U.K.'s Darling to Say Crisis to Be Deeper, Longer Than Expected

By Svenja O'Donnell

Oct. 26 (Bloomberg) -- U.K. Chancellor of the Exchequer Alistair Darling will say this week that the economic crisis will be deeper and longer-lasting that the government first predicted, the Sunday Times reported.

The government hasn't lost control of the public finances, although the crisis has hurt its revenues, Darling will say in a speech at the annual Mais lecture in London on Oct. 29, the newspaper reported, without saying how it got the information.

The U.K. economy shrank in the second quarter, its first contraction in 16 years. Prime Minister Gordon Brown and Bank of England Governor Mervyn King admitted for the first time last week that Britain is heading for a recession, while Charlie Bean, the central bank's governor for financial stability, said in an Oct. 24 interview with the Scarborough Evening News that the turmoil in the banking industry is the worst ever.

The government this month bought majority stakes in Royal Bank of Scotland Group Plc and HBOS Plc, two of the country's biggest lenders, as part of a 500 billion-pound ($793 billion) rescue plan to save the financial system from collapse. The government will formally announce spending plans in Darling's pre-budget report in the next few weeks.

The next 12 months ``will be quite difficult'' for Britons, Communities Secretary Hazel Blears said in an interview on Sky News's Sunday Live television program, adding that the government will seek to help people threatened with repossession.

``There's quite a lot we can do,'' Blears said. ``The fact we've got more influence in the banking sector is a very good thing.''

`Irresponsible Lending'

The government's assurances that banks will offer loans at 2007 rates aren't ``empty words,'' Blears said. ``We won't go back to the days when people could borrow 100 percent or 125 percent mortgages. There was irresponsible lending and people took advantage of that.''

Several Treasury forecasters have revised predictions down, with some expecting the recession to be worse than the last contraction of the early 1990s, the Sunday Times said.

Darling's pledge to increase spending and prioritize housing, energy and small businesses may ``stunt the private sector's recovery once the recession is past'' by putting the government in a ``dominant position,'' a group of economists including Trevor Williams at Lloyds TSB Corporate Markets and Peter Spencer at Ernst Young's ITEM Club, said in a letter to the Sunday Telegraph.

Almost four in five U.K. companies are cutting back on expenses, from hiring staff to Christmas parties, the Institute of Directors said, citing a survey of 1,114 businesses. Four in 10 companies said they had cut back on hiring, 27 percent said they had reduced pay or bonuses and 27 percent said they were spending less on staff entertainment. The survey was conducted in mid- September.

``After 15 years of economic growth the party is over,'' Graeme Leach, the IoD's chief economist, said in an e-mailed statement. ``Budget setting for 2009 is going to be a very tough process in order to squeeze out every possible cost saving.''

To contact the reporter on this story: Svenja O'Donnell in London at sodonnell@bloomberg.net

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Savola Third-Quarter Profit Increases 4.6% on Sales

By Matthew Brown

Oct. 26 (Bloomberg) -- Savola Al Azizia United Co., Saudi Arabia's largest food producer by market value, said third- quarter profit advanced 4.6 percent on higher sales.

Net income rose to 158 million riyals ($42.2 million) from 151 million riyals a year earlier, Savola said in a statement to the Saudi bourse today. The company didn't release earnings per share for the period. Savola's net income fell 41 percent on a quarter-on-quarter basis.

``Some people will be disappointed with the results, because they showed a quarter-on-quarter decline in both net profit and earnings before interest and taxes,'' Laurent- Patrick Gally, retail analyst at U.A.E.-based investment bank Shuaa Capital PJSC, said in a phone interview from Dubai today.

The NNS edible oil soya bean price index declined by 14 percent in the third quarter, Bloomberg data shows. Savola said May 3 that it plans to build a $350 million sugar beet refinery in Egypt.

``The decline was driven by the new Egyptian sugar operations, which are in start-up mode and posted losses, and a rapid decline in world edible oil prices, which has put pressure on the margins of the wholesale side of this business,'' said Gally.

Nine-month sales increased to 10.2 billion riyals from 7.8 billion riyals.

Savola shares lost as much as 2 riyals, or 9.3 percent, to 19.95 riyals in Riyadh trading. The shares were at 20.65 riyals at 11:41 a.m. local time, valuing the company at 10.3 billion riyals. The stock has lost 42 percent this year.

To contact the reporter on this story: Matthew Brown in Dubai at mbrown42@bloomberg.net

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Aldar Quarterly Net May Rise on Land, Unit Sales: Week Ahead

By Matthew Brown

Oct. 26 (Bloomberg) -- Aldar Properties PJSC, Abu Dhabi's largest real-estate developer by market value, may say third- quarter profit increased as it sold more land and began to book profit from unit sales.

``The company's business model is coming together well, with strong contributions from land sales, rents and maybe even unit sales,'' said Sana Kapadia, real-estate analyst at EFG-Hermes Holding SAE in Dubai, in a telephone interview Oct. 23.

Net income may advance to 1.33 billion dirhams ($361.6 million) from 528.3 million dirhams in the year-earlier period, according to Kapadia. Robert McKinnon, managing director of Dubai-based investment bank Al Mal Capital PSC, predicts third- quarter profit of 555 million dirhams.

Abu Dhabi's real-estate developers have benefited from rising land values since foreigners were first allowed to buy property in selected areas in 2005. The emirate's real-estate prices overtook neighboring Dubai's in July this year with residential properties rising an annual 61 percent, according to HSBC Holdings Plc. Abu Dhabi will face a shortage of 28,000 housing units this year as demand outstrips supply, state news agency WAM reported Oct. 5.

Abu Dhabi, the largest of the seven sheikhdoms that make up the United Arab Emirates, holds nearly 8 percent of the world's proven oil reserves and controls the world's largest sovereign wealth fund, the Abu Dhabi Investment Authority, with assets of as much as $875 billion, according to the International Monetary Fund.

Net Triples

Aldar's shares have tumbled 54 percent so far this year, compared with a 51 percent slump for the ADX Real Estate Index, and a 23 percent decline for the ADX General Index. Aldar closed down 5.7 percent at 5.61 dirhams Oct. 23, giving the company a market value of 14.4 billion dirhams.

Kapadia maintains a ``buy'' recommendation on the shares and a price estimate of 44.9 dirhams. McKinnon rates the stock ``market outperform'' with a price estimate of 12.97 dirhams.

Sorouh Real Estate Co., the emirate's second-largest property developer by market value, said last week third-quarter net income more than tripled to 689.4 million dirhams.

Markets Last Week

Five of the seven Gulf stock markets tracked by Bloomberg declined last week. Saudi Arabia's Tadawul All Share Index slumped 10 percent. The Kuwait Stock Exchange Index tumbled 9.2 percent and in Qatar, the DSM 20 Index lost 3 percent.

Stocks dropped, following world markets, on investor fears a global economic slump will damp profits and as falling oil prices reduce the region's export earnings.

Crude oil on Oct. 22 closed at $66.75, the lowest settlement since June 13, 2007.

Benchmark indexes in the U.A.E. rose. Abu Dhabi's measure climbed 4.6 percent and Dubai's gained 1.7 percent.

To contact the reporter on this story: Matthew Brown in Dubai at mbrown42@bloomberg.net

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Tamweel Third-Quarter Profit Rises 37% on Islamic Mortgages

By Arif Sharif

Oct. 26 (Bloomberg) -- Tamweel PJSC, the United Arab Emirates' second-biggest mortgage provider, said third-quarter profit jumped 37 percent on higher demand for Islamic home loans.

Net income in the three months to Sept. 30 advanced to 185.7 million dirhams ($51 million) from 136 million dirhams a year earlier, the Dubai-based company said in an e-mailed statement.

To contact the reporter on this story: Arif Sharif in Dubai at asharif2@bloomberg.net

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U.S.-Oman Free Trade Deal to Be Complete by Year-End, U.S. Says

By Matthew Brown

Oct. 26 (Bloomberg) -- The U.S. aims to complete a free trade agreement with Oman by the end of the year, the Omani Ministry of Information cited U.S. Trade Representative Susan Schwab as saying.

The trade deal was signed in January 2006 and ratified by Oman in November of that year. Its implementation has stalled on issues including telecommunications, intellectual property rights, and differences in the legal frameworks, the ministry said in a statement on its Web site today.

``Ninety percent'' of the issues have been resolved, the ministry cited Schwab as saying.

To contact the reporter on this story: Matthew Brown in Dubai at mbrown42@bloomberg.net

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Saudi Arabia Provides $2.67 Billion to Help Citizens

By Matthew Brown and Abdulla Fardan

Oct. 26 (Bloomberg) -- The Saudi government will inject 10 billion riyals ($2.67 billion) into the government-run Saudi Credit Bank to provide no-fee loans to low-income citizens, Saudi Press Agency said, citing the finance minister.

``This amount, along with the current resources of the bank, will be allocated for social loans, including loans provided for marriage, family and restoration of houses,'' Finance Minister Ibrahim al-Assaf said in a statement carried on the state-owned news agency.

The measure, ordered by King Abdulla of Saudi Arabia, follows last week's injection of about $5 billion in the form of deposits into Saudi commercial banks and a reduction in reserve requirement. The kingdom's attempt to keep credit available amid a freeze in global markets included a cut in the repo rate Oct. 12, sending the Saudi 3-month average interbank rate to 4.55 percent yesterday from 4.6512 percent Oct. 20.

The Gulf states, including the United Arab Emirates and Qatar, ``have been very proactive,'' Mary Nicola, senior economist at Standard Chartered Plc., said in a telephone interview in Dubai today. ``Credit is tight and banks are being very picky about who they lend to, so this is a safeguard for poorer families.''

Central Bank

Saudi Arabia cut the amount of money that commercial banks have to keep with its central bank to 10 percent from 13 percent, effective from last month, the central bank said in a statement on its Web site yesterday.

Governments across the Gulf from Kuwait to the United Arab Emirates, that provide about 20 percent of the world's daily oil supply, have injected cash into their banking systems in an attempt to maintain lending levels as deposits fail to keep up with loan demand.

The Central Bank of Kuwait has taken measures to increase liquidity at commercial banks in recent weeks, including raising the loan-to-deposit ratio, cutting interest rates, injecting funds into the interbank market and, today guaranteeing commercial bank deposits. The United Arab Emirates said Oct. 12 that it would guarantee all bank deposits for three years.

The Qatar Investment Authority, the emirate's sovereign wealth fund, said Oct. 13 that it would acquire stakes in banks.

To contact the reporters on this story: Matthew Brown in Dubai at mbrown42@bloomberg.netAbdulla Fardan in Bahrain at afardan@bloomberg.net

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Saudi Telecom Quarterly Net Falls on Expansion Costs

By Shaji Mathew and Matthew Brown

Oct. 26 (Bloomberg) -- Saudi Telecom Co., the Arab world's largest phone company, said third-quarter profit fell 4.1 percent, missing analysts' estimates, as expansion costs hurt earnings.

Net income declined to 3.01 billion riyals ($804 million) from 3.14 billion riyals a year earlier, the company said in a statement to the Saudi bourse today, without providing earnings per share. Global Investment House KSCC had estimated third- quarter profit of 3.92 billion riyals, while EFG-Hermes Holding SAE predicted 3.5 billion riyals. The company's net income fell 22 percent on a quarter-on-quarter basis.

``We were expecting a 9 percent quarter-on-quarter decline in profit mainly due to consolidating newly acquired start-ups in South Africa, Indonesia and Turkey,'' Nadine Ghobrial, telecommunications analyst at EFG-Hermes, said in a phone interview from Cairo today. Ghobrial has a ``buy'' recommendation on Saudi Telecom and a price estimate of 101 riyals.

Saudi Telecom has expanded its operations into Malaysia, India, Indonesia, South Africa and Kuwait to offset declining subscriber growth and competition from regional mobile-phone service providers in the Arab world's largest economy. The company faces competition in its home-base from Etihad Etisalat Co. and Zain Saudi Arabia, a unit of Kuwait's biggest mobile- phone company, which began operations in the country in August.

Mobile-phone annual subscriber growth in Saudi Arabia may decline to 5.3 million in 2009, from 6.4 million in 2008, according to a June report by EFG-Hermes.

Shares Decline

Saudi Telecom fell 1.3 percent to 58.75 riyals in Riyadh trading, valuing the company at 117.5 billion riyals. The stock, which has lost 30 percent this year, declined as much as 7.6 percent in intra-day trading. The benchmark Tadawul All Share Index, down 50 percent this year, today closed 1.7 percent lower. The measure lost as much as 4.7 percent during the trading day.

``The share-price fall is in line with the overall market trend, and it's hard to tell whether the stock was reacting to the earnings numbers,'' Simon Simonian, telecommunications analyst at Shuaa Capital PJSC, said today in a phone interview from Dubai.

Last year, Saudi Telecom bought a mobile-phone license in Kuwait and a 25 percent interest in Malaysia's Maxis Communications Bhd. The Maxis stake gives the company access to 1.4 billion people in Asia and enables it to provide roaming services to at least 1.5 million Indians working in Saudi Arabia. In January, Saudi Telecom gained access to customers in Turkey and South Africa when it paid $2.56 billion for a 35 percent stake in United Arab Emirates-based Oger Telecom Ltd.

``International operations are a very small component to Saudi Telecom's earnings and its main driver remains the domestic market,'' Simonian said. ``It might take years for the foreign operations to make contributions to the company's balance-sheet.''

Saudi Telecom will pay a dividend of 2 billion riyals, or 1 riyal a share, for the third-quarter, the company said.

To contact the reporter on this story: Matthew Brown in Dubai at mbrown42@bloomberg.net

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Gulf Bank May Have Loss as Derivatives Contracts Sour

By Arif Sharif and Fiona MacDonald

Oct. 26 (Bloomberg) -- Gulf Bank KSC, Kuwait's fourth- biggest lender by market value, may suffer losses after some clients defaulted on derivative contracts linked to the euro, sparking concern regional banks may be further hit by the global financial crisis.

The losses were incurred on currency derivatives after a decline in the value of the euro versus the dollar, state-run Kuwait News Agency said today, citing central bank governor Salim al-Sabah. Gulf Bank will have to absorb the losses until an agreement can be worked out between the bank and its clients, the news agency cited the central bank governor as saying.

The defaults will have ``no major'' financial effect, Chief Executive Officer Louis Myers said today. He declined to comment on the size of the losses. Gulf Bank may have incurred losses of as much as 200 million dinars ($746 million) from derivatives contracts used for speculative trading or hedging, Ibrahim Dabdoub, chief executive officer of National Bank of Kuwait SAK, Kuwait's biggest bank, said in an interview to Al Arabiya TV.

Banks in the six Gulf Arab states, including Saudi Arabia and the United Arab Emirates, have largely sidestepped the $681 billion of losses and writedowns that banks across the world have taken following the collapse of the U.S. subprime-mortgage market. Gulf Bank joins lenders including Gulf International Bank BSC, which has written down $1 billion, and Abu Dhabi Commercial Bank PJSC and investment bank Shuaa Capital PSC, which between them have written down $174 million.

Bigger Issue

``This is certainly unwelcome news,'' Ali Khan, head of equities trading at Arqaam Capital Ltd., said in a phone interview from Dubai. ``If this trend were to gain momentum and other banks started reporting similar defaults then we would have a much bigger issue to deal with,'' he said.

The Kuwaiti central bank will support Gulf Bank ``with full force and guarantee depositors complete rights, locally and internationally,'' al-Sabah said. An auditor will be appointed to oversee Gulf Bank's treasury management and trading, he said.

The default on derivative contracts will have ``no major effect on the soundness of the bank's financial position'' and not affect its ability to continue business, Myers said in an e- mailed statement. The bank is ``working closely'' with authorities to resolve the issue, he said.

Gulf Bank, which has a market value of $4.4 billion, reported on Oct. 19 a profit of $322.8 million in the nine- months to Sept. 30. It had assets of 5.09 billion dinars at the end of March, according to data compiled by Bloomberg.

Shares Suspended

Gulf Bank shares were suspended from trading on the Kuwait Stock Exchange today. They last traded on Oct. 23, when they fell 4 percent to 950 fils, taking the decline this year to 36 percent.

``In volatile markets, you might expect some risk to contract enforcement,'' Raj Madha, a director of equity research at investment bank EFG-Hermes Holding SAE, said in a phone interview. Bank lending against shares is protected, although if the market declines 50 percent ``you could certainly imagine that a lot of people might not be inclined to make good any further shortfall, having taken very substantial losses.''

The Kuwait Stock Exchange's benchmark share index has lost 19 percent this year Middle Eastern markets followed global benchmarks lower on worries a slowing global economy and a U.S. recession will hurt company earnings. Saudi Arabia's benchmark index has fallen 51 percent this year, Dubai's is down 48 percent and Abu Dhabi's by 26 percent.

Dozens of traders walked off the trading floor at the Kuwait Stock Exchange on Oct. 23 and demonstrated outside the building to urge more government support for the market.

No Exposure

``We don't have any exposure on the derivatives market,'' National Bank of Kuwait's Dabdoub said in a telephone interview. ``We still expect to achieve good profits by year end. The banking system is sound and what happened to the Gulf Bank won't have any negative effect on the whole banking system.''

The euro has declined about 10 percent versus the dollar since the beginning of October as a global economic slowdown spurred demand for the U.S. currency as a haven for losses in emerging markets. This week's decline in the euro was its biggest against the dollar and the yen since the 15-nation currency's inception in January 1999.

To contact the reporter on this story: Arif Sharif in Dubai at asharif2@bloomberg.net; Fiona MacDonald in Kuwait at fmacDonald4@bloomberg.net.

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Gulf Shares Retreat on Global Recession Concern; Emaar Falls

By Haris Anwar

Oct. 26 (Bloomberg) -- Persian Gulf shares declined on concern a deepening global slowdown will turn into a recession, crimping profits at local real-state and financial companies.

Emaar Properties PJSC fell the most in more than a week. Saudi Telecom Co., the Arab world's largest phone company, dropped after reporting a decline in third-quarter profit. Gulf Finance House E.C., Bahrain's largest Islamic investment bank by market value, retreated as the lender said profit fell.

The Dubai Financial Market General Index lost 4.7 percent to 3,102.65, while the Abu Dhabi Securities Exchange General Index retreated 3.8 percent. In Saudi Arabia, the Tadawul All Share Index declined 1.7 percent. The Bahrain All Share Index dropped 3.7 percent, the most since Bloomberg started tracking the measure in July 2004.

``It's panic selling led by international funds which need liquidity to cover their losses,'' Bassam Ramahi, brokerage manager at Emirates Securities in Abu Dhabi, said in a telephone interview. ``Those local investors who are following them will be the losers in the long run because you can't buy such big names so cheaply.''

In the U.S. the Dow Jones Industrial Average lost 3.6 percent, while the Standard & Poor's 500 Index dropped 3.5 percent on concern the economic slump will hurt corporate earnings. More than $10 trillion has been erased from the market value of shares worldwide this month as earnings decrease. Reports on Oct. 24 showed the U.K. economy contracted for the first time since 1992 and growth in South Korea was the slowest in four years.

Emaar

The DFM Index has lost 25 percent this quarter. The measure trades at an average of 7.1 times estimated earnings that compares with a multiple of 11 for the Standard & Poor's 500 Index, data compiled by Bloomberg show.

Emaar, the Middle East's biggest publicly traded real- estate developer, dropped 6.3 percent to 5.62 dirhams. The shares trade at 4.8 times estimated earnings.

Saudi Telecom declined 1.3 percent to 58.75 riyals as the company said net income fell 4.1 percent, missing analysts' estimates, as expansion costs hurt earnings.

Gulf Finance plunged 9.6 percent, the most in almost three weeks, to $1.98 in Bahraini trading. The bank said third-quarter profit declined to $82 million.

February 2000

Oman's Muscat Securities Market 30 Index slumped 8.3 percent to 6,506.03, the lowest since August 2007. In Qatar the DSM 20 Index tumbled 8.9 percent, the most since February 2000. The Kuwait Stock Exchange Index dropped 3.5 percent, bringing the decline this month to 21 percent.

Oman Flour Mills Co. tumbled 9.4 percent to 2.73 rials after the owner of shipping terminals said profit fell to 753,000 rials ($1.96 million) from 1.6 million rials in the year-earlier period.

Kuwait's central bank will propose a bill to parliament to guarantee the deposits in the country's commercial banks, state- run KUNA news agency reported today.

Trading in Gulf Bank KSC, Kuwait's fourth-biggest lender by market value, was suspended after reports that the bank may suffer losses after some clients defaulted on derivatives contracts, sparking concern the financial crisis could hit local lenders. The Kuwait Banking Sector Index lost 3.9 percent.

To contact the reporter on this story: Haris Anwar in Dubai on Hanwar2@bloomberg.net

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Marubeni Gets $67 Million Malaysia Train-Car Order, Nikkei Says

By Stanley White

Oct. 26 (Bloomberg) -- Marubeni Corp., the Japanese trading house that's helping build a rail tunnel under The Bosporus Strait, won a 240 million ringgit ($67 million) order for 30 train cars from Malaysia's government, the Nikkei newspaper said.

The cars will be used on a new 180-kilometer (112-mile) rail link between Kuala Lumpur and the northern city of Ipoh, Nikkei reported without saying where it got the information.

Japan's Mitsubishi Electric Corp. and South Korea's Hyundai Rotem Co. will manufacture the cars for delivery by 2010, the newspaper said.

None of the companies were available for comment.

To contact the reporter on this story: Stanley White in Tokyo at swhite28@bloomberg.net

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Itoham to Recall Millions of Products on Possible Contamination

By Maki Shiraki

Oct. 26 (Bloomberg) -- Itoham Foods Inc. will recall 2.67 million packs of wieners and other products after discovering contamination of well water used at one of its factories, the ham and sausage maker said yesterday.

The recall affects products made from Sept. 18, when Itoham inspected the water, to Oct. 15 when it switched to a safe water supply, Managing Executive Officer Shinichi Yamada told reporters at a press conference yesterday in Tokyo. It will cost the company 300 million yen ($3 million), he added.

``I can't measure the impact on our earnings,'' Yamada said. ``We can expect people to react strictly and reduce purchases, but it's impossible to fully anticipate what consumers will do.''

The recall is the latest by a Japanese food processor in the wake of China's contaminated milk scandal. Nissin Foods Holdings Co. voluntarily recalled 487,820 packs of its Cup Noodles last week after a woman who ate the product became sick.

Asahi Breweries Ltd. in September recalled 650,000 bottles of ``shochu'' spirits contaminated by pesticide, at a cost of 1.5 billion yen.

Itoham said it will announce on Oct. 30 whether cyanogen, the toxic substance found in the water, tainted the products.

To contact the reporter on the story: Maki Shiraki at in the Tokyo or at mshiraki1@bloomberg.net

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GDP Probably Contracted as Spending Fell: U.S. Economy Preview

By Shobhana Chandra

Oct. 26 (Bloomberg) -- The U.S. economy shrank last quarter for the second time in a year as consumers and companies pulled back, reports this week may show.

Gross domestic product contracted at a 0.5 percent annual rate from July to September, the biggest drop since the 2001 recession, according to the median estimate in a Bloomberg News survey ahead of Commerce Department figures due Oct. 30.

Consumer spending, the biggest part of the economy, probably dropped by the most in almost two decades as job losses mounted, stock prices sank and property values plummeted. Federal Reserve policy makers, meeting this week, are forecast to lower interest rates for a second time this month to try to thaw frozen credit markets and prevent a deepening recession.

``I don't see how the consumer can do anything but retrench,'' Robert McTeer, former president of the Fed Bank of Dallas, said in an Oct. 24 Bloomberg Television interview. ``If they all do it at the same time, it will really tank the economy.''

The projected economic contraction would follow a growth rate of 2.8 percent in the second quarter. The economy shrank at a 0.2 percent pace in the last three months of 2007.

Economists also forecast consumer spending dropped at a 2.4 percent pace last quarter, the first decline since 1991 and the biggest since 1990, according to the survey median.

Purchases fell 0.2 percent in the final month of the quarter after stalling in August, a Commerce report Oct. 31 is projected to show. Incomes likely grew 0.1 percent, a fifth of the gain in the prior month.

Growing Pessimism

Consumer sentiment probably plunged this month as stocks crashed, raising the risk the slump in spending will be even worse this quarter. The Conference Board's consumer confidence index, due on Oct. 28, probably fell to 52 from 59.8 in September, the survey median showed.

The International Council of Shopping Centers predicts the November-December holiday season, which brings in more than a third of some retailers' annual sales, will be the worst since 2002.

Wal-Mart Stores Inc., the world's biggest retailer, is seeing consumers use credit cards less often because they are ``feeling the pain'' of the financial crisis, said Eduardo Castro-Wright, the company's U.S. stores chief. Americans feel ``maxed out,'' he said in a speech in Los Angeles on Oct. 21.

Household wealth is disappearing as foreclosures drive down home prices. Home values in 20 U.S. cities fell in August at the fastest pace on record, economists forecast figures from S&P/Case-Shiller on Oct. 28 will show.

Fewer Sales

Sales are still dropping as stricter lending rules and concern that property values will keep plunging scare off prospective buyers. A Commerce report tomorrow may show purchases of new homes fell in September to a 17-year low, according to the Bloomberg survey median.

The squeeze on credit and faltering overseas demand is hurting U.S. manufacturers. The Commerce Department may report on Oct. 29 that orders for durable goods, those meant to last several years, fell in September for the second consecutive month, according to the Bloomberg survey.

Policy makers will likely focus on the risks to growth when they meet on Oct. 28-29 as the economic slowdown has depressed oil prices and eased concern about inflation.

The benchmark rate will be cut by a half point to 1 percent, according to economists surveyed. Trading in financial futures indicates there is about a one-in-four chance the rate will be reduced by three-quarters of a point to 0.75 percent, the lowest level in the two decades since policy makers established an explicit federal funds target.

                         Bloomberg Survey

=================================================================
                       Release    Period    Prior     Median
Indicator                 Date               Value    Forecast
=================================================================
New Home Sales ,000's    10/27     Sept.      460       450
New Home Sales MOM%      10/27     Sept.     -11.5%    -2.2%
Case Shiller Monthly YO  10/28      Aug.     -16.4%    -16.6%
Case Shiller Monthly In  10/28      Aug.     166.2     165.0
Consumer Conf Index      10/28      Oct.      59.8      52.0
Durables Orders MOM%     10/29     Sept.     -4.8%     -1.2%
Durables Ex-Trans MOM%   10/29     Sept.     -3.3%     -1.5%
GDP Annual QOQ%          10/30      3Q A      2.8%     -0.5%
Personal Consump. QOQ%   10/30      3Q A      1.2%     -2.4%
GDP Prices QOQ%          10/30      3Q A      1.1%      4.0%
Core PCE Prices QOQ%     10/30      3Q A      2.2%      2.5%
Initial Claims ,000's    10/30    Oct. 25     478       475
Cont. Claims ,000's      10/30    Oct. 18     3720      3720
=================================================================

To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net

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Pop. Milano Chairman Says Tier 1 Ratio May Be Low, Sole Reports

By Elisa Martinuzzi

Oct. 26 (Bloomberg) -- Banca Popolare di Milano Scrl Chairman Roberto Mazzotta said the northern Italian bank's Tier 1 capital ratio of 6.4 percent may be insufficient in current markets, according to an interview in Il Sole 24 Ore.

The ratio, a reserve built up to protect depositors, may not be enough while lending is risky, he told the financial daily.

To contact the reporter on this story: Elisa Martinuzzi in Milan at emartinuzzi@bloomberg.net

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Unitech Blames `Criminal' Speculators For 50% One-Day Decline

By Saikat Chatterjee

Oct. 26 (Bloomberg) -- Unitech Ltd. Managing Director Sanjay Chandra blamed ``criminal'' speculators for the record 50 percent one-day plunge in the stock as India's second-largest real estate developer hasn't defaulted on loans.

Unitech is filing complaints with the Securities and Exchange Board of India to restrain ``bear cartels'' that spread ``malicious rumors'' to drive down the share price, Chandra told reporters in New Delhi today.

Investors are shunning Indian property stocks, leading to a 86 percent drop in the Bombay Stock Exchange's Realty Index this year, on concern the global credit crunch, faltering economic growth and rise in borrowing costs may curb sales and profits. Chandra aims to reverse a sell-off that saw Unitech plunge on Oct. 24 on speculation that it faces a shortage of funds.

``The clarification may stop the panic selling, but most investors may want to wait before they start investing'' again, said R.K. Gupta, who manages about $90 million in equities at Taurus Asset Management Co. in New Delhi. ``The global economic situation is the main reason why the realty stocks have been battered in India, and that's not going to change in a hurry,''

Borrowing costs are currently about 15.5 percent to 16.5 percent, compared with 12.1 percent for the year ended March 31, Chandra said. He declined to comment on Unitech's cash position before the company, the second-worst performer on the Realty index this year, reports second-quarter results on Oct. 31.

Investors' concern about the developer's funding was exacerbated when India's central bank said it would continue fighting inflation, reducing the likelihood that it will ease borrowing costs.

The developer fell the most since its trading debut in January 1991 to 31 rupees at the close of markets in Mumbai on Oct. 24. The stock, which had more than doubled last year, is down 94 percent from its record close of 538.25 rupees on Jan. 2.

India's central bank on Oct. 24 refrained from taking steps to make money less expensive. It had lowered a key lending rate on Oct. 20 for the first time since 2004 to ease borrowing costs that had climbed to a seven-year high.

Overseas Borrowing Rules

Asia's third-biggest economy this month also eased overseas borrowing rules, lifting curbs it had imposed last year, as policy makers stepped up measures to prevent a looming global recession from crimping India's economic growth.

Unitech scrapped plans for a $600 million sale of shares in a real estate investment trust in Singapore earlier this year, joining rival DLF in shunning equity markets after stocks plummeted. The developer will instead seek $300 million from private equity firms to build hotels and shopping malls in India this year, Chandra said in June.

The firm also sold a 50 percent stake in a Mumbai project to Lehman Brothers Holdings Inc.'s real estate fund for $175 million in June, before the U.S. firm filed for bankruptcy. Unitech collected that payment by July 18, Chandra reiterated today.

Unitech and other real estate developers have faced speculation in recent weeks that they face capital constraints.

Denies Rumors

On Oct. 24, the company was forced to issue a statement denying rumors that it had defaulted on payments for land acquired in Noida, near New Delhi, after the Business Standard newspaper reported that Unitech had rescheduled some payments.

The payments were rescheduled due to delays in handing over the land, and because construction had been blocked by agitating farmers, Unitech said in an e-mailed statement that day.

On Oct. 10, Unitech denied a report in the Hindustan Times that Standard Chartered Plc had withheld funds from the realty firm. Unitech hadn't accepted loans from Standard Chartered and the report is ``completely false,'' it said in a statement to the Bombay Stock Exchange.

To contact the reporter on this story: Saikat Chatterjee in New Delhi at schatterjee4@bloomberg.net.

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IMF Clears Strauss-Kahn of Wrongdoing in Affair With Staffer

By Christopher Swann

Oct. 26 (Bloomberg) -- The International Monetary Fund cleared its chief, Dominique Strauss-Kahn, of any wrongdoing in connection with his relationship with a female employee while faulting him for a ``serious error of judgment.''

An investigation by the fund's board ``concluded that there was no harassment, favoritism, or any other abuse of authority,'' a statement by the Washington-based agency said yesterday. ``Nevertheless, the Executive Board noted that the incident was regrettable and reflected a serious error of judgment on the part of the managing director.''

Strauss-Kahn, in a separate statement, said: ``I very much regret the incident and I accept responsibility for it.'' The 59-year-old former French finance minister, who took the helm of the lending agency in November 2007, said he accepted the board's findings and repeated an apology to his staff and his family.

The report said ``this matter is now closed,'' lifting a cloud that threatened to distract Strauss-Kahn just as the IMF steps up lending to countries swamped by the global financial crisis. The fund last week agreed to lend Iceland $2.1 billion after the nation's banking system collapsed. Discussions with Pakistan for a loan of up to $10 billion are under way, and Ukraine may also seek help.

``Our conclusion was that this will in no way effect the effectiveness of the managing director in the very challenging period ahead,'' Shakour Shaalan, senior member of the 24-person board, told reporters in a conference call yesterday. He described Strauss-Kahn as ``very competent'' and said that the board had ``accepted his apology.''

Focus of Inquiry

The IMF investigation focused on Strauss-Kahn's relationship with Piroska Nagy, wife of former Argentine central bank President Mario Blejer, according to a fund director who spoke earlier on condition of anonymity.

The report said Strauss-Kahn made ``initial contact'' with a female staff member, who wasn't identified, concerning ``legitimate IMF business.'' There followed ``a two-week-long exchange of consensual and very personal messages.'' In early January the two engaged in a ``consensual physical relationship of short duration.''

Nagy, who worked in the IMF's Africa department, left the agency in August, according to her lawyer, Robert Litt. He said on Oct. 18 that Nagy hadn't alleged any misconduct by Strauss- Kahn, and that she resigned voluntarily in response to a severance offer available to all staff.

The IMF report said Strauss-Kahn ``played no role in her subsequent employment'' at the European Bank for Reconstruction and Development in London.

Wolfowitz Resignation

The investigation follows last year's resignation of World Bank President Paul Wolfowitz following an uproar over Wolfowitz's decision to secure a pay increase for his companion. Both Washington-based institutions were created in 1944 as the post-World War II economic order was being planned, and now have 185 member nations.

Strauss-Kahn has won praise for overhauling the fund's voting structure to give more say to emerging nations and for cutting costs. Last December, he announced plans to cut staff by as much as 15 percent, or almost 400 people, to stem losses as the fund's loan-book dried up.

To contact the reporters on this story: Christopher Swann in Washington at cswann1@bloomberg.net

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Porsche Aims for Control of Volkswagen, Discloses Holdings

By Andreas Hippin

Oct. 26 (Bloomberg) -- Porsche SE, maker of the 911 sports car, said it aims to raise its stake in Volkswagen AG to 75 percent next year and take control of Europe's largest automaker.

Porsche currently holds 42.6 percent of Volkswagen's common shares and has cash-settled options for another 31.5 percent, the Stuttgart, Germany-based carmaker said today in an e-mailed statement.

To contact the reporter on this story: Andreas Hippin in Frankfurt at ahippin@bloomberg.net



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China to Keep Textile Export `Stable' as Trade Restrictions End

By Zhao Yidi

Oct. 26 (Bloomberg) -- China will keep textile exports ``stable and sustainable'' in 2009 as it ends controls on shipments to the U.S. and Europe and World Trade Organization restrictions end.

The Ministry of Commerce will maintain ``dialogue and communication'' with relevant countries as limits imposed on China's textile exports by the WTO expire on Dec. 31, the ministry said in a statement published on its Web Site.

China aims to boost 2009 textile exports while avoiding any unwanted expansion of output after the restrictions end. The nation wants to minimize trade friction next year as textile agreements signed with the U.S. and Europe also run out in 2009.

``Local ministry of commerce offices should continue to do their job in helping enterprises to change growth models and adjust product structures,'' the ministry said in the statement, without giving details.

The government will arrange next year's export plan to meet the new situation, including a slowing world economy and the turmoil in financial markets, according to the statement.

To contact the reporter on this story: Zhao Yidi in Beijing at at yzhao7@bloomberg.net

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China Scraps Interest Tax on Stock Settlement Funds

By Zhao Yidi

Oct. 26 (Bloomberg) -- China scrapped the tax individuals pay on interest earned from stock settlement funds in an effort to boost the nation's equity market, which has fallen 67 percent this year.

Investors don't have to pay tax on interest income accumulated from their settlement funds effective Oct. 9, the Ministry of Finance said in a statement published on its Web site.

This policy change comes amid a package of measures the government is using to revive the nation's plunging stock market. The nation is restricting sales of state-owned shares by introducing exchangeable bonds and it simplified the share buyback process. China also scrapped the tax on stock purchases in September.

``This announcement is a natural extension of the policy to remove tax payments on interest income from bank deposits,'' said Jing Ulrich, chairwoman of China equities at JPMorgan Chase & Co. in Hong Kong, in an e-mail. ``We expect this to have a mildly positive effect on the market.''

To contact the reporter on this story: Zhao Yidi in Beijing at at yzhao7@bloomberg.net

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China's Spot Iron Ore Prices Fall 11% Last Week on Weak Demand

By Kyunghee Park

Oct. 26 (Bloomberg) -- Cash prices of iron ore imported by China, the world's biggest buyer, fell 11 percent to an almost two- year low because of weaker demand from steelmakers.

Prices at Qingdao, China's biggest port handling the steelmaking ingredient, dropped 80 yuan to 640 yuan ($93) a metric ton in the week ended Oct. 24, the lowest since November 2006, according to Beijing Antaike Information Development Co.

Chinese mills have cut production as the economic slowdown and a global credit crunch curbed demand from automakers and builders. All steelmakers in the Asian country will be unprofitable in October after prices fell, Shan Shanghua, secretary general of the China Iron & Steel Association, said Oct. 23.

The Chinese price of hot-rolled coil, a benchmark steel product, has dropped 40 percent to 3,560 yuan a ton from a record 5,957 yuan on June 5, according to Antaike.

Cash prices for iron ore arriving at Beilun port, where Baoshan Steel receives shipments, dropped 11 percent to 620 yuan a ton last week, Antaike said.

China buys most of its spot iron ore from Indian mining companies.

To contact the reporter on this story: Kyunghee Park in Hong Kong at kpark3@bloomberg.net

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Chalco Third-Quarter Net Drops on Weak Demand, Prices

By Xiao Yu

Oct. 26 (Bloomberg) -- Aluminum Corp. of China Ltd., the country's largest producer, said third-quarter earnings slumped 93 percent as metal prices dropped and slowing economic growth hurt demand.

Net income fell to 182.9 million yuan ($27 million), or 0.014 yuan a share from 2.29 billion yuan, or 0.191 yuan, a year earlier, the company, known as Chalco, said in a statement to the Hong Kong stock exchange, citing domestic accounting standards. Sales dropped 7.9 percent to 19.1 billion yuan.

Chairman Xiao Yaqing is shutting plants and curbing expenditure to counter a 22 percent drop in the metal price this year as China's economy grows at the slowest pace in five years. Alcoa Inc., the largest U.S. aluminum maker, on Oct. 7 posted a 52 percent decline in third-quarter profit.

``Demand looks bleak this quarter and next year due to an economic slowdown,'' Chris Ding, a Beijing-based analyst at China International Capital Corp., said before the announcement. ``With falling prices and squeezed margins, the aluminum industry will consolidate.''

Chalco's shares have slumped 85 percent this year in Hong Kong trading, worse than the 55 percent drop in the benchmark Hang Seng Index. The stock fell 14 percent on Oct. 24 to close at HK$2.48. Its yuan-denominated shares dropped 2.1 percent to 6.57 yuan in Shanghai.

Capacity Reduction

The Beijing-based company forecast on Oct. 6 that its third- quarter profit would drop by more than 50 percent, and on Oct. 22 said it will cut annual aluminum production capacity by 18 percent. JPMorgan & Chase Co. and CICC's Ding expect Chalco to post a loss in the fourth quarter.

Aluminum futures dropped by more than a fifth this year to 13,825 yuan a ton on Oct. 24 on the Shanghai Futures Exchange. Chinese smelters have an average production cost of 18,000 yuan to 18,500 yuan a ton, according to JPMorgan.

United Co. Rusal, the world's largest aluminum smelter, said Oct 16 that 75 percent of producers in China, Europe and the U.S. are unprofitable after the price of the metal plunged.

Aluminum demand will gain 6 percent this year, less than an earlier forecast of 8 percent, according to Alcoa estimates. North American demand will fall 10 percent, and Chinese growth will slow to 15 percent, trailing an expected 22 percent, the company said Oct. 8.

Chalco cut spot alumina prices three times in five months because of falling demand. The company reduced alumina production capacity 10 percent a company official said on Oct. 15. Alumina is used to make aluminum.

To contact the reporter on this story: Xiao Yu in Beijing at yxiao@bloomberg.net

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China to Tighten Foreign-Exchange Management to Fight Crisis

By Zhao Yidi

Oct. 26 (Bloomberg) -- China will tighten management of cross-border capital flows to prevent disruptions amid the global financial crisis, the nation's central banker said.

The government shouldn't underestimate the impact the crisis is having on China's economy, Zhou Xiaochuan, governor of the People's Bank of China, said in a report, delivered today to the nation's lawmakers, according to the official China News Service.

China can ``effectively defend against the impact coming from overseas,'' Zhou said, citing a ``solid'' overall economic outlook and stronger domestic financial institutions, as well as ample liquidity in the market.

Global economic slowdown will affect China's exports because reliance on overseas markets remains relatively high, Zhou said. The inflation trend may reverse or repeat its patterns in the future, Zhou said in his report.

The central bank will strengthen foreign-exchange management and improve its overseas investment system, Zhou said. China will use interest-rate tools to stabilize market expectations and keep its currency stable.

The People's Bank aims to guarantee sufficient liquidity in the market and to use open-market operations and reserve- requirement ratios to keep the banking system's liquidity at a ``reasonable level,'' according to the report.

Zhou vowed to facilitate a stable real estate credit market, while guiding commercial banks to adjust risk in the industry.

China's inflation cooled in September to 4.6 percent, the slowest growth in more than a year.

To contact the reporter on this story: Zhao Yidi in Beijing at at yzhao7@bloomberg.net

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Datang Power Posts Third-Quarter Loss on Higher Costs

By Wang Ying and Kyunghee Park

Oct. 26 (Bloomberg) -- Datang International Power Generation Co., the biggest Chinese power producer listed in Hong Kong by market value, posted a third-quarter loss because of rising coal costs and state caps on electricity tariffs.

The company had a loss of 432.9 million yuan ($63 million), or 0.037 yuan a share, Datang Power said in a statement to the Hong Kong stock exchange today, without providing year-ago figures.

The power producer said in a separate statement it expects full year net income will likely drop about 85 percent from last year's 3.41 billion yuan because of rising fuel costs. First-half profit fell by 77 percent to 406.2 million yuan, the company said in August.

To help narrow generators' losses and ease China's power shortages, the government raised the price of electricity sold to grid operators by 6 percent starting Aug. 20, the second tariff increase this year. The adjustment wasn't enough to offset rising coal costs.

Datang produced 96.4 billion kilowatt-hours of electricity in the first nine months, 11 percent more than a year earlier, the company said on Oct. 13.

Datang Power's shares fell 29 percent between June and September in Hong Kong trading, compared with a 27 percent decline in the benchmark Hang Seng Index. The stock slid 1.8 percent to close at HK$2.79 on Oct. 24.

China Datang Corp., the parent of Datang Power, may miss its full-year output target because of slowing demand growth and delays in expansion, the Beijing-based company said Oct. 17.

Rival Huaneng Power International Inc., a unit of China's biggest power producer by capacity, on Oct. 21 posted a third- quarter loss of 2.2 billion yuan because of higher fuel costs, and forecast a full-year loss.

To contact the reporter on this story: Wang Ying in Beijing at wang30@bloomberg.net;

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Bank of Korea Board to Meet Tomorrow; May Lower Rates

By Seyoon Kim

Oct. 26 (Bloomberg) -- The Bank of Korea monetary policy board called an unscheduled meeting tomorrow, possibly to discuss an interest rate cut after the stock market lost a fifth if its value last week.

``There will be an interim monetary policy board meeting tomorrow on Oct. 27, Monday, at 8 a.m.,'' the Seoul-based central bank said via a text message sent to the media, without providing further information.

President Lee Myung Bak today convened a meeting of the nation's top economic policy makers, including Finance Minister Kang Man Soo and central bank Governor Lee Seong Tae, to discuss measures against the financial-market turmoil. The benchmark Kospi stock index plummeted 20 percent last week and the won closed near the lowest level in a decade on Oct. 24, extending this year's loss against the dollar to 35 percent.

``I'm almost certain they'll cut and it's highly likely to be 50 basis points,'' said Lim Jiwon, economist at JPMorgan Chase & Co. in Seoul. ``A rate cut may help boost the stock market a bit, but all in all, the authorities need to restore investor confidence and for this, a concerted effort and more preemptive steps are needed.''

The President urged his aides to come up with appropriate measures ``so that the financial turmoil doesn't link to a recession in the real economy,'' a statement on the Web site of the presidential house said today.

Beijing Summit

Lee returned this weekend from a Beijing meeting of Asian and European leaders at which they called for an overhaul of World War II-era banking rules. It was the first meeting of Asian and European Union chiefs since calls for coordinated action mounted amid bank failures and plunging stock prices that began last month.

South Korea's government will probably come up with steps soon to encourage companies to expand investment in factories and create jobs, Yonhap News reported today. The news agency also said the central bank's policy board may discuss cutting interest rates as much as a half-percentage point.

The bank cut rates for the first time in four years on Oct. 9, by 25 basis points, to 5 percent.

Federal Reserve policy makers, meeting this week, are forecast to lower interest rates for a second time this month.

South Korea's economy expanded at the slowest pace in four years last quarter, sparking concern the nation is headed for its first recession since requiring an International Monetary Fund bailout 10 years ago.

Global Crisis

``The global crisis has been brought home to Korea with a rapid deceleration in growth, and there's worse to come,'' Daniel Melser, a senior economist at Moody's Economy.com in Sydney said after the release of the gross domestic product figures on Oct. 24. ``The state of the economy demands a rapid easing in monetary policy from the Bank of Korea.''

South Korea's central bank said Oct. 24 it will inject 2 trillion won ($1.4 billion) into the financial system through repurchase-agreement operations.

The government last week pledged $130 billion to support lenders as the credit crunch saps local banks' access to foreign funds, and said they will spend as much as 8 trillion won to rescue builders struggling with unsold apartments.

To contact the reporter on this story: Seyoon Kim in Seoul at skim7@bloomberg.net

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Mitsubishi UFJ May Raise Capital, Nikkei Says

By Stanley White

Oct. 26 (Bloomberg) -- Mitsubishi UFJ Financial Group Inc., the Japanese bank investing $9 billion in Morgan Stanley, may raise as much as 1 trillion yen ($10 billion) in additional capital, the Nikkei newspaper said.

Japan's biggest lender may sell shares before March 31, to improve its finances due to unrealized losses on stockholdings, the newspaper reported, without saying where it obtained the information.

Takashi Takeuchi, a spokesman at Tokyo-based Mitsubishi UFJ, declined to comment on the report.

Shares of Japan's six biggest banks including Mizuho Financial Group Inc. fell in Tokyo last week on concern profits may decline as the global credit crisis pushes the world's second-biggest economy toward a recession. Bankruptcy debt in the nation almost tripled in the six months ended Sept.30, according to research company Teikoku Databank Ltd.

The benchmark Nikkei 225 Stock Average has fallen 32 percent this month, eroding the value of shares the banks hold as part of their capital. Stocks in the index are trading at an average of about 90 percent of their book value, compared with 1.3 times for the 1,730 member shares making up the MSCI World Index.

Finance Minister Shoichi Nakagawa said on Oct. 17 that Japan should change mark-to-market accounting regulations if current rules are found to cause ``systemic risk.''

Masamoto Yashiro, chairman of Shinsei Bank Ltd., three days later urged immediate suspension of mark-to-market accounting for about two years, as an emergency measure to deal with the global financial crisis that's forcing companies to book losses on illiquid holdings.

Mizuho, Sumitomo Mitsui

Mizuho, Japan's second-largest bank by revenue, and Sumitomo Mitsui Financial Group Inc., the third-biggest, may also raise several hundreds of billion yen in additional capital to offset losses on their shareholdings, public broadcaster NHK reported, without citing its sources.

Telephone calls to Mizuho and Sumitomo Mitsui seeking comment on the press reports went unanswered today.

JPMorgan analyst Katsuhito Sasajima cut his rating on Mizuho to ``underweight'' from ``neutral'' and slashed his price target on the stock to 280,000 yen from 500,000 yen in an Oct. 22 report, citing rising credit costs and a weak performance by the bank's securities unit.

Lending growth at Japanese banks slowed in September for the first time in nine months as companies needed to borrow less for raw materials because prices dropped, according to the Bank of Japan. Excluding credit associations, loans rose 1.8 percent from a year earlier after 2 percent growth in August, the bank said.

To contact the reporter on this story: Stanley White in Tokyo at swhite28@bloomberg.net

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ICBC profit growth slows as demand eases

An ICBC outlet in Hangzhou, capital of east China's Zhejiang province. The bank said profits in the past nine months increased largely because of more interest income despite the malaise from the global financial crisis.[Asianewsphoto]

(China Daily/Agencies)
Updated: 2008-10-26

Industrial and Commercial Bank of China Ltd (ICBC), the world's largest bank by market value, posted the smallest profit increase since going public two years ago on weaker corporate demand for loans and other financial services.

Net income rose 26 percent in the third quarter to 28.2 billion yuan ($4.1 billion), or 0.09 yuan a share, from 22.46 billion yuan, or 0.07 yuan, a year earlier, the Beijing-based bank said in a statement on Friday.

Chairman Jiang Jianqing more than doubled ICBC's profit since 2005 as economic expansion of more than 10 percent bolstered demand for loans. He must now contend with slower demand for loans and rising credit costs as cooling exports cause more Chinese companies to default.

"All the evidence we've seen such as a deterioration in asset quality, slower loan growth and contraction of net interest margins points to a downturn in the banking industry," said Li Ming, who manages 9 billion yuan at Dacheng Fund Management Co in Shenzhen. "The best period is officially behind us."

Chinese banks may report a 7-percent decline in profit in 2009 on tighter lending margins and an increase in non-performing loans as the slowing economy drives some businesses out, Citigroup Inc said last week. Citigroup forecast the non-performing loan ratio of the nation's six largest publicly traded banks will rise 0.74 percentage point to 3 percent.

Banks offered 1 trillion yuan of new loans in the third quarter, 10 percent less than the amount offered in the second quarter and about 25 percent less than that of the first quarter, according to the central bank.

ICBC increased lending by 8 percent in the first nine months to 4.29 trillion yuan from the end of last year.


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Senior official urges lawyers to protect legal rights of clients

(China Daily/Agencies)
Updated: 2008-10-26

A senior Chinese official called on the country's lawyers to serve their clients wholeheartedly and be a guard for the legal rights and interests of their clients, at Saturday's opening of the Seventh National Lawyers Congress.

The congress will last through October 27.

He urged Chinese lawyers to strictly abide by the principle of "making facts as the base and law as the yardstick" and follow their code of conduct and disciplines.

Lawyers "should take the safeguarding of social fairness and justice as the fundamental pursuit of value in their practice," said Zhou Yongkang, a member of the Standing Committee of the Communist Party of China (CPC) Central Committee Political Bureau and the secretary of the CPC Central Political and Legislative Affairs Committee (CPLAC).

Under the leadership of the CPC Central Committee and the State Council, China's lawyer system has been gradually improving, while the lawyers' number has kept on increasing and their role has become increasingly clear, according to the senior official.

Zhou urged Chinese lawyers to give top priority to the cause of the Party, the interests of the people, and the Constitution and law, and be an adamantine constructor and guard for socialism with China's own characteristics.

Chinese lawyers should become a promoter for social harmony, he said, noting that the All-China Lawyers Association (ACLA) should bring into full play of its role as a bridge and ligament between Chinese lawyers and the Party and the government.

Present at the opening session were Meng Jianzhu, minister of public security, state councilor and deputy secretary of the CPLAC, Wang Shengjun, president of the Supreme People's Court, and Cao Jianming, procurator-general of the Supreme People's Procuratorate.

According to official website of the ACLA, the congress is its highest governing body. China has some 140,000 lawyers in practice and over 14,000 law firms.


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ASEM meeting concluded with consensus on crisis

(Xinhua)Updated: 2008-10-26

BEIJING - The two-day 7th Asia-Europe Meeting (ASEM) was concluded here Saturday with participants reaching consensus on global financial crisis and other issues.

The two-day 7th Asia-Europe Meeting (ASEM) was concluded at the Great Hall of the People in Beijing on Oct. 25, 2008. [Xinhua]

The meeting, attended by leaders and representatives from 45 Asian and European nations and organizations, realized its expected goal and was a great success, Chinese Premier Wen Jiabao said in a closing speech.

As one of the most fruitful achievements, a statement of the 7th ASEM on the international financial situation was adopted at the meeting.

"Leaders believed that authorities of all countries should demonstrate vision and resolution and take firm, decisive and effective measures in a responsible and timely manner to rise to the challenge of the financial crisis," said the statement.

The international community should continue to strengthen coordination and cooperation and take effective and available economic and financial measures in a comprehensive way to restore market confidence, stabilize global financial markets and promote global economic growth, it said.

According to the document, leaders supported the convening of an international summit on November 15 in the United States to address the current crisis and principles of reform of the international financial system.

The summit also adopted a declaration on sustainable development.

"The adoption of various cooperation proposals shows and proves again the interior impetus for strengthening dialogue at the ASEM and great potential for extending cooperation," Wen said.

China's President Hu Jintao and Premier Wen Jiabao pose with other members representing Asian and European countries for a group photo in the Great Hall of the People in Beijing October 24, 2008. [Agencies]

Amid the global financial turmoil, the ASEM has been widely regarded as an opportunity for Asian and European leaders to find a solution.

French President Nicholas Sarkozy called the meeting very "helpful" for Asia and Europe to tackle the global financial crisis and build up common cause.

"We had discussed nearly all of the topics concerned by the two continents including the most difficult issues," he said at a press conference at the end of the meeting.

Premier Wen told the press conference the need of confidence, cooperation and responsibility to find a solution to the global financial meltdown.

"We are glad to see that many countries have made their efforts and achieved some results. But it is not enough as we now see it, and more endeavors are needed," said Wen.

All countries, especially developed ones, should take measures as soon as possible to stabilize the financial market and build public confidence, he said.

Financial innovation could help develop the economy, but financial supervision is even more important for the security of the financial system, he added.

The premier also declared that China would actively attend the November15 financial summit.

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Vice Premier calls for equal job opportunities for rural and urban residents

(Xinhua)
Updated: 2008-10-26

Chinese Vice Premier Hui Liangyu said on Saturday farmers should share equal job opportunities with urban residents, which was key to realize the government goal of doubling farmer's income by 2020.

Farmers were encouraged to start their own business and local government should work out more favourable policies including preferential taxation and easier market access to help farmers find jobs and business opportunities, Hui said at a prize award ceremony of the elite rural entrepreneurs.

The reform and innovation of the rural banking system should be pushed forward so as to resolve the rural residents' problem of cash shortage in starting their own business, Hui said.

China vowed to double rural residents' income from the current level by the end of 2012 as a part of the plan aimed to revitalize the country's rural area and agriculture, which was proved on the Third Plenary Session of the 17th Communist Party of China Central Committee.

Hui said vocational training for rural people should be enhanced to allow more migrant workers to go back to their hometown to run business.


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