’ve gone into a whole new level of complexity in terms of the international change regime and its future,” said Stephen Howes, a director of the Crawford School of Economics and Government at the Australian National University in Canberra.
“There’s nothing in that political agreement [Accord] which says how it will be converted into a legal treaty, when it will be converted or even whether it will be converted,” he said.
Some negotiators say ways must be found to help the UN get back to work and try to resolve impasses.
In a first step, a select group of negotiators decided Germany would host an extra session of UN climate talks in April, the first of the year, ahead of the main Nov 29-Dec 10 meeting in Cancun in Mexico. But the April meeting would not be a formal negotiation session.
Over the coming months, nations must also try to settle once and for all what the new climate pact might look like. The accord, which was not formally adopted by the meeting in Copenhagen, adds an extra layer to the existing negotiations.
For several years, nations have been working on ways to succeed the Kyoto Protocol and negotiations have followed a twin-track path.
One looks at expanding Kyoto from 2013 and the other looks at longer-term climate actions and includes the US, which never ratified Kyoto.
Prior to the final hours of Copenhagen, these twin tracks were the only negotiating paths to guide the talks and have yielded hundreds of pages of complex negotiating texts.
“The Copenhagen Accord provides guidance,” another senior climate official said. Talks this year shouldn’t just try to return to negotiating the existing texts and pretend Copenhagen didn’t happen, said the official, who requested anonymity.
There also remains uncertainty on the fate of the Kyoto Protocol. Many rich nations want a new pact that commits all major emitters to emissions curbs, not just wealthy nations, and say Kyoto hasn’t worked. The Accord barely mentions it.
One way forward may be to put aside efforts to clinch a new legally binding pact by Mexico or by 2011.
The focus should be getting nations to meet emissions cut pledges under the Accord, Howes said.
But for that to happen, actions must speak louder than words.
“If China can show it can drive a wedge between its economic growth and the growth in its emissions and show that it is on a low-carbon growth path, then that would generate more momentum,” he said.
Pakistani finance minister to resign
Pakistani Finance Minister Shaukat Tarin is to step down this week to focus on his private banking interests, according to reports, following speculation that he would resign.
Tarin, who negotiated an IMF loan in 2008, was not immediately available for comment.
In March 2008, a consortium comprising the International Finance Corporation, Bank Muscat, Nomura and Sinthos Capital, led by Tarin and another Pakistani banker, Sadeq Saeed, bought an 86.55 percent stake in Silk Bank for about $213m.
“New investors in his Silk Bank had set preconditions that they will invest billions in the bank provided a seasoned banker like Tarin pays full-time attention,” read reports.
Tarin’s resignation is not expected to destabilise the government but international donors will be keen to see a respected minister appointed in his place.
Tarin had suggested three candidates to replace him, according to reports. One was former central bank governor Ishrat Husain, another was senior economist Hafiz Pasha and the third was chief executive of Arif Habib Investment Ltd, Nasim Beg.
Asked by reporters this month about the possibility of his stepping down, Tarin said he had not resigned nor had he discussed stepping down with anyone.
Prime Minister Yusuf Raza Gilani was caught advertently by media microphones telling a former finance minister, Ishaq Dar, that Tarin would be leaving.
Tarin was appointed the prime minister’s top adviser on economic affairs in October 2008 and later sworn in as finance minister.
Yilmaz Yildiz on Turkish insurance | Groupama | Video
The Turkish economy has performed impressively over the last three years, with one of the fastest growth rates after China. The pensions and insurance market has mirrored this performance, but although growth is strong (15 percent), excessive competition and regulation hinders profitability. Yilmaz Yildiz discusses the way forward in a country where the premium per head is just one sixth of the European benchmark.
Leading emerging markets
Founded by entrepreneur Laércio Cosentino in 1983, TOTVS is the largest emerging markets software firm and the world’s seventh largest firm specialising in the development and sale of Enterprise Resource Planning (ERP) software. The company has five thousand direct employees and another four thousand indirect employees, operating 208 franchises in Brazil and around the world.
Focused on the IT segment, TOTVS’s growth has been fast, well structured and transparent. As early as 2005, the company adopted an external auditing procedure and it was the first private company to win the national prize awarded by the Brazilian Institute of Corporate Governance (IBGC) recognising the company with the best corporate governance practices in Brazil. Transparency has always been a core value at TOTVS, which sells more than software; it also sells longevity – its own, by investing in research and development, as well as that of its clients, who can count on the company to provide durable and constantly updated solutions.
In 2006, TOTVS became the first Latin American IT company to hold an IPO and to list its shares on the Novo Mercado segment of the São Paulo Stock Exchange. To this day, the company maintains its listing on the Novo Mercado segment, the Bovespa corporate governance category with the most stringent requirements.
The company’s concern for its management is reflected in the composition of its board of directors, which has been comprised of at least 70 percent external members over the past seven years, as well as in its decision to create Auditing and Compensation committees.
Intent on leading the consolidation of its sector, TOTVS has acquired several important competitors in Brazil (such as Logocenter, RM Sistemas and Datasul) significantly increasing its portfolio and its vertical operations, which are divided into specialised market segments and have the ability to serve any client, regardless of size. TOTVS also entered into a joint venture agreement with Quality, creating TQTVD, giving it a presence in the digital television segment. All told, the company is comprised of a total of 23 individual firms and has more than 9,000 employees.
The experience TOTVS has gained through its acquisitions and mergers have positioned the company as an Administrative Operator, an intelligent and challenging concept. More than just supplying software, the company focuses itself on best business practices and positions itself as the provider of a variety of solutions that, in addition to software services, include consulting, technology services and value-added services such as BPO, infrastructure, educational and service desk solutions.
TOTVS is the only Latin American company with a proprietary technology platform for use in the development of its software solutions and it possesses operational expertise in the following 11 segments: health care, agro-industry, legal, financial services, distribution and logistics, retail, education, construction and projects, manufacturing, small businesses (series 1 and 3) and services.
The company currently has operations in 23 countries and owns six units in Brazil and 15 others distributed throughout Argentina, Mexico, Portugal and Angola. TOTVS’s portfolio totals 24,200 clients.
Strength in operations
TOTVS’s goal is to expand its operations in specialised markets, and the company has defined business segments to which it can offer software solutions with specific characteristics. The company’s segment-specific solutions go beyond the automation of back-office operations to include applications with specific functionalities for each of the segments. In order to advance in each of the segments, the company is among the biggest spenders on research and development investment in Brazil. Last year alone, the company allocated $65m to R&D.
An intelligence unit has been created for each segment that, among other activities, is charged with elaborating its operational strategy and is responsible for maintaining relationships with the market, identifying strategic partnerships and communicating material facts and information to the sector. The company’s goal is to offer personalised software solutions for the market in which its clients operates, while taking into consideration the specific challenges and compliance with the legal requirements pertinent to each segment.
Accomplishments
The past year was a period of growth and accomplishment for TOTVS. The company celebrated record sales, an increase in market share (it leads the market with a 38.7 percent share), new acquisitions, brand consolidations, the announcement of new products and the strengthening of its business segments.
In the first nine months of 2009, TOTVS posted $366.6m in net revenue, a 7.6 percent year on year increase. EBITDA totaled $94.1m in the 9M09, a 32.5 percent jump over the 9M08. In the same period, net income came to $58.2m, a 7.9 percent increase over 2008. EBITDA margin rose by 490 basis points relative to the 9M08.
The group’s 26 years of market operations led to a number of prizes in 2009, including Best Corporate Governance in the Technology Segment category and, for the second straight year, recognition in the top five Corporate Governance – Best of Brazil and of Latin America ranking by MZ Consult, a leading investor relations and financial communications firm.
In 2008, the company won IBM’s international award for “Best Partner – Innovation That Matters,” having been identified as one of 50 “local dynamos” in a listing of case studies of successful businesses published by Boston Consulting Group (BCG), one of the largest consulting firms in the world. The company was also mentioned in an article published in the Harvard Business Review that highlighted its business model and the aggressive strategies it has employed in its consolidation of the Brazilian market.
TOTVS is also active in the communities in which it operates. The company understands that corporate social responsibility is an integral part of its business, which is why it has operated the Social Opportunity Institute (IOS), a professional training programme for low-income youths, for 10 years. More than 18 thousand students have already completed the programme. IOS gets help and support from TOTVS’s clients and partners.
Entrepreneurship, leadership, a consolidating spirit and transparency are among the core values of TOTVS, a company that operates in a broad and still little-explored market. These credentials, along with the fact that TOTVS is the only emerging markets company to develop state-of-the-art technology from which to develop its software solutions, are fundamental aspects of the company’s long term prosperity and that of its clients and investors.
For more information, visit: www.totvs.com
Blazing a trail
Winner of this year’s World Finance award for corporate governance in Turkey, it is no surprise to Turkcell’s stakeholders that the telecoms giant would receive such acclaim. After all, Turkcell is the only Turkish company to attain listing on the NYSE (TKC), which occurred in 2000, the same year as it joined the Istanbul Stock Exchange. Since its formation in 1994, Turkcell has been the leading communications and technology company in Turkey and a major international operator.
Turkcell is the market leader in five of the eight countries in which it operates (Azerbaijan, Belarus, Georgia, Kazakhstan, Moldova, Northern Cyprus and Ukraine.) In Turkey alone, Turkcell has 36 million subscribers (as of September 2009), making it the second largest European mobile operator.
In 2008, Turkcell’s revenues reached $7bn (with a 37 percent EBITDA margin) yielding a net income of $1.8bn. In the first nine months of 2009, Turkcell recorded a gross revenue of $4.3bn (with a 34 percent EBITDA margin) and a net income of $922.9m.
Corporate governance
Being the only Turkish company to be listed on the New York Stock Exchange, it stands that the company’s corporate governance standards are exceptional and adhere to the requirements that come with NYSE membership. The company discloses information on a regular basis to conform with the regulatory requirements of Turkey’s Capital Markets Board (‘CMB’), the Istanbul Stock Exchange, the Securities and Exchange Commission and NYSE Euronext.
The company’s disclosure policy ensures active and transparent communication which is complete, fair, correct, timely, clear and cost-effective and equally accessible for all stakeholders. Turkcell’s interim and annual financial statements are prepared in accordance with the regulations of the CMB and IFRS published by the International Accounting Standards Board. Turkcell management host global teleconferences with analysts and investors following the release of its financial results and engage with the media both in Turkey and internationally.
Growing operations
Overall, Turkcell serves a population of 160 million customers in eight countries. Turkcell’s international presence dates from 1999 when it formed KKTCell in Northern Cyprus. Since 2000, Turkcell has been operating in Azerbaijan, Kazakhstan, Georgia, and Moldova through its 41.45 percent stake in Fintur. Turkcell has also had operations in Ukraine since 2004 and in Belarus since 2008.
Turkcell and has made $8.2bn US worth of investments since its foundation − excluding license fees – and remains opportunistic about M&A. In 2010 and beyond, Turkcell’s growth strategy will continue to be focused on organic growth, whilst selectively seeking and evaluating new investment opportunities in international markets and adjacent and new business opportunities.
Innovations in technology
Turkcell’s strong infrastructure, innovative products and commitment to provide high quality services are the reasons behind the company’s success and market leadership.
The huge customer interest in Turkcell’s 3G offering exceeded expectations and the company has been able to offer increasingly innovative mobile services to its consumer and corporate customers. Turkcell’s high quality network enables it to further build its wide portfolio of products and services. Innovative services Turkcell has launched include videocall, mobile TV, video surveillance, video chat and video messaging. Turkcell distinguishes itself from its competitors through its massive distribution network: a full 87,000 sales points. The company’s distribution channel acts as a sales force, equipped with all the latest technology.
A good example of Turkcell’s technological leadership is a recent initiative in collaboration with Turkey’s Directorate General of Coastal Safety. Together, they pioneered the “Remote Management of Lighthouses’’ project to bring the latest technology to lighthouses and reinforce existing infrastructures.
Turkcell’s technological leadership has also been recognised internationally. At the GSMA World Congress in Barcelona in 2009, Turkcell won the award for Best Mobile Advertising Service, honoring outstanding achievement in an industry renowned for its innovation. Turkcell also received an award for the “Best Mobile Content Development” for its ‘Turkcell NTV VIDEO News’ service at the prestigious Mobile Excellence Awards programme.
Turkcell has always led the way in bringing new technology to Turkey. The company is passionate about encouraging innovation and values external sources to generate ideas for new products and services. Turkcell promotes platforms to encourage innovation, making Turkcell a product and services “idea-sharing” hub. The company has established internal teams of employees from different areas to evaluate ideas. Periodically, it runs evaluation meetings to select the best ideas and to decide how to develop them into competitive offerings.
Turkcell’s recently launched partner portal (turkcellpartner.com) serves its existing partners, as well as potential new partners, with content reflecting its technical and business know-how, partnership mechanisms and procedures, and technical capabilities. Turkcell Technology, founded in 2007, aims to provide world class technology through a local work force. Turkcell Technology’s success is reflected in the fact that, on average, it has filed for a different patent every month of its existence. The trail blazing continues and Turkcell doesn’t disappoint.
3G Revolution in Turkey
While 3G mobile may be “old hat” in Europe since its launch early in the new millennium, and had a lacklustre launch in those times, the launch in Turkey in July, 2009 further cemented Turkcell’s hold against its competitors, Vodafone and Avea. With more than 19,200 base stations, Turkcell has the best mobile coverage (99 percent of the population) and highest quality network in Turkey. Today, with 36 million subscribers, Turkcell provides 3G services to a whopping 65 percent of the Turkish population.
Turkcell’s VAS revenues comprised 15 percent of its consolidated revenue in the third quarter of 2009, compared to 14 percent one year earlier. Going forward in this new 3G era, Turkcell’s 3G business model is forecasted to drive growth in its VAS revenues through increased use of mobile broadband and services.
Africa risks overstated says Egyptian export insurer
“We’re getting a lot of business in this area…mainly the Nile Basin,” said Alaa Gouda, General Manager of ECGE, adding shrinking demand from the West after the global financial crisis was driving Egyptian export interest in sub-Saharan markets.
Partly state-owned ECGE has a $200m portfolio and says more of its clients are eyeing the African market to export engineering and infrastructure products in particular, including electric cables, cement and ceramic tiles.
ECGE insures short and medium-term deals against risks like buyer insolvency and civil disturbance in the buyer countries.
“We have 50 percent of our exports going to the U.S. and Europe, now demand in the U.S. and Europe due to the financial crisis has declined. It’s normal to see a shift,” he told reporters in an interview, adding that Africa was now a growing focus.
He said Egyptian firms were targeting African markets because of upbeat growth forecasts, expanding populations and high returns. ECGE’s business with Africa grew from 10 percent of its portfolio in 2008 to 25 percent now, Gouda said.
The shift in focus by exporters is mirrored by a growing interest from Egyptian investors, which ECGE does not cover, such as private equity firm Citadel Capital’s plans to invest $200-400m in East Africa by 2012 mainly in transport and logistics, and El Sewedy Cables investment in power line production in Ethiopia.
No default
Foreign currency shortages in some African markets meant payment deadlines were often a longer tenure than in Europe, but Gouda said: “We don’t have default in the area of the sub-Sahara.”
He added that this was the only region for the ECGE with no default during the financial crisis. “Those (African) markets have been booming,” he said.
Kenya’s economy is seen growing by 3.9 percent in 2010 and Uganda’s by 6.38 percent, a poll shows.
Ratings agencies typically highlight threats such as a fear of resurging political violence in Kenya or possible secession of south Sudan, but Gouda said this seemed to overstate risks and African businesses had learnt to deal with such issues.
“All the ratings agencies have been giving weak ratings for these countries and saying there’s a lot of political risk,” he said. “You could find a lot of ethnic riots. It’s always been there, but it does not paralyse economies.”
“We have always been speaking of this part of the world as high-risk, high-risk, high-risk, then we got the hit from somewhere else,” he said, referring to the global crisis that hit the U.S. and other developed countries hard.
He said the eagerness of African states to attract foreign direct investment often encouraged businesses to be extra careful about meeting payments and improving business practices.
“For the coming two decades at least, foreign investors will be in a safe haven,” he said.
EU exec says no 20bn euro aid plan for Greece
They were reacting to a report in German weekly Der Spiegel that Germany’s finance ministry had sketched out a plan in which countries using the euro currency would provide aid worth 20-25 billion euros ($27-$33.7bn).
“There is no such plan because Greece has not requested a single euro in financial aid,” European Commission spokesman Amadeu Altafaj told a news conference in Brussels.
In Berlin, a finance ministry spokesman told a news conference Germany had not made a decision on aid for Greece but expected the debt-ridden country to be able to refinance in April.
Greece’s central bank governor meanwhile said the country was prepared to take extra fiscal steps to make sure it meets its deficit-cutting targets though he said financial markets were over-reacting to the country’s financial woes..
“Even if some risks materialise – like [poor] growth – the government is prepared to take immediate corrective action,” George Provopoulos, also a member of the ECB’s Governing Council, told Bloomberg in an interview.
“The government has said already on several occasions that it will take any additional measures required in order to achieve its goal,” Provopoulos was quoted as saying.
Der Spiegel had reported that “initial considerations” by the German finance ministry were for financial aid for Greece to be calculated according to the proportion of capital each country holds in the ECB.
Greece has pledged to reduce its budget deficit by four percentage points to 8.7 percent of GDP in 2010. Spreads of Greek government-bond yields over German bunds have surged since October.
In another Der Spiegel report, Greek Prime Minister George Papandreou told Germany he was not seeking aid, and criticised the Commission for failing to ensure Member States adhered to the EU’s Stability and Growth Pact that limits budget deficits.
“The union could in the past have more rigorously policed whether the stability pact was being observed – with us too,” he said. “In future we should allow the European statistics office direct access to individual Member States’ data.”
“We suggested that, but not all countries wanted to have so much transparency,” Papandreou said.
Bond offer
Financial markets have given Athens a hammering this year over worries it will not be able to refinance debt coming due this year, and the fallout has seen other highly-indebted EU states suffer, along with the euro itself.
The 10-year Greek/German government bond yield spread narrowed by three basis points on the day to 314 bps, the narrowest since February 17.
In his comments to Bloomberg on the way financial markets were reacting, Provopoulos was quoted as saying: “They take advantage of the weak link to make profits.”
“It’s clear that there is a certain degree of overshooting. Given the high degree of uncertainty in the markets, one should not expect that the situation will normalise overnight.”
Greece’s deficit swelled to 12.7 percent of GDP in 2009, way above the EU’s cap of three percent, and Athens needs to sell some 53 billion euros of debt this year, including at least 20 billion euros in April and May.
In another report, Germany’s Handelsblatt business daily on Monday said German Finance Minister Wolfgang Schaeuble favours using bilateral aid to help Greece in the event that Athens defaults on its debt commitments.
Finance Minister George Papaconstantinou told reporters that Greece would decide on the next bond issuance soon but confirmed no details.
Bernanke has some explaining to do
The head of the central bank heads to Capitol Hill on Wednesday and Thursday for twice-yearly testimony, fulfilling a long-time practice.
Normally, the main topic is the state of the economy.
This time, Bernanke will also have to answer why he decided to spring a surprise on financial markets last week by raising the interest rate the Fed charges on emergency loans to banks – and whether that signals the days of easy money are over.
Higher borrowing costs would be unwelcome news to Congress, where the majority of lawmakers are up for re-election and want low rates to foster economic growth and keep voters happy.
Bernanke was already under pressure from some lawmakers who thought he failed to see the financial crisis coming and mishandled the fallout. Thirty senators voted against him serving a second term as chairman, the stiffest opposition in the nearly 32 years the Senate has voted on the position.
He can expect to hear more of that criticism this week as lawmakers debate how best to reform financial regulation, and how large a role the Fed ought to play.
When the Fed announced the hike in the so-called discount rate on Thursday, it went out of its way to say this would not raise borrowing costs for households or consumers.
The numbers back that up. The rate hike affects only the Fed’s “discount window” for emergency loans, and borrowing there averaged $87.73bn a day in the week ended February 17. Paying an extra 0.25 percent interest on that amount works out to just $219m – a drop in the bucket for multitrillion-dollar global credit markets.
Why now?
That the central bank was planning to raise the discount rate was well known. Bernanke himself had said on February 10 a move would probably come soon as the Fed tries to encourage banks to resume borrowing from the private sector.
But the timing raised questions. Why did the Fed deem it necessary to raise the rate last week? Couldn’t it wait until its next scheduled policy meeting on March 16? And if not, why didn’t the Fed make this move at its January 27 meeting?
The result was a new wave of speculation that the Fed was closer to raising its benchmark interest rate, which governs lending between banks, than markets had assumed, said Brian Bethune, an economist with IHS Global Insight in Lexington, Massachusetts.
“Hopefully, Bernanke’s testimony to Congress … will shed some important new light on the Fed’s policy intentions,” he said.
Jack Ablin, chief investment officer at Harris Private Bank in Chicago, said he expected Bernanke to reassure both lawmakers and investors that borrowing costs are not heading higher any time soon.
In fact, by taking smaller steps such as raising the discount rate and talking about the need to normalise policy, Bernanke can buy himself some more time to keep rates low.
Financial market players tend to react to tightening talk by pushing up the dollar, which eases inflation pressure and gives the Fed some breathing room.
“In his heart, I don’t think he has any intention of raising rates this year,” Ablin said. “In order to do that, he has to jawbone. The more they can talk and flap their arms, the less they have to raise rates.”
To make matters even more complicated for Bernanke, his testimony comes in the midst of debate over how to reform financial regulation to ward off the next crisis.
Senator Christopher Dodd, chairman of the Senate Banking Committee where Bernanke will be testifying on Thursday, and Republican Senator Bob Corker are expected to unveil a bipartisan financial reform bill this week.
The Fed’s role in that remains to be seen. Bernanke thinks the central bank is best placed to serve as systemic risk regulator, overseeing the largest financial firms to ensure they don’t take on too much risk.
Dodd opposes putting the Fed at the centre of systemic risk regulation, and will probably seek to curb its powers.
Between the drama over the discount rate hike and the debate over regulation, Bernanke’s view of the economy may be a bit overshadowed. Look for him to give a brighter view of growth prospects, if anyone is still listening.
Brokering the mould
Keeping it people-focused, maintaining integrity at all times and innovating along with the changes in the market – these are the ingredients that make Al Ramz Securities, LLC or RAMZ one of the strongest independent brokerage companies in the UAE since its inception in the late 90s. RAMZ has matured along with the growth of the UAE as an economy and as an international investment hub.
The UAE has witnessed profound and in some ways, unprecedented changes over the last few years. Perhaps this is best underscored by the fact that, notwithstanding the spike in oil prices, oil now contributes less than 30 percent of the country’s domestic economy. The rise in the non-oil sectors’ contribution to UAE’s GDP reflects the aggressive diversification of the economy through legislative reforms, encouragement and empowerment of the private sector, and active support of the government for industrial growth.
Both the Abu Dhabi Stock Exchange (ADX) and Dubai Financial Market (DFM) have grown considerably in terms of listings, trading volumes, trade turnovers and market capitalisations. In 2005, what is now known as NASDAQ Dubai (re-branded from its former name of Dubai International Financial Exchange) opened as the international exchange serving the region between Western Europe and East Asia. Through out all these advancements, RAMZ has been an integral part of the UAE financial markets providing reliable access for investors to participate in one of the world’s fastest growing markets.
From its humble beginning in 1998, RAMZ has to date become an independent powerhouse. Even before the ADX and DFM were formally established in 2000, RAMZ has been trading equities in the over-the-counter (OTC) market. With the establishment of the country’s two stock exchanges, RAMZ immediately saw a strong position among the competitors for market share. RAMZ has consistently maintained a significant portion of traded volume on both the ADX and DFM ranking amongst the top five brokers in the UAE in terms of volume. Such achievements would not have been possible and would not have been maintained had it not been for the company’s unfailing focus to better serve its customers and continuously evolving to suit market developments.
RAMZ offers its clients a more personalised approach to their brokerage needs, which has distinguished it in the region as a leader in brokerage services. From customer service to execution, the client is provided with an up-to-date look of the UAE markets, keeping the client informed on their investment portfolios by a range of brokers spread out through a network of branches across the UAE. RAMZ’s highly professional team works within a strict ethical framework – ensuring that clients’ interests are safeguarded at all times. RAMZ also recognises that these concepts are not enough to maintain success. Markets are dynamic and changes are inevitable. The company perceives change as a challenge that presents great opportunities – and so RAMZ moves forward with transformation.
Through the years, RAMZ has expanded both geographically as it established branches all over the country and organically as it developed more service offerings. The company has set up six strategically placed branches across the emirates to cater to the investment community and provide a network of highly trained brokers and an online trading platform for its retail client base. Clients can execute their own trades from the comfort of their own homes or offices while always being able to contact their local broker for a quick summary of the day’s news and events that are affecting their portfolios.
In early 2009, apart from securing membership from NASDAQ Dubai, RAMZ formally established its Institutional Desk. More recently RAMZ, aware of the growing participation of institutional investors both locally and regionally, further expanded its institutional reach by pursuing a merger with National Financial Brokerage Company, the brokerage arm of Invest AD, combining the institutional and retail markets to build a brokerage powerhouse. The transaction brings together two leading complementary brokerage firms in the region each being a leader in their respective fields. This has given RAMZ an edge in the institutional market of the UAE in exchange for Invest AD becoming a strategic shareholder in the expanded RAMZ Group.
Invest AD joins a distinguished and influential roster of RAMZ shareholders, which include established and reputable institutions in various sectors such as finance, investments, insurance and property. RAMZ is also in a unique position to count among its owners members of the ruling Al Nahyan Family of Abu Dhabi, Invest Abu Dhabi (formerly known as Abu Dhabi Investment Company) and Oman Insurance as well as regional business leaders with decades of professional experience and expertise in diverse fields.
RAMZ has made significant strides since its inception, maintaining its premier market position even in the face of growing competition and extreme market environments. This would not have been possible without the firm’s deep and unique understanding of its markets and customers and leveraging its competencies in terms of its service offerings, branch network and technological innovations. Going forward, RAMZ sees diversification in terms of geography and, in terms of product suite, as it actively pursues expanding into asset management.
With its unrivaled ambitions and strong continued growth, Al Ramz has established itself as a unique and independent brokerage aimed at helping its clients reach financial independence on their own, by bringing a wealth of experience to better serve the investor.
