Bershidsky's View From Europe
Here's today's look at some of the top stories on markets and politics in Europe:
Crédit Agricole posts better-than-expected results.
The French market leader in retail deposits was so eager to announce an unexpectedly high profit for the second quarter, $923 million, that it published the presentation on its website before it was even approved by the bank's board. Crédit Agricole had every reason to be proud: After two loss-making years and a record loss of $8.6 billion in 2012, it is back in the black. Chief Executive Officer Jean-Paul Chifflet got the bank out of Greece, cut down operations in other Southern European nations hard hit by the financial crisis and shifted the focus from investment banking to CA's traditional base: domestic lending. One cannot help but notice another large bank, HSBC, which has just reported half-year results, has seen the most robust results in its home markets, the U.K. and Hong Kong, while registering profit drops in most of its earlier "growth markets." Could these be signals that banks should become less global and more local?
Munich Re relatively unhurt by major floods.
Central and Eastern Europe were hit by devastating floods this year. The reinsurance broker AON Benfield put insured losses from the floods at $5.3 billion. Germany's Munich Re, one of the world's top 10 insurance groups, reported a 46 percent year-on-year drop in second quarter profits, to $788 million, in large part because it lost $305 million to the floods. The company does not expect the disaster to affect its annual results, however: CEO Nicholas von Bomhard promises "approximately" $4 billion in net income, compared with $4.2 billion last year. The flood losses are not particularly damaging because natural disaster insurance only covers a fraction of the catastrophes' real cost. According to AON Benfield, the economic loss from the floods reached $22 billion. This is a year to make Europeans wish they had been less fatalistic and more inclined to shift risks to their insurance industry.
French cellular market leaders sued for $1.9 billion.
Boygues Telecom, Virgin Mobile and NRJ Mobile are suing their stronger competitors, Orange and SFR, for a total of $1.9 billion for anti-competitive practices in 2005-2008. Orange and SFR have already been fined more than $200 million by the French antitrust authorities for offering contracts including unlimited calls to contacts on the same network. At the time, Orange and SFR controlled 83 percent of the French cellular market, and the practice was seen as unfairly reinforcing their dominance. The antitrust judgement, which the market leaders have appealed, makes a court victory for the smaller operators more likely. The logic behind their case is elusive, however. Of course bigger players have more to offer their customers. Weaker competitors must find other, more creative ways to increase their customer base. Under a socialist government, however, it may be easier to win money from bureaucrats and judges than from customers.
Berlusconi's daughter seen as his potential successor.
After an Italian Supreme Court upheld former Prime Minister Silvio Berlusconi's conviction for tax fraud, Il Cavaliere vowed to fight on and to relaunch his party, now called PDL (People of Liberty), under its old name, Forza Italia (Forward Italy). Speculation is rife in Italy, however, that Berlusconi is not going to serve as Forza's frontman himself. Instead, he would hand over the top spot to his daughter Marina, 46. Marina Berlusconi chairs the family holding company, Fininvest, and serves on the boards of the key Berlusconi companies. She has always denied having political ambitions, but her father is 76, and in at least two of his numerous court cases, he faces a ban on taking elected office. Without him at the helm, his political machine is likely to fall apart because it is dependent on his wealth and his charisma. There is only a step between a charismatic organization and a dynasty, and Marina Berlusconi may find herself thrust into a position of power in the party even if that goes against her own wishes.
Brin's stem cell burger eaten in London.
Google co-founder Sergei Brin paid $330,000 for the Dutch research that led to the creation of the world's first lab-grown hamburger, which was offered to food experts at a London press conference on Aug. 5. The tasters proclaimed it very meatlike, just a bit lean. "It's a very good start," said Professor Mark Post of Maastricht University, where the burger were grown from stem cells. The goal of Post's research is to find a solution to the world's food problems. His approach, however, is unlikely to draw cheers across the border, in Germany, where one of the leading political parties, the Greens, has just proposed one meat-free day per week in school cafeterias and other publicly funded food outlets. The Green Party, likely to win between 13 and 15 percent of the vote in the upcoming general election, insists that meat-loving Germans should try going without sausage -- both for the environment and for their own sake. There is, after all, a direct relationship between meat consumption and obesity rates.
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Leonid Bershidsky at email@example.com