Business Briefs
June 23, 2003
WestLB loses chairman
Jürgen Sengera, the chairman of state-backed German bank WestLB, on Monday resigned as a consequence of massive losses at its London investment banking unit. According to the Reuters news agency, Sengera was forced out after failing to secure the backing of the bank’s owners, including the German state of North Rhine-Westphalia. Germany’s financial regulator BaFin became concerned with WestLB’s finances once losses totaling €430 million ($497 million) relating to a deal with British television rental company Boxclever were discovered in April. A BaFin report highly critical of WestLB’s risk assessment and control procedures was delivered to the bank’s supervisory board on Friday. The head of WestLB’s principal finance unit, American Robin Saunders, is now expected to be fired.
Bundesbank sees no deflation danger
The Bundesbank said on Monday that Germany is currently not showing any signs of sliding into deflation. Although Europe’s largest economy has stalled in recent months, there is no indication that Germany was experiencing a Japan-style, broad-based decline in prices, according to the central bank’s monthly report. The Bundesbank said the European Central Bank had already taken precautions to protect the euro zone from the threat of deflation by cutting interest rates by half a percentage point earlier this month. "With its rate cut on June 5 the ECB created monetary conditions sufficient to allow an economic upturn," the report said The Bundesbank said recent falling prices were primarily caused by short-term factors such as exchange rate developments and dropping energy prices.
Deutsche Börse mulls end to late trading
Deutsche Börse is considering cutting the trading hours of the Frankfurt stock exchange amid pressure from international institutional investors. Since June 2000 the exchange has stayed open until 8 p.m., but in the past three years trading volumes after 5:30 p.m. have fallen sharply. Although private investors like the extra hours in the evening, larger institutional investors largely leave the market after 5:30 p.m. International investors are now pushing for common trading times throughout Europe. "The electronic trading system Xetra hardly has extra costs, but we naturally still have high personnel and clearing costs. It’s just not worth it anymore," a Frankfurt equities trader told the Reuters news agency. Frankfurt’s 11-hour trading day is the longest of any major stock exchange worldwide.