Tuesday World Business News

SoEs owe four state-owned 
banks Tk 1,512 crore 
Staff Correspondent 

The classified loans amount of state-owned enterprises to four state-run commercial banks stood at around Tk 1512 crore till August 31st, 2008, up by about Tk 220 crore from its figure in three months back, sources in the banking sector said.
  The SoEs owe the highest amount of Tk 819.68 crore to Sonali Bank, followed by Tk 428.10 crore to Rupali Bank, Tk 247.51 crore to Agrani Bank and Tk 15.88 crore to Janata Bank in August, 2008, according to the latest figures compiled by the Bangladesh Bank.
  The public sector entities owed Tk 1292 crore to the four state-owned lenders up to May 31st, 2008. Of the amount, the SoEs owed the highest amount of Tk 602.24 crore to Sonali Bank, followed by Tk 429.28 crore to Rupali Bank, Tk 248.57 crore to Agrani Bank and Tk 10.94 crore to Janata Bank, according to the figures compiled by the Bangladesh Bank.
  Providing guarantee from the finance ministry in issuing loans to the financially ailing state-owned enterprises is a main cause for stockpiling of huge bad loans in the state-owned banks, bankers observed.
  ‘Sometimes, we become compelled to issue loans to state-owned enterprises, which suffer from shortage in their working capital or cash to pay salaries to their employees,’ a chief executive officer of a state-owned bank told New Age.
  ‘While providing loans to the SoEs, on many occasions the matter of feasibility of return of the loans had to forgo due to the status of the enterprises,’ he added.
  An executive of Sonali Bank said the finance ministry on many occasions gave guarantee for re-payment of the loan money in favour of the SoEs.
  As per the latest figure, Bangladesh Jute Mills
  Corporation alone accounted for about Tk 902.79 crore or 60 per cent of the total classified loans amount followed by Bangladesh Textile Mills Corporation for Tk 235.99 crore, Bangladesh Chemical Industries Corporation for Tk 89.87 crore, Bangladesh Agriculture Development Corporation for Tk 21.27 crore, Bangladesh Shipping Corporation for Tk 8.33 crore, BFFWT for Tk 12.09 crore and BTB for Tk 10.90 crore.
  The boards of directors of three corporatised banks — Sonali, Janata and Agrani — are expected to take serious
  steps in lending to SoEs, considering their unsatisfactory performance as clients, sources said.
  ‘We will raise the issue to the finance ministry to solve the problems immediately,’ the chairman of a corporatised state-bank told New Age.
  ‘We are ready to disburse agriculture loans among farmers on lower interest rates, but we can no longer afford to lend money to the SoEs to increase our bad debt burden more.’ 
Two lakh festival tourists expected 
Our Correspondent . Cox’s Bazar 

Beach resort town Cox’s Bazar is gearing up for hosting at least two lakh local tourists in the first two weeks of October which will see two biggest religious festivals Eid-ul-Fitr and Durga Puja.
  Hospitality industry people said accommodations in almost all the 110 residential hotels and motels and 50 guesthouses were booked in advance, and festival tourists already started pouring in.
  District administration and law enforcing agencies have taken up measures to ensure safety of travellers, mostly coming with families.
  Abul Kasem Sikder, general secretary of Cox’s Bazar Hotel-Motel Owners’ Association, said they estimated that the beach town would see more than two lakh tourist arrivals. Almost all the hotels, motels and guesthouses have already been booked from October 1 to 12, he informed.
  Deputy commissioner Manjur Alam Bhuiyan on Monday chaired a meeting that discussed the law and order situation of the town, sea beach and other tourist sites like Himchhari, Chokoria safari park, Moheskhali and St. Martin’s islands and Teknaf.
  District commanding officer Lt. Col. Mostahidur Rahman, additional superintendent of police Imam Hossein, senior administration officials Arifur Rahman and Omar Farook, Bangladesh Parjatan Corporation official Sujit Barua and Hotel Seagull managing director Masum Iqbal were among those who attended the meeting. 
State lenders owe NBR Tk 895cr 
in tax arrears 
Asif Showkat 

National Board of Revenue has asked the finance ministry to pay Tk 895 crore in income tax arrears of eight state-owned commercial and specialised banks, ministry officials said.
  These banks did not pay any income tax for the last 22 years since 1986-87 fiscal, the revenue authority said in a letter Monday, requesting the ministry to make the payment from its specified head of expenditures.
  ‘The payment of long overdue tax money will help the NBR meet its revenue income target,’ said a high official of the finance ministry.
  He said the ministry would prepare a proposal to release Tk 895 crore after eid vacation and send it to finance adviser Mirza Azizul Islam for approval.
  Bangladesh Shilpa Bank owes Tk 42 crore in income tax arrears accumulated for 22 years, Rajshahi Krishi Unnayan Bank Tk 4.72 crore and Bangladesh Krishi Bank Tk 89 crore.
  Unpaid income tax of Janata Bank totaled Tk 316 crore, Sonali Bank Tk 279.63 crore and Rupali Bank Tk 48 crore, while Pubali Bank owes Tk 80 lakh.
  The revenue board realised tax arrears of Tk 1,300 crore from Bangladesh Petroleum Corporation through budgetary provision in the last fiscal year. 
Prices of traditional Eid food 
items shoot up as usual 
Staff Correspondent 

The prices of some food items including beef, chicken, certain vegetables, sugar, edible oil, pilau rice, spices and shemai have increased further in the city’s market in the past couple of days.
  Market sources said that in accordance with their traditional practice, traders want to reap windfall profits from Eid shoppers, so they started raising prices from the Shab-e-Kadr on Saturday.
  Beef cost between Tk 200 and Tk 240 per kilogram on Monday against Tk 180 to Tk 200 just three days ago in the different markets of the city.
  Bengal Meat, a supplier of chilled and packaged beef, has raised its retail price to Tk 235 per kilogram from Tk 210.
  The prices of live broiler chicken, which were between Tk 120 and Tk 130, went up by Tk 10 in just a couple of days.
  The retail price of cucumber, carrots and tomatoes also increased in the past two or three days as their demand increased due to the need for salad in every home on the Eid day.
  ‘There is reckless profiteering by traders during any festival because the consumers are helpless then,’ said Haji Mosharaf Hossain, a shopper at Mahakhali bazaar.
  Pilau rice, which was selling for prices ranging between Tk 110 to Tk 120 per kilogram, became costlier by Tk 10 in a week and Tk 20 in month.
  In the past one week the prices of spices, especially cardamom, cinnamon, clove and cumin, increased by Tk 50 to Tk 100 per kilogram.
  The price of liquid milk also increased in different areas of the city as its demand increased sharply ahead of Eid.
  In many areas of the city a one-litre pack of liquid milk, of different brands, cost between Tk 55 and Tk 60 on Sunday against its regular price of Tk 46 to Tk 50.
  ‘Many people prefer to prepare shemai and other Eid day sweetmeats by using liquid milk, so the demand rises sharply,’ said Abu Taher, a grocer at New Market.
  The prices of vermicelli or shemai also increased sharply this year as traders said the price of flour and vanaspati increased sharply.
  Non-packed and unflavoured long shemai cost between Tk 55 and Tk 65 per kilogram, up by Tk 10 over the year, while non-packed lachchha shemai cost between Tk 120 and Tk 160 against Tk 80 and Tk 120 last year.
  The popular 200-gram pack of lachchha, of different brands, cost between Tk 26 and Tk 30 while lachchha of famous brands cost up to Tk 400 per kilogram.
  The prices of edible oils, after declining in the previous few weeks, increased again as traders said there is a fresh uptrend in their prices in the international market, and the higher demand before Eid has pushed up the prices.
  Non-packed super palm cost between Tk 85 and Tk 90 per kilogram in different outlets against Tk 80 a week ago. 
US bailout agreed but financial 
crisis hits Europe 
Agence France-Presse . New York 

US lawmakers agreed a 700 billion dollar bank bailout but the financial hurricane hit European banks full on Monday forcing nationalisations, rescues and a new stocks slump.
  After US lawmakers stitched together a revised agreement on the biggest state intervention since the Great Depression of the 1930s, Britain had to nationalise Bradford & Bingley bank, governments intervened to prop up Belgian-Dutch group Fortis and other European banks got sucked into the storm.
  European and Asian shares were badly hit.
  The US House of Representa-tives was to vote Monday on the plan negotiated through the weekend by rival Democratic and Republican leaders with the White House. But the package was not certain to be passed.
  President George W Bush said the rescue 'sends a strong signal to markets around the world that the United States is serious about restoring confidence and stability to our financial system.'
  But some conservative Republicans and liberal Democrats steadfastly opposed the plan, which includes the immediate release of 250 billion dollars to enable the government to buy up troubled assets.
  'We now have a deal that promises to bring near-term stability to our financial turmoil, but at what price?' Republican Congressman Michael Pence, a critic of the bailout, asked in a letter to colleagues.
  And White House hopefuls Republican John McCain and his Democratic rival Barack Obama offered only cautious backing.
  'The party is over,' said House Speaker Nancy Pelosi. 'The era of golden parachutes for high-flying Wall Street operators is over. No longer will the US taxpayer bail out the recklessness of Wall Street.'
  But any relief internationally came too late for Fortis, one of the biggest banks in northern Europe, which was rescued by Benelux governments for 11.2 billion euros ($16b) at the weekend. Fortis shares rallied by 14.5 per cent in initial trading after crashing last week.
  European shares were badly hit by the uncertainty over the US plan and the bad news.
  Stocks in London dived by 2.51 per cent, Frankfurt shares fell 3.16 and Paris was down 2.87 per cent after Tokyo fell 1.26 per cent and Hong Kong lost 4.3 per cent.
  'Despite the US bail out plan now being committed to paper, there's hardly a jubilant mood expected as the new trading week gets underway,' said CMC Markets dealer Matt Buckland in London.
  'The fact the funds won't be released in one lot but instead a series of tranches is certainly detracting from its appeal.
  'This, combined with the very visible scars of the credit squeeze ... will again weigh in sentiment,' he added, in reference to the B&B and Fortis rescues.
  Barclays Capital analyst David Woo said: 'In our view, while the 'bailout plan' reduces the risk of a systemic collapse, many downside risks remain -- not least those related to a protracted slowdown in the global economy.
  'In addition ... the financial market turbulence is seriously affecting the European financial system as well.'
  He added: 'The weakness in equities ... suggests the market is pessimistic about the likely effectiveness of the Treasury's plan.'
  Motomi Hiratsuka, a trader at BNP Paribas, said: 'We know that we are most likely to avoid a meltdown in the US financial sector, but what matters now is negative news from new regions.' 
S Korea signs deal to import 
Russian gas via N Korea 
Agence France-Presse . Seoul 

South Korea has signed a deal to import Russian natural gas beginning in 2015 via a pipeline running through North Korea and across the heavily fortified border, the government said Monday.
  The Ministry of Knowledge Economy said Korea Gas Corp and Gazprom reached the initial deal in Moscow on the sidelines of a South Korea-Russian summit.
  Under the plan, Seoul will import 10 billion cubic metres (350b cft) of natural gas a year over 30 years, said Vice Energy Minister Lee Jae-Hoon.
  Lee, quoted by Yonhap news agency, said gas imports over the three decades would be worth a total of about 90 billion dollars.
  Another nine billion dollars would be used to build and operate joint petrochemical and liquefied natural gas plants in Russia’s Far East, with their products marketed abroad.
  The remainder would fund pipes built in North Korea.
  Lee said the plan proposed by Russia in February calls for gasfields in Siberia and the Far East to be linked by pipelines that will send fuel to Vladivostok.
  The piped gas would then be sent through North Korea to South Korea.
  ‘Russia will be tasked with building the pipelines and negotiating with North Korea,’ Lee said, adding that Pyongyang will likely agree to the proposal since it stands to earn 100 million dollars per year from it.
  Relations are currently frosty between the two Koreas. Pyongyang cut off most official contacts after a new conservative government in Seoul vowed to take a firmer line in cross-border relations.
  A six-nation nuclear disarmament deal is also deadlocked, with the North preparing to restart its plutonium reprocessing plant. Lee said the Korean and Russian firms are also considering ways to liquefy the natural gas and send it by ship to South Korea as a contingency plan, should complications arise in North Korea. 
Citi named in 100 best cos list 
Staff Correspondent 

Citi, a global financial services company, has been named in the 100 best companies list by Working Mother magazine for the 18th year.
  About 25 per cent of the top earners at Citi represent women. The company has established best practices at Citi with embarking on new initiatives like Global Women’s Initiative launched in 2008. The initiative was aimed at helping women network and mentoring each other. Citi also provides child-care centre facilities in different locations, said a press release.
  At Citibank Bangladesh around 20 per cent of the employees are women, including working mothers. Women also represent many senior positions at Citibank Bangladesh, including the management committee. 
Stock markets slump despite 
US bailout deal 
Agence France-Presse . London 

Global stock markets tumbled on Monday, despite a Wall Street bailout deal, as the ongoing financial crisis forced the state rescue of two key European banks.
  Asian and European equities suffered fresh losses as the tentative US agreement to rid the financial sector of toxic mortgage-related assets gave only a short-lived boost to sentiment.
  In Europe, Belgian-Dutch banking and insurance group Fortis sealed a government bailout, while Britain announced it would nationalise troubled mortgage lender Bradford & Bingley.
  Investors were unsettled by signs of widening problems in the banking sector. London’s stock market dived 2.51 per cent at 4,960.61 points in early deals, accelerating initial losses.
  Paris shares plunged 2.87 per cent to 4,043.74 points and Frankfurt tumbled 3.16 per cent to 5,871.64 points.
  Global central banks meanwhile pumped extra cash into the financial system as part of continued efforts to keep credit flowing.
  ‘Despite the US bail out plan now being committed to paper, there’s hardly a jubilant mood expected as the new trading week gets underway,’ said CMC Markets dealer Matt Buckland in London.
  ‘The fact the funds won’t be released in one lot but instead a series of tranches is certainly detracting from its appeal.
  ‘This, combined with the very visible scars of the credit squeeze ... will again weigh in sentiment,’ he added, in reference to the state rescues of B&B and Fortis.
  The European Central Bank announced a special 38-day euro loan to provide eurozone banks with more cash in a bid to balance conditions on extremely tense interbank money markets.
  German bank Hypo Real Estate was meanwhile granted a last-minute ‘multi-billion euro’ credit line from a consortium of German banks that allowed it to avoid declaring bankruptcy.
  Hong Kong share prices closed down 4.3 per cent on Monday, as banking giant HSBC bumped up its mortgage rate, sending property stocks tumbling, dealers said.
  Tokyo fell 1.26 per cent by the close, Sydney lost 2.0 per cent and Seoul dropped 1.35 per cent.
  There were still doubts about the proposed US financial rescue package, which needs to be approved by Congress and offers no guarantee of an end to the credit crunch that has ravaged global markets, dealers said.
  ‘In our view, while the ‘bailout plan’ reduces the risk of a systemic collapse, many downside risks remain — not least those related to a protracted slowdown in the global economy,’ said Barclays Capital analyst David Woo.
  ‘In addition ... the financial market turbulence is seriously affecting the European financial system as well.’
  He added: ‘The weakness in equities ... suggests the market is pessimistic about the likely effectiveness of the Treasury’s plan.’
  The US deal, announced just hours before Asian markets opened, is designed to mop up toxic debts from struggling banks and prevent further financial chaos that could tip the world’s largest economy into recession.
  The bailout, worth up to 700 billion dollars, would be the largest government economic intervention since the Great Depression of the 1930s, and aims to shore up an economy in the face of a severe housing slump.
  ‘We know that we are most likely to avoid a meltdown in the US financial sector, but what matters now is negative news from new regions,’ added Motomi Hiratsuka, a trader at BNP Paribas.
  With markets still skittish, the Australian and Japanese central banks pumped more emergency funds into the short-term money markets.
  US Treasury secretary Henry Paulson said the package ‘gives us the flexibility to unclog our financial markets and increase the ability of our financial institutions to deliver the credit that will help create jobs.’
  Democratic lawmakers warned US financial firms that they would be under stricter supervision from now on.
  ‘The party is over,’ said House Speaker Nancy Pelosi. ‘The era of golden parachutes for high-flying Wall Street operators is over. No longer will the US taxpayer bail out the recklessness of Wall Street.’
  The measures laid out in the bill include the immediate release of 250 billion dollars to enable the government to buy up troubled assets.
  The US president is authorised to approve a further 100 billion dollars, but the plan gives Congress a veto power over purchases above that limit and sets a ceiling for all purchases of 700 billion dollars.
  The deal on the rescue plan provided a modest boost to the dollar, while worries about problems at European banks weighed on the euro. 
ECB loans €120b in 38-day tender 
Agence France-Presse . Frankfurt 

The European Central Bank said Monday it had loaned eurozone banks 120 billion euros ($172b) in a special 38-day operation aimed at soothing extremely tense interbank money markets.
  The ECB had said earlier in a statement that ‘the special term refinancing operation will be renewed at least until beyond the end of the year,’ amid increased pressure at the end of the third quarter.
  ‘The ECB will continue to steer liquidity towards balanced conditions’ in an attempt to bring interbank interest rates in line with the bank’s own minimum rate, it added.
  Commercial banks usually lend and borrow cash on interbank money markets but these have almost completely dried up since the US market for high-risk, or subprime, mortgages collapsed more than a year ago.
  The ECB and other major central banks have thus been pumping hundreds of billions of dollars, euros, pounds and other currencies in the form of loans into such markets.
  On Monday, the ECB also rolled over one-day dollar loans to eurozone banks, renewing that operation for a total amount of 30 billion dollars (€20.8b).
  The dollars were obtained from the US Federal Reserve through a reciprocal currency agreement known as a swap, and allow eurozone banks to obtain the US currency directly from the ECB.
  Initially, the one-day loans were for 40 billion dollars, but the ECB reduced that amount last week, while extending other dollar loans to a period of one week.
  ‘Injections of dollar liquidity by the ECB, Bank of England and Swiss National Bank have highlighted the sizeable dollar exposures among European banks,’ Citibank analysts wrote on Monday. 
Fortis admits errors after 
bailout by governments 
Agence France-Presse . Brussels 

Troubled financial group Fortis admitted on Monday that past errors had triggered the crisis that required the Benelux nations to hastily hammer out a 11.2 billion euro bailout over the weekend.
  Despite assurances last week it had ample funding, Fortis was forced to turn to the Belgian, Dutch and Luxembourg governments for help late Sunday after a foreign suitor could not be found to save the banking and insurance group.
  While blaming market ‘speculation’ and ‘rumours’ for a sharp slide in Fortis shares last week, newly appointed chief executive Filip Dierckx acknowledged that strategic mistakes also played a part in the group’s woes.
  ‘I am ... not going to deny that if you look at some of the decisions that were taken in the past then you can say that probably they were done at the wrong moment,’ he told journalists and analysts in a conference call.
  ‘If you want me to say that there were some decisions that were not the best I will indeed confirm,’ added Dierckx, who took up his post after predecessor Herman Verwilst was unexpectedly moved aside on Friday.
  Dierckx, who took over after the company’s shares plummeted by 20 per cent on Friday, highlighted last year’s involvement in the buyout of Dutch group ABN Amro as a key mistake.
  ‘Clearly indeed there was bad timing in the ABN Amro deal,’ he said.
  Fortis paid 24 billion euros for its part in a consortium buy-out for ABN Amro at the height of the market, but by Sunday the figure of 10 billion euros was being mentioned as a possible selling price.
  The new Fortis chief, who admitted he hadn’t got much sleep over the weekend as the state bailout talks unfurled, said he ‘felt a very strong commitment from a lot of parties involved to solve and to come to a good solution.
  ‘I think it personally is a very good agreement.’
  Earlier Belgian Finance Minister Didier Reynders insisted that the partial nationalisation of Fortis was only a temporary measure to support the bank.
  ‘Our ambition is clearly not to remain present as shareholders,’ Reynders told public radio RTBF.
  After seeing nearly a quarter of its stock market value wiped out over the past week, shares in Fortis opened up nearly 15 per cent in Brussels on Monday but by early afternoon were down 3.85 per cent at 5.00 euros. 
UK govt nationalises Bradford 
and Bingley 
Agence France-Presse . London 

The British government announced Monday the nationalisation of troubled lender Bradford & Bingley, the latest European victim of the fast-moving global financial crisis.
  B&B’s savings business — its best asset with 20 billion pounds of savings and 2.7 million customers — will be sold to Spanish bank Santander, while its mortgage book will be nationalised, the Treasury said.
  Abbey National, the British bank owned by Santander, will pay 612 million pounds ($1.1m) in the deal.
  ‘What you’re seeing is the government taking quick, decisive action, we’re standing behind the system to stabilise it because to let Bradford & Bingley go down would have destabilised the entire system,’ finance minister Alistair Darling told BBC radio. ‘The government has got to provide stability.’
  Bradford & Bingley is the second British bank to be nationalised this year, after Northern Rock in February.
  The FTSE 100 stock market in London plunged 2.63 per cent in early morning trade, falling to 4,954.11 points as investors digested the deal as well as a massive bailout of Wall Street in the United States.
  Hours before the deal was confirmed, US lawmakers agreed on the details of an unprecedented 700 billion dollar bailout for struggling Wall Street banks in a bid to avert the worst financial crisis since the 1930s Great Depression.
  The Belgian, Dutch and Luxembourg governments also mobilised to help troubled financial group Fortis on Sunday, agreeing to inject 11.2 billion euros ($16b), Belgian prime minister Yves Leterme said.
  The Belgian government said Monday it was prepared to support Dexia, another high-street bank, after its shares nose-dived in early trading.
  In another sign of the trouble facing European lenders, Denmark’s Roskilde Bank said Monday it had been sold to Nordic bank Nordea and two regional Danish lenders, Arbejdernes Landsbank and Spar Nord Bank.
  In Britain over the weekend, officials from the Treasury, the Financial Services Authority watchdog and the Bank of England met to try to secure the future of B&B, which has also suffered from a property market downturn.
  Anto Horta-Oso, Abbey National’s chief executive, said the deal was ‘good news’ for B&B’s savings customers, adding: ‘They can be certain that their hard-earned savings are with a bank they can trust.’ 
Foreign investors eject $540m 
from Pak stock market 
Asia News Network . Karachi 

Foreign investors have ejected $540 million from the Pakistani stock market in only three months from July to September amid prolonged political uncertainty, burgeoning insecurity in the tribal belt of the country coupled with global and local economic slowdown.
  So far this month, foreign investors have withdrawn $96 million, reflecting an increase of $68 million versus $28 million outflow witnessed in a month earlier. While inflow during September was recorded at $82 million. A major outflow of portfolio investment was recorded from the investors of the US, the UK, Switzerland, Singapore, Hong Kong and Australia.
  Pakistani market has been facing turmoil for the last four months that led the market to shed around 40 per cent. In this period, many small investors have been washed out from the stock market while others are facing back to back decline despite the freeze on shares prices.
  Those closely watching the ebb and flow of Pakistani market linked the huge capital flight to deteriorating law and order situation, economic weaknesses, like dwindling forex reserves, devaluation of rupee against US dollar coupled with the unprecedented financial turmoil in the US, which sent shock waves to all other leading capital markets of the globe.
  Analysts also held the view that the imposition of floor on the market had sent a negative signal to foreign investors and those still trapped in the market were waiting for lifting of floor from the market to make an exit.
  Analysts said that as long as the tension remained in the tribal belt, which was being linked with the suicide bombings in the mega cities of the country, the foreign investments would continue to wobble and may witness further downgrading.
  Analysts said that Moody’s verdict had also dealt a severe blow to the confidence of foreign investors and local investors as well.
  The steep decline in the stock market and economic meltdown has severely hit the confidence of foreign investors, analysts added. 
Storm may hit Indian aviation, 
if steps not taken: IATA 
Press Trust of India . New Delhi 

Warning that some Indian airlines could fold up if structural changes were not carried out immediately, the IATA has asked the government to take speedy steps to enable the industry weather the ‘perfect storm’ of high costs and falling demand.
  ‘India is among the most expensive places on the planet to buy aviation turbine fuel from. In August, it was 58 per cent more expensive to buy fuel in Mumbai for domestic flights than in Singapore,’ International Air Transport Association director general and CEO Giovanni Bisignani told PTI in an interview in New Delhi.
  Observing that the Indian aviation industry was passing through a ‘fragile and delicate moment,’ he said some airlines could go bust in the coming few months if “structural changes are not carried out expeditiously.’
  As many as 25 carriers worldwide have folded up operations in the past several months due to huge losses, the latest being Italian national carrier Alitalia, leading to over 100,000 jobs in the aviation sector being lost.
  He projected a cumulative loss of $1.5 billion for Indian carriers this year, second largest after that in the US. 
Japan faces uncertainty from 
financial crisis 
Agence France-Presse . Tokyo 

Japan will likely avoid a deep slump from the global credit crisis but faces ‘considerable uncertainty’ and downside risks to growth, a top central bank official said Monday.
  The possibility of a dive on the back of the Wall Street crisis ‘is rather small,’ Bank of Japan deputy governor Kiyohiko Nishi-mura told a news conference.
  But ‘the outlook for economic activity is accompanied by considerable uncertainty and various risk factors could influence the outlook,’ he said.
  The central bank ‘is attentive to downside risks to economic growth,’ he added.
  Despite being relatively insulated from the US-born subprime crisis, Japan’s export-driven economy is teetering on recession due to a cooling global economy and tepid domestic spending. Nishimura lauded recent investments by Japanese banks that have embarked on a buying spree of US banks, which have crumbled due to massive mortgage-related losses and failure to secure funds.
  ‘Each financial institution in Japan is trying to improve its earnings and in doing that they are looking for the most appropriate way to utilise their resources,’ Nishimura said. ‘So in that sense it is desirable.’ 
Japan reaches free trade deals 
with Vietnam, Switzerland 
Agence France-Presse . Tokyo 

Japan said Monday said it had struck free trade deals with Vietnam and Switzerland, seeking to strengthen economic ties with individual countries amid a deadlock in World Trade Organisation talks.
  About 92 per cent of trade in goods between Japan and Vietnam will be duty-free within the next 10 years, Tokyo officials said.
  Under the agreement with Switzerland, Japan’s first with a European country, 99 per cent of trade will be tariff-free within a decade. Neither agreement has been formally signed yet.
  ‘Vietnam gave us a high level of liberalisation that it had never given to other countries such as China and South Korea’ under their deals with the Association of Southeast Asian Nations, a foreign ministry official said.
  Japan, Asia’s largest economy, has also already signed a separate deal with the whole of ASEAN, which includes Vietnam.
  Vietnam will get free access to the Japanese market for shrimps, durian, and okra, among other farm and marine products, while Japan will secure duty-free trade for its auto parts, steel and electronic goods, officials said. 
Citigroup to take over Wachovia 
banking assets, gives US stake 
Agence France-Presse . Washington 

US authorities said Monday they had facilitated a takeover of Wachovia’s banking operations by Citigroup Inc in a deal that gives the government a stake in one of the nation’s biggest banks.
  The Federal Deposit Insurance Corp made the announcement that further reshapes the troubled US banking sector saddled with heavy losses from the bursting of the real estate bubble.
  ‘Wachovia did not fail; rather, it is to be acquired by Citigroup Inc on an open bank basis with assistance from the FDIC,’ the government agency said.
  The government will get a stake in Citigroup in exchange for guaranteeing a large portion of the distressed Wachovia assets linked to housing.
  Citi will assume up to 42 billion dollars of losses from a pool of 312 billion dollars of loans held by Wachovia; the FDIC will absorb losses beyond that and take a stake in Citigroup for the guarantee.