BB Governor asks banks to build risk-free banking system
UNB, Dhaka

Banks should step forward to build risk-free banking system by abiding central bank guidelines, Bangladesh Bank Governor Dr Atiur Rahman said on Thursday.
"It won't be wise to put the banking sector into additional risk by going for higher profits through a shortcut way," he said asking the banks to avoid short-term and speculative investments. The central bank Governor made the remark at the inaugural ceremony of a three-day fair that began at Hotel Sheraton. A total of 26 banks and financial institutions are participating in the fair which is being held for the third time.
Dr Atiur said stability of the country's banking sector surprised worldwide financial pundits when the banking sector abroad suffered a huge jerk due to the recent global downturn. "But, there is no scope to feel complacent for this….banking sector will have to be strengthened further," he said.
Emphasizing on risk management in the banking sector the Governor said the stability in the financial sector is very important for any economy.
The central bank chief praised the contribution of banking sector to the development of the country and asked the banks and financial institutions to concentrate on innovative ideas for their own business interests.
"The Banking community is a part of the society. Through the fair, the banks and financial institutions will be able to provide right information to their clients by removing the negative perceptions about them in the market economy," he said.
General Manager of the Hotel Sheraton Ahmed Bukhari Hamzah presided over the inaugural session of the fair.
Bangladesh Association of Banks president Nazrul Islam Mazumder, Association of Bankers Bangladesh president Kazi Mahmood Sattar and Bangladesh Insurance Association chairman AKM Rafikul Islam addressed the function. Chairmen, executive directors of participating banks and financial institutions and senior officials of the central bank were present.

 Europe gets new boost as economic confidence surges
AFP, Brussels

A surge in confidence in Europe's economy fuelled hope Thursday that the region is finally overcoming its financial troubles just days after European banks largely survived a crash test.
The Economic Sentiment Indicator produced by the European Commission soared in July to its highest level in more than two years, driven by eurozone powerhouse Germany, improved order books and optimism among consumers.
"July's sharper-than-expected increase in economic sentiment will further allay fears of a near-term double dip recession in the Eurozone and may give fresh support to the euro," Dutch banking group ING said in a note.
The European Commission said sentiment in industry was the "main contributor to the overall improvement," with an increase of two points as respondents in the sector reported "substantial improvements in their order books." Consumer confidence "regained momentum" with a 3.0-point jump in the euro area, the European Union's executive arm said.
"More optimism about the general economic situation and very significant easing unemployment fears in Germany contributed to the overall improvement," the commission said.
The data helped to drive the euro on Thursday to its highest level against the dollar since May.

  S.Korea's Lee calls for more foreign workers
AFP, Seoul

South Korean President Lee Myung-Bak ordered his cabinet Thursday to raise the quota for foreign workers to ease a manpower shortage at small firms.
"An urgent task is to resolve the chronic labour shortage at small- and medium-sized companies," Lee told a weekly economic policy meeting, according to a statement from the presidential office.
"The quota of foreign workers should be increased back to the level of previous years."
The government cut the number of immigrant workers allowed into South Korea to 34,000 this year in a bid to free up jobs for locals hit by the global economic crisis, Yonhap news agency said.
The quota was about 100,000 in 2008, according to Yonhap.
The presidential office said Lee also told Thursday's meeting that large conglomerates should pursue "co-prosperity" with smaller ones.
He said small-and medium-sized firms suffer from deepening troubles while conglomerates reap huge profits thanks to the global economic recovery.

  S.Africa not attracting enough investment : WB
AFP, Johannesburg

South Africa is not attracting enough foreign investment to tackle high unemployment and poverty, the World Bank said Thursday, citing high labour costs as a key deterrent.
"South Africa is attracting far less foreign direct investment and exporting less industrial output than many countries in the same peer group," a report said.
The investment climate report compared the country with other emerging economies such as Brazil, India and China.
High labour costs and low manufacturing productivity were holding back to the economy, it said, in a country where unions demand salary hikes more than double the rate of inflation. "The growth of manufactured exports is constrained by relatively high labour costs, including benefits and wages paid to employees," said the report.
South African labour costs outstrip similar emerging markets like Brazil, Chile and Argentina, it said. Employees of the state-owned logistics and transport company Transnet were earlier this year given a 11 percent wage hike after a lengthy strike. In June, inflation was at 4.2 percent.
Government employees are also preparing for a potentially bruising strike next month over salary increases.
While South Africa ranks highly in ease of doing business, unemployment and poverty remain widespread. "We understand the need for structural changes in the economy to address constraints," Trade Minister Rob Davies said at the release of the report.
"Even during the time of economic boom, unemployment was around 22 percent, now it is at 25 percent," Davies noted.
Earlier this month, the Organisation for Economic Cooperation and Development urged the government to lower the obstinately high unemployment rate.

  Stronger sales, weaker euro good news for VW
AFP, Frankfurt

Volkswagen, Europe's biggest automaker, benefited from strong sales and favourable exchange rates as it posted a second quarter profit Thursday of more than four times the previous year's figure.
VW's net profit of 1.25 billion euros (1.6 billion dollars) towered over the 283 million euros earned in the second quarter of 2009 and surpassed a forecast from analysts of 733 million euros compiled by Dow Jones Newswires. The results sent VW shares soaring in afternoon trade on the Frankfurt stock exchange.
Although weak earnings in the second quarter of 2009 helped the comparison, those in the period from April to June were also more than double that of the first three months of this year. A surge in deliveries saw second-quarter sales jump by an annualised 21.9 percent to 33.16 billion euros, while operating profit in the three months came to almost two billion euros, VW said.
The latter got a big boost from a favourable foreign exchange effect worth 400 million euros in the first six months of the year that should continue in the second half, finance director Hans Dieter Poetsch told a press briefing.
VW is "heavily hedged" against swings in the euro's value against major currencies like the dollar for the next two years, he added during a telephone conference.
VW maintained its full-year sales target, that of beating the record 6.3 million vehicles sold last year, and its operating profit target of more than 1.9 billion euros, a level it has already exceeded. The group-which aims to become the world's leading automaker by 2018 -- warned however that second-half sales would not be as strong as those in the first six months of the year.
Several automakers, including French group PSA and Nissan of Japan, have also posted strong second quarter results as markets in Europe and the United States recover and growth continues in China, the world's biggest car market.
VW's second quarter sales of 1.86 million vehicles put it neck-and-neck with Toyota, currently number one worldwide, which sold 1.9 million according to the Japanese economic daily Nikkei. For the six months to June, VW's operating profit climbed to 2.8 billion euros from 1.2 billion in first half 2009 as sales gained 20.7 percent to 61.8 billion euros.
A breakdown of the first-half data showed that VW's luxury brand Audi is still its main breadwinner, with an operating profit of 1.3 billion euros.
The VW brand contributed 1.02 billion euros, with heavy truck maker Scania on 577 million euros and lower-priced automaker Skoda providing 227 million euros.
Losses were reported by the Spanish brand SEAT, with 157 million euros, and the limousine maker Bentley, at 109 million euros. The operating profit and loss numbers do not take Chinese earnings into account, even though it is VW's main market, because like western rivals, VW operates there via partnerships with Chinese companies.

  Malaysian billionaire to take satellite operator private
AFP, Kuala Lumpur

Malaysian billionaire Ananda Krishnan has announced plans to buy out satellite operator Measat Global Bhd. for 207 million dollars to secure full control of the company.
The satellite operator said late Wednesday that unlisted Measat Global Network Systems Sdn. Bhd., which is controlled by Krishnan, plans to buy out 40.4 percent of the shares it does not own at 4.20 ringgit a share, or 662.6 million ringgit.
Measat Global Network currently holds a 59.6 percent stake in Measat Global Bhd. The offer is 10 percent above Measat Global Bhd.'s last traded price of 3.80 ringgit a share. The satellite operator's shares rose to a six-year high to hit 4.07 ringgit when trading resumed early Thursday after it was halted Wednesday ahead of the announcement.
The Star newspaper, citing industry sources, said Krishnan's decision to take Measat Global Bhd. private was made after "considering the huge capital that needs to be ploughed into Measat... estimated at some 1.0 billion dollars over the course of the next two or three years".
"Things are changing so fast. Once the company puts up the infrastructure and builds the satellite, it takes about eight to nine years to repay the debt," the source familiar with the deal told the Star.
Krishnan, who is Malaysia's second-richest man, in March took pay TV operator Astro All Asia Networks plc private after its holding company made a 758 million dollar buyout offer. The tycoon is also moving to take private other listed companies in which he holds shares.

  Britain gets first new bank in over 100 years
AFP, London

Metro Bank, Britain's first new high street lender for over 100 years, opened its first branch to the public-and dogs-on Thursday in a move aimed at shaking up the retail banking sector.
Co-founded by billionaire US businessman Vernon Hill, Metro Bank hopes to tap into public dissatisfaction with traditional banks following the global financial crisis.
The first branch opened in central London-offering dog biscuits to poodles accompanying their owners signing up for new accounts. Metro Bank aims to have up to 250 branches in and around the city within 10 years.
"Everything you hate about your existing bank is what we are going to change," Metro Bank chairman Anthony Thomson told AFP.
"Since the banking crisis, everybody's come to realise (that) the kind of banking we're doing-which is taking in deposits, making a proportion of those available as loans to customers-is the way forward," said Thomson, who set up the bank with Hill.
But analysts have questioned the competitiveness of the financial products being offered. Metro's instant-access savings account offers a return of 0.5 percent compared with the industry's best rate of 2.8 percent.
Its three-year fixed rate savings bond, meanwhile, pays three percent compared with the market-leading rate of 4.3 percent.
"It has been open in stating that it won't be chasing customers through the use of 'best buy' products; instead it will focus on service and doing things differently," said Kevin Mountford, head of banking at price-comparison website Moneysupermarket.com.
Tens of people lined up outside the first branch, in London's Holborn district, ahead of its opening early on Thursday.
Twenty-year-old student Dikepa Ranawake said he was attracted by the bank's openness.
"I was excited by the prospect of a new bank that was hassle-free, that wasn't confusing ... I think all banks have the tendency to try and take your money and I think the transparency that's been suggested by this new bank, the ease of opening accounts, that kind of thing attracts me."
Tola Akorede, a 44-year-old computer scientist was opening an account before heading to work. "It seems a lot of promising ideas are there ... So many ideas like removal of unnecessary charges to customers and making banking more friendly."
Metro Bank is focusing on customer service, with branches open long hours seven days a week, with a fast account opening procedure that issues debit and credit cards within 15 minutes.
And for dog-owning customers, branches are providing water bowls and free doggy biscuits. It is based on the model used for Commerce Bank in the US, which Hill founded in 1973.

  Call to further strengthen trade relationship between UK, India

PTI, Bangalore

British Prime Minister David Cameron on Thursday called for promoting investment to further strengthen the trade relations between the India and Britain.
"India represents an enormous opportunity for British companies. Already our trade relationship is worth 11.5 billion pounds a year. But I want us to go further," he told a gathering at Infosys campus while underlining the purpose behind his visit to the country.
India's plans to invest over USD 500 billion in infrastructure, the 15 per cent annual growth in the retail market and its growing mobile phone market spells a huge business potential for British firms, he said.
"Indian companies employ 90,000 people in the UK. Many more jobs in Britain exist thanks to activities of British companies in India. Now I want to see thousands more jobs created in Britain and of course in India through trade in the months and years ahead. That is the core purpose of my visit." "I want to take the relationship between India and Britain to the next level. I want to make it stronger, wider and deeper," he said. Referring to Foreign Direct Investment, he said "we should encourage more investment by Indian companies in Britain ... and vice versa."