Bershidsky on Europe: GM to Exit Peugeot

Here's today's look at some of the top stories on markets and politics in Europe:

Here's today's look at some of the top stories on markets and politics in Europe:

EU warns on Bitcoin

The European Banking Authority has warned investors in Bitcoin and other electronic currencies that "violent fluctuations," the risk of digital wallets being hacked and the lack of legal protections for users made them unsafe. This is the EBA's second-ever consumer warning, and while everything it says is obvious - no one who has used Bitcoin learned anything new from the statement - it is a sign that European regulators are worried about the spread of cryptocurrencies and may soon take steps to control them. That in itself is another risk of using Bitcoin: unexpected regulatory moves like China's ban on Bitcoin operations for banks contribute to the "violent fluctuations."

GM to sell stake in Peugeot

General Motors said it would sell its 7 percent stake in the French car maker PSA Peugeot Citroen, in a private placement to institutional investors. The Detroit company acquired the stake last year for about $450 million, but will probably only realize about $330 million from the sale. The strategic partnership between the two car producers did not work out, failing to produce the expected synergies: GM and PSA found it would not be worth their while to develop a common platform for small cars. So GM wants out before Peugeot's capital call, planned for 2014, so as not to be diluted. The U.S. partner's departure simplifies PSA's negotiations with China's Dongfeng, which may eventually take control of the French company from its founding family. Dongfeng is a better partner for PSA: There will be no technological frictions between the two companies and the Chinese firm is more ready with its cash to finance international expansion.

Slovenia says no bankbailoutrequired

Slovenia's government said the small EU nation's banks need $6.6 billion to survive, but that it would find the money without asking for help. The country's banking system, largely controlled by the state, for years issued loans to businessmen close to government officials. The euro area crisis hurt their businesses and created a quagmire of non-performing assets. Although Slovenia is small, accounting for just 0.3 percent of EU output, Germany, the bloc's major economic power, does not need yet another nation to save. Any EU bailout would have followed the Cyprus model, with bank depositors taking a major hit. That accounts for the Slovenian government's determination to go it alone and find the money by selling of national assets. The amount of extra capital needed, however, seems to be underestimated: Slovenian banks have $13 billion worth of bad loans on their books. This won't the last that the EU hears of Slovenia's problems.

Google settlement proposals rebuffed

Google may not be able to settle a potentially costly EU antitrust case by the spring of 2014. Its latest proposals on giving competing services more visibility in search results, sent by the European Commission to competitors and advocacy groups for review, met with a cold reception. Fairsearch, which represents a group of companies including Nokia and TripAdvisor that initiated the complaint, said the proposal was "ineffective" and would not restore genuine choice to consumers. Another group of competitors headed by Microsoft said that Google's proposed remedy "actually makes the abuse worse." Consumer organizations echoed the criticism. EU competition commissioner Joaquin Almunia had hoped for a speedy settlement, but he may now have to file a formal complaint that could lead to Google paying large fines. Pressure on U.S. internet companies is growing in Europe on every front, from taxes to workers' compensation to commercial practices and data protection. The tech market leaders may have to learn to play by different rules in Europe than the ones they effectively set for themselves in the U.S.

EADS chief tells EU to investin drones

Tom Enders, chief executive of EADS, said in an emotional interview with the Financial Times that EU leaders should find money to build a European military drone unless they want to order such products from the U.S., Israel and, possibly, Asian manufacturers. "Is it important or is it going to be a commodity?" Enders asked. His pain is visible: EADS is cutting jobs because European defense budgets have dropped 10 percent since 2006 and EADS has a lot of extra capacity. Enders and other European defense industry chiefs are accusing the bloc's politicians of killing their industry. Apart from preserving jobs, however, there seems no particular reason for Europe to invest heavily in its own drone technology: The commodity approach is cheaper and not too risky politically, given the lasting nature of most European nations' military alliance with the U.S.

(Leonid Bershidsky can be reached at

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