European Business News (EBN), 96-12-20

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From: The European Business News Server at <http://www.ebn.co.uk/>

Page last updatedDecember 20 1000 CET

CONTENTS

[01] EU ministers agree to compromise on easing cuts in fishing quotas

[02] German economic data suggest long-term price stability

[03] CS Holding establishes new credit-risk system

[04] French industrial production continues decline

[05] Fortis acquires Meespierson for $1.45 billion

[01] EU ministers agree to compromise on easing cuts in fishing quotas

The European Commission, acting on scientific advice, had proposed further reductions aimed at safeguarding both run-down fish stocks and the future of the EU fishing industry.

'We have agreed sensible and pragmatic quotas,' Irish Marine Minister Sean Barrett said at a news conference after 21 hours of talks. 'It was particularly complex with a lot of new elements.'

Belgium and Sweden voted against the deal, officials said.

Belgium wanted a higher North Sea sole quota while Sweden wanted more cod under a compensation deal agreed when it joined the EU in 1995.

The Commission sought a 50% cut to 12,000 tonnes in catches of seriously depleted North Sea sole stocks but ministers raised this to 18,000. Belgium wanted 23,000 tonnes.

British Fisheries Minister Tony Baldry said he had won the best possible deal for British fishermen consistent with the need to protect stocks.

'The objectives that we set have all been achieved,' Baldry told reporters after the meeting.

In Western waters, British mackerel quotas are 21,000 tonnes higher while in the North Sea their plaice quotas are 2,700 tonnes higher than originally proposed, he said.

One of the most difficult issues was the allocation of quotas under new EU fisheries agreements with the Baltic States following Sweden and Finland's entry into the EU.

In the end there was unanimous agreements between the four countries concerned -- Germany, Denmark, Finland and Sweden.

Denmark reluctantly accepted the introduction of a 15,000 tonnes quota for by-catches of herring by huge vessels hunting sprats for industrial processing into fish meal and oil.

Italy and Greece fought off quotas on tuna fishing in the Mediterranean while measures to restrict sardine fishing off the coasts of Spain and Portugal were eased.

[02] German economic data suggest long-term price stability

Pan-German producer prices were flat in November after a 0.2% rise in October, while the year-on-year figure was down 0.3%, in line with the previous month, the Federal Statistics Office said.

A 0.1% month-on-month drop in western Germany was offset by a gain of 0.1% in the Eastern region.

Separate data showed that import prices were unchanged in November after a 0.6% blip in October linked to a rally in oil prices. The yearly increase was 1.4%.

Before the data was released, Bundesbank chief economist Otmar Issing said Germany's chances of maintaining price stability were unprecedented. 'We are in a phase of stability in the value of money, which is favourable as never before,' Issing told German television.

November's producer price data showed a sharp 1.4% increase in tobacco products, while oil fell back by 1.1%.

Import prices -- excluding oil -- rose by 0.2 percent, showing that oil imports had exerted a negative influence on the overall figure.

In separate reports, Germany's states have begun reporting their consumer price data for December, showing that costs have been gaining.

Hesse said consumer prices rose 0.3% in December, after remaining unchanged the month before. Prices rose 1.4% on the year, up from 1.3%

Prices in Baden-Wuerttemberg rose 0.2% on the month, after a 0.1% gain in November. On an annual basis, prices rose at a 1.2% rate.

And in Bavaria, consumer prices were up 0.3% from a 0.1% drop the month before. For the year, prices rose 1.4%.

[03] CS Holding establishes new credit-risk system

Following similar moves by Union Bank of Switzerland and Swiss Bank Corporation, CS Holding said it will introduce 'a new method of credit risk management.' The parent of Credit Suisse and other banks said the plan aims to 'offer credit products at conditions which reflect the risks involved.'

Under the current system of provisioning, CS Holding books reserves for annual defaults.

As part of the risk-management changes, the bank said it will establish provisions for statistically expected credit losses. An annual credit provision will be determined and charged to the profit and loss account.

But because the actual credit loss may vary from the expected amount, a fluctuation reserve will be formed as well. These two reserves will be recalculated each year in order to reflect shifts in the risk profile of the bank's loan portfoliio.

For 1996, CS Holding said, this new system means it will set aside 630 million francs as an extraordinary provision for credit risks.

CS Holding said it expected its consolidated profit before deduction of minority interests to total around 1.8 billion Swiss francs ($1.3 billion) this year, including ordinary credit provisions of 1.2 billion.

But after extraordinary reserves, provisions and depreciation of a total 3.9 billion francs, CS Holding will report a consolidated loss before deduction of minority interests of around 2.1 billion for 1996, CS Holding said.

[04] French industrial production continues decline

Industrial production excluding energy dropped 0.8% in October compared to September, yielding a 1% year-on-year rise, national statistics institute INSEE said.

Manufacturing output, which excludes energy, agri-food businesses and construction, fell 1.2% month-on-month but was 0.8% higher on the year.

The car industry suffered the biggest setback, with production dropping 3.1% as the positive effect of a year of government-subsidised rebate programmes wore off. But consumer goods production and construction were also sharply lower, registering 2.6% and 2.1% declines, respectively.

'It's weak,' said Smith Barney international economist Paul Horne of the overall production figure. 'The auto effect has got to be huge. The consumer goods part is bad news because it confirms that it's more than just cars.'

The report showed seven of the production index's elements fell in October. Only the agri-food and energy sectors eked out small gains of 0.9% and 0.2%, respectively. Horne said the weakness in consumer goods production was the most worrying part of the report because it reflected weak consumer spending and hinted that production might well remain soft for the rest of the year.

'The consumer remains a problem,' he said. 'There's a lot of window shopping going on but that's pretty much it. I would think November and December will remain weak.'

Separately, INSEE released final data on November consumer prices which confirmed a small drop in inflation for the month and year-on-year inflation of 1.6%.

[05] Fortis acquires Meespierson for $1.45 billion

Fortis said MeesPierson will make a positive contribution to Fortis' earnings per share from 1997. 'After due diligence, further talks with the management of MeesPierson and the usual negotiations, agreement has now been reached on price and the other conditions,' Fortis said.

Fortis said the acquisition makes it one of the three most important financial groups in the Benelux region, and the fourth largest bank in the Netherlands.

With MeesPierson, Fortis said total assets under its management will amount to more than 99 billion European currency units ($122 billion), bringing the group to 14th place worldwide.

Fortis said it will finance the acquisition by increasing its net equity, reallocating available funds and employing various financing instruments.

The two parent companies of the group, Belgium's Fortis and Fortis Amev in the Netherlands, will each contribute equal amounts in cash in order to increase the group's net equity. Fortis noted that these measures will take into account the financing needs involved in a possible increase of Fortis' stake in ASLK-CGER Bank and ASLK-CGER Insurance in 1997.

Fortis, the company said, is considering a capital increase in 1997, with the subscription right reserved for existing shareholders only. Fortis Amev will provide the necessary funds from its own assets.

From the European Business News (EBN) Server at http://www.ebn.co.uk/

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