Spain in new bid to clear property assets – FT.com

    • Spain in new bid to clear property assets

    • The Spanish government’s fourth attempt in three years at cleaning up the billions of euros of troubled property assets held by its lenders failed to convince investors on Friday as bank shares fell sharply and Madrid’s borrowing costs rose again to beyond levels seen as sustainable.

    • Madrid took a €4.5bn stake in the troubled lender  Bankia earlier in the week. It was the country’s biggest part nationalisation of a bank since the crisis began.

    • Without certainty about the solvency of the banking sector, economic recovery is much more difficult,” Luis de Guindos, finance minister, said as he also announced measures to force lenders to split out their real estate-related loans into separate entities by the end of the year.

    • Shares in banks including Banco Santander, the eurozone’s largest by value, BBVA, and Banco Popular all fell as investors reacted to the news they would have to find the new provisions.

    • The priojected shortfall suggests Madrid would need to impose a further round of fierce austerity measures on its shrinking economy or face big Brussels fines for failing to tame its deficit.

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S&P downgrades France and Austria – FT.com

    • The eurozone debt crisis returned with a vengeance on Friday as Standard & Poor’s, the credit rating agency, downgraded France and Austria – two of the currency zone’s six triple A rated countries – as well as seven nations not in that top tier, among them Italy and Spain.

    • Olli Rehn, EU monetary affairs commissioner, called S&P’s decisions “inconsistent” and suggested they ignored the “decisive action” taken by the eurozone to commit to budget, structural and banking-sector reforms, and to a more powerful rescue fund.

    • In Frankfurt, the European Central Bank criticised the draft of a new fiscal discipline treaty for the euro area, saying that the latest version amounted to “a substantial watering-down” of tough deficit levels that could allow “easy circumvention of the [deficit] rule” by struggling governments.

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German Mogul Werner Otto Dies

German Mogul Werner Otto Dies

BERLIN— Werner Otto, the founder of the mail-order company that bears his name and a prominent figure in West Germany’s post-World War II economic resurgence, has died. He was 102.

The company, Otto Group, said Tuesday that he died in Berlin on Dec. 21 in the presence of his family.

Mr. Otto opened a shoe factory in Hamburg in 1945, but it didn’t last long in the face of tough competition from southern Germany.

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European Pressphoto Agency

Werner Otto

So in 1949, with four employees, he turned to selling shoes by mail order—the start of what became Otto Group, which now employs 50,000 people and has annual revenues of €11.4 billion ($14.9 billion).

Its first, hand-produced, catalog appeared in 1950, offering 28 styles of shoes. The business then grew rapidly during the 1950s, expanding its range and establishing itself with the help of shoppers from outside major cities who didn’t have ready access to stores; in 1963, Otto introduced telephone orders and went online in 1995.

Mr. Otto handed over the company’s operational management in 1965 and founded another enterprise, ECE, which builds and manages shopping malls in Europe.

He also set up Paramount Group, Inc., to invest in U.S. real estate.

Mr. Otto dedicated himself to a range of social causes, including his Werner Otto Foundation, founded in 1969, which supports medical research.

Among other projects, his company said he also donated a new museum building to Harvard University, the Werner Otto Hall, to showcase expressionist art from the German-speaking world.

Mr. Otto was born in the eastern German town of Seelow on Aug. 13, 1909, the son of a merchant.

He is survived by his third wife, Maren, and his five children. His oldest son, Michael, is now Otto Group’s supervisory board chairman and his youngest son, Alexander, is the chief executive of ECE.

—Copyright 2011 Associated Press

European Leaders at Odds on Debt Deal – WSJ.com

    • Prospects for a long-awaited breakthrough deal to stem the worsening euro-zone debt crisis were up in the air on Tuesday, as governments and banks remained at loggerheads over how much pain to inflict on holders of government bonds issued by Greece, the country at the heart of the Continent’s financial mess.

    • National governments and banks have been talking for more than a week in an effort to reach an accord on reducing Greece’s debt burden, so that the agreement can be included in a planned "comprehensive package" that euro-zone leaders hope to announce at a summit Wednesday in Brussels.

    • Banks on Tuesday were rebuffing pressure from governments for "voluntary" write-downs of 50% to 60% on their Greek bonds, according to people familiar with the matter, although some said there had been movement that suggested a compromise in time for the summit couldn’t be ruled out.

    • Without an agreement on how Greece’s debt will be restructured, it will be tough for European leaders

    • to determine the future size of their beefed-up bailout fund, the European Financial Stability Facility.

    • A decision on how much European banks will need to add to their capital buffers—the third element of the interlocking package—won’t be credible either until their write-downs on Greek bonds are known.

    • In a further threat to a credible deal, Germany’s main political parties are seeking to put pressure on the European Central Bank to stop the ECB’s purchases of Italian and Spanish bonds. The German government has agreed to submit the latest proposal for strengthening the euro zone’s bailout fund to the Bundestag, the lower house of parliament.

    • "Once the EFSF comes into force, the need for continuing the European Central Bank’s secondary-market program falls away," the document says.

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