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Deutsche Bank traders win unfair dismissal case
Four traders have won a case for wrongful dismissal against Deutsche Bank AG, which had accused them of violating company policy by inappropriately communicating with other traders at the bank over the setting of interbank lending rates.
The four were responsible for setting Euribor and Libor interbank rates and their dismissal in February came amid a broader inquest into interbank rates. Three banks have been fined for manipulating Libor, a larger counterpart to Euribor, and investigations are continuing into the matter.
Rates such as Euribor and Libor are hugely important in financial markets, not just as key gauges of how much banks pay to borrow from their peers but also to set prices for financial products from mortgages to complex derivatives.
Announcing her ruling relating to the ex-Deutsche Bank traders on Wednesday, presiding judge Annika Gey told a Frankfurt labour court: "The termination was out of proportion".
She ordered Deutsche to reinstate the traders and pay them their salaries for the period since they were fired in February. The traders' lawyer said they did not wish to be named.
Deutsche Bank said in a statement: "We regret the court's decision and believe our action in this matter was justifiable .. . We wait for the written judgement and will then decide whether we will appeal the decision."
The bank had fired five Frankfurt-based traders suspected of inappropriate conduct following an internal investigation into possible manipulation of the Europe Interbank Offered Rate or Euribor. One had already reached a settlement with Deutsche Bank.
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European Economics Preview: Eurozone Industrial Output Data Due
Industrial production from Eurozone is the major statistical report due on Thursday, headlining a light day for the European economic news.
At 2.00 am ET, the Federal Statistical Office is slated to release German wholesale prices for August. Wholesale prices remained flat year-on-year in July.
French inflation figures are due from the statistical office Insee at 2.45 am ET. EU harmonized inflation is forecast to slow to 1 percent in August from 1.2 percent in July.
At 3.00 am ET, Spain's statistical office INE is set to issue consumer prices for August. HICP inflation is forecast to match the flash estimate of 1.6 percent. In the meantime, Turkey's current account figures are due.
At 3.30 am ET, Statistics Sweden is scheduled to release consumer prices for August. Annual inflation is seen at 0.1 percent, the same rate as in July. Also, Sweden's jobless rate is due.
At 4.00 am ET, Italy's industrial output data is due. Production is expected to rise 0.3 percent month-on-month in July.
The European Central Bank is also scheduled to publish monthly report at 4.00 am ET.
Bank of England Governor Mark Carney is set to give testimony to the Treasury Committee at 5.00 am ET.
In the meantime, Eurozone industrial production for July is due. Economists forecast output to fall 0.3 percent on a monthly basis in July after rising 0.7 percent in June. Italy's final inflation figures are also due at 5.00.
At 6.00 am ET, Ireland's consumer prices for August are due. HICP inflation is forecast to slow to 0.5 percent in August from 0.7 percent in July.
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Sweden's Unemployment Rate Falls In August
Unemployment rate in Sweden decreased in August from a year earlier, data released by Statistics Sweden showed Thursday.
The unemployment rate dropped to 7.3 percent in August from 7.5 percent in the same month last year. The figure matched economists' forecast. Earlier, the statistical office had reported a jobless rate of 7.2 percent for July.
The unemployment rate for youth, aged between 15 and 24, was 19.4 percent compared with 20.9 percent recorded in August 2012.
There were a total of 377,000 unemployed persons in the country at the end of August, 1.1 percent less than last year.
Meanwhile, the number of persons in employment increased 1 percent annually to about 4.77 million in August. The employment rate for the month was 66.6 percent.
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Eurozone July Industrial Output Drops More Than Forecast
Eurozone industrial production declined at a faster-than-expected pace in July driven by widespread weakness across sub-sectors, official data showed Thursday.
Industrial output fell 1.5 percent in July from a month ago, reversing a 0.6 percent rise in June, Eurostat reported. It was forecast to fall by 0.3 percent.
Production of intermediate goods slipped 0.7 percent and energy output declined 1.6 percent. Output of capital goods and durable consumer goods declined by 2.6 percent and 2.2 percent, respectively. Non-durable consumer goods output was down 0.9 percent.
On a yearly basis, the decline in industrial output deepened to 2.1 percent from 0.4 percent in June. The rate exceeded consensus for 0.2 percent fall.
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EU Finance Ministers Meet Tomorrow: No Exit
The euro area finance ministers meet tomorrow. Their discussion will be in sharp contrast to next week's FOMC meeting. The FOMC will ostensibly be talking about beginning to exit from the QE by slowing down the pace of its asset purchases. Surveys suggest a majority expect the Fed to announce the a tapering of its asset purchases.
Although the existential element to the European crisis has most certainly eased, significant challenges remain. It is more likely that the official sector has to do more before it can even contemplate an exit and this will be increasingly clear in the coming weeks.
Reports suggest the ECB has discussed a new long-term repo operation (LTRO). Of course, some banks have paid back their previous ECB borrowing and this is serving to shrink the ECB's balance sheet and reduce the excess liquidity in the system that has kept the key overnight rates near zero. The suggestion of the possibility of another LTRO, like Outright Market Transactions (OMT) program, may have a desirable effect, easing the need for action.
Yet is seems LTRO early repayments, which have amounted to about 40% of total sums borrowed, reflect the emergence of a two-tier banking system. Smaller and weaker banks still need that financing and a new two-year LTRO would in effect extend the current LTRO. With the current LTRO maturing in Dec 2014 and Fed 2015, the decision is most likely not imminent, but 1) cannot be ruled out and 2) is not simply a function of macro economic data.
Existing aid programs for Greece and Cyprus will be discussed. It seems clear that Greece has a funding gap that needs to be addressed. Yet, officials have limited scope to reduce debt servicing costs through lower interest rates and longer maturities. Unlikely to be agreed now, but the risk is that a package that does not quite cover the anticipated gap is agreed upon, to retain the carrot of additional debt relief when Greece achieves a primary budget surplus.
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Bailout Nr. 5? Euro Zone Eyes Slovenia's Troubled Banks
The euro crisis has been on the back burner lately, but the problems facing banks in Slovenia are coming to a head. Billions of euros in bad loans make the country a candidate for the next bailout.
Euro zone finance ministers are reportedly considering whether Slovenia may need outside aid to shore up its banking system. The German business daily Handelsblatt reports on Thursday that the Eurogroup is due to discuss the country at its next meeting on Friday.
Slovenian Finance Minister Uros Cufer is expected to report to his euro-zone counterparts on the country's financial situation, which has been deteriorating over the past several months. The country is in recession, and is still struggling to bring its budget deficit in line with the EU-mandated maximum of 3 percent of gross domestic product.
Slovenia was the first former Yugoslav republic to join NATO and the EU, and was once hailed as a model for other former socialist European democracies seeking to establish competitive economies. But its rising standard of living appears to have been built in part on bad credit.
The Slovenian government last week announced it would liquidate two small private banks, Factor Banka and Probanka, and would put up €1.3 billion to guarantee the banks' liabilities. The central bank governor said the measures were to help avoid a run on the country's other banks.
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Bailouts still key issue as eurozone finance ministers meet
Eurozone finance ministers meet in calmer times Friday but still need to ensure bailed-out member states meet their targets amid growing speculation some will need more help to get back on track.
The informal talks are overshadowed by upcoming elections in Germany, the 17-nation bloc's paymaster and most powerful economy where the prospect of any more taxpayer funded rescues is hugely unpopular.
"We are going to listen to all the countries that have been bailed out," to review progress and consider the next steps, a European government source said.
Twice-bailed out Greece is in focus given widespread acceptance it needs a once taboo third rescue, probably for 10 billion euros ($13.3 billion), to bolster its finances.
Ministers will look closely at Ireland, whose rescue programme ends this year and is hoping for support as it returns to traditional financing via the markets.
Irish Finance Minister Michael Noonan has suggested a credit-line of 10 billion euros would serve "as a backstop to give confidence" to investors, stressing that Dublin was not expecting to actually have to use that money.
Portugal meanwhile has run into serious problems after key parts of its rescue programme were ruled illegal, leaving the government shaken and desperately trying to find other ways to balance the books.
On Wednesday, Lisbon called for what would be a third easing in its 2014 public deficit targets -- to 4.5 percent of Gross Domestic Product from the tougher 4.0 percent.
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Swiss producer/import prices up 0.2 pct yr/yr in Aug
Swiss producer and import prices rose 0.2 percent in August from a year ago and were also 0.2 percent higher compared with the previous month, the Federal Statistics Office said on Friday
It said producer prices rose 0.3 percent year-on-year, while import prices were flat.
KEY FIGURES
Aug '13 July '13 Aug '12 Combined index 98.5 98.4 98.3 change yr/yr 0.2 0.5 -0.1 change mth/mth 0.2 0.0 0.5 Producer price index 99.0 99.0 98.7 change yr/yr 0.3 0.5 0.3 change mth/mth 0.0 0.0 0.3 Import price index 97.5 97.1 97.5 change yr/yr 0.0 0.4 -1.0 change mth/mth 0.5 0.0 0.9 (index base 100 = May 2003)
Core infl. producer
prices pct change yr/yr 0.1 0.4 0.1
Core infl. import
prices pct change yr/yr 0.4 0.4 -2.4
For more details from the Statistics Office statement in German, Reuters 3000 Xtra users can click on:
Statistik Schweiz - Produzenten- und Importpreise
Spain's debt hits 92.2 percent of GDP at end-June
Spain's debt rose to 92.2 percent of gross domestic product between April and June, above the government's year-end target of 91.4 percent of GDP, the Bank of Spain said on Friday.
Spanish debt is seen rising for at least another three years and could top 100 percent of GDP, its highest level in more than a century, as the country struggles to reduce one of the highest budget gaps in the euro zone and revive the economy.
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Euro finance ministers warn against complacency
Eurozone finance ministers warned against complacency Friday as the economy recovers from a record recession, insisting the return to growth does not mean that painful reforms can be relaxed.
The bailed-out countries especially must stick to their targets, with no compromise, even though it is expected some such as Greece need further help.
"The economic outlook is improving," said Jeroen Dijsselbloem, head of the group of 17 euro finance ministers after a meeting in Vilnius.
A return to growth after an 18-month recession is welcome, Dijsselbloem told a press conference, but unemployment stuck at 12 percent "is still too high".
"We need to carry on with all our policies with strong resolve," he said, citing controversial reforms which allow Brussels to vet national budgets before approval to ensure they meet EU rules on the public deficit and debt.
"Complacency ... is simply a luxury we cannot afford," EU Economic Affairs Commissioner Olli Rehn commented.
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