ECONOMY

In Brief

European banks strong enough to withstand losses PARIS (AFP) – European banks are strong enough to withstand any sharp losses in their holdings of government debt issued by Greece, Portugal, Spain and Ireland, a leading credit agency said yesterday. Rating agency Moody’s said it had done its own «stress tests» on banks amid unease about European banks’ ability to cope with new loan problems in the public and private sectors in some European countries. Its analysis showed that banks would be able to cope without having to raise extra funds from shareholders, and said it did not expect its findings to lead to any changes in its credit ratings. Moody’s had tested 30 banks in 10 European countries. «Based on our stress test, we believe that these banks would be able to absorb losses that could arise from such exposures without requiring capital increases – even under worse-than-expected conditions,» one of the authors, Jean-Francois Tremblay, said. «The average regulatory capital ratio of the banks that we stress-tested is well above 9.0 percent.» Moody’s said that «recent EU-wide debt market volatility has highlighted investor concerns and the lack of clarity around banks’ cross-border exposures.» Cyprus passes law to cap wholesale fuel prices Cyprus’s parliament approved a law that will allow price caps on wholesale fuel prices, rather than just on retail prices, in order to boost competition. The amended law may increase competition and help combat oligopolies and profiteering, communist lawmaker Dinos Hadjinicolas of the coalition government’s main partner, Akel, said yesterday in a telephone interview in Nicosia. «When oil prices go up, the oil companies in Cyprus immediately raise their prices, but when oil prices fall, they take their time to reduce them,» the lawmaker said. Akis Pegasiou, managing director of Hellenic Petroleum Cyprus Ltd, a unit of Greece’s Hellenic Petroleum SA, said in a phone interview yesterday that moves to lift wholesale price caps won’t increase competition. «Interventions have the opposite results and only serve populist policies,» Pegasiou said. Minister of Commerce, Industry and Tourism Antonis Paschalides in February imposed price caps on retail prices for three fuel categories. His decision sparked a strike by gas station owners leading to supply shortages. (Bloomberg) Deposits slowdown Greeks lenders witnessed a slowdown in deposits by non-residents into their Cypriot units in April as the gap between rates offered in Greece and Cyprus narrowed. Non-resident deposits rose by 94.4 million euros ($114 million) in April to a total of 3.4 billion euros, according to Central Bank of Cyprus data shown to Bloomberg News. Inflows in the preceding three months totaled 970 million euros. The central bank declined to comment on the figures. The slowdown comes as Greek banks raise deposit rates at home to deter customers from transferring funds to other countries, said Alecos Sergides, an analyst at Nicosia-based Severis & Athienitis Financial Services Ltd. The banks’ Cypriot units had targeted non-residents because they must pay local depositors higher interest rates, he said. Average one-year deposit rates at Greek banks rose to 2.98 percent in April from 2.17 percent in January, according to the European Central Bank’s website. (Bloomberg) Vestas growth Vestas Wind Systems A/S’s unit in Greece expects growth in the Mediterranean country as the government moves to attract renewable energy projects by simplifying the investment process. «Greece has high wind resources and considerable growth opportunities,» Yanos Michopoulos, vice president and general manager of Vestas Hellas Wind Technology SA, the Greek unit of the world’s biggest maker of wind turbines, said in an e-mail interview on June 3. Prime Minister George Papandreou has said he wants to encourage «green growth» in Greece, focusing the nation on attracting investment to build renewable energy projects. The government pushed through a law aimed at reducing the approval time for renewable energy investments to as little as eight months from three years. It also shortened the time it takes to get authorization from the Greek energy regulator to two months from as much as a year. (Bloomberg)