Sinopec to Acquire Canada’s Daylight Energy

By Colin McClelland and Bradley Olson - Oct 10, 2011 1:12 PM GMT+0700

China Petrochemical Corp., the nation’s biggest refiner, agreed to buy Daylight Energy Ltd. (DAY) for C$2.2 billion ($2.1 billion) in its largest acquisition this year, gaining Canadian oil and shale-gas reserves.

The state-owned company known as Sinopec Group offered C$10.08 a share in cash, Calgary, Alberta-based Daylight said yesterday. That’s a 70 percent premium to Daylight’s average price over the past 20 trading days and more than double the average 32 percent premium for comparable cash bids for North American energy explorers, data compiled by Bloomberg show.

The deal would give the Beijing-based company access to more than 300,000 acres of land in areas rich with oil and natural gas, adding to its expansion outside Asia after falling crude prices made valuations attractive. Sinopec Group and Cnooc Ltd. (883) are among Chinese companies that have bought almost $30 billion of Canadian energy assets in the past five years.

“Sinopec made a number of oil-sands acquisitions, and this is probably the most gas they’ve acquired in western Canada,” Neil Beveridge, a Hong Kong-based analyst at Sanford C. Bernstein & Co., said by telephone today. “It seems that Sinopec is potentially eyeing longer-term development of those for LNG exports to the Asia-Pacific market, building on what Canadian companies are trying to do.”

North America may export 5 billion cubic feet a day of liquefied natural gas by 2017 from projects turning surplus gas from shale into LNG for shipment to Asia and Europe, New York- based consultant Eurasia Group said in a report Aug. 31. Encana Corp., Canada’s biggest gas producer, said Oct. 4 it expects to make a final investment decision on the 1.4 billion cubic feet- a-day Kitimat LNG facility in British Columbia in early 2012.

Daylight’s Assets

Daylight’s proven and probable reserves rose 46 percent to 174 million barrels of oil equivalent at the end of 2010, the company said March 1. Beveridge values Daylight’s reserves at $16.70 per barrel of oil equivalent, saying Sinopec Group is paying a “fair price” for those assets.

Daylight has assets in 69 oil and gas fields in Northwest Alberta and Northeast British Columbia, with production in the first half averaging 38,000 barrels of oil equivalent, according to the statement.

In Alberta, Daylight owns rights to more than 130,000 acres of the Duvernay shale block where the company expects to find oil and liquids rich in gas, it said in an Aug. 3 statement.

Shale in China

Sinopec Group will join rival China National Petroleum Corp. and Cnooc in seeking technology through partnerships as China, estimated to hold more gas trapped in shale than the U.S., opens new areas to exploration. The world’s biggest energy user, which currently doesn’t produce any shale gas commercially, has brought in foreign partners including Exxon Mobil Corp., Royal Dutch Shell Plc and Chevron Corp. to assess its shale potential.

China Petroleum & Chemical Corp. (386), Sinopec Group’s Hong Kong-listed unit, fell 4.8 percent to HK$7.13 as of the midday break, after the Chinese government cut fuel prices. The benchmark Hang Seng Index declined 0.5 percent. Daylight closed at C$4.59 on Oct. 7 and averaged C$5.85 over the past 20 trading days.

China Petroleum finished drilling its first shale-gas well in Hubei province July 15, Sinopec Group said July 26. Collaboration with overseas companies will help boost the search for shale-gas resources, and “future growth will mainly come from unconventional gas,” Chairman Fu Chengyu said Aug. 30.

The company will further grow its business in Canada as part of its global expansion, Sinopec Group said in an e-mailed statement today.

Attractive Assets

Daylight said its board has approved the purchase. Sinopec Group is making the purchase through its Sinopec International Petroleum Exploration and Production Corp. unit.

The purchase “recognizes the highly attractive asset portfolio” of the target, Chief Executive Officer Anthony Lambert said in yesterday’s statement.

Daylight’s shares have declined 54 percent in the past year, making the company an ideal takeover target for Sinopec Group, Michael Tims, chairman of investment bank Peters & Co. Ltd. in Calgary, said by telephone. More investment in Canada by international companies such as Cnooc or India’s Reliance Industries Ltd. may be imminent, according to Tims.

“We’ve got a confluence of a lot of adverse events in the global picture which have conspired to bring share prices down,” Tims said. “Those who have a longer time horizon may find this to be a great time.”

Canaccord Genuity Corp. and Canadian Imperial Bank of Commerce’s CIBC World Markets Inc. unit are advising Daylight in the transaction, and Blake, Cassels & Graydon LLP is the company’s legal adviser, Daylight said.

Sinopec Group is being advised by Barclays Plc’s Barclays Capital and Vinson & Elkins LLP and Bennett Jones LLP are its legal advisers.

Asian buyers may spend $150 billion by 2016 to secure energy resources for their faster-growing economies and targets could include Tullow Oil Plc, Canadian Oil Sands Ltd. and Kosmos Energy Ltd., according to Sanford C. Bernstein.

To contact the reporters on this story: Colin McClelland in Toronto at cmcclelland1@bloomberg.net; Bradley Olson in Houston at bradleyolson@bloomberg.net

To contact the editors responsible for this story: Amit Prakash at aprakash1@bloomberg.net; Susan Warren at susanwarren@bloomberg.net.

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Max Bank Tests Denmark’s Consolidation Bill as Bail-In Shelved

By Christian Wienberg - Oct 10, 2011 5:01 AM GMT+0700

Max Bank (MAX) A/S became Denmark’s first insolvent lender to test a bank package designed to sidestep the country’s bail-in laws after the state was able to find a buyer and avert senior creditor losses.

Sparekassen Sjaelland A/S will take over the healthy parts of Max Bank after it was declared insolvent by the Financial Supervisory Authority. The bank package under which the takeover will be engineered allows Sparekassen Sjaelland to tap Denmark’s guarantee fund to subsidize the purchase, while the state will take on some bad loans. Creditors will be spared, while shareholders will lose their investments.

``I'm particularly satisfied to establish that the bank package works,'' Economy Minister Ole Sohn told broadcaster TV2, which first published news of the takeover late yesterday.

The maneuver allows Max Bank to avoid Europe’s toughest bank resolution laws, which had led to senior bondholder losses twice since February. Those credit events had left international funding markets closed to most of Denmark’s roughly 120 banks. Lawmakers last month passed the consolidation bill in an effort to avoid triggering more senior creditor losses and to help banks return to bond markets and generate funds needed to avoid a credit crunch.

Max Bank was declared insolvent after the FSA told it to raise writedowns and said its solvency ratio didn’t meet the new requirement, it said in a statement over the weekend. Neither Max Bank nor the regulator published details of the demands.

Writedowns

The bank wrote down 79.2 million kroner ($14.3 million) of bad loans in the first six months of the year in addition to 218 million kroner combined for the years 2009 and 2010. In its annual report published Feb. 28, Max Bank said 34 percent of its loans were related to the building and real estate industries, identified by the FSA as among Denmark’s riskiest.

The bank had a solvency ratio of 13.8 percent at the end of June, exceeding its own calculated requirement of 11.3 percent, it said in August.

Max Bank has bonds out worth 3 billion kroner, according to Bloomberg data. The bank’s stock market value was 59.5 million kroner as of the Oct. 7 closing price, after the shares lost 72 percent this year.

The bank had assets of 9.39 billion kroner at the end of June, according to its first-half earnings report. It was the third-riskiest of 99 Danish banks graded by researcher Niro Invest ApS in a June survey.

Max Bank said Oct. 8 the OMX Copenhagen stock exchange had agreed to suspend trading of its shares and bonds.

Henrik Bjerre-Nielsen, chief executive officer of Financial Stability, didn’t answer calls seeking details. Max Bank CEO Henrik Lund didn’t respond to a message left on his voice mail.

To contact the reporter on this story: Christian Wienberg in Copenhagen at cwienberg@bloomberg.net

To contact the editor responsible for this story: Tasneem Brogger at tbrogger@bloomberg.net

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Asian Stocks Rise as Europe Leaders Ease Concern

By Shani Raja - Oct 10, 2011 8:22 AM GMT+0700

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Oct. 10 (Bloomberg) -- Nick Maroutsos, a Sydney-based money manager and co-founder at Kapstream Capital, talks about the outlook for financial markets and the U.S. economy. Maroutsos speaks with Susan Li and John Dawson on Bloomberg Television's "First Up." (Source: Bloomberg)

Most Asian stocks rose, led by exporters and mining companies, after the heads of Europe’s two biggest economies pledged to shield banks from a debt crisis, easing concern the region’s troubles will derail a global economic recovery.

Rio Tinto Group, the world’s second-largest mining company by sales, gained 2.1 percent in Sydney after commodity prices climbed. Billabong International Ltd., a global surfwear maker, advanced 2.2 percent. Samsung Electronics, the world’s second- biggest maker of mobile phones, rose 2.7 percent in Seoul, while Hanjin Heavy Industries & Construction Co., which gets 62 percent of its revenue overseas, surged 14 percent.

The MSCI Asia Pacific Excluding Japan Index advanced 0.6 percent to 384.75 as of 10:12 a.m. in Tokyo. More than three stocks rose for each that fell after German Chancellor Angela Merkel said European leaders would do “everything necessary” to ensure banks have adequate capital. The gauge dropped 14 percent in September on speculation Europe’s sovereign-debt crisis and slowing U.S. economic growth may derail a global recovery.

“The Europeans have been talking a lot about doing everything they can to solve the debt crisis,” said Nader Naeimi, a Sydney-based strategist for AMP Capital Investors Ltd. “But we still haven’t seen any detail. U.S. data has been coming in better than expected recently, easing fears of another recession, but we’re still in a very slow-growth environment.”

Australia’s S&P/ASX 200 Index gained 1.2 percent and South Korea’s Kospi Index added 1.1 percent. Japanese markets are closed for a public holiday.

Debt Crisis

Futures on the Standard & Poor’s 500 Index rose 1.2 percent today. In New York, the gauge fell 0.8 percent on Oct. 7 as concern Europe’s debt crisis will worsen overshadowed a faster- than-forecast growth in American employment.

Financial stocks had the biggest decline in the S&P 500 among 10 industries after Fitch Ratings downgraded Italy and Spain. The S&P 500 last week came within 1 percent of extending its decline from its April peak to 20 percent, the common definition of a bear market.

At the weekend, Germany’s Merkel joined French President Nicolas Sarkozy in trying to persuade investors they can stamp out the debt crisis roiling global markets. At a joint press conference in Berlin, Sarkozy set a deadline of the Nov. 3 Group of 20 summit to deliver a response that addresses the immediate debt crisis in Greece, and what he called the structural defects in the 17-nation euro area. No details were provided.

“There is some light optimism on the back of the statements from Sarkozy and Merkel that they will have a euro stability plan by month-end,” said Angus Gluskie, who manages more than $300 million at White Funds Management in Sydney.

The MSCI Asia Pacific ex-Japan Index dropped 20 percent this year through Oct. 7, compared with an 8.1 percent loss for the S&P 500 and a 16 percent decline for the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 10.7 times estimated earnings on average, compared with 11.6 times for the S&P 500 and 9.8 times for the Stoxx 600.

To contact the reporters on this story: Shani Raja in Sydney at sraja4@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net

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Belgium Seeks Dexia Consumer Unit as Breakup Nears

By Francois de Beaupuy, Jacqueline Simmons and Fabio Benedetti - Oct 10, 2011 7:43 AM GMT+0700

Dexia SA (DEXB)’s breakup gained momentum as Belgium got approval from France to buy as much as 100 percent of the Belgian consumer-lending unit, three people with knowledge of the talks said.

Belgium’s federal government may pay about 4 billion euros ($5.4 billion) for the division, said one of the people, who declined to be identified because the talks are private. The price was under discussion at a meeting of directors last night, and an agreement may be announced before markets open, the people said. Dexia said it will hold a press briefing in Brussels at 9 a.m. local time following a board meeting.

The dismantling of Dexia, once the world’s leading lender to municipalities, ends a 15-year cross-border experiment that soured during the credit crunch of 2008, when France and Belgium had to rescue the bank, and became untenable in recent weeks as concern over sovereign debt holdings caused its short-term funding to evaporate. Dexia’s breakup, three months after it got a clean bill of health in European Union stress tests, brought Europe’s banking crisis from the continent’s periphery to its center.

“Dexia is not an isolated problem,” said Cor Kluis, an Utrecht, Netherlands-based analyst at Rabobank International who rates Dexia “reduce.” “The question for all investors in Europe is how politicians are going to handle this, and what they want to see is a coordinated and professional solution. That would be a good opportunity to restore calm.”

Bad Bank

Belgium and France may also have agreed that they will guarantee 60 percent and 40 percent, respectively, of the refinancing of about 120 billion euros of bonds and loans held by Paris- and Brussels-based Dexia, two people said. Proceeds from the sale of Dexia’s profitable units will go to mitigate losses of what will be left of Dexia, which will form a so- called bad bank, two of the people said.

While France and Belgium rushed to protect their local units, they wrestled over responsibility for the troubled assets.

Belgian Prime Minister Yves Leterme and French Prime Minister Francois Fillon, in a joint statement yesterday, said the suggested solution was “the result of intense consultations with all partners involved.” Details weren’t disclosed.

Rescuing Dexia has become critical to preventing contagion in the region’s banking industry. Dexia’s balance sheet, with total assets of about 518 billion euros at the end of June, is about the size of the entire banking system in Greece and larger than the combined assets of financial institutions bailed out in Ireland in the last 2 1/2 years.

Merkel, Sarkozy

Angela Merkel and Nicolas Sarkozy, racing to stamp out the euro debt crisis threatening to engulf the financial system, gave themselves three weeks to devise a plan to recapitalize banks, get Greece on the right track and fix Europe’s economic governance.

“By the end of the month, we will have responded to the crisis issue and to the vision issue,” the French president said in Berlin yesterday at a joint briefing with the German chancellor before they dined at her office.

Dexia emerged from the 1996 merger of Credit Local de France SA and Credit Communal de Belgique SA, the biggest municipal lenders in their respective countries. Unlike Credit Local, which relied exclusively on wholesale funding for its lending, the Belgian unit also operated a local retail bank.

Wholesale Funding

Over the past decade, the Franco-Belgian bank sought to combine with another retail bank in France and elsewhere in Europe to reduce its reliance on market funding. It failed to merge with Italian lender Sanpaolo IMI SpA in 2004.

“Dexia accumulated the worst errors,” said Francois Chaulet, who helps manage 250 million euros at Montsegur Finance in Paris, and doesn’t own Dexia shares. “They were the experts of municipal lending. By getting late into businesses they weren’t able to handle, like securitization and bond insurance in the U.S., they bought all that others didn’t want to buy.”

Dexia’s 18-member board, equally split between France and Belgium, met to review a plan under which the lender would set up a bad bank for its troubled assets, hive off its French municipal loan book into a venture with state-owned La Banque Postale and Caisse des Depots et Consignations, and seek buyers for the remaining units, including Denizbank AS (DENIZ) of Turkey and its asset-management division.

The board meeting was the third in less than a month, after ones on Sept. 27 and Oct. 3. Among sticking points for Belgium and France have been which assets to put in the bad bank and what share of borrowings each government should guarantee.

Multinational Complexity

“The situation is more complex than one where you have one bank, one country, one regulator,” said Kluis.

Dexia dropped 17 percent in Brussels on Oct. 6 before being suspended, and will resume trading today. The stock fell 42 percent last week on concern that the breakup will leave shareholders with little of value. It has plunged more than 90 percent since a 2008 bailout.

“Once you go on this road, it won’t end well for shareholders,” Kluis said. “Governments aren’t there to save shareholders.”

Standard & Poor’s on Oct. 6 downgraded the credit ratings on three units, Dexia Credit Local, Dexia Bank and Dexia Banque Internationale a Luxembourg, citing the group’s limited access to wholesale funding markets. The ratings are on credit watch with “developing implications,” S&P said.

In 2008, after injecting 6 billion euros, France and Belgium gave Dexia guarantees of as much as 150 billion euros. Belgium covered 60.5 percent of the guarantees, France 36.5 percent and Luxembourg 3 percent.

Ratings at Risk

Belgium’s Aa1 local- and foreign-currency ratings were placed under review for a downgrade by Moody’s Investors Service because of rising funding risks for euro-area nations with high levels of debt and additional bank support measures that are likely to be needed.

The review will focus on the vulnerabilities of Belgian public debt in the current euro-area sovereign crisis and potential costs and contingent liabilities that the government may incur in supporting Dexia, Moody’s said in a statement on Oct. 7. Moody’s will also assess how the risks for the growth outlook of the economy and the government’s fiscal and economic plans may impact the country’s debt trajectory.

For France, the challenge is to rescue a portion of Dexia’s operations without endangering its top credit ratings from Moody’s and S&P. It’s one of six countries in the euro-zone with a AAA rating.

Fire Sale?

A large chunk of the troubled assets are on the balance sheet of Dexia Credit Local, a French unit. Dexia Credit Local carries most of the bank’s 95 billion-euro bond portfolio, which includes 21 billion euros of Greek, Italian, Portuguese, Spanish and Irish sovereign debt. Dexia’s municipal lending units in Italy and Spain, which it agreed to dispose of to win European Commission approval for its 2008 bailout, are also on the French unit’s balance sheet.

“The fair distribution of the burden is a very sensitive and crucial element in the negotiations,” Leterme said on RTL radio on Oct. 6. “To save Dexia, we need a fair division of responsibility.”

Dexia said on Oct. 6 that an investor is interested in its profitable retail and private banking unit in Luxembourg. Belgian daily L’Echo reported that a Qatari sovereign wealth fund was in discussions to buy the unit, Dexia Banque Internationale a Luxembourg, for 900 million euros, without saying where it got the information.

Opposition to Sale

That announcement set off concern that Dexia’s most valuable assets will be sold at fire-sale prices to international buyers in response to a temporary funding squeeze.

Groep Arco, Dexia’s second-biggest Belgian shareholder, said on Oct. 6 that it “opposes a forced sale of good units of the group at very low prices to foreign entities.”

In France, state-owned CDC and La Banque Postale may join with Dexia to create a new company to take over the French municipal lending arm, according to a statement on Oct. 6 from a postal union, whose representatives attended a board meeting where the plan was presented. Paris-based La Poste, the parent of Banque Postale, declined to comment, as did CDC and Dexia.

To contact the reporters on this story: Francois de Beaupuy in Paris at fdebeaupuy@bloomberg.net; Jacqueline Simmons in Paris at jackiem@bloomberg.net; Fabio Benedetti-Valentini in Paris at fabiobv@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net

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Merkel, Sarkozy Pledge Bank Recapitalization

By Patrick Donahue and Helene Fouquet - Oct 10, 2011 5:01 AM GMT+0700
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Angela Merkel, Germany's chancellor, right, and Nicolas Sarkozy, France's president. Photographer: Michele Tantussi

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French Presiddent Nicolas Sarkozy and German Chancellor Angela Merkel at a news conference in Berlin. Photographer: Michele Tantussi/Bloomberg

Angela Merkel and Nicolas Sarkozy, racing to stamp out the euro debt crisis threatening to engulf the financial system, gave themselves three weeks to devise a plan to recapitalize banks, get Greece on the right track and fix Europe’s economic governance.

“By the end of the month, we will have responded to the crisis issue and to the vision issue,” the French president said in Berlin yesterday at a joint briefing with the German chancellor before they dined at her office.

Under increasing pressure to defuse turmoil that has raged for 18 months and facing growing concern that Greece is headed to default, Merkel said European leaders will do “everything necessary” to ensure that banks have enough capital. Sarkozy said they would deliver a plan by the Nov. 3 Group of 20 summit.

“Maybe they’re still running one step behind, but they are at least discussing the right things,” Carsten Brzeski, an economist at ING Group in Brussels, said in a phone interview.

Underscoring the urgency, the board of French-Belgian Dexia SA (DEXB) met yesterday to begin dismantling the lender, the first victim of the debt crisis at the core of Europe. While the heads of Europe’s two biggest economies reiterated their intention to keep Greece in the euro, they left it to international auditors, known as the “troika,” to guide the next steps. Sarkozy avoided the line he used 10 days ago that “we can’t let Greece fail.”

‘Durable’ Solution

The focus on Europe’s banks and the search for what each called a “durable” solution for Greece signal a willingness to accept a debt restructuring there, an outcome Sarkozy has resisted. Investors may be pushed to take a bigger share of the losses, effectively spiking a debt swap that was part of a July 21 bailout that would impose a 21 percent writeoff.

“This in my opinion kills the July deal for sure and sets up a more credible and deeper Greek debt restructuring,” Jacob Kirkegaard of the Peterson Institute for International Economics in Washington, said in an e-mail.

After their eighth bilateral summit in 20 months, the two leaders unveiled no new agreement on what role should be played by the bailout fund, the European Financial Stability Facility, amid reports that they differed on how to use it.

“We will recapitalize the banks,” Sarkozy said. “We’ll do it in complete agreement with our German friends because the economy needs it, to assure growth and financing.”

European banks need as much as 200 billion euros $268 billion) of capital, Antonio Borges, the International Monetary Fund’s European department head, said last week.

‘Great Risk’

European leaders are bracing for the consequences of a Greek default. German Finance Minister Wolfgang Schaeuble told Frankfurter Allgemeine Sonntagszeitung that euro governments may have come up short on the scale of Greek debt writedowns when they reached the agreement in July. He cited a “great risk” that the crisis could spread further.

Merkel said a report from a team of inspectors from the IMF, the European Union and the European Central Bank later this month will help determine the next step to keep Greece in the 17-nation euro zone.

“On Greece, we are waiting of the troika report,” Sarkozy said. “Here, too, we are on the same line: we will take the appropriate decisions.”

The Greek debt load will climb to 172.7 percent of gross domestic product in 2012 -- about double Germany’s -- as the economy contracts for a fourth year, the Finance Ministry in Athens said Oct. 3.

‘All Possible Strength’

“The decision for a single currency was a path-breaking decision and therefore we’ll defend it with all possible strength,” Merkel said alongside Sarkozy. Sarkozy repeated several times that the two leaders agreed “on everything.”

“The typical German-French experience over the last 20 months is that almost every time they really had to agree when time was running out, they agree,” said Holger Schmieding, chief economist at Joh. Berenberg Gossler & Co. in London.

Investors are demanding a premium of 21.5 percentage points to hold Greek 10-year bonds over benchmark German bunds of similar maturity. The euro has declined 6 percent against the dollar since the beginning of September as investors assessed the risk of a European financial crisis. It traded at $1.3378, down from a May 2 high of $1.4830, as of Oct. 7.

Banks’ credit-insurance costs have surged and their shares have tumbled as the crisis spread from peripheral nations to the core euro states, even including AAA rated France.

The 50-member Stoxx 600 Banks index of European banking shares has slid 34 percent in the last six months, reaching its lowest since April 2009 on Sept. 23.

Paris- and Brussels-based Dexia was victimized by the debt crisis, which has caused the evaporation of short-term funding to what used to be the world’s largest municipal lender. The French, Belgian and Luxembourg governments said they backed management’s plan paving the way for dismantlement.

To contact the reporters on this story: Patrick Donahue in Berlin at pdonahue1@bloomberg.net; Helene Fouquet in Paris at hfouquet1@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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Euro Leaders Determined to Support Banks, Merkel Says

By Patrick Donahue and Helene Fouquet - Oct 10, 2011 1:28 AM GMT+0700
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German Chancellor Angela Merkel. Photographer: Michele Tantussi/Bloomberg

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French Presiddent Nicolas Sarkozy and German Chancellor Angela Merkel at a news conference in Berlin. Photographer: Michele Tantussi/Bloomberg

German Chancellor Angela Merkel said European leaders will do “everything necessary” to ensure that banks have adequate capital, joining French President Nicolas Sarkozy to persuade investors they can stamp out the debt crisis roiling global markets.

At a joint press conference in Berlin, Sarkozy set a deadline of the Nov. 3 Group of 20 summit to deliver a response that addresses the immediate crisis in Greece and what he called the structural defects in the 17-nation euro area. No details were provided today.

“By the end of the month, we will have responded to the crisis issue and to the vision issue,” Sarkozy said. “We’re determined to do everything necessary to ensure the recapitalization of our banks,” Merkel said.

While the heads of Europe’s two biggest economies reiterated their intention to keep Greece in the euro, they left it to international auditors known as the “troika” to guide the next steps, with Sarkozy avoiding the line he used nine days ago that “we can’t let Greece fail.” The urgency to act was underscored as the board of French-Belgian Dexia SA (DEXB) met today to begin dismantling the lender, the first victim of the debt crisis at the core of Europe.

European leaders are coming under increasing pressure from international counterparts to end the debt contagion that President Barack Obama said last month was “scaring the world.” He dispatched Treasury Secretary Timothy F. Geithner to a finance ministers’ meeting in Poland last month.

Bailout Fund

The two leaders unveiled no new agreement on what role should be played by the European bailout fund, the European Financial Stability Facility, amid reports that they differ on the scope of the mechanism. Welt am Sonntag newspaper had reported that Merkel and Sarkozy were nearing a compromise.

“We’re not going into details today -- we’re looking to introduce an entire package,” Merkel said.

European leaders are bracing for the consequences of a Greek default. German Finance Minister Wolfgang Schaeuble told Frankfurter Allgemeine Sonntagszeitung that euro-area governments may have come up short on the scale of Greek debt writedowns when they reached an agreement required in July. He cited a “great risk” that the crisis could spread further.

Merkel said a report from a team of inspectors from the International Monetary Fund, the European Union and the European Central Bank later this month will help provide a “durable solution” for Greece to remain within the euro zone.

“On Greece, we are waiting of the troika report,” Sarkozy said. “Here, too, we are on the same line: we will take the appropriate decisions.”

Greek Debt

The Greek debt load will climb to 172.7 percent of gross domestic product in 2012 -- about double Germany -- as the economy contracts for a fourth year, the Finance Ministry in Athens said Oct. 3.

“The decision for a single currency was a path-breaking decision and therefore we’ll defend it with all possible strength,” Merkel said alongside Sarkozy. Sarkozy repeated several times that the two leaders agreed “on everything.”

Investors are demanding a premium of 21.5 percentage points to hold Greek 10-year bonds over benchmark German bunds of similar maturity. The euro has declined 6 percent against the dollar since the beginning of September as investors assessed the risk of a European financial crisis. It traded at 1.3378, down from a May 2 high of 1.4830, as of Oct. 7.

Dexia

Paris- and Brussels-based Dexia became the first victim of the debt crisis, which has caused the evaporation of short-term funding to what used to be the world’s largest municipal lender. The French, Belgian and Luxembourg governments said today they backed management’s plan paving the way for dismantlement.

Any accord could still be foiled as the Slovak government struggles to overcome differences to approve enhancements to the EFSF. Slovakia’s junior government coalition member, the Freedom and Solidarity party, won’t back the overhaul of the EFSF after Prime Minister Iveta Radicova rejected its conditions for approval, according to a lawmaker from the party, Jozef Kollar.

The party insists its three coalition partners agree to two conditions before it supports the changes in a parliamentary vote scheduled for Oct. 11, Kollar said in a debate on state Slovak Radio yesterday.

Slovakia and Malta are the only countries that haven’t yet ratified the key element in the European Union’s plan to prevent the region’s debt crisis from spreading. The Slovak row risks sinking the EU plan, which needs the unanimous consent of all 17 euro members to come into force.

To contact the reporters on this story: Patrick Donahue in Berlin at pdonahue1@bloomberg.net; Helene Fouquet in Paris at hfouquet1@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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Blackstone May Back Walker’s Iceland Bid, Sunday Telegraph Says

By Maria Ermakova - Oct 9, 2011 4:55 PM GMT+0700

Blackstone Group LP (BX) may back the bid for Iceland Foods Ltd. by Malcolm Walker, the retailer’s founder and chief executive officer, the Sunday Telegraph reported.

The U.S. private equity firm has held talks with Walker about backing his likely bid of as much as 1.5 billion pounds for the 77 percent of Iceland Foods that he doesn’t already own, the newspaper said, citing unidentified people.

The first-round bids are expected to be submitted by the middle of this month and Walker may make a decision on how to finance his bid as soon as this week, the Sunday Telegraph said. The retailer is being sold by Icelandic banks Landsbanki Islands HF and Glitnir Banki HF, according to the newspaper. Officials at Blackstone declined to comment to the Sunday Telegraph.

To contact the reporter on this story: Maria Ermakova in London at mermakova@bloomberg.net

To contact the editor responsible for this story: Colin Keatinge at ckeatinge@bloomberg.net

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Romney Says Religion Shouldn’t Divide Party

By Gopal Ratnam - Oct 9, 2011 11:00 AM GMT+0700

Republican presidential candidate Mitt Romney, who was labeled a cult member last week, said religious differences shouldn’t divide Republicans and urged civility in party’s 2012 presidential nomination process.

“Poisonous language does not advance our cause,” the former Massachusetts governor and current frontrunner in polls, said yesterday at the “Values Voter Summit” in Washington. The conference is held by evangelical Christians, an important voting bloc in the Republican nominating contests. “Decency and civility is a value, too,” he said.

Robert Jeffress, a Baptist minister from Dallas, told reporters that Romney, a Mormon, is “a good, moral person, but someone who is part of a cult.” Jeffress, who introduced Perry Oct. 7 at the summit, supports Republican rival Rick Perry, the Texas governor.

Perry “does not believe Mormonism is a cult,” spokesman Mark Miner in a statement. Romney didn’t directly address that comment yesterday.

Romney’s religion and his record favoring same-sex marriage and abortion rights while governor -- both of which he now opposes -- became a focus at the summit.

The annual gathering focuses on efforts to “champion traditional values,” limit government and cut federal spending. Self-described evangelicals accounted for 44 percent of Republican primary voters in the 2008 campaign, according to exit polling.

Ron Paul Wins

Representative Ron Paul of Texas, also seeking the 2012 Republican nomination, won a straw poll held at the summit with 37 percent of the votes cast, according to Paul’s campaign. Businessman Herman Cain received 23 percent of the votes, followed by former Senator Rick Santorum of Pennsylvania with 16 percent, and Perry and Minnesota Representative Michele Bachmann each with 8 percent. Romney won the 2007 straw poll with 27.6 percent of the votes, according to the Family Research Council, which organizes the summit.

Summit attendee Ellen Elmore, 62, of St. Louis, said Romney’s record may be used against him in the presidential election if he becomes the Republican Party’s candidate.

“I think there are two Romneys: One is what he says and one is what he does, and we never know which one we are getting,” Elmore said, adding that she voted for Romney in the 2008 Republican primaries.

Abortion, Gay Rights

Romney supported legal abortion and advocated for gay rights when he won the Massachusetts governorship in 2002. When he sought the 2008 presidential nomination, his position on both issues had changed: He supported a constitutional amendment banning same-sex marriage and opposed abortion rights.

Romney drew the loudest cheers when he said during his speech that he would support the Defense of Marriage Act, which defines marriage as being between a man and a woman, and when he called on the Supreme Court to overturn its 1973 Roe v. Wade decision making abortion legal in the U.S.. He said he wanted to return the law to state jurisdiction.

Elmore said Romney switching his position showed he was “very plastic, robotic and a typical politician,” who “expects us to vote for him because he’s next in line.”

Elmore said she would pick either Cain or former House Speaker Newt Gingrich as the party’s candidate.

Bill Westerling, 73, of Saint Charles, Illinois, said he was leaning in favor of Romney “regardless of his religion, because of his experience” as a former governor and a business executive.

Economy and Jobs

Romney focused most of his comments on the economy and jobs, criticizing President Barack Obama’s economic stimulus program. Perry also focused on the economy, spotlighting his call for lower taxes on businesses and a freeze on pending government regulations, as well as promoting Texas’s job-growth record during his almost 11 years as governor.

“I’ve listened to thousands of Americans and they are not under any illusions about the current state of our country,” Perry said. “They know our first order of business to getting Americans working again is sending our current president to the private sector.”

Perry has dropped in opinion polls after drawing attacks from his Republican opponents in recent debates. A Washington Post-ABC News poll of Republicans and Republican-leaning independents taken Sept. 29-Oct. 2 gave Perry 16 percent, a decline of 13 percentage points since early September. Romney led the Republican field with 25 percent. Perry was tied for second in the survey with Cain.

Tax Simplification

Cain drew standing ovations at the summit as he stressed his opposition to abortion rights, his support of traditional marriage and his pledge to simplify the tax code. He also chastised the “Occupy Wall Street” protests. He said the demonstrators are “anti-capitalism” and “anti-free-market.”

Rival Bachmann, a Minnesota congresswoman, said the Tea Party movement’s push for significantly limited government would join with independent voters and disaffected Democrats to defeat Obama in next year’s general election.

“This is not the election to choose a moderate or a compromise candidate,” she said. “Conservatives, we can have it all this year.”

Proving socially conservative credentials on issues such as abortion, traditional marriage and school prayer won’t be enough for candidates this year, said Ralph Reed, founder and chairman of the Faith and Freedom Coalition.

“The evangelicals want to win, and they’re smart enough to know that to win you’ve got to have a compelling message on the economy,” Reed said.

Obama “has done a better job of energizing and focusing evangelicals and other social conservatives in this country than I thought anyone could ever do,” said Richard Land, leader of the Nashville, Tennessee-based Southern Baptist Convention.

To contact the reporters on this story: Catherine Dodge in Washington at cdodge1@bloomberg.net; Kristin Jensen in Washington at kjensen@bloomberg.net; Gopal Ratnam in Washington at gratnam1@bloomberg.net.

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

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Smithsonian Closed After Scuffle With Protesters

By Carol Wolf - Oct 9, 2011 5:59 AM GMT+0700

The Smithsonian National Air and Space Museum in Washington was closed today after a security officer used chemical spray to thwart the assault of another when about 150 people converged to protest the use of drones.

The guards were attempting the stop the protesters from entering the building, John Gibbons, a Smithsonian spokesman, said in a telephone interview. One security guard was held against the wall by demonstrators, he said. Several were treated at the scene for respiratory distress after another guard released the spray, and one woman was arrested.

A group called “Stop the Machine” may have organized the protest, which began about 3 p.m., Gibbons said. The demonstrators were protesting an exhibit containing a drone, or unmanned aerial vehicle, Gibbons said. The U.S. has used drones flown remotely by pilots during the wars in Iraq and Afghanistan for surveillance and to fire weapons.

One protester carried a sign saying “Don’t let the government put blood on your hands,” with the word “hand” replaced with an image, Gibbons said.

The Museum is expected to open at its normal time of 10 a.m. tomorrow, Gibbons said.

To contact the reporter on this story: Carol Wolf in Washington at cwolf@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

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China Cuts Gasoline Prices for First Time This Year as Oil Costs Plunge

By Bloomberg News - Oct 9, 2011 8:43 AM GMT+0700

China cut fuel prices for the first time this year after crude oil costs plunged as the global economy slowed.

Ex-factory gasoline was reduced by 300 yuan ($47.20) a metric ton, or 3.5 percent, starting today, and diesel was also lowered by 300 yuan, or 3.9 percent, the National Development and Reform Commission, the nation’s top economic planner, said in a statement on its website yesterday. The upper limit for retail gasoline dropped as much as 3.3 percent and diesel by 3.6 percent.

Oil traded in New York fell about 24 percent since China last adjusted prices on April 6, while Brent crude, the benchmark for about half the world’s oil, slid 13 percent. China last reduced oil-product prices in June 2010 and has increased them four times, by about 20 percent, since then.

“China hadn’t raised fuel prices enough when crude climbed to records in late-April and early May, amid concerns of inflation,” and this delayed any move to cut prices before now, the NDRC said in a separate statement on its website, citing comments from an official it didn’t identify.

China adjusts gasoline, diesel and kerosene rates when the moving average of three crude grades comprising Brent, Dubai and Cinta changes more than 4 percent over 22 working days. The government may increase the frequency of fuel price adjustments and change the global crude price benchmarks it monitors, the NDRC said yesterday, without being specific.

“China is unlikely to cut fuel prices further should the crude prices stay at the current levels,” Yin Xiaodong, the chief oil analyst at Beijing-based Citic Securities Co., said today by phone.

Containing Inflation

Lower fuel prices may help the country contain inflation. Consumer price growth eased from a three-year high to 6.2 percent in August, while industrial output slowed for a second month, giving policy makers more room to pause on monetary tightening as the economy cools and a global slowdown threatens exports and jobs.

Chinese refiners will still face losses after the cut and the government has told oil companies to ensure supply, the planning agency said. China Petroleum & Chemical Corp. (386) and PetroChina Co. are the country’s largest refiners.

China is cutting fuel prices as tightness in domestic fuel supply eases. The government reduced fuel-oil import tariffs in July. It also pressured privately held refineries to increase processing, the official Xinhua News Agency said on Aug. 8, citing an unidentified NDRC official.

To contact the editor responsible for this story: Paul Gordon at pgordon6@bloomberg.net

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Business Jet Sales May Increase in 2012 as Asia Blunts Slow Global Economy

By Susanna Ray and Rachel Layne - Oct 9, 2011 8:30 AM GMT+0700

Business-jet sales may increase worldwide starting in 2012 as emerging-market demand blunts a sluggish U.S. economy that fueled a probable decline this year, Honeywell International Inc. (HON) projected.

Purchase expectations are growing in Asia, followed by the Middle East and Africa, while the free-fall in developed markets like North America following 2008’s recession has stabilized, according to an annual survey of 1,500 companies by the Morris Township, New Jersey-based avionics and cockpit-instruments maker.

Companies also have cash to spend now, compensating for individuals that might hold back amid economic uncertainty, Rob Wilson, president of Honeywell’s business and general aviation unit, said in an interview. Replacement of aging planes has combined with international travel demand to boost potential sales of longer-range models, he said.

“Cautious optimism” will be a theme at the National Business Aviation Association’s annual conference that starts Oct. 10 in Las Vegas, Wilson said. “We’re figuring out how to make the most of it in uncertain times.”

Customers continue to say that they still intend to buy new aircraft in the next five years, though some have pushed out the timing to the latter half of that period, Wilson said.

Air-travel demand has been boosted by growing trade between Africa and China, a run-up in commodity prices and oil, and the exploration of new business opportunities in those regions, Wilson said.

Declining Deliveries

By the time the survey was conducted between May and August, much of the turmoil in the larger Middle East countries had settled down, he said.

Global deliveries probably will decline to 600 to 650 from last year’s 732, then climb in 2012 to less than 700, Honeywell projected.

The percentage of active fleets comprised by used jets for sale has declined about four points from a peak in 2009 amid the financial crisis, the survey found.

Business-jet manufacturers are building new models with greater range to lure buyers away from the used-aircraft market. General Dynamics Corp. (GD)’s Gulfstream, Textron Inc. (TXT)’s Cessna and Embraer SA (EMBR3) are all developing new planes to enter service over the next two years.

While a good leading indicator of future demand, prices are still far below 2008’s peak levels, indicating fleet managers remain cautious, some analysts have said.

How “increasingly acute macro concerns” are affecting business-jet demand will be a key topic at the business-jet association’s meeting, Joseph Nadol, an analyst with JPMorgan Chase & Co. in New York, wrote in an Oct. 7 note.

Larger Jets

“We would not be surprised by a continuation of recent trends, including solid demand for larger, long-range jets, primarily from emerging markets, and far more modest demand for light jets,” due in part to economic weakness in the U.S., Nadol wrote.

Bigger jets that can fly farther and are favored by corporate fleets are faring better than smaller planes that interest individual buyers, Wilson said.

“The bottom half of the business-jet market, the half most dependent on external finance, imploded, falling 57.1 percent in two years” in the wake of the 2008 financial crisis, said Richard Aboulafia with Teal Group, a Fairfax, Virginia-based aviation consulting firm. “That’s the worst market drop I’ve ever seen.”

The top half, whose corporate customers are much less reliant on credit, actually grew by 1.5 percent, Aboulafia wrote in a September note.

Engine Sales

Demand for small and medium-sized jets is likely to remain stagnant, Honeywell said. As planemakers use up long-held inventory, parts makers may see a pickup before planemakers do.

John Saabas, who runs Pratt & Whitney Canada, the biggest maker of engines for small and medium-sized business aircraft, said he doesn’t expect gains until the end of 2012.

“We have an opportunity on the engine side, just because the inventory levels have been depleted so much over the last couple of years,” Saabas said in an interview. “When it comes to growth in the whole market, that takes more time. People have to negotiate deals. The latest events in the U.S. and Europe -- people were going to wait out deals, wait and see what happens. That’s where some of the more softness part comes in.”

The market overall “has held relatively stable over the last several months, albeit at already low levels, despite a worsening economic outlook,” David Strauss, an analyst with UBS Securities LLC in New York, wrote in an Oct. 6 note.

Still, Strauss warned in his monthly report that “softness in our survey of industry professionals and other key bizjet market indicators we track, including flight activity and used pricing, leaves us less optimistic about a recovery in 2012.”

To contact the reporters on this story: Rachel Layne in Boston at rlayne@bloomberg.net; Susanna Ray in Seattle at sray7@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net

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Pakistan Reduces Key Rate, Beating Forecasts to Boost Expansion

By Farhan Sharif - Oct 9, 2011 2:01 AM GMT+0700

Pakistan’s central bank cut its benchmark interest rate by a more-than-expected 1.5 percentage points to spur investment after terrorism and floods undermined economic growth.

The State Bank of Pakistan lowered the discount rate to 12 percent from 13.5 percent, Syed Wasimuddin, a central bank spokesman, said in Karachi yesterday. Three of five economists surveyed by Bloomberg News predicted a 1 percentage point cut, and the remainder forecast a 0.5 percent reduction.

Acting Governor Yaseen Anwar had room to act and join emerging markets from Russia to Brazil in lowering borrowing costs after Pakistan’s inflation rate dropped 2 percentage points in the past three months. A rate cut might support an economy that’s seen growing less than half the pace of fellow South Asian nations India, Bangladesh and Sri Lanka this year.

“It’s a bold decision and would help prop up growth,” said Suleman Akhtar, head of research at Foundation Securities Ltd. in Karachi. “Further rate moves would depend on the extent to which the weakening rupee boosts import costs and stokes inflationary pressure.”

The Pakistan rupee has declined 1.9 percent this year and dropped to a record low on Sept. 16, prompting the central bank last month to conduct what it called a “calibrated intervention” to stabilize the currency.

Stocks, Bonds

The Karachi Stock Exchange 100 Index has fallen 1.4 percent since the start of this year, while Pakistan’s 10-year government bond yields are trading at 12.6 percent, the highest level after Greece and Venezuela, according to data compiled by Bloomberg.

Consumer prices rose 10.46 percent in September from a year earlier, after climbing 12.43 percent in July, according to the Federal Bureau of Statistics.

The central bank decided to slash its policy rate for a second straight meeting because of a “high probability” of meeting the FY12 inflation goal and to stimulate investment, according to yesterday’s statement. The State Bank is targeting an average inflation of 12 percent in the year ending June 30.

Even so, there are “upside risks” to meet the inflation target of 9.5 percent for the following fiscal year, stemming from “persistence of government borrowing” from commercial banks, exchange rate depreciation and a likely “upward adjustment” in energy costs, the statement said.

Acting Chief

Prime Minister Yousuf Raza Gilani’s government named Anwar, a deputy governor since March 2007, as the central bank’s acting chief after Shahid Kardar quit on July 12. The State Bank unexpectedly cut rates in the July 30 policy decision, almost three weeks after Kardar resigned blaming state spending for fanning prices.

Anwar cited the government’s commitment to “zero borrowings” from the central bank as one of the reasons for reducing rates in July. The federal government paid back 33 billion rupees ($377 million) to the central bank this fiscal year against 238 billion rupees borrowing in the same period a year ago, according to the central bank.

“Any reduction in interest rates would benefit our plans to expand capacity,” Taha Hamdani, Karachi-based chief financial officer at Thatta Cement Co., said before the report. The company plans to spend 3 billion rupees in the next two years to double production to 3,000 tons a day.

Policy makers in Pakistan are aiming to boost economic growth to 4.2 percent in the fiscal year ending June 30, from 2.4 percent in the previous year, one of the lowest expansions in the past decade, as the country struggled to cope with floods and militant attacks.

Floods, Terrorism

Floods in August forced more than one million people from their homes and damaged crops in parts of southern Pakistan still recovering from last year’s worst ever monsoon inundations that devastated the region. Terror attacks in the South Asian nation have killed at least 35,000 people since 2006, according to government estimates.

Foreign direct investment in Pakistan fell 40 percent to $112.4 million in the first two months of the fiscal year that started July 1 from a year earlier. By contrast, India, from which Pakistan was partitioned in 1947 following independence from British rule, got $13.4 billion in the three months through June, a quarterly record.

As Pakistan’s relations with the U.S., its biggest donor, frayed since Navy Seals killed al-Qaeda leader Osama bin Laden in a unilateral raid on May 2, China has emerged as a key ally, according to Saleem H. Mandviwalla, the chairman of the government’s Board of Investment.

“Pakistan needs to fire on all cylinders to support growth,” said Farid Aliani, a Karachi-based analyst at BMA Captial Ltd. “Easing monetary policy would help.”

To contact the reporter on this story: Farhan Sharif in Karachi, Pakistan at fsharif@bloomberg.net

To contact the editor responsible for this story: Dick Schumacher at dschumacher@bloomberg.net

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Saudi Arabia Beheads 8 Bangladeshis for Murder; 2011 Executions Rise to 58

By Glen Carey - Oct 9, 2011 1:01 AM GMT+0700

Saudi Arabia beheaded eight Bangladeshi nationals in public yesterday for the murder of an Egyptian citizen in 2007, the official Saudi Press Agency reported, citing an Interior Ministry statement.

The Egyptian was killed during a robbery of a warehouse in Riyadh, the news service said, citing the ministry’s statement. Three other Bangladeshis were sentenced to prison terms and flogging for their roles in the crime.

Saudi Arabia, where religious police patrol shopping centers and cinemas are prohibited, enforces Islamic law. The kingdom usually beheads or sentences people to lashings for murder, rape and drug-smuggling. The Sunni Muslim-majority country and member of the Group of 20 nations has been criticized by international human rights groups.

Two other Saudi nationals were executed in the northern city of Tabuk yesterday, bringing the total number of executions to 10, London-based Amnesty International said in a statement on its website yesterday. At least 58 people have been executed in the country this year, including 20 foreign nationals, Amnesty said.

“Court proceedings in Saudi Arabia fall far short of international standards for fair trial and news of these recent multiple executions is deeply disturbing,” Hassiba Hadj Sahraoui, Amnesty’s Deputy Director for Middle East and North Africa, said in the statement.

The number of executions had been declining, dropping to 27 people in 2010 and 69 in 2009 from about 102 the year earlier and 158 in 2007, according to Amnesty.

To contact the reporter on this story: Glen Carey in Dubai at gcarey8@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net

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Pelosi: Wall St. Protesters Angry Over Jobless

By Editors: Ann Hughey - Oct 9, 2011 12:54 AM GMT+0700

“Occupy Wall Street” protesters are angry over the lack of employment prospects and government actions that are “not relevant to their lives,” House Minority Leader Nancy Pelosi said.

“I think they are angry that they don’t have jobs,” Pelosi told ABC News’ “This Week” program, scheduled for broadcast tomorrow. “There’s nothing that makes you angrier than not being able to provide for your family or understand what your prospects are for the future.”

Americans’ pessimism about the economy helped send President Barack Obama’s approval rating to 38 percent last week, the lowest of his presidency. The nation’s jobless rate, which has been at 9 percent or higher since April, remained at 9.1 percent last month.

The stagnant labor market has limited consumer spending, which grew at 0.7 percent last month, the smallest increase since the last three months of 2009. The European debt crisis threatens to trigger another recession.

The protestors’ message to the “establishment,” including Wall Street and politicians, is that “change has to happen,” Pelosi said on ABC. The U.S. government’s bailout of banks hasn’t made capital available to average citizens as expected, the California Democrat said.

House Majority Leader Eric Cantor, a Virginia Republican, has called the movement “growing mobs” that are dividing the country. Obama, a Democrat, has expressed empathy with the demonstrators while stopping short of endorsing their movement.

“Occupy Wall Street” began three weeks ago in Lower Manhattan and has spread to cities such as Washington and San Francisco.

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Oakland Raiders’ Renegade Owner Al Davis Dies at 82

By Laurence Arnold - Oct 9, 2011 2:19 AM GMT+0700

Al Davis, the renegade owner of the Oakland Raiders whose battles with the National Football League gave him an outlaw image matching that of his silver-and-black- clad team, has died. He was 82.

The Raiders announced his death on their website, without providing any further details.

While imploring his players on the field to “Just win, baby,” Davis ran some of football’s biggest sideshows.

He first faced off with the NFL in the 1960s when, as the hard-charging commissioner of the rival American Football League, he escalated a tug-of-war for top players. The two leagues merged months into his tenure.

As owner of the Raiders, the team he led and loved as far back as 1963, he moved the franchise out of Oakland and to Los Angeles, then back to Oakland 13 years later, in a bid for a better stadium. He feuded with the NFL and with at least one Raiders star, Marcus Allen.

The Raiders won Super Bowls in 1976, 1980 and 1983 as well as 15 AFC West titles during an extended reign as one of the league’s best teams from 1963 to 2002. More recently they were among the league’s worst, winning 29 games and losing 83 from 2003 through 2009, before posting an 8-8 record in 2010. Oakland has a 2-2 record this season going into tomorrow’s game in Houston.

‘I’m the Raiders’

“People love the Raiders and every time they think of the Raiders, they think of Mr. Davis,” Willie Brown, a Hall of Fame cornerback and now an assistant with the team, said in a statement. “It’s a sad day in the Raider nation.”

Forbes magazine estimated the franchise’s value at $761 million in 2011, higher than only one other team, the Jacksonville Jaguars, in the 32-team league.

“History will dictate what my legacy is,” Davis said in an interview for “Straight Outta L.A.,” a documentary directed by rapper Ice Cube for ESPN in 2010. “Maverick is fine, ‘cause I am. Outlaw I’m not. But if believing in what you believe and sticking up for your rights and sticking up for the rights of others from time to time -- do it your way. Don’t let the culture tell you what do. That’s being a Raider.”

Regarding the team’s recent run of ineptitude, he said, “We slipped tremendously, and it’s my fault. I’m the custodian. I’m the Raiders, at least the face of it.”

On and On

Davis was inducted in 1992 into the Pro Football Hall of Fame, which hailed him as the only person to work in professional football as personnel assistant, scout, assistant coach, head coach, general manager, commissioner and team owner. “I love the game, I love the league, I love my team,” he said at his induction ceremony.

Dallas Cowboys owner Jerry Jones said today, “There was no element of the game of professional football for which Al did not enjoy a thorough and complete level of knowledge and passion.”

“He’ll be sorely missed,” said Jim Plunkett, who quarterbacked the Raiders’ last two Super Bowl-winning teams. “His contributions to the game of football go on and on.”

“Al Davis’s passion for football and his influence on the game were extraordinary,” NFL Commissioner Roger Goodell said in a statement. “He defined the Raiders and contributed to pro football at every level.”

Racehorse Football

Arthur Allen Davis was born on July 4, 1929, in Brockton, Massachusetts, the second of two sons in a Jewish family. He grew up in the New York City borough of Brooklyn, where his family had moved for his father’s work as a rain-coat manufacturer.

He was a reserve on the Erasmus Hall High School basketball team and was cut from the varsity football team at Syracuse University, where he earned an English degree, according to a 1991 Los Angeles Times profile.

Right out of college, he became line coach for the football team at Adelphi College in New York, then head coach of the U.S. Army team at Ft. Belvoir, Virginia. For one year, 1954, he ran player personnel for the Baltimore Colts of the NFL, then returned to the college ranks at The Citadel, where he introduced an early no-huddle offense called racehorse football, and at the University of Southern California.

“All my life, all I wanted to do was coach and lead men,” he told the ESPN documentary. The Los Angeles Times reported in 1991 that Davis’s fascination with military history was reflected in a slogan on each edition of the team’s travel itinerary: “Let’s go to war!”

NFL, AFL Merger

In 1960, he moved permanently to the pros, coaching receivers for the Los Angeles Chargers in their inaugural season in the American Football League. Before the 1963 season he became head coach and general manager of the Oakland Raiders, who had won just nine games and lost 33 in their first three years. Davis turned the team around, winning AFL coach of the year honors after a 10-4 season.

AFL owners named him commissioner in April 1966. He pledged to fight the bigger, more established NFL for top players and declared himself uninterested in merging the two leagues.

Within months, though, back-channel negotiations among owners of the two leagues produced a merger agreement and, in January 1967, the first game between NFL and AFL champions -- what would later become known as Super Bowl I.

Davis, “feeling betrayed and made to look foolish” by the merger, according to biographer Mark Ribowsky, returned to the Raiders as part-owner and managing general partner. The team earned a spot in Super Bowl II, losing to the Green Bay Packers.

Sole General Partner

During the next two decades, Davis first outmaneuvered one partner and then outlived another to become the franchise’s majority owner and sole general partner. His ascendancy coincided with that of the team. The Raiders cruised through the 1976 season on the way to their first championship in Super Bowl XI, winning again in 1980 and 1983.

The first two championships were as Oakland’s team, while the 1983 triumph culminated the team’s first year as the Raiders of Los Angeles.

Davis moved the franchise, over the objections of other NFL team owners, after asking for the addition of luxury boxes at Oakland-Alameda County Coliseum. With the Los Angeles Coliseum Commission, the Raiders went to court to successfully challenge an NFL rule requiring teams to win league consent before relocating. The team and commission also won millions in damages in an antitrust case against the league.

Back to Oakland

In 1987, following the collapse of plans to renovate their new home, Los Angeles Memorial Coliseum, the Raiders signed a deal with another nearby city -- Irwindale, which agreed to lend $115 million for a new 65,000-seat stadium to be built by 1990.

That too, devolved into squabbling, and in 1990, after a public courtship with yet another suitor, Sacramento, the Raiders announced they would return to Oakland, which also fell through. The team signed a 20-year lease agreement to remain in Los Angeles, with $145 million in promised renovations to the Los Angeles Coliseum. Those renovations weren’t made.

After the 1994 season, Davis gave up on one final prospect, a new stadium at Hollywood Park in Los Angeles. “The owners stopped me,” he said on ESPN. “For them to give their OK, they wanted me to take a second team, and I wouldn’t take a second NFL team into Hollywood Park. I just wanted to be alone.” He brought the team back to Oakland, which agreed to add seats and make other improvements to its stadium.

His Own Course

Davis followed his own course other times as well.

In the 1987 draft, Davis used the Raiders’ final pick to choose Bo Jackson, even though Jackson one year earlier had rebuffed football for Major League Baseball. Wooed by Davis, who offered full-time pay for part-time play, Jackson joined the Raiders after the 1987 baseball season ended and went on to play through 1991.

In 1989, Davis promoted Art Shell, a former Raider star player, from assistant coach to head coach, making him the first black head coach in the modern era of the NFL.

Davis never cited a reason for his long feud with Allen, the running back who was the team’s first-round draft pick in 1982 and most valuable player of Super Bowl XVIII. In a television interview in his final months with the team in 1992, Allen said Davis had “attempted to ruin” his career.

Asked about Allen in the ESPN documentary, Davis would say only, “It’s a deeper story than you even dream, that I was well aware of, and I just got a certain approach to life.”

Davis and his wife, Carol, had a son, Mark.

To contact the reporter on this story: Laurence Arnold in Washington at larnold4@bloomberg.net

To contact the editor responsible for this story: James Greiff at jgreiff@bloomberg.net

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Max Bank Will Fail Under Denmark’s Bail-In Law, Government Says

By Christian Wienberg - Oct 9, 2011 5:07 AM GMT+0700

The Danish government’s wind-up unit said it will probably take over regional lender Max Bank (MAX) A/S, which would become the third failure this year under the European Union’s toughest resolution laws.

The Financial Stability Company will probably take over and wind up the Naestved-based lender today, it said in an e-mail statement late yesterday. In a separate statement, Max Bank said the Danish Financial Supervisory Authority had told it after an inspection to increase writedowns on bad loans and boost solvency before a deadline of 6 p.m. today.

Denmark enacted a law in October last year making it the first EU member to force senior bank creditors to bear losses within a resolution framework. Since then, two regional lenders have collapsed and international investors have withheld funding for most of the nation’s 120 banks. Max Bank said yesterday the OMX Copenhagen stock exchange had agreed to suspend trading of its shares and bonds.

“If the bank can’t meet the deadline set by the FSA to raise sufficient capital, or find another resolution to the banks situation, it will allow itself to be settled under the resolution laws,” Max Bank said in its statement.

To spur takeovers and avoid more bail-ins, Danish lawmakers last month passed the fourth bank rescue package in three years. The legislation extends the maturity of state-guaranteed debt and allows the government to take over bad loans from ailing banks in the event of a merger. The Financial Stability Company said today that Max Bank may be resolved under the fourth package, suggesting another bank may step in with a takeover offer.

Max Bank has bonds out worth 3 billion kroner ($540 million), according to Bloomberg data. The bank’s stock market value was 59.5 million kroner as of Oct. 7’s closing price after the shares lost 72 percent this year.

The bank had assets of 9.39 billion kroner at the end of June, according to its first-half earnings report. It was the third-riskiest of 99 Danish banks graded by researcher Niro Invest ApS in a June survey.

To contact the reporter on this story: Christian Wienberg in Copenhagen at cwienberg@bloomberg.net

To contact the editor responsible for this story: Tasneem Brogger at tbrogger@bloomberg.net

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Romney Calls for Civility, Unity Among Religions at Republican Conference

By Gopal Ratnam, Catherine Dodge and Kristin Jensen - Oct 9, 2011 3:50 AM GMT+0700
Enlarge image

Tea Party activist William Temple holds up his Michele Bachmann badge as he talks with other attendees at the Family Research Council's Values Voter Summit in Washington on Oct. 7, 2011. Photographer: Bill Clark/CQ Roll Call/Newscom

Republican presidential candidate Mitt Romney, who was labeled a cult member yesterday, said religious differences shouldn’t divide Republicans and urged civility in party’s 2012 presidential nomination process.

“Poisonous language does not advance our cause,” the former Massachusetts governor and current frontrunner in polls, said today at the “Values Voter Summit” in Washington. The conference is held by evangelical Christians, an important voting bloc in the Republican nominating contests. “Decency and civility is a value, too,” he said.

Robert Jeffress, a Baptist minister from Dallas, told reporters yesterday that Romney, a Mormon, is “a good, moral person, but someone who is part of a cult.” Jeffress, who introduced Perry yesterday at the summit, supports Republican rival Rick Perry, the Texas governor.

Perry “does not believe Mormonism is a cult,” spokesman Mark Miner in a statement. Romney didn’t directly address that comment today.

Romney’s religion and his record favoring same-sex marriage and abortion rights while governor -- both of which he now opposes -- became the focus of the debate at the summit today.

The annual gathering focuses on efforts to “champion traditional values,” limit government and cut federal spending. Self-described evangelicals accounted for 44 percent of Republican primary voters in the 2008 campaign, according to exit polling.

Ron Paul Wins

Representative Ron Paul of Texas, also seeking the 2012 Republican nomination, won a straw poll held at the summit today with 37 percent of the votes cast, according to Paul’s campaign. Businessman Herman Cain received 23 percent of the votes, followed by former Senator Rick Santorum of Pennsylvania with 16 percent, and Perry and Minnesota Representative Michele Bachmann each with 8 percent. Romney won the 2007 straw poll with 27.6 percent of the votes, according to the Family Research Council, which organizes the summit.

Summit attendee Ellen Elmore, 62, of St. Louis, said Romney’s record may be used against him in the presidential election if he becomes the Republican Party’s candidate.

Two Romneys

“I think there are two Romneys: One is what he says and one is what he does, and we never know which one we are getting,” Elmore said, adding that she voted for Romney in the 2008 Republican primaries. “In the past, he said again and again that he believed in a woman’s right to choose and he would never change that. But excuse me, that’s not what he said up there.”

Romney supported legal abortion and advocated for gay rights when he won the Massachusetts governorship in 2002. When he sought the 2008 presidential nomination, his position on both issues had changed: He supported a constitutional amendment banning same-sex marriage and opposed abortion rights.

Romney drew the loudest cheers when he said during his speech that he would support the Defense of Marriage Act, which defines marriage as being between a man and a woman, and when he called on the Supreme Court to overturn its 1973 Roe v. Wade decision making abortion legal in the U.S.. He said he wanted to return the law to state jurisdiction.

Plastic Politician

Elmore said Romney switching his position showed he was “very plastic, robotic and a typical politician,” who “expects us to vote for him because he’s next in line.”

Elmore said she would pick either Cain or former House Speaker Newt Gingrich as the party’s candidate.

Bill Westerling, 73, of Saint Charles, Illinois, said he was leaning in favor of Romney “regardless of his religion, because of his experience” as a former governor and a business executive.

Romney focused most of his comments on the economy and jobs, criticizing President Barack Obama’s economic stimulus program. Perry also focused on the economy, spotlighting his call for lower taxes on businesses and a freeze on pending government regulations, as well as promoting Texas’s job-growth record during his almost 11 years as governor.

“I’ve listened to thousands of Americans and they are not under any illusions about the current state of our country,” Perry said yesterday. “They know our first order of business to getting Americans working again is sending our current president to the private sector.”

Perry’s Poll Drop

Perry has dropped in opinion polls after drawing attacks from his Republican opponents in recent debates. A Washington Post-ABC News poll of Republicans and Republican-leaning independents taken Sept. 29-Oct. 2 gave Perry 16 percent, a decline of 13 percentage points since early September. Romney led the Republican field with 25 percent. Perry was tied for second in the survey with Cain.

Cain drew standing ovations yesterday as he stressed his opposition to abortion rights, his support of traditional marriage and his pledge to simplify the tax code. He also chastised the “Occupy Wall Street” protests. He said the demonstrators are “anti-capitalism” and “anti-free-market.”

Rival Bachmann, a Minnesota congresswoman, said the Tea Party movement’s push for significantly limited government would join with independent voters and disaffected Democrats to defeat Obama in next year’s general election.

No Moderate Candidate

“This is not the election to choose a moderate or a compromise candidate,” she said. “Conservatives, we can have it all this year.”

Proving socially conservative credentials on issues such as abortion, traditional marriage and school prayer won’t be enough for candidates this year, said Ralph Reed, founder and chairman of the Faith and Freedom Coalition.

“The evangelicals want to win, and they’re smart enough to know that to win you’ve got to have a compelling message on the economy,” Reed said.

Evangelical voters “want the most conservative candidate that can win,” said Richard Land, leader of the Nashville, Tennessee-based Southern Baptist Convention. “Mr. Obama has done a better job of energizing and focusing evangelicals and other social conservatives in this country than I thought anyone could ever do.”

With the exception of Romney, all the candidates are well positioned with these voters, said Craig Shirley, a political consultant and Reagan historian in Alexandria, Virginia.

“If you polled the segment right now, I would say it’s up for grabs,” Shirley said.

To contact the reporters on this story: Catherine Dodge in Washington at cdodge1@bloomberg.net; Kristin Jensen in Washington at kjensen@bloomberg.net; Gopal Ratnam in Washington at gratnam1@bloomberg.net.

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

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Ex-Beatle McCartney to Marry in London

By Paul Dobson - Oct 8, 2011 7:49 PM GMT+0700

Paul McCartney will marry Nancy Shevell in London tomorrow, the Mirror reported, citing a person close to the musician and former member of the Beatles that it didn’t identify.

Thirty guests will attend the ceremony at Westminster Register Office, after McCartney, 69, got special dispensation from the local council to get married on a Sunday, the newspaper said. Shevell, 51, is a U.S. heiress, the paper said.

The reception for tomorrow’s wedding will be held in a marquee in the garden of McCartney’s London home, according to the Mirror. Guests will dine on an entirely vegetarian three- course meal mostly made with organic produce, which McCartney’s daughter Stella helped choose, the newspaper said. His brother, Mike, will be best man, the newspaper said.

It will be McCartney’s third marriage, after first wife Linda Eastman, whom he married in 1969, died of breast cancer in 1998 and following a divorce from second wife Heather Mills in 2006, according to the Mirror. Mills was awarded 24 million pounds ($32 million) and 35,000 pounds a year payments to support their daughter in a court-ruling on the divorce, the Mirror said.

A spokesman for McCartney declined to comment, according to the Mirror.

To contact the reporter on this story: Paul Dobson in London at pdobson2@bloomberg.net

To contact the editor responsible for this story: Mike Harrison at mharrison5@bloomberg.net

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Al-Naimi Says Oil Market Not Oversupplied

By Wael Mahdi - Oct 8, 2011 5:22 PM GMT+0700

Saudi Arabian Oil Minister Ali Al- Naimi said there’s no excess supply in world oil markets and that the kingdom has been adjusting output to match fluctuating demand over recent months.

“There is no oversupply in the market right now,” he told reporters in Dhahran today.

The country, OPEC’s biggest producer, will keep pumping at current rates even if Libyan output returns to the market this year, as long as customers are in need of the oil, the minister said. The Organization of Petroleum Exporting Countries meets next on Dec. 14 in Vienna to decide whether it needs to alter production targets.

Saudi Arabia supplied 9.39 million barrels of crude oil a day to the market in September, Al-Naimi said. Corresponding figures for June, July and August were 9.8 million, 9.6 million and 9.8 million, he said.

“I’m giving you these numbers to show that demand is fluctuating this year,” he said. “Demand is always fluctuating, but our position is we would supply whatever our customers are asking for.”

OPEC’s main crude oil grades rose above $100 a barrel on Oct. 6, after falling below that level earlier in the week for the first time since February.

Basket Below $100

The price advanced to $101.63, from $99.90 on Oct. 5, according to OPEC’s website. The so-called OPEC basket is calculated on the basis of one key export blend from each of the organization’s 12 members, weighted according to production.

OPEC ministers last met in June, when six members including Iran and Venezuela rejected a Saudi proposal to replace lost Libyan crude. Saudi Arabia and some other members had already boosted production after armed conflict in Libya that began in February curbed almost all of that country’s 1.6 million barrels a day of production.

Bloomberg estimates show Libya producing 100,000 barrels a day on average last month, and Saudi Arabia 9.76 million barrels a day. Libya is the only OPEC member not exceeding its official quota, aside from Iraq which has no target.

To contact the reporter on this story: Wael Mahdi in Dhahran at wmahdi@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net

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