Norris McLaughlin & Marcus, P.A.

Blogs > Business Without Borders

REWIND: International Business News #36

Posted on September 14th, 2012 | Author: Oren M. Chaplin

  • Reports out of Europe have European Aeronautic Defence & Space Co. and BAE Systems discussing a potential $49 billion merger. “EADS’s main strength is civil aviation through Airbus, but it has struggled to build a defense business of scale. In contrast, BAE is focused on military vehicles and equipment. The structural merger would require the two companies to overcome large gaps in operational synergies, such as making determinations relating to management of the merged entity. “The French and German governments have proved keen to influence” appointments of management at EADS, which may create an uneasy situation for British BAE Systems and its personnel. The proposed deal does not yet have a concrete structure, but If it were to materialize, the resultant company is believe to be capable to rival Boeing,
  • Efforts of the European Commission to create one single regulator for all eurozone banks have encountered a German roadblock. “Germany … is reluctant to cede control of its banking sector. The German government wants the new regulator to concentrate only on the region’s biggest banks, thought is has left open the possibility of eventually expanding its authority.” The move towards a single banking regulator is based somewhat on the recent banking crises of Spain and Ireland, and proponents “argue that only a region-wide authority that oversees all banks could respond quickly and effectively to forestall” similar crises in the future. There is dissension with the German banking community, with private-sector banks supporting the proposal arguing that it would “create a more level playing field and help stabilize the financial situation, and the public-sector banks opposing the one-regulator plan “saying their lower-risk business models should allow them to avoid the new layer of pan-European supervision.” While the banking sector is much smaller in scale than the German banking sector, similar debates are also occurring in France and Austria as the entire eurozone grapples with finding a solution that could help prevent future banking crises.
  • Chinese currency may soon become more accessible to offshore investors. A new index will track yuan-denominated bonds that are sold outside China.  Deutsche Bank AG and S&P Dow Jones Indices will start the index, and many hope that it will continue the “surge in foreign trading of bonds denominated in the yuan” that started last year.
  • Italian tax authorities believe that an underground economy which does not report income accounts for 17.5% of its gross domestic product. They have turned their attention to the arts as they try to ferret out tax fraud and money laundering. With the help of the copyright office of Italy’s arts and entertainment industry, “24 galleries and auction houses had been targeted,” leading to more than 2 million euros in unpaid taxes being discovered.